He has proceeded, besides, on the statical fallacy of the divided stick, whereby if interest falls, wages must rise, and vice versa, instead of on the dynamical principle of the wheel, where both must rise or fall together, and so on; - all of which it would be a work of supererogation to re-argue in detail. But a single consideration will be sufficient to show the fallacy of the whole argument, and it is this; - if the interest, as Jevons contends, becomes less and less according to the length of time of its investment, while the wages rise higher and higher owing to the number of the labourers remaining the same, it is evident that this result can only occur if the labourers instead of spending their wages on the product abstain from doing so, and put it in an old stocking, as, indeed, Jevons' theory of abstinence requires them to do. But as they, unlike the capitalists, have no reason for abstaining, and as they have only the product of their own work, by the hypothesis, on which to spend their wages, the probabilities are that they will not abstain; and in any case Jevons is put on the horns of this dilemma, namely, that if they do spend them, the increased consumption which comes from their increased wages will so raise the price of the product, that the capitalists will get all their interest back again in this rise of price; whereas if both capitalists and workers go on abstaining, as the hypothesis assumes, there will soon be no demand, the enterprise will have to close down, and neither the capitalist nor his workmen will get either interest or wages at all! The truth is, the whole method is so false through and through, that there is nothing true in the demonstration but the abstract mathematics, where if you put in a general error or fallacy in the premise, it will only bring out a more precise and definite error or fallacy in the conclusion.

But indeed I should not have introduced this theory of Jevons' here at all, had it not been a stepping stone to the still more celebrated, but sophistical, doctrine of his disciple, Bohm-Bawerk, which I am anxious in as few words as possible to introduce to the reader.

Jevons, then, having ground down Capital into the food and maintenance of the labourers, the factors which he bequeathed to Bohm-Bawerk out of which Interest and Profits had to emerge, were not machines and processes embodying gratuitous economic powers of Nature, and yielding products which are continuously being produced, consumed, and reproduced, but simply the money-wages of labourers, out of which the fund both for interest and profits had to be saved by Abstinence and Time; and the problem, accordingly, for Bohm-Bawerk was, not only how Interest was to be got out of these abstract or negative factors, but how its rate was to be determined. Jevons' theory was, as we have seen, that the rate of interest varied inversely as the time of investment; but as he made the value of all things depend on 'final utility' and not on Labour, Bohm-Bawerk, in following his master, was severely put to it to find anything but Time alone out of which Interest could emerge. For Jevons, in grinding down the machines into the mere food and maintenance of the labourers, had, like the proverbial man who threw away the child in emptying the water out of its bath, thrown away the economic powers of Nature with the machines; and so had left no source from which Interest could emerge, - unless indeed, as we have seen, from the labourers' wages, by an enforced abstinence from which part of these wages could be exploited and deducted.

But as it was Bohm-Bawerk's theory that all increase of production came from a union of Nature and Labour, as in the case of the land, he could not see how mere abstinence could ever get an increase out of Labour alone, when once the powers of Nature could no longer co-operate; and distinctly says, that when thus left functioning in vacuo, saving, or abstinence, can never be a 'means' of the increase of production, but only a 'motive' for it. And accordingly, as is usual with him when following his master, he went a step or two farther, and boldly throwing overboard at once both the work of the labourers and their abstinence, reduced the problem of Interest to a function of Time alone. Now, it may seem to the reader a somewhat difficult feat of conjuring, to get a solid substantial asset like Interest out of this detruncated stump of Time alone, but Bohm-Bawerk was equal to it; and, nothing daunted, set out gaily, accordingly, after the manner of most German authors, with provisions for a long siege; passing some scores of writers on the question of Interest under review before he arrived at his own theory, founded on Money functioning in an element of Time alone.

To sum up his conclusion in a word; - it is that Interest is not what you pay for the productive use you can make of the money you borrow, but, on the principle that 'a bird in the hand is worth two in the bush,' it is simply what you have to pay the lender for his having to wait a year, or five years, say, for the satisfaction which he might have had to-day out of the money if he had chosen to spend it, and for the pain of having to wait for this satisfaction until the money is returned to him a year or five years hence. But as the waiting is more painful at the start, when he has to contemplate the long vista ahead of him with all its uncertainties, but gets less and less, like the home coming of a friend, as time goes on, until at last when the period is up and the loan is repaid, the satisfaction or 'utility' to be got out of it by its immediate use is the same as it was before the money was lent; it follows that as the interest, when measured in this way by the degree of disagreeableness of waiting, must get less from year to year, the only way to get the fixed rate of interest which is to hold over all the years covered by the loan, is by striking an average of disagreeableness among them all; and this average is what is called the rate of interest for the loan.