Evening star. [volume] (Washington, D.C.) 1854-1972, 1899-09-04
Prosperity and the Rate of Interest.
To the Editor Of The Evening Star:

Prosperity and the Rate of Interest.
| To the Editor Of The Evening Star:
A member of Congress in a recent inter-
view publish in your paper cited the low
| rate of interest at which money can be
borrowed an evidence of general pros
perity and a proof of an abundance of
| money in circulation I traverse both OF
| his conclusions and assert that the low
rate of interest prevailing indicates bust
ness prostration and a paucity Of circulat-
! ing money. In making this statement 1
am not unmindful of the boom that the
| iron and lumber interests are enjoying
through the present European demand, a
boom, however, that has had no influence
upon real estate and has not lifted one
cent higher the wages of the common la
borer and mechanic throughout the coun-
try, If except those who work in the
| iron and saw mills
1 invite attention first to the common ex-
perience of men that in times of prosperity
in this country interest has always been
high. and that whenever interest has been
high wages have been high, and that when
ever interest and wages have been high
money has been plentiful. Interest, like
wages, has always been higher in this
country than in Europe, and the fact that
interest and wages both go down as society
progresses is recognized by political econ
omiStS generally.
Next l invite attention to the truism that
in times Of prosperity and abundant money
all forms of property rising in value,
and as the rate of interest which will be
paid for the use of capital is determined
by the increase which the use Of capital
will bring through investment. then it is
plain that interest will be highest when
property Is rising and lowest when prop
erty is falling. Capital is but form of
labor, a representative of certain amount
of human exertion; labor stored up to be
released when needed to cooperate with
other labor, consumed just as labor is ex-
pended, and it is evident that interest and
labor rise and fall together and low inter-
est means low wages. If wages did not
fall when interest falls the Increment of
capital would be checked
Real estate and most forms of property
have become such insecure collateral for
the loaE Of money through falling prices
agricultural portions of our country and
accumulated in vast quantities in the great
financial centers. Money can be borrowed
upon real estate only at ruinously low val
uations. and at such valuations the COM
petition among capitalists to loan money
becomes very keen, and on such security
property is falling capital turns to more
ample securities, and competition for those
securities makes interest low.
1.-The low rate of interest instead of de-
noting financial strength and Industrial
prosperity are a gauge of increasing pros
tration. Large Accommodations of money in
financial centerS instead OF being caused
by the overflow of a healthful circulation,
or even proof of a sufficient circulation.
are unmistakable evidence of a congested
condition caused by decreasing and in
sufficient circulation The readiness with
which government bonds bearing a low
rate of interest are taken is a melancholy
evidence of the Frustrated condition to
which industry and trade have been re-
duced."
1 have quoted from the writings of a
man whom John Sherman describes as 1.-The
greatest metallist in the United States"
CRANDAL MACKEY.
September 1. 1899.