THE THEORY OF INTEREST

on the other hand, to stimulate millionaires to live in anostentatious manner. Fashion is one of those potent yetillusory social forces which follow the laws of imitationso much emphasized by Tarde , 14 Le Bon , 15 Baldwin , 16and other writers. In whatever direction the leaders offashion first chance to move, the crowd will follow inmad pursuit until almost the whole social body will bemoving in that direction. Sometimes the fashion becomesrigid, as in China, a fact emphasized iby Bagehot ; 17 andsometimes the effect of a too universal following is tostimulate the leaders to throw off their pursuers by tak-ing some novel direction—which explains the constantvagaries of fashion in dress. Economic fashions maybelong to either of these two groups—the fixed or theerratic. Examples of both are given by John Rae . 18 It isof vast importance to a community, in its influence bothon the rate of interest and on the distribution of wealthitself, what direction fashion happens to take. For in-stance, should it become an established custom formillionaires to consider it “disgraceful to die rich,” asCarnegie expressed it, and believe it de riguewr to give thebulk of their fortunes for endowing universities, libraries,hospitals, or other public institutions, the effect would be,through diffusion of benefits, to lessen the disparities in

“Tarde, G. Social Laws. English translation. New York, Macmillanand Co., 1899 . Also Les Louis de limitation. Paris, Germer Bailliere etC., 1895.

“ The Psychology of Socialism. English translation. London, T. FisherUnwin, 1899. Also The Crowd.

M Social and Ethical Interpretations in Mental Development. NewYork, Macmillan and Co. , 1906.

17 Bagehot, Walter. Physics and Politics. New York , D. Appleton andCo., 1873, Chapter III.

“See The Sociological Theory of Capital, Appendix , Article 1, pp.245-276.

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