The surplus of income over outgo must be not only saved but also invested. If, after completing the canoe, our primitive man had hidden it away in some cave, obviously it would not have been capital; for one of the characteristics of capital is its use to further production. Likewise, the hoardings of a miser do not increase capital. In fact they tend to decrease it. To make savings effective, therefore, in the creation of capital, the saver must invest them directly in his own business, or in stocks or bonds, or indirectly through such institutions as banks and building and loan associations.

The source of capital, we are now prepared to say, lies three steps from the capital itself. First, the income must be above the line of bare subsistence; second, income must exceed outgo; third, the surplus must be invested.

The significance of each of these steps becomes apparent when we view society as a whole. Everywhere in this country there are families with incomes that do not permit of consumption above the line of subsistence. Consequently, they are unable even to take the first step toward the creation of capital, much less to go the whole journey. Then there are millions of families and individuals who have something left over after providing necessaries, but who have never learned to save. They could, if their imagination and will power were strong enough, assist in the creation of capital. Since they do not, their influence in this respect is little if any greater than their less fortunate neighbors. Fortunately for the progress of society, there are other millions who take the second step toward the creation of capital by spending less than they earn - by saving. Most of these, experience and observation teach us, do not hoard their savings, but place them where they can be utilized by productive industry. They, and they alone, are responsible, under the present organization of society, for the creation and accumulation of capital.