The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1849-02-20

The UsuRY LAws-THEIR MoRALE.-There 10
no hope that during the present session Oh our
Legislature, the code of rascahty known az
the usury laws, will be repealed, or even modihed'
notwithstanding that the voice OF the pubic ID OPP
posed to their remaining any longer on the statute
book II has always been mystery to US how
Legislators, who are presumed to be naen OF sense
and intelligence, can tail to see the absolute and
utter Inc Efficiency of those ridiculous laws for fulfill
ing the purpose which was contemplated by those
who enacted them. That purpose was the preven-
ton OF contracts for the loan or usage of money at
higher rate OF interest than seven per cent and
yet, in The face OF this enactment, and the penalty
attached to an Infringement of its provisions, mo-
ney Is daily and hourly loaned and borrowed at a
higher rate OF interest than that provided for by
the usuIy laws. In fact men OF business, when
cramped by the want Of money, and when the artl-
Gle is scarce-as 1t frequently ls--will not scrupe
to give at the of eighteen per cent interest for
lis use. With this law before the eyes OF the
lender this rate OF interest will be taken, because
money may actually and intrinsically be worth that
sum for its use, to the man who borrows 1t. Both
the borrower and the lender know that capital, like
every thing else, Is subject TO the laws OF supply
and demand that when the demand is great it Is
worth more than when it is not So and vce versa.
Thus, money in Wall street is frequently not
worth more than five per cent; but again 1t is
worth ten, and will command even twenty, when
1t is very scarce, IN precisely the same manner as
corn was dearer in our markets during the demand
that existed for it the time OF the Irish famine,
than it was before that demand existed.
Now, IN order to be consistent, the Legislature,
if they undertake to interfere with the laws of
trade-to step in and make bargains between bor-
rowers and lenders of money-should dictate to
the farmer that he should not receive more than
certain price for his corn his eats his hay or any
other article produced by his labor. But if it
to do so, the farmer would no doubt complain
and Justly so. He would say that agricultural pro-
ductlons are scarce In consequence OF bad harvest
weather In England that hay ID scarce in conse
quence OF the winter beng unusually severe, rem
derng 1t necessary for cattle to be better fed and
tor longer period, than in other years; and
therefore The productions OF his farm were worth
more than in former years. The owner of money
Is IN precisely the same situation. From causes
| which are continually at work in the money
market, or in the commercial world, capital IS
| worth much more this month than 1t was last !;
and why should the Legislature prescribe to the
sell it y? But there is no in arguing the matter;
It is clear as the sun at MONDAY to every
capitalist and man of business, that the usury
laws ere imperative between men of honor, and
ought to be repealed Men Of integrity never call
upon our courts Of justice declare contract for
the loan Of money veid because the lender has
charged greater rate OF interest than is provided
tor by those laws. Dishones: men, however, do so.
Thew hcrrou oocae,onaIl1 of mon IN x,hor, ii, av
are not known, and then call upon our courts to
declare that the lender has forfeited all-both prln-
cpal and interest-by charging more than seven per
cent.
An amusing instance of the way in which the
usury laws are avoided, occurred short time since
In Boston. A certain corporation was in want OF
one hundred thousand dollars, and In order to
carry on Its business, 1t must obtain It, But money
was worth, at that particular time, one and half
per cent per month. Now the company were will
ling to pay this rate Of interest but by accepting
the capitalist would incur the risk of losing all.
The company were willing to pay the rate of inte-
rest, and the capitalist TO accept 'bu no." says the
| Legislature of Massachusetts, eve know the bust
ness of each of you better than you do yourselves,
and although you the (corporatlon) say that It would
be an object for you to pay that rate OF interest,"
will not allow you to do SO; and as for you, Mr..
Capitalist, take than the legal rate of interest
If you dare. II you do, we will declare the con-
tract void, and will deprive you of your money!
What was to be done The company must have
the money. "We'll fix it In this way" SAID the
capitalist massachusetts five per cent stock sells
in the street for only ninety.one. Now will sell
you one hundred thousand dollars worth at par,
and take your bond at six months for that sum,
with legal interest" Thus the capitalist obtained
the usuriOus interest, and the company who bor-
rowed the money proceeded with their works
The law was evaded, and all parties were satisfied
| Contracts like the above are by no means Of un-
common occurrence. Similar ones are made every
day In Wall street, and in other large cities, and
still the Legislature persists in keeping the usury
laws on the statute book. How absurd, therefore.
appears the conduct Of those persons, when they
have facts Like these before their eyes! The truth
is, the sooner these ridiculous enactments are re-
peal led the better.