Sec. 4] EARNINGS AND INCOME 231 
of any future income — or, at least, the expectation that 
there would be an expectation of it — there could be no 
capital-value. ~ Capital-value, independent of expected in- 
come, is impossible. 
§ 4 
The first proposition to be emphasized as to the rate of 
value-return is that it is not necessarily equal to the rate of 
interest, but may be either greater or less than that rate, and 
to any degree. 
Let us take, for example, the case of the house which we 
assumed would endure just fifty years, giving throughout 
that period a shelter-service worth, after actual expenses 
are deducted, $1000 annually. We saw that its value, 
computed by discounting this fifty-year annuity on a 5 per 
cent basis, is $18,300. It therefore yields the first year a 
rate of value-return on its capital-value of 3%, or 5.4 per 
cent. At the end of ten years its value, found by dis- 
counting the income still remaining, will be $17,200. It 
will therefore then be yielding a value-return of 7%; per 
year, or 5.8 per cent. At the end of thirty years, in like 
manner, it will be worth $12,500 and yielding 3%, or 8 per 
cent. Again, the suit of clothes which will last two years, 
and gives services worth $20 the first year and $10 the 
second, has a value at the start of about $28, and at the end 
of the first year of about $9.50. The value-return the first 
year is therefore 2, or 71.4 per cent, and the second year 
Jo or over 100 per cent. The loaf of bread has a value 
of 10 cents. It yields 10 cents’ worth of income in a day, 
which is at the rate of $36.50 per year; consequently its 
value-return is #2 or a rate of 36,500 per cent per annum 
(interest reckoned daily or continuously”). 
In these examples the value-return exceeds the rate 
of interest. Reversely, it is possible for the value-return 
on capital to be less than the rate of interest. If, for in- 
stance, forest land with small trees is bought, it may be