of a monopoly are not transient, but are likely to be both
long-continued and large, and it might seem that they would constitute
a larger source of addition to capital than those profits which come
from technical improvement. There are several reasons why this is not
the fact. In the first place, what we are discussing is the addition
that profits make to the total capital of society, rather than to the
capital of any one person or corporation. The monopoly makes its gains
by taking something from the pockets of the general public, and in so
far it reduces the power of the general public to save.

It might be alleged, however, that since a monopoly reduces wages and
interest, adds to profits, and creates enormous incomes for a few
persons, it really diverts income from a myriad of persons who would
save very little of it, and puts it into the pockets of a few persons
who are likely to save a great deal of it. This might conceivably add
to the capital of society were it not for the fact that the more
secure and regular gains of monopolies are made the basis of large
capitalization. A company that earns twenty-five per cent of its real
capital per annum may have its stock diluted with four parts of water
and pay only five per cent in dividends on its capitalization. This
looks like interest and is apt to be treated as such by those who
receive it. It is, therefore, not a more favorable income from which
to make accumulations of capital than is the interest on real
capital. The sudden gains which promoters and manipulators of
consolidated companies make are, indeed, transient gains and may be
largely added to capital. The introduction of a regime of monopoly may
insure a period of much saving by the class that profits by it; but
the later career of the monopoly is unfavorable to the growth of
capital.

_The Special Effect of a Prospective Fall in the Rate of
Interest._--If interest which continues steadily at a low rate affords
an especially strong incentive for saving, it follows that a falling
rate, one that begins low and steadily becomes lower, affords a still
stronger one. The average rate during the years of the future for
which a prudent man makes provision is made, of course, lower than it
would be if the rate were stationary. This influence is probably not
as effective as it would be if the remote future were included in the
view of those who are securing capital. On account of the
near-sightedness to which att