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Irving Fisher Explains Interest to Socialist

Summary:
In a speech delivered before the Yale Socialist Club a decade after his return to New Haven, [Irving Fisher] related this minor incident of his stay in Santa Barbara: Discovering that the man who came to massage him was a Socialist and believed that "interest is the basis of capitalism and is robbery," my father determined to make the most of his pedagogical opportunity. To the question, "How much do I owe you" the masseur replied, "Thirty dollars." "Very well. I will give you a note payable a hundred years hence. I suppose you have no objections to taking this note without any interest. At the end of that time you, or perhaps your grandchildren, can redeem it." "But I cannot afford to wait that

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In a speech delivered before the Yale Socialist Club a decade after his return to New Haven, [Irving Fisher] related this minor incident of his stay in Santa Barbara:

Discovering that the man who came to massage him was a Socialist and believed that "interest is the basis of capitalism and is robbery," my father determined to make the most of his pedagogical opportunity.

To the question, "How much do I owe you" the masseur replied, "Thirty dollars."

"Very well. I will give you a note payable a hundred years hence. I suppose you have no objections to taking this note without any interest. At the end of that time you, or perhaps your grandchildren, can redeem it."

"But I cannot afford to wait that long."

"I thought that you said that interest was robbery. If interest is robbery, you ought to be willing to wait indefinitely for the money. If you were willing to wait ten years, how much would you require?"

"Well, I would have to get more than thirty dollars."

With a gleam of triumph, Father thrust home. "That is interest."


This is from Irving Norton Fisher, My Father Irving Fisher (New York: Comet, 1956), p. 77.

The passage appeared under the heading "Explaining Interest" on the back cover of the December 1994, Volume 102, No. 6 issue of the Journal of Political Economy.



David Henderson

David Henderson is a British economist. He was the Head of the Economics and Statistics Department at the OECD in 1984–1992. Before that he worked as an academic economist in Britain, first at Oxford (Fellow of Lincoln College) and later at University College London (Professor of Economics, 1975–1983); as a British civil servant (first as an Economic Advisor in HM Treasury, and later as Chief Economist in the Ministry of Aviation); and as a staff member of the World Bank (1969–1975). In 1985 he gave the BBC Reith Lectures, which were published in the book Innocence and Design: The Influence of Economic Ideas on Policy (Blackwell, 1986).

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