If a business man borrows from a bank on his note, he must pay for the privilege.
Interest is a sum paid for the use of money.
Interest is reckoned as a certain percentage yearly on the principal.
Interest on interest is called "compound interest" and is unused in ordinary business transactions.
Instead of collecting interest when the amount borrowed on a note is due, or deducting it from the principal in advance, it discounts the note at the rate agreed on and pays the rest.
This is called bank discount and its rate is variable, depending on the abundance or scarcity of money.
Money is a marketable article, and the price, like that of wheat or cotton, is governed by supply and demand.
INTEREST ON NOTES
A note may be made payable "with interest," or not, as the parties concerned may agree.
If nothing is said about interest in the note, no interest can be collected.