The Democratic advocate. [volume] (Westminster, Md.) 1865-1972, 1874-03-21
THE usuRY BILL.
spErcn Or nos. J. K. LosewnL

In the Maryland Senate on Tuesday, the
special order Of the day, Mr.. Stevens "Usury
Bill, was taken up.
Mr. Fields said he wished TO speak further
against this bill, but was too unwell to do so
to-day. He moved TO postpone the bill.
Mr.. Earle hoped not The Senator Mr..
Fields) had already made long speech, and
exhausted the subject.
Mr. Longwel requested to be heard now on
the bill. Tic then said he would offer an
amendment to the bill, as follows THAT the
rate of interest in this State shall be six per
centum per annum, unless another rate is
stipulated for by written contract.
Mr. Longwell said This is one of the
most important bills that will be presented at
this session Of the Legislature. Its important
because il affects largely the material interests
of the people Of the State. The interest cues.
ton was discussed atgreat length and with great
ability in the several Constitutional conventions
held in Maryland within the last % years,
and elected u most extraordinary difference
Of opinion MS to its consequences, without
arriving at a conclusion such as would have u
tendency to settle the question.
The Constitution Of 1851 provided, &c.
The Constitution Of 1864, &c. The Consiitu.
ton of 1867.
II will be observed that some progress was
made in the last convention, inasmueh as the
subject was left TO the action of the Lcgisla
ture, if it was thought necessary 10 make a
change, but notwithstanding it Is generally
conceded that some other and better provision,
should be made the whole matter is Just
where the convention left it, and it is for us
to examine the question calmly and deliberate.
ly for the purpose of determining what is best
for the whole people Of the State.
We all must admit, Mr.. President, that
great evils proceed from the operation Of
what is known as the Usury laws. And in my
opinion there is not feature in the Coustitu-
ton or laws Of Maryland SO extensively viola.
ted, and 10 the same extent, as the provision
which is intended to regulate the rate of
interest. 1t is violated daily, and to an alarm
ing extent not only in our great commercial
metropolis, but throughout the counties ofthe
State. This violation Of the law being known
TO US all, does il not become our duty, as
legislators, TO devise wholesome measures TO
avert this wholesale violation of law which,
in its general influences, is producing gross
Generalization, and seriously damaging to
the material prosperity Of the State, and TO
the honor and integrity of the people we
represent2 But the question arises, How can
we apply an efficient remedy? | answer, in
one Of two modes, according to my Judgment,
based as my opinions are on considerable
experience and observation. II can be cor.
rected in great degree by carrying out the
intention of the trainers Of the Constitution of
1851, which provided that severe penalties
should be imposed by the Legislature ON
all infractions Of the Usury law, on all persons
loaning money TO others at greater rate of
interest than six. per cent. Such penalties
might be imposed AS would accomplish the
nhiart lint will alec IL 4
result deserving our serious consideration,
aud that is this it would drive out of our
State into other States where such restrictions
on the use Of money do not exist, n very
large amount of the capital we now possess,
and which is considered barely sufficient to
meet the wants Of our people in promoting
their own interests by aiding them in bringing
forth the undevcloped resources of the State.
That is one remedy for the evil complained Of
The other remedy, aud ! conceive much
the best one is, to adopt the proposition which
| have submitted rs amendment 10 the bill
before the Senate. Its adoption would leave
the subject Of loauing and borrowing money
to the standard by which everything else il
determined; by supply and demand, and by
the free consent Of both parties to the con.
tract. This proposition may appear too broad
and too far in advance OF the present rcstric.
tive features of the law now regulating the
rate of interest. But in my opinion il only
wants a fair trial, and the result would be,
money would command a much less average
rate than il has been doing for many years
past, as il would enable the conscientious
man, who refuses to loan his money at over
six per cent, but seeks for other sources of
investment in and out of the State, TO come in
competition with the class who believe that
money is worth whatever il will command in
the market And il would also invite capital
into in place OF driving il out Of the State.
The value of money depends very much on
uncomfortable circumstances. II is worth
more at one time than another. II is worth
more IN some countries than others. Ii is
worth more in certain sections of our own
State than others. IL is worth more in com
mercial and manufacturing districts than it is
in the rural districts where farming and plant.
ing is exclusively carried on, and for this
reason, that in the one case capital is made to
produce several times in year, whilst in the
latter case the tiller Of the soil realizes but
one return in year from the capital he has
employed. As n necessary consequence the
merchant and manufacturer can afford to pay
more for the use of money to carry on his
business than the mere agriculturist. In the
one case the party may be justified in paving
twelve or fifteen per cent. in the other, over
six per cent. will endanger his estate. The
same view OF the case will be had in making
d. o comparison between the Atlantic and West.
.ern States, where lands are much less in
price and where better results are obtained
for the amount of capital invested. Hence
you will find high rates of interest allowed BY
the laws OF the Western States
In this country we have nothing like II
money regulator, as they have in Great Brit.
ain. There the Bank oil England is the great
regulator Of the rates Of interest When that
institution discovers that the country is losing
bullion by expectation the governors of that
bank Immediately raise the rate of interest
until the outflow of gold is stopped When
money is abundant the Bank OF England 3
rates are as low MS or %, as Mt present, and
when money becomes scarce, MS il did only q
few months ago, the rates were advanced 10 8
or 10. But we have no such controlling
money power here, and cannot have one,
owing to the peculiar condition of our Govern.
ment and TO the further fact that an iustihi.
ton OF that character established in the
United States would degenerate into another
Credit Mobilier, under the management Of
the moneyed rings that IN all probability
would direct its affairs. This is an admission
regret to be compelled to make, but Judging
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am justified in expressing such an opinion.
The amendments proposed by Senator
Stevens and Senator Earle are liable to ohjcc.
ton. Ii the maximum Of interest is fixed at
or 10, transactions for loans will be run up
to that point in ordinary times when money
is abundant and It will be difficult TO borrow
at lower rates. This was the experience in
Connecticut when the hiaximnm was placed at
: per cent. Immediately after the law went
into operation the savings institutions which
had been loaning money at q advanced the
rates to &, although those institutions had
been controlling many millions and were
content with the old rates, aud this created
such an opposition to the law that the Lcgisla
ture was obliged to repeal ii. With the
opinions hold on this subject have great
hesitation in establishing a maximum rate and
would much prefer a free open market.
In concluding these brief remarks | think
may say that | have fairly cndeayored to
establish the four following propositions /:
First, that n continued adherence TO the law
restricting the rate of interest causes the
money borrower to pay higher rates second,
that the law is violated more generally than
any other on the statute books Of the State /;
third, that the violation is the result of an
Naa4aa aa.aUa - .-.a Il IL.