CHAPTER XVIII

SOME ILLUSTRATIVE FACTS§1. Introduction

This chapter consists of a brief study of the chief in-fluences affecting the rate of interest. It is impossible topresent a verification of any theory of interest. The factsare too meager, too conflicting, and too intermixed toadmit of clear analysis and precise interpretation. In allplaces and at all times the economic causes tending tomake interest high are combined with others tending tomake it low. The fact, therefore, that interest is high orlow, rising or falling, in conformity with the postulatesof a particular theory, does not prove that the theoryis the only true explanation. The best that we can ex-pect is to show that the facts as we find them are notinconsistent with the theory maintained.

The causes making for high or low interest rates tendto counteract themselves. For instance, the economiccauses, which before the World War tended to make in-terest high in the United States , also tended to bring inloans from other countries, especially from Great Britain ,where the rate of interest was then low. The introductionof the loans prevented interest from being as high as itotherwise would have been. High interest in one com-munity tends to increase the borrowings of that com-munity, provided there exists another community inwhich the rate of interest is lower. If borrowing from

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