Book II: Chapter 4

CHAPTER IV.

OF STOCK LENT AT INTEREST.

The stock which is lent at interest is always considered as a capital by the
lender. He expects that in due time it is to be restored to him, and that,
in the mean time, the borrower is to pay him a certain annual rent for the
use of it. The borrower may use it either as a capital, or as a stock
reserved for immediate consumption. If he uses it as a capital, he employs
it in the maintenance of productive labourers, who reproduce the value, with
a profit. He can, in this case, both restore the capital, and pay the
interest, without alienating or encroaching upon any other source of
revenue. If he uses it as a stock reserved for immediate consumption, he
acts the part of a prodigal, and dissipates, in the maintenance of the idle,
what was destined for the support of the industrious. He can, in this case,
neither restore the capital nor pay the interest, without either alienating
or encroaching upon some other source of revenue, such as the property or
the rent of land.

The stock which is lent at interest is, no doubt, occasionally employed in
both these ways, but in the former much more frequently than in the latter.
The man who borrows in order to spend will soon be ruined, and he who lends
to him will generally have occasion to repent of his folly. To borrow or to
lend for such a purpose, therefore, is, in all cases, where gross usury is
out of the question, contrary to the interest of both parties; and though it
no doubt happens sometimes, that people do both the one and the other, yet,
from the regard that all men have for their own interest, we may be assured,
that it cannot happen so very frequently as we are sometimes apt to imagine.
Ask any rich man of common prudence, to which of the two sorts of people he
has lent the greater part of his stock, to those who he thinks will employ
it profitably, or to those who will spend it idly, and he will laugh at you
for proposing the question. Even among borrowers, therefore, not the people
in the world most famous for frugality, the number of the frugal and
industrious surpasses considerably that of the prodigal and idle.

The only people to whom stock is commonly lent, without their being expected
to make any very profitable use of it, are country gentlemen, who borrow
upon mortgage. Even they scarce ever borrow merely to spend. What they
borrow, one may say, is commonly spent before they borrow it. They have
generally consumed so great a quantity of goods, advanced to them upon
credit by shop-keepers and tradesmen, that they find it necessary to borrow
at interest, in order to pay the debt. The capital borrowed replaces the
capitals of those shop-keepers and tradesmen which the country gentlemen
could not have