FARMERS' REGISTER— ESSAY ON USURY LAWS, 



the producer, and the consequent stimulus which 

 will be given to increased production, and benefi- 

 cial changes in the modes of tillage. 



The rate of profits, however, not only varies 

 fi-om country to country, and fi'om district to district 

 of tlicsamc country at the same time, but it varies 

 likewise fi-om year "to year, with the variations of 

 seasons; with the increasing or decreasing ener- 

 gies of the population; with the opening of new, 

 or the suppression of old marlvets and channels 

 of trade; with the raj)id multiplication or sudden 

 destruction of population; with the failure or ex- 

 tension of credit; and with a thousand other cir- 

 cumstances which it would be needless to enumer- 

 ate. Wars, embargoes, restrictions, plagues, the 

 discovery of new routes and new countries, inter- 

 nal improvements of every description, and the 

 spreading of civilization — all have a tendency to 

 influence the ever fickle rate of profits, and pre- 

 vent its ever permanently settling at any one 

 point. Thus we see what is termed the average 

 or general rate of profit in a country, varies with 

 the course of trade and the general prosperity of 

 the country. 



But again: although I have shown you in a 

 former lecture that all the adv^antages and disad- 

 vantages of different trades are equal in the same 

 communit}^, or tending to an equality, yet the actual 

 profits vary according to the nature of the em- 

 plo}Tiient, Avhether agreeable or disagreeable, 

 hazardous or not. Thus a writer in our countiy 

 says "liirraing gives a remunerating price for la- 

 bor, and from two to three per cent, on capital — 

 including land and stock. The retail merchant re- 

 ceives a remunerating price for his labor and 

 twenty-five per cent, on his capital. Manu- 

 facturing gives a remvmerating price for labor, and 

 from ten to thirty per cent, on capital. Public liinds 

 four and a half per cent, on capital. The me- 

 chanic receives a remunerating price lor his 

 labor and one hundred per cent, on his capital." 

 It is a matter of no consequence whether the 

 above scale be exactly correct or not: all I wish to 

 establish is the difterent rates of profits Avhich may 

 exist in different trades and professions in the 

 same community. I have no doubt agricultural 

 profits are placed too low, perhaps they can never 

 fall permanently below profits on capital invested 

 in the public funds, Avhich are placed at four and 

 a half per cent.; but agricultural profits will al- 

 ways be near a minimum, because of the security 

 of this species of property, the pleasure and grati- 

 fication attending the occupation, the indepen- 

 dence of the landholder, the right of suffrage, &c. 

 &c. 



Lastly. Small capitals are expected to yield 

 much higher proportional profits than very large 

 capitals. The itinerant pedlar who carries his 

 goods on his back, or in his cart, at much risk 

 and inconvenience, sells at much higher profits 

 than the regular stationary retail merchant. The 

 large capitals in the towns yield a iriuch smaller 

 proportional profit, than the small capitals in the 

 country; hence goods are always cheapest in 

 the towns. If the Rothschilds can make three 

 or four per cent, on their enormous capital, 

 they are well contented: if the little grocer who 

 has gotten ^200 ahead does not make 50 or 100 

 per cent, on his capital he does but a very poor 

 business. Is it not perfectly absurd then, so far 

 as interest is dependent on profits, to attempt to 



regulate it by law? for we have seen that the gene- 

 ral rate of profits varies from country to coun- 

 tiy, and from section to section of the same countiy, 

 and from year to year: again, that particular rates 

 vary with the several trades and professions of 

 society, and Avith the magnitude of the capital em- 

 ployed. Does not reason and justice then most 

 clearly demand that the general rate of interest 

 may be allowed to vary with the general rate of 

 profits, and that particular rates may vary with 

 the rates of profits, in the several trades in 

 which the borrowed capital may be employed? 

 Is it not the height of absurdity in the legis- 

 lator to prescribe one rate for all the different sec- 

 tions of the same state or nation, and for a series 

 of years in succession, entirely regardless of the 

 fluctuations and variations in profits upon which 

 the rate of interest so essentially depends? 



In 1627 we are told that the Plymouth Compa- 

 ny were able to pay 30 per cent, on borrowed mo- 

 ney. The year before, they had paid 45. This 

 they were enabled to do in consequence of the 

 higli profits in a young and fertile countiy. Why 

 should they be interdicted the hire of money at a 

 high rate of interest, when their profits were so 

 high as to justify it? Profits in Europe, especially 

 in England and France, rose with the successful 

 establishment of commercial intercourse with our 

 western hemisphere; and Avith the East Indies, 

 by the discovery of the passage around the Cape 

 of Good Hope. Why should not the interest of 

 money be suffered to vary likewise? In the Uni- 

 ted States profits rose far beyond the ordinaiy 

 level durino; the long and expensive wars of Na- 

 poleon: Why should not the interest of money 

 have been suflered to conform to the increasing 

 rate of profits? In Virginia, in ordinaiy times, 

 not more than six per cent, can be obtained for 

 money, because profits are low: in Missouri, how- 

 ever, where they are Avorking a virgin soil, with 

 a thin population, men m good business can afford 

 to give 10, 15 or 20 per cent, on money, because 

 profits are very high. Why then should the law 

 attempt to limit the rate to six per cent.* And 

 when the great central improvement of Virginia 

 shall be completed, as I hope it will be in a few 

 years in spite of all the discouraging circvimstances 

 under Avhich we labor from the apathy of the 

 state and the appalling pressure of the times, 

 profits will no doubt rise throughout the state, 

 but especially along the line of the improvement: 

 why, again let me ask, should not interest of mo- 

 ney be suffered to follow the rising tide of our 

 prosperity? 

 T%e manner in which interest is affected hy risk. 



After having, as I hope, conclusively shown the 

 absurdity of 1he usury Iuavs, in attempting to 

 regulate interest because of the very fluctuating 

 character of profits which is one of the regulating 

 elements of the rate of interest, let us now cast 

 a hasty glance at that other element — the risk in- 

 cuiTed by the lender of losing the sum lent. It is 

 very evident that all other things being equal, the 

 interest of money Avill vary in proportion to 

 the risk of loss. Where the risk is great, high 

 interest must be demanded to indemnify the lender 



* I give this merely as a hypothetical illustration- 

 The law in Missouri allows an interest as high as 10 

 per cent, when specially contracted for; in all other 

 cases only 6 per cent. 



