SOME ILLUSTRATIVE FACTS

The income stream produced for them by their nativeisland is destined, perhaps, to decline, certainly notgreatly to increase except during the next few years ordecades of recovery from the World War. By saving fromthis declining income and investing in Canada, theUnited States, South America, Australia , South Africa,and other regions where the natural resources are beingexploited and incomes are on the increase instead ofon the wane, Englishmen may still maintain their capitalintact or even increase it. The figures given by Giffenshow that the national income increased for severaldecades, but that the rate of increase slackened for thedecade 1875-1885 compared with 1865-1875. Whereasin the earlier decades there was a general increase inall directions, in the later decade there were manyitems of decrease, 23 the most notable being of minesand ironworks. 24 Among the greatest increases was thatof foreign investments. 25

§8. Effect of Catastrophes on Interest

The time shape of an income stream is determined,however, in part by other causes than natural resources.Among these causes, misfortune holds a high place incausing temporary depressions in the income stream, thatis, in giving to it a time shape which is at first descendingand afterwards ascending. The effect of such temporarydepression is to produce a high valuation of immediateincome during the depression period, as compared withthe valuation of the income expected after the depres-sion is over. It is a matter of common observation inprivate life that loans often find their source in personal

" Giffen, Growth o] Capital, p. 44.

M Ibid., p. 35.

x Ibid,., pp. 40-42.