No, certainly, if the borrower puts the bag of one hundred pounds on the shelf.  In such a case, neither the plane nor the sack of corn would reproduce themselves.  But it is not for the sake of leaving the money in the bag, nor the plane on the hook, that they are borrowed.  The plane is borrowed to be used, or the money to procure a plane.  And if it is clearly proved that this tool enables the borrower to obtain profits which he would not have made without it, if it is proved that the lender has renounced creating for himself this excess of profits, we may understand how the stipulation of a part of this excess of profits in favour of the lender, is equitable and lawful.

Ignorance of the true part which cash plays in human transactions, is the source of the most fatal errors.  I intend devoting an entire pamphlet to this subject.  From what we may infer from the writings of M. Proudhon, that which has led him to think that gratuitous credit was a logical and definite consequence of social progress, is the observation of the phenomenon which shows a decreasing interest, almost in direct proportion to the rate of civilisation.  In barbarous times it is, in fact, cent, per cent., and more.  Then it descends to eighty, sixty, fifty, forty, twenty, ten, eight, five, four, and three per cent.  In Holland, it has even been as low as two per cent.  Hence it is concluded, that “in proportion as society comes to perfection, it will descend to zero by the time civilisation is complete.  In other words, that which characterises social perfection is the gratuitousness of credit.  When, therefore, we shall have abolished interest, we shall have reached the last step of progress.”  This is mere sophistry, and as such false arguing may contribute to render popular the unjust, dangerous, and destructive dogma, that credit should be gratuitous, by representing it as coincident with social perfection, with the reader’s permission I will examine in a few words this new view of the question.

What is interest?  It is the service rendered, after a free bargain, by the borrower to the lender, in remuneration for the service he has received by the loan.  By what law is the rate of these remunerative services established?  By the general law which regulates the equivalent of all services; that is, by the law of supply and demand.

The more easily a thing is procured, the smaller is the service rendered by yielding it or lending it.  The man who gives me a glass of water in the Pyrenees, does not render me so great a service as he who allows me one in the desert of Sahara.  If there are many planes, sacks of corn, or houses, in a country, the use of them is obtained, other things being equal, on more favourable conditions than if they were few; for the simple reason, that the lender renders in this case a smaller relative service.

It is not surprising, therefore, that the more abundant capitals are, the lower is the interest.