306 PRINCIPLES OF RURAL ECONOMICS 



making the tool, then there is no real net advantage in making 

 the tooL The apparent income from its use is not a real income 

 since it only pays off the principal. But if the total apparent 

 income from the tool is greater than the quantity which might 

 have been produced by the time and labor spent in making it, 

 there is a real net advantage in making the tool. This surplus 

 is, in other words, the real increase in production resulting from 

 the use of the tool, and this surplus alone is interest. 



If, instead of using the tool himself, the owner hires it to some 

 one else, the distinction between wages and interest becomes a 

 little clearer, but is not yet as clear as it might be. In so far 

 as the income which the owner receives only reimburses him 

 for the time which he spent in making the tool, it is wages, or 

 deferred wages, to be perfectly accurate. If the total income is 

 more than sufficient to reimburse him for his time, or to give 

 him the quantity of goods which he might have produced with 

 the time and labor spent upon the tool, this surplus is interest. 

 If, instead of making tools himself, the owner hires other men 

 to make them for him, and then hires these tools to other men, it 

 is clear that he gets no interest from his tools unless his receipts 

 are more than sufficient to reimburse him for the wages he has 

 paid out to his own workmen. Or again, if in the making of 

 the tools he has incurred other expenses than wages, he must 

 be reimbursed for all these expenses before he can be said to 

 get any interest. All the surplus would be interest. 



Let us now consider another case. Suppose that instead of 

 hiring men to make tools for him and then hiring the tools to 

 some one else, he buys them outright of the man who made them 

 and then uses them himself. Buying them outright of the man 

 who makes them probably means paying outright a sufficient 

 sum to cover all the costs of production, including wages. Un- 

 less each tool enables him to add to his production, over and 

 above what he could produce without it, enough to more than 



