The Portland daily press. [volume] (Portland, Me.) 1862-1921, 1879-05-13
Interest on Money.

In the State of New York the legal interest
on money has been seven per cent. There is
an effort to reduce it to six per cent. on which
The Rural New Yorker says: ''The earnings
of capital now become subject of greater in
terest than for many years. We see that it is
agitating both the mercantile and the agricul-
tural classes The bill before the Legislature
of New York to make the legal interest on
money six per cent, is taking a very conserva-
tive view of the question. Four per cent. is
over the average earnings of real estate in New
York, and probably in most States; and there
is no reason why the interest paid for the use
of money should be so disproportionate to its
real earnings The farmer, above all, feels the
hardship of excessive interest. A farm encum-
bered to half its value is worked solely for the
benefit of the mortgage, as the legitimate in
come will only pay seven per cent. on half its
value. The legal interest in several of the
States has been only six per cent. for many
years, and the New York movement NAV be
considered very modest since at present there
is more money than business. Yet the money
interest is combined, and vigilant in protecting
its exactions; while the farmers, practically un-
combined and looking for some miraculous in
tervention in their behalf, will probably find
that the members elected by their votes will
represent the small money class and forget
their constituents
There are many transactions where interest
is expected or to be allowed, where no rate of
interest has been specified beforehand. 1t is
very well to have a rate fixed by law to meet
such emergencies. But it is not clear why any
other rate which may be agreed upon between
contracting parties should be illegal One may
offer to hire horse for five dollars per day. but
seventy or eighty in hundred could not afford
to pay for it at that rate. They would not
know how to use the horse to profit. But
there might be twenty or thirty who could pay
five dollars, and yet make five dollars them
selves by the hire of it, and why should the
law say one should not take five dollars for his
horse under such circumstances? 1t is the
same with the hire of money as with the hire
OF horses. There are plenty of people who
could not make money pay them at two per
cent, to say nothing of four or seven. But
why should all be prevented from hiring mon
ey at four because so many would not make it
pay at two? Ii there are people who can make
it profitable to hire money at seven or ten per
cent, why not let it be loaned if any one is
found willing to lend? No one will borrow
money at any rate of hire if it is not thought
profitable to do so. The moment seven per
cent. cannot be made out of a farm mortgage,
the farmer will not want to borrow. If the
lender can find no one to take his money he
will lend it for less and be glad to get it.
This whole matter of fixing rate of interest
by law beyond which no one dare borrow or no
one lend, is a relic of barbarous ages. With
just as much reason might the law say Just how
much money the day laborer should work for,
and that it would be illegal for him to ask or
receive more than the law allows. Perhaps the
world will grow wise sometime. Philadelphia
Press.