The Charleston daily news. [volume] (Charleston, S.C.) 1865-1873, 1870-12-02
The Erect of Usury Laws.

In introducing bill to repeal the law of
1866, which repealed the usury laws of the
State, Mr.. Wilkes, of Anderson, desires, we
presume to enable the farmers and planters
to borrow money at seven per cent. per an
mum. "A purpose so laudable in itself en-
titles Mr. Wilkes to the thanks Of the agri-
cultural interest," but we think that it is not
difficult to demonstrate that he threatens to
kill his friends with Kindness, and that to
restore the usury laws s'to the statute book,
when one per cent mouth upon stock col
laterals is minimum rate, would only make
money 'dearer as we'll as more difficult to
obtain. .si
Adam Smith did, it Is true approve OF the
principle OF fixing legal limit to the rate OF
interest, and making the receipt OF more
than ppointed maximum d penal offence.
But, as is stated by Mr.. John Stuart Mill, in
his work on Political Economy' this restric-
tion is condemned by all enlightened persons,
since Che triumphant onslaught made upon
it by Bentham in his Letters on Usury, !"
which may still be, referred to as the best
extant writing on the subject.
As matter of policy, the notion may pos
sibly be that it is Tor the general good that
interest should be low. 1t is, however, o
misapprehensioa OF the causes which intlu-
ence commercial transactions to suppose
that the rate of interest is really made lower
by law than it would be made by the spon-
taneous play of supply and demand. No
borrower pays twelve per cent. when he can
get wbat.he wants al seven or at ten. 1t is
his business to borrow at the lowest market
price, and if the competition of borrowers,
left unrestrained, would raise the rate OF in
| terest to twelve per cent, this proves that
at seven Or ten per cent. there would be q
4 greater demand for loans than there is cap-
| tai in the market to supply Ii the law, in
these circumstances, permits no interest be-
yond seven per cent, or even ten per cent,
there will be some lenders who, not choosing
| to disobey the law, and not being in con-
tition to employ their capital otherwise, will
content themselves with the legal rate; but
Others, in Mr.. Mills words. finding that in q
season of pressing demand more may be
! made by their capital BY other means than
they are permitted to make by lending it,
qriU not lendR at all; and the loanable capi-
tai, already too small for the demand, will
be still further diminished. OF the disap-
pointed candidates there will be many at
! such periods who must)have their necessities
supplied at any price, aud these will readily
find third section Of lenders, who will not
be averse to join in a violation OF the law,
either by circutous transactions, partaking
OF the nature OF fraud, or by relying on the
honor of the borrower. The eXtra expense
of the roundabout mode OF proceeding, and
an equivalent for the risk of non.payment
and OF legal penalties, must be paid by the
borrower, over and above the extra interest
the general state OF the market. This brings
Alr. Mill to his conclusion, that "the laws
(which were intended to lower the price
"paid by the borrower for pecuniary accom-
"modation., end thus in greatly increasing
"it"
| Usury laws have also directly demoral-
izing tendency. Knowing the difficulty of
detecting all illegal pecuniary transaction
between two persons, in which no third per-
son is involved, so long as it is to the inte-
rest of both to keep the secret legislators
have adopted the expedient OF tempting the
borrower to become the informer, by making
the annulment of the debt a part of the pen
atty for the offence: thus rewarding men for
obtaining the property of others by false
promises, and then not only refusing pay
ment but invoking legal penalties on those
who have helped them in their need. The
moral sense of mankind very rightly infa-
mlzes those who resist an otherwise just
claim on the ground OF usury, and tolerates
such plea only when resorted to as the best
legal defence available. against an attempt
|