In today's business and corporate world, many people associate the word "interest" with money. While this isn't wrong, it's not accurate - "interest" as it pertains to finances is older than the existence of actual money!
As one might expect, it all began with the inception of civilization, a milestone wherein the lives, culture, religion, and economy of peoples progressed and became more organized. The Sumerian civilization of circa 3000 B.C. lays claim to the earliest formalized systems of credit based on major commodities. This is logical - the Sumerians are considered as the world's first civilization, after all.
In the Sumerians' time, the two major commodities used in trade were grain and silver. The practice of taking and giving loans was already extant during the period, and here "interest" comes into the picture. The formalized systems of credit continued on to the unending chain of the world's civilizations (Minoans, Mycenaeans, Greeks, Egyptians, Persians, Romans, you name it). Often, metals were used, with metal loans being based on weight. Then came coins, and nearing the modern times, money printed on paper bills.
Interest loans have been an integral part of man’s financial history. Moderate-interest loans became an accepted (but we can assume, not loved!) part of Medieval business world. In fact, another word of "interest", "usury" is derived from the Medieval Latin word usuria ("interest" or "excessive interest"). Of course, the meaning of the word "usury" has since then evolved to take on a more derogatory and insidious tone.
Speaking of usury, most people are familiar with it because of existing state laws and past and present religious restrictions on finances. For example, the collection of interest in loans was restricted by the Christian and Jewish religions under laws of usury, and is still restricted in the Islamic religion. In Islamic finance, one of the two central tenets is that no interest can be earned from loans.
The modern concept of interest stems mainly from the work of Irving Fisher, an American economist. His theory on interest, interest rates, capital, credit markets, and inflation rates was exposited in his 1930 treatise, The Theory of Interest. This has become the canonical theory regarding interest in modern economics.