312 NATURE OF CAPITAL AND INCOME [Cuar. XVII

certain amount of logs, the turning out of which is credited
to the camp, but debited to the mill. In the diagram,
the space between the base line and the first curve above
it represents the capital curve of the logging camp, and
the space above this curve represents the capital curve of
the sawmill. At the time of the transfer of logs from
the one category to the other, there is a corresponding
diminution in the capital-value of the logging camp, but
an increase in the capital-value of the sawmill.
The characteristic of such an interaction or couple is
that it leaves unbroken the upper curve of final summation.

 

 

N
B
Sapling Tree
Cc D
Fie. 24.

There is no carrying forward of teeth, as by the dotted lines
in the previous diagram, — or rather, the carrying forward
results in a cancellation. The interaction is merely a
sacrifice of one capital for the benefit of another, and does
not disturb the total.
If the interaction BC is greater than we have represented
it in the diagram, so that C is lower and B higher than indicated,
 the discount curve AB will be nearer coincidence
with MN, and CD nearer coincidence with XY. We may
suppose a case in which coincidence is reached. This case
is represented in Figure 24. Here BC represents such an
interaction as occurs when one. capital good is completely
transformed into another, as when the “sapling” becomes a
‘““tree’” at a certain definite point of time. The capital-value