Year: 1874

THE REPEAL OF THE USURY LAW.


Any law which attempts to regulate the
rate of the loan of money infringes upon
the personal rights of the citizen, injuri-
ously affects commerce, and directly solic-
it's illegality and fraud.


The Constitution of the United States,
in limiting the powers of the several States,
denies to them the right to enact laws,
"impairing tie obligation of contracts. :"
But does not usury law-indirectly, it is
true, but ubstantially-effect this9 Does
it not deprive the citizen, partially at least,
of his right to bargain as he pleases with
his own property? 1t is true there are
some laws now in force deemed perfectly
just which seem equally to conflict with
the right of making contracts, such, for
example, as the statute of frauds, which
requires certain contracts to be expressed
in writing, signed by the party to be
charged Herewith. But this law operates
upon different principles, and produces
different and far more salutary effects
This law concerns so much the terms of
the contract as the evidence that any con
tract was made at all. 1t affects the courts
more in enabling them to decide upon the
existence of contracts than it protects indi-
vduals from injudicous bargains. In fact,
it never was intended to protect individ
uals from contracts, however injudicious,
so long as they were not induced by fraud
and had some consideration to support
them, but rather to establish a rule of evi-
dence, which the weakness of memory or
the perjery of witnesses could neither gain
say nor destroy. Such laws, therefore, are
sanctioned by the broadest interests of
society and the soundest principles OF gov
ernment. But it is far otherwise with a
usury law. Such law, instead of leaving
the parties free to make their own condi-
tions, concerns itself directly with the
a price upon another mans property, be-
yond which it is criminal to go. But why
should law thus concern itself with the
terms of our contracts? In anything else
than money this interference would be
deemed intolerable. If l enter picture
gallery to make a few selections, have |
not constitutional right to offer as much
as Iplease for them? And has not the ven
dor an equal constitutional right to accept
the price so offered? 1t may be that have
offered twice or thrice the value of the pic
ture, but does this impair the legality of
the contract 1t may be that deem my
self better judge of such matters than
the dealer. l may think that in the bold
expression and perfect shading of the
painting I can detect the touch of a Raph-
ael or Michael Angelo. a thousand fan
ces may distort the real value of the pic
ture to my admiring eyes, and induce the
extravagant price | offer. But as long as
no deception is used by the seller, and
fraud is absent from the contract, the law
wisely judges the contract to be fair one,
and will not make it void for mere made
quacy of consideration. But why is such
contract less criminal or any more to be
enforced than one for the use of money at
any rate of interest the parties may stipu-
late? All the essential elements inhere in
the latter as well as in the former contract,
namely, the want and the assent of the
contracting parties.


But it is said that the public welfare
demands the continuance of the usury
laws. Then why did England, year after
year, exempt from their operation Gel tain
classes of contracts and finally abolish
them entirely? Nothing can be more in
structive than the history of England's
usury laws and the effect which their re-
peal produced upon her business relations.
Usury laws were in force there from the
reign of Queen Anne to that of William
the Fourth. The statute of 18th Anne,
chapter 16, which was the chief usury act
in England, provided that all loans of
money at a higher rate of interest than
five per cent should be void. This law
was rigidly enforced Every effort was
made to evade it's prohibitions; sometimes
10y substituting one contract for another;
sometimes by giving commission or dis
count; sometimes by transfer of stock.
Bat the courts invariably stripped these
contracts of their disguises and whenever
it was found that the real object of the
parties was to give and take more than
five per cent, whatever the form of the
contract might be, it was held null and
void. If ever usury law was well tested
it was this old statute of 12 Anne. But
gradually its seventies were relaxed. The
act of 3 and 1 William t. c. 9S, made the
first innovation, which provided, among
other things, that all bills of exchange and
promissory notes not having more than
three months to run should be exempt


from the usury laws. Here was a relaxa-
ton of those laws which we are told are sc


vital to the welfare of society. But was
society injured or commercial affairs injuri


ously affected? Far otherwise. The
change was so decidedly beneficial that a


subsequent act, that of 1 Victoria, C. So


extended the time of such bills and notes


twelve months, and by a still later statute
that of 2 and 3 Victoria, C. 81, it was en-


acted that No bill or note not having


more than twelve months to run, nor any
! contract for the loan or forbearance of no


mole thon e10 sterling, shall be void by


reason of the usury laws; provided thai


the act shall not extend to the loan or for
| bearance of money on the security of an,