62 MUTUAL BANKING. 



business, what do you say to our entering into a partnership, so ar- 

 ranging the terms of agreement that the profits will be divided in 

 fact, as they would be in the case that I loaned you SlOO at 100 per cent 

 interest per annum?" The young man will probably permit the cap- 

 italist to arrange the transaction in any form he pleases, provided 

 the money is actually forthcoming. If the usury laws speak any 

 intelligible language to the capitalist, it is this: "The legislature 

 does not intend that you shall lend money to any young man to 

 help in his business, where the insurance upon the money you trust 

 in his hands, and which is subjected to the risk of his transactions, 

 amounts to more than 6 per cent per annum on the amount loaned." 

 And, in this speech, the deep wisdom of the legislature is mani- 

 fested! Why six, rather than five or seven? Why any restriction 

 at all? 



Now for the other side (for we have thus'far spoken of the 

 usury laws as they bear on mere personal credit): If a man bor- 

 rows $1,500 on the mortgage of a farm, worth, in the estimation of 

 the creditor himself, $2,000, why should he pay 6 per cent interest on 

 the money borrowed? What does this interest cover? Insurance? 

 Not at all; for the money is perfectly safe, as the security given is 

 confessedly ample; the insurance is 0. Does the interest cover the 

 damage which the creditor suffers by being kept out of his money 

 for the time specified in the contract? This cannot be the fact — for 

 the damage is also 0— since a man who lends out money at interest, 

 on perfect security, counts the total amount of interest as clear 

 gain, and would much prefer letting the money at }>i per cent to 

 permitting it to remain idle. The rate of interest upon money lent 

 on perfect security is commensurate, not with the risk the creditor 

 runs of losing his money— for that risk is 0; not to the inconven- 

 ience to which the creditor is put by letting the money go out of his 

 hands — for that inconvenience is also 0,* since the creditor lends 

 only such money as he himself does not wish to use; but it is com- 

 mensurate with the distress of the borrower. One per cent per 

 annum interest on money lent on perfect security is, therefore, too 

 high a rate; and all levying of interest-money on perfect security 

 is profoundedly immoral, + since such interest-money is the fruit of 

 the speculation of one man upon the misfortune of another. Yet 

 the legislature permits one citizen to speculate upon the misfortune 

 of another to the amount of six-hundredths per annum of the ex- 

 tent to which he gets him into his power! This is the morality of 

 the usury laws in their bearing on real credit. 



*If, liow(!v«!r, tlio incoiivunicnco is iinytliiiip, llio lender ouRlit to be 

 Indemnilied; but such iiuU-mriificiitioii is nut proporly inturust. 



tPerhaps, we ought rather to say, "would be profoundly Immoral in a 

 morf perfect social order." Wo suppose tliat must l)o considered ri^lit, 

 iti our present chaotic state, wliicli is best on t lie wljolo, or wliich— tailing 

 men's passion as tliey are— Is unavoidable. 



