Skc. 2] INCOME ACCOUNTS 121

measured in its own special unit. The quantity of the services
 of a gardener is often measured by the number of
hours he works; the services of a windmill, by the number
of gallons of water pumped. Quantities of services (or
disservices) are thus, like instruments of wealth, very heterogeneous
 and are incapable of being combined in a single sum.
To obtain a homogeneous mass of value, we must multiply
the quantity of services (or disservices) by their several
prices.
Income and outgo, then, like capital, are used in two
senses: - 1ncome-services (as well as outgo-disservices) and
wncome-value (as well as outgo-value). Hereafter, when
the terms “income” or ‘“outgo’ are used alone, the value
sense will be understood.
The value of any individual service or disservice constitutes
 an element of income or outgo. The value of all
the services flowing from an article of wealth through any
period, that is, the sum of all the elements of income, is
called its gross income. The excess of the gross income
over the outgo, in other words, the algebraic or net sum
of all elements of income and outgo, is the net income. If,
instead of an excess, there is a deficiency, it is called net
outgo. Net income is of far more importance, both in
practice and in theory, than gross income. Gross income
may often be measured in more than one way, according
as the elements of which it is composed are considered
with or without accompanying offsets; but the sum called
net income will be the same in either case.
§ 2
Income (or outgo) always implies (1) capital as the
source, and (2) an owner of capital as the beneficiary.
Mr. Smith’s income from his farm implies that the farm
yields the income and that Mr. Smith receives it. In this

book we shall need to consider income chiefly in its relation
 to the capital yielding it rather than in its relation to