In Holland, it has even been as low as two per cent. Hence it is
concluded, that "in proportion as society comes to perfection, it will
descend to zero by the time civilisation is complete. In other words,
that which characterises social perfection is the gratuitousness of
credit. When, therefore, we shall have abolished interest, we shall have
reached the last step of progress." This is mere sophistry, and as such
false arguing may contribute to render popular the unjust, dangerous,
and destructive dogma, that credit should be gratuitous, by representing
it as coincident with social perfection, with the reader's permission I
will examine in a few words this new view of the question.
What is _interest_? It is the service rendered, after a free bargain, by
the borrower to the lender, in remuneration for the service he has
received by the loan. By what law is the rate of these remunerative
services established? By the general law which regulates the equivalent
of all services; that is, by the law of supply and demand.
The more easily a thing is procured, the smaller is the service rendered
by yielding it or lending it. The man who gives me a glass of water in
the Pyrenees, does not render me so great a service as he who allows me
one in the desert of Sahara. If there are many planes, sacks of corn, or
houses, in a country, the use of them is obtained, other things being
equal, on more favourable conditions than if they were few; for the
simple reason, that the lender renders in this case a smaller _relative
service_.
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