The Wheeling daily intelligencer. [volume] (Wheeling, W. Va.) 1865-1903, 1867-02-07
THE UsURY LAWS.
Should the Rate OF Interest for Money
BE Controlled by Legislation e---Na.


tural and Artificial Lt5ws of Trade.
From le Net0 York Commercial Advertiser. |
The Committee on the Judiciary of
the House of Representatives in Mas
Sachusetts, have made a report on the |
usury laws of that State, in which thew
come to the conclusion, unanimously.
that "while, in Difference to long-ex' |
listing prejudices, 1t may be wise to con-
time the legal rate of interest, in the |
absence ofspecial contract, at six per
cent, parties ought to be allowed to
contract for payment of interest at the
rate of seven per cent"
Inc Committee are not up to the
marx OF altogether abolishing the laws
reSuEIatlfg the interest of money. Such
reform Is too much for Massachusetts
now, ana yet it is the generally re-
celVed opinion of the world. that money
should be bought and sold mon what
ever Terms parties may agree to; that it
S SNIIAtt oe [eguIateu by no statute, but
be left solely to the laws of demand and
supply, precisely like any other com
modify. Government itself, while re-
stricting the people in their contracts.
makes that criminal which it does for
itself whenever pressed by necessity.
II sells its loans at a discount, or issues
| them with high rate of interest, as in
the case of the seven-thirty bonds, and
no one thinks that the people are
Insurers" because they take bonds so
ofered-take them, in fact, with eager
ness, because the rate is above the
usual and legal rate. The Massachu-
sets Committee, in their report, make a
few observations, which we copy. They
say:
"a common impression has been that
an increase of the rate would operate
severely upon borrowers of money on
l .
perience, and the business experience
of all business men now is, that no
loans upon mortgages are made. The
whole course of business aided by leg
islation has strongly tended to divert
| Investments into other and more profit
able channels. A mortgage at the legal
rates yields sixty dollars upon the
thousand per year. If the owner OF
the mortgage is in receipt of an income
beyond s. 900 he must pay ten per cent,
and this to the United States, and six
dollars must be deducted from his six
ty, leaving him fifty-four only.
| On examination of Public Document
No. 81, being the aggregate OF polls,
property, taxes, &c, the committee
find that the average taxation in the
whole Commonwealth for the year 1866
was Sl4 So upon the thousand dollars.
| In 1865 the average tax in the State was
SIT ST per thousand; in 1864 it was
fore be seen that from the fifty-tour
dollars remaining, above referred to,
must be deducted as the average for the
present year Sl4 SO, and the net income
of the thousand dollars is reduced from
S54 to $50 II, aud thus the holder of the
mortgage would II realize little less than
four per cent.
After considering the cases wherein
better Investments can be made-(D in
the stocks of the United States q
mortgages or other loans i'll New York
and cIher States where the rate of in
terest is higher than ours; (3) in the
stocks OF corporations of this Common
wealth-the Committee say that they
are clearly of the opinion that while
the present rate of interest continues
the people cannot expect to obtaiI
money upon mortgages at the lega
rate. And further, so long as higher
} rate of interest exists in New York thar
that fixed by law here, the tendency o
; trade is away from this State anC
toward New York. All business firmi
r having branch houses in New Yorl
keep their accounts there as well al
! their moneys, because they can Their
! charge the higher rate of interest,"
The testimony OF the great majority o
business men is in favor of an increas
of the rate of interest. Millions of dol
: lars of the money of Massachusetts ar
e now invested in New York, Chicago o
9 st. Louis upon mortgages; trust funds
/ to large extent are thus loaned"
1t is very evident that no money viii
be loaned on mortgage under these cir
l cumstances, particularly when tn
i bonds of the Federal Government ar
free from taxation, and when the pur
suits OF commerce, trade and manufaC
lures offer large returns. The commit
tee run over the document (No. 81
already referred to, and show that i
If many towns of Massachusetts an aVel
S age income of less than 500 II is real
S, lied. Thus two towns, cited by theI
have a tax 81 80 on the 500, which
; subjected to the same deduction a
3 above, makes the income on the NOR
gage only S3l. Three towns have tn
Z: of 81; three of 81 %; two of 81 50; two {
~ 81 S3, and great many others, take
"a above the average rate of 81 As. TIL
n town of Wendell has tax of 81, whic
d; reduces the interest of u mortgage theI
la to Sl4. The statements made in regar
n to Massachusetts are equally appIici
IL BILE to this State.
is The report shows conclusively Il
at folly of laws regulating the rate OF IL
terest, and furthermore, that laws ofte
produce results precisely opposite
ID those intended. The usury law WI
designed, by its advocates, to save Il
poor lndu lIOLl Lue grasp Vi CtDlIdls !
IN in fact, places him in the power
ve capital. The poor man can borrow I
os money because the rate of interest
lie so low, and because money can
more proftably invested. He is Their
IN fore Obliged 10 sell his farm, or b
town holding. This he does at a sacl
nd flee, and the capitalist buys it. No,
at had the law allowed him to pay S, 8,
10 per cent, or had there been no law +
u money, any more than for wheat
at shoes, he could have borrowed the su
"; needed, paid what the money W
les worth, and saved his farm. So Mass
~ chusetts and New York Cypress the
"a citizens, and Danish them to new State
res where homes are cheaper, and whe
or they can make the small remnant
"a their property available to the suppo
zee of a family. The Massachusetts, Cor
mittee should have seen this, and Dol
ly pressed the point. Even If the LIE
islature had been too blind to see
If. now, the people would have had L
facts before them, from which tn
To- would speedily work out correct s
luton.