My jaw dropped when I read Roger Sandilands's claim that "the business sector as a whole is usually a net saver." I have always understood that the household sector is the net saver while the business and government sectors are the net borrowers. If Roger's claim were true I would expect the household sector to be net issuers of IOUs and businesses the net holders of demand, savings, time deposit, money market deposit, and money market mutual fund accounts, as well as purchasers of stocks and bonds. But all the financial data I have seen show otherwise. I wonder which economy Roger is referring to. I also think Roger is using the term investment in the narrow but misleading sense to apply only to the purchase of capital goods (what unfortunately far too many textbooks tend to do). Otherwise, what does he mean by "in the aggregate the supply of business savings from depreciation accounts and retained earnings is consistently larger than the volume of business investment"? As the classics taught, and as in the language of the marketplace, see also Marshall(1920, 60, 647; 1923, 46), investment on the part of households is the purchase of interest- or dividend-earning assets while, on the part of producers, it is the employment of funds (typically borrowed) to earn profits. To achieve the latter end, producers devote some of the funds to purchasing or hiring capital goods, including raw materials, renting land and hiring workers, and keeping some on hand to facilitate transactions: even the vendor needs to keep some cash on hand to make change. Also note that retained earnings constitute a borrowing from stockholders who otherwise would have been paid their full dividends in return for their "investment" in the enterprise. It is such narrow usage of the term "investment" to apply only to the purchase of capital goods that denies some analysts the ability readily to recognize the truth to the classical explanation that savings promote investment or capital accumulation, e.g., "The investment market can become congested through the shortage of cash. It can never become congested through the shortage of saving. This is the most fundamental of my conclusions within this field" (Keynes 1938, 669). Back to George, I don't think his denial that the wages fund derives from past savings is helped by Roger's attempted defense. And for George to argue, in effect, that the wages-fund explanation by the classics was some wool they pulled over our eyes so we wouldn't recognize the evil role of rental incomes in denying higher wage rates to labor should be recognized as plainly mistaken. And dangerous, to boot. Roger is correct in noting that "Though many workers are paid in advance of the sale of the product, it is very rare indeed that they are paid in advance of their work." I never argued otherwise. But without the sale of their produce, employers have no means of paying workers other than from borrowed savings or capital -- the wages fund. By the way, specie or paper money in the hands of businesses amounts to the same thing: part of borrowed "capital." Neither of them is manufactured by the business, save for counterfeiters. It betrays George's misunderstanding of capital in the financial sense to have argued the point Roger restates. James Ahiakpor