THE THEORY OF INTEREST

deeper the poverty, the higher the rate which the bor-rowers are compelled to accept. Even pawnbroking isnot available for the extremely poor, but is patronizedrather by the moderately poor. Those who are extremelypoor cannot give the kind of security which the pawn-broker requires. On this account they become the victimsof even higher rates of interest, pledging their stoves,tables, beds, and other household furniture for the loansthey contract. These loans are repayable in installmentssuch that the rate of interest is seldom lower than 100per cent per annum. 11

Turning from social classes to countries, it is note-worthy that in the countries in which there are largeincomes we find low interest, a tendency to lend as wellas to borrow, to accumulate as well as to spend, and toform durable rather than perishable instruments. Incountries where incomes are low the opposite conditionsprevail. Thus, incomes are large and interest rates arerelatively low in the United States, Holland, France ,Germany, and England , whereas the reverse conditionshold in Ireland, China, India, Java, the Philippines andother less developed countries. In Ireland, for instance,especially in the early part of the nineteenth century,the rate of interest was high. The cotter was always indebt, and his hut and other instruments were of the mostunsubstantial variety. 12 Again in the Philippines the rate

11 For details as to thirteen typical loans of this character, see U. S. Bureau of Labor Bulletin, No. 64, May, 1906, pp. 622-633. Thus “loan 1,”143 per cent, “loan 3,” 224 per cent, “loan 7,” 156 per cent. For laterfacts see Ryan, Usury and Usury Laws; also the publications of theRussell Sage Foundation on Small Loans, especially Raby, The Regula-tion oj Pawnbroking.

“Longfield, Mountifort. The Tenure oj Land in Ireland in Probyn’sSystems of Land Tenure in Various Countries. London , Cassell,Petter, Galpin & Co., 1881, p. 16.

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