:--

[Illustration]

Line _EF_ measures fifty years and line _FG_ another fifty. The heavy
line _AB_, rising toward the right, represents the rising standard of
living which the man's reason makes him maintain during the period
over which his vision is clear, while the dotted line _BC_ represents
the standard for which, in an imperfect way, he makes provision during
the next fifty years. Over later periods his vision does not extend at
all. It loses clearness after the point _B_ is passed, and in the same
proportion it loses influence over the man's conduct. He therefore
reconciles himself to whatever standard may prevail, even though it
were a stationary one during the latter part of the time. Very seldom,
however, would the man consciously lower the standard even during
this later period.

_The Effect of Limited Vision on the Valuation of a Perpetual
Income._--This failure of vision, or economic myopia, accounts for the
fact that the infinite series of payments of interest that a sum of
invested capital will earn do not overbalance, in the man's estimate,
the principal which he must refrain from spending in order to get
them. If interest is at five per cent, abstaining from using a hundred
dollars for present pleasure will put into the man's hands, in twenty
years, a sum equal to the principal, in twenty years more another like
sum, and so on _ad infinitum_. The man who considers whether he shall
save a hundred dollars or spend it might be said to be comparing the
importance of a hundred present dollars with that of an infinite
number of future ones. In his consciousness the number is not
infinite, because his vision does not extend over much of the future.
The fact of most importance, as determining whether low interest
causes small savings, is that in weighing the importance of the
dollars which will be used during the period over which his vision
ranges the average man is influenced by a desire to maintain some
standard of living, which involves the more saving, the lower the rate
of interest.

_The Action of the Motive for Saving on Minds of Varying Degrees of
Reasonableness._--Not only the man who looks a little way forward, but
the man so constituted that he can content himself with a falling
standard, is impelled to save more if interest is low than he is if
interest is high, so long as he deems it necessary to maintain any
standard at all; but much importance still attaches to the question
whether the st