“But to return.  We will say labor buys back two billions.  Then it stands to reason that labor can consume only two billions.  There are still two billions to be accounted for, which labor cannot buy back and consume.”

“Labor does not consume its two billions, even,” Mr. Kowalt spoke up.  “If it did, it would not have any deposits in the savings banks.”

“Labor’s deposits in the savings banks are only a sort of reserve fund that is consumed as fast as it accumulates.  These deposits are saved for old age, for sickness and accident, and for funeral expenses.  The savings bank deposit is simply a piece of the loaf put back on the shelf to be eaten next day.  No, labor consumes all of the total product that its wages will buy back.

“Two billions are left to capital.  After it has paid its expenses, does it consume the remainder?  Does capital consume all of its two billions?”

Ernest stopped and put the question point blank to a number of the men.  They shook their heads.

“I don’t know,” one of them frankly said.

“Of course you do,” Ernest went on.  “Stop and think a moment.  If capital consumed its share, the sum total of capital could not increase.  It would remain constant.  If you will look at the economic history of the United States, you will see that the sum total of capital has continually increased.  Therefore capital does not consume its share.  Do you remember when England owned so much of our railroad bonds?  As the years went by, we bought back those bonds.  What does that mean?  That part of capital’s unconsumed share bought back the bonds.  What is the meaning of the fact that to-day the capitalists of the United States own hundreds and hundreds of millions of dollars of Mexican bonds, Russian bonds, Italian bonds, Grecian bonds?  The meaning is that those hundreds and hundreds of millions were part of capital’s share which capital did not consume.  Furthermore, from the very beginning of the capitalist system, capital has never consumed all of its share.

“And now we come to the point.  Four billion dollars of wealth is produced in one year in the United States.  Labor buys back and consumes two billions.  Capital does not consume the remaining two billions.  There is a large balance left over unconsumed.  What is done with this balance?  What can be done with it?  Labor cannot consume any of it, for labor has already spent all its wages.  Capital will not consume this balance, because, already, according to its nature, it has consumed all it can.  And still remains the balance.  What can be done with it?  What is done with it?”

“It is sold abroad,” Mr. Kowalt volunteered.

“The very thing,” Ernest agreed.  “Because of this balance arises our need for a foreign market.  This is sold abroad.  It has to be sold abroad.  There is no other way of getting rid of it.  And that unconsumed surplus, sold abroad, becomes what we call our favorable balance of trade.  Are we all agreed so far?”