4 THE OUTLOOK FOR CAPITAL

machinery is being created for the manufacture of
munitions and other stuff needed for the war, and a
large part of this new machinery ought to be avail-
able as industrial capital when the war is over.
Those people who talk so glibly of the .enormous
destruction of capital by the war are surely making
a mistake common to minds which look at economic
questions through a financial telescope, mistaking
money for capital. They see that an enormous
amount of money is being spent on the war, and they
jump to the conclusion that this money, if not spent
upon the war, would have been put into capital
investments and so have increased the tools and
equipment of industry. In fact, a great deal of the
money now spent upon the war would have been
spent, if there had been no war, not upon increasing
the equipment of production, but upon purely
frivolous and extravagant consumption. There is
no need to dwell on the effect of war in reducing
many kinds of expenditure on which hundreds of
millions must have gone in peace time, and this
restriction of extravagant consumption has to be
deducted before we even admit, not that all money
spent upon the war is destroyed capital, but even
that all the money spent upon the war is destroying
what might otherwise have become capital.

If, then, it is true that the war is not making a
very terribly substantial inroad upon the mass of
existing capital, how is it going to affect the supply
of capital in the future ? To answer this ques-
tion we have to see how capital is created. The
answer to this question is very simple, very obvious,