, 1877-11-02
The Rate Of Interest.

Few features Sf the present sra are W
remarkable a. the contagious influence
sHcrtrd by the national funding measure.
upon the prevalent rates uf interest loans.
Pnor 90 the commencement of the work
oi reducing the ratrs on the government
loans u seemed to be the hned determin.
alton Of the most intelligent and infiuen.
tiai classes In the couutry 10 push the
rates 0i interest As high as possible, to
keep them up, and 10 make point of
always favoriug an advance. State legis.
lAtures were beset with demands for the
repeal ofall laws against usury, and mum
beTs of the state banks and other fiscal
companies were chartered authorizing
them 10 charge any rate Of interest on
loans. Nearly all of the companies so
chartered have failed. Those that have
escaped have done 30 only bt loauing on
the mCst ample cOllAterals. And the best
proof of the total unsoundness Of any
state of business based on such unnatural
and ruinOus rates Of interest is that, al.
though nearly four years have elapsed
since the panic of 1873, the bankruptcies
are still astounding in magnitude, num-
Der aud liabilities. Men have been
preaching up the necessity of corporate
companies being content with moderate
dividends, but very few have deemed it
necessary to dwell on the duty Of being
content with moderate interest.
Yet this is the one chief lesson of the
times. High rates of interest having ru-
ined the great majority Of the borrowers
and good many of the lenders, the
business seems to have collapsed. When
the national government can borrow un-
told millions at four per cent men are re-
covering from their desperate haste to
pay seven, eight, ten and twelve per cent.
Property held at security for loans will
not now pay the face of the debt. In
New York City mortgages are reduced
from seven per cent. to six, and people
who are able to command the cash are
paying off their membranes. There is
vast surplus of unemployed capital
everywhere. Money is drug, and the
initiation that gave existence to high rates
of interest is dead. The decline of rates
is as general at the West as here. Ten
per cent. can no longer be obtained in
Chicago. Eight and nine are eagerly ac-
cepted by the lenders. Speculation is
Improbable; kite flying has few dev-
otees.
The truth is that the existence of abun-
dance of home capital adequate for all
legitimate purposes has been fully estab-
| lished and recognized. Our country is
taking one great step toward emancipa-
tion from the dangers of periodical crashes
and panics. Excessive rates of interest
ate up the profits ofregular business, and
forced an unnatural struggle to secure
trade beyond the bounds of prudence or
safety. 1t has been fully demonstrated
that sound and reliable traffic cannot af-
ford to pay such rates, and that money
lenders must be content with more mod
crate rates in order to keep business with
in safe limits. The very numerous bank
failures that have been occurring have
arisen from total disregard of this les
son, and it is now morally certain that
these failures must go on unless the fiscal
institutions learn wisdom at once.
The States and cities should all follow
the example of the national government
and gradually reduce the interest on their
debts by the funding process.-North
american.