Sunday, December 16, 2012

Adam Smith on Financial Cost

The Wealth of Nations, Book 3, Chapter 2: The Discouragement of Agriculture:

The farmer, compared with the proprietor, is as a merchant who trades with borrowed money compared with one who trades with his own. The stock of both may improve, but that of the one, with only equal good conduct, must always improve more slowly than that of the other, on account of the large share of the profits which is consumed by the interest of the loan.

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