[184-2] According to the Lex Visig., V, 5, § 8, the maximum rate of interest allowed on loans of money was 12½ per cent., and on other res fungibiles, 50 per cent. From the 12th to the 14th century, the Lombards and the Jews in France and England took generally (?) 20 per cent. a year. (Anderson, Origin of Commerce, a., 1300.) Philip V. of France, in 1311, fixed the rate of interest at the fairs in Champagne at 15 per cent. (a species of discount) at most, and at a maximum everywhere of 20 per cent. (Ordonnances de la France, I, 484, 494, 508.) The legal rate of interest in Verona, in 1288, was fixed at a maximum of 12½ per cent.; in Modena, 1270, at 20 per cent. (Muratori, Antiquitt. Ital., I, 894); in Bresica, 1268, at 10 per cent. (v. Raumer, Geschichte der Hohenstaufen, V, 395 ff.) Frederick II. wished to reduce it to 10 per cent. for Naples, but failed. (Bianchini, Storia delle Finanze di Nap., I, 299.) The tables of Cibrario, Economia polit. del medio Evo., III, 380, for 1306-1399, show for upper Italy interest to have been at 20, 15, 14, 10, and also 5½ per cent. About 1430 the Florentines, in order to moderate the enormously high rate of interest, called Jews to their city, and the latter promised not to charge over 20 per cent. (Cibrario, III, 318.) In the Rhine country, the Kowerzens, during the 14th century, took from 60 to 70 per cent., for which they had, however, to pay a heavy tax to the archbishop. (Bodmann, Rh. Alterthümer, 716.) Of Jewish maximum rates of interest, in the 14th and 15th centuries, see Stobbe, Juden in Deutschland während des M. Alters, 103, 110, 234 seq.; Hegel, Strassb. Chr., II, 977, 984.
The rate of interest usual in these countries must not however be calculated from the data furnished by these usurious rates and fixed rates of interest, simply. In Germany, the rate of interest promised by princes in the 13th and 14th centuries was usually 10 per cent. The Frankfort municipal loans made by Jews in the 14th century bore interest at the rate of 9, 11-2/3, 13, 18, 26, and even 45 per cent. (Kriegk, F.'s Bürgerzwiste, 343, 539.) The rate of interest in the purchase of annuities continually declined between 1300 and 1500, especially in the time of the emancipation of manual laborers. Old Base documents give, between 1284 and 1580, as the highest rate, 11-3/9, and as the least, 5 per cent. The latter became more and more usual later, especially in the sale of house-rents (Hauszins), so that in 1841 all annuities (Renten) might be canceled by a payment of their amounts multiplied by 20. Until the beginning of the 15th century, in the city, the rule was 6 to 7 per cent.; outside of it, 8 to 10 per cent. (Arnold, Geschichte des Eigenthums in den deutschen Städten, 222 seq., 227 seq.) According to the Bremen Jahrb. of 1784, 164 seq., the rate of interest in the case of Handfesten, in 1295, = 10 per cent., gradually sank: in the 15th century it was never over 6-2/3; after 1450, generally 5; in 1511 only 4 per cent. In 1441 ff., in Augsburg, people were satisfied with a business profit of 7-2/3 per cent., while the usual rate of interest paid by house-rent, etc. was 5 per cent. (Hegel, Augsb. Chr., II, 134 seq., 157.) Handsome tables in the rate of interest in the purchase of annuities for all Germany, from 1215 to 1620, give as the rule, 7 to 10, scarcely ever over 15 per cent., in M. Neumann, Geschichte des Wuchers, 266 ff. For the upper Rhine, compare Mone's Zeitschr., 26 ff. Among the Fathers of the councils of Constance and Basil 5 per cent. was considered equitable. Compare F. Hammerlin, 1389-1457, De Emtione et Venditione unius pro viginti. Russian interest at 40 per cent., according to the laws of Jaroslaw (ob. 1054 after Christ). Karamsin, Russ. Gesch., II, 47.
[184-3] The high rate of interest in many countries at present may be thus accounted for. In the United States, during the last century, less than 8 per cent. was seldom paid. (Ebeling, III, 152.) According to M. Chevalier, Lettres sur l'Amérique du Nord, 1836, I, 59, the rate of interest in Pennsylvania was 6, in New York, 7, in most of the slave states, 8-9; in Louisiana, 10 per cent. In South Australia (1850) it was, with full security, 15-20 per cent. (Reimer, Südaustralien, 39.) In the West Indies, about the end of the last century, a strong negro might produce a revenue equal to one-fourth of his capital value. (B. Edwards, History of the British West Indies, II, 129.) In Brazil, the lowest rate of interest was at 9 per cent., and 12-18 per cent. was nothing unusual. (Wappäus, M. and S. Amerika, 1871, 1413.) In Cuba, for the government 10, for private parties, 12 to 16 per cent. (Humboldt, Cuba, I, 231.) In Potosi, in 1826, Temple got 30 per cent. interest on chattel mortgage, and from 2 to 4 per cent. a month was offered, while the rate of interest in Buenos Ayres amounted to 15 per cent. per annum. (Temple, Travels, II, 217.) In Russia, Storch, Handbuch,[TN 20] I, 262, speaks of 8-10 per cent. According to v. Haxthausen, it was, in the interior, never less than from 8 to 12 per cent. per annum; at Kiew and Odessa, 1¼, 1½ and 2 per cent. per month. (Studien, I, 58, 467; II, 495.) In Greece, the rate of interest on first mortgages is at least 10, on a second, 15-18 per cent. (Ausland, 1843, No. 82.)
[184-4] Nebenius, Oeff. Credit, I, 55.
[184-5] Only in this particular instance is what Ricardo so frequently insists on true, viz: that the rate of wages can be increased only at the expense of the profit of capital, and vice versa.
HISTORY OF THE RATE OF INTEREST.—INFLUENCE OF AN ADVANCE IN CIVILIZATION.
With an advance in civilization, the rate of interest is wont to decline.[185-1] [185-2] One of the chief causes of this phenomenon is the necessity, as population and consumption increase, to employ capital in the fertilization of less productive land, and in less profitable investments.[185-3] An increase in the stock of money does not necessarily depreciate the rate of interest. If this increase comes in connection with a corresponding depreciation of the individual pieces of metal, it cannot be said that the nation has thereby become richer in capital. All that would be required in such case is only a greater number of pounds of gold or silver, or more paper bills to represent the same capital.[185-4] Only during the transition-period, during which the depreciation of money is still incomplete, is the rate of interest wont to be lowered; and all the more, since loaned capital is generally offered and sought after in the form of money.[185-5] [185-6]
The decline of the rate of interest generally shows itself earliest in the large cities, which are everywhere the national organ, in which the good and bad symptoms of later civilization may be soonest observed.[185-7]
Moreover, the condition of capitalists is not necessarily made worse by a decline of the rate of interest. It is possible that, for a long time, the increase of capital should continue more rapid than the decrease of interest for each individual. (If, indeed, the aggregate interest of capital should become absolutely smaller, there is always a pleasant remedy available, viz.: to consume a part of the capital!) But, however, a decline of the rate of interest is nearly always followed by increased activity on the part of capitalists; and they come to the resolve to retire later to enjoy the results of their previous labors. In Holland, after the time of Louis XIV., no branch of business was wont to pay more than from two to three per cent. In the case of the purchase of land, no one calculated on more than two per cent. Hence it was scarcely possible for small capitalists there to live on their interest; and the good sense of the people so well adapted itself to this state of things that to live in leisure on one's rents was considered a not entirely honorable mode of existence.[185-8] The lower the rate of interest, the larger, in highly civilized countries, is the stock on hand of cash apt to become, for the reason that business men then hope to gain more by the advantages of cash payments than by the saving of interest. [185-9] [185-10]