Nashville union and American. [volume] (Nashville, Tenn.) 1868-1875, 1869-09-04
USURY LAVA.

UsURY LAWS.
In recent article on this subject
we endeavored to show that the
effect of our usury laws is to pros
hibit altogether the lending of
money to individuals. United
States bonds convertible at will,
bearing a higher rate of interest
than the law will permit individu-
ais to pay, affording a better secus
rity than individuals can offer, abb
serb vast deal of our unemployed
capital. This inficts a double in~
jury upon the country. Its cur-
rency, already inadequate, is cons
stantly withdrawn from the chan-
nels of trade for investment in these
fayorite securities, the funds avail~
able for borrowers being steadily
diminished afflicts the debtor class
with increasing distress, subjects
them to the necessity of paying a
higher rate of interest for money,
and often in default of even these
costly succors, forces them to sacris
flee property to pay their debts.
These evils are chargeable to our
usury laws, to laws framed long
years ago in very different state
ofaffairs and now not merely useless
but absolutely mischivous. When
the volume of currency afioat in the
country could be regulated, in
creased or diminished, by our own
banks according to the require
ments Of commerce, when those
banks adhered to the legal rate of
interest, when there was no out
side temptation to draw capital out
of the State, restrictions upon the
price of money, always absurd, did
comparatively little injury; now
they have grown to be a curse of
superlative magnitude. To JUS
tity these laws upon the principle
that debt is an evil which should be
eliminated from our commercial
system is not only unjust but alb
surd. AS commerce is conducted in
our day, credit in some form is es-
sential to success. We have not
money enough for a strictly cash
business, and to develop our vast
resources, mineral, mechanical and
agricultural, to advance as we
should do in the career ofprosperity,
we need not only our own money,
but as much more as our credit will
reasonably procure. Credit there
fore is a necessity, and credit i'm
plies debt. 1t follows then that
debtors, not being offenders against
the laws or policy CT the country,
are entitled in common with other
citizens to the wise consideration
and protection of the Legislature,
and should be relieved from bur
dens ostensibly imposed upon the
creditor class, but really resting
upon their shoulders.
If then the usury laws are unjust
and inexpedient, the question is,
what is the remedy. We do not
propose to repeal all restrictions
upon the loan of money, although
we believe that is the true principle,
and were we beginning the world
without the complications of the
past, and with a reasonable volume
of currency in the country, we
should advocate that policy. But
taking things as we find them, re-
Wondering that the scquGlG of the
war have not yet exhausted their
force, we propose to modify, not re-
peal. Let the Legislature place the
borrowing citizen upon such a foot
ing that he can legally compete
with United States bonds for the
money of his fellow citizens; let
ten per cent. per annum be a legal
rate of interest for borrowed money
and in case of collection by law,
compel the debtor to pay at that
rate from the issuance of the writ
to the return of the execution.
Then he will be able to offer two
or three per cent. nore for money
than the bondholder will receive,
and in our Judgment that much
is due to him in consid-
Grafton of the convertibility and
superior security of the |
rival investment. If the borrower
shall be permitted legally to prom
Use ten per cent. interest, and can
secure it TO the satisfaction Of his
we venture to assert that |
the money lender now requiring |
twelve per cent and upwards, |
will be content with the |
lower rate; that the flow of capital |
for investment for gov
eminent securities will cease that
many bonds boarded by our capt.
talists will be reconverted into cur
rency; that capital from other
States will be brought hither for
investment, and that the volume of
our currency will very scnsibiy and
rapidly increase, stimulating enter
prise and'enhancing property.