If it be true, as I believe it is, that in states where credit is so well established, that their funds or public debts are commonly negotiated abroad, there is an average fixed for the value of money, by the operations of credit over the commercial world: and if it be true, that no law can be framed so as to restrain mercantile people, and those who make a trade of money, from turning it to the best account; then all that should be proposed by government, is, to preserve the value of it at home, within that standard. For which purpose, nothing more is necessary than to prevent the competition of the dissipating class of inhabitants, from disturbing the rate which commerce may establish from time to time. This is accomplished by the methods above hinted at, and which in the next chapter shall be more largely insisted on. If, by prudent management, the _conventional_ rate of interest, can thus be brought below the _legal_, then there will be no harm in diminishing the latter by statute, not however _quite_ so low as the conventional standard; but to leave a reasonable latitude for gentle fluctuations above it. From what I have said, I still think I had reason to object to Child’s plan for forcing down the interest by statute: and had he lived at this time, I am persuaded he would have come into that opinion. ------------------------------------------------------------------------ CHAP. VII. _Methods of bringing down the Rate of Interest, in Consequence of the Principles of Demand and Competition._ I hope the arguments used in the foregoing chapter will not be construed as an apology for the high interest of money. I entirely agree with Sir Josiah Child, that low interest is the soul of trade; the most active principle for promoting industry, and the improvement of land; and a requisite, without which it is hardly possible that foreign commerce can long be supported. This proposition I take to be at this time universally admitted to be true; and did there remain, concerning it, the vestige of a doubt in the mind of any one, the writings of many, much more capable than I can pretend to be, and among the rest the author just now cited, are sufficiently capable to remove it. I shall not therefore trouble my reader with a chapter upon that head, but only observe, that the terms _high_ and _low_ are constantly relative. Here the relation must be understood to regard other states, because when we speak of a _rate_ of interest, we are supposed to mean something general in the country we are speaking of: accordingly, if we could suppose that, within the same state, the rate of interest should be lower in one city than any where else, that circumstance would give an advantage to that city in all its mercantile operations.