Nashville union and American. [volume] (Nashville, Tenn.) 1868-1875, 1870-01-16
WHAT SHOULD BE THE RATE OF
INTEREST

on money loaned TO be regulated by sup
rly and demand, is found chat this prac
tice has worked favorably for borrower
in Europe. In England and Holland tn
right to contract for money at any rate o
interest the parties may agree upon ha
existed for many years, and dhere are NJ
countries in the world where the rate i
usually so low. AT those great money
centres, London and Amsterdam, the ratt
rarely exceeds four per cent, while it is
generally below that rate. 1t can FIRE
quently be had at three per cent, and Offer
as low as two; indeed it has been as low
in England as one and One-half per cent
In those countries the borrower is neverOp
pressed with cXorbitant rates, becaus,
there are too many ready 10 lend at q
moderate rate. There is a greater &C
cumulation of capital at London ant
Amsterdam than any other cities in the
world, and the holders make money by
lending at low rates. Free trade in money
would not result in low rates here perhaps
for many years, for we have not the
amount of money in this country that
there is in the old world. But there is no
question that it would attract capital here
whichis seeking investment elsewhere, and
thus enrich the State. 1t has resulted adj
vantageously in other States, and there is
not a single reason why it should not in
this. We extract from communication
in the Knoxville Wing of few weeks
ago some practical suggestions on This
subject. The writer says:
''The scarcity Of money is one of The
pressing evils of our State. From this
cause, business is everywhere dull. Hun
dreds of new enterprises would be started
if money were plentiful. War has wasted
our material resources. The high price
of coin has driven il out of circulation.
The bank bills in circulation before the
war have become worthless. The pro-
perry destroyed by the war has not yet
been restored. There is but little surplus
property or produce in the State for sale.
Money being merely the representative
of property, there has been since the war,
and there is now, but little to command
it. We cannot manufacture money as
We can boot or q hat. Ii
flows along the channels of trade and com
merce, and is to be found where property
is being bought and sold. Wherever it is
aUOrth the most il will be found in great
est abundance, other things being equal
Like wheat or bacon, it will gOtO the highest
market If wheat is worth 81 80 per
bushel in Ohio, il would be sheer folly to
expect the Ohio farmer to send il to Ten
nCssee where It IS only worth 1925.
Equally unreasonable is it to expect money
to be sent into our State, where it is only
worth six per cent, from States where it
is worth more: OrtO he sent here in prefer
ence to States where it commands much
higher rate of interest. Suppose a CAPT
talist in Massachusetts has one hundred
thousand dollars to lend. lie can get
six per cent. at home, and can
get six per cent. in Tennessee.
In Missouri he can, by special con-
ract, get ten per cent Where will he
90, or send his money? No one can
doubt. The difference Of four thousand
dollars year would settle the question in
favor of Missouri. This hypothetical case
illustrates transactions of every day OC-
currence. In September last, the writer
Of this article was informed by gentle
man Of a small, young town in Missouri,
that ne then had in his hands one hundred
thousand dollars, sent to him by capital
list in the North, to be lent at ten per cent
in that State. BY sending it there, he
would make four thousand dollars per an
nun. This, | was informed, was not a
solitary instance. The result there is,
that money is plentiful, the State is pros
pering, manufactures are springing up,
and populations pouring in at the rate of
two hundred thousand a year. The high
rate of interest brings both money and
population.
'In some Of our older States, and espe-
cially in the New England States, there is
a large surplus capital. There enterprise
has well nigh exhausted itself. Men of
capital are seeking more profitable fields
of investment. Some desire to invest in
one tn ng, and some in another, but all
desire. in the end, the same thing, that
is, to make the most profitable use they
can of their money. Where will they
ro2 To Tennessee, where they can get
six per cent for their money, or to Mis-
souri, where they can get ten, or TO Wis
consin, where they can get twelve, or to
Kansas, where they can get twenty, or to
California, where they can get thirty!
Let the relative progress Of these several
States answer the question.
'The banking capital of this State,
before the war, probably exceeded ten
millions of dollars. To-day the capita
Of the National Banks in this State
amounts 10 1880, 600, while that o.
.he other banks probably amounts to ont
fourth of that sum, making in all abou
two and one-half millions. The money
in the hands of private individuals is pro
badly not mole than one third what
was before the war. Thus, with vast de
mands for money, and with protitabl,
enterprises everywhere presenting them
selves. our people have to work out thci
destiny with one fifth the capital they la
before the war. There are probably on
hundred millions of unemployed capt.;
in the United States, watching fo
favorable opportunities of investment
VIII not the Legislature, by
broad and comprehensive policy, il
yite "A part Of this capital into on
midstl II can be done by increasing In
rates of interest. AdrulcC tie price 0
money and i! VIII surely come. PlaC
capital here on the same footing that
has in Ohio, Michigan, Illinois, Missouri
Iowa, Wisconsin. Minnesota, Kansas, N
braska, Oregon and California, and it wi
flow in upon US. Population will ali
come with il. In This way our own pc
pie will he induced TO retain their surpll
money al home, instead of sending it OI
of the State, as was formerly the case,
be loaned at a higher rate of interest,
to be invested in Western lands. Capita
lists al a distance viii then find as MAJ
inducements to settle or invest here
they 10 in the Western State
This policy would cause hl
drcds of thousands of dollars, no
locked up in United States bonds, to
set loose. II would bring to light, al
put in circulation, the large sum of mon
now boarded up and hidden away in o
own State, by mon who are afraid or Il
willing 10 lend at six per cent, but who
higher rate would tempt The result
ali this would be 10 make money mo
abundant, and 10y reason Of that abuI
ance, 10 keep the rate of interest Will
reasonable limits. Day by day, mt
our present policy, We are losing our ca
itg1 by II b.ive.r gag-f nv 4ll-ar, ~ Slot