Year: 1873

defenders think to protect the property OF IN
fants and those who are dependent. In this
respect it is like the law which requires the
wife's assent to real estate conveyances.


In one case only do the opponents of usury
laws admit their possible need the case
where no rate has been agreed upon between
borrower and lender. They denOunce the law
as unjust to the poor by preventing their bor-
rowing except of the pawnbroker, and as alb
soute cruelty to men who would willingly pay
high rates to save their financial honor; yet
almost simultaneously they say that the law is
really imperative. 1t must be conceded that
the mercantile community in general recognize
no crime in breaking the law, but treat
with scorn and permanent discredit the
man who takes advantage OF it. We have
seen short obligations of very wealthy
merchant banded about without finding
purchaser, though offered with heavy discount
when money was cheap, because he had once,
ten years before, pleaded usury. STILL strictly
speaking, the fact that law is disregarded
is not a reason for its repeal. A stronger ar
gument is found in the Generalization worked
to a community by habits OF evadlng law.
Roundabout methods also involve extra ex-
pense to the borrower, while the lender re-
quires an additional equivalent for his added
risk of the law being pleaded against him.


The methods of evasion usually prescribe an
assumed purchase and sale. The money


lenders in England used to compel spend


thrifts waiting their inheritance, to purchase
at high prices such unstable things as CART


loads of waters, which only the money lenders


would repurchase even at great reduction.


One heir, more extravagant than his fellows,
burned his waters, thus most unexpectedly IN
terfering with the business OF the loan dealer.
TO obtain a loan at usurious rates, merchants
frequently sell goods at one price and buy
them back at another. a similar process is
sometimes adopted in respect to land, and III
| Brooklyn, about four years ago, there was an
instance where man lost real estate valued


at 100000, by employing this method of OBJ


tanning loan upon it of $4,000 at 25 per
| cent per annum. But of course the mlsfor-
tunes of those who transgress a law cannot
| be urged as an argument against it. The eX-
pense of obtaining money at usurious rates Is
increased by the usury law through the en-
ploymert of middlemen who hold the secrets


of both parties to an illegal transaction. In
the House of Commons Report in 18lS ii is
mentioned that generally the extra price OF


money is the solicitors charge. In this city
there are second mortgages renewed year by
year between the same parties, and at each


renewal the title il reeXamined for lawyers
fee. the hulk of which finds its way to the


pocket of the usurer.


No more capital will be created by repeating
the usury laws; but their opponents say that
capital is as abundant as fish in the sea, and


tho repeal would bring out more of it that is
Ioanable-would catch more fish. More capi-


tai might be drawn hither from abroad by re-


peal, but this is not certain, for John Bull


wants better security rather than higher rates


Some loanable capital now sent for invest


ment to Western States might be kept here, if
there were no limit to usury. 1t is not prob


able that, as John Stuart Mill declares capital


unable to obtain remunerative rates will not


be invested: though much that has now gone
into Government securities might have been
| kept on land if that could have paid higher


rates. But the needs of the borrowers at seven


per cent are to be considered. If the discount


banks in this State could charge more than


seven per cent, they doubtless would, in great


numbers of instances. If the holders of seven
per cent mortgages could get higher rates, they
would be very likely to demand them. The farm


ing interest cannot in this State afford to pay


more than seven per cent for the use OF money,
| and it is for the benefit of the community that


the present usual method of land purchase
with little cash, the mortgage to be worked
| off slowly, should be encouraged. Besides, the
State is full of expired mortgages, left run
| ming: if high rates OF foreclosure were de-


manded on these, great hardship must ensue.
But so far as savings banks are the lenders,
| higher rates from mortgages would increase
| the interest paid to depOsitors-principally of
| the working classes.


Perhaps Commission to examine results of
repeal Of usury laws elsewhere, might bring
| together basis for legislation. 1t is not to
| be denied that the needs of new enterprises
| for money at untrammeled rates deserve con-
| sideraton. Massachusetts, and Connecticut re-


suits of repeal of usury laws should be ascer-
| tained it is said that already much suffering
has followed such legislation in the latter
| State but in both those States O change in


usury laws was precipitated by the higher rate


allowed in the neighboring State of New


York, and since the repeal no Eastern capi-


tai comes here for investment. The reasons
why Indiana and Wisconsin, after repeal, re-


enacted usury laws, should be investigated.
The effects or the recent repeal III OnlO


can scarcely yet be known. 1t is said


that great numbers of small holdings in


Canada have been foreclosed and the


farmers sold out, by the workings of repeal of


usury laws-which may or may not be true.


From Europe, where the needs of enterprise


are immeasurably less and the amount of


loanable capital incomparably greater, we


have not much to learn on the subject ex-


cept perhaps, to copy the English method of


making haste slowly and abolishing the usury