682 THS ECONOMIC JOURNAL back it is in the past since the first operations were begun that resulted in the various parts of this immensely productive whole, we shah scarcely require further proof. Of course the productive process, after the preparatory stages have been passed, is immensely shorter, but the time taken to produce the means of production will usually quite counterbalance the' shortness of the later processes. In fact, the whole dynamic tendency of modern production may be said to consist in shortening the final processes of production by lengthening the preliminary stages. Goods at our disposal we are free to embody in lengthy processes now, while goods that come into our possession in the future are available only for processes that yield their returns pro- portionsrely later. The range of this fact is greater than at first sight appears, for most consumption goods can be used either as capital or as wealth: as consumption goods they have one value; as productive goods they have another possible value. And, again quite apart from capital--just as goods may be used to support idlers who merely consume, or labourera who add a little more than they consume, the consumption of wealth simply as wealth may enable the population to embody their powers of labour in processes that take time. Thus, while it is, as ?BShm- Bawerk shows, an error of definition to include the means of sub- sistence in the national capital--as distinguished from private capital--' the means of subsistence may be used as an important ally of capital. To sum up. The poor man because he has pressing needs satisfy, the spendthrift because he does not think about the future, the producer because he has the hope of a larger return all these, constituting the majority of mankind, certainly value a good in the hand as worth two in the bush of the future. Suppose this difference in the value of present and future goods now admitted and accounted for, we have to show how it is the source and origin of interest in all its various forms. There are three ways in which people who have capital obtain an income. The first is the interest on a simple loan; the second the dividend or 'profit' on productive undertakings; the third is the 'hire.' To look at these in succession. The simplest case of interest is that of the Loan. Here we have a real and true exchange of a smaller amount of present money, or present goods, for a larger amount of future money or goods. The sum returned, 'principal' plus interest, is the market valuation and equivalent of the capital sum lent. The apparent difference in value is simply due to the fact that 100 in
