[Letter] Jan.10,1889,Smith College [to F.H. Giddings]

Jan. 10, 1889, Smith College.

Dear Mr. Giddings,
       I was very glad to
get your letter. I was, in
fact, on the point of writing
to you and expressing the
pleasure I derived from my
visit with you. I look
forward to another visit with
you here in the early
Summer, unless I go abroad,
as I do not expect to do.
Even if I do I want the
visit, as you close a little
earlier than do we.
 About Capital.
 Do I rightly understand
that your thought leads
you to the view that a
man earns more and
gets more by working when
he is tired than by
working when he is fresh?
How would it be if the
man in the supposed case
who could not save from
his existing rate of earnings
because all went for
subsistence, simply
concluded to work over time
and get a second suit of
clothes? Of course I know
that you cannot mean to
claim that the extra hours
would buy more than other
hours. What I do not see
is what, except that, your
real thought can be. I do
not like much more than
you do the word abstinence
when used as coordinate with
labor as indicating an
'economic merit'. I do not
quite see, however, where the
real difficulty lies if
abstinence, or time sacrifice,
or delayed enjoyment be
used legitimately. Two
men hoe all day. You
ask them if they will defer
receiving their wages; they
will refuse. Wages a month
after the time when they
are earned have simply
a diminished present
utility. Give one his pay
and compel the other to
wait and they will see that
they are unequally treated.
Make the one to wait and
give him what the other
would regard as enough to
equalize the utilities, and
you deal justly. You have
to find what the one who
gets his pay would regard
as the psychological
present worth of a utility
located in the future. Here
I give you what I have
given no one before by
notion of a theory of the
equities of interest, namely,
the man who takes his
pay when earned is not
wronged if the other gets
enough to make his (No. 2's)
pay when psychologically
discounted, equal his own.
A is the wage earner and
gets his pay promptly. B is
the capitalizer, and waits for
his utility or real pay. A's
standard of discount for
deferred enjoyment is a
high one. If he were waiting
he would ask a large
increase at the end of the
time. Perhaps 1.25 per
day, a month after the
time of earning would have
a psychological present worth
equal to 1.00 now. If so
B does not wrong A, if
he gets 25% per month
for waiting. Of course
these proportions are
exaggerated but - the
capitalist class can
and do discount future
utilities at a rate that
falls indefinitely within
the standard that would be
set by workmen. They serve
workmen by time sacrifice
as workmen serve them by
labor. It is not a question
of ethical merit in the
sense that seems to attach
to the word abstinence. It
is simply that the capitalist
is able to serve the workmen,
by doing for industry what
must be done for it, and
what the workmen himself
could not do for a much
larger return. Now tell
me, in tum, where I am
wrong. I mean to show
that both classes gain
in utilities by the commercial
relation between them. As in
trade both parties gain,
not always equally, so here
both must gain; and
clear equity is not violated till
one begins to lose. The
workman does not lose till
the capitalist gets more than
he (the workman) would ask
for time sacrifice. The
standard of equity in interest, is
the psychological rate of discount
for deferred enjoyment made by
the workmen themselves.
 I have always liked your
algebraic formula for
the mode in which capital
operates. On the question
of Rent my view, as
partly but not completely
foreshadowed in my monograph
on Cap. is this. The
immediate returns of any
concrete instrument are gauged
by a law of rent. The am't. of
the rent would gauge the
am't. of pure capital in
them if they could not
be reproduced.
If they could be reproduced
after some delay the rent
law would partly gauge
the capital in them. If
they can be made easily
and quickly at a known
cost, the pure cap. in them
will be gauged by that cost.
Is that sound? I like
very much the idea of
making all capital abstract.
That is the most
philosophical nomenclature.
Then, however, we need
a name for the totality
of productive instruments.
Current nomenclature calls
them capital. What shall
we call them? Shall
we drop into Latin and
say Materia opifera?
Or shall it be simply
opifera? The trouble is to
get what is expressive and
not pedantic. Have I
covered the points indicated?
I will reread your very
interesting and welcome
letter and write again
if there are loose ends.
Just now I must close
on account of our
engagement.

        Yours Very Truly,
              J. B. Clark