§ 7. Hastening the ripening process. A man or a family in an isolated economy would, when in urgent need, make efforts to convert future goods if possible into present goods. Sometimes this can not be done, e.g., the starving man in the forest can not hasten the ripening of wild fruits, and the desperate Richard III cries in vain, "My kingdom for a horse." But in many other cases there are ways of converting future into present goods, tho rarely without making some sacrifice for the conversion. (For if they were indeed available at once they would be present goods.)6

Future goods of one quality may often be appropriated as present goods of a lower quality, e.g., the future ripe apple is a present green apple, the future matured wine is the present grape juice, the future seasoned lumber is present green lumber. In thousands of artificial ways in modern industry the time needed for acquiring the better physical quality and the higher value, is cut short. In times of siege and famine, goods may be changed entirely from their usual purposes; trees are dug up that the roots may be eaten, and leather is chewed for food. Again, future goods may be hastened into becoming present goods of nearly the same quality by being put through technical processes, e.g., the lumber may be kiln-dried, the fruit may be forced in a hothouse; but as in this process other agents must be used, the present goods and the future goods are somewhat different groups of things presented to choice. Again, to get more present goods the usual care of durable agents may be neglected and their future uses destroyed by taking more than the true present usufruct, as by using up a farm, or by driving a horse to death in going for a doctor, or by burning Indian corn or fruit trees for firewood.

6 Review ch. 10, sec. 4, on the use of indirect agents for hastening the uses of goods.

In all these ways the adjustment of choice between present and future goods in the individual economy is constantly going on, reflecting a prevailing time-preference in some person's mind. It will be noted that in every case this adjustment, even when made quite outside of a market and without exchange with other persons, requires a sacrifice of something, either in quality or in quantity, either in valuable labor or in materials taken from other uses. This sacrifice bears some value-ratio, more or less clear, to the time-value of the present good.

§ 8. Postponing the use and the readiness for use. If on the other hand there is preference at any time for future goods over present goods of like kind and quantity, adjustment is made as far as possible in the other direction.7 If the person has but one unit (good or use) to dispose of, the use can be either now or later, but not both times. Shall the lunch one has in his basket be eaten now, or kept until noon ?

7 Review ch. 10, sec. 3, on the relation of time to value, and sec. 5 on agencies for postponing the uses of goods.

Shall the rare flask of wine of romance be opened now, or kept for some future greater occasion? Often, however, the question presented is that of distributing a stock of like units, or of like uses, over two or more time-periods. In such a case as the bountiful crop, the surplus overflowing the usual demands of the present is held for the future. The anticipated future desires factor as present desires (more or less weakened by time or perspective it may be). They claim a portion of the present stock, that portion which if used at present would have a smaller value. Each unit of like goods, under the law of indifference, must have equal value at the moment whether to be used at the present or the future (tho it may have a higher value when later used). Until this adjustment is complete, units are shifted from one time period to another, according to the law of substitution. The possibility of using things later thus gives a valuation to each unit of any present stock of goods higher than it would have if the goods were entirely perishable and usable only in the present. In Figure 31 if the present stock of meat is eight units, the value would sink to one, represented by the line AB. But if four of these units can be kept for the future, the present takes but four units, and the value will be three (line CD) for each unit, whether used in present or in future. Note that units five to eight may be worth more later when they are used, and probably enter into present choice at a discount from their future magnitude.

On the whole it would seem that in a greater number of cases it is more easily possible to retain a surplus of present goods for future use, than to hasten a future (unripe, unfinished, or merely potential) supply, to meet present uses. It would seem that present value is more often, and in the case of more kinds of goods, and in a greater degree, raised by a chance shortage than it is unexpectedly reduced by a chance surplus. For usually the surplus can be kept as is often the case even with direct consumptive goods (such as grain, coal, textiles, carriages, etc.), and still more often the case with indirect durative agents, such as tools, machinery, buildings, stocks of metal, etc.

Present and Future Use of Homogeneous Units

§ 9. Physical-change accompanying time-change. Some goods deteriorate physically by keeping, as fruit rotting in the bins; some remain almost unchanged for a long time, tho costing trouble and expense to store and care for, as cotton, grain, and fireworks. Still others improve physically with time, as newly brewed beer, newly vinted wine, bananas ripening on the stem, celery blanching in the cellar, fattening poultry, half ripe fruit on the tree, the violin seasoning and growing richer in tone.

It is difficult in studying the problem of valuation in such cases to keep clearly distinct the two ideas, that of the physical change that goes on, and that of the pure time-value change. When the object physically improves with time and at the same time increases in value, the physical change seems to account for the increase; but as great an improvement physically may in other cases be accompanied by a fall in value. It is evident that no change in value is to be attributed solely to objective changes in the good, without regard to complex conditions in the desires of men.

In all such cases and in so far as there is any conscious comparison whatever, it is the net desirability (net present value) of the future goods that is compared with the value of the present goods. If half of the apples probably will rot before it will be time to use them, the present value of the future apples, per bushel, must be somewhat more than twice as great as present apples to make a motive for keeping them, and further allowance must be made for trouble, expense, etc.

But, as a part of the present apples are expected to spoil, they represent, and must be compared with, a smaller number of apples in the future. The physical change is an inevitable (or a practical) condition, of the time change. It is, so to speak, a function of time. It happens rarely, perhaps, that it is with respect solely to time, in simple, unadulterated form, that time-choice, time-preference, and time-value are presented to us. Time-value is the present value-difference between the possible uses of a thing or group of things at different times. If therefore the lapse of time is accompanied by increase or decrease of quantity, or by gain or loss in quality, this enters into choice at the present moment.8

Undoubtedly, the importance of time in many acts of business life is well understood. " Time is money," is a business maxim. But neither in business nor in the philosophical study of value has the omnipresence of the time element been fully appreciated. This chapter has, perhaps, served to show how time is a factor in practically all economic choice and in practically all valuation. Indeed, time-value and time-preference have aspects that transcend economics; they are universal phenomena of life and conduct.

We have now to see in the next chapter how time-preference is expressed in the values of goods and how in these valuations necessarily a rate of preference, a premium for time, comes to be expressed in each person's valuations.

8 Each of the four types of value is presented in manifold combinations with the other three. Time-preference is interwoven in the choice of things with relation to place, stuff, form. Time-value as a matter of analysis may be deemed to be added (algebraically either as plus or minus) to the other values in determining the sum of value in a good.


Present and future goods, uses, desires. We may note the following distinctions to be kept in mind throughout our discussion.

Present goods are any goods actually available for choice at the present moment. These comprise not only goods that may be used directly, as immediately enjoyable, but indirect agents if present. Fu-ture goods are any goods that will not be available for choice until some future moment.

All ready durative goods contain either present or future uses, or both kinds. The uses contained in goods must be distinguished from the concrete goods themselves, e.g., the house from its use as a shelter, an ax from its cutting of the wood. (On this relation between the uses and concrete agents see above, chs. 11 and 12.) A future good when it arrives, may contain uses available at various economic periods. It is not unusual to speak of a choice between present goods and future goods when more exactly one should speak of a choice between present and; future uses of goods. As any particular concrete good, as a field, a building, a machine, may be yielding indirect uses of many ranks, and of many degrees of futurity, the time differences involved in this process must be expressed in terms of the uses rather than in terms of the agents.

In every case the choice made is, at the moment when made, a present choice. We have no future desires tho we may have a present forecast of a future desire. "Future desires" means desires that will be present at some future time. Present desires are all those desires now being weighed in choice. Present desires may be either desires for present uses or for future uses (either in the same or in different goods). A present desire for future uses is but the anticipation of a future desire, tho the two may be of unequal magnitude. It appears therefore that all time-choices are, in the last analysis, reducible to choices between present desires for psychic-incomes occurring at different time-periods.