The Sun.
London, England, 1841-08-07 00:00:00

CANADIAN USURY LAWS.

A subject of considerable importance to our Canadian
colonies, which from being perhaps imperfectly under-
stood has not attracted the attention of the press in
this muntry, is dwelt upon in -most of the advices to
hand during the last few weeks, from that quarter ; we
allude to the state of the usury laws. The experience of
many years must have taught the thinking part of the
British community the folly, and, indeed, the absolute
danger of investing their surplus capital in foreign
loans or improvement schemes, and it has often been
a matter of regret that a good portion of the heavy
amount locked up in those sources had not been em-
ployed to the benefit of our own transmarine posses-
sions. The small amount of money circulating in
Canada is absorbed, at high rates of interest, in those

necessary works and establishments, canals, roads,
banks, and forwarding companies, and there, is still
a wide field for. the profitable outlay of much more.
An important artificial obstacle, however, has hitherto
presented itself to the introduction of Britith capital
for agricultural purposes, and thus is the great dispro-
portion between the legal rate of interest in the colony, 6
per cent., and that currently obtained from investments
in trading speculations, viz., 8 to 12 per cent. To remedy
this, a Bill has been introduced into the Provincial Par-
liament, under the auspices of Lord Sydendam, but which,
it appears, will require some amendments to meet the
exigencies of the case. The whole matter is well ex-
plained in the subjoined comments of a local writer:—
" Every one in Canada," he observes, " is aware that
money is worth more than 6 per cent., the present legal
rate—that while thousands are willing to borrow at a
far higher premium, few are willing to run the risk of
losing principal and interest by. a violation of the law.
Whil such a state of things lasts, the 'country can never
prosper, or her resources be sufficiently developed.
Capital will not be loaned by those possessing it when
the law forbids their doing so, except at an undervalue
and a sacrifice.

" The change we should like to see effected in Canada
would be this—declare that any rate of interest that the
parties may agree on, not exceeding the highest possible
value of money, say 12 per cent., may be received on any
contract. When no rate is fixed, then the law should declare
some adequate general standard. Our landed property will
never become available as security fbr the raising of money
until the lender and the borrower are allowed to fix on any
rate of interest they please, and make any bargain they
like without the intervention of a usury law, which may
vitiate the whole contract, if they pressume to receive a
higher interest than the present rate, which every simple-
ton knows is far below the actual value of money in this
country.
"Bank Stock, insurance companies, marine railways,
forwarding speculations, pay their 8, 10, and 15 per cent.,
and, as a natural consequence,. engross every disposable
farthing of capital in this country. Not a penny can be
spared to lend the poor farmer to improve or pay for his
land. True he can offer undeniable security, but the law
says he must not give more than six per cent., and the
moneyed man to whom he applies, tells him very coolly,
buttoning his pocket at the same time, my good friend,
I can invest my money in the Bank of Upper Canada, in
the British American Insurance, in the. Ottawa and

Rideau Forwarding Company, and get my ten per cent.,
and a handsome bonus occasionally—surely you cannot
expect one to be silly as to lock it np with you at six per
cent. ?' This is common sense. We cannot blame the
capitalist, and yet we must pity. the farmer.
" We understand that a Bill was to be introduced into
ti e Provincial Parliament, to'assimilate the usury laws
of Canada to those of England—in other words, to abo-
lish them so far as they affect bills of exchange and pro-
missory notes that have more than twelve months to run,
and leave them untouched so far as they affect monetary
transactions.

"A change of this nature will be totally inoperative
as a means of alleviating the evils now pressing so
heavily upon the mass of our population. It can in no
respect benefit the farmer, whose interests we are espe-
cially anxious to promote ; but it will be of no small
benefit to moneyed men and all banking institutions.
" We want in this country banking institutions which
will readily advance money on security of real property.
English capital, we advisedly assert, can be readily ob-
tained for such investments, provided a rate of interest
be allowed by law, which will be something like the
value of money."