capital are made in periods of every variety, but the annual production of crops renders it convenient to measure all incomes as annual. The aggregate of income is, therefore, the aggregate of annual income.

Of the whole aggregate stock of money or paying power, namely, bullion, bank-notes, and bank credits, every portion is held by some one, to be laid out either as part of his income or as capital. At any one moment, therefore, there is a certain definite portion of the whole held by the whole community, as income. The remainder is necessarily held as capital, and is, in fact, the then existing stock of money capital.

The sum of bullion, bank-notes, and transferable bank credits, would give us at any moment the then existing aggregate of money, including both income and capital. The same sum, after deducting the part held to be used as income, would give us the exact total of money capital; but the sum of the part so deducted for income is evidently quite a different thing from the sum total of annual income, and even if we knew the former, it would not enable us to know the latter. Few men hold a year's income in cash or at a bank, and the great mass of those who spend have seldom at command more than from a week's to a month's supply. As men's actions are so much governed by habit, it is certain that, unless when alarm leads to hoarding, the aggregate amount usually held in hand for expenditure bears some pretty constant proportion to the aggregate of expected annual income, but unfortunately neither term of the proportion is accurately known to us.

The income-tax returns', combined with some other and more uncertain data, have suggested rough estimates of the gross income of the community as measured in money. We know the aggregate of income assessed to the income tax, but we can only

Of what immense value it would be to have a copious and clear digest of the information contained, and hitherto concealed, in the records of the income tax. Every object, of course, might be attained without a single disclosure injurious to individuals.

It would not all

guess at the gross amount of the smaller incomes. Whatever it may be, it is a definite amount, susceptible of increase or diminution; and it is easy to conceive a measure by which, for a time, it might be considerably augmented. A large sum taken up by Government, or a railway company, and applied in wages and salaries, would evidently enlarge the gross income by more than its own amount, for after enlarging the income of the first recipients, it would go on from the increased demand enlarging other classes of incomes. The more rapidly taken up and applied, the greater the effect. be paid out at one time, nor, of course, all held as income at one time; but in proportion as each man came to believe that he could afford to spend more in the course of the year, he would naturally hold more at command for his increased current expenses. To many, especially of the working class, the actual proportion of the whole income held at one time would be even increased, and thus two sets of causes would draw into that part of the monetary machinery which distributes incomes, a large portion of what previously existed as money capital.

But it is frequently found that these large drafts out of capital into income leave the former apparently as abundant as before. During the war the Government drew upon the stock of money capital with insatiable voracity; but, though the rate of interest remained high, the capital was never exhausted. The loans were always to be had, and it seemed as if the water in the reservoir only rose higher for every new pipe of discharge that was opened out of it.

The causes which determine the variations in the amount of money capital are so veiled by the complexity of our banking and credit system as almost to defy accurate analysis. The materials for such analysis are only possessed by those who, in the actual course of varied and extended banking transactions, see the movement of that wonderful circulation which is the life-principle of modern industry, and is undoubtedly the most delicate and highly-finished portion of our whole social organization.

It is impossible to keep quite separate the different parts of this subject. They flow into each other. Such rough distribution as I have attempted, however, will assist the reader. Having considered money capital, I now pass to money incomes; an examination of which will more clearly show the nature of the transformations incidental to money capital.

CHAPTER IV.

MONEY INCome.

"It hastens along, conflicting, strong,
Now striking and raging

As if a war raging

Its caverns and rocks among;

Turning and twisting

Around and around,
Collecting, disjecting

With endless rebound;
And darting and parting,

And threading and spreading;

Recoiling, turmoiling, and toiling, and boiling,

And so never ending, but always descending;
Sounds and motions for ever and ever are blending,

All at once and all o'er, with a mighty uproar,

And this way the water comes down at Lodore."-SOUTHEY.

Money Incomes from Foreign Trade.

IN a country which draws the matter of its currency from abroad, money incomes cannot arise without exchanges. The exporter keeps, out of the gold brought home for his goods, the percentage of gain as his money income. The remainder of the gold travels on to the producing capitalist, leaves with him again a percentage as money income, and then flows on in separate streams into the money wages which labourers receive for their services. The several currents again flow off to dealers, reuniting at the different points, and leaving at each pausing place a deposit of profit, as money income.

Looking now at what is actually going on, and disregarding for the present official, funded, and professional incomes', it is evident that the great mass of exchanges which give rise to incomes may be divided into two great classes: namely, those which give incomes to producers, and those which give incomes to distributors. We have now to see the manner in which the application of capital gives rise to the formation of these several classes of income, which, if understood, will make it plain in what manner the different investments of new capital operate upon the aggregate of income.

Origin of Income.

Historically, income is the parent of capital, for it could be only out of the gains of the first labour that the first capital was saved. We see the process at the gold-mines. The treasure which the miner digs up is the wages of his

In the analysis of incomes, a landlord may be considered as a sleeping partner with each of his tenants, who regularly receives their surplus profits, and sometimes a great deal more; but, practically, rents belong to that large mass of income which remains nearly stationary during the fluctuations of profits and wages. If we admit this, nearly one-half of the income assessed to the income tax, must be considered as absolutely or virtually fixed for long periods. Something like the following division of the aggregate would probably be found correct :

From lands, tithes, and houses under long leases, say 63,000,000

The aggregate of the incomes not assessed to the tax must be greater than that which is taxed, and contains a far larger proportion of variable incomes, the fluctuations in which, if they could be ascertained, would mark exactly the alternations of prosperity and depression.