Phenix gazette. [volume] (Alexandria [D.C.]) 1825-1833, 1832-02-25

GENTLEMEN-l have long thought that, u the
rate Of interest for money borrowed was reduced
from 6 to 5 per cent per annum, great benefit
would result to the general business Of this coun-
Try, and that the renewal Of the charter OF the
U. s. Bank would afford the opportunity to effect
that object in due time. Each State possesses,
1suppose, the power to regulate BY law the rate
of interest within its own limits; Of course Con.
gress cannot egislate upon that subject Tor the
whole nation; but it can establish by law the rate
of interest which the u. S. Bank shall receive
upon loans of money; and if it be limited to S
per cent. per annum, that will most probably be-
come the general rate Of interest in short period
of time. The monied capital of this country
far exceeds that of England at the time the Bank
Of that country was chartered to discount at .
per cent. Capital has for some years increased
aud continues to accumulate SO successfully In
this country, that if this Bank now adopts the
rate Of per cent. discount, there is fair reason
to expect that money will be loaned by private
capital at the rate of per cent. long before the
charter now asked for will, II granted. expire
Other Banks must follow the practice Of this
wheresoever it has branches: when that happens
as there will not to present appearance be pub
lie securities wherein to invest private capital, 1t
must seek employment at a rate of interest less
than il paid To Banks. That is now the case here
as well as in England, where money can be Dor
rowed at per cent. upon good securities with
long date for repayment. The Bank OF Eng
L.. L. -, bar Last WaS ain
counting freely at per cent; while in this coun-
try the discount paid, BY means of an improper
book of discount, is about 81 per cent. There
exists no reason for this inequality Of interest so
injurious to The trade Of this country. cannot
perceive any just cause why Congress should
not insist upon the rate of 5 per cent. discount
as a condition Of renewal Of the charter. The
Bank may not offer such condition; but, If de-
mahded, it will not, ii cannot. be refused. lbeg
leave now to ask your attention to general prac-
tee, in dscounting at Banks in this country,
which is very unfair, and Of more importance
to the trading community than meets the public
eye.
In 1902 Mr.. Rowlett, Of Philadelphia, OBJ
Discount and Interest," lthas been profitable
book to the Banks. and no doubt Mr.. Rowett's
servic es were well repaid. For particular ex-
planation, or rather confirmation OF what state,
/ refer you to the book itself. Ii not in the Lii
brary a, the Capitol most of the traders and all
the Banks have it. The title page processes that
the computations of discount are at per cent. as
for the wear. 1t is not so He states the dis
count upon every sum at one-haif per cent for so
DAYS. This gives to the Banker 6 per cent. for
500 days, and clear additional interest for the
remaining five DAYS of the year at the undue cost
Of the borrower. His Tables also run out the
discount upon allowances for Ga days. The Phi
iadelphia Banks have always taken the "a days
discount. as understand, and it is now gene
raj practice Of the Banks to do so-thus includ-
ing, contrary to law and equity, the day Of loan
and the day Of payment too. This process upon
a note Of 60 days, six times renewed, takes. IN
about one year. six days more interest; SO that
upon loan for $50 days. the Banks take 81
DAYS interest Such is the result OF g the eguit-
able principles Of the Banks" as set forth in
Mr.. Rowlett's title page. Mr. Rowlett had the
confidence to assure me that his Tables, as to
time. correspondent truly with the English Tables
Of Interest. A comparison Of the English book,
which have left with the Hon. Robert Allen. will
prove the falIacy Of his assertion. You lind in
the English Book that all computations of inter-
est correspond with the year Of s65 days; and
asspre you. mon my own knowledge, that the
English Bankers do not take any discount but
for the time the security discounted has to run:
That is. upon note of go days. they take IS
DAYS discount, which covers the three days of
grace, and no more. So the Bankers in the u
ni,ed States charge and receive eiepen days more
Interest IN the gear than the Bankers Of Europe.
Individually. this practice may seem of no i'm
portance; but upon any reasonable computation
of the enormous mass Of millions loaned by all
che Banks Of this eOuntry iSone year, all pursu.