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The History of Interest Rates

Updated: May 25, 2021

By Robert Warther, Warther Private Wealth

Interest Rates are currently at a 5,000-year low, but low interest rates are not a new phenomenon. The Bank of England conducted a study that found a pattern of declining interest rates globally, stretching back thousands of years. This would mean that the pattern of declining rates would have been occurring even before the creation of modern central banks!

Close to 5,000 years ago, during the time of ancient Mesopotamia (3000 BC) interest rates were around 20%. 3,000 years later during the time of the Roman empire and Jesus, interest rates ranged anywhere from 4% to 15%. By the time Da Vinci was painting the Mona Lisa in the 15th century, rates were fluctuating around 6-8%. Later, in the 1700’s when the U.S. was being settled, British interest rates were around 9 – 10%.

U.S. Interest Rates Historically

Interest rates from the 19th century can also help display trends. For the first three decades of the 1800’s, interest rates declined, coming to rest at 4% in 1835. 1835 was also the year that President Andrew Jackson paid off all of the U.S.’s national debt, which was the first and last time the U.S. was debt free. Following this, the government sold a lot of land to avoid the accumulation of more debt. This eventually led to a real estate bubble and recession. This meant that the government had to borrow more, leading to increased interest rates.

During the civil war, rates increased slightly but the overall trend continued downwards. Rates increased slightly again during World War I and finally started climbing significantly again following World War II. During World War II, interest rates were only 1.7% and the government was injecting billions into the U.S. economy to fund the war effort. Around this time national debt also skyrocketed to over 100% of the GDP. In December of 1974, interest rates jumped from 4.7% to 12.3% before hitting their all-time high of 15.8% in 1981, which was due to rampant inflation in the 1970s and early 1980s. Since then, the rates have been declining again. Over the course of 2020, interest rates dropped again, from around 1.25% to 0.25%! This rate is much smaller than the average interest rate of 6.1% over the last 58 years. It took around 100 years for interest rates to beat the 7% highs of the Civil War era!


Robert Warther

Securities offered through Independence Capital Company, Member FINRA/SIPC, a registered broker-dealer. Investment Advisory services offered through Warther Private Wealth, LLC, a Registered Investment Advisor ("RIA"), registered in the State of Ohio. Independence Capital Company, Inc and Warther Private Wealth are not affiliated. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. The information contained herein is based on sources we believe reliable but is not considered all-inclusive. Past performance is no guarantee of future results. Please contact your Financial Advisor with information regarding specific investments. Opinions are our current opinions only and are subject to change without notice. Generally, investments are NOT FDIC INSURED, NOT BANK GUARANTEED, and MAY LOSE VALUE.


- Khan, K. (2021, May 14). Interest rates move off of 5,000-year lows. Seeking Alpha.

- Swan, B. (2016, April 29). Lowest Interest Rates in 5000 Years? Svane Capital. -

- Long, H. (2020, March 15). Federal Reserve slashes interest rates to zero as part of wide-ranging emergency intervention. Washington Post.

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