Sec.3. Waiting for Consumption.  But let us carry the argument a step further.  After the farmer has sold his crops, there are many stages through which they must pass, at each of which more waiting is required, before they reach the ultimate consumer.  But then the waiting is at an end.

This, however, is by no means the case with a great number of commodities.  Let us take the case of a speculative builder.  While he is building a house he, like the farmer, must wait (or find someone to wait on his behalf), for his own reward, and for the repayment of his expenditure on wages and materials.  But, after the house is built, if he lets it to a tenant for an annual rent, his waiting is far from over.  Not until many years have passed will the rent payments add up to a sum which equals or exceeds his outlay.  He may, of course, sell the house, and thus bring his waiting to an end.  But then the purchaser must wait, no matter whether or not he is the occupier.  For no one would consider the use of a house for a day, a month, or a year as an adequate return for the price it cost to buy.  The occupier-owner pays for the prospect of its use for a long and perhaps indefinite number of years ahead, and he must wait to enjoy the benefits for which he pays now in full.  Waiting is as inherent in the consumption of durable things as it is in all production.

Now most industries are consumers of durable things of a very expensive kind.  Here we come back to the factories and machinery which ordinarily spring to our mind at the mention of the word capital.  Not merely does the construction of these things involve waiting; their consumption involves waiting on a vastly larger scale.  Just as with a house, many years must elapse before their derived utility can even approximate to their purchase price.  It is mainly to supply the waiting involved in the consumption of such durable goods, that a typical joint-stock company issues shares for public subscription.  The waiting required to cover the period of time, which its own productive process requires, is largely supplied by means of bank overdrafts or other forms of short-period borrowing.  More strictly, fixed capital represents the waiting involved in the consumption of durable things; circulating capital the waiting involved in current production.

This distinction loses its sharpness when we consider not the affairs of a particular business, but the industrial system as a whole.  Then the period of time involved in the consumption of durable instruments falls into place as part of the time required for the production of the ultimate consumers’ goods.  We can even, perhaps, conceive of an “average period of production” for industry and commerce as a whole; and this conception is not without its uses.  For it serves to bring out the fact that the period of consumption, and the period of production in the narrower sense, are only two aspects of the same fundamental thing, the interval of time which elapses between work and the utility, which is its ultimate purpose.  It serves, moreover, to make clear that anything which lengthens this interval of time increases the demand for waiting, or in other words, the demand for capital; and, conversely, that anything which shortens this interval diminishes the demand for capital.