102 



FARMERS' REGISTER— ESSAY ON USURY LAWS. 



boiTovv money for these several purposes, and the 

 rafe which they are wilhng to give does not de- 



Eend on the quantity of money in the country, 

 ut on ths gains wliicli the merchant, tlie manu- 

 facturer, aad ihe agricuhurist, expect to make on 

 their goods, on their manulactures, on their land, 

 and uj;on the emokimcnts and reputation which the 

 lawyer and doctor liave in prospect. Money is mere- 

 ly the agent ol'circulalion ofcapital generally. If 

 money, is scarce, its value rises; if too plenty, it falls; 

 and iha rate of interest is never permanently af- 

 fected by ils high or low value. If ^50 be worth 

 to-day as much as $'100 was yesterday, ^3 in- 

 terest on the Sp50 will be worth just the same as 

 S6 on the ,^100. The only effect produced on 

 interest is while the change in value is taking 

 place. Thus, let us suppose the banks begin to' 

 over-issue; there is a corjsequent increased facility 

 of borrowing, which may lowet interest iempora- 

 7'ily; then an appreciation of prices ensues, and 

 80 soon as prices become stationary, interest rises 

 to the rate which is determined by profits and 

 risk. 



So far from tliere being any reason for restrain- 

 ing the rate of interest, there are some reasons 

 why it is better regulated by the laws of trade 

 and the influence of public opinion than perhaps 

 any thing which can possibly be mentioned in the 

 whole catalogue of commercial transactions. First. 

 Money being the universal measurer of value, is 

 better known, its agency in the hands of indi\'id- 

 uals better understood, than any other species of 

 property whatever. Second. Great concentration 

 of value in small bulk renders it the most trans- 

 ferable of commodities, and consequently it passes 

 more rapidly from places v^diere it is redundant to 

 those where it is deficient, than any commodity 

 we know of. From this cause it is, that compe- 

 tition among capitalists is more certain to keep 

 down the hire of money to a fair proportion to 

 profits and risk, than any other species of hire 

 whatever. You cannot carry land and houses 

 from one section to another, to keep down rents: 

 manufacturing estabhshments are incapable of loco- 

 motion, and therefore the exorbitant jjrofits of one 

 are slowly corrected by another: labor moves 

 so sluggishly from disti'ict to district, that Smith 

 pronounced man the most immoveable of lumber. 

 Hence the slowness with which the equilibrium 

 is restored in the labor market. But money passes 

 from section to section with all the rapidity of the 

 mail and the steam boat. Is there a great demand 

 here for it to day, while there is a relative redun- 

 dancy elsewhere? The easy transference of it from 

 f'lace to place, will quickly restore tlie equilibrium, 

 f A, a monied man, charges too high an interest 

 in proportion to profit and risk, B, another mo 

 nied man in the same neighborhood will find it to 

 his interest to take less: and if neither will take a 

 fair rate, capital will epeedily flow in fi'om other 

 quarters, and relieve the pressure. At this mo- 

 ment, large amounts in specie are pouring into the 

 United States, ia consequence of the money pres- 

 sure; and no doubt if public confidence could be 

 suddenly restored, we should be found to have a 

 greatly redundant circulating medium. 



Hires, rents, interest and prices of all descrip- 

 tions, are determined by the ratio of the supply to 

 the demand. Now if a restraining law should ever 

 become necessary, it would be in those cases 

 where the price rose generally greatly beyond the 



ratio of deficiency. Upon this principle, the great 

 necessaries of life, corn and wheat particularly, 

 would require the regulating agency of law, more 

 than any other commodities whatever. When 

 the harvests are deficient, the price of corn and 

 wheat always rises immensely beyond the rate 

 which would be indicated by the delect in the 

 harvest. This is a lact which has been noticed 

 as lar back as the time of D' A venant, in England. 

 He has given us the tbllowing table, which al- 

 though not perhaps mathematically con'ect, yet ia 

 sufiiciently so, no doubt, to illustrate the liict. 



Defect in wlieat harvest. Above the common rate. 



1 Tenth, ^ f 3 Tenths, 



2 do. Raises the I 8 do. 



3 do. > price of <{ 1.6 do. 



4 do. wheat 2.8 do. 



5 do. J J 4.5 do. 



Tooke in his verj^ able and elaborate work on 

 prices, gives us this table of D'Avenant, with the 

 remark that " there is some ground tor supposing 

 that the estimate is not very wide of the truth, 

 from the observation of the I'epeated occun-ence 

 of the tact, that the price of coi'n in this country 

 (England) has risen trom 100 to 200 per cent, and 

 upwards, when the utmost computed deficiency of 

 the crops has not been more than between one- 

 sixth and third of an average:" and again he says, 

 "considering the institutions of this country relative 

 to the maintenance of the poor, if there should be 

 a deficiency of the crojjs amounting to one-third, 

 without any surplus from a former year, and 

 loithuut any chance of relief by importation the 

 price might rise five, six, or even ten Ibid." It 

 is tor this reason that farmers who make more 

 than enough to supply themselves are benefited 

 by a general scarcity, in consequence of the more 

 than proportional rise of produce. This remark I 

 have often heard made by the most successful 

 farmers with whom I am acquainted. Mr. Tooke 

 ascribes (and I think very correctly) the extraor- 

 dinary impulse which was given to the agricul- 

 tural interest in Great Britain from 1793 to 1809 

 to an unusual number of bad harvests during this 

 period, which raised the price of wheat greatly 

 beyond the detect of the harvest, and consequently 

 threw into the hands of the agriculturists a nmch 

 larger amount of capital than more favorable har- 

 vests would have done. Thus we see that the 

 great staple of life, is precisely that article which 

 rises most rapidly and to the greatest extent in 

 the market, from a defect of quantity: If then 

 the price of any article in the world should be 

 regulated by law, the price of corn ought, because 

 in time of scarcity the holders of this article can get 

 much more than a remunerating price for it. Why 

 then are not such laws passed now? Because 

 they have been tried and found disastrous. They 

 increase the very e^•il to be removed. The hold- 

 ers of corn have ever been disposed to lock up, 

 and secrete their produce when the law attempted 

 to make them sell at less than the rate adjusted 

 by the struggle between the buyers and sellers. 

 It is certainly the interest of all the corn farmers 

 in the world that there should, for example, be such 

 a scarcity, as that each one on the average should 

 have a sixth or third less for sale — for the price 

 would rise greatly be3ond the defect — but no one 

 apprehends ii-om this, a combination of ii\rmersto 

 destroy a portion of their crops, because such a 

 combinatioji is impossible, and, conseq^uently, it ia 



