INTEREST

an allowance made for the use of borrowed money or capital. The ratio which the I. bears to the loan or principal per annum is the rate per cent. I,,is payable periodically, usually half yearly in commercial transactions, but frequently monthly in the case of loans by registered moneylenders or by persons who ought to be so registered. I, is either simple or compound, the former being payable on the principal alone, the latter on the amount of the principal and interest as and when it fall due. The exaction of I. was prohibited in England as early as 1197, and the prohibition rested, as elsewhere, upon religious grounds. It is an economic commonplace that the rate of I. is the same in all trades in the same country and at the same time—a law which rests for its validity on the elimination from profits, of compensation for risk, of dishonorable reputation and everything but pure I. on capital. But the risk in some occupations being greater, and some trades requiring more superintendence than others, there must always be differences in the rate of I. or profits in different trades at the same time; and in those trades or busine es in which the rate is higher than the bank rates—their criterion of the average rate—some econom= ists contradistinguish such higher rate by the name false I. It is an accepted position in economics that as wealth and population increase the rate of I. declines, because, among other causes, wealthy and populous communities afford le and le scope for any given quantity of labor and capital, a tendency which is the root principle of the Ricardian theory of rent; and again the increasing export of capital tends to produce a uniform rate for all countries. Mac#ings,