THE PLACE OF INTEREST IN ECONOMICS

by buying and selling. An individual whose rate of pref-erence for present enjoyment is unduly high will con-trive to modify his income stream by increasing it inthe present at the expense of the future. The effects uponincomes may be traced to capital by applying the prin-ciples explained in The Nature of Capital and Income,Chapter XIV.

If a modification of the income stream is such as tomake the rate of realized income relative to capital valueexceed the standard rate of income returns, capital willbe depleted to the extent of the excess, and the individual,group, or class, under consideration will grow poorer. Thiscondition may be brought about either by borrowing im-mediate income and paying future income, or by sellinginstruments whose returns extend far into the futureand buying those which yield more immediate returns.Individuals of the type of Rip Van Winkle, if in pos- ^session of land and other durable instruments, will eithersell or mortgage them in order to secure the means forobtaining enjoyable services more rapidly. The effect willbe upon society as a whole that those individuals whohave an abnormally low estimate of the future and itsneeds will gradually part with the more durable instru-ments, and that these will tend to gravitate into thehands of those who have the opposite trait.

By this transfer an inequality in the distribution ofcapital is gradually effected, and this inequality onceachieved tends to perpetuate itself. The poorer a mangrows the more keen is his appreciation of present goodslikely to become. When once the spendthrift is on thedownward road, he is likely to continue in the same di-rection. When he has succeeded in losing all his capitalexcept his own person, the process usually comes to an

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