The nature of capital and income . ing place simultaneously in the various layers;or we may follow the successive time connections involvedbetween one layer and the next. In the treatment whichhas been given in the previous chapters, the former methodwas employed. The present diagrammatic representationgives us a birds-eye view of both. Thus, in Figure 30,representing the logging camp, sawmill, lumber yard, etc.,having selected a period represented between the verticalline drawn at A and B, we may either address ourselves tothe mutual relations of the various layers there comprised;or we may a
The nature of capital and income . ing place simultaneously in the various layers;or we may follow the successive time connections involvedbetween one layer and the next. In the treatment whichhas been given in the previous chapters, the former methodwas employed. The present diagrammatic representationgives us a birds-eye view of both. Thus, in Figure 30,representing the logging camp, sawmill, lumber yard, etc.,having selected a period represented between the verticalline drawn at A and B, we may either address ourselves tothe mutual relations of the various layers there comprised;or we may address ourselves to the income item a, whose ^ Positive Theory of Capital, English translation, 1890, pp. 179-189. Wages and Capital, New York (Appleton), 1896, Chapters II, III. Sec. 8] SUMMARY OF PART III 319 influence traverses the entire section. It is produced bythe logging camp; ripens into all that income of the saw-mill which is comprised between the points P and Q; andthis in turn ripens into the income of the lumber yard. Fig. 30. comprised between the points P and Q. In this way weare virtually following the log as it is transformed in thevarious processes from tree to lumber. It is in consideration of such a relation or set of relationsthat an income item like a was called a preparatoryservice. Each such preliminary process of productiontakes place in anticipation of future resulting processes,and derives its value from them. Combining this principlewith the principle that the value of all capital is the dis-counted value of its expected income, we see that the valueof the capital in the lower layers is ultimately dependenton the value of the income in the topmost layer; for thevalue of that earlier capital is the discounted value of theincome it produces, and this income, consisting of interac-tions or preparatory services, is in turn the discounted valueof the services to which it leads, and so on through succes- 320 NATURE OF CAPITAL AND INCOME [Chap. XVII sive l
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