The Wheeling daily intelligencer. [volume] (Wheeling, W. Va.) 1865-1903, 1872-07-20
THE POWER OF INTEREST.
How a ManMay become sRAch on
Small Beginnings. =

QRrom tho Boston TraVtller.)
The gradually increasing rate OF inter.
est should make people wary OF borrow
ing money for speculative purposes, and
especially Of hiring it for the purchase
Of unproductive property, or in the expec.
tation Of Of obtaining permanently high
rents. 1t Is the high rate Of interest which
every few years causes general breaking
up Of business, when property and pro.
ducts fall in prices. This also it is which
causes wealth gradually but steadily to
concentrate into the hands OF compare
lively n few persons in the community.
Take any series often, twenty, or thirty
years, or more, and the longer tho series
the more positive and conclusive becomes
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 few years,
tend TO such concentration Of wealth as
can not fail 10 be injurious to society, and
will ultimately so straiten the debtor class.
es as to necessitate to very great extent
the process Of wiping out old accounts and
beginning anew. Anew examples will be
sufficient to illustrate the great power OF
interest.
A man buys a house for which he pays
$4,000. He leases it and charges the
tenant seven per cent upon its cost, clear
Of insurance, taxes and repairs. The
rent is payable quarterly. A rate of in.
terest Of seven per cent per annum, paid
quarterly will accumulate sum equal
to the principal loaned or invested in
property in ten years. In 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
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 $1,270000, which sum
has been paid for seventy years' rents OF
one house worth $4,000. If, instead 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 quarterly, the money would &C.
cumulate precisely the same amount as
Improperly.
Take another illustration Of the power
Of interest. Two mechanics Just come of
age, aye good workmen and DESTROYS Of
becoming rich. Each is able to earn
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 a dollar day besides
their expenses 800 days in each year,
during forty years and four months
Their age is then 81 years and 4 months.
Each earns by labor $500 per year for 40
years, or, for the whole period, $12, 1870
together, $4,000. But the interest on
their returns, loaned halt yearly, for 9
period oil 40 years and 4 months, doubling
at seven per cent, paid and reinvested half
yearly, In 10 years and 4 months, amounts
TO Sl04,550 70, which added to the amount
OF $4,000 earned by their labor, makes
the aggregate, $12S,750 20. The interest
on the sum $24 200 earned by their labor
Is Sl04,550 70-more than four and o
quarter times greater than the amount
they have earned by their labor.
Suppose the two men to live twenty
years and two months longer, that is to
the age Of eighty'one years and six
months, and continue to loan their money.
During this period 1t would double twice,
making the total accumulation in sixty
years and six months, $515002 so. The
two men do not labor during the last
twenty years and two months, and eX.
pend of their income for living during
that period, $4,000 so, leaving to their
heirs 100000. In forty years and four
months they earn by their labor 1900,
and live twenty years and two months on
their money withoutlabor. Substract the
money earned by labor, $24 200, and the
remainder accumulated by interest is
$475,S00. Now, not one dollar Of this
SAFE, 800 is earned by the labor Of these
men. 1t is the legal interest upon 1884,
200 These men live laboriously and
work for very moderate compensation
They take only the legal rate OF interest
Neither do they enter into any speculs'
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