USURY. 



they may fafely truft private people with theirs. If their 

 own extravagance does not ruin the ftate, that of their fflb- 

 jeAs never will." 



However prefumptuous and impertinent it may be, fays 

 Mr. Bentham, for the fovereign to attempt in any way to 

 check by legal reftraints the proJigality of individuals ; to 

 attempt to check, their bad management by fucli reilraints, 

 feems abundantly more fo. To err in the way of prodi- 

 gality is the lot, though, as you well obferve, not of many 

 men, in comparifon of the whole mafs of mankind, yet at 

 leaft of any man : the ftufF fit to make a prodigal of is to 

 be found in every alehoufe, and under every hedge. But 

 even to err in the way of projefting is the lot only of the 

 privileged few. Prodigality, though not fo common as to 

 make any very material drain from the general mafs of wealth, 

 is however too common to be regarded as a mark of diftinc- 

 tion, or as a fingularity. But the ftepping afide from any 

 of the beaten paths of traffic, is reg.vded as a fingularity, 

 as ferving to diftinguifh a man from other men. Even where 

 it requires no genius, no peculiarity of talent, as where 

 t confifts in nothing more than the finding out a new 

 market to buy or fell in, it requires however at leaft a degree 

 of courage, which is not to be found in the common herd 

 of men. What (hall we fay of it, where, in addition to the 

 vulgar quality of courage, it requires the rare endowment 

 of genius, as in the inftance of all thofe fucceflive enter- 

 prizes by which arts and manufactures have been brought 

 from their original nothing to their prefent fplendour ? 

 Think how fmall a part of the community thcfe muft make, 

 in comparifon of the race of prodigals ; of that very race, 

 which, were it only on account of the fmalhicfs of its num- 

 ber, would appear too inconfiderable to you to deferve at- 

 tention. Yet prodigality is effentially and neceffarily hurtful, 

 as far as it goes, to the opulence of the ftate : projefting, 

 only by accident. Every prodigal, without exception, 

 impairs, by the very fuppofition impairs, if he does not 

 annihilate, his fortune. But it certainly is not every pro- 

 jeftor that impairs his : it is not every projeftor that would 

 have done fo, had there been none of thofe wife laws to 

 hinder him : for the fabric of national opulence — that fa- 

 bric of which you proclaim, with fo generous an exultation, 

 the continual increafe — that fabric, in every apartment of 

 which, innumerable as they are, it required the reprobated 

 hand of a projeftor to lay the firft ftone, has required fome 

 hands at leaft to be employed, and fuccefsfully employed. 

 When, in comparifon of the number of prodigals, which is 

 too inconfiderable to deferve notice, the number of pro- 

 jeftors of aU kinds is fo much more inconfiderable — and when 

 from this inconfiderable number muft be dedufted, the not 

 inconfiderable pi-oportion of fuccefsful projeftors — and from 

 this remainder again, all thofe who can carry on their pro- 

 jefts without need of borrowing — think whether it be pof- 

 fible, that this laft remainder could afford a multitude, the 

 reducing of which would be an objeft deferving the inter- 

 pofition of government by its magnitude, even taking for 

 granted that it were an objeft proper in its nature ? 



But we forbear, and proceed with the fame admirable 

 writer, to ftate the mifchiefs which the ufury laws create 

 in all direftions. The moft obvious mifchief is, the de- 

 priving many perfons altogether of the loans of which they 

 ftand in need. A perfon having the means of fupplying 

 himfelf with money, and being alfo prefTed by neceftity, is 

 precluded from all chance of obtaining it, unlefs he has ftill 

 further means of meeting his wants by evading, at an addi- 

 tional coft, the laws in queftion. Had it not been for thefe 

 laws, fucb a perfon might have reheved his wants with 



eafe : and he is one of thofe who have the greateft occafion 

 for affiftance, and the beft claims to it. Since, by the fup- 

 pofition, they cannot do without the loan, and are both 

 able and willing to pay the extraordinary rate of intereft. 



The next mifchief is that which the law of ufury inflifts 

 upon thofe who have the means of giving, not only fuch an 

 extraordinary rate of intereft as the lenders, but for the re- 

 ftriftions, would be fatisfied with, but fomewhat more. 

 Thcfe are not excluded altogether from the money market, 

 like the former clafs ; but the terms of the bargain are 

 raifed to them. Suppofe they have nothing to fell, by 

 which they can raife the money they want, then they muft 

 pay for the breach of the law, and this in two ways, both 

 by giving a fufficient premium to the lender to make him 

 run the extraordinary riflf, and becaufe the illegality of the 

 trade keeps many dealers out of it, and by narrowing the 

 competition, raifes the profits. In the courfe of the laft 

 twenty years, a great trade has been driven in annuities, 

 which admirably illuftrates the operation of thefe laws, 

 this being a perfeftly legal mode of evading them, and yet 

 one attended with ruinous expence to the borrower. The 

 law has impofed a number of regulations upon fuch tranf- 

 aftions, with the view of preventing them from becoming 

 too eafy a means of evading the ufury laws. Thofe regu- 

 lations increafing the rifl< of the lender, fomewhat raife the 

 price to the borrower. Then the nature of the tranfaftion 

 renders an infurance neceffary upon the life of the borrower ; 

 and this is a large increafe of price. Moreover, the number 

 of lenders at ufurious intereft in the illegal way being nar- 

 rowed by the competition, as all who are driven from this 

 traffic do not neceflarily refort to the line of annuities, the 

 market is, notwithftanding the legal method of evafion, con- 

 fiderably narrowed. It has thus happened, that perfons 

 with excellent fecurity, and who could eafily have gotten 

 loans at fix and a half or feven per cent, but for the law, 

 are obliged to pay eight or nine, befides the infurance, or 

 from ten to twelve in all ; and this, not to private money- 

 lenders, who exaft much more, but to the. great infurance- 

 companies, who have fallen upon this way of employing 

 their fuperfluous capital, tempted by the double gains of 

 lenders and infurers. 



Moreover, fuppofe now, that the laws have prevented a 

 man from borrowing at feven per cent., and that he has ftill 

 goods which he can part with to raife the money. But for 

 the law he might keep his goods ; and nothing can prevent 

 his felling them at an under price, according to his nccelTities. 

 No one who has known any thing of falcs made in diftrefled 

 circumftances, will think a lofs of thirty /ict cent, very extra- 

 ordinary in fuch cafes. To fuch a lols as this, the moil 

 exorbitant ufury bears no proportion ; yet this is exaftly 

 the premium which the diftreffed man is compelled to pay 

 for money, by the law which fays he ihall not borrow at the 

 rate of five and a half. The preffure upon proprietors of 

 real eftates is ftill more fevere. Suppofe a man comes into 

 poffeflion of an eftate worth two hundred a-year, charged 

 with a thoufand pounds ; and that the incumbrancer wifhes 

 to have his money rather than the legal intereft, but would 

 be fatisfied with one or two per cent, above that rate ; — at 

 any rate, if he would not, fome other certainly could be 

 found to advance the money at that premium, upon the 

 fame fecurity. 



The laft mifchief occafioned by the ufury laws is, per- 

 haps, more important than all the reft ; r/'s. the corrupting 

 influence upon the morals of the people, by the pains they 

 take, and, as Mr. Bentham obferves, cannot but take, to 

 give birth to treachery and ingratitude. 



" To 



