52 NATURE OF CAPITAL AND INCOME  [Cmar. IV 
1905, is a flow of wheat. The term “wealth” by itself is 
insufficient to determine which of these two kinds of mag- 
nitudes is meant. Similarly, when we speak of property 
or of value, we may have in mind either a fund or a flow. 
A thousand shares in a certain company owned by a cer- 
tain man at a certain time constitute a particular fund of 
property ; the number of shares transferred in a week on the 
stock exchange constitute a flow of property. Again, the 
value of the checks held at noon of any day by one bank 
drawn on other banks constitutes a fund of value; the value 
of the checks which pass through a clearing-house in twenty- 
four hours constitutes a flow of value. Services and satis- 
factions, unlike wealth and property, can exist only as 
flows; a fund of either is impossible. 
A fund is fully specified by one magnitude only; a flow 
requires two, — the amount of flow and the duration of flow. 
From these two a third follows, — the rate of flow or the 
quotient of the amount divided by the duration. The rate 
of flow is often of more importance than the amount of flow. 
Thus we care less to know the aggregate wages of a work- 
man‘ during a lifetime than the rate of his wages during 
various periods of his life. 
The distinction between a fund and a flow has many 
applications in economic science.! The most important ap- 
plication is to differentiate between capital and income. 
Capital is a fund and income a flow.. This difference be- 
tween capital and income is, however, not the only one. 
There is another important difference, namely, that capital 
is wealth, and income is the service of wealth. We have 
therefore the following definitions: A stock of wealth ex- 
isting at an instant of time is called capital. A flow of sero- 
ices through a period of time is called income. Thus, a 
dwelling house now existing is capital ; the shelter it affords 
or the bringing in of a money-rent is its income. 
1 For some of these applications, e.g. to monetary circulation, see: 
“What is Capital ?”” Economic Journal, 1897.