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law, which had existed in spirit, though it had varied in letter, throughout the whole of our history, should be “ineffectual, and the more especially as the natural feelings of mankind were at direct and violent enmity with the extortions of the usurer. There are indeed some laws which are ineffectual, or which become obsolete, because they are at war with the national opinions; but the character of a miser had always been odious, and inordinate interest was inseparably connected with an avaricious disposition.
But then, it was said, that the restriction was not merely inoperative and ineffectual, but it was positively mischievous, because it drove the borrower to submit to severer terms than would have been imposed on him if no law against usury had existed,—that he was obliged to accomplish his object by way of annuity, to pay a premium for the hazard of the undertaking, and to indemnify the lender against the laws themselves. Now, the extreme cases of this kind are comparatively few, and exceedingly light in the scale of general advantage. In the great majority of annuity transactions, the terms are adjusted upon equitable principles. The money is sunk after the decease of the two or three lives for which they are granted; it cannot be called in at pleasure, as in the case of mortgages,--and very rarely can it be sold on equal terms; and, on these grounds, a higher rate of interest is really and fairly justifiable. The borrower has also the opportunity of paying off the incumbrance at a short notice; and if, therefore, the rate of interest should fall, he can easily diminish his hurthen.
There is an advantage, also, in a settled rate of interest, even as it respects these objectionable transactions, for the quantum of annuity is always compared with the legal rate; and the latter has an extensive effect in keeping within bounds the amount of the former. In various ways, therefore, a legislative standard has a salutary and indirect effect. It may be compared to the current coin of the realm, which is conveniently fixed at a precise value, instead of being left open to the appreciation of each individual. The price of gold frequently varies, and, by the same reasoning that the regulation of interest is condemned, it might be held unreasonable to compel a man to take certain pieces of metal for the rent of his land during a long term of years, when the useful articles which he can procure in exchange for the metal may be diminished one half in quantity. The general convenience and advantage is, in each case, the ground and the warrant of the legislative provision.
The defenders of usury had asked, why an unlimited profit might not be made on a hundred pounds in money, as in the same amount in manufactured silver, since there was an equal
risk in the sale or loan of each? We deny both the facts and the inference of this argument. There is not an unlimited profit on manufactured articles, for it is regulated by the price of the material and the extent of the workmanship; and on these a jury can be appealed to, and injustice prevented. Neither is the risk the same; for, on the loan of money, security is taken ; but, on the sale of merchandize, credit is given. The borrower is always confined to a fixed rate of interest; but the purchaser, or hirer, enters into no express stipulation, and is only, as the lawyers say, bound by an implied contract to pay the quantum meruit or valebat.' In the one instance, therefore, the party is subjected to the extortion of the very person whose interest is opposed to his conscience, (generally a fearful case !) and, in the other, he can appeal to twelve of his impartial countrymen.
Then, it was said, that these regulations were rather an impertinent interference with the affairs of mankind, who generally knew their own interests better than the legislator, and were able to take care of themselves. If this argument were well-founded, we should need no laws whatever : let there be no punishment for fraud,-men need not be imposed upon! and, if they are foolishly willing to submit to deception, why should the law prevent them ? If tradesmen were not so officiously protected by legal enactments, they would be less credulous and more vigilant! Even the wisdom of punishing theft is very questionable; pockets are picked chiefly because people (relying on the law,) do not take care of their contents! Shops are robbed, because the owners think the gallows a sufficient substitute for personal watchfulness ! Houses are broken open, when they are not well secured; and property is taken away, because the inmates choose to go to sleep, and do not convert a private dwelling into a garrison, and mount guard by turns, with a blunderbuss, ready to dismiss all intruders into the regions of “cold obstruction!”
From these sweeping arguments, we were conducted to another position : « The lenders of money did not impose severe terms; interest was regulated by the market price, and would find its just level, and for a long time the market had been below the legal rate.” What the usurer will do, when he may do as he pleases, could not, perhaps, be precisely predicted; but it was not unfair to infer, that as, in spite of the law, he now sometimes received more than he ought, when extortion was legalized, it would not be diminished. To talk of the market price of money was, in the majority of instances, purely nonsensical. There might be a market rate with the great bankers, and the discount of first-rate bills might vary from time to time; but could the little tradesman
or farmer, who wanted temporary relief, obtain it by going to Threadneedle-street, or the Royal Exchange? They were generally averse to declare their wants, because it indicated their poverty; and they no doubt preferred paying a higher rate to secure the secrecy of their state of affairs. The “ market price” of goods could always be ascertained,- no man was ashamed to be a purchaser, and could boldly inquire into the terms; but who could enter the money-market and declare aloud his need, as if it were a merit, and demand the lowest rate at which he could be accommodated ? It was to be suspected, that they who contended that the price of money would find its true level, knew but little of the reserve on pecuniary matters which belonged to the British tradesman, or how delicate are his feelings on whatever can affect his credit. The present low rate of interest applied only to loans where the security was unexceptionable, and constituted no criterion of the facilities afforded to traders in general. The rate of discount upon ordinary securities was still 5 per cent.; and, if the laws were abolished, it would very probably soon rise to 6 or 7.
It did not appear, that the distinction between money and other property, which had in the opening been maintained, was very formidably assailed. That distinction was characterized as “metaphysical,” but it appeared to be real and substantial. Land and houses could not be returned in the same state in which they were let, whilst gold could be returned in the same state. In the former, the use and wear were excepted in the repairs which were stipulated to be done. The property might be improved by the occupier, or, from particular circumstances, the age of the house, or the quality of the land, it might be seriously deteriorated, and the degree of these injuries could not a priori be estimated; and hence, from necessity, the quantum must be left to be settled by the parties; but even then, if there were no express stipulation, a reasonable amount could alone be recovered.
It had been urged, also, that the laws did not restrain the profligate from borrowing, or endeavouring to borrow, money at a higher rate than was legal. Supposing this to be true in many instances, still the restriction was beneficial, because it prevented many persons from losing their money by loans to such persons. No doubt there was a great number who would be tempted to lend, and consequently to lose, money to the worthless, by the temptation of large interest, were it legal, and no obloquy attached to it; but they are deterred by the law, and the disgrace of the transaction. Here, therefore, the monied classes are benefited, and the extent of profligacy is confined. Allowing, however, all the weight that can be claimed in favour of this position, it is not very momentous; for,
though the number of spendthrifts be great enough, there are, comparatively, few who possess the means, by the semblance of property or security, to delude any one to part from their money.
But then, it was contended, that adventurous industry was also restrained. This objection appeared, however, to be founded on an entire mistake of the true state of the case. Industry was best promoted by giving to labour its just reward. An increase of borrowell capital might indeed increase the attempts to extend industry; but, if too large a return was made for the loan, then the labourer would be inadequately paid ; and, ultimately, these adventurous undertakings must be pernicious. If the prosperity of the country can be extended by an increase of capital, the only advantageous mode obviously is to ensure a real and actual, not a borrowed, capital; and this can only be accomplished by restricting the facilities to borrowing, and increasing the inducements to capitalists to embark a share of their wealth.
In answer to the argument, that freedom of trade required freedom of capital, it was urged, that there was no restraint upon any one in employing his capital in trade, provided he fairly brought it forward; but it was both pernicious and mean, in the character of a secret and sleeping partner, to swallow up a disproportionate share of the profits, and to throw the burden not only of skill and labour, but also of responsibility, upon another. These only were the things that were restrained, and these it was proper to restrain, upon every moral, as well as upon every political, consideration.
With regard to the assertion, that the legislature had no right to interfere in the private contracts between man and man, it was perfectly monstrous to allege such a doctrine. As there was an undoubted right to prevent men from destroying and defrauding each other, because of the injury of such acts upon society, through the individuals of which it was composed; so it was clear, that whatever had the effect of diminishing the prosperity of the country-of impairing the industry on which it depended, or encouraging a system which was calculated to overthrow it,-ought to be put down by the severest enactments. Thus, on the whole, it appeared that the Usury Laws were efficacious in promoting the real interests of Great Britain,--that they restrained only what was pernicious, - that they tended to secure to labour its hire, and to skill its reward, that they checked improvidence, promoted useful and productive undertakings,and, therefore, ought not to be abolished.
INFLUENCE UPON HAPPINESS OF THE PROGRESS AND
MUTATIONS OF ART AND SCIENCE.
The object of this brief and imperfect sketch is to shew that the happiness of niankind, in general, is neither increased nor diminished in those progressive changes which we are accustomed to call improvements. It is proposed, also, to deduce these important conclusions;—that there are no grounds upon which to elevate the present age above the times which are past; and that no class of society should repine at the condition in which they are placed, for felicity is not allied to genius, nor is it dependent upon renown. We
may admit that modern Europe, in the state in which we find it placed by a variety of circumstances over which, perhaps, it could have no control; the preservation of Iiterature, art, and science, may be important to the interests, and connected with the happiness, of a large part of the community. We have arrived at that point of luxury, which, in the past annals of the world, has ever been the forerunner of decline; and, perhaps, that declination may be somewhat stayed, and our fall protracted, by intellectual pursuits.
It is of the very nature of mental exertion to counterpoise the tendency to sensual indulgence, for the exalted intellect abhors moral abasement, and the purity of reason is disgusted by the very aspect of vice. The understanding, enthroned in truth, spurns with indignation all the approaches of defilement. In proportion as the mind is cultivated, the morals are improved. The thinking principle is identical with that which feels. It is one and indivisible, although its modes of operation are different. We cannot indulge in the baser passions, and at the same moment plan a didactic poem : nor can we speculate in moral improvement, nor abstract science, and yield, simultaneously, to worldly appetites.
It must, therefore, necessarily follow, that the more the higher faculties are employed, the less active must be the lower propensities.
But, however true and important this may be in theory, we are brought back to inquire how it appears in the living practice of the existing race? It is a popular opinion, that the present is far more intellectual than any former age; yet vice is not diminished, nor is virtue increased : and the truth will be found to be, that the really intellectual are still very