independence. Others maintain that a high rate of interest induces
people to save because they can see the direct advantage of doing so.
Both these arguments are probably true in some cases. But, as a rule,
people who have the instinct of saving will save, within certain
limits, whatever the rate of interest may be. When the rate of
interest is low they will certainly not reduce their saving because
each hundred pounds that they put away brings them in comparatively
little, and when the rate of interest is high the attraction of the
high rate will also deter them from diminishing the amount that they
put aside. Moreover, we have to consider, not only the money payment
involved by the rate of interest, but its buying power in goods. In
1896 trustee securities could only be bought to return a yield of
2-1/2 per cent. for the buyer; now the investor can get 5-1/4 per
cent. and more from the British Government. And yet the power that
this 5-1/4 gives him over the goods and services that he wants for his
comfort Is probably not greater, and very likely rather less, than the
power which he got in 1896 from his 2-1/2 per cent. One of the few
facts which seem to stand out clearly from a study of the movement of
the prices of securities, and consequently of the rate of interest to
be derived from them, is that the rate of interest is high when the
price of commodities is high, and vice versa. So that the answer to
the question: What is the rate of interest likely to be after the war?
may be given, in Quaker fashion, by another question: What will happen
to the index number of the prices of commodities? It seems fairly
probable that both these questions may be answered, very tentatively
and diffidently, by the expression of a hope that after a time, when
peace conditions have settled down and all the merchant ships of the
world have been restored to their peaceful occupations, the general
level of the price of commodities will be materially lower than it is
now, though probably considerably higher than it was before the war.