In what are commonly called loans of money, it is not really the money, but the money's worth, that the borrower wants; and the lender really assigns to him the right to a certain portion of the annual produce of the land and labour of the country, As the general capital of a country increases, so also does the particular portion of it from which the possessors wish to derive a revenue without being at the trouble of employing it themselves, and, as the quantity of stock thus available for loans is augmented, the interest diminishes, not merely "from the general causes which make the market price of things commonly diminish as their quantity increases," but because, with the increase of capital, "it becomes gradually more and more difficult to find within the country a profitable method of employing any new capital" - whence arises a competition between different capitals, and a lowering of profits, which must diminish the price which can be paid for the use of capital, or in other words the rate of interest.
He became an associate of Jay Gould in the development and sale of railways; and in 1863 removed to New York City, where, besides speculating in railway stocks, he became a money-lender and a dealer in "puts" and "calls" and "privileges," and in 1874 bought a seat in the New York Stock Exchange.
Practically every form of investment in which a man is capable of indulging involves the lending and borrowing of money, the interest exacted being the profit which the lender receives for the use of.
The existence of the professional lender, as apart from the ordinary facilities for borrowing money on good security, is obviously due to the fact that it is not every borrower who is in a position' to give good security for a loan.
It had been the practice of a certain class of lender to trade under a variety of names; so that under one name the same individual would lend money to a person who borrowed from him under another name; the second loan would be spent in liquidating the first, and the borrower finding it always easy to obtain more money would continue borrowing until he became hopelessly involved.