Editing Interest (section)

===Development of the theory of interest during the seventeenth and eighteenth centuries===
[[Nicholas Barbon]] (c.1640–c.1698) described as a "mistake" the view that interest is a monetary value, arguing that because money is typically borrowed to buy assets (goods and stock), the interest that is charged on a loan is a type of rent – "a payment for the use of goods".<ref>Barbon, "A discourse of trade", 1690</ref>{{sfn|Schumpeter|1954|p=61}}<ref>William Letwin, "Origins of Scientific Economics: English Economic Thought, 1660–1776".</ref> According to Schumpeter, Barbon's theories were forgotten until similar views were put forward by [[Joseph Massie (economist)|Joseph Massie]] in 1750.{{refn|group=note|"Barbon's Discourse, on this point at all events, did not meet with success. The tract seems indeed to have been forgotten very soon. Thus, Barbon's fundamental idea remained in abeyance until 1750, when it was again expounded—for all we know, independently rediscovered—by Massie,<ref>{{cite book|last=Massie |first=Joseph |title=Essay on the Governing Causes of the Natural Rate of Interest |year=1750}}</ref> whose analysis not only went further than Barbon's but also gathered force from its criticism of the views of Petty and Locke."{{sfn|Schumpeter|1954|p=314}}}}

In 1752 [[David Hume]] published his essay "Of money" which relates interest to the "demand for borrowing", the "riches available to supply that demand" and the "profits arising from commerce". Schumpeter{{sfn|Schumpeter|1954}}{{page needed|date=June 2019}} considered Hume's theory superior to that of Ricardo and Mill, but the reference to profits concentrates to a surprising degree on 'commerce' rather than on industry.

[[Anne Robert Jacques Turgot|Turgot]] brought the theory of interest close to its classical form. Industrialists
<blockquote>share their profits with capitalists who supply the funds (''Réflexions'', LXXI). The share that goes to the latter is determined like all other prices (LXXV) by the play of supply and demand amongst borrowers and lenders, so that the analysis is from the outset firmly planted in the general theory of prices.{{refn|group=note|Schumpeter;{{sfn|Schumpeter|1954|p=316}} the references are to paragraph numbers in Turgot's "Réflexions sur la formation et la distribution des richesses" written in 1766, first published in 1769-70 in a journal, and then separately in 1776.}}</blockquote>