Year: 1871

man of the Joint Select Committee to
whom the subject was referred, ad-
| dressed circular to a number Of promi-
nent gentlemen in the various portions
of the State, inquiring rs to the amount
OF money loaned, the rate atwhich i was
loaned, whether borrowers could obtain
a sufficient amount to answer their pur-
poses, and whether money had been
sent out of the State TO be loaned. A
large number of letters were re-
eeived in reply. In summing up the
information thus derived, General
Payne said in his report Com
paratively but little money is now
loaned out in Tennessee at legal rates.
In some portions ofEast and Middle Ten
nessee, and occasionally by a conscien-
tious guardian or private individual in
other parts Of the State, loans may be
effected at the legal rate, but in these in
stances it is generally done more for ac-
commodation to friends of known pane
tuality than for the sake Of gain; and
in such amounts as cannot affect the
truth of the proposition that the rate Of
interest in Tennessee is largely over that
which is established by law, and that the
law fixing that rate for borrowed money


is no longer operative in keeping down
the price OF money, as demanded and
regulated by the laws Of trade and the
wants Of the community, whilst the
same law is all efficient in aggrayating
the mischiefs which it was honestly in
tended to guard against.


1t is impossible TO state accurately the
rate OF discount paid by borrowers for
money. In East Tennesseet the rate OF dis
count cannot he less than fifteen per cent.
per annum.. In Middle and West Tennnes-
see, the average rate Of discount is little
if any less than twenty or twenty-five per
cent. per annum on good paper. An
intelligent commercial man Of Memphis,
who has given much attention to the
subject, estimates the amount of usury
paid by the county of Shelby at not less
than six hundred thousand dollars per
annum, and other communities in these
two divisions Of the State are in but 1T
tie better condition, according to the
amount Of capital used by them. 1t
may be safely stated that in the two last
named divisions Of the State, good notes
having twelve months to run, cannot be
sold on an average at less than twenty
five per cent. discount" What was true
of this State at the time General Payne
submitted this report to the Legislature,
is equally true to-day. Money is worth
more than six per cent. not oulyin Ten
nessee, but in every State in the Union,
aud 1t is about as reasonable. to expect
that men having money tolend will take
six per cent. for its use as that holders OF
wheat will sell for one dollar per bushel


or that O mechanic will work for
less than his services will readily
command Capitalists who are not
disposed TO run the risk Of eyading
our usury laws can make their
money pay more than six per cent. by
investing it in government bonds, which
pay six per cent. in gold, and that is
equal at present rates for gold TO about
seven per cent. in currency. 1t is safe
to estimate that s., 900, 900 TO $40, ,0OO,O 600
were invested in Middle Tennessee in
government bonds before the passage Of
the present interest law, which would
have been loaned to energetic merchants,
manufacturers and business men gener-
ally, and thus have added to the wealth
Of the State. 1t is well known, too, that
hundreds of thousands Of dollars were
sent to other States to be loaned at
better rate Of interest than could be le-
gaIIy obtained here. By far the greater
portion of this money which is locked
up in government bonds or sent out Of
the State to be loaned at higher rate
of interest than was legal here, would be
brought back to Tennessee if our present
interest law shall be continued in force,
to be loaned here and used to assist in
building up the commerce and industries
Of the State. But it will not be so placed
as to be thus used if the law be repealed.