The daily dispatch. [volume] (Richmond [Va.]) 1850-1884, 1871-03-18
Interest on Borrowed Money.


We regret that the Legislature has
brought up the question Of interest with
view to reviying the old law prohibiting the
payment of more than six per cent. for the
use of money. The House of Delegates has
passed resolution proposing an amend
ment to the Constitution for this pur-
pose, and it will be soon brought I'M
der the consideration of the Senate. If
passed by the present Legislature it must
be approved by the next, and afterwards
by the people, before it can prevail ; but
we trust it will not be passed by the pre-
sent body. Time has not been given for !;
fair test OF the benefits from freedom in
transactions in money-the right to lend
and to borrow ut any rate of interest
agreed upon by the parties, just as in cases
OF buying and selling any commodity of
commerce.
In Virginia cities this freedom, ut least to
the extent OF twelve per cent, has worked
very well. 1t has brought great deal of
money into Richmond that never would
nave come here but for the high rate OF i'll
serest: as other cities and communities
have paid rates above six per cent. Rail-
road and other corporations have paid by
permission Of law from eight to ten per
cent, and as long as these rates are paid by
other communities and by these corpora
tions, we could not expect to borrow at
less here.
The higher rate has brought large capt.
tai into the community, and has diminished
the aggregate OF loans at eXorbitant rates
above The present limit. When the limit
Is SIX per cent, all paper discounted at
higher rate incurs danger for which an
added charge is made, and borrowers suffer
more heavily than they do under the twelve
per cent. limit. The capital that has flowed
into the State, invited by The authorized
rate of interest, has lowered the rate
charged commercial paper by the banks to
below IL per cent, while the community
has been much relieved from the necessity
Of resorting to outside money lenders at
excessive rates.
The Judgment of the Richmond Chamber
OF Commerce in this matter is entitled
TO peculiar weight. in recent annual re-
port submitted to that intelligent body of
merchants, and approved by them, occurs
the following paragraph:
" For twenty years or more we have been
also urging repeal OF the antiquated usllry
laws. At last, by the same perseverance,.
that boon also is granted by the new Con-
! stitution, almost in the terms of our fire..
quent petitions. And now the Anticipated
result has been realized. Instead of making
money dearer, it has become more plenti-
full and cheaper, and upon undoubted secu-
rites can be had when wanted at rates gen.
orally prevalent in commercial centres"
The great cities all now have freedom in
this matter. There is, of course, an estab-
lished rate, but commercial paper is freely
s discounted at rates higher and sometimes
lower than this. This sort of freedom
should always be granted to commerce,
which thrives better the more free it is and
the more perfectly it is left to the j,,.,,c.
ment, sagacity, and interest of those en-.
gagged In trade.
IL would De q GLOW inflicted upon Vir-
gina commerce to put shackles upon it by
Withdrawing the freedom now secured to
sae trade in money by the Constitution.
We hope the Legislature will at least leave
the subject to their successors.
Whatever the Legislature may do on the
general question, it would be most unwisp
to put restrictions upon commercial com.
munities that will impair their prosperity.
The whole country is Interested in the en-.
couragenent of commerce and the strength
ening OF trade. Therefore, when the rural
districts seek relief from what they con.
slider oppressive, they should not seek at
the same time to injure themselves by ex-
tending the remedy for their ills to the cities
which do not complain and desire no such |
,elief These are satisfied, and it viii be
infinitely better for the country that they
e LETT to the operation of the law which
las been the main source Of their success J