We take interest for granted today. You put money in a bank, it grows. You borrow money, you pay extra back. But the concept that "money has a time value" was a revolutionary idea that built civilization.
2000 BC: The Grain Loans of Mesopotamia
The earliest known loans weren't given in gold or silver, but in grain. In ancient Sumeria, farmers would borrow seeds for planting. At harvest time, they would return the seeds plus a portion of the crop.
The Rule of 72 (1494 AD)
As banking moved to Italy during the Renaissance, the math became more sophisticated. Luca Pacioli, a friend of Leonardo da Vinci, published the first known reference to the "Rule of 72" in his book Summa de Arithmetica.
This rule stated that to double your money, divide 72 by the interest rate. Even today, investors use this mental shortcut.
1613: The Discovery of Compound Interest
While simple interest was common, compound interest ("interest on interest") was often considered confusing or even illegal (usury). It wasn't until Richard Witt published Arithmeticall Questions in London that the world got its first comprehensive tables for compound interest.
Jacob Bernoulli and the Number 'e'
In 1683, mathematician Jacob Bernoulli asked a question that changed finance forever: "What happens if you pay interest not just annually or monthly, but continuously?"
His work on this problem led to the discovery of the mathematical constant e (2.718...), which is now fundamental to everything from calculating mortgage rates to rocket trajectories.
See the Math in Action
Use Bernoulli's principles to calculate your own investment growth instantly.
Open Interest CalculatorModern Era: Algorithms and High-Frequency Trading
Today, interest is calculated in nanoseconds by algorithms. Yet, the underlying principle remains the same as it was for the Sumerian farmers: resources today are worth more than resources tomorrow.