108 NATURE OF CAPITAL AND INCOME [Cmae. VII

of double counting. This fallacy they escape only in the
case of the very durable instruments, such as the dwelling,
and the very perishable instruments, such as the bread.
The dwelling is too evidently not income ever to be so
regarded, and, as to bread, one of the two elements—its
use —is overlooked altogether. But it is felt that intermediate
 types, like the piano, are as fairly entitled to be
called income, when acquired, as the bread, and that their
services are as fairly entitled to be called income as are the
services of the dwelling. Consequently both are deemed
income. But a piano valued at $500 is so valued because
this sum is the capitalized value of the future expected
uses which, let us say, are $600, distributed over the
lifetime of the instrument. Consequently if, when the
piano is first purchased, it is entered as real income to
the extent of $500, and then later its subsequent services
in providing its owner with music are also counted as
income to the extent of $600, it is clear that there has
been double (though successive) counting. The services
of the piano have been counted as income in anticipation
as well as in realization.
Yet this error, in one form or another, is not infrequently
committed. It is virtually in this way that Cannan® and
others regard “savings” as income in the year in which
the savings are accumulated, although the interest upon
those savings will be counted as income in subsequent
years. The nature of the fallacy is seen as soon as
we translate from money to other instruments. If a
man saves up money and purchases an automobile,
it is clearly double counting to call the automobile thus obtained
 “real income,” and then include its subsequent uses
in the real income of ensuing years. It does not matter

t Elementary Political Economy, London, 1888, pp. 58, 59. The
fallacy of including savings in income will be treated at greater
length in Chap. XIV. The reader who believes that savings ought to
be regarded as income is asked to stay judgment until he has finished
Chap. XIV.