It seems opportune that the old prohibition against interest on interest (Cicero, ad. Att., V, 21, and L, 26, Digest, XIV, 6) and the provision that the interest should not be permitted to be greater than the alterum tantum (Digest, l. c.) should be permitted to continue. (Digest, l. c.) Both of these measures were first decreed by Lucullus, for the protection of Asia Minor. Compare § 115. Florentine law, of 1693, that interest in arrears, or that interest on interest beyond 7 years, should not be added to the principal without an express contract to that effect. (Vasco, Usura libera, § 155.) In England, the usury laws were by 2 and 3 Victor., c. 37, repealed, but only to the extent of excepting from their provisions bills of not over 12 months, and money loans not over £10. Compare Rau, Lehrbuch II, § 323.
[194-7] Compare Locke, Considerations: Works, 10, 32 ff. In Spain, the Council of State is required to regulate the rate of legal interest yearly (law of 1856, art. 8); a thing which, according to Braun, would be better done in each individual case by the judges themselves. (Faucher's Vierteljahrsschrift, 1868, II, 13.)
[194-8] In Athens, the rate of interest in general was voluntary from the time of Solon, who, however, did away with slavery for debt. (Lysias adv. Theomn., 360.) Yet there was a legal rate of interest of 18 per cent. for the case in which a divorced husband delayed the return of his wife's dowry. Compare Böckh, Staatshaushalt der Athener, I, 148.
CHAPTER V.
THE UNDERTAKER'S PROFIT.
(UNTERNEHMERLOHN.)
THE REWARD OF ENTERPRISE.
The essence of an enterprise or undertaking, in the politico-economical sense of the word, consists in this, that the undertaking party engages in production for the purpose of commerce, at his own risk. In the earlier stages of a nation's economy, the production of consumers is, naturally enough, limited chiefly by their own personal wants. Somewhat later, when the division of labor has been further developed, the workman produces at first, enough to meet occasional determinate "orders;" and still later to meet them regularly and as a business. Later yet, and in stages of civilization yet higher, especially when the freedom of labor constantly grows, as it is wont to, here, and the freedom of capital and trade becomes more extensive, enterprise plays a part which grows more important as time rolls on, and is usually carried on more at one's own risk.[195-1] This transition is a great advance, inasmuch as the advantages of the coöperation of labor and of use may be utilized in a much higher degree by undertakers (Unternehmer) than by producers who labor only to satisfy their own household wants, or to meet "orders" already made. The awakening of latent wants, a matter of the utmost importance to a people who would advance in civilization, is something which can enter into the mind only of a man endowed with the spirit of enterprise (an undertaker).[195-2]
While most English political economists have confounded the personal gain of the undertaker with the interest on the capital used by him,[195-3] many German writers have called the "undertaker's earnings" or profit a special, and fourth, branch of the national income, coördinate with rent, wages, and the interest on capital.[195-4] Yet, the net income of every undertaker is either the fruit of his own land used for purposes of production and of his capital, in which case it is subject to the usual laws of development of rent and interest; or, it must be considered as wages paid for his labor.[195-5] These wages he earns, as a rule, by organizing and inspecting the work, calculating the chances of the whole enterprise; frequently by, at the same time, keeping the books and acting as cashier; and, in the case of small undertakings, as a common fellow-workman. (Tradesman, peasant). In every case, however, even when he puts an agent paid by himself in his place, he earns these wages from the fact that his name keeps the whole enterprise together; and for the reason that, in the last instance,[195-6] he has to bear the care and responsibility attending it.[195-7] When a business goes wrong, the salaried director or foreman may permit himself to be called on to engage in another; but the weary, watchful nights belong to the undertaker or man of enterprise, alone; and "how productive such nights frequently are!"[195-8]
This profit of the undertaker is subject essentially to the same natural law as wages in general are; only it differs in this from all other branches of income, that it can never be stipulated for in advance. Rather does it consist of the surplus which the product of the undertaking affords over and above all the rent stipulated for in advance or estimated at the rate usual in the country, the interest on capital, and wages of common labor.[195-9]