The Dalles times-mountaineer. [volume] (The Dalles, Or.) 1882-1904, 1897-01-09
RATES OF INTEREST.

AS the time approaches for the con-
vening of the Oregon legislature
the demand for the reduction
of the legal rate of interest in the
state from 10 to per cent is again
being forcibly urged, and such u
measure, when introduced, will no
doubt receive heartier support than
it has in past sessions.
Whether the rate of interest on
money can be controlled by legislation
is question that has been very gener-
ally discussed, and many able argu-
ments have been produced in favor of
abolishing all usury laws, it being
held that money is nothing more than
any other property, and its price should
be governed by the law of supply and
demand, the same as wheat or flour. 1t
is also argued that the attempt.to regu-
late the rate of interest by legislation
drives money ont of the markets and
causes it to seek loans in localities
where higher rates of interests are al
lowed; also that all usury laws are
violated by the charging of commits
sions and brokerage for negotiating
loans, and the exacting of a bonus
wherever loan is made. Another
argument against the method of es-
tablishing low legal rate of interest
is that it will cause owners of money
to refuse to loan it, and COMPEL them
to invest directly themselves.
This latter contention is q more
forcible argument for than against a
low interest law. If the adoption OF a
strict usury law and the fixing of a low
rate of interest by legislation would re-
suit in reducing the profits from loan,
ing money to such an extent that own
ers would invest their capital in busi-
ness instead of holding it to loan,
much would be accomplished toward
reforming business and bringing the
commercial transactions nearer to a
cash basis. Few can do business sue
cessfuly on borrowed capital, and those
who do succeed must make a double
profit; that is their profit must first he
suffi :ient to pay interest and then to
re,ompense them for their labor. hence
the customers of those operating on
borrowed capital must pay greater
profits than are consistent, since they
must pay for the use of money as well
as legitimate profits for conducting thu
business; and the higher the rate of
interest, the more the customer must
suffer.
The contentious that the reduction
of the legal rate of interest will drive
money out of the state or will force
owners of money to violate the law by
exacting usury are not we'll founded.
If the money is driven away, where
will it seek investment? Certainly
not in the United States, for in a
maj ,rity of the states the rate allowed
by special contract is already lower
than it is here, while in few states any
rate is admissible, though in major
ity it is 8 per cent. AS to money loan
ers violating the law by charging
usurous rates regardless of legislative
enactments, some of course will, no
matter what rate is established so long
as they find borrowers who are willing
to attempt OF pay more than legal rates;
but prudent money loaners will not
take the risk of violating the law for
the sake of little extra interest.
They will either accept the rate fixed
by law, or will invest their money di-
rect in enterprises offering higher
profit than can be had from extending
loans.
AS to the business of the demand for
lower interest rates, there can be no
question. The time probably existed
once in this state when business would
justify the payment of 10 or IL per cent
per anum: for the use of money, hut
that time has passed. No class of
business pays as high profits now as a
few years since. The income of the
the mechanic, the day
laborer and the farmer has been re-
duced, and it is but just that the money
lender should be content with q cor
reduction. Hence it is that
the measure to reduce the legal rate
allowed for the use of money will re-
ceive strong support in the next |