The Washburn leader., 1891-04-04
Good Credit and Cheap Money.

Good Credit and Cheap Money.
A bill has been introduced in the Mime
sofa Legislature to reduce the legal rate of
interest to 6 per cent and make eight per
csnt. the highest rate permitted by con-
tract. 1t is probable that the time has ar
rived when the legal rate should not ex-
ceed six per cent, but legislation which
limits the rate of interest on contracts be-
tween the parties and which makes forfeit
ures for charging usurY, should be proceed
ed with very slowly. The Northwest is as
yet full of borrowers, dependent on East
ern money to carry on the business of de-
veloping its great possibilities. 1twould be
an easy matter to pass ill-considered bills,
which would drive this capital away when
it is most needed, and cause untold hard
ship to those whose notes mature during
the next two years, and before fata! defects
in the law could be remedied. Kansas is
proposing all sorts of wild enactments,
such as extending the time of redemption
cages, heavy penalties for usury and the
collection of commissions, ETC., and yet no
State in the Union is SO dependent on out
side money to carry on its business. Such
legislation, if enacted, will drive money else
where. Washington is getting plenty of
money at reasonable rates, because its laws
are liberal, and invite capital instead of
threatening it, and the whole south is in
viting money to come that way for invest
ment. There never has been time when
legislation hostile to capital would have
west than now, for the reason that there
are so many other profitable fields for i'll
vestments invitingly open. There is an
amazing lack of common sense i'll the
treatment of the question of interest on
money both by newspapers and legislators.
It is we'll to catch your hare before spend
ing time and wasting fuel i'll building a fire
to cook it. If all the money lenders were
forced into the State, and were obliged to
lend their money here, it would be possible
to pass laws to make it hot for them, but
so long as they are at large, and their
money is very much needed, it is well to
remember that more can be caught with
molasses than with vinegar. Money goes
where it IS invited and where it brings the
most profit, safety being prime requisite.
Government bonds at three per cent are
taken because safe. The best real estate
mortgage can be negotiated at and per
cent in the East where values are settled.
In the West where is more or less suspicion
of "boom," and 6 per cent are demanded.
As the risk increases, the rate demanded
lender or make his security doubtful, or
increase the risk in placing or collecting
l6ens, and the rate of interest will advance.
Or the money will go where legislation is
favorable instead of hostile. The way to
get cheap money is to make laws for the
collection of debts which are fair and do |
not encourage rescality, and leave the rates
of interest to contracting parties, except
so far as necessary to protect the victims !
of dire necessity against greedy usurers
Che question of the rate of interest will
then settle itself, by competition, just as it
has already in Minnesota without legal in
reference. A great deal of money is loan
ed in Minnesota at S per cent and under
contract 10 per cent. Competition and
good credit has done what no law would
have done. No law can make money
cheap to those who have bad credit, any
more than it can make fool wise, or a
man sober. Tho banks of Min
nesota and local capitalists would, no
doubt, be the gamers If legislation hostile
to Eastern capital could be enacted, but it
would be fatal to borrowers, and in all new
States they are in the najority.-American