Page:The New International Encyclopædia 1st ed. v. 10.djvu/784

* INTEREST. 69fi INTEREST. a political and not a moral piuocpt, and follow- iiij; the i-uiioiisly narrow philot-opliy of Aristotle oirtliis subject, "tin- Clirislian CInircli and laynii-n larly condemm-d the custom, and held any inter- est to be usury and against good morals. The secular law in" Christian nation.s naturally fol- lowed the ecclesiastical in those times, and the taking of interest was forbidden in Kngland from the reign of King Alfred in the' ninth (rntury to the time of Henry VIII. The prohibition of in- terest led. of course, to nuuiy evasions ; and to one of the most ingenious and successful of these the word 'interest' owes its modern technical meaning. At Roman law. interest fijiiod acloris iiilcrtst, the difference to the plaintiff) meant damages. The Church itself did not deny that one from whom money was wrongfully withheld wa.s entitled to damages. Contract.s for (he re- payment of money loaned were accordingly so drawn as to insure a teclinical default on the part of the borrower, and the damages to he paid on default were stipulated in advance. The pro- hibition of interest led also to the development of new legal institutions like the cutiniiniKlila, or silent partnership, in which payment for the use of money took the form of a sliare of profits. The prohibition of interest was generally re- scinded by .secular legislation before or at the close of the Middle .ges-, in Germany, however, not until 1.57". By the statute of ;!7 Henry I., eh. ix., in 1545, interest to the amount of 10 per cent. [K-r annum was permitted. This was ao- eomplished 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. liv statute of 12 .Anne 11., ch. xvi..5 per cent, was fixed as themaximum amount of interest which could l>o demanded. In the United States the demand of interest on money due has always been recogniz<'<l a.s just. How- ever, the right to interest exists only by virtue of such statutes or by agreement of parties, and does not follow necessarily as a legal right from the mere fact that one has another's money in his possession, or owes him money by contract. For example, in the absence of statute or agreement, if .-K loans R $100 to lie paid on demand, A may demand payment five years hence, but is not en- titled to interest for that time. . d even under such statutes interest does not begin to accrue until mone>- is due and payable, because not mplation of law, regulated by agreement of the parties. The statutes in most jurisdictions provide that interest shall be allowed at a fixed rate on all sums when they become due. as on a debt for goods sold and (lelivercd when the period of credit has expired. It is not customary, however, to exact interest in such cases unless the creditor is forced to sue on his claim. In some States, and in England, interest is allowed in certain tort actions on the amount of the damages awarded from the time the claim accrued, but this is not the general rule. A distinction is usually made between the rale which will be allowed by law. usually called the 'legal rate.' where it is not agreed upon hy the parties, or where allowed by operation of law, as on a judgment, and the maximum rate which may l>e stipulated for bv contract, sometimes known as the conventional rate. For example, in Ohio the statutes provide that ti per cent, shall be al- lowed on all sums on which interest is chargeable by ojieration of law. as on a judgment after its entrj', and on sums due where no rate is agreed upon by the parties, whereas H per cent, may be legally- demanded if provided for by express con- tract. The following are the rates of interest fixed by law in the States and Territories of the I'nited States : HTATES AND TKBRITORIKB Alubaiiia Arizona .rkanaaH CalKorniu Colorado (NnoiertlcUt Ilcliiwaiv Liistrii-t of ('ulunibla. Florida Oeoricla Idaho llUiiolB Indiana I*)wa KnnRos Keiituck.v LoulHiniia Miiliw Mtirylaix) M aHsiichiiHetta MiehlKan Minnt'Hota MiusIsNippi Missouri Montana .Ne-braHka .Ni'viiila New IlainpHlliro New .IiTwy , New Mexico New York , North Carollua .North IJakota Ohio Oklahoina Oregon I'Miinsylviinla Rhode Isiund South rnroliiia South Dakota TenneswH* Texas Utah Vermont Virginia Washlli^rton W'est Vliitlnia Wlsfonsin Wyoming I(ut« Lfgal rat« allowed by per ceut, contract per cent. 8 any lU any

10 10 8 12 10 6 8 any e rtll.V 7 10 10 N Vi 8 any i; 6 6 « VI 6 8 7 I'i 8 10 6 6 6 any 7 H 7 li 6 any 8 111 8 any 6 « 6 6 « 12 6 6 7 10 8 12 These rates are occasionally changed by statute, but there has been comparatively little variation in recent years. An interesting fact is that several Eastern States, as .MassHchusett-^. have removed all limitations on rates by eonlraci, and in New York any rate may be charged by contract on loans exceeding .$5000 payable on demand, and known to the financial world as call loans.' In Great Britain, after thei existence of rigor- ous measures against excessive interest for cen- turies, all statutes against usury and fixing rates of interest were repealed by the act of IT and IS 'ict., ch. xc. (1854). The power of the court of equity to relieve against unconscionable bar- gains as to interest still exists; and in 1000. by the Money Lender.s' Act. special provision was made for setting aside a contract made with a professional lender of monej' where an oppressive