THE PROBLEM. OF INTEREST 91

be used in short-period investment. The interpretation of
long and short here may, of course, be somewhat elastic.
To some extent the supply and demand in the former
market are distinct from those in the latter. The changes
in the utility of capital, that is, in the conditions acting
on demand, are especially liable to rapid change in the
latter market. The manifestation of these changes may be
due to changes in the degree in which the total supply has
been distributed between the two markets, leading to a
relative over-supply of the one and under-supply of the other.
The willingness of investors, to dispose of their supply in the
one or the other market, is mainly influenced by the estimation
 they put on risks running over long periods as compared
with those which terminate quickly, and by anticipations of
the ‘probability of the occurrence of superior opportunities
for investment in the near future, as compared with those
available in the present. An over-estimation of long risks
would lead to investment in rapidly maturing forms, even
with lower net returns; an expectation of early improvement
in the chances of making a profitable investment would have
a similar result. Influences thus acting on the supply of
capital, for quickly terminating investments as compared
with slowly maturing risks, readily account for divergencies,
between the loan-value of capital in the two cases, which
may be observed from time to time,
The market for capital is thus not so perfectly organised,
that all demands for its use at the same net price rank
equally, and all units of supply are interchangeable, Certain
parts of the market are peculiarly well organised, but there
are other parts more or less shut off from the levelling
influences of a market organisation. With such limits as
are imposed by defects of market organisation, the statement
may be made that the price of the control of capital, the
rate per cent. per annum which is the expression of that
price, tends to equality for all loans, This price, in practice,
is not dissociated from the recompense for the risk attaching
to the particular use to be made of the capital, and thus the
gross interest on different loans is by no means uniform, and
there is no economic force tending to make it so, but quite