The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1851-03-10

obliged to lsase the field Of gain to those Who
sarily increase their price in proportion not only
risk Incurred, thereby unnecessarily enhs ncing the
value OF money to the borrower who is compelled to
make the sacrifice, by preventing competitions a1l.
;th ABecause the effect of the operation of thel,v
during scarcity Of meney Is to lock up capital and
thereby dspreciats the value Of real estste As
that Of all commodities; and but too frequently
reduce the wages OF labor the arm OF indus
Sth because the repeal OF tbs present, and the.
nsctment Of new law retaining the existing legal
rate of per cent, when no contract exists, and
leaving the rate above below the legal standard to
be agreed ON between ths parties 10 the contract,
would be the means OF bringing capital from other
quarters to our State in search of investment OF re-
neying the money market during pressure ana pre-"
venting many Of the various sacrinces Wien are 'ne
capitalists the and employment OF money under
the protection of laws, would reduce tue price
by cIseting competition among lenders and tend more
ee ctually squaze and establish the rate OF inter
est on sure foundation than any legal enactment
could possibly accomplish
Your committee do not deem it necessary to reca-
pitulste arguments with which all mlisr IN favor
Of relaxing some OF the features Of our present In
relation to the intere.t on money; nor 40 they tnns
necessary to remind the Senate Of all the wrongs
that have pssn ny m M
Nothing of the kind is required; the public fully CON-
prshena the whole matter general feeling OF dis
far it operates at all tends to make the ri,h rich
and the poor poorer They believe tina. It is only
the interruptions cunning, well informed man. who
undertakes to svade it and escape from its penalties
They believe that the money lender is the only
man whe lie In reality greatly benefited by 1t;
add that, whereas, much greater portion o.
the community borrow than loan money, the
as those of lenders they bersvs that It. is ne,
part Of the policy OF the State to countenanss laws
which operate for the exclusive benefit of any single
class in society, and particularly for the benefit OF
that class Who do not to the least pursue an hon
est and reputable calling
proposed entitled an act to prohibit corpora
tons from interpreting the defence of usury
succsssful defence OF usury, which had then just
New York city; but which law was in reality, arst
suggested by the managers OF large railroad corpo
made and for the purpose OF enabling that company
to take advantage Of greater competition among
capitaiits and thus 10 obtain the money upon their
bonds at rates Of interest," for the completion Of
their road.
1t is hardly probable that any member of the Lsgs-
lsture misled by the title Of the bill and yet the
apparent influences which favored its passage were
those adverse to corporations The effect OF ths Law,
instrumental in creating it. 1t has aided largely
the corporation above alluded to- aud all others sinh
larry situated. In the opinion of your committee,
nearly, quite ten per cent more has been real
lied by the stockholders Ia several railroad
poratiens In tho sale Of bonds, than eonld have
been realized but tor the existence OF the Law in ques-
tion, besides the advantage OF reader sale. And
now if this Law to prohibit corporations from inter-
posing the defence OF uslry in any action, has had
the eject of bsneatting to large extent, here
segs it has and IT, as is believed, tits in it.ee
principles Of right justice can Legislature pass
an act virtually permitting corporations TO borrow
money lawfully 1T any rate Of Interest At which said
corporations may agree for and at the same
time deny to individuals the same privilege! Such is,
mses believe that benefits which have resulted to
porations by the act OF last winter is convincing
proof OF the duty Of the Legislature to further,
ard, BY extending to individuals the iame privileges
granted to corporations all portions of fellow
citizens win be placed upon an equal footing. The
days OF special privileges fast passing away by
the force Of public opinion which IT, the ain COR
rect Do not therefore by legislative action
decision made in the Court of Appeals last winter,
in which banking corporation in New York, and =
some indignation in the public mind and brought into
full view the practcs operations OF the existing usury
law and for the information of the Senate the scte
connected with. also the itself Is here with pre-
sented landlords Chsncery Reports vol. g. pare 2l5,
entitled the New York Dry Dock Company vs. the
Others tried before Vice Chancellor SANFORD 1916
A banking company In New York, which had
rum Of money, applied TO trust company usually
lending money In New York, for loan OF their esrtiB-
Gates OF deposit payabl. at short dates and offered to
recure the Of the amount by their obli-
cations, and mortgage on real estate Of sufisisnt
value The trust company agreed to issue th.ir GER
titcsts bearing ave pee cent Interest payable In Lon
don, within two years fer e4s0oo sterling on -ec.is-
ing the banks promissory notes for 9 80 900 sterling
in London at the rate Of SIS tor every III stsr
ling with Elk per cent interest within seven years
secured by conveyance OF the real estate 20 trustees
containing rrovi'ion that the bank should pay to
the trust company. In New York, TIE respective in
etalment OF the $50 Coo, with interest at seven per
cent forty days before each insamsn should ltnre
wSs understood by the parties. that the tru.. com.
pany would negotiate the banks obligations in Lon
don, With their own gua intes in order meet ths
certificates Of deposit The ARRANGEMENT va. con
summsted between the parties.
He'll let. That the Transaction was loan By the
Trust COMPANY to the Bank, and not an exchange OF
paper or sale I'd That the reservation of 81 OOe or
four per cent on the principal secured to bs pail
rendered the contract usurtous The OF Bank
were negotiated In London, to bankers there Held,
nevertheless. that the contract was governed By the
lave Of New YORK Whenever comm ission. Ia addi-
ton legal interest charged By the lender on dis
counting bill or note, or IN making advan ses there
unless be for services dtinc. from tn.
loan Itself and then by a moderate aud ressousbia
charge, will be referred 70 tbs use Of the
money loaned, and renders the trsrsation nsurisns
on applying for . loan, the borrower oaer.I 20 the
lenders agent collateral advantage, which was
likely to ,. pr.juicsa to the former and certain
t. be profitable to the latter The oner Was accepted
md the loan Was made Held that the otter coasti.
tu,ed ore OF the terms and conditions OF the ilan
Woe Chsncellors decision after being reversed nv
the Supreme Court Of this State was sihr by the
Court Of Appeals. being the of las, resort and
therefore. the case stsBd, permanently decided in
favor of the bank on the ground OF usury
While your committee do not presume 20 doubt the
Fgaity OF the decision which has been ms ds BY the
TIM unal Of last resort out preums said decision to
be Ina conformity with the statute laws of this state
they nevertheless believe IL shows couslu,iv,iy the
Injustice ef ssid Law, ana with what facility and 4,
what extent, dishonest men may avail themselves OF
!. to p.Ip,trate gigantic robssre, provided thereto
any such thing az robbing according TO law
The report contains quotations from ne~spaper
articles upon the u.ury question sustaining he COM
mi.teee In the petition they have taken ana then it
concludes as follows
The present law in a majority Of ca,e. "a a dead
letter in Others enable, roSuss to profit largely by
IL, which never could have been intended aud 'ha1
sltogs thsr failed 70 accomplish any good purpose In
view 81 the foregoing cousiderations and 10 order
mesttns riews OF a portion Of your committse they
have sAsnded the blu IS herein before stated and
amended recommend It's passage
signed ". d. MORGAN,
GEO. GEUDE5
WI HORACE BROwN,
SeIe,t Con ntt,ee
cory of the Law introduced aud referred > by tho