The home journal. (Winchester, Tenn.) 1858-188?, 1873-12-18
The Conventional Interest Law

Legislature against the present c0nVeh' |
,ional interest law. SUCH a prejudice
ran only find a place in the most lg-
norant minds. No sensible man can
sec any more reason why the price OF
money should be established ny law,
The law of supply and demand should
regulate the price Of both, There
be no restrictions whatever
placed upon the value Of either. Inc
interest on judgments, and on con
tracts in which no rate is speclhca,
ought to be regulated, but this should
be the extent of Legislative interference
Anything beyond this Is suicidal 10 tAe
commercial interests OF the state al
nicted with such legislation. The pres
emit law is better than the old SIX per
cent. law but to leave the price o.
money as free as we leave the price Of
corn would be better still. 1t there Is
to be any change it should he in re
moving restrictions, not in making
them more severe.
Restrictions imposed upon the lend
ing of money by establishing q rate OF
interest less than the money is worth
works a hardship upon the very class
which they are intended to protect.
The borrower is the sufferer. Ii mon
cy is lett free from such trammeIS ana
restraints he will hardly pay more for
it than he can afford to pay. He is the
hes. Judge Of his " affairs. lie Is Il
free agent. He knows bow valuable
money will be to him at such a time
He knows how much lie can pay tor 1t.
What right has Il Legislature to step in
and say You shan't pay any more than
six per cent. for money?
But such laws are always evaded
1t is true they keep Il good deal OF
capital out of the State but u good
deal will come in spite ofthem. A class
oil lenders will come who will readily
Violate the law, and, knowing they
cant enforce their contracts in the
courts, they will charge for the risk.
They get more for their money than
they would get If there was no such
law, because competition 10 KEEP away.
Eastern capital seeks other localities
Ter investment, and the few money len
dcrs have their way and get their
own rates. True; they lose some Of
their debts when the statute is pleaded /;
but they make this loss up from the
honest borrower who will not plead
the statute.
Here, then, we sec that usury laws
drive away capital to foreign localities
where a wise protection is afforded 1t.
What capital remains or comes in ex-
acts u higher premium, because it is
comparatively free from competition.
The capitalist charges also for the risk
he runs in consequence Of being unable
to enforce his contract in the courts.
Such law oilers q temptation, too, to
the borrower ID violate his contract
and sacrifice bis commercial honor.
1t is known that under the former
usurv laws of New York restricting
the rate of interest to six per cent.
money was higher on Wall street than
at any other time. 1t was also scarcer.
The same was true Of Boston and Of
Chicago. But wherever Legislatures
have been composed Of intelligent men
who knew something of political econ
omy, these shackles have been re,
moved, and wherever they have been
removed money has been cheap and
plentiful, 1t has had a tendency al
ways to seek such localities. 1t has
always gone where it could find q safe
home, where it was not subject to the
repeated and annoying hazards ofhos-
tile legislation.
The sort Of agitation which charac-
terized the last Legislature is calculated
to produce an Injurious effect. Such
chronic efforts 10 get rid OF a law
which is calculated to encourage the
importation of capital will Of course
tend to discourage that importation.
and in proportion as foreign capital is
kept away native capital viii! either
seek other ahedes, where better pro
lection is afforded it, or it will remain,
and, being free from competition, it
will become exacting and despotic.
1T is the height Of folly, therefore,
to TUX Of reducing the present low
rate of interest. 1t is suicidal to the
hest interests of the State, and the
dcmagogues who clamor for it deserve
to be confined to nurseries. Nothing
but the most misguided ignorance can
So assall the public welfare We are
dependent upon foreign capital for the
development of our vast and uncx
plored mineral resources; we are dc
pendent upon it tor the Improvement Of
nur cities and the increase of their
trade. If the demagogues are to rule
the State, God help US Louisville
Courier Journal.