Nashville union and American. [volume] (Nashville, Tenn.) 1868-1875, 1875-02-11
CONVENTIONAL INTEREST.
A Split in the House Judiciary Com.
mittee.
Three Different Reports submitted
Yesterday.

Yesterday.
-
Reports from the Judiciary Committee of
the House were submitted Yesterday. on
the proposition to reIeal the conventional
interest law. The report Of the majority,
consisting Of Judge Gardenhire, the chair
man, and Messrs. East, Gibson, Head.
Gates, Neal, LedgervFood and Cole, is as
follows:
The Majority Report.
The Judiciary Committee, to whom was
referred House bill No. 3, to be entitled an
act to regulate the rate of interest. and 10
repeal chapter So of the acts of
1e69-71, passed Feb. %, 1870, have accord
ing 10 order, had the same under consider
alton and instruct me to report back the
same, with a recommendation that the bill
pass, when amended as follows, to wit:
tnat the law take effect from and after the
LIST day Of July, 1875.
1t was thought by your committee that,
by that time, the public generally may
learn its provisions and govern themselves
accordingly. If it takes effect from and
after its passage, parties without be-
ing aware Of it, may become guilty Of
usury. Your committee state also that
House bills No. 46, No. 2S, No. IS, and
House bill No. s, also House bill No. SO,
on the subject of the rate of interest, have
also been considered by the committee,
and they recommend the rejection Of all
the latter. The bill they recommend en-
braces the conclusions Of a majority Of the
committee.
1t is believed to be bad policy to ALLOW a
higher rate of interest than other forms of
capital will command under existing cir
cumstanees. Ten per cent.'is more than
can probably be realized on an investment
in land. If ten per cent. can be realized
for the loan Of money, of course such
money will seek the most profit
able Investment. 1t is believed that
if the price Of money is reduced below, or
to a point equal to, the profits and land,
then money will be rs apt TO be vested in
lands as in loans. If this is true, then, as
the price of money increases, the price Of
lands decreases, and Q cOHUeTSO- If money
vested in lands yields as much or more
than thu interest On loans, there will be
more purchasers, and the greater the num-
Der Of buyers the greater will be the price
Of lands.
It IS admitted that the fixing Of the price
Of money is contrary to political philOsO-
HANH OAA n ANlGAA1 AANAA eAA1eAlA A0A1aAN
Of elementary principles of political ecOnO-
Omy. If a privileged few only are allOwedto
f~urnIshcurrency, uehmonOpOlists can easily
combine and produce a scarcity of money.
They and their friends then buy the
staples Of the country at a uinOusly low
price. When their purchases are made, in
hatiOn builds up large fortunes at the ex- !
pense Of the producers Of values. II is be-
lieved the true policy is to let every man
or company engage in banking, who has
the capital and credit. If more currency is
then needed by the community, private en-.
terprise will furnish il, precisely as more
corn and wheat is produced, when there is
a great demand for them. But if a certain
class by law mOnOpOlize the production Of
wheat and corn, they would not be likely
to increase the quantity on account Of the
demand. They would probably charge an
enormous price, for what they saw proper
to produce, and realize as much
for a small quantity as for any increase in
the bulk. What a community needs most
private enterprise will always supply.
Competition, too, will soon supply the arti-
Gle At a reasonable price, whether it be
sugar, salt, rice or money. If every man
Of credit, means n integrity was free to
engage in banking, money would be fur
nished at a reasonable price, and we would
need no usUTy law TO fix the price, When
every man is free 10 produce meat and
-four, we need no law TO fix the prices Of
mea, and flour. But if government chooses
TO confer on a favored few the right to pro-
duce meat and flour, the necessity
Of fixing the price Of these articles
is obvious enough. What the COM
munity most want, they will
bid high for, and competition will soon re-
duces prices to the level of fair profit.
Money is no exception to this sphOusm.
Government ought not to assume the
gu lrdianship Of any class Of its children.
1t ought to give them complete protection;
let no one modest them or make them
afraid; give them a speedy remedy for the
enforcement Of their contracts, and let each
work out his own prosperity and happiness.
Let there be no mOnOpOlies, even of money,
but if m~OnOpOlies must give us a currency,
the price must necessarily be fixed.
II is proper to state that the committee
simply recommended the passage of the
bill as herein before stated. The reason
ing is that OF the chairman.
E. i. GARDESHIRE,
Chm. judiciary Com. of the House.
The Minority Reports.
Mr.. Speaker: The undersigned men,
bers of the Judiciary Committee, differing
from the majority Of said committee in
their recommendation for the passage Of
House bill No. ), beg leave to submit this
minority report:
The bill referred to proposes the repeal
of what is known as the conventional in
terest law, which allows parties to contract
for any rate Of int rest not exceeding ten
per Centum. ,
We hardly need, in this place, to trace
the history of interest laws, or enter upon
anT review Of usuTy, or the need Of, or the
in any statutory restriction upon
The use Of money, or the price for the hire
Suffice It to say that the idea and the Z
of governmental control OF money /
had their origin in a barbaroUs !
age, and with a people illiterate and saw
age, forty centuries ago, in the darkest !
ages of the human mind. I
That, while it is pretended to Justify this '
control on the authority Of the Mosaic Z
COde-Deut. xiii, 19-"Thou shalt not {
lend on usury to thy brother" vet, those |
who thus appeal to a religious superstition, |
that usuTy as there used, meant any '
gain or profit for the use of money, as well I
IS that this introduction applied only as be-
members Of the Jewish Church, and {
hat they were allowed a carte blanche as
70 the rates of interest exacted from the {
world. I
While again this entire restriction is i'm I
repealed in the later Cole, by the '
Noses, n Mathew XIV, ~: /
Thou OUghtest, therefore, to have put my 7
money to the exchangers, and then, at my !
l should have received mine own, I
TiarBtFy." !
In the language of David Hume, one of .
he ableSt of political economists as well .
IS of historians, We would submit that cit {
S needless -. observe how unreasonable q
md iniquiIOus are these laws, how impOs- !
.ible TO be executed, and how huTtful to !
rade if they cnuld ever take place." !
But the bill in question does not set up I
rules as to USlHy; it only lessons the y
egal interest rate, by prohibiting parties 4
rom bargaining for ten per centum, and .
Uniting them to six per cent. We believe u
hat, under the workings of the cOnven- u
iOnal interest act, of the 23d of February, y
$50, the interest rate in Tennessee. has L
from twelve and n half per "
,ent. to ten per cent, as is evidenced by |,
rade statistics and that the mOnied capt. =
al in the State, since the passage Of said y
81 hoe s.u-a,z,1 -,lra eHnrr Fvu, 81 - III