The Charleston daily news. [volume] (Charleston, S.C.) 1865-1873, 1870-12-12
A ParadoxicaI Position.

Ihe BarnWeu iSentlReE OCCUPIES u [atuer
paradoxlcal position. Itadmlts that no one
controverts ''the argument OF Mr.. MILL of
sthe newspapers, of the Chamber OF Com
s'merce and the Board of Trade" against
what areknown as usury laws and it says
further thatit approved OF the repeating act
of 1866, now sought to be repealed, which
leaves every man free to do the best be can
with his money. Yet it stoutly supports the
proposition to revive the old usury laws OF
the State, justifying itself, apparently, by the
statement ofits own experience OF the effect
OF repeating those laws, viz: that money
went mp Immediately to 2 and q per cent.
month, and has never been lower than l and
IA per cent. month from that time to this.
Upon this point, however, the Sentinel Is,
according to our information, altogether
wrong. The repeal OF the usury laws could
not make money dearer, because the, only
practical effect was to allow money to be
dealt in at the rates which lenders were will
ling to take and borrowers were willing to
pay. There was no constraint in the trans
action. Capitalists fixed their lending
rate at the highest figure at which they could
keep all their funds employed. When the
borrower could not afford to pay ''the ruin
ssous rate" Which was demanded, the money
was not worth that rate to him, and he would
be very foolish to take it. But if he did
take it, his reason was that he could not do
without it, or that he expected to make
profit upon its use, and in eithar case the
money to him was worth the rate of interest
paid. The lender puts his price upon the
money which he has to lend; that price can
not be higher than the prevailing rate, With
equal security, because in that case bor-
rowers would seek other capitalists who
would accommodate them at a lower rate.
The borrower knows the price, and may take
the money or leave it. When he does take
it, whether his operations are successful or
not, he has no right to complain because the
rate is high. And it is fixed law Of trade
that, where there is no legislative interfe
renee, self-interest, governing both lender
and borrower, will keep money at the high
est rate which the one can obtain, and
which the other can, or thinks that he
can, afford to give. 1t is evident, therefore,
that Oil advance in the price OF money,
following close upon the heels OF the re-
peal of the usury law, would detract
nothing from the force of the argument
in favor OF that repeal; because that advance
would be the result, not Of free trade in
money, but OF more active demand for the
capital which was to be lent. For instance,
it is very plain that, as the planters resumed
planting on large scale in 1866 and 1867,
using costly fertilizers with judicious libe-
rality and requiring money for wages or for
supplies, the demand for capital must have
largely increased But the amount OF capi-
tal remaining free for employment did not
increase in nearly.the same degree. This
alone would account for even such al ad
vance in the lending rate as that OF which
the Sentinel complains But no such adj
vance has taken place. Money was fully as
dear before the repeal Of the usury laws as it
has been since, and at this time money is
cheaper in this State than it has been at any
preceding period subsequent to the close OF
the war; A careful inquiry will convince
the Sentinel OF the correctness Of this state
ment. 1t is not pretended, for moment,
that the absence of usury laws does, of ne
cessity, make money cheap. The price is
determined by the amount of money which
is loanable and the number OF borrowers.
Moneyis lower now than it was few months
ago, because the demand has slackened.
When there is again pressing demand and
an active competition, the price will rise
once more until it reaches the figure beyond
which the borrower cannot go with, safety.
The object of the Sentinel, in advocating
the revival of usury laws, is to enable the
planters to borrow what money they want at
the rate OF seven per cent. year; and any
measure which would accomplish this would
have our heartiest support. But no legisla-
tion can make man take seven dollars for
what is worth twelve. Let it be assumed
that usury law can he enforced so strictly
that no man will pay, in any shape, more
than the legal maximum rate for what adj
vances he requires. The experience Of the
mercantile world, an experience without ex-
ception, shows that no usury law can be
rigidly enforced; but, if it could be carried
out to the letter, money would Immediately
aow to that place in which there was no
usury law, or where the law could be easily
evaded. In Georgia, for instance, where
usury law is in full blast, money brings thir-
teen per cent year-seven per cent. legal
interest and one-half per cent. q month as
commission. Does the Sentinel think that
the Charleston banks will lend money at
seven per cent in South Carolina while they
can obtain nearly double the profit in any
other Of the States of the South! Or why
should money be lent to planters al seven
per cent when State bonds pay seven and
O nall per cent. in gold; when Charleston
City stocli pays twelve per cent, and ap-
proved railroad bonds pay eight and nine
per cent.
This State, whatever may be thought, is