panies collapses it is tacitly assumed by unthinking
people that those who invested their money in it were foolish persons
who might have sought and found some better investment. Yet a little
investigation would have shown that at the time this company arose no
opportunity of safe remunerative investment open to the outside public
existed, every sound form of business being already fully supplied
with capital.

At first sight it might appear that Consols and first-class railway
and other stocks were open, and that the folly of the investors in
bogus companies consisted in not preferring a safe 2-1/2 per cent. to
a risky 5 or 10 per cent. But this argument is once more a return to
the unsound individualistic view. It was doubtless open to any
individual investor of new savings to purchase sound securities at
2-1/2 per cent., but, since the aggregate of such soundly-placed
capital would not be increased, this would simply mean the
displacement of an equal quantity of some one else's capital. A could
not buy Consols unless B sold, therefore the community to which A and
B belong could not invest any fresh savings in Consols. Any widespread
attempt on the part of those who plunged into bogus companies to try
first-class investments would obviously have only had the effect of
further reducing the real interest of these investments far below
2-1/2 per cent. The same effect would obviously follow any effective
legal interference with company-promoting of this order. The fact that
Consols and other first-class investments do not rise greatly at such
times is, however, evidence that the promoters of unsound enterprises
succeed in persuading individual investors that their chance of
success is not less than 2-1/2 per cent. In many instances the
investor may be acting wisely in preferring a smaller chance of much
higher profits, because a secure 2-1/2 per cent. may be quite
inadequate to his needs. For it must be borne in mind that a knowledge
that the new bank or new building society is unnecessary, because
enough banks and building societies already exist, does not make it
impossible or necessarily improbable that the new venture will
succeed.

The objection, then, which takes the form that over-saving cannot
exist, because the worst investments made with open eyes must be
productive of more than that which could be obtained by investing in
Consols, is not a valid one. It would only be valid on the supposition
that capital wer