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What society invented compounding interest on money lent?
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[quote:Anonymous Coward 776992:MV85MzMyOTJfMTQ0NzAzMzNfODgxRDNENzY=] FEDERAL RESERVE BANK OF ST. LOUIS Usury laws have been traced back to the dawn of recorded history. Both legal and religious restrictions on interest charges were imposed in ancient times.2 The early Babylonians permitted credit but limited the rate of interest. One of the earliest writings of the Bible (Deuteronomy 23:19-20) stated, “Thou shalt not lend upon usury to thy brother, . . . Unto a stranger thou mayest lend upon usury; but unto thy brother thou shalt not lend upon usury ....“ In the New Testament (Luke 6:35) the admonition was broadened lend freely, hoping nothing thereby.” In Greece, Aristotle considered money to be sterile, and that the breeding of money from money was unnatural and justly hated. During the period of the Roman Republic, interest charges were forbidden, but they were permitted during the time of the Roman Empire. During the early Middle Ages religious leaders treated the subject niore thoroughly, and reached the same conclusion — that interest on loans was unjust. The exploitation of the poverty-stricken by rich and powerful creditors who lent money at interest was considered sinful to the Christians of that period, who stressed humility and charity as among the greatest virtues and played down the value of earthly goods. Secular legislation responded to the Church’s influence and, in general, interest charges and usury were regarded as synonymous.~ The increase in economic activity and expansion of personal freedom that came with the Renaissance forced modifications in the prevailing views concerning interest rates. Recognizing that man was imperfect, Martin Luther and other 15th century reformers began to concede that creditors could not be prevented from charging interest. In the 16th century John Calvin rejected the scriptural basis for interest prohibition on grounds of conflicting interpretations and changed circumstances, but still advocated some control. more: http://research.stlouisfed.org/publications/review/74/08/Usury_Aug1974.pdf ........ [b]History of the Term [/b] Wayne A.M. Visser and Alastair McIntosh provide a short, scholarly summary of history of this term in "A Short Review of the Historical Critique of Usury".1 The religious prohibition against usury is found in all of the world religions. The first recorded use of the term "derives from the Vedic {basically, Hindu - e-hadj} texts of Ancient India (2,000-1,400 BC) in which the "usurer" (kusidin) is mentioned several times and interpreted as any lender at interest." The Christian tradition is found in Luke 6: 34-35: "And if ye lend to them of whom ye hope to receive, what thank have ye? for sinners also lend to sinners, to receive as much again. But love ye your enemies, and do good, and lend, hoping for nothing again; and your reward shall be great, and ye shall be the children of the Highest: for he is kind unto the unthankful and to the evil.". However, the biblical usury theme borrows strongly from Judaism. Visser and McIntosh remark, "The Hebrew word for interest is neshekh, literally meaning "a bite" and is believed to refer to the exaction of interest from the point of view of the debtor." Perhaps the most famous literary reference to usury is Shakespeare's The Merchant of Venice, although I fear the Bard took the Hebrew for "bite" a bit too literally... More recently, usury has generally been interpreted in both the religious and secular context to refer to the undesirable practice of lending at excessive rates, rather than as a ban on all interest-based lending. The exception is current-day Islam, and the growing practice of Islamic Banking.2 Many legal jurisdictions have usury laws that function to limit the amount of interest creditors may charge. In spite of the popularity of such laws for consumer advocates, these laws have been on the books in one form or another for ages, and owe their origin to the religious heritage of the word. One way to conceptualize this difference is, in the context of contemporary consumer protection, the debtor is the victim of usury and the creditor is the perpetrator; whereas in the Christian religious context, both the creditor and the debtor are harmed by usury; the creditor (or more accurately, his soul) is harmed because the worldly lure of interest perverts the Christian spirit of altruistic charity. Discussion of the economic implications of usury laws is addressed adequately by the interest node. http://www.everything2.com/title/usury . [/quote]
Original Message
I have been curious about this for a few days.
Who invented compound interest on debt?
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