of comparatively recent usage. It used to be called usury, and interest is so referred to in the Bible. Today, "usury" applies only to illegal interest. There was some semblance of the use of interest in the days of the ascendancy of Babylon. A great deal of the wealth and commerce of Tyre were founded on the use of credit and payment therefor. But in these earlier ages the world's business was largely agricultural and pastoral. Industry, transportation, and commerce were of little significance, as compared with those functions today. There was little wealth and for that reason but little need for the use of credit, the lending of accumulated capital, in wealth production.

GAMBLING AND SPECULATING

The use of accumulated capital may take many forms. It may be used in gambling, which is pure chance with no possible foreknowledge or control of the result. This, of course, is the lowest form of its application. It may be used in what we call speculation. The word "speculation" is used with hesitancy, for it has such loose usages. In some applications it may be a slightly higher form of employing money than is gambling. At best, speculation is based on probabilities and, in every instance, is dealing in future rather than on established history.

Every business, every action carries with it some element of chance or risk. In gambling, it is all chance. The gambler has no control over causes and there is no way by which he may foretell results. In business, although there is the element of chance always present, the capable business man has knowledge and experience that enable him to control causes to some extent and to foretell results in a satisfactory measure. But the man who speculates on changes in prices, over which changes he has no control, and little knowledge of the factors causing the changes, that man's activities may be called speculating, but they are essentially gambling. Also, the man who

puts money into an undertaking about which he knows little or nothing and who is without knowledge of the character of the management, may believe he is investing, but he is not. He, too, is leaving everything to chance, which is gambling.

Accumulated capital may also be used in the enterprise in which the owner himself is engaged in the management, and this, of course, is the basis of much of our commerce and industry. It is the combination of his money plus his brains and endeavor which is the basis of the income of the average small business man. Unfortunately, the average man's intelligence is not even equal to a proper judgment of the business which he knows most about, and only a small percentage of these enterprises may be called successes. Most of them, at best, make only a fair living and the percentage of failures is very high. If the average man is unable to judge of his own business successfully, why should he be so foolish as to speculate in other businesses of which he knows nothing!

BUSINESS DEPENDENCE ON CREDIT

Today perhaps 90% or more of the business of the country is carried on by means of credit or instruments of credit. Producers of raw materials must have larger supplies of capital, both from their own resources and from credit. For example, it is said that the farms of the United States have more than $3,500,000,000 invested in implements and machinery. Our farm lands, buildings, and improvements represent a further investment of approximately $75,000,000,

All this land, improvements, machinery, and live stock of the farms represent accumulated capital invested or capital ventured in the risks of the farming business. A great part represents money capital, borrowed and converted into these other forms of capital. There are billions invested in oil, mining, timber, and other extractive industries; still more

billions in the manufactories, railroads, commercial enterprises, and utilities that function in the creating and distributing of still greater wealth. In all these, borrowed money which supplies funds to be converted into machinery capital, ties, rails, and rolling stock, mills, shops, stores, and materials is an absolute essential. Without this borrowed money capital much of these other forms of capital could not exist.

The growth of this feature of economic life has had a vast effect on our country and on the world's commerce. It has enabled great enterprises to be undertaken, such as the building of transcontinental railroads, the development of vast resources, which no man or combination of a few men properly could finance. Many of such corporations, continuing to exist by reason of their soundness and stability long after the original creators have passed away, have become so established in the confidence of the people through their belief in the stability of the enterprise and its management, that their stocks and their bonds have become recognized as safe investments, and into these securities vast amounts of accumulated capital of hundreds of thousands of small investors have been safely and wisely placed. A man with $100 may buy a share of the capital stock or acquire a loan from one of these corporations secured by a mortgage on its property, and while he may be earning his daily cash by the labor of his hands, his $100 is being managed for him by the ablest brains and under the soundest conditions that the country can furnish; and he, as the owner of that small amount, has benefit of all this expert ability in the management of his $100, just the same as his neighbor who may have $1,000,000 in the same company. So, the corporation has not only been of tremendous benefit in making possible the accumulation of capital for the upbuilding of the resources of the country, but under the management of men of the highest abilities and in proven enterprises it has likewise been of untold benefit in the conserving of the savings of the people.

THE NEW NEED FOR CAPITAL

This greater need of the world for the use of credit, or borrowed capital, has existed only during the last two or three centuries. Had you offered to lend $1,000,000,000 to the ancient seats of civilization, Persia and China, they would not have known what to do with it. Little productive use could have been made of it. There were no great wealth-producing industries, as today. Machinery was utterly primitive. Almost all industry consisted of slow, small production, hand work. For example, the work in metals comprised tiny clay smelters and forges and a few crude tools. Today, one steel industry alone the United States Steel Corporation-has more than a billion dollars invested in its huge furnaces, equipment, and other capital uses. In the ancient textile industry a few clumsy, homemade looms, some earthern dyepots and hanks of handspun yarn comprised the necessary capital outlay. There were no packing houses nor other food products manufactories, as today. The productive uses of capital in the form of machinery were so mediocre and limited, that if a Carnegie of ancient history had had a comparatively few thousand dollars he could have duplicated all the little clay furnaces and forges necessary for a kingdom, or all the looms necessary for the country's needs. But having thus doubled the industrial equipment of his country, the ancient industrialist probably would have gone bankrupt, because, with its meager, toilsome production, primitive agriculture could not have released workers to man his industries. Or, if he could have obtained workers, transportation was too inadequate to distribute his goods.

This sketchy comparison has been made somewhat at length to emphasize the fact that modern investment and the use of capital are based on the superior ability of people to use wealth to create and distribute more wealth. In the ancient days of the so-called simple life, when the great bulk of invested capital was in lands and cattle, illiteracy

predominated. There was little need for the masses to borrow because there was little opportunity or knowledge of how to use capital in productive enterprises. The masses being illiterate, such money as they might acquire by borrowing was often for wasteful extravagance. Most of the people were poor and could give no property security for debts. Hence, the custom of giving their persons as security arose. This inevitably led to a form of slavery for non-payment of debts, and this is perhaps the origin of the age-old prejudice against what were termed "usurers." The Mosaic law prohibited a charge of interest between Jew and Jew. Roman law also forbade such a charge at one time, and the penalty for violation was more severe than the punishment for theft. Aristotle said that interest was essentially immoral. Later the early Christian church forbade it. England and France adopted laws against it, and at various times in certain countries the charging of interest was a crime next to that of murder.

INTEREST PERMITTED BY LAW

It was not until the reign of Henry VIII that England legalized interest. The old prejudice gradually gave way; first, because it caused extortionate rates. A person urgently in need of money would pay high enough to induce the usurer to commit the crime of lending. But the basic reason for the dying out of this prejudice was that it became economically unsound. As the world advanced and wealth accumulated, there was a wholesome need for employing money capital, through credit, to produce and distribute greater wealth. With this development has come a change in the conception of the use of money and the position of the money lender. He and his function have come to be recognized as an essential and honorable factor in the world's industry and commerce.

As civilization progressed and men began to accumulate goods beyond their own personal needs and to store com