The advocate., 1892-01-06
Is INTEREST A TAX ON PRODUCTIVE
INDUSTRY

TO the Editor Of THE ADVOCATE.

Cff1Qh2c, over inc signature Va Ek@uOlS
Schletzbaum, in which Mr.. s. seems to
attempt to found new school Of politi-
cal economy, one of the tenets of which
Is that interest is "no more tax on pro-
ductive industry than are the wages paid
q farm hand tax on the productive in
dustry Of farming"
In formulating the above proposition,
or tenet, Mr.. s. loses sight OF the fact
that it is only to the extent that the
proprietor farmer himself works that he
is factor in productive industry" and
that 80 far as the farm laborer Is con-
cerned, the farmer who hires him is the
personifcation of interest and profit, be-
cause the amount such laborer lacks Of
receiving the total product of his labor,
Is just the sum taken by the farmer as
interest and profit upon the money in
vested In the land, stock, tools and ma
chinery.
The standard and accepted theories Of
social and political economy teach and
hold that the three factors that conUpire
to rob labor of a goodly portion Of It's
product are rent, interest and profit, but
Mr.. s. now gravely assures US that so
far as interest Is concerned, this is an en-
tire mistake, interest being In no sense
% tax on productive industry" ReCOg-
nlzlng capital or stored labor as an estab-
lIshed factor In productive industries, 1t
may, in fairness to Mr.. s., be stated that
his proposition is but half truth, or q
truth but half stated, as follows: Elimi-
mating from the problem all resemblance
to fictitious capital, such as wsteFed
stock or over capitalization, interest,
while tax upon productive industry, Is
not an oppressive, or unfair tax, under
the present system, so long as Its rate Is
not such as 20 take an undue, or unfair
proportion OF the joint products OF CAPT
tai and labor.
II is here that Mr.. S. errs in his con-
tention. He does not Rpprehend that the
fight the people are waglng Is not so
much against the factor interest, per Sc,
as 1t is against the rate of interest, or
usury.
Political economists teach US that they
have ascertalned from q carefully kept
set Of computations that civivilized ma
tions increase their wealth In a certain
given ratio per annum or decade. This
increase In national wealth Is called by
political economists, the residual incre-
ment." The census discloses the fact
that the United States has increased Its
net wealth or residual increment from
1870 to 1890, at the rate Of A per cent. a
year from 1870 to 1880, and then upon the
gross amount existing in 1880, at the
rate again Of 4 per cent. from 1880 to
1890, being equal to 95 per cent. for the
twenty years, or nearly double. This
net increase in wealth, or residual incre-
ment constitutes and comprises the net
earnings Of capital, or money, and the
net savings Of labor. This being the
case it remains an lncontrovertable fact
that II the rate Of interest, year by year,
for the last past twenty years has been A
per cent, or equal to the net increase in
national wealth, capital or money has alb
sorbed the total product Of the labor Of
the nation, while labor has received for
Its efforts "a bare subsistence" If the
rate Of interest has been more than 4 per
cent, capital or money has not only alb
.o.hnd A. N Aokal ma y,ro1uok ~ kha ma