PERSONAL AND BUSINESS LOANS

ciations are organized to accommodate young couples andothers wishing to enjoy good homes in anticipation oftheir power to pay for them in full. Installment buying,now so widely used to finance the buying of dwellings,furniture, automobiles, radios and other long-lasting in-struments, cater to the same desires. They all appeal toyoung people with small immediate incomes but greatexpectations for the future.

It is evident that all the foregoing cases, comprisingpersonal loans, are taken care of from the viewpoint ofthe borrower in the theory of interest; they are all ex-pressions of impatience for greater income expected inthe future.

§2. Business Loans

Business loans are commonly called productive loans,in contrast with personal or consumption loans. Busi-ness loans constitute by far the most important class ofpresent indebtedness. Mr. George K. Holmes, formerlyof the U. S. Census, at one time estimated that at leastnine tenths of the indebtedness in the United States thenexisting was incurred for the acquirement of the moredurable kinds of property, leaving not more than onetenth, and probably much less, as a consumption debt.The overwhelming preponderance of business loans hasled some economists to account for interest on personalloans as a reflection of the rate of return lenders cansecure by lending for production.

From another point of view it might seem that thetheory which has been given in this book, based as it ison the enjoyable income stream of an individual, canapply only to consumption loans.

It is also said, with some appearance of truth, that

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