St. Paul daily globe. [volume] (Saint Paul, Minn.) 1884-1896, 1891-03-18
SUPPLY AND DEMAND.
They Regulate Interest as Well as
Commodities.

They Regulate Interest as Well as
Commodities.
To the Editor of the Globe.
DULUTH, Mimi. March 81 have
watched with some interest the various
measures pending in our legislature
affecting the question of interest, uSury
and taxation of mortgages, and, while
the passage of any of the measures now
proposed or which may be introduced
will not materially affect the people fol-
lowing my profession, yet it is matter
of vital concern to the state, and every
patriotic citizen ought to express his
views to prevent any legislation which
would result iniuriOuSly to the state.
1t is beneficial to borrowers to get the
money they require in their business at
the lowest possible rate of interest.
Experience has shown that an abund-
ance of money i'll any community, state
or county tends to lower the rate of in
tercst III such community state or
county. The law of supply and demand
which largely regulates the price of
cor modities and the price of labor en-
tiers largely into this question of inter-
est. If there is plenty of money seek
ing investment, and the investor or
loaner has confidence in the security
offered. the rate of interest will be low
aside from any law regulating the rate.
On the other hand, if the loaner or in
weston has not confidence in the security
offered, the rate of interest will be high.
and no law can be formed to compel
him to take low rate. He will loan
his money where he has the most conf
dence in the securities.
Suppose the law to tax mortgages is
passed, and the rate of interest is re-
a. y . Il e..
fixture clause and penalty. 1t will have
the effect of driving away the best class
of money lOaners, men who have some
regard for the law, while the money
sharks aud Scalpers will, because of the
hazard and risk which the law imposes,
infest the state and eXtort rates which
the opportunity of scarce money will
permit, far in excess of any rates they
could now possibly obtain. This last
class of men can and will evade the
most stringent law, aud the borrower
will suffer.
The cheapest money that is loaned in
this state at the present time belongs to
non-residents. Mortgages are personal
property, and are so considered by the
courts of all states. By the laws of the
various states mans personal prop
erty<s taxed in the place where he re-
sides.
1t is true that he often evades paying
taxes on such mortgages, but that can
not be helped. If the law in this state
is so framed to compel the payment of
the tax on all mortgages which are upon
real estate in this state, that fact will be
taken into consideration when the loan
is made, and one OF two things will fol-
low, either there will be some way de-
viSed for the borrower to pay this tax,
OF the lender will place his money in
Wisconsin or other states where less
stringent laws are in vogue.
This will make money scarce in Min
nesota, and because of its scarcity
higher rates of interest will be de-
manded and will have to be paid ire
spective of what may be the law.
The result of the passage of such a
law in Minnesota will be of great adj
vantage to other states which do not
have such laws, and will retard the
progress and development of Minnesota.
As to the usury laws. l believe better
results would follow if only the interest
were forfeited. On principle am OPP
posed to theE state interfering and at
tempting to make contracts for its citi-
Zens in their private affairs. The hon
est and honorable man will and does
make his contract about his private
business and abides by it.
No one but the rogue and dishonest
men plead usury. We all know that
the usury law is seldom enforced, yet
there are hundreds of usurious loans
made. Any law which hampers the
contracts of citizens in making loans
operates similarly to the collections of
customs duties-the user really pays an
additional amount because of the law
1t tends to corrupt the citizen by hold
ing out reason or inducement to evade
the law.
1t is possible that the time has come
to reduce the legal rate OF interest to 6
and per cent. for the reason that the
greater part Of the loans are now made
at those rates.
Tie question of what the borrower
can afford to pay does not enter into it..