The Charleston daily news. [volume] (Charleston, S.C.) 1865-1873, 1873-02-13

Honse of Representatives of lhe State % Sonth
| Carolina, now met aud sitting lE General AS
sembly, and by the authority OF the same:
| That section OF an act entitled IAN act 10
we'd December 9Th, 1866, being section Oh
chapter IS, OF title IL, OF the General Statutes,
| he and the same Ia hereby, amended 30 as 10
read as follows: "Tbat all acts or parts Oh acls
limiting the rate OF interest recoVeraole upon
Contracts for the hiring and use OF money 10
nealed: Provided, That nothing herein con-
tained shall be construed TO permit the recov-
ery OF more than ten per cent. per annum
upon any contracts for the hiring, lending or
use of money hereafter entered into"
The section proposed to be amended was
a simple repeal OF the restrictions upon the
rate OF interest to be charged for the use OF
money, and reads as follows:
| SECTION 7. That all acts and parts of acts.
limiting the rate of Interest recoverable upon
/ contracts for the hiring, lending or use OF
money, are hereby repealed.
AS the law stands, the lender OF money
charges for its use what the borrower is
willing and able to pay. An attempt was
made at the last session OF the Legislature
to limit the rate of interest, which might be
charged, to seven per cent. The argument
against any interference with the liberty OF
the lender to charge what he pleases, and OF
the borrower to pay what he pleases, was
unanswerable then, as 1t Is now, and the
bill, which had passed the House, was
promptly killed In the Senate. The differ
ence between the bill which was then de-
feated and the bill now before the Legisa-
ture is only difference In degree-the diff
ference, In other words, between seven pef
cent. and ten per cent. But any tamper-
ing with the laws OF trade involves princi-
pie, and the application Of that principle, In
the present case, is very clear.
Either it Is IN the power OF the General
Assembly to fix by law the rate at which
money shall be lent, or it is not Unless
the members believe that stringent State
law will enable the needy planter and mer-
chant to borrow money at q low ratn, why
do they propose to pass such lawf They
must believe it, or they are making game Of
their constituents. And ifthey do believe that
they can make the rate Of interest what
they, In their wisdom, please, why do they
tix the rate at ten per cent? In England
money is worth two and three per cent
Why should it be any dearer 10 South Caro-
linai There are tens Of thousands of per-
sous In South Carolina, the members OF the
Legislature included, who could make for
tunes In a week, il they could borrow as
much money as they wanted at two and
three per cent. year. 1t is Sin and
shame that the people should pay ten per
cent for what, by Law, could be compelled
to be given them at less than bali that rate.
But here the trouble comes 10. A member
will say, ave can fix the rate ut three or
''iour per cent, but the bankers won't lend
sat that price. They will send their money
'.away. So we will give them fair price
'sand the money will stay" Thou fool
This knocks away the foundation Of the
fabric. It is on admission that the lender,
not the legislator, determines at whatra bis
capital shall be used by others. II there is
power to make him lend at ten, there is
power to make him lend at three. II there
is no power to do one, there is power to do
the other.
Let Us look at 1t again There are two
classes OF States In the United States; those
in which money is free from restriction, and
those 10 which usury laws prevail. 1t is the
universal experience, other things being
equal, that money Is cheaper where the
usury laws are abolished than where they
remain In force. Money, to-day, is cheaper
in South Carolina than In Georgia; and,
likewise, 1t is cheaper here, upon equal secu-
rity, than In New York. But In New York
the usury law is exceedingly stringent' 1t
is; and yet money rules at from six to sixty
per cent. G year. The money, at the time,
is worth the rate which is charged, and the
usurv law does not stand In the way. The
lender charges commission instead OF plain
interest; or the borrower pays interest on
ten thousand dollars and only draws two
thousand five hundred dollars from bank.
The history OF civilization shows that re-
strictions upon the free use OF money only
make Its cost the greater; because the lender
must be paid for the risk OF violating the
letter OF the law, as we'll as for the ordinary
risk Of losing his money.
This is too plain to need any further
demonstration; but we can tell the Legis-
lature what the effect OF the proposed bill,
il passed, will be. A part OF the banking
capital will be driven away, and the remain
der will be lent out at eighteen per cent and
twenty -four per cent, instead OF the present
rate, which is twelve per cent. The nomi
nal rate will be ten per cent, and there will
be 'commission" sufficient to make up the
difference. And even IL the Legislature
could frame law which would prevent any
man from paying, directly or indirectly,
more than ten per cent. for borrowed cap
ltal, the trouble would arise In another form. |
The borrower would not get the money. A
banker who can obtain twelve and eighteen |
per cent. in Georgia would not lend money
here at lower rate. The effect would be
that neither planter nor merchant could
borrow any money at oil, and many OF them