West, virgin forests, prairies, and mines offer as splendid opportunities to enterprise as enterprise has ever known; so far, therefore, the demand for capital to develop these new resources will tend to raise, or at least to conserve, the rate of interest. While this is true, it must be remembered that a given amount of capital is more efficient now than it ever was, that its efficiency increases; which means lessened demand for it, tending to reduce the terms paid for its use—unless new and profitable applications of capital can be made. As invention after invention is perfected and introduced, the outlay for machinery required to make a million pairs of shoes steadily diminishes. Quick and cheap railroad transportation enables a country merchant to keep his stock at a minimum by constantly "sorting-up"—reducing the capital needed for his business. Telegraphic purchases and payments now exclude the necessity for locking up capital while correspondence goes on through the post-office. In the vast stores of capital, set free in these and similar ways, arrives the opportunity for inventiveness, taste, and skill to create new wants, to supply them and some old wants as well which have long gone hungry—to increase the quantity and improve the quality of life. In so far as such new applications of capital are not commercially reproductive, they tend to maintain the rate of interest.
Next, as to security in investment. During recent years there has been an immense growth of American capital in the hands of people unable or unwilling to superintend its application in business, people in the main desirous of thorough security in their investments—many of them executors and trustees. Financiers have not failed to observe this state of things; it has enabled them to obtain vast loans at comparatively low and diminishing rates. Of late years have appeared innumerable issues of bonds, debentures, and mortgages; covering not only railroad property, but mills, elevators, apartment-houses, office and club buildings. When the loans obtained by these wholesale borrowings have been remuneratively applied, the result has been all that the lenders could wish. But, unfortunately, the securities which warrant a buyer in dismissing caution and the necessity for discrimination are few indeed. The popularity of coupon bonds has extended from those of a substantial description to many of little or no value. During the year ending June 30, 1888, twenty-one per cent of the bonds outstanding on American railroads paid no interest; the capital involved being no less a sum than eight hundred and twenty-seven million dollars. Of allied significance is the fact that in 1888 one in every ninety-eight firms in business in the United States became insolvent. Despite improved methods of transacting business, of estimating credits through mercantile agencies, there persists an overtrading which burdens the com-
