And this means that projects undertaken with borrowed money still need to generate a return that is sufficient to repay that principal and also compensate for risk. I suspect that some of Melville's engineering ideas wouldn't have met this test. So how then do we explain these low interest rates around the world?
Like many questions in economics, a reasonable place to start is supply and demand. Over recent times, the global supply of savings has been high relative to the demand to use those savings to invest in new productive capital. As a result, the return to savers, especially those who save in low-risk assets, is low.