human device—namely, money and banking—will, if not restricted, prevent the necessity of borrowing capital as a general thing, and therefore virtually abolish interest; though interest might still be paid in extraordinary cases, just as water-pipes still freeze up under extraordinary conditions. Is this claim true? That is the only question.
This claim is met in the single relevant sixteenth of To-day's article,—that already referred to as an economic error. But it is met simply by denial, which is not disproof. I give the writer's words:
The most popular fallacy upon the subject now is that the rate of i nterest can be lowered by increasing the amount of currency. What men really wish to borrow usually is capital,—agencies of production,—and money is only a means for the transfer of these. The amount of currency can have no effect upon the abundance of capital, and even an increase in the abundance of capital does not always lower the rate of interest; this is partly determined by the value of capital in use.
This paragraph, though introduced with a rather nonchalant air, seems to have been the objective point of the entire article. All the rest was apparently written to furnish an occasion for voicing the excessively silly notion that "the amount of currency can have no effect upon the abundance of capital." As I have already said, to show how silly it is, it is only necessary to slightly change the wording of the phrase. Let it be stated thus: "The abolition of currency can have no effect upon the abundance of capital." Of course, if the former statement is true, the latter follows. But the latter is manifestly absurd, and hence the former is false. To affirm it is to affirm that currency does not facilitate the distribution of wealth; for if it does, then it increases the effective demand for wealth, and hence the production of wealth, and hence the abundance of capital. It is true that "an increase in the abundance of capital does not always lower the rate of interest." An extra horse attached to a heavy load does not always move the load. If the load is heavy enough, two extra horses will be required to move it. But it is always the tendency of the first extra horse to move it, whether he succeeds or not. In the same way, increase of capital always tends to lower interest up to the time when interest disappears entirely. But though increased capital lowers interest and increased currency increases capital, increased currency also acts directly in lowering interest before it has increased the amount of capital. It is here that the editor of To-day seems to show unfamiliarity with the position of the opponents of interest. It is true that what men really wish to get is capital,—the
