In Europe, the difference between a carpet and a rug is purely one of size. Anything 40 square feet or under is a rug, anything over that is a carpet. In North America today a rug denotes an area rug of whatever size, whereas carpet or carpeting speaks of wall-to-wall or broadloom.
In the older reference books, one does not see the word rug anywhere. It is almost as if the word carpet was necessary in order to pay sufficient respect to a weaving that took six or nine or twelve months of someone's life. It is almost a question of scale. Of course a 3 foot x 5 foot piece, however beautiful, is a rug. Well, almost. That beautiful piece of pure silk glimmering on the wall behind you, which may have taken three years of an old master's life, is the closest thing we might ever see to a flying carpet.
Yet, in his "The Oriental Rug Lexicon", Peter Stone points out that a rug comes from the Old Norse meaning “shaggy”, referring to “any fabric floor covering”. He also states that the difference between carpets and rugs is that the rug is any weaving less than 8 feet x 10 feet in size, the carpet anything that size or larger.
At Knot By Knot, we have decided to favor the term rug, in deference to the hemisphere in which we live. If this changes in the future, it probably will be that the industry, or some clever decorator or rug dealer, will come up with a new term that satisfies us all. Perhaps the German teppich? But that leads to tapis in French, which is very close to tapestry in English. So perhaps we should hang them on the walls and solve the problem that way!