Financial interest

“ By empowering such an authority to buy the companies out in full, with money borrowed at 3 or 31⁄2 per cent., we should come into possession of their works at an annual charge for interest, less, by nearly two-fifths, than our present annual payment to the companies ”

“ Interest is determined by the amount of capital seeking investment in loans, relative to the demand, and in a time of relative contraction of the volume of money, and consequent falling prices, will, as a rule, be low, since there is less inducement for men to borrow capital to engage in business, and more men wishing to lend. ”

“ You will see immense sums brought to light which are at present yielding nothing, and which would be gladly exchanged for productive securities bearing annual interest, when once it is felt that the payment of that interest is certain, and that the capital will not be endangered. ”

“ With the third method a permanent increase is secured in the capital funds available for use in the business. Financial policy, governed by the needs of the business and its markets, will always dictate the method to be used for extinguishing or contracting a debt. ”

“ The capital of those who live on the interest of their own fortunes, has generally sought and found some fixed investment, such as the public funds, mortgages, or the bonds of public companies, which investment, except under peculiar temptations or necessities, is not changed.
§ 3.⁠Fluctuations in the rate of interest arise from variations either in the demand for loans, or in the supply. The supply is liable to variation, though less so than the demand. ”

“ I've practically no capital to enlarge the business, and I don't care to mortgage what I have and pay a high rate of interest when, just at the critical moment, we might have a commercial crisis and I would then lose everything. ”

“ If you have to borrow money to complete or perfect some transaction or business deal, or to carry you through, or tide yourself over some delay, you can always get it at the regular rate of interest, provided you have reputation, and security. ”

“ The undying body in which the particular things are tissues absolutely needs to come into view. The very mention of a problem of interest—of the percentage of itself that a fund of a given amount can annually earn—puts before us at once the permanent entity, capital, and the problems relating to it. ”

“ If life-incomes were assessed at three-fourths of their amount, the profits of business, after deducting interest on capital, should not only he assessed at three- fourths, but should pay, on that assessment, a lower rate. ”

“ The credit, which is rendered as secure as possible in all its stages by the accumulating securities of the drawer, acceptor, and endorsers of a bill of exchange, brings capital into activity,—it carries it directly to those channels in which it may be profitably employed,—it conducts it to those channels by a systematic mode of payment for its use, which we call interest, or discount;—and it therefore carries forward accumulation to its highest point of productiveness. ”

“ Under the operation of a shrinkage in the volume of money this enormous mass of borrowers, at the maturity of their respective debts, though nominally paying no more than the amount borrowed, with interest, are, in reality, in the amount of the principal alone, returning a percentage of value greater than they received—more than in equity they contracted to pay and oftentimes more, in substance, than they profited by the loan. ”

“ The money in the hands of lenders, in common with all other money, will be enhanced in value, that is, there will be a greater amount of real capital seeking borrowers; while the real capital wanted by borrowers will be only the same as before, and the money amount less: the rate of interest, therefore, will tend to fall. ”

“ Those men in business who call themselves financiers say that money is "worth" 6 per cent, or 5 per cent, or some other per cent, and that if a business has one hundred thousand dollars invested in it, the man who made the investment is entitled to charge an interest payment on the money, because, if instead of putting that money into the business he had put it into a savings bank or into certain securities, he could have a certain fixed return. ”

“ At present, they do not seek investment outside of corporate limits, and, of course, the money they have been intrusted with, must be about all invested, and cannot be called idle money, or there could be no interest paid to its owners. ”

“ Nor is it only our revenue from duties that would be increased to an extent sufficient of itself, in a few years, to pay the principal and interest of the debt incurred in the construction of these works, but our internal revenue, also, would be prodigiously augmented. ”

“ The disposable capital deposited in banks, together with the funds belonging to those who, either from necessity or preference, live upon the interest of their property, constitute the general loan fund of the country ”

“ Next, my Remedy will benefit that great middle class whose savings go to make up the billions in the savings-banks, national banks, trust and insurance companies, which are used by the "System" to secure for themselves a hundred, a thousand, and ten thousand per cent. interest on their capital, while the owners of these billions must be content with two and a half to four per cent. per annum ”

“ The net output thus obtained is obviously for each industry the only fund from which first, wages, salaries, interest on capital, rent, royalties and profits are, or can be, paid, and secondly, taxes, rates, depreciation, advertisement and sales expenses. ”

“ The taxing of evidences of debt would limit borrowing and would return to the people part of the interest fund. The rich would be compelled to invest their money in productive enterprises, where it would be of use and would take risks, leading to its wider distribution. ”

“ On the other hand, the capital owned by persons who prefer lending it at interest, or whose avocations prevent them from personally superintending its employment, may be short of the habitual demand for loans. It may be in great part absorbed by the investments afforded by the public debt and by mortgages, and the remainder may not be sufficient to supply the wants of commerce. ”

“ The chief work of money and credit is done in, and because of, "transition periods." Assume a normal equilibrium accomplished, and you have little trading left to do. It will still be necessary, if you have the division of labor, and private enterprise, for goods to pass through as many different hands as there are different independent enterprisers in the stages of production, and on, through merchants, to the consumer. It will still be necessary to pay wages, rents, dividends and interest. ”

“ The preceding account will, I fancy, help to shew what is practicable, taking things as they are, in borrowing money for public uses. It proves, that the nation loses greatly by the low price of all capitals bearing a higher interest than 3 per cent. ”

“ Eliminating from interest the element of insurance, and regarding only interest proper, or the return for the use of capital, is it not a general truth that interest is high where and when wages are high, and low where and when wages are low? ”

“ We note, further, that the successful men of business pay as high prices for materials and as high rates of interest for the use of capital, if the scale of their transactions and the greater security of payment be taken, as it should be, into account. ”

“ The government obtained a large sum at the time, with the necessity of only paying a small sum every year for interest; investors obtained a remunerative use for their money, and if they should need the principal, some one else was always ready to pay its value to them for the sake of receiving the interest. ”

“ A capital lent at interest may, in this manner, be considered as an assignment, from the lender to the borrower, of a certain considerable portion of the annual produce, upon condition that the borrower in return shall, during the continuation of the loan, annually assign to the lender a small portion, called the interest ”

“ The rate of interest, which the capitalist will demand, will depend upon a variety of circumstances, and especially upon the risk of loss attendant upon the loan-in other words, upon the character of the security offered by the borrower for the payment of the loan. ”

“ Again: he, who sells upon credit, asks a price, for what he sells, equivalent to the principal and interest of his money, for the time he is to be kept out of it. Therefore, he who buys upon credit, pays interest for what he buys; and, he who pays ready money, might let that money out to use. So, that he who possesses any thing he has bought, pays interest for the use of it. ”

“ This property would all be needed by the organized consumers who, with their continually accumulating fund from pooling the savings of profit, interest and rent, even on a comparatively small scale, would always be able to buy. ”

“ As to internal loans, on which, after all, we must chiefly depend, there are two things that operate against them, to any [Pg 236] large amount; the want of a sufficient number of men, with sufficient moneyed capitals to lend the sums required, and the want of confidence in those who are able to lend, to make them willing to part with their money. It may be added, that they can employ it to greater advantage in traffic, than by merely lending it on interest. ”

“ It is clear, that when the rate of interest is increased, the gains of money-lenders are augmented, and the money gained will buy a greater quantity of property and [Pg 90] labor. The increased gains of the lender must be paid by the borrowers, by the productions of their own or of others' labor. ”

“ Let us next examine the principles which prevent the monied men from committing extortions, and which oblige them to lend their money for that rate of interest which is in proportion to the profits upon trade and industry. ”

“ Again, the thing to which the value of debts is referred may be a thing quite different from the goods borrowed, and with the growth of the money economy and the use of the interest contract, money comes more and more to be used as the standard. ”

“ They shall convert my said residue of property into money, which they shall then invest in safe securities; the capital thus secured shall constitute a fund, the interest accruing from which shall be annually awarded in prizes to those persons who shall have contributed most materially to benefit mankind during the year immediately preceding. ”

“ This Proposition better pleas’d those wealthy Citizens, than if we had plaid the Hucksters with our Commodities, wherefore two of the most wealthy and greatest account amongst them bought all, paying us ready money without a penny Credit. After that every man had received his share or dividend proportionably, and according to a general Agreement; we divided our selves into parties as Interest or Inclination lead us. ”

“ He shall see, too, that our first care has been your sister's interests. Six-sixteenths of the profits for fifty years are to be hers; three each we reserve for ourselves; the remaining four will form a reserve fund for casualties, a capital for future development, and a sum at interest to pay superannuations, with some other objects that you will find roughly jotted down here, for which, however, they will amply suffice. ”

“ In a money economy those who have cash use it to pay their bills or settle their accounts.
Those who buy on credit pay interest to money lenders. The money lenders, later the bankers, make their profits by helping others to spend beyond their own means. ”

“ The economic financial incubuses you have created now control your lives, from the day of your conception, until long after your death. With your money they directly control your most essential industries; and indirectly hold ownership through their loans, and mortgages, of your business, your homes, farms, stock, lands. ”

“ Interest on Partners’ Loans.—Careful differentiation must be made between interest on partners’ capitals and on partners’ loans. If a loan is secured from outside parties, its interest cost is a business expense, to be taken into account before determining net profits. ”

“ Their own importance has vastly grown as their companies' assets have piled up. A man with $400,000,000 or $500,000,000 under his control, with an annual income of $60,000,000 requiring investment, has become a financial giant. ”

“ To the credit of the account he pays in such sums as he may not have occasion to use, and interest is charged or credited upon the daily balance, as the case may be. From the facility which these Cash Credits give to all the small transactions of the country, and from the opportunities which they afford to persons who begin business with little or no capital but their character to employ profitably the minutest products of their industry, it cannot be doubted that the most important advantages are derived to the whole community. ”

“ We, in event, literally sold them for nothing, and are obliged to pay their present holders an annual sum for keeping them in possession; for many of us have, or must soon pay for the interest of them, a sum nearly or quite equal to the money given to purchase them, and still be annually taxed to discharge the interest and principal of said securities. ”

“ It must be remembered, too, that theoretically all the funds on hand are supposed to bring interest, while in practice a considerable part must always remain unemployed, so that the average rate realized is less than the current rate of interest. ”

“ And the three parts into which profit may be considered as resolving itself, may be described respectively as interest, insurance, and wages of superintendence.
§ 2.⁠The lowest rate of profit which can permanently exist, is that which is barely adequate, at the given place and time, to afford an equivalent for the abstinence, risk, and exertion implied in the employment of capital. From the gross profit, has first to be deducted as much as will form a fund sufficient on the average to cover all losses incident to the employment. ”