190 NATURE OF CAPITAL AND INCOME [Cuar. XI

the sellers have been good speculators as to what prices
would be. If they had foreseen that prices would not cover
costs and interest on costs, they would have refrained from
production entirely, while if they had foreseen the opposite
condition, that of large profits, competition would have
tended to reduce these profits to the usual dimensions.
We see, then, that although prices bear a normal relation
to past costs, this relation does not always hold true; and
that, whether it holds true or not, the costs do not predetermine
 the prices except in the sense that the producers
have skillfully adapted the stocks available now, and those
to be available at succeeding points of time, to the expected
demand for them.
It is not our purpose in the present book, however, to
emphasize these principles, for they belong properly to the
theory of prices. We merely premise them in order to
proceed to the study of the relation between capital-value
and income-value, that is, of what we have called “ valuereturn.”