The record-union., 1893-02-21
THE UsURY BILL AGAIN.

THE USURY BILL AGAIN.
Some cogent reasons have been ad-
vanced in these columns why Assembly
Bill No. 143 should not become law and
put a usury law upon the statute books.
It has been replied that while it is true
that England repealed her usury laws
IS far back as 1854, and Massachusetts
hers twenty-six years ago, that the reason
for such action was that the laws were no
longer necessary.
This argument assumes what is not
true that the decline of interest rates was
due to the penalties of the usury laws;
that those communities were held up by
z penal code to a sentimental level OF
morals in business by the law, until
that sentiment became strong enough to
stand alone.
We submit that this is unsound rea-
soning because it cannot and has not
been proved that the decline in the inter-
est rate was due to the force of the law.
1t is, however, strictly within the lines of
fact that the declination of rates was due
to the laws of supply and demand, the
legitimate and inevitable result of tinan-
cial competition.
An instance of this is given by practi-
cal merchant, who calls attention to the
fact that while thirty years ago in Cali
fornia'the rate of interest was all the way
from l to per cent. per month, it has de-
clined to 3, 6 and 7 per cent. per annum
without usury laws upon the statute
books. The same is true of Nevada, and
other localities.
1t is conceded by all Lawmakers that
an imperative law, dead letter, is more
injurious TO system of laws than the
absence of such a law could be. Now
usury laws, as a rule, are imperative;
they are easily and generally evaded;
hence their presence in the codes of laws
is an influence encouraging what the law
denounces as dishonest, extortionate and
inequitable.
A corr Iespondent of the RECORD UNION
on Saturday pointed out special reasons
why the proposed law will work hard
ships, to wit: that the penalty clause can
not apply to officers of national banks,
the Federal courts having decided as well
as State courts that State penalties for per-
sonal punishment for violation of usury
laws are not applicable to national bank
officers. The result of the proposed law,
therefore, will be to drive all money ac-
commodation business into one class oi
banking. It will have the effect, there
fore, of a special and discriminating law,
and if not the letter will violate the spirit
of the Constitution.
As to evasions some citations have
been made of those the law will encour-
age. Another and very common form
will the be requirement by the lender that
the borrower shall give him an indorser
whom the lender will name. This in
dorser, being a man of straw, will require
payment for his service, and this pay
ment will go into the lenders purse to
cover the difference between the 8 per
cent. permissible and the rate actually
charged.
But the strongest and best reason foI
the defeat of the usury bill is that it is
LEGISLATION against the best interests of the
moor man and the men of moderate
means. Their needs require them to
hire the service of money. They must DC
it. as a rule. under whatever conditions
the lender exacts, and as the risk in
creases by the penalties of the usury law
the exactions upon the borrower will
augment. Savings banks and building
and loan associations, which with realty
as security for loans must meet the tax
rate also, will find the per cent. insult
ficient payment for the service OF the loan,
and they will therefore be unable to ac-
commodate the people. which OF all others
need their assistance. Beside, therefore
of driving capital out, congesting what
remains in the hands of the few, the pro-
posed law will cripple and neutralize the
beneficence of those financial associa-
lions in which the poor man is more In