he rate of interest very
low. A certain portion of the monied class would be obliged either to
sacrifice their predilections by engaging in business, or to lend on
inferior security; and they would accordingly accept, where they could
obtain good security, an abatement of interest equivalent to the
difference of risk.

This is an extreme case. Let us put an extreme case of a contrary kind.
Suppose that the wealthy people of any country, not relishing an idle
life, and having a strong taste for gainful labour, were generally
indisposed to accept of a smaller income in order to be relieved from
the labour and anxiety of business. Every producer in flourishing
circumstances would be eager to borrow, and few willing to lend. Under
these circumstances the rate of interest would differ very little from
the rate of profit. The trouble of managing a business is not
proportionally increased by an increase of the magnitude of the
business; and a very small surplus profit above the rate of interest,
would therefore be a sufficient inducement to capitalists to borrow.

We may even conceive a people whose habits were such, that in order to
induce them to lend, it might be necessary to offer them a rate of
interest fully equal to the ordinary rate of profit. In that case, of
course, the productive classes would scarcely ever borrow. But
government, and the unproductive classes, who do not borrow in order to
make a profit by the loan, but from the pressure of a real or supposed
necessity, might still be ready to borrow at this high rate.

Although the inclination to borrow has no _fixed_ or _necessary_ limit
except the power of giving security, yet it always, in point of fact,
stops short of this; from the uncertainty of the prospects of any
individual producer, which generally indisposes him to involve himself
to the full extent of his means of payment. There is never any permanent
want of market for things in general; but there may be so for the
commodity which any one individual is producing; and even if there is a
demand for the commodity, people may not buy it of him but of some other.
There are, consequently, never more than a portion of the producers, the
state of whose business encourages them to add to their capital by
borrowing; and even these are disposed to borrow only as much as they
see an _immediate_ prospect of profitably employing. There is, therefore,
a practical limit to the demands of borrowers at any given insta