Smyrna times., 1872-08-07
The Power Of Interest.


The gradually increasing rate of interest
should make people wary of borrowing money
for speculative purposes, and especially of hir-
ing Il for the purch ssC of unprOductiVe property
or In the expec alton Of obtaining permanently
high rents. 1t is the high rate of interest
which every few years causes general break
ing up OF business, when property and products
fail in prices. This also it is which causes
wealth gradually but steadily to concentrate
into the hands of comparatively few persons
in the community. Take any series of ten, |
twenty, or thirty years, Or more, and the longer |
the series the more positive and conclusive be- |
comes the evidence Of the fact, and it will be |
seen that the most profitable business in the
world is the lending of money. The high rate
of money, high rents and high taxes must, in
the course of u few years, tend to such con-
centratiOn of wealth as cannot fail to be injuri
GUS to society, and will ultimately straien the
debtor classes as to necesstate to a very great
extent the process of wiping out old accounts and
beginning anew. A few examples will be suf
6cient to illustrate the great power of interest
A man buys house for which he pays $4,000.
| tie leases 1t and charges the tenant seven per
cent. upon its cost, clear OF insurance, taxes and
repairs. The RENTS payable quarterly A rate of
interest of per cent. per annum, paid quarter
| ly, will accumulate a sum equal to the principal
loaned or invested In property In ten years. La
the first period of ten years, therefore, his
rents build him another as costly house as
the first. In twenty years his rents build three
such houses; in thirty years seven houses in
forty years fifteen houses in fifty years thirty
one houses; in sixty years sixty-three houses,
and in seventy years one hundred and twenty
seven houses. In seventy years all these are
built from the accumulated rents of one house.
These houses are worth 81 100000, which sum
has been paid for seventy years rents of one
house, worth $4,000 IT, instead of being in
vested in the house and lot, the $4,000 were
, loaned on interest at seven per cent and the
interest collected and reloaned quarterly, the
| money would accumulate precisely the came
r amount of property.
Take another illustration of the power Of
interest. Two mechanics just come OF age, are
good workmen aud desirous of becoming rich
Each is able to earn a dollar day over &nC
| above his expenses Every six months they
4 invest the money thus earned at seven pei
cent. interest, the interest payable halt yearly
4 These men earn an average of dollar day
v besides their expenses 300 days in each year
K during forty years and four months. Their ag
is then 81 years and four months. Each earn
|. by labor $500 per year for forty years, or to
:, the whole period, $l2, ,l2O-together, $24. .24C
d But the interest on their returns, loaned hal
h yearly, for a period of 40 years and months
Is doubling at seven per cent, paid and reinves
10 ed half yearly, in 10 years and four month
Ut amounts to $l04. $50 10, which added to tn
e. amount Of $24, ,240 earned by their labor, make
r. the aggregate. $l2S, 75070. The interest o
ID the sum $24, 240 earned by their labor is 5 l04
~ $50 7O-more than four and quarter tlm'
US greater than the amount they have earned
I'd their labor
w Suppose the two men to live twenty yea
Id and two months longer, that is to the age
e, eighty-one years and six months, and continV
lie to loan their money During this period
e !; would double twice making the total accum
= lation in sixty years and six months $5l5,00:
IN, so. The two men do not labor during the Ia
rs twenty years and two months, and expend
lat their income for living during that peri
$1,000 so. leaving to their heirs $4,000.
Ia forty years and four months they earn by the
ne, labor $2424O, and live twenty years and t
Ia. months on their money without labor. ST
tract the money earned by labor, $24,240, a
aid the remainder, accumulated by interest,
md $475,S00. Now, not one dollar Of this Sal
Did 800 is earned by the labor of these men.
But is the legal interest upon S24,2 $40. These n
en- live lshOriously and work for a very mo1er
compensation. They take only the legal r
md of interest. Neither do thev enter into
her speculations.-BostOn 7raueler.