The Hickman courier. [volume] (Hickman, Ky.) 1859-current, 1872-11-30
The Power Of Interest.

81 + =
The gradually increasing rate OF
interest should make people wary OF
borrowing money for speculative
purposes, and especially of hiring 1t
for the purpose of unproductive pro-
perty, or IN the expectation OF OBJ
tanning permanently high rents 1t
is the high rate of interest which
every few years causes q general
breaking up of business, when pro-
perty and products fall IN prices
This also it is which causes wealth
gradually bit steadily to concentrate
into the hands of comparatively
few persons in the community. Take
any series of ten, twenty, or thirty
years, or mora, and the longer the
series the more positive and conclu-
siye becomes the evidence OF the TACT,
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 few years
tend to such a concentration OF
wealth as cannot fail to be injurious
to society, and will ultimately so
straitens the debtor classes as to ne
cessitate to q very great extent the
process Of wiping out old accounts
and beginning anew. A few exam
pies will be sufficient to illustrate
the great power of interest.
A man buys house for which he
pays $4,000. He leases it and char
ges the tenant seven per cent. upon
It's cost, clear of insurance, taxes and
repairs. The rent is payable quar-
terly. A rate of interest of seven
per cent. per annum, paid quarterly,
will accumulate a sum equal to the
principal loaned or invested in prop
erty, in ten years. In the first pc
Rod of ten years, therefore, his rents
build MIN 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,
sizty-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 $1,270,00O, which sum has
been paid for seventy years rents OF
one house worth 10000 If, in
stead of being invested in the house
and lot, the $4,000 were loaned on
interest at seven per cent, and the
interest collected and reloaned quar-
terly, the money would accumulate
precisely the same amount as the
property.
Take another illustration of the
power of interest. Two mechanics
just come of age are good workmen
and DESTROYS of becoming rich. Each
is able to earn a dollar day over
and above his expenses. Every six
months they invest the money thus
earned at seven per cent. interest
the interest payable half yearly
These men earn an average of dol
lar day besides their expenses 300
days in each year, during forty years
and four months. Their age is these
sixty years and four months. Each
earns by. lator $500 per year for
forty years, or, for the whole period,
$l2,120-together, S24, 24O. But the
interest on their returns, loaned half
yearly, for period of forty years
and four months, doubling at seven
Per cent, paid and reinvested half
yearly, IN ten years and four months,
amounts to $104,550.7O, which add
ded to the amount of $24, 240 earned
by their labor. makes the aggregate,
. $l26, 1000. The interest on the
.dm 81, $40 earned by their labor IS
!!ll 80. s0-Inore than four and q
quarter times greater than the
amount they have earned by their
labor. Suppose the two men to live
twenty years and two months lon
ger, that is to the age Of eighty-one
years and SIX months, and continue
to loan their money. During this
period it would double twice, max
ing the total accumulation in sixty
years and six months $515, 002 so.
The two men do not labor during
the last twenty years and two
months, and expend of their income
for living during that period S15,-
002 so, leaving to their heirs $780,
600. In forty years and four months
they earn by their labor So. 240, and
live twenty years and two months on
their money without labor. Subtract
the money earned by labor, q, $40,
and the remainder accumulated by
interest is SITS, 500. Now, not one
dollar of this $475,80O is earned by
the labor of these men. 1t is the
legal interest upon $24, 240. These
men live laboriously, and work for a
very moderate compensation. They
take only the legal rate of interest.
Neither do they enter into any spec
ulatlons.