since all prices would correspond exactly to the expenses of production and these would never vary. The whole matter may be represented graphically by the accompanying figure. In the figure production is represented as subdivided into three great stages, A, B, and C. The extractive industries: (A) turn out raw materials. Manufacturing (B) takes these and transforms them into manufactured products. Transportation and trade (C) deliver the latter as finished products to purchasers, who may be either consumers converting their money incomes into real incomes, or entrepreneurs converting the free replacement fund into capital goods to restore the wastes incidental to production. The figure represents movement without change." And furthermore: "Goods are flowing continuously from stage A to B and from stage B to C. At C the stream is divided, an unvarying volume of capital goods flowing one way and an unvarying stream of consumers' goods flowing the other. The capital goods exactly replace the goods destroyed in the course of production and the consumers' goods exactly remunerate the owners of land, workmen, and owners of capital goods for the productive services which they or their possessions have rendered. Finally the prices of goods are invariable and everywhere just equal to their unvarying expenses of production." Later in the 20th century the model of the circular flow of income has been developed, which comprehends similar concepts. Principles of economics In his 1913 Principles of economics Seager further extended his theory of production and distribution. Seager explained: "Since the relations we are trying to picture are between flows of goods rather than fixed funds of goods, certain of their aspects may be more easily presented in graphic than in arithmetical form. The [accompanying] figure... represents capitalistic production in a self-contained industrial society brought to a state of normal equilibrium. In it are represented in successive and connected compartments the three great branches of production: the extractive industries, manufacturing, and transportation and trade..." About the flows in the model, he explains: "...Raw materials, the products of the extractive industries, flow through from left to right, being enriched as they pass along by the addition of form, place, time and possession utilities. On leaving the hands of dealers, they are separated into two great streams, one, the replacement fund, which flows back to repair and renew capital goods worn or destroyed in the process of production, the other, consumption goods, which begin