So far in our discussion of the interest question we have considered only pure interest, and the current rate of pure interest. We may now examine some of the forces that cause (1) the current rate of contract interest to be above the current rate of pure interest, and (2) variations in rates of contract interest. Risk is the chief cause for the difference between pure interest and contract interest. No debt, we may say, is absolutely sure to be paid, though in the case of United States bonds uncertainty is reduced to a minimum. Risk increases rate. Government obligations bear a relatively low rate of 3 or 4 per cent; railroad bonds, 5 per cent; ordinary bank paper (promissory notes), 6 or 7 per cent; while collateral loans made by pawn shops often bear a rate of 30 or 40 per cent. A portion of the interest income, therefore, represents risk.