PRODUCTION. CONSUMPTION. LABOUR. NECESSARIES

II.III.1

§ 1. Man cannot create material things. In the mental and moral world indeed he may produce new ideas; but when he is said to produce material things, he really only produces utilities; or in other words, his efforts and sacrifices result in changing the form or arrangement of matter to adapt it better for the satisfaction of wants. All that he can do in the physical world is either to readjust matter so as to make it more useful, as when he makes a log of wood into a table; or to put it in the way of being made more useful by nature, as when he puts seed where the forces of nature will make it burst out into life.

II.III.2

It is sometimes said that traders do not produce: that while the cabinet-maker produces furniture, the furniture-dealer merely sells what is already produced. But there is no scientific foundation for this distinction. They both produce utilities, and neither of them can do more: the furniture-dealer moves and rearranges matter so as to make it more serviceable than it was before, and the carpenter does nothing more. The sailor or the railway-man who carries coal above ground produces it, just as much as the miner who carries it underground; the dealer in fish helps to move on fish from where it is of comparatively little use to where it is of greater use, and the fisherman does no more. It is true that there are often more traders than are necessary; and that, whenever that is the case, there is a waste. But there is also waste if there are two men to a plough which can be well worked by one man; in both cases all those who are at work produce, though they may produce but little. Some writers have revived the mediæval attacks on trade on the ground that it does not produce. But they have not aimed at the right mark. They should have attacked the imperfect organization of trade, particularly of retail trade.

II.III.3

Consumption may be regarded as negative production. Just as man can produce only utilities, so he can consume nothing more. He can produce services and other immaterial products, and he can consume them. But as his production of material products is really nothing more than a rearrangement of matter which gives it new utilities; so his consumption of them is nothing more than a disarrangement of matter, which diminishes or destroys its utilities. Often indeed when he is said to consume things, he does nothing more than to hold them for his use, while, as Senior says, they "are destroyed by those numerous gradual agents which we call collectivelytime." As the "producer" of wheat is he who puts seed where nature will make it grow, so the "consumer" of pictures, of curtains, and even of a house or a yacht does little to wear them out himself; but he uses them while time wastes them.

II.III.4

Another distinction to which some prominence has been given, but which is vague and perhaps not of much practical use, is that between consumers' goods (called also consumption goods, or again goods of the first order), such as food, clothes, etc., which satisfy wants directly on the one hand; and, on the other hand, producers' goods (called also production goods, or again instrumental, or again intermediate goods), such as ploughs and looms and raw cotton, which satisfy wants indirectly by contributing towards the production of the first class of goods.

II.III.5

§ 2. All labour is directed towards producing some effect. For though some exertions are taken merely for their own sake, as when a game is played for amusement, they are not counted as labour. We may define labouras any exertion of mind or body undergone partly or wholly with a view to some good other than the pleasure derived directly from the work. And if we had to make a fresh start it would be best to regard all labour as productive except that which failed to promote the aim towards which it was directed, and so produced no utility. But in all the many changes which the meaning of the word "productive" has undergone, it has had special reference to stored-up wealth, to the comparative neglect and sometimes even to the exclusion of immediate and transitory enjoyment; and an almost unbroken tradition compels us to regard the central notion of the word as relating to the provision for the wants of the future rather than those of the present. It is true that all wholesome enjoyments, whether luxurious or not, are legitimate ends of action both public and private; and it is true that the enjoyment of luxuries affords an incentive to exertion, and promotes progress in many ways. But if the efficiency and energy of industry are the same, the true interest of a country is generally advanced by the subordination of the desire for transient luxuries to the attainment of those more solid and lasting resources which will assist industry in its future work, and will in various ways tend to make life larger. This general idea has been in solution, as it were, in all stages of economic theory; and has been precipitated by different writers into various hard and fast distinctions by which certain trades have been marked off as productive and certain others as unproductive.

II.III.6

For instance, many writers even of recent times have adhered to Adam Smith's plan of classing domestic servants as unproductive. There is doubtless in many large houses a superabundance of servants, some of whose energies might with advantage to the community be transferred to other uses: but the same is true of the greater part of those who earn their livelihood by distilling whisky; and yet no economist has proposed to call them unproductive. There is no distinction in character between the work of the baker who provides bread for a family, and that of the cook who boils potatoes. If the baker should be a confectioner, or fancy baker, it is probable that he spends at least as much of his time as the domestic cook does, on labour that is unproductive in the popular sense of providing unnecessary enjoyments.

II.III.7

Whenever we use the word Productive by itself, it is to be understood to mean productive of the means of production, and of durable sources of enjoyment. But it is a slippery term, and should not be used where precision is needed.

II.III.8

If ever we want to use it in a different sense, we must say so: for instance we may speak of labour as productive of necessaries, etc.

II.III.9

Productive consumption, when employed as a technical term, is commonly defined as the use of wealth in the production of further wealth; and it should properly include not all the consumption of productive workers, but only that which is necessary for their efficiency. The term may perhaps be useful in studies of the accumulation of material wealth. But it is apt to mislead. For consumption is the end of production; and all wholesome consumption is productive of benefits, many of the most worthy of which do not directly contribute to the production of material wealth.

II.III.10

§ 3. This brings us to consider the term Necessaries. It is common to distinguish necessaries, comforts, and luxuries; the first class including all things required to meet wants which must be satisfied, while the latter consist of things that meet wants of a less urgent character. But here again there is a troublesome ambiguity. When we say that a want must be satisfied, what are the consequences which we have in view if it is not satisfied? Do they include death? Or do they extend only to the loss of strength and vigour? In other words, are necessaries the things which are necessary for life, or those which are necessary for efficiency?

II.III.11

The term Necessaries, like the term Productive, has been used elliptically, the subject to which it refers being left to be supplied by the reader; and since the implied subject has varied, the reader has often supplied one which the writer did not intend, and thus misunderstood his drift. In this, as in the preceding case, the chief source of confusion can be removed by supplying explicitly in every critical place that which the reader is intended to understand.

II.III.12

The older use of the term Necessaries was limited to those things which were sufficient to enable the labourers, taken one with another, to support themselves and their families. Adam Smith and the more careful of his followers observed indeed variations in the standard of comfort and "decency": and they recognized that differences of climate and differences of custom make things necessary in some cases, which are superfluous in others. But Adam Smith was influenced by reasonings of the Physiocrats: they were based on the condition of the French people in the eighteenth century, most of whom had no notion of any necessaries beyond those which were required for mere existence. In happier times, however, a more careful analysis has made it evident that there is for each rank of industry, at any time and place, a more or less clearly defined income which is necessary for merely sustaining its members; while there is another and larger income which is necessary for keeping it in full efficiency.

II.III.13

It may be true that the wages of any industrial class might have sufficed to maintain a higher efficiency, if they had been spent with perfect wisdom. But every estimate of necessaries must be relative to a given place and time; and unless there be a special interpretation clause to the contrary, it may be assumed that the wages will be spent with just that amount of wisdom, forethought, and unselfishness, which prevails in fact among the industrial class under discussion. With this understanding we may say that the income of any class in the ranks of industry is below its necessary level, when any increase in their income would in the course of time produce a more than proportionate increase in their efficiency. Consumption may be economized by a change of habits, but any stinting of necessaries is wasteful.

II.III.14

§ 4. Some detailed study of the necessaries for efficiency of different classes of workers will have to be made, when we come to inquire into the causes that determine the supply of efficient labour. But it will serve to give some definiteness to our ideas, if we consider here what are the necessaries for the efficiency of an ordinary agricultural or of an unskilled town labourer and his family, in England, in this generation. They may be said to consist of a well-drained dwelling with several rooms, warm clothing, with some changes of underclothing, pure water, a plentiful supply of cereal food, with a moderate allowance of meat and milk, and a little tea, etc., some education and some recreation, and lastly, sufficient freedom for his wife from other work to enable her to perform properly her maternal and her household duties. If in any district unskilled labour is deprived of any of these things, its efficiency will suffer in the same way as that of a horse that is not properly tended, or a steam-engine that has an inadequate supply of coals. All consumption up to this limit is strictly productive consumption: any stinting of this consumption is not economical, but wasteful.

II.III.15

In addition, perhaps, some consumption of alcohol and tobacco, and some indulgence in fashionable dress are in many places so habitual, that they may be said to be conventionally necessary, since in order to obtain them the average man and woman will sacrifice some things which are necessary for efficiency. Their wages are therefore less than are practically necessary for efficiency, unless they provide not only for what is strictly necessary consumption, but include also a certain amount of conventional necessary.

II.III.16

The consumption of conventional necessaries by productive workers is commonly classed as productive consumption; but strictly speaking it ought not to be; and in critical passages a special interpretation clause should be added to say whether or not they are included.

II.III.17

It should however be noticed that many things which are rightly described as superfluous luxuries, do yet, to some extent, take the place of necessaries; and to that extent their consumption is productive when they are consumed by producers.

INCOME. CAPITAL.

II.IV.1

§ 1. In a primitive community each family is nearly self-sufficing, and provides most of its own food and clothing and even household furniture. Only a very small part of the income, or comings in, of the family is in the form of money; when one thinks of their income at all, one reckons in the benefits which they get from their cooking utensils, just as much as those which they get from their plough: one draws no distinction between their capital and the rest of their accumulated stock, to which the cooking utensils and the plough alike belong.

II.IV.2

But with the growth of a money economy there has been a strong tendency to confine the notion of income to those incomings which are in the form of money; including "payments in kind" (such as the free use of a house, free coals, gas, water), which are given as part of an employee's remuneration, and in lieu of money payments.

II.IV.3

In harmony with this meaning of Income, the language of the market-place commonly regards a man's capital as that part of his wealth which he devotes to acquiring an income in the form of money; or, more generally, to acquisition (Erwerbung) by means of trade. It may be convenient sometimes to speak of this as his trade capital; which may be defined to consist of those external goods which a person uses in his trade, either holding them to be sold for money or applying them to produce things that are to be sold for money. Among its conspicuous elements are such things as the factory and the business plant of a manufacturer; that is, his machinery, his raw material, any food, clothing, and house-room that he may hold for the use of his employees, and the goodwill of his business.

II.IV.4

To the things in his possession must be added those to which he has a right and from which he is drawing income: including loans which he has made on mortgage or in other ways, and all the command over capital which he may hold under the complex forms of the modern "money market." On the other hand debts owed by him must be deducted from his capital.

II.IV.5

This definition of capital from the individual or business point of view is firmly established in ordinary usage; and it will be assumed throughout the present treatise whenever we are discussing problems relating to business in general, and in particular to the supply of any particular group of commodities for sale in open market. Income and capital will be discussed from the point of view of private business in the first half of the chapter; and afterwards the social point of view will be considered.

II.IV.6

§ 2. If a person is engaged in business, he is sure to have to incur certain outgoings for raw material, the hire of labour, etc. And, in that case, his true or net income is found by deducting from his gross income "the outgoings that belong to its production."

II.IV.7

Anything which a person does for which he is paid directly or indirectly in money, swells his nominal income; while no services that he performs for himself are commonly reckoned as adding to his nominal income. But, though it is best generally to neglect them when they are trivial, account should for consistency be taken of them, when they are of a kind which people commonly pay for having done for them. Thus a woman who makes her own clothes or a man who digs in his own garden or repairs his own house, is earning income; just as would the dressmaker, gardener or carpenter who might be hired to do the work.

II.IV.8

In this connection we may introduce a term of which we shall have to make frequent use hereafter. The need for it arises from the fact that every occupation involves other disadvantages besides the fatigue of the work required in it, and every occupation offers other advantages besides the receipt of money wages. The true reward which an occupation offers to labour has to be calculated by deducting the money value of all its disadvantages from that of all its advantages; and we may describe this true reward as the net advantages of the occupation.

II.IV.9

The payment made by a borrower for the use of a loan for, say, a year is expressed as the ratio which that payment bears to the loan, and is calledinterest. And this term is also used more broadly to represent the money equivalent of the whole income which is derived from capital. It is commonly expressed as a certain percentage on the "capital" sum of the loan. Whenever this is done the capital must not be regarded as a stock of things in general. It must be regarded as a stock of one particular thing, money, which is taken to represent them. Thus £100 may be lent at four per cent., that is for an interest of £4 yearly. And, if a man employs in business a capital stock of goods of various kinds which are estimated as worth £10,000 in all; then £400 a year may be said to represent interest at the rate of four per cent. on that capital, on the supposition that the aggregate money value of the things which constitute it has remained unchanged. He would not, however, be willing to continue the business unless he expected his total net gains from it to exceed interest on his capital at the current rate. These gains are called profits.

II.IV.10

The command over goods to a given money value, which can be applied to any purpose, is often described as "free" or "floating" capital.

II.IV.11

When a man is engaged in business, his profits for the year are the excess of his receipts from his business during the year over his outlay for his business. The difference between the value of his stock of plant, material, etc. at the end and at the beginning of the year is taken as part of his receipts or as part of his outlay, according as there has been an increase or decrease of value. What remains of his profits after deducting interest on his capital at the current rate (allowing, where necessary, for insurance) is generally called his earnings of undertaking or management. The ratio in which his profits for the year stand to his capital is spoken of as his rate of profits. But this phrase, like the corresponding phrase with regard to interest, assumes that the money value of the things which constitute his capital has been estimated: and such an estimate is often found to involve great difficulties.

II.IV.12

When any particular thing, as a house, a piano, or a sewing machine is lent out, the payment for it is often called Rent. And economists may follow this practice without inconvenience when they are regarding the income from the point of view of the individual trader. But, as will be argued presently, the balance of advantage seems to lie in favour of reserving the term Rent for the income derived from the free gifts of nature, whenever the discussion of business affairs passes from the point of view of the individual to that of society at large. And for that reason, the term Quasi-rent will be used in the present volume for the income derived from machines and other appliances for production made by man. That is to say, any particular machine may yield an income which is of the nature of a rent, and which is sometimes called a Rent; though on the whole, there seems to be some advantage in calling it a Quasi-rent. But we cannot properly speak of the interest yielded by a machine. If we use the term "interest" at all, it must be in relation not to the machine itself, but to its money value. For instance if the work done by a machine which cost £100 is worth £4 a year net, that machine is yielding a quasi-rent of £4 which is equivalent to interest at four per cent. on its original cost: but if the machine is worth only £80 now, it is yielding five per cent. on its present value. This however raises some difficult questions of principle, which will be discussed in Book V.

II.IV.13

§ 3. Next to consider some details relating to capital. It has been classed as Consumption capital, and Auxiliary or Instrumental capital: and though no clear distinction can be drawn between the two classes, it may sometimes be convenient to use the terms, with the understanding that they are vague. Where definiteness is necessary, the terms should be avoided; and explicit enumerations should be given. The general notion of the distinction which the terms are designed to suggest, can be gathered from the following approximate definitions.

II.IV.14

Consumption capital consists of goods in a form to satisfy wants directly; that is, goods which afford a direct sustenance to the workers, such as food, clothes, house-room, etc.

II.IV.15

Auxiliary, or instrumental, capital is so called because it consists of all the goods that aid labour in production. Under this head come tools, machines, factories, railways, docks, ships, etc.; and raw materials of all kinds.

II.IV.16

But of course a man's clothes assist him in his work and are instrumental in keeping him warm; and he derives a direct benefit from the shelter of his factory as he does from the shelter of his house.

II.IV.17

We may follow Mill in distinguishing circulating capital "which fulfils the whole of its office in the production in which it is engaged, by a single use," from fixed capital "which exists in a durable shape and the return to which is spread over a period of corresponding duration."

II.IV.18

§ 4. The customary point of view of the business man is that which is most convenient for the economist to adopt when discussing the production of goods for a market, and the causes which govern their exchange value. But there is a broader point of view which the business man, no less than the economist, must adopt when he studies the causes which govern the material wellbeing of the community as a whole. Ordinary conversation may pass from one point of view to another without any formal note of the change: for if a misunderstanding arises it soon becomes manifest; and confusion is cut short by a question or by a volunteered explanation. But the economist may take no risks of that sort: he must make prominent any change in his point of view or in his uses of terms. His path might have seemed smoother for the time, if he had passed silently from one use to another: but in the long run better progress is made by a clear indication of the meaning attached to each term in every doubtful case.

II.IV.19

Let us then during the remainder of this chapter deliberately adopt thesocial, in contrast with the individual point of view: let us look at the production of the community as a whole, and at its total net income available for all purposes. That is, let us revert nearly to the point of view of a primitive people, who are chiefly concerned with the production of desirable things, and with their direct uses; and who are little concerned with exchange and marketing.

II.IV.20

From this point of view income is regarded as including all the benefits which mankind derive at any time from their efforts, in the present and in the past, to turn nature's resources to their best account. The pleasure derived from the beauties of the rainbow, or the sweet taste of the fresh morning air, are left out of the reckoning, not because they are unimportant, nor because the estimate would in any way be vitiated by including them; but solely because reckoning them in would serve no good purpose, while it would add greatly to the length of our sentences and the prolixity of our discussions. For a similar reason it is not worth while to take separate account of the simple services which nearly every one renders to himself, such as putting on his clothes; though there are a few persons who choose to pay others to do such things for them. Their exclusion involves no principle; and time spent by some controversial writers on discussing it has been wasted. It simply follows the maxim De minimis non curat lex. A driver who, not noticing a pool in his way, splashes a passer by is not held to have done him legal injury; though there is no distinction in principle between his act and that of another, who by a similar lack of attention, did serious harm to someone else.

II.IV.21

A man's present labour yields him income directly, when devoted to his own use; and he looks to be paid for it in some for or another if he devotes it as a matter of business to the service of others. Similarly any useful thing which he has made or acquired in the past, or which has been handed down to him, under the existing institutions of property, by others who have so made or acquired it, is generally a source of material benefit to him directly or indirectly. If he applies it in business, this income generally appears in the form of money. But a broader use of this term is occasionally needed, which embraces the whole income of benefits of every sort which a person derives from the ownership of property however applied: it includes for instance the benefits which he gets from the use of his own piano, equally with those which a piano dealer would win by letting out a piano on hire. The language of common life while averse to so broad a use of the term Income as this even when discussing social problems, yet habitually includes a certain number of forms of income, other than money income.

II.IV.22

The Income Tax Commissioners count a dwelling-house inhabited by its owner as a source of taxable income, though it yields its income of comfort directly. They do this, not on any abstract principle; but partly because of the practical importance of house-room, partly because the ownership of a house is commonly treated in a business fashion, and partly because the real income accruing from it can easily be separated off and estimated. They do not claim to establish any absolute distinction in kind between the things which their rule includes, and those which it excludes.

II.IV.23

Jevons, regarding the problem from a purely mathematical point of view, was justified in classing all commodities in the hands of consumers as capital. But some writers, while developing this suggestion with great ingenuity, have treated it as a great principle; and that appears to be an error in judgment. A true sense of proportion requires us not to burden our work with the incessant enumeration of details of secondary importance, of which no account is taken in customary discourse, and which cannot even be described without offending against popular conventions.

II.IV.24

§ 5. This brings us to consider the use of the term capital from the point of view of inquiries into the material wellbeing of society as a whole. Adam Smith said that a person's capital is that part of his stock from which he expects to derive an income. And almost every use of the term capital, which is known to history, has corresponded more or less closely to a parallel use of the term Income: in almost every use, capital has been that part of a man's stock from which he expects to derive an income.

II.IV.25

By far the most important use of the term Capital in general, i.e. from the social point of view, is in the inquiry how the three agents of production, land (that is, natural agents), labour and capital, contribute to producing the national income (or the national dividend, as it will be called later on); and how that income is distributed among the three agents. And this is an additional reason for making the terms Capital and Income correlative from the social, as we did from the individual point of view.

II.IV.26

Accordingly it is proposed in this treatise to count as part of capital from the social point of view all things other than land, which yield income that is generally reckoned as such in common discourse; together with similar things in public ownership, such as government factories: the term Land being taken to include all free gifts of nature, such as mines, fisheries, etc., which yield income.

II.IV.27

Thus it will include all things held for trade purposes, whether machinery, raw material or finished goods; theatres and hotels; home farms and houses: but not furniture or clothes owned by those who use them. For the former are and the latter are not commonly regarded as yielding income by the world at large, as is shown by the practice of the income tax commissioners.

II.IV.28

This usage of the term is in harmony with the common practice of economists of treating social problems in broad outline to start with, and reserving minor details for later consideration: it is in harmony also with their common practice of taking Labour to include those activities, and those only, which are regarded as the source of income in this broader use of the term. Labour together with capital and land thus defined are the sources of all that income of which account is commonly taken in reckoning up the National Income.

II.IV.29

§ 6. Social income may be estimated by adding together the incomes of the individuals in the society in question, whether it be a nation or any other group of persons. We must however not count the same thing twice. If we have counted a carpet at its full value, we have already counted the values of the yarn and the labour that were used in making it; and these must not be counted again. And further, if the carpet was made of wool that was in stock at the beginning of the year, the value of that wool must be deducted from the value of the carpet before the net income of the year is reached; while similar deduction must be made for the wear and tear of machinery and other plant used in making it. This is required by the general rule, with which we started, that true or net income is found by deducting from gross income the outgoings that belong to its production.

II.IV.30

But if the carpet is cleaned by domestic servants or at steam scouring works, the value of the labour spent in cleaning it must be counted in separately; for otherwise the results of this labour would be altogether omitted from the inventory of those newly-produced commodities and conveniences which constitute the real income of the country. The work of domestic servants is always classed as "labour" in the technical sense; and since it can be assessed en bloc at the value of their remuneration in money and in kind without being enumerated in detail, its inclusion raises no great statistical difficulty. There is however some inconsistency in omitting the heavy domestic work which is done by women and other members of the household, where no servants are kept.

II.IV.31

Again, suppose a landowner with an annual income of £10,000 hires a private secretary at a salary of £500, who hires a servant at wages of £50. It may seem that if the incomes of all these three persons are counted in as part of the net income of the country, some of it will be counted twice over, and some three times. But this is not the case. The landlord transfers to his secretary, in return for his assistance, part of the purchasing power derived from the produce of land; and the secretary again transfers part of this to his servant in return for his assistance. The farm produce the value of which goes as rent to the landlord, the assistance which the landlord derives from the work of the secretary, and that which the secretary derives from the work of the servant are independent parts of the real net income of the country; and therefore the £10,000 and the £500 and the £50 which are their money measures, must all be counted in when we are estimating the income of the country. But if the landlord makes an allowance of £500 a year to his son, that must not be counted as an independent income; because no services are rendered for it. And it would not be assessed to the Income tax.

II.IV.32

As the net payments on account of interest etc. due to an individual—net, i.e. after deducting those due from him to others—are part of his income, so the money and other things received net by a nation from other countries are part of its income.

II.IV.33

§ 7. The money income, or inflow, of wealth gives a measure of a nation's prosperity, which, untrustworthy as it is, is yet in some respects better than that afforded by the money value of its stock of wealth.

II.IV.34

For income consists chiefly of commodities in a form to give pleasure directly; while the greater part of national wealth consists of the means of production, which are of service to the nation only in so far as they contribute to producing commodities ready for consumption. And further, though this is a minor point, consumable commodities, being more portable, have more nearly uniform prices all the world over than the things used in producing them: the prices of an acre of good land in Manitoba and Kent differ more than those of a bushel of wheat in the two places.

II.IV.35

But if we look chiefly at the income of a country we must allow for the depreciation of the sources from which it is derived. More must be deducted from the income derived from a house if it is made of wood, than if it is made of stone; a stone house counts for more towards the real richness of a country than a wooden house which gives equally good accommodation. Again, a mine may yield for a time a large income, but be exhausted in a few years: in that case, it must be counted as equivalent to a field, or a fishery, which yields a much smaller annual income, but will yield that income permanently.

II.IV.36

§ 8. In purely abstract, and especially in mathematical, reasoning the terms Capital and Wealth are used as synonymous almost perforce, except that "land" proper may for some purposes be omitted from Capital. But there is a clear tradition that we should speak of Capital when considering things as agents of production; and that we should speak of Wealth when considering them as results of production, as subjects of consumption and as yielding pleasures of possession. Thus the chief demand for capital arises from its productiveness, from the services which it renders, for instance, in enabling wool to be spun and woven more easily than by the unaided hand, or in causing water to flow freely wherever it is wanted instead of being carried laboriously in pails; (though there are other uses of capital, as for instance when it is lent to a spendthrift, which cannot easily be brought under this head). On the other hand the supply of capital is controlled by the fact that, in order to accumulate it, men must act prospectively: they must "wait" and "save," they must sacrifice the present to the future.

II.IV.37

At the beginning of this Book it was argued that the economist must forego the aid of a complete set of technical terms. He must make the terms in common use serve his purpose in the expression of precise thought, by the aid of qualifying adjectives or other indications in the context. If he arbitrarily assigns a rigid exact use to a word which has several more or less vague uses in the market place, he confuses business men, and he is in some danger of committing himself to untenable positions. The selection of a normal use for such terms as Income and Capital must therefore be tested by actually working with it