In what are commonly called loans of money, it is not really the money, but the money's worth, that the borrower wants; and the lender really assigns to him the right to a certain portion of the annual produce of the land and labour of the country, As the general capital of a country increases, so also does the particular portion of it from which the possessors wish to derive a revenue without being at the trouble of employing it themselves, and, as the quantity of stock thus available for loans is augmented, the interest diminishes, not merely "from the general causes which make the market price of things commonly diminish as their quantity increases," but because, with the increase of capital, "it becomes gradually more and more difficult to find within the country a profitable method of employing any new capital" - whence arises a competition between different capitals, and a lowering of profits, which must diminish the price which can be paid for the use of capital, or in other words the rate of interest.
All the states have what is called a "legal rate" of interest; and when no rate of interest is specified in the contract between the parties, there is a presumption that the borrower has agreed to pay the legal rate.
The existence of the professional lender, as apart from the ordinary facilities for borrowing money on good security, is obviously due to the fact that it is not every borrower who is in a position' to give good security for a loan.
The question whether any interest is payable or not, and also the amount of such interest, depends on whether the parties to the transaction have expressly or impliedly agreed to the payment of interest by the borrower; for apart from such agreement no interest can lawfully be demanded on a loan.
Although in general there is no limit on the amount of interest which a borrower may agree to pay, equity has always been ready to grant relief from unconscionable bargains.
It had been the practice of a certain class of lender to trade under a variety of names; so that under one name the same individual would lend money to a person who borrowed from him under another name; the second loan would be spent in liquidating the first, and the borrower finding it always easy to obtain more money would continue borrowing until he became hopelessly involved.
A check is placed on false representations and promises made with the intention of inducing a borrower to enter into a loan transaction.
Where an intending borrower breaks his agreement to borrow, specific performance will not be granted, and the damages recoverable must be measured by the loss sustained through the breach and not by the sum agreed to be lent (The South African Territories, Limited v.
The borrower is in this unhappy state rather a distressed man soliciting aid than a solvent man capable of making and fulfilling a contract; and if he cannot find a friend to make a free gift to him in the former character he would not under the latter character obtain a loan from a stranger except by the promise of exorbitant interest and by the fullest eventual power over his person which he is in a position to grant."
He was a follower of none, an original borrower from all.
1 To make James the coiner and Paul the borrower not only throws back James to a date incompatible with the other phenomena, but implies a literary polemic tactlessly waged by Paul against the head of the Jerusalem church.
One of these is micro-lending, which directly connects the lender with the borrower and which the Internet has made appealingly easy and personal.