What is Interest?

   Interest is a sum paid for the use of money. Excessive interest is called usury. Ordinary debts do not bear interest unless there be an agreement to that effect. In case A buys of B and promises to make payment at a certain date and fails to do so, B cannot collect interest. If, however, A has defrauded B and B sues, he may recover with interest. Money loaners have usually a higher rate of interest for a small sum than for a large one, for a short time than for a long time. The greater the risk, the greater the charge for interest; the better the chance for investment, the higher the rate of interest investors are willing to pay. School districts, cities, counties, states, and nations pay very different rates of interest. An old, well established community, fairly out of debt, can borrow a large sum on long time at a very low rate. A new town with an uncertain future must pay a much higher rate.