far-seeing business men know that prices are likely to fall, and,
consequently, investments become unprofitable: therefore they do not
invest; therefore they do not want money; therefore they do not borrow,
and idle money accumulates. This is a phenomenon always observed in hard
times. In good times, on the contrary, when investments are reasonably
sure to be profitable, there is naturally an increased demand for money,
and so the rate of interest rises. As a matter of fact, however, interest
rates, when properly estimated, have been for several years past very much
higher than previously--that is, the borrower has, in actual value, paid
very much more; so rapid has been the increase of the purchasing power of
money, that the six per cent. now paid on a loan will buy more than the
ten per cent. paid a few years ago. In addition to that, the value of the
loan has been steadily increasing. Make a calculation for either of the
years since 1890, and you will find it to be something like this: the six
per cent. paid as interest has the purchasing power of at least ten per
cent. a few years ago, and the lender has gained at least two per cent. a
year, if not twice that, by the increased value of his money; so the
borrower will have paid, at the maturity of his obligation, at least
twelve per cent. per annum, and probably much more.

The silent and insidious increase of their obligations, by reason of the
enhanced and steadily enhancing value of gold, has ruined many thousands
of business men who are even now unconscious of the real cause or of the
power that has destroyed them.

I may add in this connection that the three per cent. now paid on a United
States bond is worth about as much in commodities as the six per cent.
paid previous to 1870, and at the same time the bond has doubled in value
for the same reason; thus, calculated on the basis of twenty-five years,
the bondholder is really receiving, or has received, the equivalent of ten