SOME ILLUSTRATIVE FACTS

of interest on good security is often 2, 4, and even 10per cent a month. The Chinese money lender frequentlytakes advantage of the Filipino’s poverty. 13 Many ofthese cases may be wholly or partly explained by othercauses such as have been mentioned in the last section.

§4. Examples of Influence of Composition of Income

As to the influence of the composition of income, it iseven more difficult to obtain any statistical confirmationof importance. Variations in the amount of that real in-come which takes the form of food has an effect on therate of interest similar to the effect of variations in thetotal income itself. Scarcity of food tends therefore tocause high interest, and abundance of food, low interest.During the siege of Paris the rate of interest was high,although other causes than the scarcity of bread weredoubtless largely accountable for the fact. While nostatistics of interest rates appear to be in existence forsuch periods, the testimony of eyewitnesses agree that inBelgium when starvation threatened during the WorldWar the rates of interest were extremely high. Likewiseduring the blockade of Germany when the food shortagewas acute, abnormally high interest rates are reported.

§5. Examples of Influence of Risk

As to the influence of uncertainty or risk, we encountersimilar difficulties in getting positive inductive evidence.But evidence that in general risk tends to raise the com-mercial rate of interest but to lower pure interest isabundant. The first part of this proposition is a matter

“From a letter to the author from Professor E. W. Kemmerer; seealso his article in The Business Monthly, Pittsburgh , April, 1907, p. 2.

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