240 NATURE OF CAPITAL AND INCOME [Cuar. XIV 
butions to the depreciation fund. Where there is a defi- 
ciency, as in the case of a’, the contribution to the 
depreciation fund is negative; that is, for that particular 
time, instead of some of the income being reinvested, some 
of the capital is used as income, to prevent income from 
falling below the uniform level prescribed for it. The same 
  
  
  
  
  
  
  
B 
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A 
Fie. 7 
principles apply in case the income is a continuous flow, as 
shown in Figure 8. Here the earned income is represented 
by the elevation of the straight line CD, and the realized 
income by that of the curved line EF; the deprecia- 
tion fund is formed from the successive differences be- 
tween these elevations. Thus, if $1000 of capital is in- 
vested on a 4 per cent basis, but so that the returns are 
not $40, but $70 a year for twenty-two years, the annual