The daily dispatch. [volume] (Richmond [Va.]) 1850-1884, 1874-02-16

prohibits loans at a higher rate In all their
different phases. Tlits law has been dis
cafded by the enlightened Government o.
England, and has been repudiatcd by se'e-
raj of the States OF this Union.
In February, 1867, Mr.. RICHARD u. DANA,
Jr.. delivered speech in the Legislature OF
Massachusetts on this interesting SUBJECT.
II was regarded as very conclusive In its
arguments in favor of repeating the usury
,aw of that State. We have before us copy
Of this able speech, and we take from it the
following extract showing to what straits
the borrower is often brought by law
which diminishes the supply Of money and
forces him to pay excessive rates, which II
prohibits. MIR. DANA presents this view OF
the oppressiveness OF usury laws in very
clear and convincing light:
aSuppose the natural rate Of interest 70
be here in Massachusetts, seven per cent.
Nv the natural rate mean the rate II
would come to, In the absence OF legislative
interference, If the borrower ana iehoer
came directly together in the market. NOW
appear the phiianthropists, and say tbae
sercn per cent. is too much for men TO pay,
and enact laws which prohibit the giving OF
taking Of more than six per cent.
Suppose there are fifty millions ol
canital in the market to DC loaned
when the usury law goes into opera.
tion. What will be the effect OF the law!
| think we will all. at least, agree on TINS
that il will divide the capitalists into three
classes-those that will lend at six per cent,
those that will not lend at all unless they
oct their moneys worth, and those VINO
will disobey the statute and take all thcy can
oct admit there will be few oil tue nrse
Class. men who will lend at six per cent.
money that is worth seven. They are men
ecr,,nuIous about formal laws, aItnousn
they see no moral wrong In the 1orDiuueu
oct They are in the habit Of investing Ia
mans and do not like to change their naoits,
or are too old, or inexperienced, or t,lliu, W
nnt their capital into business. but thls
.y,ss is not large, and is diminishing every
year. I'LL rot land ar less
.,on the fill value, and yet will not take the
r;Sts or disrepute of violating law, nor re-
.nrt TO the circuities and chicanery and mid
dlemen such forbidden loans entail. They
invest in Government securities, or, If they
are active and enterprising, turn their capt.
,al into business, add their own skill, care,
and industry to it, and make twelve per cent.
md more. This second class takes from
the private loan market a large part OF
the supposed fifty mllionS-perhaps
third or half. The effect Of this is to raise
the rate, for the supply is lessened ana the
demand is not, but becomes the moEeanA-
ious and eager.
aNoW. gentlemen will see to what conal-
tion such legislation has brought the ooI.
rover. He must have bis money or lali. IL
~ no longer the national rate OF seven
ner cent that be is to give on perfect
security. but nine or ten per cent,
and he is brought to an inferior class OF mo-
nar.lenders. But this is not all. Another
oIrment i, forced in. This is insurance 10
no ch0roed for The risk the lender takes IN
Iendtno on illegal security; for il the Dor,
over will not turn against him ana
.efi,se to pay the interest the bor-
overs assignee in bankruptcy, or
,is executor, may feel it his duty |
O do SO. Nor is that all. Something is to
&c charged for the disrepute attending the |
transaction. But there is larger addition
till. These transactions require secrecy,
ircuity, transfers Of notes, drafts, and hctl-
ious exchanges, and, above all. the middle.
aen. who must be employed that the real
aries NAV not be known. How much do |
lese middlemen charger That you never
now.
"As YOU have brought your borrower
own to dealing with less respectable, less
esponsible class of men, he must bear the |
And what rate does the dis |
ressed borrower at last pay for that which
70 could have openly, like man, face TO face
With the lender, at seven per cent, because
ou thought to force by legislation the mar
;et rate below the natural levelf
81 have been assuming that the borrower
,ffers satisfactory security. But suppose he
,oes not. An honest but poor man IS little
and must pay debt or have
,is property taken on execution: or an en-
young man, with health, anu
kill. and character, but no capital. wishes
o borrow sum to put with bis industry and
kill with fair hope Of profit. Neither
IF these men can give perfect security. All
hangs on their lives or health. Death, or a |
oug fever, lasting through a season, VIII
leave them penniless; and in all probability |
if they are young men, they mold their |
houses under purchase-m0ney mortgages, |
and can give no landed security. Ii theo- |
retically perfect security, driven to middle |
men and circuitouS transactions ends
IN giving ten per cent, where will
such borrowers As these be in such !
bands? The strong and enterprising |
Young man will give the utmost that his |
expected profits will allow him to give,
without actual loss, for he must work; but |
the distressed debtor must sell or let his |
creditor sell all be has to meet the payment |
of his debt.
"You put the borrower under guardian
ship as to money, and limit him TO SIX per
cent, whatever the market rate, Whatever
his need, aud whatever his security; Dut you
leave him bis own master as to everything
else. He must not borrow money at seven
ner cent. but he may sell the very ground
Under his feet, He cannot be trusted in the
money market, but the pawnbroker's shop
il omen to him. He may sell all he has to
prat,fy his passions, or to meet necessities,
and no one can interfere TO save bis wife
and children, unless he is SO far gone as to
he longer SUI iuriS. Take the case Of the
poor. honest debtor Sickness or misfor-
tune has left him In debt, and o hard credl.
tor. or an institution or trustee that acts by
rule is pressing him to an execution. Ii he
could borrow thousand dollars on year
or three years. loan, he could pay the debt,
and have little with which to begin again.
But, with his poor security and the high
state of the market, he cannot get the
money at six per cent. You prohibit him
from giving seven; even he must sell the
lard under his feet, the house over the head
of bis wife and children, and ali their useful
and endeared furniture, which they may
never get back, and sell it all at ruin
Gus loss, rs is always the case in
forced sales-a loss of at least twenty