The usury laws.
, in his annual message, recommends the repeal of the laws against usury.
If at any time the wisdom of putting a restriction upon the rate of interest upon money were doubtful, certainly at the present time, it should be generally conceded as entirely impolitic and productive of little else than injury to the interests of commerce and the general business of the country.
Our people are striving to "reconstruct" their trade and rebuild their city; and one of the most serious obstacles in their way is the difficulty of obtaining money for their enterprises.
They have the best securities; but capitalists will not lend money at the legal rate of interest when they can readily get from seven to ten per cent.; and they are unwilling to loan it at higher rates than the legal interest to persons residing here, where heavy penalties are prescribed for exacting more.
This State cannot isolate itself financially and commercially by ignoring the circumstances and the usages which surround it, and which prevail in communities with which its intercourse is constant and rapid.
Her true policy is to recognise and conform to them by her legislation.
She will thus invite capital and untrammeled the energies of her people.
It is idle to say that our citizens cannot pay the same for the use of money that other people pay; and it is equally idle to expect them to get the use of money unless they do. There are those who will predict the utter ruin of all who pay more than that interest which this State has decided by its laws to be proper.
Many of those who entertain these views are free trade
men — men who contend that there should be no restriction upon trade; that men should buy where they can buy cheapest, and sell where they can sell dearest, and that everything except money
is worth what it will bring in the market.
And why except money?
Is not that as much the subject of the laws of supply and demand as anything else?
There is, indeed, nothing more so; nothing whose value is so decidedly and suddenly affected by these causes.
Indeed, so inevitable is this, that the most rigid laws cannot prevent it. With all the vigilance and the rigor of our State in its measures to compel the value of money to remain without alteration,
(for if that be not the object, there is neither wisdom nor justice in usury laws,) it has changed just as rapidly and as frequently as if no law existed.
The effect has been to deprive its citizens of the use of money when it was worth more than six per cent.: or to throw them into the power of a few capitalists, who did not scruple to violate the law, and who, besides the advantage which they had in having the field of shaving to themselves, put on additional charges to indemnify themselves for incurring the perils of the laws against their usury.
The State would be doing a wise thing for its citizens, and for the promotion of its own prosperity, by leaving the transactions in money to determine their own rate of interest.
It would increase the capital employed here, and very much diminish the rate of interest which some people, by stress of circumstances, have to pay, by increasing the competition among capitalists for the purchase of good paper.