Etymology
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capital (n.1)

early 15c., "a capital letter," from capital (adj.). The meaning "city or town which is the official seat of government" is recorded from 1660s (the Old English word was heafodstol; Middle English had hevedburgh). For the financial sense see capital (n.2).

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capital (n.3)

"head of a column or pillar," late 13c., from Anglo-French capitel, Old French chapitel (Modern French chapiteau), or directly from Latin capitellum "head of a column or pillar," literally "little head," diminutive of caput "head" (from PIE root *kaput- "head").

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capital (n.2)

1610s, "a person's wealth," from Medieval Latin capitale "stock, property," noun use of neuter of Latin capitalis "capital, chief, first" (see capital (adj.)). From 1640s as "the wealth employed in carrying on a particular business," then, in a broader sense in political economy, "that part of the produce of industry which is available for further production" (1793).

[The term capital] made its first appearance in medieval Latin as an adjective capitalis (from caput, head) modifying the word pars, to designate the principal sum of a money loan. The principal part of a loan was contrasted with the "usury"—later called interest—the payment made to the lender in addition to the return of the sum lent. This usage, unknown to classical Latin, had become common by the thirteenth century and possibly had begun as early as 1100 A.D., in the first chartered towns of Europe. [Frank A. Fetter, "Reformulation of the Concepts of Capital and Income in Economics and Accounting," 1937, in "Capital, Interest, & Rent," 1977]

Also see cattle, and compare sense development of fee, and pecuniary. Middle English had chief money "principal fund" (mid-14c.). The noun use of the adjective in classical Latin meant "a capital crime."

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capital (adj.)

early 13c., "of or pertaining to the head," from Old French capital, from Latin capitalis "of the head," hence "capital, chief, first," from caput (genitive capitis) "head" (from PIE root *kaput- "head"). The meaning "main, principal, chief, dominant, first in importance" is from early 15c. in English. The modern informal sense of "excellent, first-rate" is by 1754 (as an exclamation of approval, OED's first example is 1875), perhaps from earlier use of the word in reference to ships, "first-rate, powerful enough to be in the line of battle," attested from 1650s, fallen into disuse after 1918. Related: Capitally.

A capital letter "upper-case latter," of larger face and differing more or less in form (late 14c.) is so called because it stands at the "head" of a sentence or word. Capital gain is recorded from 1921. Capital goods is recorded from 1899.

A capital crime or offense (1520s) is one that involves the penalty of death and thus affects the life or "head" (capital had a sense of "deadly, mortal" from late 14c. in English, as it did earlier in Latin). The felt connection between "head" and "life, mortality" also existed in Old English: as in heafodgilt "deadly sin, capital offense," heafdes þolian "to forfeit life." Capital punishment was in Blackstone (1765) and classical Latin capitis poena.

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capital letter (n.)

late 14c.; see capital (adj.). So called because it is at the "head" of a sentence or word.

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capitalize (v.)

"write or print in capital letters," 1764, from capital (n.1) + -ize. The meaning "convert (assets) to capital" is recorded from 1868, from capital (n.2). Related: Capitalized; capitalizing.

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decapitalize (v.)

"reduce from the rank or position of a capital city," 1870; see de- + capital (n.1) + -ize. As "to remove the financial capital from," by 1913, from capital (n.2). In reference to letters, "to change from upper case to lower case," by 1899. Related: Decapitalized; decapitalization.

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per capita 

1680s, Latin, "by the head, by heads," from per (see per) + capita "head" (see capital).

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capitalist (n.)

1791, "man of money, one who has large property employed in business," from French capitaliste, a coinage of the Revolution and a term of reproach; see capital (n.2) + -ist; also compare capitalism.

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capitalism (n.)

1854, "condition of having capital;" from capital (n.1) + -ism. The meaning "political/economic system which encourages capitalists" is recorded from 1872 and originally was used disparagingly by socialists. The meaning "concentration of capital in the hands of a few; the power or influence of large capital" is from 1877.

"Capital" may be most briefly described as wealth producing more wealth; and "capitalism" as the system directing that process. This latter term came into general use during the second half of the 19th century as a word chiefly signifying the world-wide modern system of organizing production and trade by private enterprise free to seek profit and fortune by employing for wages the mass of human labour. There is no satisfactory definition of the term, though nothing is more evident than the thing. [J.L. Garvin, "Capitalism" in Encyclopaedia Britannica, 1929] 
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