The Indiana State sentinel. [volume] (Indianapolis) 1868-1895, 1879-01-29
INTEREST LEGISLATION.

have recommended in theirannual messages
the passage of laws reducing the legal rate
of interest, s per cent. being the maximum
and per cent being the minimum rates
recommended. The question of interest is
undergoing very general discussion. the con-
clusion being that free trade in money is the
correct theory. while others maintain that the
law should determine the rate of interest
which lenders shall exact aud borrowers pay.
Free trade IN money, that is to say, that the
law should fix ne rate where the parties are
competent to contract, is in conflict with the
policy upon the subject from the foundation
ef the Government, and yet we conclude
that the theory Is gaining adherents
every year. 1t may be difficult
to determine what the rate of in
terest should be. but, since the Gov
eminent controls the volume of money, the
theory of supply and demand is 10 longer
applicable in determining its value since the
demand, should it exceed the supply, will
necessarily advance values, leaving borrow
-ers without any remedy whatever. With
this view of the case it will readily occur to
those who seek prudent adjustment of
conflicting interests that the law may prn-
IDENTIFY determine the maximum rate of in
terest to be paid and enforce the law by
penalties calculated to restrain those who
would violate it. If, as it is admitted, that
values of property generally have declined
fully 90 per cent, and dividends from in
vestments in legitimate business enterprises
have rroportionately declined, then we see
no reason why the value of money should
not be regulated by such standards.
The New YORK Times takes occasion
to tell the governors of the states who have
recommended low rate OF interest that
legal restraints will prove imperative. and
that Western farmers will be compelled to
pay high rates of interest or go without
money. In the course of its argument it re-
iterates facts which the Sentinel has fire.
queutly laid before its readers, that invest
ments in government bonds at a low rate OF
interest Is indicative of business prostration,
and has no encouraging significance what
ever, and that it will not do to assume that
business men are able to obtain money al
low rates because the Governments is fertu
nate in that regard. SIT will be found" says
the Times, ''that the accumulation of idle
4caprtal denotes q disordered condition OF
credit which renders the lending of money
almost impossible. There are no great en-
@terprises to absorb capital; corporate loans
ARE not heard of; business has not regained
activity; and when borrowers do appear
Ordinary evidences of credit are unavailable.
The banks, being choked with money, lend
it, let call, on securities that are Immediately
convertible. The proceeds of bond:
called in for redemption, and much other
capital, find their way into four per cent
bonds"
Here we have the statement that in bushes.
circles there is no confidence, and thai
money is seeking investment in no enter
prlses calculated to revive the prosperity -o
the country. Money is concentrating at the
center of business, and loaned on cal
VIXEN convertible collaterals are offered fol-
security. In this condition of things, tn,
West being the debtor section, Will be com
PEELED to pay high rates of interest, sine,
farms are not such securities as capitalist
desire to deal in. Such arguments. instead
Of being calculated to divert Western Legis
ist2res from trying to modify the ipjustic,
of exhorbitant rates. will be likely to stimu
late them IN finding some remedy for tai
cruel effects of extortion.