FARMERS' REGISTER— ESSAY ON USURY LA^VS. 



105 



milk, of vegetables and fruits, the busiiiees of the 

 village grocer and the countrj^ merchant, &c. &c. 

 always lirill into the hands of the little cai)halists, 

 and yield high relative profits. ' The great im-;. 

 port and export trade of every country," the great 

 retail business of such towns as London, Paris and 

 New York, ."ail the great Itictories fu;d manufac- 

 turing establisliinents, all the great transactions ol 

 commerce, all the great masses of property, tlie. 

 roads and canals, the mines of gold and silv^er, and 

 iron; the cargoes of. sugar, cotton and indigo, that 

 are constantly being transterred Irom one possessor 

 to anothei-"" on the royal exchange of London, or 

 at New Orleans, or New York; all this is done by 

 the intervention and agency ot great capitals. 

 Men therefore who have very large capitals to lend,' 

 naturally -seek men Avho are engaged, in large and 

 extensive business; men who have but little to 

 lend woidd seek those carrjing on some business 

 comm.ensurate with the capital to be lent; and the 

 rate of interest would and ought to vary in the two' 

 cases. A man who lends out 50 or |;100 to tlie 

 little village grocer, or the seller of vegetables and 

 fruits, jnight^with propriety demand a veiy high 

 interest, Avhereas he who would lend his thousands- 

 to the great mercliant or farmer, wodld takt? the 

 lowest rate. In London the great loans-consisti)ig 

 of hundreds of thousands', and millions, are con- 

 tracted tor at- two, three and four p^r cent.; the 

 «mall one? at a much higher rate. Colquhoun, in his 

 London Police, says that money is lent at ten per 

 cent, per day to barrow-v,'omen who sell .fish, 

 li'uit, &c. in the streets.* . ; 



Is it not then the ver3'climax of absurdity in the 

 legislator to prescribe one rate of interest, in all 

 these cases? The moral elTect of the law on those 

 who have very small sums to lend, is of the most 

 pernicious kind. It is no object Vv'itli a man who 

 has iglOO only to lend out to gain .§6 on it: allow 

 him, as circumstances direct, to get ten or twenty, 

 which perhaps some little grocer or fruit seller 

 might well atibrd to pay, and immediately you 

 stimulate such an individual to save as much as 

 possible — the principle oi" accumulation triumphs 

 over that of dissipation. His gains, though still 

 small, are sufficient to call all his energies into ac- 

 tion, to summon him away from the grog shop or 

 the cock-pit, to make him orderly and economical 

 in his habits, cheerlld and contented in disposition; 

 of such an individual, however humble his walk 

 in life, we may truly say in the graphic laiiguage 

 of the poet, 



"Motion is in -his days, ' 



"Rest in his slumbers; and cheerfulness 



"The handmaid of his toils." 

 Such an iridividual becomes a good husband, 

 a good father, and a good member of society. Let 



* The following table is given us in the Penny Mag- 

 azine and serves to illustrate what I have advanced on 

 t]iis head. It is given qn the authority of INIr. Mott, 

 the contractor for Lambeth work house, said to be a 

 most intelligent gentleman. "I made a calculation of 

 the interest paid by them, for their tritling loans, says 

 Mr. Mott, and I found it to be as follows: — 



If redeemed the same 

 day pays interest at the 

 rate of 



pr. ct. pr. ct, 



) 5200 weekly 860 

 } .3900 " 650 

 V2600 " 433 

 1733 " 28S 

 1300 " 216 



an unwise law however prevent him from procur- 

 ing that rate of interest which his small capital 

 will command, or in other words induce him to 

 pocket his money without lending it out, or placing 

 it in trade, and immediately such a man may well 

 utter the iiiost appropriate prayer lor poor fi-ail 

 lumian nature^ "Lord deliver us from temptation." 

 The money in his j)ocket is .like fire in the moun- 

 tains. 



Agitat totam molem. 



It in\-ites him to the scene of dissipation, it car- 

 ries hiiTi to the tipjding shop, to the race field, to 

 the cockpit, or the gambling table. The principle 

 of dissipation trium{)lis. over that of accumulation. 

 Such an individiuil may soon become the torment 

 and disgrace of his family, the disturber of the 

 neighborhood, and finally a fit subject for the gal- 

 loAvs or the penitentiary. The law in this case as 

 far as' it operates, produces the same eflect Sismondi 

 so beautitidly describes as being produced in Flo- 

 rence by the general insecurity of capital in conse- 

 quence of the wai's, dissentions, invasions, &c. to 

 which that city was liable duri^jg the troubles of 

 the middle ages. 



The law limiting the rate of interest theii, evi- 

 dently has a tendency to produce the most perni- 

 cious influence on small capitalists, by checking 

 Irugality and industry', and encouraging dissipation 

 and prodigality; because a small rate of interest 

 although an ampde. inducement to the large capi- 

 tal ist.to save, is scarcely any wh ate ver to the small 

 capitalist. 



Supposie then the rate of interest fixed by law at 

 the lowest marketable rate, as is perhaps the case 

 at this time in Virginia, what, let me ask, will be 

 the general effect so fixr as law operates efficiently? 

 The efiect of the law will be to throw the largest 

 possible portion of the loanable capital of society 

 into the hands of the rich, and those already es- 

 tablished in business. The young, the enterprising, 

 those engaged in hazardous or uncertain occupa- 

 tions, all those in fine who cannot give the best 

 security, must be unsupplied, for a very plain rea- 

 son — the risk of a loan to them, is greater than 

 when made to a wealthy man, and consequently 

 the lowest niarketable rate is not sufficient to in- 

 demnify the lender, except in those cases where 

 there is ample wealth to make the security perfect. 

 The law by drawing too large a portion of the 

 capital into the hands of the rich, has a tendency 

 to make the rich, richer, and the poor, poorer. It 

 prevents that due distribution of capital over the 

 various occupations of society, so conduciv'e to 

 the morality, and prosperitj' of every community. 

 That division of labor, so necessaiy to the rapid 

 accumulation of wealth is checked, and all the 

 trades of a hazardous or uncertain, character, no 

 matter how profitable in -the main, are proscribed 

 and denounced by the law. 



But sav the advocates of such a law, "all this 

 is jiist as it shovdd be. In Ihe first place, when the 

 legal coincides loiih the lowest market rate, a large 

 portion of capital is drawn to the land just tuhere 

 it should go. — j'/nd 2dly-. — men ivho are established 

 in business are preferred to projectors, as they cer- 

 tainly ought to be.'''' I hope I shall be able to show 

 by a very brief examination, the utter fallacy of 

 each of these arguments. First. Land it is said 

 yields but a Iq.w rate of profit, and consequently 

 can afford to pay but a low rate of interest: reduce 

 interest to the lowest market rate, and land will 



