THE THEORY OF INTEREST

who would never mend his leaky roof. When it rained hecould not stop the leak, and when it did not rain therewas no leak to be stopped! Among such persons, thepreference for present gratification is powerful becausetheir anticipation of the future is weak. In regard to fore-sight, Rae states: 11

“The actual presence of the immediate object of desire in themind, by exciting the attention, seems to rouse all the faculties, asit were, to fix their view on it, and leads them to a very livelyconception of the enjoyments which it offers to their instant pos-session. The prospects of a future good, which future years may holdout to us, seem at such a moment dull and dubious, and are aptto be slighted, for objects on which the daylight is falling strongly,and showing us in all their freshness just within our grasp. Thereis no man, perhaps, to whom a good to be enjoyed to-day, would notseem of very different importance, from one exactly similar to beenjoyed twelve years hence, even though the arrival of both wereequally certain.”

The sagacious business man represents the other ex-treme; he is constantly forecasting. Many great corpo-rations, banks, and investment trusts today maintainstatistical departments largely for the purpose of gaug-ing the future developments of business. The carefullycalculated forecasts made by these and independentservices tend to reduce the element of risk, and to aidintelligent speculation.

Differences in degrees of foresight and forecasting abil-ity produce corresponding differences in the dependenceof time preference on the character of income. Thus, fora given income, say $5000 a year indefinitely, the reck-less might have a degree of impatience or rate of timepreference of 10 per cent, when the forehanded wouldexperience a preference of only 5 per cent. In both cases,

u Rae, Sociological Theory of Capital, p. 54.

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