CHAPTER XVII

SUMMARY OF PART III (CHAPTERS XI-XVI) REPRESENTED
BY DIAGRAMS

§1

We have finished our study of the relations between
capital-value and income-value and may .now pause to
summarize them briefly. At the beginning of Part III it
was stated that the income from capital wealth consists
of whatever service it performs for man; that capital and
income may each be measured either in specific quantities
of their respective units, or in value; and that consequently
there are four ratios between income and capital; namely,
(1) the physical productivity of capital, (2) the value productivity,
 (3) the physical return, and (4) the valuereturn.
 Our special theme has been the value-return, —
the relation between income-value and capital-value.
We saw that the value of capital wealth is the discounted
value of its expected income. The relation between the
value of the income and the value of the capital was indicated
 by diagrams. Income Was represented by a series
of vertical lines as in Figure 13 (a, a’, 0 ' a"), the horizontal
 distances between them representing intervals of
time. It was then found possible to represent the capitalvalue
 of this income in anticipation, on the assumption
that the income could be relied upon with certainty.
This representation gave the capital curve, — a broken or
toothed curve AB. In this curve, each vertical drop 1s
equal to the corresponding income item shown below it,
and the intervening points are connected by discount
303