Year: 1875

Y @s9x384O8 ~
New York yossnal ~ Co. -
cent comnents on the Usury law d
New York State, says that methods oi
business. which are mot only convenient,
but often absolutely necessary TO the
conduct of commercial affairs, are pro-
hibited by the laws of that State.
And adds that If laws that are re-
pugnant to reason and common sense
were strictly enforced, they would be
intolerable and would soon be repealed.
The Usury laws are never enforced ex-
cept as . cover to fraud or dishonesty.
The pressure which leads to this gen.
eral disrespect Of the Usury statute
does not come from the greed Of capi-
talists. If no man could borrow . dol
lar of capital except at the limited rate
OF interest, some of the most useful en-
terprises in the State would come to
an end, and many business adventures
which contribute largely to the general
prosperity would be altogether suspen-
ded.


BY far the largest portion of the us
urious operations, notwithstanding the
devices and covers which are designed
to shield the lenders, are really but an
evasion Of the Law. The most inge-
nious device is that under which men,
bers of the Stock Board avail themselves
of the difference between regular and
cash sales to obtain larger price for
one days use of the money.


The most common method n the
sale, through note broker, of promis-
sorry notes at . greater discount than
seven per cent. per annum. But this
paper is voidable upon the plea of usu-
ry, and the capitalists who buy it SUBJ
ject themselves to criminal prosecution.
A very large proportion of the CONNER
cial paper daily negotiated in New York
is of this character, and If the odious
plea was made, could not be legally col
lected. Another device 10 to give the
transaction the character of a sale of
securities, with a contat to repur-
Chase. instead of q ic. N money!
Ihis, hoxJ.Sfs = e. Lnswz-sS -
serve as q protection, ankd ~ Nv HIS
already decided that such an arrange
ment is usurious.


A method very much in vogue few
years ago, and still in common use, is
known as the voluntary gift" instead
of the exaction of interest. The lender
makes a specific contract to lend his
money at seven per cent, and when it
is returned takes no more than this
rate for its use. After a while the bor-
rover makes him a present, or address
ses him letter of acknowledgment,
telling him (what is no doubt really
trIe) that the use of the money has
been worth far more than the legal rate,
and he eucloses an additional sum in
testimony Of this fact, yet this evasion
will not stand a moments test if q Sc
ries of such transactions are brought
into court. The real understanding be-
tween the parties is the basis Of the
contract.


The acceptance Of a commission in
addition to the interest for an advance
upon merchandise was for q time be-
lieved to be legitimate transaction to
which the Usury law will not apply
1t is certainly shame that any statute
will interfere with an equitable arrange
ment at once so convenient to business
men with moderate means and SO use
full to the whole community. But the
principle is inexorable. If the advance
is a mere loan, and the property, or the
warehouse receipt which represents it.
is left only as security for the return oi
the money, any charge of a commission
or of any sum whatever above the legal
rate for the use Of the money leaned
vitiates the entire contract and subjects
the lender to the legal penalty.