The Pacific commercial advertiser. [volume] (Honolulu, Hawaiian Islands) 1856-1888, 1868-03-28
For the p &. Advertised
maeUess

Mr.. EDIroR-Not long since the Gazette had one
or more articles upon the reduction of the rate of
interest, showing that at twelve per cent. per annum
the borrower must pay to the lender the entire cost
of his enterprise in q little less than six years for in
terest; and if he pays no more, he viii still owe for
the whole of the principal. For example, if a good
plantation, producing FIVE hundred tons of sugar a
year, costs 100000, and it nets 800, 900 in SIR
years besides The expenses Of the pianidtto2, it will
take the lrhoie to pay the interest, and leave the
planter just as much in debt as when he started.
What industry or business OF Il country can pay this
and prosper What nation can or does double its
wealth in ftreire years except the United StateS, and
this IS by reason of the vast emigration which flows
TO 1t, bringing 4 great amount of wealth and industry
TO improve and increase the value of its vast domain.
The legal rates of interest in all of the United
States except the Pacific States, is from five to eight
per cent, and in the Pacific States ten.
l do not know that there is any usury law in force
in any of the States, and the actual rate of interest
often varies from the legal rate. depending on the
supply and demand. In California it has commonly
been twelve per cent, but the abundance of capital
is diminishing it; and the papers inform US that it is
now seeking investment in long loans, with real
estate security, at eight per cent. A California
writer says: Extreme rates of interest have been
one of the greatest barriers to our progress and
the present California Legislature has just passed a
bill reducing the legal rate to screen per cent. as the
following from a late Bulletin will show, to wit:
SACRAMENTO, Jan. %, 1S6S-To-day, in the Senate, the
bin introduced in the Assembly by Nj. Middleton TO reduce the
legal rate Of interest 10 seven per cent per annum,w was consid-
cred. The Judiciary Committee reported an amendment allow
ing parties TO make contracts for the payment of any rate of
interest they please, which shall he allowed up 10 the tune of
entering Judgment, il suit is brought upon il; but If the courts
are rescrtcd to 10 compel its enforcement, by means OF a judg-
ment, then thereafter the debt in that shape shall only bear
interest at seven per cent per annum. The amendment was
adopted and the bill passed by a vote of % ayes TO 1a noes.
Money at eight per cent. interest per annum, pay
able semi-annually, will double itself in a little less
than nine years. very much shorter period than
the wealth Of a nation will double itself by the ordi-
nary methods of industry and business, even in pros
porous circumstances; and high rates of interest,
disproportioned to the incomes derived from the ag-
gregate of a nations industries, must tend to retard
and depress general prosperity. In this view of the
subject / fear the same is true here that is asserted
by the California writer, and that a lower rate of
interest here would promote the general prosperity.
Whilst | would not recommend a usury law, yet 1
would enact one similar to the one just passed by the
California Legislature, reducing the legal rate to EIGHT
per cent. per annum, in the absence of any special
agreement to the contrary, and imposing eight per
cent. only, ON all sums awarded by the courts.
This subject is Intimately connected, as i believe,
with the prosperity of the country, and / hope the
coming Legislature will give it at least a fair exam
ination, which | think will result in some change for
the better. Y.