Marx-Engels Correspondence 1867
Source: MECW Volume 42, p. 410;
First published: in Der Briefwechsel zwischen F. Engels und K. Marx, Stuttgart, 1913.
Enclosed two schedules for machinery, which will make the matter fully clear to you. The rule is that part of the original sum is written off each year, usually 7 1/2%, but to simplify the calculation I have kept to 10%, which is not excessive for many machines either. Thus, e.g.,
|1860 1 Jan.||Purchases||£ 1,000|
|1861 1 Jan.||Written off 10%||£ 100|
|New purchase||£ 200|
|1862 1 Jan.||Written off 10% £1,200 (£1,000+£200)||£ 120|
|New purchase||£ 11 200|
|1863 1 Jan.||Written off 10% £1,000+£200+£200||£ 140|
In schedule No. 1 I am now assuming that the manufacturer puts his [money] out at interest for writing-off purposes; on the day when he has to replace the old machinery with new, he has not £1,000 but £1,252-11s. Schedule No. 2 assumes that he puts the money straight into new machinery, each year. As is shown in the last column giving the value of the total purchases as it stands on the last day of the 10 years, it is true that the value of his machinery then does not exceed £1,000 (and he cannot have more, as he has, after all, only invested the value of what has been worn out, and the total value of the machinery cannot thus grow by the process), but he has extended his factory from year to year, and as an average over the 11 years he has employed machinery which cost £1,449 in investment, in other words, he has produced and earned substantially more than with the original £1,000. Let us assume he is a spinner and every £ represents one spindle together with the roving-frame; in that case, he has on average spun with 1,449 spindles instead of 1,000, and, after the original spindles have ended their useful lives, he begins the new period on 1 January 1866 with 1,357 spindles that he has purchased in the meantime, to which is added a further 236 from the writing off as per 1865, which makes 1,593 spindles. The money advanced for writing off has thus enabled him to increase his machinery by 60% and without putting a farthing of his actual profit into the new investment.
Repairs have been disregarded in both schedules. At 10% write-off, the machine should cover its own repair costs, i.e., the latter should be included. Nor do they affect the issue, as they are either included in the 10%, or else they prolong the useful life of the machine in proportion, which amounts to the same thing.
I hope schedule No. 2 will be sufficiently clear to you; if not, just write, I have a copy of it here.