THE THEORY OF INTEREST

kinds of economic gain, capital gain and income gain, theformer being the anticipation or discounted value of thelatter. Interest is the former kind. It gradually accrues,along a discount curve as the income which it anticipatesgrows nearer. But it is not itself income, nor is it cost. 0

The other pitfall is the idea that interest is a certainpart of the income stream of society, the part namelywhich goes to capital, the other parts being rent, wages,and profits. I shall, in Chapter XV, discuss the relationof interest to the whole problem of the distribution ofwealth. But it may help if the reader is again warnedat this point, as he has already been warned in Chapter I,against the idea that any one part of the income streamhas an exclusive relation to the rate of interest. All in-come is subject to discount, or capitalization, that fromland as well as that from (other) capital goods. And if thewhole income stream of society, including all wages, allrents and all profits were capitalized, that whole incomecould still be regarded as a rate per cent, i.e., interest onits own capitalization, just as truly as can the income ofthe bondholder or rentier.

“For fuller discussion see The Rate of Interest , pp. 38-51, and belowChapter XX, §7 and the Appendix to Chapter XX of this volume.