Year: 1873

Wu1cm We GmIH ene Prtcc Q


Money.


The study Of the subject of interest


cospnunIy styled the price of money


more correctly styled the price Of capital


is cf practical Importance both to com


mcrcial and agricultural communities
While political economists, from serie


of premises generally stated, have de


duced a few general conclusions, tendins


to show that, other things being equal


interest will be high, when the risk L


great, and low, when the risk Is smsll


that IL win be high when the profit Of
capital is great; and low, whsn the profit
Of capital Is small; that both of these


mutually affect each other within certain


limits; that Is, when profit Is great and


risk y great, interest viii be very high,
and when profit is low and risk is great
there viii be no loaning whatever, it


behoovcs the people to consider the ques-
ton less theoretically, or il theoretically,
none the less practically.


TIE THING ITSELF.


Just as there are circumstances which
regulate the rate of wages, so there are
circumstances which regulate the rate
Of interest. For illustration of this we
might take the case oe a mechanic. His
power to accomplish a given result in
his line of business is dependent upon
muscular force and skill BY the one,
he excrts mere brute force; by the
Other, he l. enabled to avail himself Of
the 'use of natural agents" His LABOR
Of the first kind is scarcely productive at
all; bat If he be deprived of the use of
capitsl, his labor is necessarily confined
10 the mere exercise Of muscular force.
IL he has no tools, he can in no wise
avail himself either Of the skill, with
which God has endowed him, and which
he has measurably perfected by practice,
or the use of the natural agents with
which he is acquainted. But let him
have the use of shop and tools sufficient
10 embark in business, and be can at
once avail himself of his skill. His Ia
Dor becomes more productive that is, he
will be able in given length of time to
create a far greater amount of value
than before. If his simple labor were
worth one dollar per day, his labor and
skill will now be worth double that
amount. In other words the capital
which he uses has doubled his wages.
But the borrowing Of shops, tools and
materials, is not the ordinary way in
which capital is borrowed. 1t is more
convenient, and more in use, for him
VINO wishes tn borrow capital, to borrow
it in the form of money, which he in
stantly invests in that kind of capital
which his business and occupation de-
msnd. Wherefore it is, that we common
" say. CONTRACTS of this kind are esti-
mated in money" 1t is possible for the
laborer to derive great benefit from the
loan of money; it enables him to employ
his skill, and count his profit from the
three several sources of labor, skill and
capital. Hence money lending is not an
odious business. If there were no mon
ey lenders, taere could be no money bor-
rowsrs, and the mechanic in this case
would suffer the worse. Nor should any
man be expected to lend his money for
the simple accommodation of the borrow
er. The maxim Of the Greek philoso-
pher, who taught that nothing should be
given for the use Of money, because it
was not value, but representative Of
value, and possessed no power in itself of
increase. is but refined theory and too
unjust to be practical. All that can be
said in favor of any sort of exchange is,
that one benefits himself, while he bene-
fits another. The lending is honorable,
and the borrowing is honorable. The
transaction per Sc Ia not Objectionable,
bat no one can deny that, while the bor-
rover may be indolent and profigate, the
lender may be oppressive. tyranical and
avaricious and from this consideration
of he 1,ing itself, that is, the transaction
of lending. we come to consider


THE PRICE OF LENDING.


The rate Of interest is affected by va
riety Of causes, among which we may
mention az prominent, the risk of lend
ing, the convenience Of investment, the
profit of capital, and the freedom of cap
ital No man will have the imprudence
to lead his money to an individual who
is renuied TO be fraudulent, indolent and
proAisate, There Is certain amount Of
risk in lending it to any one. The-lend-
. -sre--ssnghf robppahtfor this risk, and
~ greater the risk the more. as gen
eral rule, has he right to demand
Thus the danger Of tho sea being greater |
than the danger of the land, tho rate of
maritime insurance exceeds that of
land insurance. Thus it is that many
Of the governments Of South America
can scarcely borrow money at any rate
Of interest; while The government of
Great Britain borrows freely at three and
four per cent. These South American
governments are unstable. aud subject
70 revolutionary convulsions. The pub.
lie confidence Ia the solidity, perma.