"Legitimate profits under private capitalism," replied the girl Margaret--"that is, such profits as men going into production or trade must in self-protection calculate upon, however well disposed toward the public--consisted of three elements, all growing out of conditions inseparable from private capitalism, none of which longer exist. First, the capitalist must calculate on at least as large a return on the capital he was to put into the venture as he could obtain by lending it on good security--that is to say, the ruling rate of interest. If he were not sure of that, he would prefer to lend his capital. But that was not enough. In going into business he risked the entire loss of his capital, as he would not if it were lent on good security. Therefore, in addition to the ruling rate of interest on capital, his profits must cover the cost of insurance on the capital risked--that is, there must be a prospect of gains large enough in case the venture succeeded to cover the risk of loss of capital in case of failure. If the chances of failure, for instance, were even, he must calculate on more than a hundred per cent profit in case of success. In point of fact, the chances of failure in business and loss of capital in those days were often far more than even. Business was indeed little more than a speculative risk, a lottery in which the blanks greatly outnumbered the prizes. The prizes to tempt investment must therefore be large. Moreover, if a capitalist were personally to take charge of the business in which he invested his capital, he would reasonably have expected adequate wages of superintendence--compensation, in other words, for his skill and judgment in navigating the venture through the stormy waters of the business sea, compared with which, as it was in that day, the North Atlantic in midwinter is a mill pond. For this service he would be considered justified in making a large addition to the margin of profit charged." "Then you conclude, Margaret, that, even if disposed to be fair toward the community, a capitalist of those days would not have been able safely to reduce his rate of profits sufficiently to bring the people much nearer the point of being able to consume their products than they were." "Precisely so. The root of the evil lay in the tremendous difficulties, complexities, mistakes, risks, and wastes with which private capitalism necessarily involved the processes of production and distribution, which under public capitalism have become so entirely simple, expeditious, and certain." "Then it seems it is not necessary to consider our capitalist ancestors moral monsters in order to account for the tragical outcome of their economic methods." "By no means. The capitalists were no doubt good and bad, like other people, but probably stood up as well as any people could against the depraving influences of a system which in fifty years would have turned heaven itself into hell." MARION EXPLAINS OVER-PRODUCTION.