THE THEORY OF INTEREST

York companies. Since 1880 the Middle West has de-veloped less feverishly, and loans on farming lands havebeen made at lower rates.

Australia furnishes another example of a countrywhich, through improvement in the means of trans-portation and consequent great investment opportunities,created a great demand for loans. The rate during thefifties on safe securities was rather low. This rate in-creased until during the seventies, 7, 8, and 9 per centwere usual. After 1880 the rates declined. 22

England may perhaps be cited as exemplifying thesame phenomena which we have seen in the case ofNevada, though in a less degree. Thus as Nevada hasexhausted its mines of precious metals, so England ison the road toward exhaustion of its coal and iron sup-plies. As coal and iron lie at the base of England’s com-mercial power their exhaustion must carry with it thereduction of the income stream from English domesticindustries. This fact has been noted with considerablealarm by some English economists, especially Jevons. Butit does not necessarily indicate that the economic powerof Englishmen will be greatly or even at all lessened.Its significance shows itself in the tendency of England to become an investing country. It is the part of thosewho have property in mines or other investments yield-ing terminable income not to use all of the product asincome, but to reinvest some of the earlier income inorder to maintain the capital. This the Englishmen havedone and are doing, and, being unable to make enoughsatisfactory investments at home, they have placed theirloans all over the world.

22 Zartman, Lester W. The Investments of Life Insurance Companies.New York, Henry Holt and Co., 1906, p. 103.