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The land owner requires

would adopt if no usury laws existed. money to increase his live stock, or improve his land, or for any other purpose, at a period when the government is borrowing money at above five per cent., no one will then lend to the landowner because his money is worth more to him than the law allows him to take; the land owner must, therefore, either give up his improvements, or borrow money on annuity interests, on much more disadvantageous terms than he could have done if no law existed against usury. The man in trade, in want of money for an unexpected demand, or disappointed in his returns, must fulfill his engagements, or forfeit his credit. He might have borrowed money at six per cent., but the law allows no one to lend it to him, and he must sell some of the commodity he holds, at a reduced price, in order to meet his engagements. For example, he holds sugar which is worth 80s., but he is compelled to sell it immediately at 70s. to the man who will give aim cash for it, and thus actually borrows money at twelve and a half per cent., which had the law allowed to him, he might have borrowed from a money dealer at six per cent."

"It is known to every merchant, that cases of this kind are common occurrences in every commercial town, and more especially in the metropolis. A man in distress for money pays more interest, owing to the usury laws, than he would if no such laws existed; because now he is obliged to go to some of the disreputable money lenders to borrow, as he knows the respectable money lender will not break the laws of his country. The disreputable money lender knows that he has the ordinary risk of his debtor to incur in lending his money, and he has further to encounter the penalty of the law, for both of which risks the borrower must pay. If no usury laws existed, in common cases, and when a person is respectable, he might obtain a loan from the respectable money lender, who would then only have to calculate his ordinary risk, and the compensation for the use of the money."

The appendix to the report of the committee contains much other testimony corroborating the statements and opinions of Mr. Sugden and Mr. Holland; and the committee admitting the force of the evidence agreed to the following resolutions:

"1st. That it is the opinion of this committee that the laws regulating or restraining the rate of interest have been extensively evaded, and have failed of the effect of imposing a maximum on such rate; and that, of late years, from the constant effect of the market rate of interest above the rate limited by law, they have added to the expenses incurred by borrowers on real security, and that such borrowers have been compelled to resort to the mode of granting annuities on lives; a mode which has been made a cover for obtaining a higher rate of interest than the rate limited by law, and has further subjected the borrowers to enormous charges, or

forced them to make very disadvantageous sales of their estates."

"2d. That it is the opinion of this committee, that the construction of such laws, as applicable to the transactions of commerce at present carried on, have been attended with much uncertainty as to the legality of many transactions of frequent occurrence, and consequently been productive of much embarrassment and litigation."

The committee conclude their report by recommending a repeal of the usury laws; but notwithstanding their recommendation and the clear and satisfactory nature of the evidence on which it was founded, the popular prejudice was so strong against their repeal, that the measure failed, and the law remained unchanged until the year 1833. The first inroad upon this relic of a barbarous age was made by a provision in the act renewing the charter of the bank of England; by which all bills of exchange and promissory notes, not having more than three months to run previous to their maturity were excepted from the operations of the usury law, and might be discounted at any rate of interest agreed on by the parties. This act sapped the foundation of the usury laws of England, and opened the way for the introduction of a more rational and just policy. In 1837, by the act I. Vic. c. 70, the provisions respecting usury contained in the act of 1833, were extended to all such mercantile instruments not having more than twelve months to run before they are due. And by 3. and 4. Vic. c. 83, simple loans above £10, not secured by real estate, were also excepted from the statute of usury.

And here let us observe that while the people of Great Britain were extricating themselves, step by step, from an unwise policy which originated in superstition, and in ignorance of the true principles of political economy, the public mind in the State of Missouri was undergoing a change which prepared it in 1847 for the adoption of a barbarism which had been condemned and repudiated not only by theoretical writers but by the best practical economists of every civilized country.

But it may be said, the modification of the usury laws of England is an experiment of too recent date to establish the fact that usury laws can be abolished in a State without raising the market rate of interest.

On this as on all subjects of legislation, the British parliament proceded with deliberation and much caution. Fifteen years

elapsed after the investigation of the subject by the committee of the House of Commons, in 1818, before the first act was passed affecting the usury laws. Nor does that appear to have been a direct and independent movement, but was introduced in the nature of a detail in the act rechartering the bank of England. The initiatory step thus made, has been followed by subsequent enactments until for all practical purposes except in the case of loans on real estate, the usury laws of England have been abolished. And we learn that within the last few months a bill has been introduced in the House of Commons to repeal this last remnant of a branch of political economy at war with the rights and interests of a free people.

In presenting this bill, the Chancellor of the Exchequer is reported to have made the following remarks in explaining its objects:

"The usury laws were already repealed, except in a single instance, and the measure was chiefly intended to sweep away a mass of useless legislation. Tracing the history of the subject, he observed that the great offender against the usury laws has been the State. The superstitious notions on the subject, partly Judaic, partly Mohomedan, had disappeared, and Parliament had disposed of the restrictions one by one, until the only one which remained was that affecting loan of money secured on real estate. Explaining the great inconvenience which had been occasioned in Scotland by the existing restriction in regard to mortgages on land, and in England in regard to railway debentures, he observed the usury laws had driven men to an enormous system of evasion of the law. Let us, he urged, fully recognize free trade in reference to money, and let those who desired to borrow, obtain money at the current price of the day."

But besides her own experience, England had an example in Holland, her near neighbor, where no usury laws or laws regulating the rate of interest had been in operation for ages; and we believe that it is generally known and admitted that the average rate of interest in Holland is lower than in any other part of Eu

rope.

Having written and published two articles "on laws regulating interest" in the preceding volumes of this work,* in which we examined and discussed at large the principles and practical operations of such laws, we find it difficult to adduce arguments here without reiterating what we have published elsewhere. Indeed, to our

Vide Vol. IV, p. 142. Vol. VIII, p. 261.

view, the argument is all on one side, and all that can be required to convince any unprejudiced mind of the folly and injustice involved in usury laws is a plain statement of their operations.

The only excuse that we have heard of for opposing the repeal of the present interest law in Missouri is, that under the former law the merchants were in the habit of claiming ten per cent. interest of their customers, and inasmuch as that rate was allowed by law, the customer could not refuse to pay it without endangering his reputation as an honorable and fair dealer. And hence it is infered that if the former law be re-enacted, the maximum rate of interest will again be claimed and established by the merchants. To this there is a ready answer: it will be in the power of every one to make his own contract, and it will be as convenient in all cases to stipulate in respect to the rate of interest, as to settle on the price of the goods to be purchased. But even this objection will be removed by repealing all limitation, and leaving the entire subject open to contract. That is doubtless the true principle and the correct policy. But where no terms are agreed on let the law fix a reasonable rate by which the rights of the parties may in all cases be determined. This is the policy adopted by Wisconsin, and we were pleased to observe that it was approved by Hon. R. W. Wells, Judge of the U. S. District Court, in an able article from his pen on the subject of usury, published in the fifth volume of the Western Journal, page 288. The Wisconsin law is in the following words: §. 1. Any rate of interest agreed upon by the parties in contract, specifying the same in writing, shall be legal and valid. §. 2. When no rate of interest is agreed upon, or specified in a note or contract, seven per cent. shall be the legal rate.

Such a law, we think, would remove the only plausable objection that we have ever heard urged against the repeal of the interest laws of this state.

In fixing the rate in cases left open by the parties to the contract, the average market rate for a series of years would seem to be the proper criterion; but it would be better, perhaps, to establish it below than above that point.

Money is an article of commerce, and is moreover one of its principal agents. It is one of the properties of money as an article of commerce, to go to the market where the demand is the most extensive and unremitting; but as an agent, it goes where, after deducting all costs and risks, the highest price can be obtained with the greatest certainty for its services.

If one State or nation place an arbitrary price upon its hire and that should be below the rates which can be obtained in some other country, it will leave the community where the price has been thus depressed and go where better wages can be had. But the high rate of interest occasioned by usury laws, will not bring money into a country except such amounts as may be introduced by the speculator and hard dealer; who having no respect for the law are willing to risk its penalties for the profits which they hope to realize by evading its sanctions.

But it is useless to enlarge upon a topic which must be plain to the understanding of all intelligent, unprejudiced minds. We have endeavored to discharge our duty touching a subject which, in our opinion, is most intimately connected with the prosperity of the State in a pecuniary point of view; and one which, as we believe, affects in no small degree the moral and social condition of the people.

By preventing the transfer of money from other countries to Missouri to be let out on interest, the usury laws operate materially against the establishment and growth of manufactures, against the development of our mineral wealth, against the operations of commerce, and against the progress of all works of public improvement; while the evasions which daily occur familiarize the mind of the citizen to a sense of disrespect and even contempt for the laws of the State.

A law so fruitful of evils, and so barren of benefits except to a class of individuals caring little for the common welfare, is a reproach to the State. And should the next General Assembly refuse or neglect to repeal it, that body will do injustice to its constituency, and stultify itself in the estimation of the enlightened Public economists of every civilized country..

In view of the subject in all its aspects, we say to the people and to the General Assembly of Missouri, renounce entirely this relic of barbarism and superstition. Let trade in money be as free as in all other commodities; place the conscientious and lawabiding citizen upon an equal footing with the unscrupulous lawevading usurer; and the certain consequences will be—a greater abundance of money and less temptation to the people to evade or violate the laws of the country.

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