, 1872-12-06


are imposed, ranging from loss OF unlawful
interest to forfeiture Of debt and interest, with
fine and imprisonment, as in New York Comp
troller Knox well says it is difficult to see why
the rate Of interest should be limited to 10 per
cent in the City OF Washington, to per cent in
the neighboring cities of Philadelphia, Baltl-
more, Wilmington, and Raleigh, and to Il per
cent across the Potomac. It is still more dlth-
cult to sec why the rate Of interest should be
fixed in any way by law. In the field OF
economic science, the argument may be consid-
cred closed It is nearly two hundred years
since Locke taught that for the State to attempt
to fix the price Of money WIS as absurd as to
regulate the price Of cutlery or broadcloth. In
the Middle Ages the absurd tyranny OF regu1at-
ing prices Of commodities by Law OF edics was
all but universal, and was so minute that,
in London, in 1868, it Tas ordered, by
proclamation Of the Mayor, that only one penny
should becharged for four 1arks; butthese laws,
with one exception, have long since been dis
continued as pernicious violations Of the rights
Of property. The usury laws remain as the one
relic Of this medieval barbarism. Writer after
writer has proved their injustice and their USE
lessness. For two centuries every reputable
economist has attacked them. Adam Smith, in
deed, justified them in bis first edition, but up
on Jeremy Bentham's vigorous exposure Of the
heresy, acknowledged his error. When, IS Adam
Smith SO clearly Bays, something can every
where be made by the use Of money. something
ought everywhere to be paid for the use Of it,
and this compensation should be settled,
like any other bargain, by the par
ties concerned. Why are not people, whom the
Government thinks ft to make every other con-
tract, ft to borrow money on their own re-
sponsibility? Have not money-lenders the same
right as others to deal in free market? The
value Of money is not uniform, and the at
tempt By Government to hold it at 8 uniform
rate, would if successful, be only uniform in
justice-to borrowers, when the actual vas be-
low the legal rate; to lenders, when above that
rate. But these lava, in fact, could never be
enforced. When religious zeal led Edward VI.
to forbid all interest, 'as contrary to the
word Of God" the effect WAS, as might have
been expected, not to abolish interest, but to
make it higher than before. A similar result
followed the edict Of 1866, by which the King
Of France, in order to reduce the interest on
the public debt, ordered the rate OF
interest to fall from 5 per cent to 4,
whereupon it rebelIously rose to 6. Something
OF the same kind Was seen when Congress lin
tied the interest OF new issue OF bonds to S per
cent, and the imposaibiGty Of negotiating them
in the face Of 6 per cent bonds, which could not
be sold at par, led our jealous Secretary to pay
a bonus by his Syndicate contrivance. Despite
Lord Mansfe1ds vigorous declaration that
there WAS no device known to human ingenuity
that could evade the usury laws, everybody
knows that they are e7aded every day. In New
York, where the most stringent punishment is
proclaimed against usury, the Law IS dehed in al
most every transaction, and more than per cent
Even banks which have charters to lose, andmust
needs be more cautious than Individuals, manage,
in spite OF the law, to get the market rate for
money by 1oaning only to those who will leave
with the bank, under the guise Of deposits,
enough OF the loan to make the interest On the
rest adequate; or else they loan only to those
who present paper on which they can charge
a premium in the way Of exchange. In practice
the pseudo principle Of the usury laws ia over
ridden, and money ia bought and sold 1T its real
worth The actual wrong is seen in the disorder
caused by the attempt to regulate arbitrarily a
changing value, IN the Generalization always
produced by laws that are only legal, not just
and which people must violate to preserve their
rights and by the injury wrought to the very
class they we're meant to protect the borrowers,
who are compelled to pay an e1orbitant
interest as insurance for the illegal risk Of the
lender. These considerations have led several
Governments to abolish the usury laws. Eng
land aud Holland have done so with the greatest
benefits to both borrowers and lenders. In 1867
Massachusetts abolished her usury lawB; Rhode
Island had done SO before; in neither case was
there any harm done. The borrower did not
fall a prey to the lender; indeed, the reports Of
the Massachusetts banks show that their average
rates have been less than those in the States
which limit the rate Of interest. These expert
ments are wide enough to show that usury laws
may be safely repealed everywhere.
The Swedish press is just now giving shape
and voice to what the Swedish people expect
from their new king, Oscar II. They demand
that the boundaries Of Swedish territory shall
be fixed absolutely by treaty with Germany
and Russia, as also an arrangement for settling