The independent. [volume] (Lincoln, Neb.) 1902-1907, 1904-07-21
IN RE ROEBUCK.

I
criticises my article in The lndepen-
dent of June 8. He objects to my
statement that 1.-The rate OF interest
depends upon the supply OF and de-
mand for money" but he does not at
tempt to tell us what it does depend
on.
I It is always easy to get up hair
splitting argument that does not lead
where, and 1t seems to me that a
good part of Mr.. Roebuck's argument
is of that kind. Because money is
used to buy capital, or wealth, he
claims that interest is paid for the use
Of wealth, and not for the use OF mon
ey, in spite Of the fact that money is
actually loaned and the money lender
receives interest. Credit may be OBJ
tanned in other ways than by borrow
ing money; still great deal OF credit
is obtained in that way. and many
able writer's agree that the rate OF in
terest depends upon the supply OF and
demand for money.
On what else can it depend? Mr..
Roebuck claims that interest is really
paid for the use OF wealth; but he
surely does not claim that the rate of
interest depends upon the supply and
demand of wealth. Ii there is an in
creased demand for certain line of
goods, it is the price and not the
rate of interest that rises.
Mr. Roebuck says Money is SIM
ply a medium of exchange" 1t Is more
than that; it is a measure of values,
and as such should always be of the
same value; and he has not shown
that my proposal to supply the de-
mand at fixed rate of interest would
not have that effect He admits that
"the government being backed by the
wealth of the country, is gilt edge Sc
curity,' yet farther along he says:
Twill 1t not be found that when the
government goes into this sort OF
thing it's credit will fall, and the dol
lar bills 1t issues will not be consid-
cred sound and will not be of as
much value as they are today?"
That would happen if the govern
ment was to issue more money than
was needed, but 1t could not happen
with the plan l propose, because pri-
yate parties could lend money at any
rate of interest they could get, and
whenever there was less demand for
money than usual they would offer to
lend money at less than the govern
ment rate, and there would be less call
for government loans. Mr.. ROebuck
has not proved that my proposal
would depreciate the currency; conse-
Quently it is not fair to assume that
the evils resulting from a deprecated
currency would follow If my plan was
adopted JAS. S. PATTON.
Grimsby, Ont.
Technically, no doubt, interest
is payment for the use of wealth
whether capital or not-as distin-
guished from payment for the use of
land (rent), or the use of human en-
ergy (wages). But a little thought
will show that there is interest and
interest.
When hire horse and buggy for a
day and pay therefor the sum of S.,
part of that sum goes to reimburse the
livery stable keeper for his own or
hired service in caring for the horse,
keeping the buggy washed and oiled,
ETC.. but part of 1t is payment for his
Investment in the horse and buggy
and, therefore, interest" When
hire horse and cultivator to use In
working my garden, a similar state of
affairs exists.
So when | borrow SIS at the bank
or from q chattel mortgage shark
pay interest" for the use OF the S..
But the fundamental difference
comes In here: In either case re-
Rpecting the horse, and the buggy or
cultivator, these articles OF wealth are
subject to deterioration and decay,
When return them to their owner
after the days use Is over. they are
one day older and one day nearer final
dissolution. There must. In the very
nature OF things, come a time when
the horse will die: when the eutlya-
tor and buggy will so 10 the scrap
heap. So that the Interest" | pay for
use OF such articles OF wealth is really
the purchase price Of a temporary sale
OF the same.
Not so In tho case of borrowed mon
~. am not obliged 10 return the
specific coins | borrowed. but what |
do return must be Just as good. Just
o. young" aa those | received. Al
x..tff a..