nd [wm 1800]

Institute

Ch. 2. Leading Features.

'.3.I. Wealth. 3. Non Agenda

Broad Measures

3. Reducing Interest

14

5

66

4. The expectation that the reduction of interest would produce an addition to

the aggregate mass of wealth is an illusion which has its source in another

illusion. Encrease of wealth, though not the effect, is apt to be an

accompaniment of a reduction in the rate of interest. As capital encreases,

wealth encreases: and as capital encreases, if the effectual demand for capital,

(for money in the shape of capital) does not encrease in so great a proportion,

men will not give so high a price for the use of it as they did before. The

reduction, in this case, is the result of freedom: and though it does not itself

encrease wealth, it cannot take place any further than as wealth is encreased by

other causes. The reduction, here contended against, is the product of coercion:

and whenever the illusion prevails, it may be carried into effect at any time,

in the poorest country as well as the richest, in the most declining as well as

the most prosperous, accelerating and aggravating the decline.

* The mischief that would be produced by a reduction in the rate of lawful

interest, is over and above the constant mischief produced by the fixation of

that rate: {concerning which, see the "Defence of Usury".}

* In Ireland, in 1788 or thereabouts, the reduction of the rate of interest,

from 6 to 5 per cent, was proposed in Parliament, as a means of encreasing

wealth; but, though proposed by Administration there, rejected after a hard

struggle.+ The Defence of Usury which I sent over at the time contributed to

throw out the Measure as Parnell, then Chancellor of the Exchequer very good

humouredly acknowledged to me.

 Four pages more of Non Agenda are to follow. viz: 2 on Encreasing Land: 2. on

Narrow Measures

Section 7. Rates of Interest Evils of fixation. p.320 to 335.

+ To Dumont. The Defence of Usury which I sent over at the time contributed to

throw out the Measure as Parnel, then Chancellor of the Exchequer, very good

humouredly acknowledged to me.