PERSONAL AND BUSINESS LOANS

was against interest on such loans that the biblical, classi-cal, and medieval prohibitions and regulations weredirected, and it is chiefly against interest on such loansthat today, in enlightened communities, regulationsaffecting the rate of interest still survive. It is such loansthat supply a large part of the business of pawn shopsand of “loan sharks,” the patrons of which are too oftenvictims of misfortune or of improvidence.

The theory of interest which has been propounded inthis book applies to this species of loan. Sickness ordeath in one’s family, or losses from fire, theft, flood,shipwreck, or other unexpected causes, make temporaryinroads upon one’s income. It is to tide over such strin-gencies in income that a personal loan is contracted. Itekes out the inadequate income of the present by sac-rificing something from the more adequate income ex-pected in the future. Similar principles apply to thespendthrift, who, though not a victim of accidental mis-fortune, brings misfortune upon himself. He borrows inorder to supplement an income inadequate to meet hispresent requirements, while he trusts to future resourcesfor repayment. It is evident, therefore, that the loansjust described are made by the borrower for the sake ofcorrecting an income stream the time shape of which isunsatisfactory.

The second class of personal loans comprises thosegrowing out of such fluctuations in income as are not dueto misfortune or improvidence. Some persons receivetheir money income in very irregular and unequal in-stallments, while their money outgo may likewise havean irregular time schedule. Unless the two series happento synchronize, the individual will be alternately “short”and “flush.” Thus, if he receives his largest dividends

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