INTEREST (OF. interest, Fr. intera, in terest, from Lat. interest, it concerns, 3d pers. sg. pres. ind. of interests, to concern, from inter, between ± esse, to be). A certain profit or premium for the use, forbearance, or detention of money. In spite of the natural feeling that the payment of interest was a hardship, and that to exact interest from a borrower was to take an unfair advantage of his necessities, all the chief peoples of antiquity recognized that interest might lawfully he stipulated in con nection with a loan, and might be awarded in the discretion of the court even when no such stipu lation had been made. Babylonian tablets show ordinary loans at moderate 'interest, and also maritime loans. in which the claim of the credi tor for his principal was extinguished by the los.: of the ship. and on which a mueh higher rate of interest was exacted. It was very common among the ancient llebrews. and the Alosnie la W contains a prohibition against the taking of usury (or interest, as it should have been trans lated) from the Jews, but permitted it as to all other races. The Greek and the laws recognized interest. The Romans called it pay ment for use (usurer). and assimilated it to the natural yield or increase derived from organic nature by classing it. with rent, among civil or legal fruits (fructus eirilcs). They did not limit it to the loan of money exclusively: any generic or 'fungible' things, like wheat. wine, or oil. could be stipulated.
Aristotle speaks of it. but condemns it as vicious. holding that money is 'naturally barren,' and that to make it 'breed money' is preposterous and a perversion of the end of its institution. which, lie declared, wns to serve as a medium of exchange and not for purposes of increase. Through a misconstruction of the real intent and purpose of the law of 'Moses. which was clearly a political and not a linIral precept, and follow ing the curiously narrow philosophy of .\ristotle on this subject, the christian Chore and laymen roudeuancd the ell.t..111. and livid any inter• ist to be usury and against good morals. The •ciular law in Christian nations naturally fol lowed the ecclesiastical in those times, and the taking of interest was forbidden in England from the reign of King Alfred in the' ninth century to the time of Henry VIII. The prohibition of in
terest led, of course, to many evasions; and to one of the nowt ingenious and sticeessful of these the word 'Merest owns its 1110tie te•illlieill meaning. At Roman law. interest I gaud uctorts intro st, the (W1'41191(x to the plaintiff) meant damages. Church itself did not deny that one from NN hew money %vas xvrongfully withheld was entitled to damages. t'ontracts for the re payment of money loaned were acrordingly sm as to insure a technical default on the part of the borrower, and the damages to be paid on default were stipulated in adeauttu. The pro hibit' of interest led also to the development of new legal institutions like the emli ;nand; la, or silent partnership. ill which payment for the use of money took the form of a share of profits. The prohibition of interest was generally re ...eluded by -4'el11:11* legislation before or at the close of the 'Aliddle Ages; in (lerniany. however, not until 1577. By the statute of :17 Henry ch. ix.. in 1545, interest to the :mount of 10 per cent. per :1111111111 was permitted. 'bilk was ac complished in a negative manner. by simply pro. viding penalties for taking more than that amount, thus giving only an indirect sanction to taking it at all. By statute 14 12 Anne 11.. cll. xvi..5 per c•nt.‘va fixed :IS the maximum amount of interest which could be demanded. In the United States the demand of interest On money due has always been as just. flow ver, the right to interest exists only by virtue of such statutes or by agreement of parties, and flocs not follow necessarily as a legal right from the mere fart that one has another's money in his or owes him money by contract. For example. in tIm absence of statute or agreement, it A loans 11 $100 to be paid on demand. A may demand payment five years hence. but is not en titled to interest for that time. And even tinder such statutes interest di M'S not begin to accrue until money is due and payable. ])excuse not until that time is there an unjust detentitin from the owner. Previous to the debt lie•oming due, the matter is, in contemplation of law, regulated by agreement of the parties.