The Cost principle cannot fail to seem arbitrary to one who does not see that it can only be realized through economic processes that go into operation the moment liberty is allowed in finance. To see this it is necessary to understand the principles of mutual banking, which Mr. Matthews has not attentively studied. If he had, he would know that the establishment of a mutual bank does not require the investment of capital, inasmuch as the customers of the bank furnish all the capital upon which the bank’s notes are based, and that therefore the rate of discount charged by the bank for the service of exchanging its notes for those of its customers is governed by the bank’s rate of discount, for capitalists will not be able to lend their capital at interest when people can get money at the bank without interest with which to buy capital outright. It is this effect of free and mutual banking upon the rate of interest on capital that insures, or rather constitutes, the realization of the Cost principle by economic processes. For the moment interest and rent are eliminated as elements of price, and brisk competition is assured by the ease of capital, profits fall to the level of the manufacturer’s or merchant’s proper wage. It is well, as Mr. Matthews says, to have the Cost principle in view; for it is doubtless true that the ease with which society travels the path of progress is largely governed by the clearness with which it foresees it. But, foresight or no foresight, it gets there just the same. The only foresight absolutely necessary to progress is foresight of the fact that liberty is its single essential condition.(94 ¶ 6)