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 magnitudes
 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 certain
 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 twentyfour
 hours constitutes a flow of value. Services and satisfactions,
 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 workman‘
 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 application
 is to differentiate between capital and income.
Capital is a fund and income a flow.. This difference between
 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 existing
 at an instant of time is called capital. A flow of seroices
 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.