Spirit of Jefferson. [volume] (Charles Town, Va. [W. Va.]) 1844-1948, 1873-01-14
Splrit Of Aeffcrsoll.
TUESDAY MORNING, JANUARY "a, 1873. :

@f4.A ~ yNlutaUlt. e
TUESDAY MORNING, JANUARY IA, 1873. ;
Money Abundant when Interest is Low,
and Scarce when it is High.
[R1aH RATES OF INrEREsT.-We publish
this morning an article on this subject, which
will supply food for reflection.
Wig, yannary2.l -
To the. Editor of tie. TYhig 81 send you
the extract below from Kellog, pages 1884,
which will be a full demonstrators of the
above proposition, although the very reverse
has been crammed down the throat Of poor old
Virginia, under the II per cent. clause, until
sad experience compels her to change it
The reason is, you will see by the extract,
that the State loaning at a high rate of in
terest will soon have the balance of trade in
her favor, and of course an abundance of
money, while it naturally becomes scarce, by
the irresistible fat of trade, in the State bor
rowing at higher rate than the net increase
of her production.
Wells stated in bisreport to Congress, page
10, that the net increase Of the entire labor
of the country, embracing agriculture manu-.
SNN
only 81 per cent, and while the net increase
of agriculture, of itself, is not over per cent.
With these facts before you, all who will read
the following extract carefully must ackuowl-
edge the proposition heading this communi>
cation. | send it for the benefit of the money
changers, and especially for the benefit of the
farmers aud others who are robbed by them
.. OBSERVER.
Summit Point, Vest Virginia, Dec Is, '72.
"That low rate of interest would drive
specie from the country, is false suppose
tion. DO the lower rates Of interest in Eng
land drain that country of its specie? Does
six per cent. interest in the New England
States drive their specie into the Southern
and Western States, in which the legal in>
terest is eight per cent. per annum? Such is
not the fact Where interest rs the 1oucst,
money and specie are the most abundant If
products pay profit by shipment to England,
they go forward rapidly to meet the demand
Not SO with money. In England money is
often lent for months together at from two to
three per cent. per annum, while the New
York banks lend at six and seven per cent
per annum. For years past, the people of
the United States have paid nearly or quite
double the percentage for the use of money
not money from England flow in and supply
the market, so as to equalize the rates of in
terest of the two nations? Why do the States
wh'o' pay the highest rates of interest 20
abroad most frequently to borrow money. and
still have not enough 1t is because the rates
are so high that the people or these States eau
not produce a sufficient surplus 10 ray the in
tereSt to capitalists among themselves and to
other States where the interest though lower
Is still oppressive, to procure the money res
quired to carry on their business. Money is a
icea! representative, and serves to fix an in
come, but not to produce wealth loan it
twenty OF thirty times where the interest is
high, and every time it is lent it makes an in.
come for the lenders for longer or shorter
period. which impovcrishes the borrower. be-
cause they must sell their products to pay the
interest The principal borrowed must soon
be returned to the lenders in interest. and
the interest is reloaned to the people. These
high rates of interest serve to make the pcopIc
paying, them tributary to few mnuev>lend>
ers amnng themselves and in ether States.-
For few years previous to 1851, the State of
Wisconsin made all rates of interest legal
that is, the rate of interest was matter of
agreement between the borrower aud the
lender. The consequence was that the rate
per annum. We are crelibly informed that
the highest rate was. in many instances. ex>
acted. and good landed security obtained for
its payment. Let us see what effect certain
rates of interest on money borrowed abroad
must have upon the circulating medium of
the State. If the rate Of interest were at one
per cent. and T., living in New York should
lend $40, 600 in Wisconsin Cor Eirginia) at
that rate. the borrower, at the close Of the year.
must send to 7. 500. The people Of Wiscon-
sin would have SO 800 of the money borrowed
remaining among them as a circulating me-
dium. But if T. lend his money at - per
cent, the borrower must send T. at the close
of the year 81 200 aud but SIS, 500 would be
left circulating in Wisconsin. If he lend at
fifty per cent, the borrower must duly send
Y. S5, 900 to pay the interest, so that one half
of the borrowed money is returned to y. in
New York. and only $4,000 are left in Wis
consin. But il 7. lends the $40, 600 at hun.
dred per cent. per annum, the borrower must
send T. at the end of the year $4,000, aud
not one dollar Of it is left IN Wisconsin. Still
the borrower would be indebted to T. for the
principal of $40, ,000 and in another year
would owe 7. $4,000 more in interest 1t
would not take very large amount of money
lent at this and approximate rates by the citi>
zens of New York to those of Wisconsin, to
throw the balance Of trade against Wisconsin
and in favor of New York Nor, in such
case, would it be strange that money should
be scarce in Wisconsin while it was plenty in
New York
''In the United States, if interest we're re-
duced to one. or to one and one-tenth per
cent, (and the author. contends that cur
rency could be instituted at lilo of Der
cent. that would pay its own expenses and
do the exchanges). Useful productions
would, probably, increase from twenty-five to
fifty per cent The wealth, instead of being
accumulated in few hands, would be dis