The first known use of the word capital is in early Middle English, in which it was used as an adjective meaning "of or relating to the head." It is derived from the Latin adjective capitalis, of the same meaning, which is based on the Latin name for "head," caput. The word was originally used to indicate something affecting the head, as in "a capital bruise" or "a capital wound."
Injuries to the head can be serious and even fatal; by extension, capital came to describe people or things threatening the loss of life—for example, a capital enemy. Such deadly uses of capital have since died away except in describing crimes, like murder, that are punishable by death or the punishment, as the loss of one’s head, inflicted for such crimes. The other familiar "head" sense of capital refers to a letter standing at the head of a page, passage, or line, and it was also in currency about the same time.
In Latin, capitalis also meant "chief" or "principal." That meaning was adopted into English in the 15th century to describe things of importance, such as a city, district, manor, or monastery. Nowadays, the noun capital is commonly used in reference to principal cities. Both the French and Italians adopted capitalis with this sense in the form capitale. Their word eventually came to refer to an essential stock of goods used to enter into business.
The other worde, the Italians call the Capitall, that is to saie, the Stocke or principall that the Marchant began with all.... And it is at your pleasure whether ye will use this worde Stocke in Englishe, or Capitale.
— J. Y. Christoffels, Notable Woorke Book Accompties, 1547
This financial word worked its way into English in the 16th century from either French or Italian. In time, capital gained more worth with additional meanings, including "accumulated goods to produce other goods" and "accumulated possessions calculated to bring in income."