Comments on the Theory of Interest
Ray H. Taber
[Reprinted from Land and Freedom, May-June
Permit me to offer a word of comment on Gaston Haxo's "Theory of
Capital is a vital necessity of modern business.
In large scale business, borrowed capital is the rule rather than the
exception, as evidenced by the billions of security values listed in
our Stock Exchanges, Insurance Companies, Building and Loan
By the promise of Interest, a million trickles of small savings
accounts are now induced to come out of hiding and flow into one vast
pool where, under experienced management, they accept the risks of
industrial activity and assist in providing work for our people.
Whether we call this promise "Interest" or "Insurance"
or some other name is of no importance. But the principle, that when
one individual entrusts his funds to another, he accepts a risk of
loss, is of the greatest importance. And unless there is an adequate
inducement to compensate for this risk, only a lunatic would consider
Any attempt to deny this compensation for risk, dams every one of
these capital trickles at the source. The pool of capital funds
available for the encouragement of industrial enterprise dries up.
Every form of business dependent on borrowed capital would tend to
degenerate to what each individual manager could provide from his own
resources. Conditions of unemployment would be indescribable.