The Meaning of "Interest"
in Political Economy

Walter G. Stewart

[Reprinted from Land and Freedom, November-December 1939]

As to terms employed in presentation of the fiscal measure, we recognize the practical usefulness in "A Single Tax on Land Values" with its long-established meaning; and we must all recognize the frequent need of using "land rent" (or ground-rent), because of badly confused ordinary usage of the word "rent," and of similarly using "rental values of land" instead of the less specific scientific term "land values." All this aims simply at clarifying intended meanings.

But how can we present "interest" as a scientific term meaning "all returns for the use of capital, and not merely those that pass from the borrower to the lender" (its meaning "as commonly used" by Henry George in Progress and Poverty)? For "all returns for the use of capital" includes returns which go neither to the borrower or to the lender even the vast "returns" which are obviously distributed to all by reduced labor costs and resulting in reduced selling prices of products. Such returns have no connection whatever with "interest as commonly used" and do not go "exclusively to capital." Therefore their inclusion makes the term inherently as unclear and unscientific as the term "profits" obviously is. Certainly presenting it as essential to the basic "philosophy of Henry George" is a serious "defect of presentation." He never publicly mentioned interest himself in twenty years of teaching, and himself demonstrated that the increased production due to ordinary using of tools benefits all consumers equally regardless of ownership while above-average using entitles high wages to such users, not interest to owners.

And does it not discredit that philosophy to tie to it the belief and warning that normally provident and prosperous human beings will not save wealth merely to insure against future needs and will not lend it for use as capital (instead of suffering the waste of it which nature decrees for non-use) unless borrowers guarantee return of more than is loaned? "Business men" are naturally against increased outgo to mere lenders, and "scholars" resent inconsiderate pleading.

Followers of Henry George are individually responsible for correcting "defects in presentation" of his basic philosophy.

Even captious objecting is better than blind following which at best is fanatical.