THE THEORY OF INTEREST

amount of capital, but the decision to lend or borrow it,(or the income stream which the capital stands for) whichis important.

We end, therefore, by emphasizing again the impor-tance of fixing our eyes on income and not on capital. Itis only as we look through capital value at the income be-yond that we reach the effective causes which operateupon the rate of interest. It has, perhaps, been the ab-sence of a definite theory and conception of income whichhas so long prevented economists from seeing these rela-tions. Borrowing and lending are in form a transfer ofcapital, but they are in fact a transfer of income of whichthat capital is merely the present value. In our theoryof interest, therefore, we have to consider not primarilythe amount of capital of a community, but the futureexpected income for which that capital stands.

§12. Impatience Schedules

Unfortunately for purposes of exposition, the relationbetween impatience and income cannot be expressed in asimple schedule or a simple curve, as can the relationbetween demand and price, or supply and price, or mar-ginal want and quantity consumed, for the reason thatincome means not a single magnitude merely, but a con-glomeration of magnitudes. As mathematicians wouldexpress it, to state that income impatience depends onthe character of income, its size, shape, and probabilityis to state that this impatience is a function of all thedifferent magnitudes which need to be specified in acomplete description of that income. A geometrical repre-sentation, therefore, of the dependence of time preferenceon the various magnitudes which characterize incomewould be impossible. For a curve can be in two dimen-

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