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duties.' But even yet, as among the Cherokees, a mode of conveyance from one to another, the remembrance of which is more capable of permanent preservation than livery or mutual entries, has not been established. This contrivance for the security of property seems to be tardy of introduction.
We will not continue this investigation, which we fear has long since grown tiresome, - for it is absurd to say that there is any state of man in which his right to a share of the common property of the race, is given him by any act of his own. If when a spot is occupied by any individual, his authority is acknowledged to exclude, for the time, all others from it, he does not gain that authority by the mere act of occupancy. There must be some right, of which that act is only the exercise. There must be some rule which gives to that act or exercise, such efficacy.
That rule, as it respects the temporary use of the soil, is the law of nature ; and, as it respects the right to permanent exclusive property in the substance of the soil, is the law of the land.
ART. III._USURY LAWS.
Half our laws exist only because they have never been examined. Established as they were in days of ignorance and superstition, they derive their support from prescription and ancient usage rather than from intrinsic worth. The natural and common effects of ignorant and unenlightened legislation, are the misplacing punishments and rewards, and the confounding of all moral distinctions; treating as criminal what is beneficial, and as praiseworthy what is injurious. Such laws exist only because they have heretofore existed, not because they ought to continue. But it is not enough that a law is perceived to be bad and founded in error or absurdity — that it is productive of evil pure and uncompensated, — still the prejudices of the community must be
The progress of truth is slow, of error rapid and in all directions. Considering the usury laws as one of that class, we shall endeavor to call the attention of the public to the sub
ject; for however tedious may be the examination of error, it is necessary to its refutation.
By the term usury,' in its original sense, was understood the taking of any sum of money whatever for the use and forbearance of the principal, without any reference to the magnitude of the sum taken. As such it was considered as an offence deserving the full weight of temporal and spiritual punishment. Popular prejudice transferring to the usurer the blame for which he was not responsible, forgetful that it was his own wants which compelled the borrower to apply for a loan, and not the oppression of the usurer — mistaking the origin of the suffering - viewed the lender as the cause of the necessities he in fact relieved, and which, if he did not relieve, he at any rate did what the borrower wished him to do for that purpose.
For ages, the sage remark of Aristotle, that money was naturally barren, and that to make it breed money was a perversion of the ends of its institution, afforded an argument amply sufficient to satisfy the philosopher of the impropriety of usury. To no one did it seem to occur that the remark was equally conclusive to show that rent should not be paid for houses, inasmuch as they are equally affected with a natural and incurable barrenness — and it might equally be considered a perversion of the ends of their institution, that they should do a thing so monstrous as to breed money.
The antipathies of the religious portion of the Christian community, were excited by the prohibitions of the Hebrew legislator, forgetting that in this code usury was prohibited only among the Jews, and that strangers, to any extent, might be made its prey. To those who have laid so much stress on the prohibitions of Moses, it might not be amiss to remark that the inspiration of Moses no more extends to political economy than to natural philosophy; and that the same course of reasoning that has satisfied the Christian world that his astronomical theories were only in accordance with the vulgar notions of that era, might prove no less conclusively that his notions on usury were the result of a similar conformity to popular prejudice. However that
may be, it is by no means to be admitted that a legislation which might have been proper and judicious for that barbarous and unique people, would be expedient for a people differently situated, and infinitely their superior in all the elements of national respectability. While, then, the wise," the learned, and the pious were all united in pouring out denunciations against usury, it was naturally to be expected that the devout believer in the wild vagaries of witchcraft, and the superstitious and unlettered barbarian, fearful of his own shadow, should follow on in the path in which his intellectual superiors led the way.
1 • Usury is a concessum propter duritiem cordis.' so hard of heart as they will not lend freely. Bacon's Essays, No. 42.
« Since men are i Cum ille, qui quæsiêrat, dixisset, quid fænerari ? Tum Cato, quid hominem ( inquit) occidere ? Cic. de officiis. Lib 2, s. xxv.
But in process of time the meaning of the word changed, and the very offence, which once was looked on as so deadly, being christened anew, under the less obnoxious name of interest, lost all its evil qualities. The use of the term, with a change of signification, still continued. By the law, interest to a certain extent was allowed, and the excess above the sum so permitted to be taken, was termed usury; and the same idle and senseless clamor which before had been raised against the individual who received any sum for the use of his money, was transferred to him who received more than the legal rate; and branded with the odious name of an usurer, he was equally exposed to the public odium.
The laws on the subject vary, imposing different limitations on the rate, and different penalties for the violation of the law, in some instances rendering the contract void, in others, only pro tanto. Whatever may be the law, and embracing whatever of these varieties it may, it is objectionable, but only in a degree varying with the law on the subject. In some states, in addition to the annulment of the contract, the lender, besides the loss of his money, is exposed to a suit for a penalty equal in amount to the sum loaned.
It should be remembered that formerly all interest was considered as unjust and wicked ; but the law which authorizes any interest, assumes the propriety of some compensation to the lender for the use of his money. The propriety of some rate of interest, therefore, in discussing the existing laws, is a question not to be touched. Assuming, then, with the legislatures, that
2 Minus solvit, qui tardius solvit. Plus est statim dare, minus est post tempus dare.--Cooper Institutes, 592 notes. In these few words is a brief and conclusive defence of usury, that is, of interest for the loan of money.
some rate is just and proper, we shall proceed to the inquiry whether legislation on the subject is either necessary or expedi
whether in any event it is not more likely to be attended with evil than with beneficial results. In doing this we shall first enter into a brief analysis of those circumstances which, united, make up the fair rate of interest among any people at any given period of time.
Interest, in the strict sense of the term, is the compensation allowed by the borrower to the lender for the use of his capital during the period of its loan. As however there are other circumstances beside the mere value of the loan, which enter into the composition of what we call interest, they will all be considered in discussing the question,-What constitutes the rate of interest?
1. Among the numerous causes tending to vary the rate of interest, the most prominent is the amount of disposable capital in the market, seeking investment, as compared with the demand for that capital. It is obvious, that in a year of plenty, when a large supply of corn is raised, the demand remaining unchanged, the price will be less than in years of scarceness. So, too, when there is a large amount of disposable capital, of money if
you will — that is, when there are many who wish to lend and few to borrow - the mutual competition of lenders will lower the rate of interest. On the other hand, when there is little money or disposable capital in the market, and those who possess it are fond of retaining it, and the number of borrowers is large, it is clear the rate will rise. The demand will obviously be in proportion to the profits to be derived from the use of capital, so that interest may rise equally from the scarcity of capital or from a demand originating in its requisition for new or multiplied uses. The relative proportion of supply and demand will naturally vary the price of interest, precisely as rent would vary in a town under similar variations in the proportion between the numbers of those who respectively wished to become lessors or lessees. This circumstance will produce a variation in different countries and in different parts of the same country. In an old country, rich by the accumulated wealth of centuries, capital will always be loaned on better terms than in a new country, where accumulation has but recently commenced, and where few individuals have more than they want for
VOL. VI.-NO. XII.
their immediate use. Thus in London the rate of interest would be less than in Portland, and in Portland less than in the poor and sparsely settled parts of Penobscot or Washington counties, in Maine.
2. The character of the borrower enters largely into the calculation. Thus, an industrious, frugal, and enterprising individual, though poor, will obtain money on better terms than if, with the same property, he were idle, dissipated, and extravagant. So, too, one who has been uniformly punctual in his engagements will be preferred to one who has repeatedly failed in the performance of his contracts.
3. The ability to repay is another circumstance. The chance of eventual repayment varies according to the pecuniary situation of the borrower. The borrower should insure against this risk — and the premium for this insurance will vary according to the circumstances and standing of the borrower. A poor man should of right pay a higher premium than a rich man — if money be lent to two individuals, one of doubtful and the other of unquestionable solvency, the rate should accordingly vary. The lender parts with values equal to himself, and should in return receive equal values, he should receive enough from the poor man to indemnify him for the greater risk run; so much, that if both notes were sold in the market, they would sell for equal prices. This is no more than strict justice to the lender, and the borrower has no reason to complain, as his notes, not being equally valuable, should be larger in amount, precisely as if debts of equal amount were to be paid in coin of different qualities, the individual whose coin was the poorest could not rightfully complain because a greater quantity was required to pay his debt. But it is commonly remarked in answer to this, that if the money be actually repaid, one individual should not pay more than another. This extra sum is the premium for the RISK RUN, and it is just as absurd to demand a repayment or deduction of interest in this case, as it would be for an individual who had insured his house for a year to demand a repayment of the premium because it was not burnt. In either case the money is justly due for the risk run. This circumstance then, the different degrees of solvency of the borrower, is one reason why some can obtain money on better terms than others. Thus the City of Boston or the Govern