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# Interest of Money

## Definition

The price paid for the use of borrowed capital, typically expressed as an annual percentage rate. The interest rate serves as an indicator of the ordinary rate of profit in a society, with higher interest rates corresponding to higher potential profits from capital investment.

## Source Chapter

Book I, Chapter 9

## Context

Smith establishes interest of money as a practical measure for understanding the ordinary rate of profit across different trades and time periods. He traces historical changes in legal interest rates from Henry VIII through Queen Anne, showing how these rates followed rather than led market conditions, and uses interest rates as evidence for understanding broader economic trends.

## Economic Domain

Regulation

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