FARMERS' REGISTER— ESSAY ON USURY LAWS. 



103 



the interest of each to i)roduce as much as possi- 

 ble. If com were made by a licensed few, under 

 the control of a company of directors, there is no 

 question but that such would be the interest of the 

 producers, and a restraint on production might be 

 laid by the company of directors. In that case 

 the law might interpose with advantage, not in 

 regulating the price, ibr even in that case tlie 

 price should be left to tlie adjustment oi"the mar- 

 ket — but in either destroying the monopoly, or 

 controlling the directors, in regard to their I'estraint 

 on production. If then there can be no necessity 

 for a law to regulate the price of corn, which is 

 known to rise higher from scarcity than any other 

 article whatever, much k-ss can there be any need 

 for the regulation of interest by law, because of 

 the supposed advantage which the holders of the 

 money capital possess, in the struggle for the ad- 

 justment of' interest. The rate of interest de- 

 pends on profits, and the latter, as we have seen, 

 depend on the proportion of the whole capital of' 

 the society to the channels of profitable invest- 

 ment. The capacity of the capitalist therefore, to 

 obtain a liigh rate of interest, increases in a par- 

 ticular district of country fi'om adeficiency of capi- 

 tal generally — and not -wholly from a deficit of 

 mone}'. Now this general deficit of capital does 

 not enable the money lender to raise the interest of 

 money to any tiling like tlie height to Vvdiicli a si- 

 milar deficit in corn or any other necessary of lite, 

 will enable the holder of those articles to raise 

 their j)rice. The laws then restraining the rate of 

 interest cannot be justified upon the ground that 

 the holders of money have it in their power to 

 take what interest they please, for the fact is not 

 so. They have not, as we have just seen, by any 

 means so great a power ov'er the borrower as the 

 corn holder has over the purchaser; and if policy 

 requires the latter to be left fiee, surely tlie former 

 ought likewise. 



Again, if it were true that the money holders, 

 when the quantity of money was smaU, could com- 

 mand a disproportionally large interest, then it 

 ^vould follow, (lor the remark is susceptilile of great 

 generalization,) that when the quantity of money 

 happened to increase, the rate of interest would 

 sink di3proportionaIl3dow. Tliat is universally the 

 case with corn, and with all articles which rise in 

 price, higher than in proportion to defect; they 

 always sink more than in proportion to redundancy, 

 so that if the holders gain in the former case, they 

 equally lose in the latter. Now if it were true that 

 mone}' holders could command an interest greater 

 than in proportion to the deficiency of capital, they 

 ought not to be restrained: for it would be certain 

 that in case of redundancy of capital, interest 

 would sink more than in proportion to I'edundancy 

 — and consequently the loss and gain should surely 

 be left upon every principle of equity and justice, 

 to balance each other. Besides: public opinion 

 has much more infiuence on money lenders than 

 perhaps any other classes of the community, be- 

 cause the value of money is well understood, the 

 value of its agency estimated, and consequently, if 

 the money lender, from a combination of circum- 

 stances, shovdd be enabled to take advantage of 

 the exigencies of the borroiver by the exaction of 

 exorbitant interest, the transaction is at once as- 

 saded by an indignant public opinion. Whereas 

 you may take advantage of the customer in selling 

 goods, or any other marketable commodities what- 



ever,merely because of the indefiniteness of quality 

 and the general micertainty and instability of 

 prices. I shall prove, before finishing the subject 

 of interest, that public opinion has been too much 

 excited against the money lender, and has pro- 

 duced rattier a bad than a good effect. Certain it 

 is however, that it is brought to operate against 

 usurious interest, with as much power and elucacy 

 as against any mercantile transaction whatever. I 

 hope then I have shown that there is nothing in 

 the nature of money, or money transactions, call- 

 ing for the special interference of the legislator, 

 and justifymg the restriction on the profits made 

 by one class of capitalists, while all others are lefl 

 li-ee to make what gains the state of the market 

 will allow. 



I shall now show that the laws restraining the 

 rate of interest are inexpedient and impolitic in 

 relation to public prosperity. I Iiave before shown 

 you that it is conducive to the public weal, to give 

 to capital and labor, as much freedom as possible. 

 Freedom of trade and action, contributes to the 

 welfare of individuals, of countries, and nations. 

 The law restraining the rate of interest, so far as 

 it operates, impedes the wholesome circulation of 

 capital from hand to hand— it is a clog thrown 

 upon the great wheel of commerce — it is in fact, 

 part and parcel of that detestable mercantile sys- 

 tem, under whose blighting influence, the pros- 

 perity of the south has been arrested, and a gar- 

 den of Eden almost converted into a wilderness. 

 A has money, and v/ishes to lend it to B ibr seven 

 per cent, which B is willing to pay; but the law 

 says "No, you shall not receive more than six." 

 Does not the law in this case impertinently inter- 

 fere with individual transactions, and claim to un- 

 derstand their interests better than individuals 

 themselves? What would be the fair presumption 

 in this case, according to the principle of the free 

 trade theory? Certainly that B would employ the 

 money to greater advantage than A, and conse- 

 quently it would be better that B should have it: 

 but the law forbids him, and therefore A is in- 

 duced to employ the money himself^ with less ad- 

 vantage to the community. A perhaps may be a 

 salaried man, a functionary of the state, whose 

 entire services should be devoted to his office; tlie 

 law forbids his lending at the fair marketable rate 

 of interest, and consequent!}', may force him into 

 trade, very much to his ovrii inconvenience and the 

 detriment of the public. So far then as the usury 

 laws ojierate, they act injuriously by checking that 

 tree circulation of capital, so essential to the pros- 

 perity of the country; they tend to prevent that 

 perfect division of labor and trade, which the pro • 

 gress of society generates. When the market- 

 able rises above the legal rate of interest, the 

 monied man, whether competent or not, is induced 

 to enter into active business, and thereby exclude 

 some more efficient indisidual, merely because the 

 laws will not allow him to take a ftiir rate of in- 

 terest for his money. 



Again, suppose an individual called on for the 

 payment of a debt. He has property amply suf- 

 ficient to meet all demands, but has not the ready 

 cash: lie wishes to borrow at seven per cent., the 

 law however will allow but six, v.hich we sup- 

 pose less than the money can be borrowed at. 

 Under these circumstances, his property must be 

 sold, and we all know the result of' these forced 

 sales. Real estate in Virginia which brings two- 



