686 AGRICULTURAL ECONOMICS 



means of removing that hardship, through increasing the supply of 

 capital available to meet the demand. Capital is, as we have seen, 

 the result of saving. Interest, then, is the reward of abstinence. 

 The strength of the motive to accumulation will vary with the reward 

 of abstinence. If that be high, the disposition to save will be strength- 

 ened, and capital will be rapidly accumulated; if that be low, that 

 disposition will be relatively weak, and capital will increase slowly, 

 if, indeed, the body of existing capital be not dissipated at the demands 

 of appetite. 



We do not say that the strength of the disposition will increase 

 proportionally to the increase of remuneration; that it will, for 

 instance, be one-fifth greater at 6 per cent interest than at 5 per cent. 

 Moral philosophy has reached no such precision in gauging motives. 

 But it is certain that, among the same people, and at the same time, 

 the higher the rate of interest the stronger will be the motives which 

 lead to saving: the more rapid the accumulation of capital. So we 

 see that a high rate of interest, instead of being the cause of an evil, 

 is really its cure; and that to depress the rate of interest as, for 

 example, by force of law, would be to retard the processes by which 

 capital is supplied. 



As a high rate of interest is not in itself an evil, so a low rate of 

 interest does not necessarily imply a condition which is a subject of 

 congratulation. A low rate of interest may mean that the accumula- 

 tion of capital has gone on so rapidly as to outrun the occasions for 

 its productive use. It may mean that the people are so dull, indolent, 

 and unambitious, or the state of society so disordered, that commercial 

 and manufacturing enterprises are not undertaken, and no enlarge- 

 ment of traditional industries is looked for. A small amount of 

 capital more than suffices for such scanty needs. 



The plain facts of interest seem to controvert the proposition that 

 in one market, at one time, there can be but one price for equal portions 

 of the same commodity. Differing rates of interest in the same mar- 

 ket are due (excluding the false interest sometimes paid as insurance 

 of the principal) to imperfect competition in the money market. 

 Now, perfect competition only exists where there is ample and accurate 

 information. In bargains relating to the use of capital, so little is 

 known by the parties respecting the supply of and the demand for 

 capital, especially where usury laws drive borrowers and lenders to 

 shifts and evasions; so much more are men disposed to conceal the 



