308 PRINCIPLES OF RURAL ECONOMICS 



the lending of money is virtually the lending of tools or other 

 goods. When he lends his money he transfers that power to the 

 borrower, which is virtually the same as transferring the tools to 

 the borrower. When the borrower pays interest to the lender 

 he is, therefore, virtually paying for the use of tools. From this 

 point of view the case becomes almost identical with those 

 considered above, where no money intervened. 



But how does it happen that a tool or any productive agent 

 will sell to-day for less than the whole of its future product ? If a 

 certain tool will enable me to produce $10 a year more than 

 I could without it, and if it will last for a period of 10 years, 

 why should I not be willing to pay $100 for it ? If I do, then 

 the toolmaker gets in cash the whole future value of the tool, 

 and I get no interest. In the course of 10 years I merely get 

 back the principal, that is, the original price of the tool. Or, why 

 should the toolmaker be willing to sell such a tool for less than 

 $100? If he is willing to sell it for $90, and I am willing to 

 pay that for it, then he is willing that I should gain $10, that is, 

 $ i per year for waiting. That is interest, a very low rate to be 

 sure, but interest nevertheless. If I am unwilling to give $100 

 for such a tool, but insist upon getting it for something less than 

 this amount, then I am insisting on interest. Men generally act 

 in just this way, though some of them inconsistently disapprove 

 of interest (in theory) at the same time, their disapproval being 

 based upon a misunderstanding of the problem of interest. 



The reason why such a tool does not sell for $100, or why 

 any piece of capital will not sell for its whole future value, is 

 simply that men do not like to wait. They would rather have 

 something now than have the same thing or its exact equiv- 

 alent in the future. Since waiting is as necessary as working, 

 and since men do not like to wait any better than they like 

 to work, it follows that they must be paid for waiting, just as 

 surely as they must be paid for working. Waiting is involved 



