partly upon the available supply of land of the type wanted. This is
equivalent to saying that rent is determined by the interaction of the
two forces of supply and demand.

87. THE CAPITALIST RECEIVES INTEREST.--Besides land, the entrepreneur
needs machinery, office equipment, raw materials, the services of
laborers, and numerous other aids in production. Let us assume that
the entrepreneur borrows of a capitalist the money required to procure
these necessities. The entrepreneur can afford to pay interest for the
use of this money, since with the aid of the goods and services which
it will buy, he can produce more shoes than would otherwise be
possible. Not only can he afford to pay interest, but he is obliged to
pay it, since otherwise he could not secure the required loan. Though
some people tend carelessly to overlook this fact, saving and
abstinence are necessary to the accumulation of money. The individual
who has money, therefore, cannot be expected to allow the entrepreneur
to use it without payment, especially not when, as we have just seen,
the entrepreneur can acquire wealth by the use of the goods and
services which that money will buy.

The amount of interest which the capitalist receives for the use of
his money will depend, as will rent, upon the law of supply and
demand. If there is a large amount of funds available for investment,
and at the same time few borrowers, then a given capitalist must be
content to accept a relatively low rate of interest, lest his refusal
cause the entrepreneur to close a bargain with a competing capitalist.
If, on the other hand, available funds are scarce and entrepreneurs
are greatly in need of money, then capitalists are at an advantage and
entrepreneurs must offer relatively high rates of interest.