FOREST FINAMCE 19 



On the other hand, a man letting out, in 1898, 10,000 acres of land and 

 retaining them in 1908 in equal productiyeness, is absolutely as wealthy now 

 as before; relatively wealthier than before, although he was allowed to con- 

 sume all interest or revenue obtained from the lease. 



PARAGRAPH VIM.— INTEREST. 



I. — Definitions. 



A. — Interest (gross) is the price paid for the use of capital. 



B. — As freight is the price of "site-difference", so is interest the pric* 



of "time-difierence". 

 C. — Net interest is the difference of a capital's ''earning power" at the 

 beginning and at the end of a season plus the value of the product 

 in the meantime produced by capital and not by labor. 

 D. — Interest may mean either the net or the gross product of capital, 



i. e., of any object having earning power. 

 E. — ^The price of the use of labor equals the value (of product, or of 

 capital) which the employer hopes to create thereby. 



The price of the use of capital equals the value (of product, 

 or of new capital) which the employer hopes to create thereby. 

 F. — Interest is the product of capital; its price is the price of the product! 

 In loans of capital, it is usual to loan the ''measure of capital" (gold) 

 and to turn over to the owner thereof the "measure of the product" 

 (gold.) 

 The borrower may use a loan to pay WAGES and in that case he ACT- 

 UALLY borrows LABOR, reconverting "ACCUMULATED" labor into "RUN- 

 NING" labor. 

 II. — Gross Interest on Money Loans. 



This is the product of capital employed in another man's production. 

 It consists of the following parts: — 



a. The true, net, actual, clear yield of capital "(Ifa)". 



b. "Risk quota", or remuneration for risk taken, or capital secretly 



repaid, or capital apt to be consumed in the course of the pro- 

 duction. This quota is meant to rebuild that much of the origina 

 capital as is liable to incidental destruction "(fb)". 



c. Remuneration for labor, financial sagacity and discomforts requiredl 

 from the owner in harvesting the yield of capital "(fc)". 



d. Quota which must be saved and added to the original in order to 



allow the owner to remain equally wealthy whilst the purchasing 

 power of money declines "(^d)". 

 The investing capitalist invariably over-estimates the true or net yields 

 of his investment (1[a) and proceeds to consume (Ifb) and (Hd). 



Few families remain equally "wealthy" in the long run excepting those 

 owning entailed real estate. 



in. — Interest on merely natural investments (farms) consists of "(Ifa)" and 

 of "(He)". The risk "(Kb)" is little smce the soil, at least, is saf*. 

 There is no "(Ifd)". 



