New-York tribune., 1921-06-19
By Lawson urdy

To attack All old established custom,
especially one having its root in an
ostensible desire to protect the poor
from the consequences of their pow
erty, is an act not unlikely to give rise
to misunderstanding and perhaps to
imputation of sinister motives. Yet
when one sees the supposed benefi-
Charles of restrictive financial legisla-
tion become its unconscious victims,
when the supposed fabric of shelter
becomes an instrument which impedes
their progress. it is hard to refrain
from pointing out to the sufferers how
their hardships are intensified by the
very custom which they have been
taught to regard as their protector.
Over forty years ago told an old
man that had talked with man two
miles away through the medium of
wire. He was surprised and incredu-
lous because he had not kept up with
the advances in physics. SO the testi-
mony concerning borrowing and lend
ing on bond and mortgage, developed
by the Lockwood committee, surprised
people who knew nothing about cur
rent practices. To those who did
know, the story was commonplace.
Except for some new devices of
evasion, conditions always have been
similar to the conditions of to- day
Any one who knows human nature and
what it will do in the face of such
iillogical, legal obstacles as the usury
law could have predicted the outcome
with entire confidence. 1t always will
happen.
Measure Long Out of Date
The usury law is an achronomsm.
1t grew out of very natural desire
to mitigate the hard lot of men who
had to borrow because they were poor
and in danger of starvation.
TIC charge a needy brother any in
terest upon money lent to supply food,
clothing or shelter for himself or his
family was repugnant to Jew and
Christian alike. But this creditable at
titude Is not involved at all in the
lending Of money for purely CONNER
cial transactions in which normally n
profit is earned. The usury law always
has borne and always must bear hardly
on the man with poor security. When
money was plentiful for ordinary mort
gage loans at per cent, some careful
people were willing to lend money for
per cent on superior security; others,
willing to take a risk, lent money at
10 per cent when the security was poor.
In 1850 to borrow money was made
easier for corporations than for natu-
raj persons. In effect, the usury law
was repealed when q corporation was
the borrower. Lenders accommodated
natural persons at their peril if they
charged more than 6 per cent. The in
evitable consequence is that the person
ho crht OH Ap,,
loan at 9 per cent, if such loan were
less, because he must resort to those
willing to break the law of the state
and take the chance of losing their
principal. Of course, they cover up
the transaction as best they may by
one device or another in the form Of
bonus or commission or exchange of
property or otherwise.
Should we not accord to the natural
person the same privilege accorded u
a corporation to borrow money upon
such terms as he can get in a free
market, paying rate proportionate to
the security he offers?
What Law Has Done
The existence of the usury law Great
ed prejudice against an interest rate
in excess of per cent. 1t has been an
incentive to falsify public records and
make mortgages that do not tell the
truth. BY its recording act the state
protects persons who deal in real
estate, who own real estate or lend
money on real estate as security. The
state should require that every instru-
ment it records shall tell the truth
publicity as to their transactions.
When nine-tenths of the conveyances
recite untrue considerations and
large percentage of mortgages do like
wise no wonder men hesitate to put
truthful instruments on record. If all
were compelled to do so transactions
are so numerous that no one would
feel subjected to undue publicity.
Free Money in Bay State
A truthful record of conveyances
would check many frauds and be of
value in many ways. A true record of
would show from day to day
the prevailing rate of interest on mort
cages offering varying degrees of Sc
curity.
Incidentally, there is no usury law in
Massachusetts, and the record shows
rates of interest running up to 12 per
cent OF more Does any one suppose
borrowers really pay more in Massa-
chusatts than in New York?
1t is no sin, nor is it foolish for
borrower to pay 20 per cent for the
use of money if he has a reasonable
chance of making 40 per cent. There
are cases where it may be not only no
sin, but wise and prduent to pay 20
per cent for loan, small in proportion
to the total value of the property. to
save an enterprise from wreck; neither
is it sin for some man knowing the
facts to take the risk of lending that
sum of money at 20 per cent. He is
entitled to know all the facts; he is 81
special partner in the enterprise; he