THE PLACE OF INTEREST IN ECONOMICS

losing it. The business borrower who borrows in order toinvest always hopes to gain and often succeeds beyond hisexpectations.

The rates of return over cost in various investment op-portunities play an important role in both. Henry Ford and others grew rich not so much because of thrift asbecause they took advantage of unusual investment op-portunities, in which the rates of return over cost provedto be many times the market rate of interest.

Besides thrift and luck, with their opposites, there isanother factor closely associated with the process of ac-cumulation or dissipation. This is habit. It has been notedthat a person’s rate of preference for present over futureincome, given a certain income stream, will be high orlow according to the past habits of the individual. If hehas been accustomed to simple and inexpensive ways, hefinds it fairly easy to save and ultimately to accumulate alittle property. The habits of thrift being transmitted tothe next generation, by imitation or by heredity or both,result in still further accumulation. The foundations ofsome of the world’s greatest fortunes have been basedupon thrift.

Reversely, if a man has been brought up in the lapof luxury, he will have a keener desire for present enjoy-ment than if he had been accustomed to the simple livingof the poor. The children of the rich, who have beenaccustomed to luxurious living and who have inheritedonly a fraction of their parents’ means, may spend be-yond their means and thus start the process of the dissi-pation of their family fortune. In the next generationthis retrograde movement is likely to gather headwayand to continue until, with the gradual subdivision ofthe fortune and the reluctance of the successive genera-

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