St. Paul daily globe. [volume] (Saint Paul, Minn.) 1884-1896, 1891-03-25
THE USURY BILL.
that Editor Owen Thinks of the
Davis Bill.

arm, Stock and Home for April.
lt Is doubtful ii in recent years any
abject has been more generally and
thoroughly discussed, particularly in
he Northwestern states, than is that of
aterest at the present time. Legisla-
ures, papers, forums, and. to large
'Xtent, pulpitS are full of it. The ne
'essity for lower rates of interest is i'm
jeratlve; this proposition is conceded
~ all well informed men, but how to
get the lower rate is a question most
fruitful of discussion and difference of
opinion. There is, of course, but one
SIRE way of reducing the rate of inter-
est. and that is to reduce the demand
or money; but this phase of the QueS-
ion it is not proposed to discuss in this
connection.
In Minnesota the main point at issue
to reduce the legal rate to 6. and the
contract rate TO s per cent, and against
that no sound objection can be urged.
Already the normal rate of interest.
With all conditions favorable. is less
than 8 per cent: so that declaring tn at
money snail not earn over per cent is
much like declaring by law that land
lord shall not take over S25 month for
house that he would not ask over $50
tor; it would be foolish but harmless
declaration. Under normal conditions.
such as unquestioned security, assur-
ance of prompt payment of interest, and
no risks of legal coniScation, money is
being loaned in large quantities at from
> to per cent even in Minnesota. But
the state has a law fixing a contract
rate of 10 per cent. with for
fixture of principal for violation of the
law. Strangely enough, small borrow
f1rmnrS at NThn
through agents, rarely if ever get money
at less than 10 per cent, including COM
mission. When the contract rate was
II per cent the same class of borrowers
paid y per cent, and at the same time
there was the same difference III rates
paid by the large and small borrower.
1t is now proposed TO reduce the rate to
per cent, and it IS reasonable as
sumption that the prevailing rate to
small borrowers will be per cent, judy
ing the future by the past. Under Ger
tain conditions we believe this may be
so, not by the direct operation of law
naming the rate of interest, but through
a Just and reasonable imposition of pen
altieS.
Money from nonresident loaners for
small borrowers must be handled by
agents: if penalties for violation of the
law are visited on the non resident, it
is plain that only such will send money
into the state as are constituencies: that
Will be attracted by big rates of inter-
est, and that are willing to risk an oc-
caslonal loss because of the big pre-
MUM they receive, after the manner of
insurance companies; and SO farmers
will have to 10 largely with a class OF
m0neyed dNenturerS-hnancial fee
hooters. But Oh the other hand, in the
absence of so severe neuaitV as forfeit
ure OF the principal, or any other eX-
ceSsive penalty, it is reasonable to as
sumo that better, more conscientious
class of money loanerS would be at
tracted to the state; men who be-
lleye that low rate is the
best possible guaranty Of prompt
payment OF interest and principal,
who realize that even 8 per cent is
greater interest than farmers can afford
to pay, and who think more of absolute
secu rity and regularly paid interest than
of small extra per cent. Such men
are not likely TO come if they must take
the terrible risk of losing their princi-
pal through the uufaithfulnes of an
agent. Whether the adventures will
continue to come If there is not big
rate per cent to attract them is. of
course, an open question; but, if they
rate than s per cent will ever be OBJ
tanned from them. The resident money
loaner, who can look after his own af-
fairs, or the agent of the alien, may
safely be punished to almost any eX-
tent for violation of law; but both
justice and public policy protest against
penalties imposed upon innocent non
residents that will at least prove to be >
barriers between farmers and the bet