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DEBATES

OF THE

Convention to Amend the Constitution.

ONE HUNDRED AND TWENTY-SIXTH DAY.

TUESDAY, June 24, 1873.

The Convention met at nine o'clock A. M., Hon. John H. Walker, President pro tem., in the chair.

Prayer by Rev. Jas. W. Curry. The Journal of yesterday's proceedings was read and approved.

LEAVE OF ABSENCE.

Mr. MANTOR asked and obtained leave of absence for Mr. Craig on account of ill health.

CORPORATIONS.

Mr. STANTON. I move that the Convention proceed to the consideration of the article reported from the Committee on Private Corporations, report No. 21.

The motion was agreed to, and the Convention resumed the consideration or second reading of the article on corporations.

The PRESIDENT pro tem. When the Convention adjourned yesterday the question was on the eighth section. It

will be read.

The CLERK read as follows:

SECTION 8. No banking or other corporation shall receive or pay directly or indirectly a greater rate of interest than is allowed by law to individuals.

Mr. FUNCK. I move to strike out all after the word "section" and insert the following:

Mr. FUNCK. Mr. President: I conceive it important that the rate of interest should be fixed by this Convention. An immense number of "shaving shops" are daily springing up over the country, and they are oppressing the business of the country very greatly. If there is any source from which the community at large suffers, it is from this extortion; and if this Convention will adopt some method by which they can get relief, it will be a great blessing. Banks of issue, regularly chartered, in consequence of the pressure which has been brought to bear upon them by these "shaving shops," have entered the money market and all of them have become borrowers; and in consequence of the course which they are pursuing, all the money of the community finds its way into their vaults. There it is held. No business man any longer is able to go to his neighbor and borrow money at six per cent. or five per cent. interest as was customary heretofore; but every man who goes into business without having capital enough of his own to carry it on is obliged to submit to a shave in order to prosecute it.

These banks first make money scarce, and afterwards take advantage of that scarcity to run up the rate of interest, and consequently no new enterprises are springing up in the State; no forges, manufactories or other industries are built and prosecuted, because of the scarcity of money. Real estate is selling below its actual value because there is no

"The legal rate of interest shall be six per cent. per annum; and banks of issue shall not be allowed to pay interest on deposits." The PRESIDENT pro tem. The question desire for it. If a man wants to buy a is on the amendment.

farm and has two-thirds of the money ne

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cessary he cannot buy it, because he does not know where to get the balance of the money; consequently the business community is impoverished through this system; and when we reach the proper stage of our deliberations I shall offer a section to the report now before the Convention, calling upon the Legislature to annul the charters that have heretofore been issued to these "shaving shops," in such manner, however, that no injury to the corporators shall be done, and to prevent the Legislature hereafter from granting like privileges to corporations of that character. I believe they are an unmitigated nuisance, from which the country desires to be delivered. If individuals seek to engage in business of this kind, let them do it on their individual responsibility, because it is a business utterly selfish in its character. The community derives no benefit from it. If it were some manufacturing or productive industry that was to be advanced, by which laborers were to be employed and the community benefited, it would be different, but it is a privilege to individuals only for their exclusive benefit, to the detriment of the community. For this reason I hope the Convention will think favorably of the amendment I have offered and adopt it.

Mr. NILES. Mr. President: I am opposed to the amendment and to the section. I would have had no particular objection to the section if the Convention yesterday had put the word "private" in before the word "corporation;" but if we adopt this section as it is pending to-day, it will be utterly impossible for any municipal corporation in this State to erect any public buildings or to borrow money to build school houses or anything of that kind. Now, sir, if we are to limit any corporations whatever in this State-I am speaking particularly about municipal corporations-if they are to be limited to six per cent., it will either prevent the loaning of a dollar by one of these corporations, or it will succeed, as the delegate from Columbia told us yesterday, in forcing the rate of interest up to a point that will satisfy all the corporate bodies of the State. That is just exactly what this proposition is to result in, to force up the legal rate of interest to a point that will be acceptable to the corporations, or else it will prevent the building of additional improvements in the State from this day henceforth. I, sir, am unwilling to go upon the record as voting for this proposition. It is to tie up all the industries of

this State from this day henceforth. We are putting here into the organic law a proposition that no delegate on this floor can begin to comprehend the final results of. It is in my judgment the worst species of legislation. It has no business in the Constitution; and if we were in the Legislature it would be an article of very exceptional propriety.

For these and for other reasons I hope the Convention will vote down this proposition. And if anything of this nature is needed, let it be done by law that can be repealed if found to work disastrously to the best interests of the people.

Mr. BROOMALL. Mr. President: I am not so much opposed to the amendment as I am opposed to its taking the place of the section, which, as it reads now, is to my mind a most valuable one and one that ought to have a place in the organic law. The gentleman who has just taken his seat says that if this section is passed as it stands, no corporation will be enabled to live in effect and make its improvements. I want him to tell me why. If it is true, it is because at present they are enabled to sweep the money market and no individual is allowed to compete with them. If it is true, it is because the rates of money by the laws of trade are at this time higher than individuals are allowed to give openly; and if he wants this kind of favoritism for the corporations, either public or private, to be continued, I am perfectly willing that he should be allowed to cast his vote for that unrighteous discrimination.

I do not want corporations to be deprived of a fair chance in the money market. What I want is that they should not have all the chance. What I want is that individuals should have a fair chance with them. If you want to make the community rise in a mass and by revolution put down these giant bodies that have so long ruled them with an iron hand, only keep on discriminating in their favor; only continue the process by which I, if I want to borrow, must sneak into the money market at the back door and deal with the first scamp who chooses to ask me an extortionate rate, while the agents of corporations can go in boldly at the front door and take money at the rate which the laws of trade fix,and sneer at me because I cannot compete with them.

Sir, this unfair discrimination has existed too long. In my county such a thing as borrowing upon mortgage by a

CONSTITUTIONAL CONVENTION.

private individual at the rates at which private individuals can deal by law is a thing of the past; it is heard of no longer. I grant that the farmers there get money, some of them must get it or be broken up, but they get it how? They get it at an enormous shave; they get it at twelve per cent. and from that down to eight, and sometimes up to fifteen, while the corporations, with no better security, can get it for seven or eight; and why is this difference? Because the corporations are allowed to go in at the front door and openly bid, while we must sneak in at the back door and deal with those who are dishonest enough to take advantage of our unfortunate situation.

Now, sir, let this section go in; and what will be the result? Not that corporations will be crippled unless, indeed, they are afraid of the competition of individuals, unless, indeed, they want all the capital of the country and are not willing to let individuals come in and get their share. That I do not myself believe. I believe they would be satisfied with their share, though they have an unfair advantage as the matter now stands, because undoubtedly if individuals are allowed to deal openly, they will get no more than their share of the money of the country. But what will happen if we put this in? Simply that the corporations which have, as gentlemen say,.controlled the Legislature, will force the money market open for us as well as for themselves, and the laws of trade will regulate the rates of money; and why not? This section does not say that corporations shall be limited; it only says that corporations shall be limited if individuals are.. This section puts no clog upon the operations of corporations; it only says that individuals shall not be clogged unless corporations are. This section does not forbid corporations from borrowing; it only says that if you shut the money market to me, you shut it to all the world. I demand the right to buy in the markets of the world at such rates as are allowed to others. I deny your right to say that I must not buy flour when flour gets to eight dollars a bariel, but that the rich corporations shall still live. I deny your right to say that I must violate the law if I can get money at more than six per cent., and hence must pay for the risk of that violation of the law in one way or ar other; and yet that the gentleman's favorite corporations, about which he seems to be so particular, should be al

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lowed to get money at the market rates often at half the price which I am compelled to give. I hope the section will pass as

it is.

The

It

Mr. COCHRAN. Mr. President: question now before the Convention is not at all that which has been discussed by the gentleman from Tioga, (Mr. Niles,) as I understand it, and especially not that which has been discussed by the gentleman from Delaware (Mr. Broomall.) is simply whether this amendment shall be substituted for the original section or not. Now, sir, it seems to me that the argument which was well stated by the gentleman from Lebanon (Mr. Funck) ought to prevail. What is the object of this amendment? The object of the amendment is to prevent corporations from forestalling the money market just as you would prevent people from forestalling any other market. They go to work and draw into their vortex the money of the country; and having it there, when individuals come to borrow from them they have to pay exorbitant rates of interest in some form or other by which the provisions of the law as it exists are evaded or violated. Now, the object of this amendment is to leave the corporation and the individual on the same footing at the legal rate of interest and no other, and not to allow the individual borrower to be put at a disadvantage.

Mr. President, this is opposed by the gentleman from Tioga, as I understand, on the ground that it would prevent municipal corporations from obtaining the funds necessary to enable them to make their improvements. Such has not been my experience or observation in the section of the State from which I come. Municipal corporations in our section of the State have always been able to get money at the legal rate of interest. They have got it heretofore; they can get it to-day; and the reason is, because the people have confidence in the security that is offered to them, and they will take the bonds of the county of York, or the obligations of the borough of York, and lend money on them at six per cent. Why, sir, the county of York is indebted in the sum of nearly $300,000, on its own bonds, and on that sum, as I understand, it pays no more than the rate of six per cent. interest, and it always has been able, except in cases when there was suspicion thrown upon it, to obtain money at that rate;

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