§7. The Future

From what has been said it is clear that, in order to estimate the possible variation in the rate of interest, we may, broadly speaking, take account of the following three groups of causes: (1) the thrift, foresight, self-control, and love of offspring which exist in a community; (2) the progress of inventions; (3) the changes in the purchasing power of money. The first cause tends to lower the rate of interest; the second, to raise it at first and later to lower it; and the third to affect the nominal rate of interest, in one direction and the real rate of interest in the opposite direction.

Were it possible to estimate the strength of the various forces thus summarized, we might base upon them a Edition: current; Page: [506] prediction as to the rate of interest in the future. Such a prediction, however, to be of value, would require more painstaking study than has ever been given to this subject.

Without such a careful investigation, any prediction is hazardous. We can say, however, that the immediate prospects for a change in the monetary standard seem to be toward its stabilization; that this will tend toward a general prosperity, the main effects of which should be in the direction of lowering the rate of interest; that changes in thrift, foresight, self-control, and benevolence are for the most part likely to intensify these factors and thus to lower the rate of interest; and that the progress of discovery and invention shows now a tendency to increase in speed, the immediate result of which should be to raise the rate of interest but finally to lower it.

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