180 
POLITICAL ECONOMY 
price; and this ¡Supply price measures the 
inducements in the form of interest necessary 
to bring about additional increments of 
saving. It is this supply price which, in 
conjunction with the demand that measures 
the marginal worth of different quantities of 
capital, decrees the net rate of interest payable 
at any time. Again we observe how it is 
marginal incidents that directly move the 
economic world, 
In the last sentence I have introduced for 
the first time the phrase “ net interest.” 
Previously I have spoken simply of interest 
but I have meant by it net interest. At this 
point it is necessary to distinguish between 
net interest and gross interest. The latter is 
the interest which is actually paid. The 
former is the part of the payment which is 
simply remuneration for saving. Gross inter 
est includes, in addition to this, charges which 
are of the nature of insurance against risk, 
recompense for the inconveniences of certain 
investments and for any work entailed on the 
part of the investor. Hazards are greater 
in some industries or businesses than in others ; 
and the former, therefore, must offer a higher 
rate of interest than the latter in order to 
attract capital. In certain undertakings 
capital is either locked up for lengthy periods