The Charleston daily news. [volume] (Charleston, S.C.) 1865-1873, 1871-02-17
The Senate and tho Usury Laws.

| The Senate and tho Usury Laws.
The solfy Of '.ths. TIE. attempt to regulate by
law thefafe a: which money shall be lent
and borrowed has been demonstrated in
every State of the Union. InSlS66 the Gen
eral Assembly repealed the Usury Laws in
| this State. Ohio, Georgia aud Mississippi
are moving in the same direction. Where
the Usury laws remain on the statute book,
| they inJure the borrower without affecting un-
favorably the lender Of capital This fact is
as plain as that two and two are four. Yet
a bill has passed the lower House OF the
General Assembly Of South Carolina repeal
Ing the Act of 1866, and re-establishiDg the
Usury Laws OF the State: The defenders OF
this childish and ruinous measure do not
deny that Usury Laws are unsound in prin-
ciple. They say that they deal with facts,
and not with principles. They justify their
conduct by the general declaration O that
e1nerieatess proves that7sthes repeal OF the
Usury Laws has not brought capital into
the State; (2) that moneyis dearer now than
| it was when the Usury Laws were in force;
(3) that the planters and merchants are
made bankrupt by the rates which they are
forced to pay for money, and az that money
can be borrowed in New York and elsewhere
for per cent. year, while in South Caro-
lima the rate, is l.. II and 2 per cent. q
month This is the quadrilateral, or rather
/ the pasteboard castle. occupied by the de-
tenders lof, the Usury Laws in the slower
House : 81 the General Assembly We pro-
pose to test the strength Of the position by
| the light OF hard and incontestable truths.
|. l. There is more banking capital now in
South Carolina than at any previous period
since. the war CLOSED, and We may state,
from our own knowledge, that the banking
Capital was about to be further increased
when the proposition was made in the Leg
islature to revive the Usury Laws. Whether
the rateSfyed by law, as the interest on
money, be per cent. or I per cent, the lend
ers OF money will charge, and will obtain,
Just as much as their money is worth,
whether it be 10 per cent. or 20 per cent.
But when Usury Laws are in force the differ
ence between the legal rate and the market
value must lie made up in indirect ways
in the shape of commissions, brokerage
and so on. The lenders OF money now in
the State may be willing to keep here what
they now employ, but they will not increase
their lending capital with the penalties of a
Usury Law staring themin the face. We
know, moreover, that the revival OF the
Usury Laws will cause the immediate with
drawal of certain large sums OF money now
employed at the regular banking rate. We
repeat, then, that free trade in money has
brought capital into the State which would
not otherwise have come. And the con-
verse ithe proposition is as easily demon
strated. Massachusetts, to take one In
stance only, found that while the Usury
Laws prevailed, the capital Of the Massa-
cLusetts banks was sent to New York and
there lent out at higher rates than the Mas
sachusetts law allowed, while the people of
Massachusetts, were forced to go to New
York and borrow there The very capital
which the Usury Law had driven out Of their
State. Massachusetts, at once repealed her
Usury Laws.
2. Money is not dearer now than it was
before the Usury Law was repealed In
1866 money was snapped up at and q
per cent. month. When the Usury Law
was repealed capital began 70 flow in. the
price steadily declined, and now money is
freely lent at per cent. month.
s. The plaulers AMI merchants who bor
rowed money at high rates, did so with their
eyesppen. They believed that; they could
use4he;boToWsd capftafat a profit. They
failed, but the fault is theirs alone. Had
they not taken the money, some one else
would have done So. There is no rhyme or
reason in making the rate Of interest respon-
.sible for the ravages Of the caterpillar, for
increased production, Gor for European;
war. The lender OF money fixes his psics..
The money is there to take or to leave. 1t
is for. the. borrower TO say whether he can
afford to pay the price. Wien he has once
taken it, there i. no sense insaying that his
operations failed because Of the cost OF his
borrowed capital.s Perhaps it is desired to
prevent farmers andSpianters from borrow
ing money at alIg Then, the simpler way
wqnldbeto TO pass aa act to thatsefsct. This
wonld be as practicable as to make banker
take 7 per cent. fSr#ihat is worth IL.
4. Money can be'b@roSedsin New York
at sand per cent, but this is upon ths the,
security Of gold notes, orof government.
bonds, WHICH the lender can, sell at any mo-
ment iifssthe loan be not returned when
called ior.. Commercial paper in New YoEk