The National Register. — London, England, 1816-04-28 00:00:00

• a w k ir No. 433.—V0i.. IX. ON THE EXPEDIENCY OE RAISING the LEGAL RATE of INTEREST. [FROM A TASIMIET JUST Pt7OI.IISIIID 111 r Z. a. suourw, ESQ. The war is now at an end. A re-action has ensued, which has involved all in one common distress. It will not be supposed that lunch money is afloat in the market, and even if there were, yet under the depresses! state of agriculture, the 4indssl interest, generally speaking, could not afford to pay even the legal rate of interest fir the loan of it. •It is deeply the interest of all to consi der what measures it were proper to adopt, in order to relieve the country undsv the existing difficulties. If it should be thougl:t too bold a measure to allow more than 5 per cent., to be taken on good security, yet as money may now be borPowcsl at any rate, however exorbitant, by way annuity, some measure ought to be adopted to prevent the clashing consequences arising out of this system. For instance, let it be made legal to take 7 or 8 per cent., on such securities as annuities are now generally granted upon, viz. life interests, and rever sions, and leasehold estates ; and at the same time render it illegal to grant a redeemable annuity. This would at once open the market to fair bidders the extra interest would compensate for the risk, more especially when re payment of the money could be compelled, and borrowers with inferior securities would be saved from great oppres sion. The borrower where he had a determinable inter est, for example, a life estate, would still have to insure his life ; but, subject to the money borrowed, the assur ance would belong to himself; he might keep the assur ance on foot after the money was paid off for his own be nefit. or he might sell it ; wherists an assurance for money lent on an annuity is always effected by the lender, al though paid tin• by the borrower, and naturally falls to the ground when the annuity is paid of—To this plan it may be objected, that irredeemable annuities would be granted in order to evade the law. This objection, and the mode of obviating it, require great consideration. It would hardly be endured that the sale of an irredeem able annuity should be prohibited, nor does it seem ne cessary to resort to so violent a measure. It is a well known fun, that very few life annuities are ever granted, without being subject to redemption. Where an irre deemable annuity is grant sa, it is generally a fiunily trans tiction, and wholly free from fraud. It would not there fore be attended with any practical inconvenience to fix the rates at which such annuities shall be bought accord ing to the plan proposed in the bill so often referred to, which was dripped. This measure, I am persuaded, would never affect the persons whose conduct it would seem to regulate, and It would facilitate the state plan now in action of raising money by the grant of ab s•,lute life annuites, although even in regard to this limited traffic, individuals should be allowed to give considerably more than Government offers. It would at the same time prevent lenders from flying to this scheme in order to evade the law, nicking the borrower rely upon the honour in granting a redemp tion. It may perhaps still further be objected, that this measure would open a door for all classes to borrow at the increased rate. A man haying a fee simple estate, laid also a life estate, might pledge the life rate as a se curity for a loan at the highest rate of interest, the tender relying on his other property, or on a lien on it by means of a judgment, as a better security. This, it must be admitted, might be don°. But still no new evil would be introduced; for a man in the same cirewn stances, or with fix simple estates only, may, as matters now stand, under colour of an annuity, borrow money at 40 Iwr cent.; and the greater the amount of the an nuity that is taken, the more it assumes the shape of a loan, for it heroines the more certain that the annuity will be paid oft in a reasonable time. The best, however, although the boldest measure, would be at once to sweep from the statute book all the laws against usury. This would leave money like other commodities, to find its level; and would essentially be nefit those upon whom it would seem to have the harsh est operation. . . . Conflicting opinions, however, upon this great question must necessarily exist. It is thought by some that the rate of interest should be reduced. The objection to such a measure has been already stated, that the luw, although made, would be inoperative, and would sub ject borrowers to harsher terms than would be imposed on them without a protecting law. The story of Don Quixote's interference on behalf of the peasant whom his waster was beating, should not be loam mankind. If .41ur sifts, It ottatitution attb Kabul. SUNDAY, APRIL 28, 1816. the borrowers can convince the legislature, that the re duction•by an act of Parliament of the rate of interest will really be a benefit to them, and through them to the country in general; of course the aid of the legislature will not be refused to them. But they are bound to prove, that either the rate of interest is really reduced in the market, or that any law in any state was ever pro ductive of benefit where the market rate was above the price fixed by the law. Annuities, as the law now stands, are in effect usurious loans of money, and they prove, as I have already obser ved, that mankind will, in extreme cases, in despite of acts of Parliament, make their own money bargains, If it were intended to lower the rate of interest, of course the first stop would be to render annuities irre deemable ; or, in other words, to prevent loans in any shape at more than 5 per cent. This step, accompanied with an increased legal rate of interest on infirm secu rities, has already been recommended; but if it were taken alone, the immediate consequence would be, not that redeemable annuities would cease, but that smaller sums would be paid for them, and the borrowers would be compelled to rely on the honor of the lenders to suffer a re purchase. This is not a matter of speculation. Before re deemable annuities, with a power to re-purchase, were legal, this was the plan resorted to, and with pernicious effect as against borrowers, to evade the usury laws. The attempt succeeded, and the Judges were, in point of fact, forced to yield to the prevailing habits of mankind ; and to give legality to such grants with power to re-purchase, in order to seer borrowers from oppression. To render annuities irredeemable, would once more,it is to be feared, expose borrowers to the evils which the system, as it at present stands, retards them against. When annuities were, to evade the usury laws, made irredeemable, the great anxiety of the legislature, as we have seen, was to render them redeemable. Now that annuities are univer sally made redeemable, the only object of making theta irredeemable would be to lower the market rate of interest : an object which, in the present state of thin g s, must mots sarily prove unattainable. It is not to be denied, that annuities ought to be placed on time footing which would make them accord better with the existing laws against usury, whilst they are suffered to remain in the statute book. But to render anuuites irredeemable, would only increase the evils under which borrowers now labour, if even the legal rate of interest were not reduced. But if that measure were to be followed up by a reditetien of the rate of interest below the market rate, the landed interest could not stand the shock. In the presenr state of commerce, when we speak of the market rate of - interest, we look io point of fart to the general rate, as well in this as in other states, for the average value of our money is fixed by the general operations of the monied interest throughout all commercial natious. Our own funds, therefore, may safely he considered as the just standard of the market rate of interest. Now at this moment more than a per cent. can he obtained in the fonds. If, therefore, the rate of interest were to he re duced to -1 per cent., all the loans to individuals would be promptly called in; for it would be impossible to ask the legis !Mare not only to reduce the rate, but also to allow debtors time to pay their debts, 'lime money so called In would of course be invested in the funds. This would occasion a rise in the funds; and that would probably drive men to lend their money to foreign states, where more interest could be obtained. " Flue lauded interest would not only be compelled to pay off their existing debts, but would be prevented from obtaining any further loan. It would he idle to talk of the future or probable benefits of a system which would at once paralyze Ma hand of the agriculturist throughout the kingdom. IMPERIAL PARLIAMENT. HOUSE OF COMMONS, WEDNESDA%, %vim 21. %Ir. K. Douotas preaeuted a Petition from Diitufrias, signed by 640 tieNons, concerning the situation of Mr. Hyslop, ind 70 other persona, subjects of this countr, N ho had been taken by General Murillo in lit, expedition against Carthagena, and bail tutu comic 1111 l cit to death ; Litt sa Ito had since been sent to Spain, to await the determination of the Spanish Govern ment. Lord CasTi-rats:acit said, that Government took Pleasures on this subject, whicb left no doubt that the persons of these individual% were out of danger. Gen.Ttioitsrots, pursuant to the notice he had given, rose to :nose for " a retwrn of the total al value of all notes pre sented at the ltaiik of England. and refused payment as being forged, in the l est four years, and up to the latest period to which it could lie made out. specifying the alumna of each year." Ile obt.erved, that the practice of forging notes had risen to a grog t height lately, and he understood particularly since the restcration of peace. Marv - of those notes were so well A:scented, that they were with dilErillty distinguished from good ones. lie also understood that several of those notes wore brought from the Continent, but he hoped this would 114 t bo t I cornet. His object in making the 'nation was, that some remedy might be devised by which such folgery mit:lit be rendered more ditficolt. This he conceived might he done by a different method of making them from that which was at present followed. several plans for this purpose had alt ei dy Luca presuated N ttsolank ; and aelioui other., Paid Sid. one by Earl Stanlimbc, which bad been rejected by the Bank an ton expensive. He (Geo. T.) conceived Om the adoption of some plan was neees-ary to prevent the moat evil which he had pointed ont. He then moved no above, and the motion wit* agreed to. . _ Mr. ConweN inquired whether it was in the contemplation of Government to bring forward anv new measure on the son ject of the Poor Laws? If not, he should deem it his duty.to bring it under the consideration of Parliament. Lord CA4II.III4PAGIi said, that Ministers were not prepared to recommend the adoption of any 11It:01141'e 011 1111/1 diftienit an h ject, and he hoped the Hon. Gentleman would bring forward whatever plan :night seem expedient in his jiigmenr. nnoison 474 wished to know, whether (a. an alarm bad gone forth to that effect) it was the inteotiou of Government to pursue rigorous measures to collect the Property Tax? Mr. VansmanTasewred the HonAiestletmin noorders bad been given by the Government to use rigorous measures for collecting the Tax. Indeed, he had stated his intention to bring forward a measure to give relief; which would be rend, in a few days.—Adjourned. THURSDAY, APRIL 25. A disenesion arose in consequence of a motion for a Com mittee, to revise the laws relating to the importation of Forszign Linens. It was contended, that these laws, so far as they impose a transit duty, were injurious to commerce. Lord CASTLRR FAG!' maintainedtliat our commerce dialog the war was the effect of a diseased and chilling system. On a division, the motion was negatived by a majority of 75. A number of Petitions were presented from various persons against any alteration in the laws with respect to wool, and ngainst the leather tax; others were also presented praying economy and retrenchment,and recommending a commutation of tithes. Lord 6. CAVFNutsR rose and made his promised motion, to reduce within proper and constitutional limits the Establish ments of the Country. His Lordship said, on comparing the present F4tablisliments with those formerly, he could perceive that the increase of the National Debt and the amount of the Estimates were such, as in a constitutional point of view to create the greatest alarm. He was convinced, that unless a different policy was pursued by Mll ini.ters—unlets retrenchment was adopted in every departnieut 011ie State, the Country must sink under the pressure. The Noble L9rd col:mini:lrd with mow _ MA , totl• .10 part _ present year. The country had been relieved from 11 millions of tax- Attila ' and he saw nn grounds for gloomy apprehensions. The motion was also apposed by Lord Pahnerston,and suppor ted by Lord Nugent, Mr. Macdonald, Mr. Curwen, and Mr. J. Smith. The House divided on an amendment, moved by Lord Pal merston, fur proceeding to the other orders of the day —Ayes, 158---Noes, 102--Majority, 50. Lord C tsTLERZAGH obtained leave to bring in a Bill to con tinue the Alien Act under the same provisions as after the peace of Amiens.—Adjourned. FRIDAY, APRIL !6. Lord COCHRANE gave notice, that .lie should on the 3d of May move to refer the charges he had esdithited against Lord Elleaborough to a Committee of the whole house. THE STATE. OF IRELAND. Sir J. NIEWPORT rose to bring forward his motion relative to the present State of Ireland ; and observed, that in calling the attention of the House to this subject, the tirst question which would arise was, how it was possible that two countries should fur upwards of six centuries have been connected as England and Ireland have been ; and that one country should remain to disaffected, so miserable, and so wretched, whilst the other had made such rapid strides in improvement, civilisation, and un esampled cultivation. The answer, the Right Hun. Baratta said. would soon be found, if the history of the two countries was looked into. It was because Great Britain wished to claim union with Ireland, bat wonld never eoend to her British law and British justice. The Hon. Baronet then proceeded to take a review of the State of Ireland, from the origin of her connection with this country down to the time of James the First, at which time, the Right Hoo. Baronet said, colonists had been sent from this country to the province of Ulster, who, however, took possiosion of the country as soldiers going to take possession of and gurris , :ii a conquest ; thus, instead of ameli orating the state of that country, inninOSities sod discords were sown, which even tip to the present time had never been eradicated, and which hal, indeed, been the source of all the miseries to which Ii el mil bad •ince bu'r'n subject. The Ho. nourable Baronet then proceeded at considerable length to take a review of the different measures adopted by different administrations towards Ireland, from that lime to the Revolu tion, from the Revolution to the accession of the House of and from that period to the time of the Union; and especiatly commented on the conduct of the Irish Parliaments themselves towards their eollstillicnts. One Parliament in.** reign of George I. on one occasion attempted to vote supplies • and that - carried, motion. thirty. for - ?I years to come; _ measure was nearly there being • majority of one vote only against the Ahother Patti nt, in the reign of George 11., sat _ three N ears, thus causing itself to outlive all its original connections, and completely separating its interests from those of the people these and otlit r similar acts had tended materially to alienate the minds of the people from the Government. These things remained till Ins, when almost t m entire military force was withdrawn from Ireland for the r urp, se• of the American war, tied she was left tts herself— ing an Address to the Prince Regent, which in substance repre- sents to his Royal Highness the impolicy of keeping up so large a military establishment, the necessity of . retrenchments, dm. Mr. J. P. GRANT seconded the motion at some length. Our expenditure this year, he said, excetded our income by 19,991,9601.! It was impossible that the House must not see the immense importance of this subject. and view ser e moat serious alarm the frightful precipice on whit* we The CHANCELLOR Or the ExcHisteun, in opp 1110.6.- lion, said, our income fell short of the expenditure by IS mil- lions only, nut 19 millions. He took this opportunity of stating that a loan :multiform no part IV' the arrangements for the resent . . ottr+ ~ 'tA :•(.- . i .,(-)-r, 4 ow, ..,. , - 1. .. .v i . . . ) k,...:... --.. c .44 . .'