Belmont chronicle. [volume] (St. Clairsville, Ohio) 1855-1973, 1869-01-21
Interest on Money.

How much money is loaled in Ohio
at per cent. per annum? How much oi
the discount business of third street is
done at per cent? What proportion of
the money borrowed on real estate mort
cages is obtained at 6 per cent? These
questions are easily answered. We sup
pose it safe to say that not 10 per cent.
of the money borrowed in this State is
obtained at per cent.
Yet there is on the statute books of this
State q law which makes it illegal to
charge more than 8 per cent. for money.
Nation Banks, too, are liable 20 forfeit
ure of charter if they exact more than
6 per cent. But money Is worth more
than 8 per cent. Therefore it commands
more. The laws of trade are far more
powerful than legislative enactments.-
This can not be disputed. Therefore,
Legislators, instead of attempting to OBJ
stru,;t the laws of trade, should aim to
adapt the laws to this current.
In proportion as legislators attempt to
make money cheap by restricting the
rates of interest it becomes dear. Let us
illustrate: We had e conversation
some time since with the agent of an
Eastern insurance company. He was
asked if he was investing money in real
estate naper He answered, "Yes; ] have
loaned in the last nine months $3.50. 600. F"
"Did Won invest it here?n "No, at Chi
cago.n "Why not here?" 'The laws OF
Ohio allow on.y 6 per cent. We receive
3 ner cent. at Chicago" "But first class
mortage paper is selling on Third street
aft IOGS IL per cent? 81 know 1t; but the
comnany represent will not buy from
third parties; they deal directly with the
borrower. This cannot be done in Ohio
at a higher rate of interest than per
cent"
Another case: A gentleman OF this
CITY. the owner of large amount OF real
estate. desired TO engage in a manufac-
turing business. He found he could ne
potiate loan in Hartford, Connecticut,
at s per cent, but not at 8. The law
made s per cent. illegal. He was there
fore compelled to'issue mortgage paper,
and have ii sold by third parties at
discount. which made the rate OF interest
equal to eJeren per cent:
The Legislature of Ohio, therefore. by
attempting to cheaper money, has by
keeping capital out of the State, made 1t
dear. But for our interest law, money
for mortage paper would be abundant at
8 per cent. AS it is, it Is comparatively
scarce at 10@12. -,
In support of the interest law it will
be said that borrowers cannot afford TO
nav over per cent. In answer to this
we need only say that borrowers do pay
more. The interest law, which was
made for the protection of borrowers, Is
really heavy tax on the class 1t was in
tended to serve.
The State of Massachusetts, abolished
all interest laws in that State, except to
provide fixed rate in the absence OF
contracts. The result has been cheaper
money. The same result would be gain
ed by an abolition of the Interest law in
Ohio. Capitalists who have money now
in this State. at over six per cent, take
risks, and for these tue borrower is made
TO pay. Besides, the law keeps foreign
capital out of the State, and the supply
being thus diminisheshJhome capitalists
are able to make theft own terms.
The Ohio Legislature can not do any
thing that would SO much tend to ad
vance tie interests of the State as to
modify the interest lew to the extent in
dicated. a..s 80 :.
To sustain this recommendation IL
seems unnecessary to argue the case
| further, and we will, in addition 10 tne
points presented, state this single prop.o,
sition: q. S. bonds bear q per cent. gold
interest, free of tax. Is it to be expected
that capitalists, while they can obtain
equal to I0611 per cent. on government
securities, will loan money at 6 per cent!
| It is not to be expected. II is not done
The interest law is disregarded by those
who loan money. Thus, it fails entirely
| to secure what it was intended to ac
complish, and is. besides, a burden upor
these who borrow money.-[Cin. Caz.