Sec. 4] FOUR INCOME-CAPITAL RATIOS 189 
But, however determined, it is the estimated future cost 
alone which enters into the calculation of present value. 
All of these principles are well illustrated in the case of 
the canal. After some $300,000,000 had been sunk in the 
enterprise, the proprietors were willing to sell out for only 
$40,000,000. To them, therefore, it was worth less than it 
had cost. The effect of the work already done on the canal 
was certainly to lessen the labors of the present possessors, 
but it also at the same time opened their eyes to the magni- 
tude of the task still before them; hence the reduction in 
value to correspond to the new forecast of the future. 
No one will dispute that the buyer of any article of capital 
will value it for its expected services to him, and that “at 
the margin” of his purchases, the price he will pay is the 
equivalent to him of those expected services, or, in other 
words, is their “present worth,” their “discounted value ” 
or “capitalized value.” But some doubt may be felt re- 
garding the professional seller. As to him, he is simply a 
speculator as to the possible demand. He sells for what he 
can get, affixing whatever price he believes will, in the end, 
profit him most, sometimes making out of the transaction 
more than his costs of acquisition, sometimes less, usually, or 
normally, covering those costs plus interest on them for the 
time elapsing between their occurrence and the sale. 
The same principle applies all the way back in the pro- 
duction processes. The labor expended is staked (either by 
the laborer or entrepreneur) in anticipation of the prices 
which the buyers will be willing to pay. If these anticipated 
prices are not expected to cover the value of the labor and 
other costs plus the interest upon them, the result will be 
that the labor and other costs will not be expended. Hence 
by trial and error the labor and other costs will, under nor- 
mal conditions, gradually be fitted to the prices. 
When prices find this normal level at which costs plus 
interest are covered, it is not because the past costs of pro- 
duction have determined prices in advance, but because