§ 1. Dynamic movement of saving. § 2. Orderly government favorable to saving. § 3. Private property favorable to saving. § 4. Opportunities for investment. § 5. Get-rich-quick schemes. § 6. Slower and safer plans. § 7. Relation of the interest rate and saving. § 8. Bountiful income and abstinence. § 9. The interest rate and waiting. § 10. Duplicate agents and slower processes. § 11. Lower interest rate stimulating invention. § 12. Time-price determining the selection of processes. § 13. Newly discovered process; effect upon interest rate. § 14. Railroad betterments and the rate of interest. § 15. Effect of war upon the interest rate.

§ 1. Dynamic movement of saving. Let us, finally, examine the influence for dynamic change that is exerted by man's choice and use of goods with relation to time. We have already considered time-preference from the individual standpoint (Chapter 24), and have seen how with varying degrees of abstinence the individual's fortune may be maintained, or decline, or advance. In the community as a whole, individual time-choices more or less neutralize each other. Prodigality versus abstinence, spending versus saving, of all the members of the community taken together, have, as a resultant, the maintenance or the reduction or the accumulation of economic agents. Accompanying this movement more or less closely, now ahead and now lagging behind, go changes in the rate of time-price as shown in the rate of interest. Let us look first at some conditions favorable to saving, and then at some adverse movements, making for the lowering of the economic environment.

Abstinence varies from man to man and from one period to another, but there are certain general conditions that appear to be favorable to the development of abstinence as a widespread habit of mind in society, and that contribute up to a certain point, to a general state of accumulation.

§ 2. Orderly government favorable to saving. As saving results from a comparison of the future with the present, any lack of certainty regarding the future decreases the appeal it makes. The theory of probabilities applies roughly in this matter, and a use is only half as great when there is but one chance in two of ever getting it. Political security against foreign aggression is favorable to saving. War is not only destructive of wealth and of industry in the zone of conflict, but it weakens the motives of thrift in the citizen. The energies of the people are given to fighting and to preparation for fighting, and the national resources are used regardless of the future need. Domestic order is favorable to saving. Where there are frequent revolutions as in some countries and periods in South America, and where brigandage is common, as it has been in Italy, Macedonia, and Bulgaria, the motive for saving is greatly weakened. Oppressive government, especially when it takes the form of irregular taxation, decreases the certainty of income and in that proportion weakens the motive for the accumulation of property. While the miserable subjects of the state live from hand to mouth, the very sources of the public revenue disappear. Improvidence grows upon such a people into a prevailing national custom; ambition is wanting; industry is the sport of chance; economic order and economic prosperity are impossible.

§ 3. Private property favorable to saving. Social institutions that give a motive to the individual seem to be essential to effective and continuous saving. Among these institutions the most important are the family and, closely connected with it, the institution of private property. The effect of this in its best manifestations is to fix the responsibility for each person's economic welfare upon himself or upon his family. Through the institution of private property the state says to men: " Save if you will; the wealth and its future fruits shall be yours. But if you spend in the present, you alone will suffer the consequences." The institution of private property never is found in an ideal form. Corrupt public officials weaken its working, dishonesty in business and the oppressive monopolistic power of a few exaggerated private fortunes reduce its benefits. Every propertyless family marks a partial failure in its purpose. These limitations, pretty generally admitted, have made private property a favorite object of attack by radical reformers. Its abolition has been advocated from the days of ancient Greece to our own days, as the remedy for all the great social ills. We are not concerned here with the moral judgment of the question, but with the pure economic aspect. Private property gives men an incentive to subordinate their present desires to the future. Private property has served to fix responsibility for waste and improvidence and to multiply the rewards of abstinence. History shows as yet no communities where any other motive has been effective in inducing large numbers of men regularly to conserve economic agents and in maintaining a progressive economic state.

§ 4. Opportunities for investment. Opportunities for the investment of small savings favor the spread of a spirit of saving. The institution of small property, peasant proprietorship, has worked powerfully in this direction in many parts of Europe; and the same effects have resulted in America from the wide diffusion of property in agricultural land. If the decline in the number of small independent farmers has somewhat weakened this influence in America, other agencies are effectively performing the same functions in other ways. Savings-banks, penny banks, building and loan associations, penny-provident funds, and other convenient means of investing small sums, encourage men to reduce their tobacco bills, their candy bills, their saloon bills, and to lay aside for the winter's coal, for the children's education, for houses, for business investments, or for old age. The French government, by the sale directly to the people of national bonds in small denominations, both recognized and helped to strengthen a custom of thrift in the small investor that has probably become more widespread in France than in any other country. Probably no one thing has given a greater stimulus to saving than has the development of insurance and the endowment policies in connection with it. The modern systems of compulsory accident and sickness insurance, and of pensions for old age, are accumulating large funds (invested in securities) and are collective saving on a large scale (whether it be deemed the saving by employers or by employees). Great modern corporations have displaced many small business enterprises into which so much of the saving of the past was put, but have opened up other large fields of choice for investors in notes, bonds, and stocks. Of late some American corporations and governments have begun to issue bonds in denominations of less than $1000, known as "baby bonds," especially of $100 and $500, and their sale is steadily increasing.