THE PROBLEM OF INTEREST 93

lending are large, and the supply of capital is likely to
be thereby restricted. Its local increase is restrained, as
well as the flow from a distance, for savings are discouraged
by uncertainties attaching to property rights, a class of
uncertainty operating in the same way as the uncertainty
necessarily attaching to any event of the future.
In the preceding, no reference has been made to borrowing
 for other purposes than business operations, inasmuch as
the willingness of the private borrower, who desires means
for consumption in excess of his current income, to pay high
rates for loans, depends on purely personal characteristics in
the main. Such borrowing does not much affect the rates
at which capital is loaned. The devotion of capital to the
ends of spendthrift borrowers diminishes, pro tanto, the
supply available for industrial uses. It is through such
restriction of the available supply that any effects on loanrates
 must be sought.
In modern times the great bulk of the borrowing and
lending is related to industrial and commercial operations,
and the means of paying interest are derived from the profits
which are earned by the employment of the borrowed capital
in these operations. The cheapness of modern loans, the
low rate of interest securable from investments in which the
risk is at a minimum, results from a combination of the
circumstances to which attention has been directed in the
preceding discussion. The total of invested capital is very
great, so that opportunities for additional investments at
profitable rates are practically dependent on the opening up
of new uses for capital, either as the result of changes in the
tastes of consumers, or as the outcome of scientific discovery,
the exploitation of undeveloped districts, or of newly-found
resources elsewhere. The progress of society has removed
from many countries a great part of the risks arising from
liability to civil tumult or to warlike operations. Improved
means of communication, and of spreading information, are
reducing the risks of committing capital to distant investments.
 Thus the difference between gross and net interest
has been largely reduced, and the increase of supplies of
capital has reduced net interest, so that the low rates current,