INTEREST (ante) is founded upon the principle that, as capital is the fruit of labor, its possessor is therefore entitled to compensation for its use. A general denial of this, by destroying one of the most powerful motives to industry, enterprise, frugality, and fore sight, would, it is now generally believed, binder the advancement of the human race in knowledge and virtue, if indeed it did not give it a direct impulse toward barbarism. It is the belief of the most enlightened political economists of the present day that much of the legislation upon this subject, intended as it has been to protect the poor from the assumed rapacity of the rich, has nevertheless been in reality a mistaken and injurious kindness—an attempt to regulate by law that which might better be left to the discretion of the parties directly concerned. The interests of capital and labor are not conflicting but identical, and any legislation resting upon a contrary assumption is now seen to be injurious alike to both. The opprobrium cast, in the name of Christianity, upon the money-lender in the early centuries of our era, originated unquestionably in motives of benevolence; but it is now seen to have been founded in ignorance of thc divine law of political economy. The money-lender may indeed abuse his power to the injury of the borrower, as the borrower may sometimes deceive the lender; but this is only the abuse of a thing not bad in itself. It was the growth of commercial enterprise under the influence of the Protestant reformation that first effectually undermined the ancient doctrines upon this subject; and the economists of the school of Locke, Hume, Adam Smith, and finally of Jeremy Bentham, did much to set the truth in a clear light. More and more the legis lation of the world in respect to this subject is advancing toward an unreserved recogni• tion of time principle that the rights of capital and labor rest upon one and the same foundation, and that the money-lender is not, any more than the money-borrower, necessarily a wrong-doer. In England, as long ago as 1854, all laws intended to prevent the taking of higher than legal rates of interest were repealed, borrowers and lenders being left free to make such agreements as might be mutually satisfactory. Some of the American states have, within a few years, followed the example of England, and the tendency of public sentiment in the United States is believed to be in the same direction. The generally prevailing rate of interest in the United States is 6 per cent, though in some of the states it is higher. In some states a particular rate is declared applicable to ordinary transactions where there is no specific agreement, but time parties are at liberty to stipulate for any rate that to them may seem good; if no rate be mentioned the legal rate is under stood to be implied. No agreement to pay a higher than the legal rate can be enforced,
unless such agreement is expressly authorized by statute, the established presumption of the law, in the absence of such legislation, being that such a rate is usurious. If there is a stipulation to pay a higher than the so-called legal rate of interest to the time of the maturity of the obligation, and nothing is said of the rate to be charged after that period in ease of default, the weight of authority favors the conclusion that thenceforth the interest must be reckoned at the statutory rate. is an obligation to pay interest arises from well-established usage when there is no written contract to that effect ; as where a debt is due upon account, and it is the general custom, within the knowledge of the debtor, to upon such (Jahns after a certain. time. Again, interest is recoverable as damages for failure to pay a debt or claim at the time it becomes due, though there be no contract to that effect, such interest being reckoned at the legal rate from the time when the debt should have been paid. For example: suppose a note of hand, without interest, to be due upon a certain day; if there be default of payment at the appointed time, the courts will award interest from that date until the note is paid. If judgment have been obtained for a debt, interest on the same is reckoned at the legal rate from the day the judgment was rendered. The common law upon this point has iu this country generally been reversed. Upon unliquidated demands—i.e., the amount of which, and the date when payment is due, have not been precisely fixed—interest is not collectible. If a man convert to his own use the personal property of another, interest upon the value of such property accrues from the time of its conversion. The custodians of trust funds and trustees of every sort will be required to pay interest in eases of maladministration of the sums intrusted to them. If a guardian or executor fail in his duty to account for or invest the trust-funds in his possession within a reason able time, he is liable to pay interest thereon as damages for his delinquency, and, if the case be flagrant, compound interest may be charged. In ordinary transactions compound interest is not favorably regarded by the courts and is seldom enforced. Even a special agreement to pay interest at the compound rate will generally be treated as not binding. An obligation to pay compound interest may, however, arise from the usages of trade, and in such cases courts will exact payment. In the case of foreign contracts intercel will be allowed at the legal rate of the place where the contract is to be performed. Specific legacies draw interest from the testator's death, but ou general legacies, payable at a particular day, interest is not allowed till that day arrives.