The workingman's advocate. [volume] (Chicago [Ill.]) 1864-1877, 1869-10-09


az DISTRIBUTION 70 LABOR AND CAPITAL.
SECTION XVII.
BENEFICIAL results TO LGbOTeTs and Merchants
from the reduction Of the rate cfiIntereSt.
(CONTINUED.)
II may be said that the reduction OF the
interest on money would cause pror erty to
rise in price in proportion to the decrease OF
interest, and therefore, the condition OF the
laborer would not be improved. 1t will be
supposed that il the market value Of property
should rise 10 proportion to the decrease OF
interest, Ppecnlstors and owners Of property
would be the gamers by the reduction; that
interest being reduced from seven to one
per cent, W. four farms (see Section ~
would rise in their market value from 80.
600 t. $40 600, and q rent Of one per cent.
on the $4,000 would be S700-precisely the
same sum as seven per cent. on $40 600
and thus ibe tenants would gain nothing by
the lessening Of the interest, but v. would
gain BY the rise in the market value Of bis
farms. By looking little deeper into this
matter, we shall see that such would not be
the fact. For, if V.'s farm rise to so, 900
each, and A. B. G., and D., hire them at rne
pNA NBub Ou tGlo NdAuAblOuS hu0b IeS NJ y lUO
ear for each, which V. on lie receipt,
loans out at one per cent, yearly collecting
and TeloaniDg the interest, it would be
seventy years before the rent, and it's accru-
Ing interest would buy four other farms.
Hence the relative gam Of the laborers BY
lowering the rate per cent. interest, would
not be altered By any rise in the market
value Of the farms. To show this vet more
ulaorIv - -
farm increase from $4,000 to $4,000 and
let v. instead Of renting cell them, and loan
out their proceeds on bond and mortgage AT
one per cent. per aDnum, yearly collecting
and reloaning the interest, it would still be
seventy years before the interest would equal
the principal and amount 10 $3.50, 900; and
the $28O,CO0 gained By interest, would buy
for v. only four farms worth SIC, 900 ;
whereas, with interest at seven per cent, il
v. should sell the same four farms at SIO,-
600 each, losDing out the $4O, 900 proceeds
AZ seven Ier cent, and yearly collecting and
TelOaniDg the interest at the same rate, in
seventy one years and nine months be would
galn SIS 080,OOO, which would buy Eve hun
dr, and eight farms.
Whether properly rise or fall, or maintain
its present price, the reward Of labor would
Db E4uaAAy lnNA C0cCN Wy uAutuuklOu VI
interest. Suppose II. has lot that cost b i'm
IL caeh 81 900, and builds house upOn Il
costing 8 l,O0O-togeIher worth 81, 900. In
te1e,t on mUDry is at TX per cent. per an
pum; therefore to make the property worth
Tie noney il cost, u. must let the house for
1920 year, clear Uf insurance, repairs, and
taxes. Labor then is at one dollar per day.
Reduce The interest on money to one per
- "a ~ ~ -
Ietthe lOt and house rise to Fix times their
fumer prce-tbat is, from 81 900 to $l2,-
GOO. The iLteIest on $4,000 At one per
cent. would be $l20, the same as when the
property would sell for but 1000 The
houre could not rise from e.. 90 10 $l2. QUO
unless labor should rise " JpOrtiODAIly-
thar is from one dollar day TO six dollars .
day. i be same amount of labor would as
readily build. the house az one time as an
other. With labor at six dollars per day,
the tenant could pay the $l20 rent with
twenty Gays work whereas, with interest
at Fix Eer cent, and labor at one dollar per
day, it would take one hundred and twenty
days labor 70 pay the rent, six times more
than v ben the interest on money was at one
per cent. Now suppose the change in in
terest TO produce no effect upon property,
49, tbN AbNpN oh0 Aoe w OoAbAhoG NOIb0 OUly
$4,000. The interest on the g., 600 at one
Ier cent. would be $50. If property did not
rise, labor would not rise, because il Would
take twenty days labor to pay the rent-the
came number Of days tnat II would IL the
property should rise TO $4,000.
A just per ceDtage on money being estab-
lished, the rise or the fall Of property would
not affect the relative positions Of labor and
nur.ftul ~ ahOV1d ~ In
the tenant would not be Obliged to baiId an
other house for the use OF one, any sooner
han If property should fall 10 price. ii
could pay The rent in the one case as easily
az il the other, and with the same amount
Of labor but q change in The rate Of in
teTest would Immediately sfft Ct bin.
The amount Of products required as the
rent OF land would be diminished by reduc-
ing the rate Of interest. Suppose G. owns q
farm Or one hundred acres Of well improved
land worth 800 per acre. Fl. rents this
farm u seven per cent. interest on it's cost,
and consequently must pay TO G. 800 q
year. II the luDd produce twenty five bush
Els OG wheat TO the acre, and wheat be worth
ST, per busbel, II. must SOW, reap, and sell
the products Of twenty eight acres, and "a,
tie whole proceeds to G as the rent Of one
hundred acres Tor tine year. " interest were
AZ one Ter cent. instead Of at seven, the
rent Of the farm, or Of the $4,000 for the
wear would be 500, instead of 800; and
II. would be Obliged to cultivate and sell
the products Of four acres only to procure
one hundI ed bushels Of wheat, or 800 to
ray the rent. II be performed the same la.
Dor v ben interest was &C one as when il was
al seven per cent, be would retain the pro-
ducts of tweDty-four acres. e., Six hun
bred bushels Of wheat as the surplus earn
ings Of bis labor, instead OF paying them to
9. Tor the use OF capital The reduction OF
the rate 81 interest would not lessen the
quantity Of products, nor decrease their
value it would only give q larger proper
tion 70 producers If q should cultivate his
own farm, be would receive the whole Of it's
products as the rnings of his labor, whether
interest were at one or at seven per cent
But u interest were at one per cent, and
"a snould rtnt the second farm, G. would
exact but small proportion Of the product.
or the farm as rent. q. would rpceiva
more just sum for the use Of the farm. and
ii. would likewise receive moro ;u.t -
ward for bis labor upon it.
A low and uniform rate Of interest woUld
have q most beneficial effect on trade i: and
az this the following is a practical iIlustia. |
tiOn. Suppose a merchant in the CITY nov
Faye 81. 900 rent for bis store, and $500 for
bis b. use. His rents must be paid from the
profits on bis goods before be can gain any
thing for bis own support. Reduce the rate
OF interest to one per cent, and bis rents
would be reduced to 800, The interest on
bic stock Of goods would also be but one