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P. Williams, "On the Maintenance of Permanent Way," Paper read at the Institute of Civil Engineers, Autumn, 1867. [R. P. Williams's paper was published in Money Market Review of December 2, 1867. -- Ed .])Finally, here as everywhere else in modern industry, the moral depreciation plays a role. After the lapse of ten years, one can generally buy the same number of cars and locomotives for £30,000 that would previously have cost £40,000. Depreciation in the rolling stock must be set at 25 per cent of the market price even when there is no depreciation whatever in its use-values. (Lardner, Railway Economy .)"Tube bridges will not be replaced in their present form." (Because now there are better forms for such bridges.) "Ordinary repairs, taking away gradually, and replacing are not practicable." (W. P. Adams, Roads and Rails , London, 1862.) The instruments of labour are largely modified all the time by the progress of industry. Hence they are not replaced in their original, but in their modified form. On the one hand the mass of the fixed capital invested in a certain bodily form and endowed in that form with a certain average life constitutes one reason for the only gradual pace of the introduction of new machinery, etc., and therefore an obstacle to the rapid general introduction of improved instruments of labour. On the other hand competition compels the replacement of the old instruments of labour by new ones before the expiration of their natural life, especially when decisive changes occur. Such premature renewals of factory equipment on a rather large social scale are mainly enforced by catastrophes or crises.

By wear and tear (moral depreciation excepted) is meant that part of value which the fixed capital, on being used, gradually transmits to the product, in proportion to its average loss of use-value.

This wear and tear takes place partly in such a way that the fixed capital has a certain average durability. It is advanced for this entire period in one sum. After the termination of this period it must be totally replaced. So far as living instruments of labour are concerned, for instance horses, their reproduction is timed by nature itself. Their average lifetime as instruments of labour is determined by laws of nature. As soon as this term has expired they must be replaced by new ones. A horse cannot be replaced piecemeal; it must be replaced by another horse.

Other elements of fixed capital permit of a periodical or partial renewal. In this instance partial or periodical replacement must be distinguished from gradual extension of the business.

The fixed capital consists in part of homogeneous constituents which do not however last the same length of time but are renewed piecemeal at various intervals. This is true for instance of the rails and railway stations, which must be replaced more often than those of the remainder of the trackage. It also applies to the sleepers, which on the Belgian railways had to be renewed in the forties at the rate of 8 per cent annually, according to Lardner, so that all the sleepers were renewed in the course of 12 1/2 years. Hence we have here the following situation: a certain sum is advanced for a certain kind of fixed capital for say ten years.

This expenditure is made at one time. But a definite part of this fixed capital, the value of which has entered into the value of the product and been converted with it into money, is replaced in kind every year, while the remainder continues to exist in its original body form. It is this advance in one sum and the only partial reproduction in bodily form which distinguish this capital, as fixed, from circulating capital.

Other pieces of the fixed capital consist of heterogeneous components, which wear out in unequal periods of time and must so be replaced. This applies particularly to machines. What we have just said concerning the different durabilities of different constituent parts of a fixed capital applies in this case to the durability of different component parts of any machine figuring as a piece of this fixed capital.

With regard to the gradual extension of the business in the course of the partial renewal, we make the following remarks: Al-though, as we have seen, the fixed capital continues to perform its functions in the process of production in kind, a part of its value, proportionate to the average wear and tear, has circulated with the product, has been converted into money, and forms an element in the money reserve fund intended for the replacement of the capital pending its reproduction in kind. This part of the value of the fixed capital transformed into money may serve to extend the business or to make improvements in the machinery which will increase the efficiency of the latter. Thus reproduction takes place in larger or smaller periods of time, and this is, from the standpoint of society, reproduction on an enlarged scale -- extensive if the means of production is extended;intensive if the means of production is made more effective. This reproduction on an extended scale does not result from accumulation -- transformation of surplus-value into capital -- but from the reconversion of the value which has branched off, detached itself in the form of money from the body of the fixed capital into new additional or at least more effective fixed capital of the same kind. Of course it depends partly on the specific nature of the business, to what extent and in what proportions it is capable of such gradual addition, hence also in what amount a reserve fund must be collected to be reinvested in this way, and what period of time this requires.