On a good day, only half the profit goes to pay interest

Adam Smith in The Wealth of Nations:

The stock which is lent at interest is always considered as a capital by the lender.

Dirk Bezemer and Michael Hudson in "Finance is Not the Economy" quote J.S. Mill restating Smith and using Smith's view as an example of an all-too-common error:

All funds from which the possessor derives an income … are to him equivalent to capital. But to transfer hastily and inconsiderately to the general point of view, propositions which are true of the individual, has been a source of innumerable errors in political economy.

To transfer to the macroeconomic view, propositions which are true of the micro-economic, has been a source of innumerable errors in economic thought. Say's law comes to mind.

Adam Smith again:

Double interest is in Great Britain reckoned, what the merchants call, a good, moderate, reasonable profit; terms which I apprehend mean no more than a common and usual profit. In a country where the ordinary rate of clear profit is eight or ten per cent., it may be reasonable that one half of it should go to interest, wherever business is carried on with borrowed money.

Bezemer and Hudson:

Adam Smith assumed that the rate of profit would be twice the rate of interest, so that returns could be shared equally between the “silent backer” and entrepreneur. But as bonds and bank loans replace equity, interest expands as a proportion of cash flow. Nothing like this was anticipated during the high tide of industrial capitalism.

Profit and the Cost of Interest since 1947:

Profit (blue) and Interest Cost (red) for Corporate Business

This graph overstates profit and understates the cost of interest. Since the year 2000, half the assets of Nonfinancial Corporate Business are financial assets. So I have to figure that half of what they call profit is really interest income. The blue line should be much lower than what the graph shows.