, 1873-10-28

HOW NOT TO GET IT.
The logal ratio of interest undor tho laws of
Illinois ia por cont, but by special contract 10
per cent mny be paid and collected. Whom,
therefore, money Gun only get or I per cont
elsewhere, it flows to Illinois. whore it may bo
hirod at 10 por cont; but, when It can command
10 or more per cent elsewhere, 1t ceases to como
hlther, and whateyor surplus may bo hore will
flud It's why to tho places wAero it can DO loaned
to tho best advantage.
During tho last two yoars, Chicago has enjoyed
great advantage and benefit resulting from tho
usury Laws Of othor States, and tho moro liberal
provisions Of our Law. Our citizens havo been
ablo to borrow all tho money needed to rebuild
othor States wl,ero tho legal rnto Of interest ia
low, aud haa beon invested here ut 8, 0, aud 10
per cent In largo amounts, and on limo to suit
tho borrowurs. During tho spring aud sum-
NOR months Of 1878, there was m unusual
nmount Of money in this city soeldng invost-
mont 1t from to 10 Per cont. No person hay
ing good security to offer could fail in finding
all tho funds le needed.
Matters have changed. Tho advantage We on
joyed in tho legal permission to pay 10 per cent
interest haB been overcome by tho greater rates
permitted elsewhere wlero the money happens
to bo needed. Much Of tho capital sent
hero during tho summon for Investment
has boon taken back, and Just at
this time Boston Is borrowing it all, and pay
ing as high as u por cont, with tho very best
rcal essato security It will bo Boon, therefore,
TINT tho great roason why money is no longer
obtainablo hero upon roal estate security Is, that
allow to DO paid for 1t. Massachusetts has
abolished hor laws limiting the ratio Of interest,
othorwiso known as tho ''uHury laws" and now,
when money sookiug Investment is In extraor-
dinary demand, it naturally flows to tho point
whore 1t can obtain tho highest rate for it's uso.
All tho money from Massachusetts aud tho other
Eastoru States which has hitherto boon sont
Wcst for investment at 8; Q, or 10 per cent, is
now turned into Boston, whoro it may be
hired at u per cent, or my other rato
which borrowers md lenders Gun agree on.
Rhode Island and Connecticut have many
millions OF do}lars invested in this city and stato
and TIC might have anticipated the continuance
Of its flow hithor had not Massachusetts re-
moved the roles Of paat ignorance by repoalng
the uBury 1aws. thus offering market In that
State for MI tho capital soeking Investments in
loans On landed property.
Here, then, Is o practical illustration Of tho
short-sightod policy of seeking to place limit
upon the ratio Of interest. It Aas beon argued
that usury lawa arc tile poor nuns
protection that they knop down tho
ratio Of interest, 80 that when the poor man wants
money with which to build Il house or improve u
farm ho Gnu got it at d reasonable rate. This
theory, however, docs not work successfully.
Thoro has nevor been, until now, a luck Of cap
ital in this city, because Chicago has boon al-
loved 10 pay 10 per cent intoroat wlon tho laws
Of Eastorn States gonoraliy limited the rate to
Tho money that would commonly be sont hore
for Investment at 10 per cont is now going
to Boston, where 1t can DO loaned at "a.
Our usury law stops In, and at tho
worry moment when tho poor man wants
tho money most-to prevent him from falling
porhapa-preyents linn from getting 1t at
nil. Tho rate Of :.iutorost for money depends,
like tho yaluo Of my other commodity, on tho
demand for 1t. There are mon In this city and
elsewhere in Illinois who would gladly pay t2
to il por cont interest Oh tho best real estate
security, but they cannot get it, becauae tho
capitalist who would willingly lend at TINT rate,
will not incur tho penaltlos and risks imposed
by our uHury laws.
It doluelon to suppose TINT tho naury laws
operate to tho advantage Of tho borrower. Tho
law has actually cut Off t.io outirc business OF
the loan agenta Of tllis city. They can lend no
money In Chicago at 10 per cont, because oapi-
talists arc offorod 12 for all they havo on equally
good security, IN Now England. II tho law Of
Illinois permitted, tllosp who neod money now,
when the mood IL peculiarly pressing anl sovoro
might meet theIr prosont emergency by paying
tin rate which money IA toorth. It Is true that
the: emergency whloh makos money worth Ia per
cent in Boston on bond and mortgage will be Of
comparatively short duration. but precisely tho