Delaware gazette. [volume] (Delaware, Ohio) 1855-1886, 1858-02-26
TcoanuKIcArEp. I
Ought the Rate Of interest 70 BE- Restricted b.
Inv

Law
think that Legislators often CIR By un-
wise attempts to restrict men in the exercise
of their natural rights In this class of Leg
~islation / place laws limiting the rate OF in
teres,. Fur the greater part of the time
since the organization of Ohio interest above
SIX per cen, has been Illegal This ~restric-
ton, in times past, as vel. as the present at
tempt in our Legislature to renew it, was
probably designed TO benefit the borrower;
but can il have this effect!
There is but one way 80 ascertain the true
value of pFoducts:-to observe the price tlisy
bring when free competition is ailowed to
buth buye fs and seiiers: the same is true
with regard 10 The interest Of money. OH
er products fall in price whenever the sup
ply exceeds the demand-when the compe-
t:tion among sellers IS greater than among
buyers. So with money; if there ID u larger
amount te be lent than is wanted By the
borrowers the rate of interest falls. and vice
versa.
l. the competition now among lenders,
when they are allowed 10 charge ten per
cent, sufficient To reduce the rate of interest
as low as il should be IF so, there is no
need Of d law for that purpose; il not, will
an enactment striking or i per cent from
the oroductiuevess of loans, while the income
of capital in every other shape is left undis-
turbed, increase the competition among iana-
ers Certainly not.
Money. for several years past, has brought
a high iuicres; not because the law allowed
it. but because a profitable trade justified it,
and the rapid rise of Western lands, in con-
sequence of their rapid settlement. and the
immense influx of gold from California ana
Ausiraiia, has he'd out strong ~inducement
tor Investments. The Inducements, for the
last few years. to use capital have been SO
great that those who wished to borrow could
not always obtain money, even at ten per
cent
| There arc two classes Uf money lenders,
-oHe will obey-aad one eyade the law
Il is we'll known that the former class has
fallen tar short of supplying the demand foc
loans. Should the rate of interest be re-
stricted 10 six per cent, thus curtaiiing the
income of lay rbiding lenders nearly one
half, il is visionary to suppose that ung..eon-
siderable number would continue the bust
ness while tbeF law evading competitors
were realizing two or three times as much;
nor is there any great necessity for them to
continue while they may successfully enter
as equals any of the thousand various pur-
suits IN which capital is required
Should trade languish AMI property OF all
kinds decline in value, and no outlet for mo-
uey be found which would bring a return OF
more than 5 or s per Cent, the law in ques-
ton would be productive of little Injury and
no good; but should the mines continue TO
throw specie in circulation as rapidly as
they have done, and trade prosper, hnd real
estate rise as rapidly as it has for a few years
past, to restrict, with heavy penalties, inter
est 10 six per cent would compel nine-tenths
OF borrowers, who are under The necessity
of making more than temporary loans. to re-
sort 10 those who lend in violation or eva
sion Of law; and they would be compelled
to pay Il fearful interest, as insurance against
increased risk.
In the absence of Legislative interference,
, capital in the shape of money can be hired
on as favorable terms as IN any other of the
various shapes which it assumes; and the
rate of interest will be governed by it's pro-
ductiyeness in the different branches of in
dustry and trade TO which it Is applicable
But | will not assert that q aaan of doubtful
honesty or s~olvency can borrow at as lo~ d
rate as one whose ability and integrity are
beyond dispute. If A can borrow at'six pei
cent it is not in consequence of any law OF
The State, but because the lender does mol
consider his money worth more to De invest
ed in any other way. Ii B.. comes into the
same market and is obliged to pay twelve
per cent, one hall only is for the use of capital
and the other to cover the risk of loss--or a
premium OH insurance. Ii B. is such a no.
toTious rascal that no one will trust him short
of this excessive interest,", all will admit thai
he is getting HIS just deserts. But if he is
honest, and some villain has found a defecI
in the title OF his farm and is trying to wrong
him out OF it, aud he must have money to
defend his home in the lottery of the law.
while if he loses he will be ruined AMI can
never repay there will be a strong sympathy
in his behalf. Under these circumstance
people may make him donations, Or lenc
without interest, or with interest Mt the uSu.
al rate; but it shosld be borne in mind thai
any fayors they bcstow are not III conae-
%queuce of legal enactments, but out of sym
patty and friendship. AS a business trans.
action, il six per cent is the smallest amount
lIluA ii RoJ y 6kAS 2 Vi A|OANy 6lAA SA
per cent the least that will cover the risk Of
loss, twelve per cent is as low as any person
eaniafford to lend money TO him. But stioulc
D., who has money to lend, take such Il pei
cent fran Ell honest man under such unfor.
tunnte circumstances, people would regarc
him as hard hearted, and seek to place lega.
restrictions upon his business transactions
In accordance with this popular opinion the
Legislature attaches heavy penalties, anc
forfeiture of principal to the taking of more
than six per cent. The question 20 be con
sidered Is not whether B. is entitled to sym
pnthy. but whether this Legislation will ben.
eft i.inl
! suppose that few Legislative bodies art
composed Of men who form SO law an esti
nate of their ability as Legislators Us to ad
nit that they caInot frame u law for the vic.
lation or evasion of which the penalty vii
not be inflicted as often as one time in TWEEN
ty. Should tie result show that they hae
not over estimated their ability, and the pen.
aiiv they attach be the forfeiture Of the
debt, what is the rate at which D. can now
furnish b. with money? Five per cent il
the smallest amount which will cover this
legal risk, and b. must suffer this loss il.
J consequence of the law enacted for his ben
eft. But is this loss all which public opin-
; ion conpels him to sustain! D. knows thai
the opinion which required The enactment o.
such a statute will condemn him for riolat-
ing the law and taking advantage of BIS
necessity; and that the remarks made abuBi
him will be far from complimentary. Probab.
~ none of BIS. friends would bear the obloquy
heaped upon d. for this usurious transaction
for less than five per cent OF the money loan.
ed: and, unless i. is a bigger fool than mo.