, 1874-10-08
The Rate of Interest as the
Test of Civilization.

l
Test of Civilization.
Under this heading the Merchant and
Banltcr, of New York, of a recent date.
has very sensible article. It starts
cut as follows:
What is the be criterion of the de-
gree of civilization to which people
has attained? Some promptly answer,
The proportion of those who can reed
and write in the total population but
this will not serve, for census figures are
not always reliable, and literary instruc-
tion by no means secures commercial or
political intelligence and property. 9th
ers will say, The relative wealth of
countries;' but this is very difficult to
determine, and if ascertained the more
important inquiry remains-in which
countries is that wealth increasing and
where is it growing less? Others still.
name the degree of religious devotion.
the extent of virtue, the development
of learning, the culture of art and
science in various lands; but nither of
these is practically available as stand.
ard, since before it can he 30 applied it
must itself be quantitatively determined.
1t then states that there is. however,
a test quantitative in its nature, sell. de-
termining, and for the most part readi-
ly ascertained. 1t is the average rate of
interest actually paid for loans on good
security. Not. OF course, the rate sane
toned by law; for the only relation of
this rate to that actually paid is COM
monty tendency to heighten the latter
by increasing the risk of the loan. The
rate Of pure interest does not great
ly differ in different countries and is
not far from four per cent. The amounts
demanded or offered and actually paid
for loans above this rate consist mainly
of premiums of insurance on the risk
the lender considers himself to take
when he puts his property out of his
possession. When it is remembered
that confidence is plant of slow growth,
that is developed by long experience
and very quickly and easily destroyed,
and that its development. to such a point
that premiums on risks of loan are
nearly nothing. means that commercial
practice and legal administration have
convinced property-holders by exper-
fence that their property is secured to
them through business honor or through
the aid of law: when these great and
grave facts are borne in mind, it is clear
that the countries where interest rules
lowest are the most civilized. The fall
in the rate when state of thorough Be-
curity to property (Which means per-
sonal liberty, commercial integrity and
honest government) has been Develop
ed, is hastened and furthered by the
Immigration Of capital from less civili-
zed countries. To the land where he
learns that his property will be secure,
the owner in country where he feels
that his tenure of it is unsafe sends that
property for investment; and the none
tary centres of such lands overflow with
capital seeking investment at irates as
tonishingly low. for the sake of the Sc
curity expected. Hence, for all proper
enterprises, in such nation capital is
readily obtainable at price that per-
mits development of her resources
compared with which the plausible
schemes that politicians propose for
Government to execute are as puerile as
they are futile.
It then argues that there is one inn
portant lesson to be deducted from
these facts, viz: that every one in the
community. and every law-maker espe-
cially. can help or hinder among our
selves the development of such a COM
ditior. Every man who faithfully pays
his debts and lives an honest life, helps
to develop great civilization and rem
ders real service to his country. Every
man who commits fraud or robbery,
does more to destroy confidence, to in
crease the rate of interest, and to retard
civilization, than two honest men can
do to help it on. Every law that prac-
tically protects men in the possession of
their own, operates to lower interest
aud build up civilization; but every law
that operates to make it less secure
tariffs, legal tender acts, etc.-raises the
rate of interest and postpones the ad-
vance of civilization.