Rutland weekly herald. [volume] (Rutland, Vt.) 1859-1877, 1869-05-27
The Interest Question.

show the allowance of interest, az it i,
now termed, to be pernicious to the wei
fare of individuals, and contrary to good
morals in community. However, the
natural progress in trade and finance
has now removed ali general doubts upon
that subject, and only few isolated in,
dividuals are found to make opposition to
a moderate payment for the use of money
under proper legal restrictions.
For some generations past, the law OF
England, which, to a certain extent, is
the basis Of the law of this country, as
well az legislative enactments in many OF
our States, permits parties to bargain for
a certain rate of interest, and enforce
that contract. The law also in many cas-
es prescribes that where there is no con-
tract to pay interest, the party who neg
lects to pay money when it is due, shall
pay certain per cent. upon.such money
as damages for the detention of it. The
laws of the different States of this Union
differ widely upon the details of this in
terest question, and it would tend to con-
fusion, and be OF no profit to make com
parsons of the various statutes upon the
subject, or to seek out the general
principles upon which the law is now
based, to note the special exceptions to
the general rules.
Early in the legislature history of our
state the legal rate of interest was fixed
at six dollars on each one hundred dollars
for one year, and in the same proportion
for larger or smaller sum or for longer
or shorter time that rate continues to be
the legal rate of interest in this state, and
the language Of our present statute makes
the rate very specific, and then adds the
words and no higher rate shall at any
time, be allowed" Now under this law
parties may govern tho rate of interest
for the forbearance of money by contract
mp to the legal standard, contract to pay
i per cent is valid but no contract can
bind party to yay more then six per
cent, and contract to pay higher rate
il construed by our courts as a contract to
pay just tho legal rate and no more
Usury has always met with rebullcs at
the hands of courts in all countries, and
in Vermont was once prohibited by
heavy penalty, being no less than an abso-
lutte forfeiture of both the principal and
interest tainted with the usurious pay
mont. The law now, however, only
places the Insurer in position to be com
PEELED to pay back the excess he has taken
over the legal rate, with interest thereon
md costs. We think this law is defective
and should be at once changed by the Leg
stature. It's working is pernicious in
this, that it induces avaricious monied
men to resort to strategy and chicanery to
obtain larger interest than the law al
lows, or, in other words, the law provides
a stringent rule and then offers pre-
MUM for its infraction, by only requiring
the convicted usurer to repay what he has
illegally obtained
We do not think that the rate now
fixed by the law is the proper one, and we
are not advocating an enforcement of the
six per cent rule unless the general good
of the people Of the State require it, but
we do believe that no law should he en-
acted except what the good Of the people I
demands, and then let those necessary
laws be enforced by such penalties as will |
ensure respect Therate of interest which
money will command, that is, what general
business men can afford to pay for it, is
undoubtedly the correct rule, and the pol
icy which would drive capital from the
State by too low rate is as ruinous as a
policy which would put debtors at the
mercy of every Shylock who has the
means to alleviate their necessities.
There is one thing however, connected
with this subject which has been source
of surprise to Us, and that is the general
understanding OF the method of com
putting interest under our old six per cent
rule. As far a. We have enquired, we
find that business men have very generally |
regarded the rate fixed by law as a stand
ard of the value Of their money which
they were entitled to when they collect
"a their principal, and not before, and
that ii their debtor pays chem anything
on the demand, he is entitled to inter
est on that from the date of payment to
Ia the time Of final settlement.
1t is probably correct. where demand
is payable with interest simply, that the
interest is due and payable at the same
time as the principal; but it is not true
that payments are to carry interest in the
same way. Tie law provides that the APP
plication of a payment shall be made
when the payment is made, and that what
interest has accrued at that time is TO be
considered paid by the payment; conse-
quenly every payment made on
debt bearing simple interest is at
once applied in liquidation of that
part of the demand, which is earn
ing no interest TO its owner, the ex-
cess only after paying such accrued inter-
est being applied in extinguishment of the
productive portion of the debt.
We find many people who are fully sa-
tisfed that there is n radical difference in
the value of note payable with interest
annually or one payable with annual in
terest. Now an analysis of the two sem
fences will show them to mean precisely
the same thing unless strained definition
is given to the words. Still this question
has been pressed and urged so persistent
ly that the Supreme Court of this State
has been twice called upon to solemnly
adjudicate the question, and to record
their opinions that the two phrases mean
precisely the same thing. Still the ques-
ton appears. mysterious to many, and in
computing the interest on a note payable
in the future, with annual interest, with
numerous partial payments thereon, they