Daily Richmond Whig. [volume] (Richmond, Va.) 1865-1869, 1866-01-13
An Old Virginian.

The communication, in another column, adj
verse to any amendment of the usury laws,
presents some points worthy OF consideration.
The writer apprehends that zone of the first
effects will be to impair, materially, the value
of State stocks and railroad bonds, &c This
would certainly be "calamitouS result u
such should happen TO be the consequence I;
but, we think, the apprehension and the argu-
ment may be disposed of by the remark, IA
liAiHs, that the competition between SIX per
cent. stocks and securities, and investments at
a higher rate Of interest, from which our cor
respondent anticipates such injury TO the for
mer, already eriStS. If Virginia does not allow
more than six per cent, other States do. The
capitalist already has his choice, and our State
stocks and bonds already suffer whatever III
Jury such competition can produce. But are
the fears of Gan Old Virgiuian' well founded
In our opinion the effect Of the proposed legis-
lation would be just the opposite. His idea
necessarily involves another proposition, viz:
that the present limitation of the rate OF inter-
est in this State, in all contracts, to SIN per
cent, operates as protection against the de
probation of these securities. How Is the
fact Registered State stock is to-day selling
at forty cents on the dollar, and coupons tor
about forty three cents on the dollar and rail
road bonds are at various rates, according To
their character, all largely below par. Could
the market for these securities well be in any
worse condition, under any conceivable state
of the law 1t is suggested that "the state
and our large corporations will now necessarily
be in the market borrowers This can
scarcely be true as to the State. Neither ne
cessity or policy indicates that she is about To
become borrower. But if she does propose
it, 1t would seem to be advisable that she hrs1
do something to enhance the value of her bonds.
Evidently the six per cent. statute wont help
her in the negotiation; for, under its operation,
she cannot hope for more than forty dollars for
promise 10 pay hundred, What rate OF IN
terest would that be Six dollars year ON
forty lust fifteen Per cent. per annum. This
Is the rate Of interest now received by parties
who have bought her bonds at forty dollars on
the hundred.
The railroad corporations will be large Dor
rowers. Ask them what, more than anything
else, prevents them from getting what they
want at a reasonable rate of interest, such as
similar borrowers in other States pay, and
they will uniformly answer-"the usury laws.
at is obvious" says Gan Old Virginian,'
.,if you legalize a rate of twelve per cent, the
stocks and bonds would very soon fall To
1850" &c. State stock could not certainly
fall TO $50, because it is bs!olr that now. Nor
does il appear that the result would be any
depreciation OF its present value. The error
in all these prophecies and calculations is the
confusion of the legal rate OF interest with the
actual rate-in other words, the superstition
that the statute and not the laws of trade, is
the great regulator. Making it legal to pay
more than six per cent. will force nobody TO
nav more. and lead nobody 10 ask more, I'M
less the market and current value OF money
at the time of any loan shall actually be more
BY admitting lenders, everywhere and oil every
class, 70 { sree competition, increasing indeh-
nitely the supply of capital, and removing the
risk (which now has to be dearly paid tori N
evasion Of the law, the inevitable effect nus'
be great Improvement in the present sad
condition Of monetary affairs in EirginiA- Wh>
are most TO be relied upon to sutaiE the credit
and the value Of the bonds OF the State L.
own citizens, Of course, And If they were nol
utterly impoverished q capital and forbidden
TO raise it on such security as they have to Of
fer, at such rates as the citizens Of other Static
nav, the price Of these bonds would NOT Il,
where it is. How can it DC expected that i'm
Vestments will be made in them at any but
very low rate when the little capital here ind
employment in commercial paper and NOR
cages at twenty to fifty per cent; when Ii
large capitalists and lenders, who are at i
times looking for more secure and more pc
manent investments and loans at seven and
half to eight per cent, are not peTmitt'
TO enter the Reld-and the only competiH,
is the competition among borrowers. SUI
reasoning would not be listened TO IN come
ton with any other subject Of trade. And
money is now daily bought and sold, and b
become an article Of merchandise, and Deepen
as much as anything else on competition
bring it and keep it down To its proper level.
The apprehension that the creditor ek'
yyould be eager to force debtors TO pay up
case contracts in writing for more than six p
conf. should be legalized, does not appear
have any good foundation. 1t proceeds aga
mon the notion that the statute is the lev
which raises or depresses the value of none
The statute may permit hty per cent al