CH. 7 THE MEANING OF SAVING AND INVESTMENT 75

or new, by an individual or a corporation. Occasion-ally, the term might be restricted to the purchase of anasset on the Stock Exchange. But we speak just asreadily of investing, for example, in a house, or in amachine, or in a stock of finished or unfinished goods;and, broadly speaking, new investment, as distinguishedfrom reinvestment, means the purchase of a capitalasset of any kind out of income. If we reckon thesale of an investment as being negative investment,i.e. disinvestment, my own definition is in accord-ance with popular usage; since exchanges of oldinvestments necessarily cancel out. We have, indeed,to adjust for the creation and discharge of debts (in-cluding changes in the quantity of credit or money);but since for the community as a whole the in-crease or decrease of the aggregate creditor positionis always exactly equal to the increase or decreaseof the aggregate debtor position, this complica-tion also cancels out when we are dealing withaggregate investment. Thus, assuming that incomein the popular sense corresponds to my net income,aggregate investment in the popular sense coincideswith my definition of net investment, namely the netaddition to all kinds of capital equipment, after allowingfor those changes in the value of the old capital equip-ment which are taken into account in reckoning netincome.

Investment, thus defined, includes, therefore, theincrement of capital equipment, whether it consists offixed capital, working capital or liquid capital; and thesignificant differences of definition (apart from thedistinction between investment and net investment)are due to the exclusion from investment of one or moreof these categories.

Mr. Hawtrey, for example, who attaches greatimportance to changes in liquid capital, i.e. to unde-signed increments (or decrements) in the stock ofunsold goods, has suggested a possible definition of