u

A TREATISE ON MONEY

BK. I

For, obviously, it is equal to tbe money-income of thecommunity, winch constitute the payments in, minusany increase (or plus any decrease) in the amount ofthe income-deposits themselves . 1 Put broadly, theannual turnover of the income-deposits will equal oneyear’s salaries plus one year’s wages plus one year’srentier interest plus one year’s business earnings ; or,in other words, one year’s earnings of the factors ofproduction. Thus aggregate money-incomes will fluc-tuate with the money costs of current output, if weinclude in the latter not only everything newly createdwhich is the subject of exchange including services,but also income from the use of fixed consumptioncapital ( e.g . houses ). 2

What will be the relationship between this turn-over, i.e. the aggregate annual money-income of thecommunity, and the amount of the income-deposits ?The latter will be some more or less stable fractionof the former. Let us call this fraction k 1} and itsinverse Y x .

Generally speaking, one would expect the averagevalue of in a given economic society to be a fairlystable quantity from year to year. But this averagestability may be accompanied by considerable seasonalfluctuations, if income, though accruing steadily dayby day, is not received and disbursed daily but at inter-vals. Where, as in the case of working-class wages, thepayments of income are made weekly, /q will have adifferent value for each day of the week, falling steadilyor sharply from pay-day onwards ; but its weeklyaverage will be stable. Where, as in the case of manymiddle-class salaries, the payments are made quarterly,Tc x will be at its maximum on quarter-days and will

1 To avoid misunderstanding, it should be stated that the non-incometransactions of private individuals, arising out of (e.g.) loans for building orother purposes or changes of investments are to be reckonod on the aboveclassification as business transactions and the balances connected withsuch transactions as Business-deposits.

2 For a more precise definition of income see Chapter 9 below.