THE THEORY OF INTEREST

practice and each in consideration of the other. But, forpurposes of exposition, we may take one at a time. Orrather, we may suppose the double choice made andthen, in order to analyze it, we go back and consider eachprocess separately, assuming the other constant. Let thevarying process be the loan, that is, let us suppose one in-dividual to have irrevocably made his choice from amongoptions mutually available. This done, he is limited, asin the first hypothesis, to buying and selling or borrow-ing and lending as a means of changing the shape of thatparticular income stream. In this process he cannotchange the present value, but in making his initial choicehe had the privilege of selecting that option having themaximum present value.

For example, the owner of a piece of land may use itin any one of several different ways. He may, let us say,use it to grow crops, graze animals, plant forests, extractminerals, or to support buildings. Again, the owner of abuilding may use it, say, for office purposes, apartments,manufacturing, salesrooms, or a warehouse. Most raw ma-terials, too, may 'be used for any one of a number ofpurposes. Iron may be wrought into steel rails, or intomachinery, implements, tools, armor for ships, or girdersfor buildings. And so of tools and other implements;a derrick may be used for quarrying stone, building ahouse, or unloading a boat. A ship may be used to carryany sort of cargo, and sent over any one of numerousdifferent routes. Hammers, saws, nails, and other toolsmay be used in almost numberless ways.

Perhaps the most adaptable of all instruments ofwealth is man himself. He may be simply a passive en-joyer or “transformer” 1 of the services of other wealth1 See Chapter I, or The Nature of Capital and Income, Chapter X.

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