THE LONG-TERM RATE OF INTEREST AND THE PRICE OF LAND IN THE SEVENTEENTH CENTURY
Tr HE immediate purpose of this article is to settle an unresolved difference of opinion between Sir Josiah Child and John Locke. The dispute was one ofthe subsidiaryskirmishes in the seventeenth-century controversy about the reduction of the legal maximum rate of interest, 'and the particular point at issue was the relation between the legal maximum rate of interest and the return on the purchase of land. The return from land purchase which they were concerned with was not the return which purchasers in fact made in the years after their purchase, but simply the ratio between the annual value of a property at the time of purchase and the price paid for it." In contemporary language this was normally expressed by stating the price in terms of the annual value, rather than by stating the annual value as a percentage of the price. Thus land of the annual value of xIoo, bought for 2,000, representing a return of 5 per cent, was said to be bought for twenty years' purchase.2 Would the number