Year: 1875

/ ltAAtI ntRoEA


To the Union and American:


The majority report Of the judiciary


Committee, fayOring repeal Of the Con


ventiOnal Interest law, is a document too


extraordinary and amusing % be allowed


10 sink into Unmerited Obscurity, f1r want
/ of q friendly notice. As the matter is one


Of great public importance, perhaps you


will yield enough space for such brief re-
/ view as may bring out a few Of the merits
Of this remarkable paper.


The argument opens thus:


ut is believed to be bad policy to ALLOW a
| higher rate Of interest than other forms Of
| capital viii command under existing cir
! cumstances. Ten per cent. is more than
can probably be realized on an Investment
in land. II ten per cent. can be realized
for the loan Of money, of course such


money will seek the most profit


able Investment. It is believed that


if the price of money is reduced below, or


to point equal to, the profits and land,


then money will be as apt to be vested in


lands as in loans. If this is true, then, as


the price Of money increases, the price of


lands decreases, and 2 cOnUerSO. If money


vested in lands yields as much or more


than tn interest on loans, there will be


more purchasers, and the greater the num-


Der Of buyers the greater will be the price


of lands"


Suppose we grant that 'Fen per cent. is


more than can probably be realized from an


investment in land" at present prices, and


that an arbitrary reduction in the interest


allowed On money loaned, insteaS Of driving
capital ont Of this State or into stocks and


bonds especially United States bonds
which pay no taxes towards the support Of
the State Government and for that reason
are better than any ordinary six per cent.
investment) will have the effect Of raising
the prices OF lands. 1t is not pretended
that it will raise the prices Of agricultural
products, lower the rates Of wages or de-
crease the cost Of living. How does It
benefit the farmer? It may help the man
who has been thinking of selling out and
going to Texas (where By the bye land is
cheaper and money dearer than here) to
make up his mind and leave.
But l am taxed now at the
rate Of so per acre on my land. Suppose
by protective legislation you drtiticidliy IN
fate its value to $50 per acre. In the first
place, you have doubled my taxes. Then
(and here comes in the jOke), you have
doubled the amount Of Hy iHCestmeRt IN
land, bJt not increased the net returns
from it. Therefore, instead of getting, as
you suppose me TO do, net profit Of six
per cent. on $50, 1 have only three per cent.
on $50, whereas, you have fixed the legal
interest on money at six per cent. Cen
tlemen, if YOU could raise the value Of
lands by any such process (Which it seems
to me absurd to expect) You would damage
the farmers ofthe State almost as much as
if you had directly adopted the notable
scheme Of taking all taxes off personally
and fixing them on land. You would en-
courage emigration and discourage immi-
grafton. You would impose penalties for
residing in the State, aud offer a premium
for leaving il. let more, you would force
that large class Of mOneyed men who are
unwilling 10 lend al illegal rates to with
perhaps from the State, leaving the field
open 10 the note shavers, who care for The
illegality only as it diIninishes competition
and increases the profits they can charge in
consequence. II is within the personal
knowledge Of the writer that one man, who
had $4,000 loaned in St. Louis at ten per
cent, drew it to Tennessee and invested It
here as soon as the temper cent. law passed.
If that law is repealed, it Will probably re-
turn to s.. Louis rather than be invested IN
land here.


The next paragraph Of the report means,
if it means anything TO throw open the
doors TO absolutely unlimited imitation, by
allowing anybody who chooses TO issue
bank notes o any amount. It compares
bank notes TO wheat, rice and corn. The
value Of these latter depends on the fact
that labor is required 20 produce them.
The limit 10 their production is the amount
of labor available for that puTPOse-their
value is fixed with some relation to the
cost OF production. 4 bank note costs g
few cents TO print and is not intrinsically
worth more than the paper IL IS printed on.
Unless it represents an actual salue PGyQ-
Die IN coin, it represents nothing and
is worth nothing. Garry out the pro-
gramme laid down above and you viii
soon have bank notes down to their in
trinsic value, and the country absolutely
without a currency by reason Of their co.
lapse. If the Legislature wants to help
the farmers without injuriag any class in
the State, let it fix the maximum rate Of
interest on land notes Gt siI per cent,
leaving the interest on borrowed money
unchanged. As a general rule, nobody can
afford TO pay over six per cent on notes for
land, wheras every man knows that there
have been occasions in his life when he
would have made money by borrowing at
ter. per cent, or even a higher rate. ID.