The motives which influence such saving, alike in its amount and its application as capital, are complex and various.But the sacrifice ascribed to such saving cannot be assumed to involve any economic cost, in the sense that it requires the payment of economic interest to evoke it.Still less can it be assumed to involve a human cost.A good deal of this middle-class saving, though less automatic than the savings of the rich, is a calculated postponement of some expenditure which might purchase present comforts or luxuries, in order to make provision for the purchase of necessaries or conveniences at some future time.In a word, it is of the nature of the 'stocking' saving, which the better-to-do peasants have always practised before the opportunities of profitable and fairly safe investment were open to them.Though utilised to earn interest, the saving would be made just the same if no objective interest were attainable, provided it were tolerably secure against pillage or destruction.Risk counts for more than interest in such saving, and the bulk of the so-called interest which such savings demand, as a condition of loan or investment, is not true interest but insurance.But in practice inseparable from such saving is that undertaken with the direct object of earning interest upon the capital.A great deal of middle-class saving, and some saving of the rich class would not take place without the hope of receiving interest.If no interest were attainable, though some saving might take place, in order to provide against the possibility of a total collapse of current earning power and a consequent deprivation of the necessaries of life, there would be little disposition to give up any present free expenditure on comforts in order to provide for future comforts which might not be wanted, or which, in consequence of loss of savings, might not be procurable.A positive bonus in the shape of interest seems necessary to evoke this latter saving.The operation of this bonus as an inducement is, however, very complex.It might appear at first sight obvious that, the larger the bonus in the shape of rate of interest, the greater the aggregate of saving it would evoke.So far as non-automatic saving is motived by a general desire to be better off in the future, in order to attain a standard of consumption and of social consideration which denote success and satisfy personal ambition, or in order to bequeath a large estate to one's family, higher interest will tend to evoke a corresponding increase of saving in those whose current incomes enable them to save considerable sums without encroaching upon their established standard of comfort.Young or middle-aged men, of an aspiring nature and with rising incomes, will undoubtedly save more if they see a handsome return on their investments.
But, as most men will realise more clearly and feel more keenly these future economic and social gains if the full fruits of such savings will be reaped by themselves, not by their heirs, ageing men will be likely to respond less freely to this motive.Present comfort, security, and power, will mean more to them than a future liberality of living which they can only hope to enjoy for a few years, if at all.The amount, therefore, of the acceleration of saving achieved by a rise of interest will depend a good deal upon the relative importance this general desire to be better off possesses as an inducement to save.That relative importance again will depend a good deal upon whether the economic and social conditions of the community place considerable numbers of younger business or professional men in a position of rising incomes and of considerable saving power, or, on the contrary, confine such surpluses chiefly to older men.
If, instead of taking as our motive a general desire to be better off, we take a desire to save in order to make some limited specific provision, as for example to buy an annuity of £100, the effect of a higher rate of interest upon volume of saving is likely to be different.Though it may serve to quicken in some degree the pace at which the sum required will be amassed, it will reduce the absolute amount of saving.For when interest is higher, the capital sum required to yield an annuity of £100a year will be less than before.Against this, however, must be set the fact that, when a definite sum is needed in order to pay off some debt, or to furnish a sufficiency for retirement, a high rate of interest may be required in order to make this saving possible or certain.If a man cannot save enough to attain such definite object, he will not save at all, for an insufficient amount will be held futile; whereas, if a rise of interest gives him a good prospect of saving the required amount, he will put forth the effort.
§9.But making due allowance for counteracting motives, it is tolerably certain that a rise of interest, showing any signs of continuance, will stimulate an increase of 'motived' saving, though by no means a proportionate increase.Thus it will appear that, so far as this large section of middle-class saving is concerned, some definite measurable economic costs, in the sense of deprivation of current consumption, are involved, requiring compensation in the shape of interest.But the question which concerns us is whether there are human costs corresponding to and involved in these economic costs.
In answering this question, it is not enough to point to the admitted fact that this saving involves the failure to satisfy some current desire for increased consumption.It has to be considered whether the sacrifice of current 'satisfaction' is really a sacrifice of welfare, either from the standpoint of the saver, or of the society of which he is a member.For we have not taken the view that the personal transient desires and valuations of consumers are a final criterion, either of personal or social welfare.
