106 



FARMERS' REGISTER— ESSAY ON USURY LAWS. 



command all the capital required, because it affords 

 the very best security. To this we answer, that 

 in almost every country the general rate of profits 

 is determined by agricultural profits — that there are 

 some peculiar advantagps attendant on agriculture, 

 which will always draw towards it its due share of 

 labor and capital". In every country, from this cause, 

 agricultural profits are near the minimum. So lar 

 then from capital, in case of perfect tVeedom of. 

 trade, tending' Avith too little gravity towards agri- 

 culture, it perhaps generally, (but especially in 

 those countries where there is a minute division of 

 landed property, or Avhere the right of suffrage is 

 attached to real ]iroperty alone,) tends towards 

 this department of industry too much. Some 

 distinguished writers are of opinion that in Ire- 

 land and France, the too minute division of landed 

 property has drawn to the land an undue share ol' 

 labor and capha!, and in the course of time will 

 produce the most lamentable consequences. At all 

 events, there is no law required to throw into the 

 agricultural business the capital which it requires, 

 and the circumstance of agricultural profits being 

 always near the minimum rate in every country, 

 most conclusively proves this to the satisfaction of 

 every sound political economist. The fact is, those 

 who support the hmitationof therate of interest on 

 this principle, must necessarily give up the free 

 trade theory. For they can only support them- 

 selves by the assertion "that capital, when left free, 

 will not take the most advantageous direction. 



Secondly. It is asserted that when the legal rate 

 of interest approximates nearly to the loAvest mar- 

 ketable rate of interest, prodigals and projectors 

 are prevented Irom getting money to the injury of 

 those carrying on more regular and better establish- 

 ed trades. Adam Smith, unfortunately, has given 

 the sanction of his great name to this argument. 

 He says "the legal rate, it is to be observed, though 

 it ought to be somewhat above, ought not to be 

 much above, the lowest market rate. If the legal 

 rate of interest in Great Britain, for examj^le, was 

 fixed so high as eight or ten per cent, the greater 

 part of the money which was to be lent, Avould be 

 lent to prodigals and projectors, who alone would 

 be willing to give this high interest; sober people 

 who will give lor the use of money no more than 

 a part of what they are likely to make by the use 

 of it, would not venture into the competition. A 

 great ])ai't of the capital of the country, would thus, 

 be kept out of the hands which Avere most likely to 

 make a profitable and advantageous use of it, and 

 thrown into those which were most likely to Avaste 

 and destroy it; Avhere the legal interest on the con- 

 trary, is fixed but \'ery little above the lowest mar- 

 ket rate, sober people are uniA'ersally preferred as 

 borrowers, to prodigals and projectors. Tiie per- 

 son Avho lends money, gets nearly as much interest 

 from the former as he dares take from the latter, 

 and his money is much safer in the hands of the 

 one set of people, than in those of the other. A 

 great part of the capital of the country is thus 

 thrown into the hands in which it is most likely to 

 be employed Avith advantage." With regard to 

 prodigals, I will content m^'self for the present 

 with another quotation Irom Dr. Smith, AAdiich Avill 

 be a sufficient ansAA'er to the aboA'c. "The number 

 of prudent and successful undertakings (says he) 

 is every Avhere much greater, than that of injudi- 

 cious and unsuccessful ones. Afrer all our com- 

 plaints of the frequency of bankruptcies, the un- 



happy men Avho fall into this misfortune, make 

 but a A^ery small part of the whole number engaged 

 in trade, "and all other sorts of business, not much 

 more perhaps than one in a thousand." Again "It 

 is the highest impertinence and ])rcsumption there- 

 fore in kings and ministers, to pretend toioatch over 

 the economy of private people, and to restrain their 

 expense, either by sumptuar}^ Iuavs, or by prohi- 

 biting the importation of foreigt^ luxuries. They 

 are themselves always and Avithout exception the 

 greatest spendthrifts in the society: let them look 

 Avell alter their oAAm expense, and they may safely 

 trust private people Avith theirs. If their oAvn ex- 

 travagance does not ruin the state, that of their 

 subjects ncA-er Avill." According to Dr. Smith's 

 OAvn assertion then, it is the height of impertinence 

 and absurdity in the legislator to endcaA-or to 

 restrain private prodigality; Avhy then sliould he 

 defend the usury Iuav upon this principle? Surely 

 it must be granted, that in this case he goes against 

 his OAvn best established principles. I shall again 

 advert to the case of the prodigal under another 

 head. 



With regard to projectors, I have to observe, that 

 if according to Smith's OAAm admission, the waste- 

 ful spendthrift fbrms not more than the thousandth 

 part of society, reckless ]irojcctors form a still 

 smaller portion, and therefore it is less necessary 

 and more impertinent still for kings and ministers 

 to meddle Avith their private concerns. "To err in 

 the Avay of prodigality (says Jeremy Bentham in 

 that inimitable and unansAverable production 'De- 

 fence of Usury') is the lot, though as you Avill 

 observe not of many men, in comparison of the 

 AAdiole mass of mankind, yet at least of scrae. The 

 sturt' fit to make a prodigal of, is to be found in 

 CA^ery ale house, and under every hedge. But 

 CA'en to err in the Avay of projecting, is the lot only 

 of the privileged few. Prodigality, though not so 

 common as to make any material drain from the 

 general mass of Avealth, is hoAvcA'cr too common 

 to be regarded as a mark of distinction or singular- 

 itj'. But the stepping aside from any of the bea- 

 ten paths of trafhc is regarded as a singularity, as 

 ser\dng to distinguish a man from other men. 

 When in comparison AAath the number of prodi- 

 gals, AA'hich is too inconsidei'able to desei'A'e notice, 

 the number of projectors of all kinds is much more 

 inconsiderable, and Avhen from this inconsiderable 

 number, must be deducted the not inconsiderable 

 proportion of successful projectors, and from the 

 remainder again, all those Avho can carry on their 

 projects Avithout need of borroAving, think Avhether 

 it be possible, that this last remainder could aflbrd 

 a multitude, the reducing of Avhich, Avould be an 

 object, deserving the interposition of goA^ernment 

 by its magnitude, even taking for granted, that it 

 Avere an object proj^er in its nature." Thus eA^en 

 if projectors were like prodigals, unthrifty and dis- 

 advantageous to the general prosperity of the 

 community, still their number Avould not be suffi- 

 cient to render them a \'ery material clog on the 

 accumulation of Avealth. But this cry against pro- 

 jectors is unmerited and unjust. Pi'ojectors are 

 those Avho ex[)lore new channels of trade, make 

 ncAV api)lications of established principles, aim at 

 improvement in the arts and manufactures, &c. &c., 

 and let ine ask, if these are not the A'ery men Avho 

 have given the character to the age in Avhich we 

 live. Your Watts, Fultons, Whitneys, ArkAvrights, 

 &c. Avere all projectors, and the steam boat, the 



