The Lexington intelligencer. [volume] (Lexington, Mo.) 1901-1949, 1903-02-28
INTEREST LAWS.

some new law W mpoiSo'
charges. All futile legislation il
harmful, aud interest laws are always
futile. But futility is not their only
fault. Such laws are wrong in
essence and in spirit: in essence
because they deny to a man the right
to do what he wills with his own; il
spirit because they Of playing
to a popular prejudice. Such statutes
deny to one mar the benefit Of the
law Of supply and demand while they
leave that law operative as to others.
There is no more just eason fol
fixing interest rates than for fixing
farm rents.
And then it can't be done. Unless
the legal rate happens to coincide
with The current rate, such laws are
always Ineffective except to bring
about a back room banking business,
note shaving, and curbstone brokerage.
There is nothing to prevent, there
can be nothing done to prevent a man
or a bank from lending an applicant
ninety dollars and taking his note for
one hundred dollars. There can be
nothing done to prevent a man from
taking a note at the legal rate and
discounting the face Of it. NEEDLE
some legislation can serve only to
lower the dignity Of the banking
business OF to transfer to sharks and
sharpers the responsibility Of furnish
ing short time small loans.
AS for large loans and long time
loans on good security, they r at
present made at lower rates than that
contemplated in the pending Missouri
statute. Such loans would not be
affected. But small, short time loans
would either be refused by banks and
money lenders or else the provisions
OF The law obviated by %discounting
such notes in advance. II the legis.
lators are at all acquainted with the
history Of usury laws during the past
ten centuries, they must know that
this has ever been their effect; and il
they have as much courage as they
ought to have they will refuse to be
influenced by an immemortal prejudice
upon the part Of a large, non-think-
ing class Of their constituents.
II such a law could be effective, il
banks and money lenders should see
fit to respect it, the result would be
the very reverse Of that intended by
its short-sighted friends. Small loans
could not be had. Short time loans
would be impossible. The results
would accrue to the disadvantage OF
the poor, of the small borrower.
Such loans are made only because OF
the higher rate. 1t costs the lender
as much to record a chattel mortgage
for fifty dollars as for ten thousand
dollars. II costs him as much tC
~foreclose upon a poor mans COW as
upon the big feeders herd. Usury
laws fixing the rate of interest below
the current rate, if they were respect
ed, would result in the exclusion Of
small borrowers
Besides, it is wrong. The legiSla-
ture would not think of fixing the
price at which a farmer must hire out
bis horse. If he converts his horse
into cash, why should the legislature
fix the price at which be must hire
out the proceeds? If a farmer sells
his farm, the Legislature would fix
the rate at which he must lend his
money. If he re-invests in a farm.
why should not the legislature fix the
price at which he must rent it?
If the purpose of the Legislators
were to keep the small borrower
from obtaining money, to keep the
poor from running into debt, such
legislation would be no worse thar
futile meddlesomeness. If their pur,
pose were to promote the interest Of
the great trust companies, city banks,
and large loan companies and to drive
small country banks and small private
money lenders out Of business, sucf
legislation would be no better thar
futile license TO wrong an honorable
business. But they have no sucf
motives. They have a hazy notion
that money, being stamped by the
government and necessary to trade
and commerce, belongs in some sense
different from wheat and beef, to thu
whole people; and they think that il
is thus the proper object Of lega
regulation In the hands Of individuals