Nashville union and American. [volume] (Nashville, Tenn.) 1868-1875, 1871-11-01
UNION AND AMERICAN
SHOULD THE UsURY LAWS BE RE
rfr STOREDT


sTOREDT
While the question of repeating the con-
ventional interest law, and thus restoring
the usury laws, is before the Legislature, it
may not be ainiss to call attention to some
facts having an important bearing on this
subject. The Legislature of 1880
passed conventional interest law, allowing
as high as ten per cent by special contract,
but continuing the legal rate at six per
cent where there was no stipulation as to
the rate to be paid, as does the present law.
During the tendency Of this bill before the
Legislature, Gen. r. G. Payne, the Chair
man of the Joint Select Committee to whom
the subject was referred, addressed circu-
lar to a number Of prominent gentlemen in
the various portions Of the State, inquiring
as tot the amount ofmoney loaned, the rate at
which it was loaned, whether borrowers
could obtain a sufficient amount TO answer
their purposes, aud whether money had
been sent out of the State to be loaned. A
large number of letters were received in re-
ply. In summing up the information thus
derived, Gen. Payne said in his report:
Comparatively but little money is now
loaned out in Tennessee at legal rates.
In some portions of East and Middle Ten
nessee, and occasionally by conscientious
guardian or private individual in other parts
of the State, loans may be effected at the
legal rate, but in these instances tits general
ly done more for accommodation to friends
of known punctuality than for the sake
of gain; and in such amounts as cannot
affect the truth of the proposition that the
rate of interest in Tennessee is largely
over that which is established by law, and
that the law fixing that rate for borrowed
money, is no longer operative in keeping
down the price Of money, as demanded and
regulated by the laws of trade and the wants
Of the community, whilst the same law is all
efficient in aggravating the mischiefs which
it was honestly intended TO guard against.
: 1t is impossible TO state accurately
the rate Of discount paid by borrowers for
money. In East Tennessee the rate of dis
count cannot be less than fifteen per cent
per annum. In Middle and West Tennes-
see, the average rate Of discount is little if
any less than twenty or twenty-five per cent
per annum on good paper. An intelligent
commercial gentleman of Memphis, who has
given much attention to the subject, estimates
the amount of usury paid by the county Of
Shelby at not less than six hundred thou
sand dollars per annum, and other commu-
mites in these two divisions Of the State are
in but little better condition, according TO
the amount of capital used by them. II
may be safely stated that in the two last
named divisions Of the State, good notes
having twelve months to run, cannot be
sold on an average, at less than twenty-five
per cert discount" What was true of this
State at the time Gen. Payne submitted
this report TO the Legislature, is equally
true to-day. Money is worth more than
six per cent, not only in Tennessee, but
in every State Of the Union, and it is
about as reasonable to expect that men
having money TO lend will take six per
cent for its use as that holders of wheat
viii sell for one dollar per bushel, or that
a mechanic viii work for less than his SER
vices viii readily command. Capitalists
who are not disposed to run the risk of
evafling our usury laws, can make their
money pay more than six per cent. by in
vesting it in government bonds, which pay
six per cent. in gold, and that is equal at
present. rates for gold to about seven per
cent. in currency. It is safe to estimate
that SS,OOO,OOO to s1O,0O0,OO0 were in
vested in Middle Tennessee in government
bonds before the passage of the present
nterestlaw, which would have beenloaned TO
energetic merchants, manufacturers and
business men generally, and thushave added
10 the wealth of the State. 1t is well known
too thai hundreds of thousands Of dollars
We're sent to other States TO be loaned at a
better rate of interest than could be legally
obtained here. BY far the greater portion
of this money which is locked up in
government bonds or sent out of the State TO
be leaned at 'as;Ier rate Of interest than
was legal here, would be brought back to
Tennessee if our present interest law shall
be continued in force, to be loaned here
and used to assist in building up the com.
merce and industries of the State. But il
will not be so placed as to be thus used il
the law be repealed. In this connection
we present the following extracts from a
letter addressed to Gen. Payne by Hon.
West H. Humphreys, in 1859, which we
think will carry conviction to the most
doubling mind as 70 the impolicy of repeal.
inc the present interest law, and thus re
storing the old usury law:
,soyERNNfENrAL PROTECTION OF BORROW
ERs.
Bat, it is said, the ustJry laws are neces.
sary TO protect the ignorant, the imbecile
the reckless prodigal, against greedy anC
INSCRIPTIONS money dealers. The vas
majority of thrifty mechanics, Of industri
ouS and frugal farmers, and of sagaciOu
merchants aud traders, are therefore TO b.
derived of their natural right % max
their own contracts, 10 prevent small por
ton of the whole number from being over
reached and ruined by the inscription
potion of tie money dexierss Elyet II b
recollected that infants are now protected
and Chancery win relieve against al fraud
ulent overreaching Of ignorarft1 ard NiInbe
Gle persons. Let it be reccllected that tn
limitation of interest to ten per cent, pro
posed by this bill, conf he's theA range {
Contracting power within the limits Q
cc,srientiOus action, and then answer
MI extent this apprehended frauduler
oyelreaching may be carried, and answt
,wbsa4ler sufficient cause can be found Their