Whatever the tractor returns him over and above its cost is interest. Nothing could be further from the truth than to say that interest in this is the result of cheating laborers. The farmer conferred a benefit on the community by buying the tractor rather than the pleasure automobile and at the same time he suffered a postponement of enjoyment. If he did not earn something as a result of this operation it would be difficult to find any member of the com munity who ever earned anything.
It is always advantageous to the community for any one to buy tools and equipment which are needed in production rather than articles of consumption which benefit him alone. It turns the productive energy of the community toward the making of tools and equipment rather than toward making articles of pleasure. The com munity's power of production is increased in the one case and not in the other.
But the purchase of productive instruments rather than of articles of pleasure does not, in every case, involve any genuine postponement of enjoyment. In the first place, the farmer may really derive as much joy from the run ning of a tractor as from the running of an automobile, though he would be a somewhat exceptional man if that were so. Nevertheless, the benefit to the community is as great as though running a tractor was irksome to him, and the community is willing to reward him as liberally. In the second place, a man may have such a large income as to be able to pur chase practically everything in which he could possibly take any pleasure, and still have money enough left to invest in producers' goods, that is, in tools and equipment. In this case, his
purchase of tools and equipment cannot be said to occasion any postponement of enjoy ment. Nevertheless, so long as the community needs anything it is usually willing to pay for it whether it costs any sacrifice to the person who supplies it or not. This applies to capital as well as to anything else.
From the standpoint of the community, in terest is paid because it is advantageous to have more capital than the community has got, in short, because capital is scarce relatively to the need for it. It is scarce primarily because men do not as a rule like to wait or to postpone enjoyment. They will postpone enjoyment if there is a prospect of more enjoyment in the future than in the present. They would rather have their articles of pleasure in the present than to have articles of production in the present unless, as a .result of buying articles of production they will have larger means of enjoyment in the future. Though some waiting or buying of articles of production would doubt less be done for other reasons than the expec tation of a surplus, not enough would be done to supply the community with all the capital it needs. In order to induce still further saving and purchasing of articles of production a sur plus must be allowed as an inducement to those who would not save and invest for other reasons. This surplus is interest.