The evening times. [volume] (Grand Forks, N.D.) 1906-1914, 1913-05-22
SD MAY %. 1913.
WHAT Is MONEY WORTH:

Does anyone know what money is
worth? We put various prices on IT,
but answers to the question: What Is
money worth would doubtless be
wonderful in their variety.
There are a few people who believe
that 1t is a sin to charge interest Tor
the use of money Nothing that Is
natural, and useful and beneficial is
wrong, and it is natural, useful and
beneficial thai interest should be
charged on loaned money. The pro-
ductive years Of the normal man are
limited, hence it is the part of second
wisdom to prepare in youth for old
age, to accumulate in youth and
strength by industry and thrift for
the later years Of life. Accidents may
happen. illness may come, the
wise man will make provision for the
proverbial rainy day. The earnings
Of the man whose life is to be we'll
ordered must, therefore. during the
years Of his activity, be greater than
his current consumption. He must ac-
cumulate a little surplus.
What shall be done with the sur
plus? Three courses are open to him.
He may use the money, or the things
for which 1t may be exchanged, with
which to enlarge his operations, and
thus make 1t yield him a profit. Or
he may permit some other person to
use 1t. Or he may permit it to lie
unused. It is not good for society, and
at IL certainly not profitable for the
Individual hat wealth. no matter in
what form. shall lie idle and unpro-
ductive. 1t is evident, therefore, that
In most cases this accumulated wealth
will be used. md it should be used.
The question is: Who shall use it, and
on what terms? II the owner uses It,.
its use is worth to him just what it
enables him to earn more than he
could earn without it. obviously it is
this which fixes the price at which
he will permit others to use it. If 9TH
ers are willing to pay a little more
than this price for it, he will let them
have 1t. If not. he will Use It himself.
It is that element which fixey the rate
Of interest.
Interest rates vary. In this state
the legal interest rate is twelve per
cent. and a good deal Of money is loan
cd at hat figure. At the same time
millions of dollars are loaned at two
per cent. What makes the difference,
and what is the use Of money actually
worth?
1t will be found on analysis that in
oil loans there are involved several
elements, among them being the pos
sible risk of n%on-payment, the care of
the loan, to insure that the security
ls always ample. the cost of collecting
interest. and the time which the loan
b to run, which involves the length
Of time of idleness between loans. The
risk attendant on loans is affected by
the stability of governments. the
prosperity Of nations, communities and
II dividuals. individual honesty, and a
number of other factors. That risk
must be paid for according to the de-
gree in which 1t exists in any partic-
ular loan. 1t costs something to trans
act the business attendant on making
loans, collecting interest and guarding
securities. That cost is included in
the interest rate. And the short time
o must carry a higher rate than
the long time loan because of the
probability that money invested in
such loans will be idle for a greater
part of the time.
All Of t~hesefactors it will be seen,
are outside Of the real value of the
use of the money itself. and a part
of h interest, when the rate is high.
81 not for the actual use of the loaned
capital, but for the risk and the serv-
ice which go with the making of the
loan. These additional elements are
least conspicuous in connection with
such loans as those on long time gov
eminent bonds. There the risk is re-
duced to the minimum. For all prac-
teal purposes it is eliminated. The
cost Of caring for the investment is
practically nothing, and the element
Of idle time almost disappears. A
pretty fair index, therefore. of the
r value Of money, aside from any
Of the features mentioned. is. the cur
rent price Of long time government
bonds. AS a rule interest rates which
exceed the earnings of such securities
are based on conditions. perfectly
sound and proper, but which are in
addition to the real value Of the money
itself.