good, and
the remainder will be the net rent of the instrument. We can, in a
like way, get the net rent of all the following instruments in the
series for a long period, add these net rents together, and get the
true net earnings of the series for the time covered by the
calculation. If this chances to be ten years we may compare a tenth of
this total, or the earnings of the series for one average year, with
the cost of the first instrument,--which is the capitalist's original
investment,--and we shall thus get the fraction which represents the
annual rate of interest on that investment. Perhaps in an average year
the series has earned, above what is required to repair waste, five
hundredths of what the first instrument cost. That is, then, the rate
of interest that the series as a whole, or the permanent capital, is
yielding. The whole procession of instruments in which permanent
capital is invested creates every year this fraction of its own value,
over and above the sum that is needed to offset the wear and tear of
an average year's use.[2]

[2] If the fund for replacing a costly capital good, such as
a ship or a building, were allowed to accumulate for a term
of years before being spent, the parts of it remaining on
hand for some time would earn interest for their owner, and
in his bookkeeping this would figure as reducing the amount
he must save from the product of the ship or the building in
order to replace it. This does not affect the general law of
self-replacement, for the ship or building really produces
what results from this compounding.

_General Interest as Rent._--If you compute the net income of all
tools, machines, and other like things in the world, add the amounts,
and get the grand total of them all, you have the entire income from
this part of the capital of the world in the form of net rent. If then
you compute the value of all this class of instruments and see how
large a part of this value the net rent is, you translate this total
rent into the form of interest, and therefore net rent and interest
are the same income regarded in two different ways.[3]

[3] In computing both of these values for comparison one
should use a labor-cost standard, and we shall later see
under what limitations such a standard may legitimately be
used.

_Stocks of Made Instruments graded in Quality as is Land._--It is
necessary to notice the fact that the perman