Under the same heading comes, of course, "Replacement." Again, all economic thinkers agree. Adam Smith says:[1] "When any expensive machine is erected the extraordinary work to be performed by it before it is worn out, it must be expected, will replace the capital laid out upon it with at least the ordinary profits." And he applies this to trained men as well as to machinery. Professor Turner treats this subject as follows:[2] "* * * each item of the merchant's stock must normally sell at a price which will replace that item with one of equal price" (this truth is ignored by those who support an erroneous construction of the Act) "together with a surplus sufficient to cover all the costa of selling it. * * * Any item failing to do this is carried at a loss; and the merchant who continues to carry items at a loss will see his stock diminish and ultimately disappear. Likewise, a manufacturing plant gradually diminishes in worth unless the items composing it produce a sum sufficiently large to enable the owner to purchase another item of the same character, which, in turn, will produce enough to install its successor. * * * * upon applying this reasoning to a manufacturing plant, in which heavy fixed capital is involved, it will follow that in many cases sudden changes will involve heavy social losses."
Professor Ely and Wicker set forth:[3] "A man is facing business ruin who takes and consumes as profits from his plant what should be set aside for its upkeep and replacement. The same may be said of the payment to provide against risk, which may be
