PREFACE

The tremendous expansion of credit during and sincethe World War to finance military operations as well aspost-war reparations, reconstruction, and the rebuildingof industry and trade has brought the problems of capi-talism and the nature and origin of interest home afreshto the minds of business men as well as to economists.This book is addressed, therefore, to financial and indus-trial leaders, as well as to professors and students ofeconomics.

Inflation during and since the War caused prices tosoar and real interest rates to sag in Germany and othernations far below zero, thus impoverishing millions ofinvestors. In all countries gilt-edge securities with fixedreturn became highly speculative, because of the effectof monetary fluctuations on real interest rates. After theWar the impatience of whole peoples to anticipate futureincome by borrowing to spend, coupled with the oppor-tunity to get large returns from investments, raisedinterest rates and kept them high. Increased nationalincome has made the United States a lender nation. Athome, real incomes have grown amazingly because ofthe new scientific, industrial, and agricultural revolu-tions. Interest rates have declined somewhat since 1920,but are still high because the returns upon investmentsremain high. Impatience to spend has been exemplifiedby the organization of consumers’ credit in the form offinance companies specially organized to accommodateand stimulate installment selling and to standardize andstabilize consumption.

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