both kinds are present
in all stages of industrial evolution. Savages use raw materials and
tools for fashioning them.

_Active Capital Goods._--The hammer which fashions the iron, the awl
which pierces the leather, and the saw that cuts the log into boards
have an active function to perform. They do not receive utilities,
but impart them. They manipulate other things and are not themselves
manipulated; and except as unavoidable wear and tear injure or destroy
them, they are not themselves at all changed by the processes in which
they take part. They are the workman's active assistants in the
attacks that he makes on the resisting elements of nature. Passive
instruments, then, and active ones--things which receive utility, as
industry goes on, and those which impart utility--constitute the two
generic kinds of capital goods. What is commonly called "circulating
capital" is a permanent stock of passive capital goods; and, in like
manner, what is usually known as "fixed capital" is such a stock of
capital goods of the active kind. The materials and the unfinished
goods that are scattered through a modern mill and receiving utility
are what the manufacturer would at this moment identify if he were
asked to point out the things in which he has circulating capital
invested; while the mill, the machinery, the land, etc., which are
imparting utility, are what he can point to as now constituting his
fixed capital. At a later time there will be other goods of both kinds
in his possession, and these will at that time embody the two kinds of
capital. While a primitive man would have little occasion to use the
term _capital goods_, he would possess both varieties of the goods
which the term denotes.

_Varieties of Active Capital Goods._--Mere hand tools act as armatures
attached to the person of the worker, and they enable him effectively
to attack resisting substances. The hammer fortifies the blacksmith's
hand against the injuries it would suffer if he delivered blows with
his fist, and it multiplies the efficiency of the blows. Machines,
however, substitute themselves for the person of the worker and carry
the tool through its movements. A steam hammer, so called, is an
engine that gets power from a boiler and wields an armature, which is
the real hammer, much as a smith would do it, though with far greater
force and effect. Machines do rapidly and accurately what a manual
laborer would, without them, have to do slowly and im