John Ruskin, in the first of his Fors Clavigera series of letters to British workmen, opened what he had to say about interest by picturing what he called the position of William. Bastiat, the French economist, had tried to show the nature of capital and interest by a little story, in which a carpenter named James made a plane in order to increase his productive power, but, having made it, was induced by a fellow-carpenter named William to lend it to him for a year in consideration of receiving a new plank at the end of that time besides a plank for the use of it. Having fulfilled these conditions at the end of the first year, William borrowed the plane again on the same terms at the beginning of the second, and year after year the transaction was repeated to the third and fourth generations of the posterity of William and James. Ruskin disposed of this plausible story in a sentence by pointing out that the transaction of William and James amounted simply to this,—that William made a plane every 31st December, lent it to James till 1st January, and paid James a plank for the privilege of thus lending him the plane overnight.(63 ¶ 1)

Ruskin called this the position of William, and, though he threw down the gauntlet right and left, he could never find an economist rash enough to undertake to dispute the justice of his abridgment of Bastiat’s tale. At last, however, one has appeared. F. J. Stimson has discovered the fallacy in the position of William, and confidently tells the readers of the Quarterly Journal of Economics that it lies in Ruskin’s tacit assumption that the plank which William paid James was the only plank which the plane had enabled him to make during the year. Mr. Stimson is so proud of this discovery that he puts it in italics, but I am unable to see that it shows anything except Mr. Stimson’s failure to get down to the kernel of the question at issue.(63 ¶ 2)

If Ruskin made the assumption attributed to him,—which is improbable,—he did so because he knew perfectly well that the number of planks which the plane enabled William to make ought in equity to have no influence upon the plane’s selling or lending price, always provided the number was great enough to make it worth while to have manufactured the plane in the first place. If Mr. Stimson were half the economist that Ruskin is, he would know that, in the absence of monopoly, the price of an article worth producing at all is governed, not by its utility, but by the cost of its production, and that James consequently, though his plane should enable William to make a million planks, could not sell or lend it for more than it cost him to make it, except he enjoyed a monopoly of the plane-making industry.(63 ¶ 3)

The fallacy in the position of William remains undiscovered. Perhaps a few more failures to discover it such as Mr. Stimson’s may convince the people that there is no fallacy there to be discovered. On the whole, the original policy of James’s friends was the safer one,—to ignore the position of William on the ground that his champion, Mr. Ruskin, is not an economist, but an artist.(63 ¶ 4)