l82 INSTEAD OF A BOOK. "J. 'I know nothing of the sort; but I do know that if I were to lend you my plane for a year, it would be giving it to you. To tell you the truth, that was not what I made it for.'
"W. 'Very well, then; I ask you to do me a service; what service do you ask me in return?'
"J. 'First, then, in a year the plane will be done for. You must therefore give me another exactly like it.'
"W. 'That is perfectly just. I submit to these conditions. I think you must be satisfied with this, and can require nothing further.'
"J. 'I think otherwise. I made the plane for myself, and not for you. I expected to gain some advantage from it. I have made the plane for the purpose of improving my work and my condition; if you merely return it to me in a year, it is you who will gain the profit of it, during the whole of that time. I am not bound to do you such a service without receiving anything in return. Therefore, if you wish for my plane besides the restoration already bargained for, you must give me a new plank as a compensation for the advantages of which I shall be deprived.'
"These terms were agreed to, but the singular part of it is that at the end of the year, when the plane came into James's possession, he lent it again; recovered it, and lent it a third and fourth time. It has passed into the hands of his son, who still lends it. Let us examine this little story. The plane is the symbol of all capital, and the plank is the symbol of all interest."
If this be an abridgment, what a graceful piece of highly-wrought literature the original story must be! I take the liberty of abridging it a little more.
James makes a plane, lends it to William on 1st of January for a year. William gives him a plank for the loan of it, wears it out, and makes another for James, which he gives him on 31st December. On 1st January he again borrows the new one; and the arrangement is repeated continuously. The position of William therefore is that he makes a plane every 31st of December, lends it to James till the next day, and pays James a plank annually for the privilege of lending it to him on that evening. This, in future investigations of capital and interest, we will call, if you please, "The Position of William."
You may not at the first glance see where the fallacy lies (the writer of the story evidently counts on your not seeing it at all).
If James did not lend the plane to William, he could only get his gain of a plank by working with it himself and wearing it out himself. When he had worn it out at the end of the year, he would, therefore, have to make another for himself. William, working with it instead, gets the advantage instead, which he must, therefore, pay James his plank for; and return to James what James would, if he had not lent his plane, then have had—not a new plane, but the worn-out one. James must make a new one for himself, as he would have had to do if no William had existed; and if William likes to borrow it again for another plank, all is fair.
That is to say, clearing the story of its nonsense, that James makes a plane annually and sells it to William for its proper price, which, in kind, is a new plank. But this arrangement has nothing whatever to do with principal or with interest. There are, indeed, many very subtle conditions involved in any sale; one among which is the value of ideas; I will explain that value to you in the course of time (the article is not
one which modern political economists have any familiarity with deal-