April 1G, 1921 
594 
Tht RURAL NEW-YORKER 
A style and size for every requirement 
Since 1832 more 
than 3 million 
STEWART 
Stoves and 
Ranges have been 
made and sold. 
PRICES HAVE BEEN REDUCED 
Get Your New Range NOW 
and be sure you get this old reliable make 
You take no chances, you make no mis¬ 
take when you buy a STEWART Range. For the 
past 89 years*, from Maine to California, they have been 
famous for GOOD SERVICE, PERFECT BAKING and 
LONG LIFE. In fact, many, many STEWART Cook Stoves that have 
been in use for 40 or 50 years are still in service. There are probably some 
right in your neighborhood. We get lots of letters like these— 
Blue Store, 
Columbia Co., N. Y. 
“The date on our STEWART stove is 
1859. It was originally the property of 
my wife’s grandmother. She had it from 
the time it was made. 
I have used for the past 34 years. Con¬ 
dition is good; lids slightly warped now. 
There have been no repairs required with 
the exception of about 20 years age I 
purchased some coal fixings. My wife 
says it is a good baker.” 
Yours truly, 
(Signed) GEORGE W. SMITH. 
Jamestown, N. Y. 
"I have a STEWART range that I am 
using every day and it looks as nicely as 
any up-to-date range would. It has been 
in our family for 57 years and was pat¬ 
ented Jan. 18, 1859; it has been in use 
every day all those years. 
If it ever wears out I shall buy a 
STEWART range.” 
(Signed) 
MRS. M. A. GIFFORD. 
89 YEARS of successful stove-making 
experience is built into every STEWART Range 
_that’s a mighty good guarantee that they are RIGHT in 
every respect—design, materials, construction and finish. They include 
every modern improvement, and are built to last a lifetime. 
STEWART Ranges are sold by leading 
Hardware, Furniture and Stove Stores in most every 
city and town in New York, New England, New Jersey and 
Pennsylvania. If you have any trouble finding one of them, please write us. 
A Primer of Economics 
By John J. Dillon 
Part XX 
What is interest? 
Interest is that part of the product of 
industry that goes to pay the capitalist 
for the use of capital. It is computed 
on a percentage of the capital value esti¬ 
mated in dollars and cents. 
It must be remembered that capital is 
the buildings, machinery, implements, raw 
material, labor, etc., that are necessary 
for production. The business man may 
provide these from his own resources for 
his own enterprise, or he may borrow the 
money of a capitalist to use in his busi¬ 
ness. Wh.n he uses his own capital he 
takes (he interest to himself. When he 
borrows the money to supply the capital, 
the interest goes to the lender. 
IIow is the rate of interest determined? 
The rate of interest on capital is fixed 
by the equalization of supply of capital 
to the demand for capital. We buy and 
sell the use of capital. The price is in¬ 
terest. and the price is fixed by the same 
general influences that fix the prices on 
potatoes and corn and other commodities. 
If the capital offered exceeds the demand 
for it, the interest will fall. If the de¬ 
mand exceeds the supply, rates will rise. 
This, however, implies that trade is open 
and supply and demand have free oppor¬ 
tunity to equalize each other. In our 
complicated affairs we know that influ¬ 
ences are at work to suspend the laws of 
trade, and under manipulations of credit 
the rate of interest, like other prices, is 
fixed by arbitrary power. 
Why was the interest rate high during 
and following the late war, when money 
was abundant and cheap? 
During the war the purchasing power 
of money was low. We said prices of 
commodities and of labor were high. We 
could have expressed the same thing by 
saying money was cheap. You could buy 
more money, so to speak, with a bushel 
of wheat, a dozen eggs or a pair of shoes 
than formerly. When all other things 
are high in price, money is cheap. Dur¬ 
ing the war a large part of the gold of 
the world came to us, and our Federal 
bank system issued more than three bil¬ 
lions of bank notes that circulated as 
money. Money was therefore plentiful 
and cheap. If horses were plentiful and 
cheap, we would be able to hire them for 
less money than when they are scarce 
and dear. Money was plentiful and 
cheap, but when we wanted to hire the 
use of it, that is. when we wanted to bor¬ 
row it. the cost of the use of it, that is 
the rate of interest for it, was higher 
than ever before. There was no gold in 
circulation anywhere; the world then 
and now, was and is on a credit basis. 
The demand for money was incessant to 
meet the expenses of the Government and 
to facilitate the business of the country, 
but the reserve banks were the only source 
of new supply ; and the money could reach 
the people only through the local banks 
which are members of the reserve district 
banks. This banking system had the 
power to increase the volume of money 
or to withhold it. It had the authority 
to fix the rate of interest, and while 
money was plentiful and cheap, interest 
was arbitrarily fixed at a high rate. 
Banking profits were correspondingly 
high. 
Is the rate of interest uniform in all 
places and in all industries? 
Many economic writers tell us that 
there is a single rate of interest for all 
industries. In a certain theoretical 
sense this is probably true. Interest is 
paid for the use of capital, for risk and 
for superintending the investing of it. 
The greater the risk the higher will be 
the interest rate. A long-term invest¬ 
ment usually secures a low rate, because 
it saves loss in passing from one invest¬ 
ment to another, and also avoids error 
and expense is supervision. The experi¬ 
enced capitalist first seeks safety in his 
loan ; second, he seeks a mobile security, 
so that if necessary lie can reconvert it 
into money; and. third, he seeks the 
highest rate of interest to be had with 
the first two conditions secured. The 
schemer and promoter of doubtful enter¬ 
prises. who promises an inducement of 
big profits on capital, limits himself for 
the most part to inexperienced small cap¬ 
italists, because experienced investors 
know that the high rate would be offered 
only because of the high risk. 
Is the capitalist entitled to interest? 
Socialists insist that the capitalist is not 
entitled to interest. In the Middle Ages 
the taking of interest was prohibited. 
Later it was admitted in certain circum¬ 
stances. and finally the State recognized 
the principle, and limited the rate that 
would he legally accepted, hut in many 
cases the restriction was and is now 
avoided. In call loans, which are merely 
loans that are due whenever the lender 
demands a return of the money, and 
which are made by banks for the accom¬ 
modation of traders or gamblers in the 
New York Stock Exchange, there is no 
legal limit to the rate of interest. It has 
gone as high as 30 per cent, according 
to the statement of Controller Williams 
of the T'nited States Government. Inter¬ 
est is certainly as fully justified as rent. 
Both have the legal and conventional sanc¬ 
tion of society and usage, but this phase 
of the subject will be discussed in another 
place. 
What is the annual interest bill of the 
United States? 
We have no very reliable figures. Prof. 
King cautions that his figures are subject 
to error, but estimates that for 1910 the 
total $30,529,500,000 income for the 
United States from all sources. $5,143.- 
900.000 would he about the portion to go 
for interest of lfi.8 per cent of the total 
income. 
consumer’s doi.lar 
‘‘When Mr. Dillon claims that at least 
75 cents of each consumer’s dollar could 
go or should go to the producer, he says 
what may be good in theory, but utterly 
fallacious in practice. The Standard Oil 
Company, with all its genius for organi¬ 
zation, cannot do that. 
“We have an illustration in Buffalo as 
to the distribution of produce direct from 
the farmer to the consumer. When the 
ordinance was passed to that effect the 
charge was made that the farmer would 
crowd the streets and cause congestion. 
The writer favored the ordinance and 
hoped for the best, and now, after a year, 
finds that the farmer still goes to the 
market; does not sell on the street, and 
seems to have neither time nor inclina¬ 
tion to do so.” F. C. M. 
Anything that is not good in practice 
cannot be sound in theory. It is easy, 
however, to get un an argument between 
men who mean different things, but who 
would agree perfectly when they start 
with the same premises. With a system 
by which tin* farmer through his coopera¬ 
tive organizations sells his goods to a local 
store, which in turn sells direct to the 
consumer, it seems reasonable enough 
that substantially 75 cents of the consum¬ 
er’s dollar could go to the producing in¬ 
terests. Twenty-five cents should pay 
the retailer. Of course, the producer 
would have his legitimate costs iu trans¬ 
portation and wholesaling, but he would 
have the whole process of wholesale mar¬ 
keting under his control, and unless he 
can work out a saving in this, there would 
be no justification of protest against the 
present system. In Paris and in other 
European cities the producer gets about 
80 cents of the consumer’s dollar.. Of 
course, he has some expense, that the 
speculators would also incur, if the work 
fell to them; but there is opportunity 
for saving between 80 cents and our 
present 35-cent dollar. 
While the Standard Oil Company is 
not a producer, but a speculative dis¬ 
tributor. it sells at wholesale to local 
distributors, about as we would have the 
co-operative organization sell to local 
distributing stores. The Standard Oil 
Company does not allow the retailer any¬ 
thing like 25 per cent of the cost of gaso¬ 
line and oil. 
The Buffalo experience is an argument 
for wholesale terminal city markets, and 
not against them. It was an attempt 
to induce farmers to peddle produce 
through the streets of the city. He has 
no time, and, as stated, no inclination for 
such traffic. It is too expensive an un¬ 
dertaking for him. When properly or¬ 
ganized and managed in the interest of 
the producer and consumer, a terminal 
market to receive ;.ud distribute whole¬ 
sale food products to local stores is the 
economic system of distribution. It is 
easy to confuse premises, but we think 
our friendly correspondent will agree 
with these conclusions as a whole. 
