The times. [volume] (Richmond, Va.) 1890-1903, 1902-01-12
Interest ard Taxation.
for OF. The Times

Editor OF The Times:
Sir,-In answer to your query in your
issue Of the 2sth instant, will you per
nit the following reply? Looking pach
some thirty years the, following VIII D.
what can be remembered by those wit1
had during that time, business connectec
with lending money on real estate. Com
mencing at 1870 the rate Of interest PAID
on such loans was, in the general mar
ket, from twelve to fifteen per cent, PEI
annum in Richmond, and it was doubt
less the same in all parts of the State
Taxes were no higher then than now
There was no money loaned on real es
tate by private lenders, at the legal rate
of interest, and there were always per
sons willing to take. the risk OF usury
being plead to obtain the high rate winch
money commanded. In the years 1876 tc
1879 the rate had fallen to seven OF. eight
per cent. per annu1n; that, too, was usury
Between 1870 and 1879 there had beer
several changes made by the Legislature
in regard to usury, but none of them
made the lender unwilling to take the
risk for charging rate beyond the limit
allowed by law. And SO, coming on down
to the present time, interest has cheap
ened by reason of the greater amount OF
money in use, and it has been as greatly
influenced by the many commercial ca
lamities through which our country and
the whole world has passed IN the pas,
thirty wears. Capitalists have been atra1,
at times to use their money in com
merce:@ then stocks and bonds would rise
in value and interest cheaper. All OF
these causes making interest, not alone
on short time paper. but in long loans.
secured by real estate. variable. There
is no standard rate of interest for any
length of time anywhere. There is one
powerful reason which will help to stay
the fall Of interest below the legal rate
allowed by any State, and that is the
rate the state fixes; for fiduciary settle
ments In New York, Tor instance, though
I know but little of affairs there. the
rate OF interest is seven per Gent. All
mortuary. tables, all fiduciary settlements
are made at that rate. and there cannot
be a doubt that, with other influences
which decide the current rate OF interest.
is this, that lenders do not wish to take
less than legal rate for their money.
am not writing now Of nlillionaires and
comma nies investing surplus funds, VINO
demand unexceptional security and are
willing to take less than market rate to
get what they want; but refer to ordi-
nary business loans-such transactions as
take place every day In open market. (
In Virginia the ratio is six per cent. In
Richmond our tax IS Sl.ou t0ldle anu CityJ.
It is hardly possible that money could be
gotten here at 40 per cent. interest
though the tax were removed from loans
for if lenders have beens willing to sub
iect themselves to loss by charging usnry
ana holders are willing to take the risk
Of a fine for not reporting their holdings
and II is conceded there are. such, then
whv will they be willing to lessen thei,
interest charges? They have shown them
selves in the past able to take care q
themselves. They have been bold in de
fvinr the law, and win they now part
With their money at a paltry price? fAnd
If it were a certainty that interest swoule
Tha lowered by abatfng the, tax. there Is
tp1s To offset any. benefit that might &C;
crne therefrom there viii be q deficit hy
the amount Of tax derived from loaned
nm t,y d charge on some kind Of property
on r whom or on what would this deficit
! fan? This is a question to be considered
can the state and the cities ana the
i counties do without the. tax now receiref
from notes. secured or unsecured /? If 50