How Interest Rates Were Set, 2500 BC – 1000 AD

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Originally published in Journal of the Economic and Social History of the Orient 43 (Spring 2000):132-161 Máš, tokos and fænus as metaphors for interest accruals* * An earlier draft of this paper has benefited from comments by William Hallo, the late W. F. Leemans, Johannes Renger, Piotr Steinkeller, Cornelia Wunsch and Norman Yoffee. For the points on which I was unable to convince them, I take full responsibility. ABSTRACT. The earliest interest rates in Mesopotamia, Greece and Rome were set not economically to reflect profit or productivity rates, but by the dictates of mathematical simplicity of calculation. The interest that was born calendrically did not take the form of young animals, but rather of the unit fraction, the smallest unit fraction in each ...