308 NATURE OF CAPITAL AND INCOME [Crar. XVII 
In the special case in which there is but one item of cost 
and one item of income, the curve is reduced to that shown 
in Figure 17, where a is the expected income, and a’ the 
  
a' 
b re 
c' 
  
  
  
Fre. 18. 
past outgo. If the capital-value AB be taken at a point 
midway between the income and outgo, it evidently fol- 
F—r—"1 
at 
—G 
  
  
I 
cn 
  
1 
beer ama 
Fic. 19. 
lows, by the nature of the discount curve, that the ratio 
of a’ to AB is the same as the ratio of AB to a, or that 
a" 
w 
= 
=< 
Fia. 20. 
AB is the “mean proportional,” or “geometric mean,” 
between a and o/. In other words, the normal relation 
between cost, capital, and return is expressed in the state-