Nashville union and American. [volume] (Nashville, Tenn.) 1868-1875, 1870-02-06
CoNvUnrroNAL IN-rr.lsEsE

CONVENTIONAL fNE1.ASsoAa
We have again and again allnded TO me
ubiquitous National Bank system. we
have alluded to the practical aid and COM
fort which Congress gives to this system
by imposing ten per cent .ptpally upon
All State banks who dare to come INTO
competition with the National Bank
monopoly Nc have spoken Cd theyery
ateat need which thelpcople of Tennessee
now have for additional capital. We
have spoken Of the effect of our usury
laws in driving home capital into other
States for investment We have insisted
that limited conventional interest law
would be beneficial to the people of the
State in bringing back this home capital,
and in creating competition against the
National Banks, which now fix their own
terms of lending money. We understand
that it is urged by some that convention
al interest law would be unconstitutional.
We insist that such cannot be the case,
either upon reason or authority. The
question has been squarely before one Su-
preme Court, and again and again decided
in favor of its constitutionality. The same
question has also been decided in the same
way by that able and incorruptible jurist
Chancellor David Campbell. The ques-
ton first came before our Supreme Court
at its December term, 1866, in the
case of Caruther's ex'r VS. Andrews,
reported in . Coldwell $50, Judge Gaut,
Special Judge, delivering the opinion.
The note sued upon In that case was as
| follows:
5000. Six months after date we,
OF either of us, promise to pay
James Caruthers, or order six hundred
dollars borrowed money with ten per
cent. interest until paid, from date, for
value received from him. Witness own
hands and seals, Oct. 5, 1860.
NJ L. ANDREWS (seal
NJ. NJ. ANDREWS (seal.)
We make the following extract from
the decision of the court in that case. The
Court said:
"We are unable to perceive wherein the
| act of 1860 authorizing conventional in.
terest violates the Constitution of om
State or comes in conflict with its spirit
and meaning. After the passage of the
act of 1860, as before its passage, there
was but one equal and uniform rate of in
terest established by law throughout the
State, which WassiX per cent per G1lll1tDl,
But by the provisions Of the act of 1850 il
was made lawful for any person in thi:
State, on the loan of his money or in the
renewal of debts for money lent, by con.
tract and agreement to take more or lesi
than the legal and uniform rate of inter.
est established by law in this State, pro
vided, no contract shall exceed the rate OF
ten per cent per annum. If the partic!
contracted to pay three per cent or any
rate below six per cent, there can be ne
question but that the contract would bC
legal and binding, and would be executed
by the courts, although the rate agreed
upon was less than the legal rate estab
lished by law. So, on the other hand
although the Legislature had fixed the
rate of interest equal and uniform through.
out the State at six per cent, We can SEE
no constitutional objection to the act OF
1860, founded in reason, because ID per.
mitted the parties to the contract tC
stipulate on the loan of money
for a rate of interest to be paid thereon,
not TO exceed ten per cent. per annum, OF
for any rate below ten or below six pei
cent, that the parties by contract might
agree upon. The law only makes such
contracts legal, and viii enforce them
when made in conformity to law"
The Court then proceeds to show that
the conventional act of 1860 is not class
legislation; that it does not suspend the
general law of the land for the benefit of
a class of individuals, and concludes:
"We therefore believe, and so decide,
that the act of 21st February, 1850, was
constitutional, and therefore legal and
binding"
With the belief that under present
circumstances such a law would be in the
highest degree beneficial to the money
needing and money borrowing people of
the State, to those who now suffer from
the lack of money or suffer from the
banking institutions into whose clutches
they now fall, we warmly advocate its
Dacgarn