Grand Forks herald. [volume] (Grand Forks, N.D.) 1916-1955, 1921-12-29

: THURSDAY EVENING, CEN 90. 1921.
CAPITAL AND INTEREST.
a A correspondent who shares with Henry Ford
the notion that the owners of railroad stocks are
not entitled to dividends goes a step farther than
Mr.. Ford, and denounces the whole system Of cap
Hal and interest as the sum of all evils, the thing
which is responsible for all the economic ills which
aFlict humanity. The correspondent and Mr.. Ford
are in agreement as to railway dividends, but Mr..
Ford shows no inclination to extend his theory to
stock in the Ford automobile company. In this the
correspondent is the more logical of the two, for the
principle, if admitted, is OF universal application.
If railway stocks are not entitled to dividends,
neither are returns from any other form Of invest
fnent permissible, and the whole theory of the pri-
7ate ownership of property falls to the ground.
Inasmuch as the right Of the individual to own alb
solutely the PROPERTY which he has created or hon
estly acquired has been recognized since the begin
ming of time, and inasrluch as every system based
on a denial Of that right which has ever been at
tempted has failed, it seems that theories now pro-
pounded in denial of the right at least merit careful
inspection.
What is a railway stock certificate? Merely
On evidence that someone has applied his interest
in certain property to the building and operation Of
a railroad. A share of stock in a railroad is Just
Ike a share of stock in any other business enter
prise. 1t represents the application of certain prop
erty to a specific form OF enterprise.
/ What is interest? Whether called interest,
dividends, earnings, or what not, the thing is the
same. 1t is that which is received for the use OF
property. Ii there were no earnings there would
be no property beyond what is necessary for the
mere subsistence Of the individual. The primitive
man who, by means of industry, thrift and ingenui-
y had provided himself with a surplus stock of pro-
visions or a better set Of tools than his neighbors
had, was entitled to compensation for them when
he permitted them to use the products of his labors.
The use of his surplus was a benefit to them. The
amount of payment was fairly a matter of agree
rnent. That principle applies through the whole
realm of economies. Without it there would be no
civilization, no progress.
There is a curious oversight in the arguments
OF those who denounce the capitalistic system. They
object to the payment of earnings to the owners of
capital. They seem to have no objection to the in
vcstr1ent of capital itself. Presumably there is no
objection to having capital left invested in rail-
roads. But its owners must receive no compensa-
ton therefor. On the same principle the manu-
facturer may continue to own his factory and the
farmer his farm, provided that their ownership
Yields them no profits. But if the collection of divi-
bends, or interest, or earnings, were eliminated,
there would be no further investment in anything.
No more railroads would be built, no more fac
tories erected, no more farms improved. All prog
ress would cease.
The argument that if twelve per cent interest
IS wrong eight per cent or any other sum is also
wrong, the degree of wrongness depending merely
on the rate, is also unsound. Going back again to
primitive man, the huntsman returning from the
chase with more 1000 thar1 ne needed might trade
apart of his supply to his neighbor who had none,
but who had a surplus of arrows. In establishing
a basis of exchange the average time required to
make the arrows and to secure food would be taken
into account. On that basis so many arrows would
be given for SO much meat, and the exchange would
be entirely equitable. But the huntsman, being
avaricious, and, knowing that there was no more
meat to be had soon, might seek to take advantage
This neighbors hunger and to obtain an exorbitant
price for his goods. There the tribe might proper
y step in and prohibit such an act Of %extortion.
Prohibition of extortion would not imply that no
Compensation whatever should be received for the
property. Modem society properly permits the
collections Of interest which, under all the circum-
stances, IS deemed fair and reasonable. With equal
propriety it seeks to prevent ~extortion.