Chap. IX : Does not Interest fall in Proportion as Wealth increases?

I answer in the affirmative: provided it be supposed that dissipation do not increase in proportion to the wealth. Now in a general proposition, such as this which stands at the head of our chapter, this very necessary proviso is apt to be overlooked, and thus people are led to error. The manners of a people, not their external circumstances as to riches, are that which renders them frugal or extravagant. What, therefore, depends upon the spirit of a people, cannot be changed, but in consequence of a change of that spirit.

If the rate of interest be high, from a taste of dissipation, let foreign trade throw in what loads of money it may, interest will stand high, until manners do change. Every class of a people has their peculiar spirit. The frugal merchant will accumulate wealth, and the prodigal lord will borrow it. In this situation, internal circulation will be rapid, and lands will shift hands. If this revolution should prove a corrective to dissipation, by vesting property in those who have contracted a firm habit of frugality, then an augmentation of wealth may sink the rate of interest. But if, on the contrary, the laws and manners of the country do distinguish classes by their manner of living, and mode of expence, it is ten to one but the industrious and frugal merchant will put on the prodigal gentleman, the moment he gets into a fine country seat, and hears himself called your Honour. In certain countries, the memory of past industry carries a dreg along with it, which nothing but expensive living has power to purge away.

Let this suffice at present upon the subject of interest: it is so connected with the doctrine of credit, that it will recur again at almost every step as we go along.