154 _ NATURE OF CAPITAL AND INCOME [Cnar. 1X 
In this case, canceling the two log items we have left only 
the lumber item ; i.e. the income from the combined logging 
camp and sawmill consists only of the production of lumber, 
its final product. The transfer of logs from one department 
to the other no longer appears. T his transfer is like the 
taking of money from one pocket and putting it in another, 
as is particularly evident in case the logging camp and 
sawmill are combined under the same management. 
Extending the same principles to the entire series, we have 
the accounts as given on the opposite page. 
Tt should be noted that these entries relate not to sue- 
cessive but to simultaneous events; that all the items refer 
to a fixed period of time; that is to say, we are not following 
the fortunes of the original logs through succeeding stages, 
but comparing the simultaneous operations of the series of 
groups of instruments. 
If we successively cancel items pair by pair by offset- 
ting any item on the right side by the item in the line 
above it on the left side, we shall find, if we stop after the 
first two cancellations, that the net income from logging 
camp, sawmill, and lumber yard, consists only of the pro- 
duction of retail lumber, $70,000; it does not include either 
the transfer of logs or the transfer of wholesale lumber. In 
like manner, if we proceed one stage further, that is, if we 
stop our cancellations, at the end of the first four interac- 
tions, the production of retail lumber no longer appears as 
an element of income; and so on, step by step to the end, 
when the only surviving item will be the “wear” of the 
suits. 
Tt is, of course, true that in any actual accounts there 
will be numerous other items than those which have been 
exhibited in this simple chainlike fashion. Were it worth 
while, we might insert these additional entries of income 
and outgo elements. Most of them would consist of the posi- 
tive or negative side of an interaction, and if we were to 
introduce its mate, the opposite aspect of the same transac- 
     
     
     
  
  
  
  
  
  
  
  
  
  
  
  
  
   
  
  
  
  
  
  
  
  
  
  
   
  
  
    
     
  
   
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