19. The Rate of Interest 1. The Phenomenon of Interest
It has been shown that time preference is a category inherent in every human action.
Time preference manifests itself in the phenomenon of originary interest, that is, the discount
of future goods as against present goods.
Interest is not merely interest on capital.
Interest is not the specific income derived from the utilization of capital goods.
The correspondence between three factors of production, labor, capital and land, and three
classes of income, wages, profit and rent, as taught by the classical economists, is
untenable.
Rent is not the specific revenue from land. Rent is a general catallactic phenomenon.
It plays in the field of labor and capital goods the same role it plays in the yield
of land. Furthermore, there is no homogeneous source of income that could be called profit
in the sense in which the classical economists applied this term. Profit in the sense of
Entrepreneurial profit and interest are no more characteristic of capital than they are
of land.
The prices of consumers' goods are, by the interplay of the forces operating on the market,
a portion to the various complementary factors cooperating in their production.
As the consumers' goods are present goods, while the factors of production are means
As for the production of future goods, and as present goods are valued higher than future
goods of the same kind and quantity, the sum thus apportioned even in the imaginary construction
of the evenly rotating economy falls behind the present price of the consumer's goods
concerned.
This difference is the originary interest.
It is not specifically connected with any of the three classes of factors of production
which the classical economists distinguished.
Entrepreneurial profit and loss are produced by changes in the data and the resulting price
changes which occur in the passing of the period of production.
Naive reasoning does not see any problem in the current revenue derived from hunting,
Fishing, cattle breeding, forestry and agriculture.
Nature generates deer, fish and cattle and makes them grow, causes the cows to give milk
and the chickens to lay eggs, the trees to put on wood and to bear fruit, and the seeds
to shoot into ears.
He who has a title to appropriate for himself this recurring wealth enjoys a steady income.
Like a stream which continually carries new water, the stream of income flows continually
and conveys again and again new wealth.
The whole process is plainly a natural phenomenon.
But for the economist a problem is presented in the determination of prices for land, cattle
and all the rest.
If future goods were not bought and sold at a discount as against present goods, the
The buyer of land would have to pay a price which equals the sum of all future net revenues,
and which would leave nothing for a current reiterated income.
The yearly recurring proceeds of the owners of land and cattle are not marked by any characteristic
which would catallactically distinguish them from the proceeds stemming from produced factors
of Money, The Theory of Money and Credit of Money and Credit of Money and Credit of Money
The ownership of a machine or a bale of cotton is the control of its cooperation in the manufacture of all goods which are produced with its cooperation.
The fundamental fallacy implied in all the productivity and use approaches to the problem of interest was that they traced back the phenomenon of interest to these productive services rendered by the factors of production.
However, the serviceableness of the factors of production determines the prices paid for
them, not interest.
These prices exhaust the whole difference between the productivity of a process aided
by a definite factor's cooperation and that of a process lacking this cooperation.
The difference between the sum of the prices of the complementary factors of production
and the products, which emerges even in the absence of changes in the market data concerned,
is an outcome of the higher valuation of present goods as compared with future goods.
As production goes on, the factors of production are transformed, or ripen, into present goods
of a higher value.
This increment is the source of specific proceeds flowing into the hands of the owners of the
The Factors of Production of Originary Interest
The owners of the material factors of production, as distinct from the pure entrepreneurs of
the imaginary construction of an integration of catalactic functions, harvest two catallactically
different items.
The prices paid for the productive cooperation of the factors they control on the one hand,
and interest on the other hand.
These two things must not be confused.
It is not permissible to refer in the explanation of interest to the services rendered by the
factors of production in the turning out of products.
Interest is a homogeneous phenomenon.
There are no different sources of interest.
Interest on durable goods and interest on consumption credit are, like other kinds of
Interest and Outgrowth of the Higher Valuation of Present Goods as Against Future Goods
2.
Originary Interest
Originary interest is the ratio of the value assigned to want satisfaction in the immediate
future and the value assigned to want satisfaction in remoter periods of the future.
It manifests itself in the market economy in the discount of future goods as against
present goods.
It is a ratio of commodity prices, not a price in itself.
There prevails a tendency toward the equalization of this ratio for all commodities.
In the imaginary construction of the evenly rotating economy, the rate of originary interest
is the same for all commodities.
Originary interest is not the price paid for the services of capital.
The higher productivity of more time-consuming roundabout methods of production, which is
referred to by Boehm-Bawerk and by some later economists in the explanation of interest,
does not explain the phenomenon.
It is, on the contrary, the phenomenon of originary interest that explains why less
This time-consuming methods of production are resorted to, in spite of the fact that
more time-consuming methods would render a higher output per unit of input.
Moreover, the phenomenon of originary interest explains why pieces of usable land can be
sold and bought at finite prices.
If the future services which a piece of land can render were to be valued in the same way
In the way in which its present services are valued, no finite price would be high enough
to impel its owner to sell it.
Land could neither be bought nor sold against definite amounts of money, nor bartered against
goods which can render only a finite number of services.
Pieces of land would be bartered only against other pieces of land.
A superstructure that can yield during a period of 10 years an annual revenue of $100 would
be priced, apart from the soil on which it is built, at the beginning of this period
at $1000, at the beginning of the second year at $900, and so on.
Originary interest is not a price determined on the market by the interplay of the demand
Demand for and the supply of capital or capital goods.
Its height does not depend on the extent of this demand and supply.
It is rather the rate of originary interest that determines both the demand for and the
supply of capital and capital goods.
It determines how much of the available supply of goods is to be devoted to consumption in
in the immediate future and how much to provision for remoter periods of the future.
People do not save and accumulate capital because there is interest.
Interest is neither the impetus to saving nor the reward or the compensation granted
for abstaining from immediate consumption.
It is the ratio in the mutual valuation of present goods as against future goods.
The loan market does not determine the rate of interest. It adjusts the rate of interest
on loans to the rate of originary interest as manifested in the discount of future goods.
Originary interest is a category of human action. It is operative in any valuation of
external things and can never disappear. If one day the state of affairs were to return,
In the modern, which was actual at the close of the first millennium of the Christian era,
when people believed that the ultimate end of all earthly things was impending, men would
stop providing for future secular wants.
The factors of production would, in their eyes, become useless and worthless.
The discount of future goods as against present goods would not vanish.
It would, on the contrary, increase beyond all measure.
On the other hand, the fading away of originary interest would mean that people do not care
at all for one's satisfaction in nearer periods of the future.
It would mean that they prefer to an apple available today, tomorrow, in one year or
in ten years, two apples available in a thousand or ten thousand years.
We cannot even think of a world in which originary interest would not exist as an inexorable
element in every kind of action.
Whether there is or is not division of labor and social cooperation, and whether society
is organized on the basis of private or of public control of the means of production,
originary interest is always present.
In a socialist commonwealth, its role would not differ from that in the market economy.
Boehm-Bawerk has once for all unmasked the fallacies of the naïve productivity explanations
of interest.
That is, of the idea that interest is the expression of the physical productivity of
factors of production.
However, Boehm-Bawerk has himself based his own theory, to some extent, on the productivity
Productivity Approach.
In referring in his explanation to the technological superiority of more time-consuming, roundabout
processes of production, he avoids the crudity of the naive productivity fallacies, but in
fact he returns, although in a subtler form, to the productivity approach.
Those later economists who, neglecting the time preference idea, have stressed exclusively
Originally the Productivity idea contained in Boehm-Bawerk's theory cannot help concluding
that originary interest must disappear if men were one day to reach a state of affairs
in which no further lengthening of the period of production could bring about a further
increase in productivity.
This is, however, utterly wrong.
The interest cannot disappear as long as there is scarcity and therefore action.
As long as the world is not transformed into a land of cocaine, men are faced with scarcity
and must act and economize.
They are forced to choose between satisfaction in nearer and in remoter periods of the future,
as neither for the former nor for the latter can full contentment be attained.
Then a change in the employment of factors of production which withdraws such factors
from their employment for want satisfaction in the nearer future and devotes them to want
satisfaction in the remoter future must necessarily impair the state of satisfaction in the nearer
future and improve it in the remoter future.
If we were to assume that this is not the case, we should become embroiled in insoluble contradictions.
We may at best think of a state of affairs in which technological knowledge and skill
have reached a point beyond which no further progress is possible for mortal men.
No new processes increasing the output per unit of input can henceforth be invented.
But if we suppose that some factors of production are scarce, we must not assume that all processes
which, apart from the time they absorb, are the most productive ones, are fully utilized,
and that no process rendering a smaller output per unit of input is resorted to merely because
because of the fact that it produces its final result sooner than other, physically more
productive processes.
Scarcity of factors of production means that we are in a position to draft plans for the
improvement of our well-being, the realization of which is unfeasible because of the insufficient
quantity of the means available.
It is precisely the unfeasibility of such desirable improvements that constitutes the
element of scarcity.
The reasoning of the modern supporters of the productivity approach is misled by the
connotations of Boehm-Bawerk's term roundabout methods of production, and the idea of technological
improvement which it suggests.
However, if there is scarcity, there must always be an unused technological opportunity
to improve the state of well-being by a lengthening of the period of production in some branches
of industry, regardless of whether or not the state of technological knowledge has changed.
If the means are scarce, if the praxeological correlation of ends and means still exists,
There are biological necessity unsatisfied wants with regard both to nearer and to remoter
periods of the future.
There are always goods the procurement of which we must forgo because the way that leads
to their production is too long and would prevent us from satisfying more urgent needs.
The fact that we do not provide more amply for the future is the outcome of a weighing
In such a world of perfect technological knowledge, a promoter drafts a plan A, according to which
a hotel in picturesque but not easily accessible mountain districts and the roads leading to
to it should be built.
In examining the practicability of this plan, he discovers that the means available are
not sufficient for its execution.
Calculating the prospects of the profitability of the investment, he comes to the conclusion
that the expected proceeds are not great enough to cover the costs of material and labor to
be expended, and interest on the capital to be invested.
He renounces the execution of Project A and embarks instead upon the realization of another
plan, B. According to Plan B, the hotel is to be erected in a more easily accessible
location which does not offer all the advantages of the picturesque landscape which Plan A
had selected, but in which it can be built either with lower costs of construction or
finished in a shorter time. If no interest on the capital invested were to enter into
the calculation, the illusion could arise that the state of the market data, supply
of capital goods, and the valuations of the public, allows for the execution of Plan A.
However, the realization of Plan A would withdraw scarce factors of production from employments
in which they could satisfy once considered more urgent by the consumers.
It would mean a manifest malinvestment, a squandering of the means available.
A lengthening of the period of production can increase the quantity of output per unit
of input or produce goods which cannot be produced at all within a shorter period of
production.
But it is not true that the imputation of the value of this additional wealth to the
capital goods required for the lengthening of the period of production generates interest.
If one were to assume this, one would relapse into the crassest errors of the productivity
approach, irrefutably exploded by Boehm-Bawerk.
The contribution of the complementary factors of production to the result of the process
is the reason for their being considered as valuable.
It explains the prices paid for them and is fully taken into account in the determination
of these prices.
No residuum is left that is not accounted for and could explain interest.
It has been asserted that in the imaginary construction of the evenly rotating economy,
no interest would appear.
However, it can be shown that this assertion is incompatible with the assumptions on which
the construction of the evenly rotating economy is based.
We begin with the distinction between two classes of saving, plain saving and capitalist
saving.
Plain saving is merely the piling up of consumers' goods for later consumption.
Capitalist saving is the accumulation of goods which are designed for an improvement of production
processes.
The aim of plain saving is later consumption, it is merely postponement of consumption.
Sooner or later the goods accumulated will be consumed and nothing will be left.
The aim of capitalist saving is, first, an improvement in the productivity of effort.
It accumulates capital goods which are employed for further production and are not merely
reserves for later consumption.
The boon derived from plain saving is later consumption of the stock not instantly consumed
but accumulated for later use.
The boon derived from capitalist saving is the increase of the quantity of goods produced
or the production of goods which could not be produced at all without its aid.
In constructing the image of an evenly rotating, static economy, economists disregard the process
of capital accumulation.
The capital goods are given and remain as, according to the underlying assumptions, no
changes occur in the data.
There is neither accumulation of new capital through saving, nor consumption of capital
available through a surplus of consumption over income, that is, current production minus
the funds required for the maintenance of capital.
It is now our task to demonstrate that these assumptions are incompatible with the idea
that there is no interest.
There is no need to dwell in this reasoning upon plain saving.
The objective of plain saving is to provide for a future in which the saver could possibly
be less amply supplied than in the present.
Yet one of the fundamental assumptions characterizing the imaginary construction of the evenly rotating
economy is that the future does not differ at all from the present, that the actors are
are fully aware of this fact and act accordingly, hence in the frame of this construction no
room is left for the phenomenon of plain saving.
It is different with the fruit of capitalist saving, the accumulated stock of capital goods.
There is in the evenly rotating economy neither saving and accumulation of additional capital
Capital Goods, Nor Eating Up of Already Existing Capital Goods.
Both phenomena would amount to a change in the data and would thus disturb the even rotation
of the imaginary system.
Now the magnitude of saving and capital accumulation in the past, that is, in the period preceding
the establishment of the evenly rotating economy, was adjusted to the height of the rate of
If, with the establishment of the conditions of the evenly rotating economy, the owners
of the capital goods were no longer to receive any interest, the conditions which were operative
in the allocation of the available stocks of goods to the satisfaction of wants in the
various periods of the future would be upset.
The altered state of affairs requires a new allocation. Also, in the evenly rotating economy,
the difference in the valuation of want satisfaction in various periods of the future cannot disappear.
Also, in the frame of this imaginary construction, people will assign a higher value to an apple
If the capitalist no longer receives interest, the balance between satisfaction in nearer
and remoter periods of the future is disarranged.
The fact that a capitalist has maintained his capital at just $100,000 was conditioned
by the fact that $100,000 present dollars were equal to $105,000 available 12 months
later.
These $5,000 were, in his eyes, sufficient to outweigh the advantages to be expected
from an instantaneous consumption of a part of this sum.
If interest payments are eliminated, capital consumption ensues.
This is the essential deficiency of the static system as Schumpeter depicts it.
It is not sufficient to assume that the capital equipment of such a system has been accumulated
in the past, that it is now available to the extent of this previous accumulation and is
henceforth unalterably maintained at this level.
We must also assign in the frame of this imaginary system a role to the operation of forces which
which bring about such a maintenance.
If one eliminates the capitalist's role as receiver of interest, one replaces it by the
capitalist's role as consumer of capital.
There is no longer any reason why the owner of capital goods should abstain from employing
them for consumption.
Under the assumption implied in the imaginary construction of static conditions, the evenly
and the Rotating Economy, there is no need to keep them in reserve for rainy days.
But even if, inconsistently enough, we were to assume that a part of them is devoted to
this purpose, and therefore withheld from current consumption, at least that part of
capital will be consumed, which corresponds to the amount that capitalist saving exceeds
plain saving.
If there were no originary interest, capital goods would not be devoted to immediate consumption,
and capital would not be consumed.
On the contrary, under such an unthinkable and unimaginable state of affairs, there would
be no consumption at all, but only saving, accumulation of capital and investment.
Not the impossible disappearance of originary interest, but the abolition of payment of
of Interest to the Owners of Capital would result in capital consumption.
The capitalists would consume their capital goods and their capital precisely because
there is originary interest and present-want satisfaction is preferred to later satisfaction.
Therefore, there cannot be any question of abolishing interest by any institutions, laws
and devices of bank manipulation.
He who wants to abolish interest will have to induce people to value an apple available
in a hundred years, no less than a present apple.
What can be abolished by laws and decrees is merely the right of the capitalists to
receive interest.
But such laws would bring about capital consumption and would very soon throw mankind back into
the original state of natural poverty.
3. The Height of Interest Rates
In plain saving and in the capitalist saving of isolated economic actors, the difference
in the valuation of once satisfaction in various periods of the future manifests itself in
the extent to which people provide, in a more ample way, for nearer than for remoter periods
of the future.
Under the conditions of a market economy, the rate of originary interest is, provided
the assumptions involved in the imaginary construction of the evenly rotating economy are present,
equal to the ratio of a definite amount of money available today and the amount available
at a later date which is considered as its equivalent.
The rate of originary interest directs the investment activities of the entrepreneurs.
determines the length of waiting time and of the period of production in every branch
of industry.
People often raise the question of which rate of interest, a high or a low, stimulates saving
and capital accumulation more, and which less.
The question makes no sense.
The lower the discount attached to future goods is, the lower is the rate of originary
interest.
People do not save more because the rate of originary interest rises, and the rate of
originary interest does not drop on account of an increase in the amount of saving.
Changes in the originary rates of interest and in the amount of saving are, other things,
especially the institutional conditions, being equal, two aspects of the same phenomenon.
The disappearance of originary interest would be tantamount to the disappearance of consumption.
The increase of originary interest beyond all measure would be tantamount to the disappearance
of saving and any provision for the future.
The quantity of the available supply of capital goods influences neither the rate of originary
interest nor the amount of further saving.
Even the most plentiful supply of capital need not necessarily bring about either a
lowering of the rate of originary interest or a drop in the propensity to save.
The increase in capital accumulation and the per capita quota of capital invested, which
is a characteristic mark of economically advanced nations, does not necessarily either lower
over the rate of originary interest or weaken the propensity of individuals to make additional
savings.
People are, in dealing with these problems, for the most part misled by comparing merely
the market rates of interest as they are determined on the loan market.
However, these gross rates are not merely expressive of the height of originary interest.
They contain, as will be shown later, other elements besides, the effect of which accounts
for the fact that the gross rates are, as a rule, higher in poorer countries than in
richer ones.
It is generally asserted that, other things being equal, the better individuals are supplied
for the immediate future, the better they provide for once for the remoter future.
Consequently, it is said, the amount of total saving and capital accumulation within an economic system depends on the arrangement of the population into groups of different income levels.
In a society with approximate income equality there is, it is said, less saving than in a society in which there is more inequality.
There is a grain of truth in such observations.
However, they are statements about psychological facts, and as such lack the universal validity
and necessity inherent in praxeological statements.
Moreover, the other things, the equality of which they presuppose, comprehend the various
individuals' valuations, their subjective value judgments in weighing the pros and cons
of immediate consumption and of postponement of consumption.
There are certainly many individuals whose behavior they describe correctly, but there
also are other individuals who act in a different way.
The French peasants, although for the most part people of moderate wealth and income,
were in the 19th century widely known for their parsimonious habits, while the wealthy
members of the aristocracy and the heirs of huge fortunes amassed in commerce and industry
were no less renowned for their profligacy. It is therefore impossible to formulate any
praxeological theorem concerning the relation of the amount of capital available in the
whole nation or to individual people on the one hand, and the amount of saving or capital
consumption and the height of the originary rate of interest on the other hand. The allocation
Description of scarce resources to want satisfaction in various periods of the future is determined
by value judgments and indirectly by all those factors which constitute the individuality
of the acting man.
4.
ORIGINARY INTEREST IN THE CHANGING ECONOMY
So far, we have dealt with the problem of originary interest under certain assumptions,
that the turnover of goods is affected by the employment of neutral money, that saving,
capital accumulation and the determination of interest rates are not hampered by institutional
obstacles, and that the whole economic process goes on in the frame of an evenly rotating
economy.
We shall eliminate the first two of these assumptions in the following chapter.
Now we want to deal with originary interest in a changing economy.
He who wants to provide for the satisfaction of future needs must correctly anticipate
these needs.
If he fails in this understanding of the future, his provision will prove less satisfactory
or totally futile.
There is no such thing as an abstract saving that could provide for all classes of want
satisfaction and would be neutral with regard to changes occurring in conditions and valuations.
Originary interest can therefore in the changing economy never appear in a pure unalloyed form.
It is only in the imaginary construction of the evenly rotating economy that the mere
passing of time matures originary interest.
In the passage of time, and with the progress of the process of production, more and more
value accrues, as it were, to the complementary factors of production.
With the termination of the process of production, the lapse of time has generated in the price
of the product the full quota of originary interest.
In the changing economy during the period of production, there also arise, synchronously,
Other Changes in Valuations
Some goods are valued higher than previously, some lower.
These alterations are the source from which entrepreneurial profits and losses stem.
Only those entrepreneurs who, in their planning, have correctly anticipated the future state
of the market, are in a position to reap, in selling the products, an excess over the
The Costs of Production, Inclusive of Net Originary Interest, Expended
An entrepreneur who has failed in his speculative understanding of the future can sell his products,
if at all, only at prices which do not cover completely his expenditures, plus originary
interest on the capital invested.
Like entrepreneurial profit and loss, interest is not a price, but a magnitude which is to
to be disengaged by a particular mode of computation from the price of the products of successful
business operations.
The gross difference between the price at which a commodity is sold and the costs expended
in its production, exclusive of interest on the capital invested, was called profit in
the terminology of British classical economics.
In economics conceives this magnitude as a complex of catallactically disparate items.
The excess of gross receipts over expenditures, which the classical economists called profit,
includes the price for the entrepreneur's own labor employed in the process of production,
interest on the capital invested, and, finally, entrepreneurial profit proper.
If such an excess has not been reaped at all in the sale of the products, the entrepreneur
not only fails to get profit proper, he receives neither an equivalent for the market value
of the labor he has contributed nor interest on the capital invested.
The breaking down of gross profit in the classical sense of the term into managerial wages, interest
and Entrepreneurial Profit is not merely a device of economic theory.
It developed with progressing perfection in business practices of accountancy and calculation
in the field of commercial routine independently of the reasoning of the economists.
The judicious and sensible businessman does not attach practical significance to the confused
His notion of costs of production includes the potential market price of his own services
contributed, the interest paid on capital borrowed, and the potential interest he could
earn, according to the conditions of the market, on his own capital invested in the enterprise
by lending it to other people.
Only the excess of proceeds over the costs so calculated is, in his eyes, entrepreneurial
profit.
But of course the present-day intentional confusion of all economic concepts is conducive
to obscuring this distinction.
Thus, in the United States, in dealing with the dividends paid by corporations, people
speak of profits.
The precipitation of entrepreneurial wages from the complex of all the other items included
in the profit concept of classical economics presents no particular problem.
It is more difficult to sunder entrepreneurial profit from originary interest.
In the changing economy, interest stipulated in loan contracts is always a gross magnitude
Out of which the pure rate of originary interest must be computed by a particular process of
computation and analytical repartition.
It has been shown already that in every act of lending, even apart from the problem of
changes in the monetary unit's purchasing power, there is an element of entrepreneurial venture.
The granting of credit is necessarily always an entrepreneurial speculation, which can
possibly result in failure and the loss of a part or of the total amount lent.
Every interest stipulated and paid in loans includes not only originary interest but also
entrepreneurial profit.
This fact for a long time misled the attempts to construct a satisfactory theory of interest.
It was only the elaboration of the imaginary construction of the evenly rotating economy
that made it possible to distinguish precisely between originary interest and entrepreneurial
profit and loss.
5.
The Computation of Interest
Originary interest is the outgrowth of valuations unceasingly fluctuating and changing.
fluctuates and changes with them. The custom of computing interest pro-ano is merely commercial
usage and a convenient rule of reckoning. It does not affect the height of the interest
rates as determined by the market. The activities of the entrepreneurs tend toward the establishment
of a uniform rate of originary interest in the whole market economy. If there turns up
Up in one sector of the market, a margin between the prices of present goods and those of future
goods, which deviates from the margin prevailing in other sectors, a trend toward equalization
is brought about by the striving of businessmen to enter those sectors in which this margin
is higher, and to avoid those in which it is lower.
The final rate of originary interest is the same in all parts of the market of the evenly
and the Rotating Economy.
The valuations resulting in the emergence of originary interest prefer satisfaction in
a nearer period of the future to satisfaction of the same kind and extent in a remoter period
of the future.
Nothing would justify the assumption that this discounting of satisfaction in remoter
periods progresses continuously and evenly.
If we were to assume this, we would imply that the period of provision is infinite.
However, the mere fact that individuals differ in their provision for future needs, and that
even to the most provident actor, provision beyond a definite period appears supererogatory,
forbids us to think of the period of provision as infinite.
The usages of the loan market must not mislead us.
It is customary to stipulate a uniform rate of interest for the whole duration of a loan
contract and to apply a uniform rate in computing compound interest.
The real determination of interest rates is independent of these and other arithmetical
devices of interest computation.
If the rate of interest is unalterably fixed by contract for a period of time, intervening
Unchanging changes in the market rate of interest are reflected in corresponding changes in
the prices paid for the principal, due allowance being made for the fact that the amount of
principal to be paid back at the maturity of the loan is unalterably stipulated.
It does not affect the result whether one calculates with an unchanging rate of interest
and changing prices of the principal, or with changing interest rates and an unchanging amount
of the principal, or with changes in both magnitudes.
The terms of a loan contract are not independent of the stipulated duration of the loan.
Not only because those components of the gross rate of market interest which made it deviate
from the rate of originary interest are affected by differences in the duration of the loan,
but also on account of factors which bring about changes in the rate of originary interest.
Loan contracts are valued and appraised differently according to the duration of the loan stipulated.