THE THEORY OF INTEREST

lines exert a great and more controlling influence on theslope of the Market lines.

If the investment opportunity area is large so as tocause the Opportunity line to curve slowly, its relativefixity of slope indicates a relatively stable rate of interest.If the slope is absolutely constant and the same for allindividuals, as in the case of the hard-tack island, 6 repre-sented by a 45° straight line, or the example of ProfessorHarry G. Brown’s imaginary fruit trees, represented bya straight line steeper than 45°, this fixed shape may,within limits, fix the rate of interest absolutely, forcingit to agree with that fixed slope whatever may be theWillingness lines representing impatience. The limitswithin which this would be true may readily be chartedby the reader.

The most important result here is that the Oppor-tunity line cannot be dispensed with in the theory ofthe rate of interest. It is something distinct from and inaddition to the Impatience lines as well as to the Market lines. If those theorists who still insist on the subjectiveprinciple as the only principle of filterest will try to pic-ture its determination on this map, they will find it im-possible to get any determinate direction of the Marketlines without invoking the Opportunity lines. To adapta simile of Alfred Marshall ’s, both blades of a pair ofscissors are needed to make the scissors work.

§9. Can Interest Disappear?

One use of this graphic method is to help us form amore complete picture of the problem as to whether therate of interest may ever be zero or negative.

Just as there is a prevalent idea among the economi-

6 See Chapter VIII, §4, for discussion of these examples.

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