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Your July-August issue contains an interesting article on a "Theory of Interest" by Mr. Gaston Haxo. He is sound in his statements that interest is not due to the reproductive forces of nature; also, that the contract (interest) freely entered into by borrower and lender, both of whom benefit therefrom, is equitable; and this custom is not likely to cease. Payment for service rendered, and it is commonly, so understood, is the justification for interest, and the average rate is determined by competition between lenders. The return to lenders is their own concern.

I purchase a machine (capital). I purchase it from my own funds. It is mine for all time. That is just. But again, I borrow money not for itself, but for the service it supplies and I buy the machine. It is not mine. I pay for its hire. That is just. Service for service - interest.

Surely Mr. Haxo's statement that interest as an institution is "but the evil fruit of an evil economic system", and is "unearned increment" is wrong. It largely arises from his treating money as if it purchased only capital. If I, a land speculator, buy and sell vacant lots I do not spend money in purchasing capital. I purchase land- a wide distinction. If I buy a block, erect a building upon it, and let the whole, I am paid in money; I receive so much in interest on my building (capital). This is just. And I receive so much in land rent. This is due to society, and I have no just claim to it. Mr. Haxo makes no such vital distinction.

There is little doubt the enormous land rent incomes of Astors, English dukes, German junkers, etc. are invested by them partly in purchasing additional land - not capital. They also invest land-rent money in capitalistic enterprises, claiming "interest" and also in interest-bearing Government loans, stealthily reducing the masses to slavery. The whole world is the sufferer.

The investment origin is land rent privately appropriated. Only in this sense is Mr. Haxo's statement correct that "interest as an institution has its roots in land monopoly and the resultant exploitation of labor". This investment of the people's values we must put an end to. We must eliminate all land rent from private incomes.

Then will money lent be invested in capital alone, which, with interest thereon, Mr. Haxo endorses as just. Long-term interest on debts would disappear and back debts be paid off, for a new world of prosperity would prevail. The effect of breaking up land rent monopoly would be the same as witnessed in early "Go West" days before land speculation got the mastery and brought the United States to its present condition of progress and poverty. George would be vindicated. So great would be the demand for labor and capital, that wages and interest (both just, and the same in origin) would rise together, and with land rent collected and the abolition of monopolies, parasitism would be ended. Melbourne, Australia.