The nature of capital and income

Bibliographic data

Monograph

Identifikator:: 102659555X

URN:: urn:nbn:de:zbw-retromon-82920

Document type:: Monograph

Author:: Fisher, Irving http://d-nb.info/gnd/118533541

Title:: The nature of capital and income

Place of publication:: New York

Publisher:: The Macmillan Company

Year of publication:: 1923

Scope:: XXI, 427 Seiten

Digitisation:: 2019

Collection:: Economics Books

Usage license:: Get license information via the feedback formular.

Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Part III. Capital and income

Collection:: Economics Books

224 NATURE OF CAPITAL AND INCOME [CHar. XIIT as the future income approaches, and falling suddenly as the installments are successively passed by and acting in a contrary manner before and after an outgo. This os- cillation of capital-value ends finally at zero, when the life or service of the article or group is ended. It also often begins at zero, when the instrument or group is one that is newly acquired or produced. These changes constitute, as it were, a sort of life history of capital-value.! Tt may seem to some readers that there is an exception to the rule that the value of capital is the discounted value of its expected income, in the case where the income which might be received from the capital is In- definitely postponed. This is the case in which the ‘prin- cipal” accumulates ab compound interest so that no “ in- terest” is withdrawn. If a person has a deposit of $1000 in a savings bank and leaves it there to accumulate at 4 per cent until it amounts to double that sum, which will happen in about eighteen years, the $1000 does not appear to him to be the discounted value of any income. If he thinks of it as the discounted value of anything at all, it will be of the $2000 of capital which he expects to own at the end of eighteen years. It is perfectly true that the capital-value of $1000 is the discounted value of the future capital-value of $2000; but the latter capital-value is itself the discounted value either of some subsequent income, or, in turn, of a capital still further deferred, and so on indefinitely. Actual income is hoped for some- time, even if it be not for a million years. The present $1000 is the discounted value of that ultimate income, how- ever far distant. A perpetual accumulation is, humanly speaking, out of the question. But if such perpetual accumulation be regarded for the moment as possible, it may still be interpreted as a perpetual postponement of possible income; so that even in this case the $1000 may 1 For mention of the case where the rate of interest changes and its changes are foreknown, see Appendix to Chap. XIII, § 15.

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