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DEBATES OF THE

and so has the borough of York on the few occassions when it has had to borrow money. I do not believe that it is necessary for any well managed municipal corporation which has the confidence of the public to pay one cent more than six per cent. interest, and I believe I am sustained by the experience of the section of country in which I live.

But, sir, we understand the purpose for which this section was framed, which was well pointed out yesterday by the gentleman from Columbia. It is an attempt to reach indirectly that which this Convention has refused to allow to be done directly; and that is to put power in the hands of those who wish to raise the rate of interest in this State which will enable them to work with force upon the Legislature. The idea is to compel the Legislature to do that which they have never been able to make them do yet: and that is to increase the legal rate of interest, and thus, by bringing the force and power and influence of all the great corporations in this State to bear upon the Legislature, to compel them to raise the rate of interest. Now, that is the open and undisguised purpose, and it has been avowed here, I may say, by the gentleman from Delaware this morning. What, farmers pay thirteen per cent.! Farmers pay twelve per cent.! Why, sir, no man who pays twelve per cent. as a farmer can live under it; he must go down inevitably; and my observation has been that I have never known farmers who were compelled to pay these rates of interest who were able to survive. They went into the hands of the sheriff or their property into the hands of assignees, or they go now into the court of bankruptcy whenever they are compelled to pay these rates. A farmer had better at once sell his farm and give up before he borrows money at such rates of interest. I protest here on behalf of that interest, an interest which is the foundation of afl the wealth and all the prosperity of this Commonwealth, and not great corporations or any other class of the community. I protest on behalf of the agricultural interest of this State against any provision which will have the effect, directly or indirectly, of compelling them to submit to the exactions of money-dealers at the rates which they choose to place on the money which they lend,

Mr. DARLINGTON. Mr. President: I am opposed to the amendment of the gentleman froin Lebanon and I am op

posed to the proposition of the committee, and I think this Convention would do wisely to take the suggestion of the chairman of the committee and vote the section down. I think it would be unwise for us to make any provision in the Constitution whatever on the subject of interest unless we are prepared to say that the Legislature shall not at any time fix any rate of interest. This is a restraining provision. The Legislature have entire power over the subject and will act exactly as the people desire them to act from time to time unless we think it wise to take that power away. I do not; but that is the only thing we ought to say if we say anything.

Now, what would be the effect of fixing in the Constitution either the rate of six or seven per cent.? Remember that we are making an instrument for a long series of years. Such a provision might not be acceptable to the people for a year and would require to be changed. The rate of interest for money would change probably with every varying year. It might be too great now; it might be too little next year; and therefore it is unwise to fix it in the Constitution.

Now, as I am not in favor of saying that the Legislature shall never fix the rate of interest for the non-payment of money, and because I think it is wise there should be a limit fixed when a debt is unpaid what the damages shall be for non-payment, I believe such a provision is wise and should be retained. It is, therefore, that I am opposed to denying the Legislature the power to fix the rate of interest. As they have fixed it wisely and as it does suit our circumstances, I shall be entirely opposed to saying that they shall never fix any rate, and thus leave that open. I think, therefore, the best thing we can do is to negative the proposition of my friend from Lebanon and then negative the report of the committee itself.

Mr. CAREY. Mr. President: In the interest of labor, whether it is agricultural, manufacturing, or of any other description, I beg of the Convention to vote this down. It is the very worst sort of legislation. We seem to be going around in every direction to find opponents to make opposition to the Constitution, and if you go on piling them up one after anotheryou did a great deal in that direction yesterday-we may just as well adjourn. It is utterly impossible that our Constitution shall ever be adopted unless we put

an end to this system of legislation. We were appointed here to revise a Constitution and not to make laws. We have been making laws all the time, and we are now making worse laws than we have made yet.

I beg and pray that this whole question of money may be left out of the Constitution. It belongs to the Legislature. For years and years this has been pushed and urged on the Legislature, by the money-lenders, the men that want nine, ten, fifteen and twenty per cent. They have been begging the Legislature; but the Legislature has steadfastly refused to give them the power they want. They now tell us the reason is that the people are so stupid that they cannot understand it. Sir, the people understand their true interests. The people do not believe in paying ten per cent. or twenty per cent. The people do not believe in building up the fortunes of city millionaires, or country millionaires either.

Now, we have in this city forty thousand houses of working men, that are under mortgage. Are you going to enlist all those poeple against your Constitution? Are you going to compel every man who thinks as I do, that this is an abomination, to go into the field against you

when the Constitution is submitted? I say distinctly, that you may make a Constitution as good as you can, you may make it as perfect in all other respects as you can, and if you put in these provisions that are asked for, they will so far counterbalance all the good there is in it that I shall feel it my duty to advise everybody by speaking and by writing to oppose the Constitution, and I will do it. I know one thing is certain, that the working men of the State will believe in me. For one vote that the gentlemen who urge this can command in this city on this subject, I will engage to furnish a thousand.

Now, are we to go around and beg and pray people to oppose the Constitution? Are we to seek everywhere opponents for the Constitution? Would it not be a great mistake? Remember, I am not asking you to omit anything that ought to be put in the Constitution. 1 am asking you not to legislate on this, the most important question that can come before us. Let us make a Constitution and let us quit the idea of making laws. Then we shall have some chance of having the Constitution adopted.

Mr. MACCONNELL. I merely rise to say that I desire to call the attention of the Convention to the tenth section of of the article on legislation, which has been already adopted. It reads thus: "The Legislature shall not pass any local or special law fixing the rate of interest." It seems to me that that covers the whole ground. If you will make a law authorizing corporations to pay more or receive more interest than individuals, certainly that will be a special law, and it is prohibited by the provision that I have read.

Mr. WOODWARD. Mr. President: I do not intend to discuss this subject; I merely rise to say that I think this amendment to the section and the section ought both to be voted down.

Mr. CAREY. Yes; let us vote them down.

Mr. WOODWARD. The reason presented to my mind why this should be done, is not exactly the reason that my venerable friend from the city (Mr. Carey) has put between the relations of borrower and forward. All this legislation to interfere lender is injudicious. We must leave our fellow-citizens free to make their own bargains. I suppose that a constitutional provision which would regulate the manner in which these young men shall court and marry their wives would be judicious; but if that were proposed they would answer that they preferred to attend to that business in their own way. And we should leave this matter of borrowing and lending money to be regulated by the parties who sustain those relations. If one man has money to lend and

another wants to borrow, let them agree upon the terms on which they shall borrow and lend. I object to a constitutional provision on the subject.

In justice to the Committee on Private Corporations, let me say that they have reported no such section. It has been interpolated upon us. 1 am going to vote against it, and I hope the House will vote it down.

The PRESIDENT pro tem. The question is on the amendment.

The amendment was rejected.

Mr. LEAB. I propose to say a word on the section. There seems to be an intention on the part of the chairman of the Committee on Private Corporations (Mr. Woodward) to inform the Convention that this section crept into this article without the aid of that committee, and he says that it was interpolated. I believe that it ought to pass, if not in its present,

in some other form. Whatever effect it may have upon the Legislature with regard to this question of interest we may not be able to foresee, nor do I consider it important; but I consider it important for the financial and the business interests of Pennsylvania that there should be some regular established rate of interest by law in the State, and that that rate of interest should be left so that we can enforce it. For that reason it is that I think we should not have these shaving shops that have been sprinkled all over our State, paying interest for deposits and shaving the people at enormous rates of interest, when the regular monied institutions, the national banks of the State, are prohibited by an act of Congress from charging more than six per cent. for the money which they loan.

Why should there be this great difference? Why should these private banks be allowed to charge ten or twelve or fifteen per cent. for their money, which enables them to buy up all the deposits at the legal rate of interest, five or six per cent., which the national banks ought to have for nothing, in order that they may accommodate the whole business community with money at the regular legal rate of interest in this Commonwealth? I am connected myself with an institution of that kind, and in discounts in one year in a little bank in our county we have reached the sum of two millions of dollars, on notes that did not average three hundred dollars each, and all those discounts went to the farmers, mechanics and laboring men to pay their hands, and purchase stock and materials, at the season of the year when their means are small, because they are receiving no return from their crops, and in their regular course of business. Now, this money was diffused throughout a whole community for the regular business purposes of that community at six per cent. But there may be a bank upon the opposite side of the street, that pays six per cent. for its deposits, and loans its money, not to all the people of the community, but to a few favorites, or lame ducks who are engaged in some irregular pursuit or speculative employment, by which they can pay a rate of interest which would be ruinous to a regular and legitimate business, and thus enable the shaving banks to buy up all the deposits at interest, which the national banks ought to have for nothing in order to furnish the business community with the necessary means

to carry on the legitimate trade and traffic of the people.

We look to the national currency as the best currency we have. Our national banks are prohibited from loaning more than ten per cent of their respective capital to any one individual. These private banks may loan any sum they please to a single party. I was connected, in a professional way, not long since, in collecting money against an estate where it appeared that a private bank in a neighboring county had loaned one man $80,000, and that at enormous rates of interest. say this is all wrong. It is wrong to allow these private banks to do that, and it is proper that we should put into our Constitution some rate of interest which will regulate these transactions between borrowers and lenders. It ought to be a fair rate. I do not care whether it is six per cent., or seven, or eight, or five; but there ought to be a fair and equal rate for every man as well as every corporation, for every firm as well as every company; and I also do not see how there can be any objection to prohibiting these banks from receiving, directly or indirectly, a rate of interest which allows them to buy up at a legal rate all the money of the community, and thus keep it out of the business channels of the State.

I want the section to go further. I want to say that Jay Cooke & Co., Drexel & Co., DeHaven & Bro. and E. W. Clark & Co., and all the other private banks shall not go into the market with their money and say, "here, you can have money by discounting this paper at ten per cent.' You can go to Third street to-day and buy the notes of corporations or of individuals, or of private banks. You can buy the paper, of a man who has recently been quoted in the public papers of the State as being worth twenty millions of dollars. I allude to Ario Pardee. You can buy his paper, guaranteed by the Lehigh Valley railroad company, at a discount of ten per cent. You can buy Asa Packer's apper guaranteed by the Lehigh Valley railroad company, at a discount of ten per cent. Yet gentlemen say that the legal rate of interest in Pennsylvania is six per cent. So it is, but if you have a legal rate of interest, that is not or cannot be enforced, it is no legal rate at all, and there is no legal rate of interest when you can buy all these men's paper at this large discount. The national banks cannot do that, and they are the banks on which you rely, the banks that have not

only to deposit dollar for dollar with the government of the United States, the bonds of that government as security for their notes, but can then only issue notes to the extent of ninety per cent. upon those deposits, and hence their paper is as good in California as it is in Philadelphia. Even if one of these banks, by some mismanagement, or some dishonest conduct upon the part of its officers, should fail, the notes of that national bank will still sell in the market at a premium after it has failed. Yet you cripple these institutions for the purpose of building up speculative interests, for the purpose of building up private corporations, for the purpose of building up those men and firms who are amassing enormous fortunes, who should be looked to as a portion of the oppressive power upon the poor in this Commonwealth, for we should not look to corporations alone.

I am opposed to them all, all of them having a different rate of interest in this State from that which the law allows. I say that we should confine them all, and let us put in a prohibition that no banking company and no corporation shall receive more interest than the legal rate fixed by the law of the State; and, if you please, I am willing to fix it in the Constitution if they are afraid that it will drive the Legislature to fixing a higher rate of interest. Why, we have to day $50,000,000 and probably $100,000,000 invested by the trust companies of Philadelphia in Missouri and Illinois, where they have their agents regularly appointed to invest their money and collect their interest, and that money goes out of the material interests and the enterprises of Pennsylvania to where they can get a higher rate of interest, and that is because we are looking to that narrow and contracted policy, as I think, that we prohibit parties from making a bargain for the rate of money they shall have directly instead of indirectly.

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Everything else has raised in price. say that I am in favor of raising the rate of interest, and if we have a rate of interest let us have it universal and not partial. I am in favor of raising the rate of interest because I believe it would be to the interest of those very working classes with whom the gentleman from Philadelphia has not associated more than I have. He knows nothing more about the agricultural interest of this State, although he has theorized it, and wrote about it for years; but a year's experi

ence is worth a life of dreaming, and I would not give a farthing for all the theorizing, unless it was based upon wellestablished and sufficiently proved facts or personal experience; and I know what our farmers, laborers, mechanics and business men require, and need, from actual observation and in the practical business of life.

Mr. ARMSTRONG. Mr. President: I desire to say only a few words on this question. I think it is highly injudicious that this section should pass. Prior to 1723, as is very well known, the legal rate of interest in Pennsylvania was eight per cent. In that year it was reduced to six per cent. This section I think would be wholly nugatory, it could not be enforced, and is therefore useless, and would be a mere incumbrance to the Constitution, and as such would be a reproach to the Convention which should insert it. The section prohibits any banking or other corporation to receive or pay, directly or indirectly, a greater rate of interest than is allowed by law to individuals. It is the law as to banking institutions now, and it has been over and over so held by the Supreme Court that they may purchase paper at a discount, and yet that is only a mode of receiving interest. So also corporations when they make their bonds and put them into market sell them at what they are worth. They have a certain market value and selling them at a reduced rate is their privilege to do. It is not usury and they have the right to do it, and when they cannot get more than a certain selling rate they would be forced to sell at such rate or stop their work. The law would be evaded in that respect by a hundred devices which no law could prevent.

But it is said that they shall not receive or pay a greater interest than is allowed by law to individuals. By the act of 1857 commission merchants and agents of parties not residing in this Commonwealth may contract for interest at seven per cent. Thus we find that it would be the easiest thing in the world for the Legislature to render a provision of this kind nugatory by simply enacting that some individual or class of individuals might receive interest thus and so. I think it is far wiser and safer to leave this provision under the protection of that section which we have already adopted in the article on legislation, that no local or special act fixing the rate of interest shall be passed. It is safely vested there,

and any act or any provision of the Constitution which undertakes to carry it beyond that will be an entire failure, because the modes of evasion are so easy that such law could not be enforced.

The are many reasons why it ought not to pass, but to my own mind these reasons are conclusive.

Mr. BIDDLE. I am in favor of this section. I have listened with great attention to the arguments for and against it; but 1 think it is right to place in the fundamental law a provision of this kind. What does it tell us? Simply that equality is equity. Simply that no distinction shall be made hereafter between the private corporation, the bank or the railroad company, and the individual.

Now, sir, I do not propose to discuss here whether it be wise or not to establish in the fundamental law a specific rate of interest; probably I should vote against that; but I do say that so long as you adhere to the principle of having a fixed rate of interest, of prohibiting a free traffic in money, no distinction should be made between the individual and the corporation. The corporation starts already with many advantages over the individual. It has got rid of the principle of individual liability. It starts on the principle of liability only to the extent of the stock, whereas an individual in business is obliged to jeopard every cent of his property. Now, what reason is there for the distinction? If the corporations, as we are told by their advocates, cannot compete in making lines of public im-. provement without borrowing at a higher rate of interest than that established by law, then I appeal to the common sense of every man here if it is not an irresistible argument against laying down a fixed rate of interest. Let the rate of interest be fixed by the Legislature, and expanded and contracted according to the exigencies of the community; but if you do fix it, say to the corporations, "you shall deal and be dealt with just as the individual." I cannot see a single argument against this section, and I see many for it, and I trust it will receive the sanction of the House.

Mr. MACVEAGH. Does the gentleman know that it has not been fixed in reference to individuals at all in the Constitution?

Mr. BIDDLE. I am perfectly aware of that. I started with saying that it had not been, and that I thought it unwise; but ever since we have been a people,

ever since we have been a province and a republic, this State has from time to time by enactments regulated the rate of interest beyond which it is illegal to go.

Now, I do say that if it is wise to regulate the rate of interest at all, it is wise to apply the limitation to everybody alike, and there is no reason why a great corporation should be allowed to lend or borrow, I do not care which, (take it in 'the alternative,) at a higher rate than the rest of the community. I therefore earnestly hope the section will pass.

Mr. COCHRAN. Will the gentleman from Philadelphia allow me to call his attention to the fact that it is avowed by the friends of this section that the expected effect of it will be to compel the Legislature by the influence of corporations themselves to raise the rate of interest?

Mr. BIDDLE. I do not understand that it is so avowed by the friends of this section. I listened with great attention to the argument yesterday and to-day. I know well that the gentleman from Columbia presented that as a new view of the question; but I never heard it avowed by the friends of the section that that was its purpose. I do not care if it is its purpose, if it is right that a large portion of the community should have the right to traffic in money at a rate different from that established by law, then it is right and fair for all; and gentlemen cannot get out of this dilemma. If they vote against this provision, they are saying to the individual undertaker of an enterprise, "you start handicapped and handcuffed in the race of commercial enterprise, but the great corporations shall be entirely discharged from the obligations to obey the law, and they may distance you in the race. Compete with them if you can under this great disadvantage." I can not imagine anything fairer than such a provision as this.

Now, as I am about to sit down, I do not intend to answer any more questions. Gentlemen may discuss the subject as they choose.

Mr. MACVEAGH. I simply rise to protest against such morality for the guidance of a Constitutional Convention from such a source. It seems to me that it is unworthy of the distinguished gentleman whose candor has been such a charm in his arguments in this Convention to tell us that it is perfectly right, after we have agreed to leave the entire question of the rate of interest to the Legislature, after we have rejected a provi

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