The Mankato free press. [volume] (Mankato, Blue Earth County, Minn.) 1879-1924, 1895-02-22
SHOULD BE FREE.
The Traffic in Money Should Be AS
Unrestrained by Law AS that
of Any Other Commodity.
G. III. Riggs Reads a Paper on that
Subject Before the Social
Science Club.


bea very interesting and instructive
topic. Mr.. G. H. Higgs read paper
on that subject, in which he took as
his main position that the usury laws
were wrong and as whole were more
promotive of hardships upon the very
class which they ought to protect,
THIN would be the case, if they did
nf5 exist. He introduced his paper
with few remarks as to how the
natter of interest was regarded in
ancient times and how it is regarded
at present. He also referred to the
right of interest, and followed with a
few statistics showing the amount of
z indebtedness and the interest there
on in this country. The estimated
interest charged in this country is
1880 million dollars, or sum nearly
equal the value of the combined
corn, wheat and cotton crop of the
country. The greater proportion of
this is of course payable to our own
people, and if it represents the actual
proportion that borrowed capital is
ACTUALLY entitled to, he could see no
cause therein for alarm, as the figures
simply illustrate the enormous scale
of our production and earning power.
= The question, he thought, for concern
is whether in all cases capital is get
ting more or less than it's just share,
and whether all classes and individ-
uals are getting their proper proper
tion of the earnings of the factors of
production. He did not think that in
all cases the return for the use OF
money was based on it's just earning
power, and that in it's wide variation
the poor suffer at the expense of the
rich, and gave numerous illustra-
tions to this effect, and sought the
reasons why it is so. The reason for
this was partly owing to natural
causes, and partly to artificial. The
natural causes cover the question of
security, which ranges from gilt edge
to that which is more or less inferior.
The artificial causes related to laws
enacted in the attempt to regulate in
terest charges, etc. People who bor-
row on good security can naturally
get the best possible rate of interest,
and the larger the amount on such
security, the lower will be the rate at
which they will secure it, But as the
security grows inferior and the risk
greater, the rate will naturally adj
vance and it soon reaches point
where financial institutions will not
place loans, because the law will not
allow return on the same sufficient
to justify the risk. In this case the
poor borrower who may want but a
small sum for few days or weeks is
driven into the hands of the money
shark, who EFFORTS an eXorbitant rate
of interest because of the inferior
security, and then demands still
greater return because of the risk he
is taking in defying the law. And so
he argued that the law which was en-
acted to protect the poor borrower in
! just such case, does not protect him,
but on the other hand does him an in
Jury because it forces him into the
hands of the sharks, when if there
was no law to prevent, the legitimate
loanerS of money would, in the
majority of cases, give him the loan
at a slight advance on the maximum
rates they are now allowed to make,
and which would amount to but a
small fraction of what the money
shark often EFFORTS. If the usury
laws could be wiped out, and the mat
ter allowed to regulate by the law of
supply and demand, he believed that
much of the injustice which results
from the loaning of money would dis
appear, especially in the large cities
where it is practiced to the greatest
extent, and the greatest evils are
found.
He also believed that the question
of interest was more or less aggravat-
ed by laws regarding the taxation Of
mortgages, and also by our exemption
laws. Unwise and unjust laws in
this respect, do more harm than
good. The real conditions, he said,
which naturally determine the rate of
interest is the law of supply and de-
mand plus the risk and rate so deter
mined can not be lowered by any
legislation but on the contrary laws
which have for their purpose the re-
straining of the supposed rapacity of
the lender will nearly always react
against the borrower. The traffic in
money, he held, should be as free as it
is in all other commodities between
citizens of the same commonwealth;
that while laws that regulate the
rate of interest in cases where no con-
tract is made, on the sums that
have become overdue are natural
and reasonable, and necessary to
prevent litigation, legislation which
attempts to prohibit our citizens