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You know that, when I first came here, I had the house almost to myself; now, however, it is almost completely packed, and every day brings new squadrons of carriages and ladies, and old gentlemen and children. Such a hubbub, you perhaps imagine, must be very disagreeable, yet it is the pleasantest thing that can be; the people are all as familiar as if they had been acquainted all their lives. The house, too, is every body's and nobody's; and whatever may be their rank, all here are on a level. What a treat it would be for you to see our meals. At breakfast there are upon a table, which seems to be half a mile long, innumerable tea-trays, each surrounded with their proportion of buttered toast, &c. While some parties are finishing their breakfast, other parties are just coming down stairs to begin. Every party, you must observe, breakfast by themselves; but conversation is promiscuous and loud; and we never want some droll creature who keeps the table in a roar. At dinner we dine all together. It is like a mason lodge, only there is here the highest breeding, and the most perfect order. Ladies and lords, and generals, and clergymen, are mingled with old wives and children, and misses and beaux. Rank is forgotten, and restraint banished, and all is freedom, and jollity, and good-breeding.

prevent an offer of this kind being made; and, if the lender had implicit confidence in the secrecy, punctuality, and solvency of the borrower, he might accommodate him with the sum wanted, without requiring any additional interest, or premium of insurance, for the risk he runs in entering into what the law declares to be a fraudulent transaction. But this can hardly ever be the case. Gratitude, and a sense of benefits received, are, unfortunately, when they come in contact with self interest, but slender security for honourable conduct. Numberless unforeseen events occur to weaken and dissolve the best cemented friendships; and an additional source of jealousies and heart-burnings would certainly be found in a transaction of this kind. In such matters, indeed, men are more than usually sharp-sighted, and are very little disposed to trust to moral guarantees for the security of their property. This feeling, however, does not put an end to the under-hand species of bargains between capitalists and borrowers; it only obliges the former to demand, and the latter to promise, a higher rate of interest. Such transactions being illegal, the lender is exposed to the risk of losing his capital. This risk must be compensated. No person will voluntarily place his fortune in a state of jeopardy; and, according as the risk of its being lost is greater or less, so will the sum that must be paid to cover this risk be increased or diminished. Thus, a capiBy nothing, perhaps, has the per- talist might be inclined to lend a manicious consequences of restrictive nufacturer a given sum at six or seven laws been rendered more clear and per cent., but as the law declares the palpable, than by the effects which stipulating for interest above five per have resulted from the attempts made cent. to be illegal, were the capitalist to regulate and limit the natural rate to enter openly into a bargain of this of interest. All the efforts that have kind, his whole property would in ever been made to lower the rate of fact be trusted to the honour of the interest by authority, have had a pre- borrower. If the debtor refused paycisely opposite effect. Instead of re- ment either of the principal or inteducing, they have uniformly contri- rest, the creditor could not prosecute. buted to increase its amount. Nor is He could not apply for redress to that this any thing but what might have law whose enactments he had already been foreseen and expected. If the violated; but, on the contrary, he ordinary rate of profit is at ten or would be exposed to a prosecution on twelve per cent. and if the law enacts the part of his debtor. If there was that only five or six per cent. interest no method of defeating this law, there shall be exacted, it is obvious that a would obviously be an end of all borperson might be inclined to borrow, rowing, except when the statutory and to offer privately a considerably rate of interest was above the market greater rate of interest than what was rate. Whenever it was below that declared to be legal. No law could rate, no person would be able to bor

*

PRINCIPLES OF THE USURY LAWS.

row a single farthing. There would be no circulation of capital. It would for ever be locked up in the same hands; and the national prosperity and welfare would suffer severely.

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Fortunately, however, the mutual interest and ingenuity of borrowers and lenders, have always proved an overmatch for the threatenings of the law. Their sole effect has been to render the acquisition of capital by the industrious a more difficult task, and to compel them to pay a higher rate of interest for it. What might have been borrowed at 6 per cent. had there been no hazard from antiusurious statutes, is, on account of that hazard, raised to perhaps 10 per cent.; and what is nearly as bad, a habit of carrying on business in a secret and underhand manner is spread abroad in society; and that spirit of frankness, open-heartedness, and sincerity, which, wherever it predominates, is so highly valuable, either in individuals or states, is cramped in its developement, or altogether supplanted by duplicity, extortion, and cunning.

These conclusions do not rest on theory only, but are supported by a constant and uniform experience. At Rome, during the period of the Republic, the ordinary rate of interest was excessively high. The debtors or plebeians were every now and then threatening to deprive their creditors, who were generally of the patrician order, not only of the interest of their capital, but of the principal itself. Repeated outrages proved that these were not mere empty threats; and the patricians were, therefore, obliged to indemnify themselves, by means of a corresponding premium for the risks to which they were exposed. The same is the case among the Mahometans. Mahomet prohibited the interest of money altogether; and notwithstanding, the rate of interest in Asiatic countries amounts to ten or twenty times the ordinary rate in Europe.*

During the middle ages, the average rate of profit was not, perhaps, so high, certainly not higher, than at present. But, to use the words of a learned and accurate historian, "the clamour and persecution raised against those who

took interest for the use of money was so violent, that they were obliged to charge it much higher than the natural price, which, if it had been let alone, would have found its level, in order to compensate for the opprobrium, and frequently the plunder, which they suffered; and hence the usual rate of interest was what we should now call most exorbitant and scandalous usury.' The risks to which lenders were exposed rendered the premium of insurance on all sorts of capital enormously high; for, of the 50, and even 100, per cent., which borrowers then frequently engaged to pay as interest, not more than 5 or 6 per cent. can properly be said to have been given for the productive services of capital. The rest must be considered as a bonus to compensate the lender for the risk he encountered of losing the capital itself.

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Legal interest," says Mr Birkbeck, in his late publication on America," is 6 per cent., but it is worth 12 to put in trade, and, some how or other, this, like other articles, finds its value in spite of the maximum established by law.

"Efforts are now making in some parts of the Union, particularly in Virginia and North Carolina, to do away the restraints on usury, which operate merely as a tax on the needy borrower;-should this liberal principle succeed here, I think it will be generally adopted, and will afford a new instance of the plain Americans doing right, while the philosophers of Europe are reasoning about it." t

But it is not necessary to refer to a distant country, or a remote period, for an exemplification of the pernicious effects resulting from laws limiting the rate of interest. In Great Britain, during the latter years of the war, and when the market rate of in-、 terest was considerably higher than the statutory rate, almost no money could be borrowed unless from bankers in discount of bills, except in the way of redeemable annuities, or loans at 12, 15, and 20 per cent. That this was neither more nor less than a scheme to defeat the law limiting the rate of interest, is sufficiently notorious; and the extraordinary extent

* Macpherson's History of Commerce,

Say, Traité d'Economie Politique, Vol. I. p. 400. Tom. 11. p. 108.

+ Letters from Illinois, p. 36.

to which the practice was carried, and the very great additional expence and charges which it imposed on the borrowers, shows, at once, the utter inadequacy of such statutes to effect their object, and the injury which they are sure to inflict on the public.

If it were possible, and unquestionably it is not, for laws regulating the rate of interest to accommodate themselves to the variations in the ordinary rate of profit, still these laws would be highly injurious. The rate of interest must fluctuate, not only as the ordinary rate of profit fluctuates, but it must also fluctuate according to the greater or less security of the principal sum for the use of which it is paid. What can be more absurd than to attempt to compel a capitalist to lend, suppose L. 10,000, on the personal security of 'a gunpowder manufacturer, and as a mortgage on a valuable estate, at the same rate of interest? In the one case there could be no risk of losing the principal. The owner of the estate might become bankrupt, but the estate itself would remain, and might be taken possession of by the creditor. With the manufacturer, however, the case is extremely different. The extraordinary hazard of the gunpowder trade exposes all the capital invested in it to an extreme degree of risk. It may be dissipated in a moment, and the power of the borrower to replace the capital he had borrowed, as well as the capital itself, may be destroyed for ever. The gross profit derived from the capital invested in this, and every other employment of more than ordinary hazard, must, therefore, be greater than that derived from capital invested in the more common and less dangerous employments. The former must yield an equal nett profit with the latter, and they must, besides, yield a sum sufficient to cover the higher premium of insurance necessary to guarantee the capital itself. If this were not the case, no capitalist would voluntarily expose his property to such imminent danger, and no undertakings of a comparatively hazardous nature would ever be entered upon. But, if this is the case with the master manufacturer, who invests his stock in a concern conducted under his own superintendence, why should it not also be the case with the capitalist, who furnishes him with

stock to embark in the same concern? Why should not the greater risk of the one as well as of the other be compensated? The loss of capital would equally affect both. Each would have the same insurance to pay to cover his capital, and, therefore, each should have the same power to secure to himself a proportionable profit.

It is somewhat surprising that the sagacious framers of the present code of usury laws did not think of extending their uniform scale to policies of insurance; and of compelling the underwriters to insure a gunpowder magazine and a salt warehouse on the same terms. This would not be more absurd than to enact that one uniform rate of interest should be paid for the capital employed in such opposite departments of industry.

The laws of the moderns, respecting interest, are less judicious than those of the Athenians. These ancient republicans did not attempt to force a capitalist to lend to persons engaged in employments of different degrees of hazard, at the same rate of interest. While the sum paid by the merchant for capital embarked in a voyage to the Black Sea, as maritime interest, amounted, on account of the greater risk of losing the principal, to about 60 per cent., the territorial interest, or that paid by the occupiers of land, did not exceed 12 per cent.

Nothing can be more unreasonable, and more entirely unfounded, than the clamour that has been set up against usurers, as money-lenders are sometimes termed, because of their exacting a higher rate of interest than ordinary from prodigals and spendthrifts. This surely is the most proper and efficient check that can be put upon the thoughtless or unprincipled extravagance of such persons. Supposing the security of a prodigal and of an industrious person to be equally good, and this can scarcely ever be the case, does not the capitalist who would lend to the latter, at a lower rate of interest than he would lend to the former, confer a real service on his country? Does he not prevent those funds which ought to be employed in supporting useful labour, and in adding to the real wealth

* Voyage D'Anacharse, Cap. 55.

of the nation, from being squandered a very material disadvantage. It is in ridiculous extravagances? to this feeling that the comparatively low rate, at which governments, whose circumstances are perfectly desperate, are able to borrrow, is to be ascribed. A stockholder's mortgage, his claim on the revenue of the country, can be immediately converted into cash at the current prices. And although the generality of the creditors of the state are perfectly aware of the worthless nature of the se curity they have for their debts, every particular individual, confident in his own good fortune, foresight, and acuteness, flatters himself with the comfortable idea, that he at least will be able to predict the coming tempest, and that he will be able to sell out before the bursting of the bubble.

Neither is the outcry raised against capitalists for taking advantage of the necessities of the industrious one whit better founded. According as a person has a character for sobriety, and for punctuality in discharging his engagements, and according to the presumed state of his affairs at the time, so will he be able to borrow. To say that a capitalist took advantage of the necessities of any individual, is only saying that he refused to lend to a person in suspicious or necessitous circumstances, at the same rate of interest he would have done had no such suspicion existed,-had there been no risk of the principal sum being lost; and if he had not acted in this manner, should we not have considered him a fool or a madman?

But, as we have already remarked, the usury laws afford no check whatever on such transactions ;-they only render the acquisition of capital more difficult, by forcing the borrower to pay a premium of insurance in addition to the interest ;-they attempt to remedy what is not an evil, and what consequently ought not to be interfered with; and in doing this, they create a real grievance.

There are many other circumstances, besides the fluctuations in the ordinary rate of profit, and the different degrees of hazard to which borrowed capital is exposed, that must of themselves produce very considerable variations in the rate of interest. Capital lent for short intervals, or capital lent in such a manner as that the lender may obtain possession of it at pleasure, will, provided the security is nearly as good, always bring a lower rate of interest than capital lent for any definite and considerable period. We naturally wish to be able to command our capital when we please, and to make what use of it we please. No mercantile man would ever think of locking up his funds on a mortgage. If he did, he would no longer be able to take advantage of a good bargain when it occurred. He would be cut off from all power of speculating; and although this might, in many instances, be for his advantage, still the flattering opinion which every one entertains of his own abilities and good fortune, would but seldom allow him to doubt of its being

If usury laws are to have any existence, they ought certainly to be made operative on the greatest of all borrowers,-on those who do not borrow for themselves, but for others. Is it not the extreme of folly, that while an industrious manufacturer or agriculturist is prevented from borrowing from a capitalist at more than 5 per cent., the government of the country should be allowed to transact with him at 6, 8, 10, or even 20 per cent.? What is this but holding out a bait to loanmongers? and causing the capital of the country to flow with an accelerated and unnatural velocity into the Treasury? Surely nothing can be more absurd than this. If we are to have usury laws, they ought to operate alike on every class of borrowers; and considering the superior attractions which the facility of repossessing the principal gives to the investment of capital in the funds, the rate of interest at which government should be allowed to borrow should be less than the rate at which private individuals might borrow.

We trust, however, that we have said enough to show the impropriety and the pernicious tendency of all such regulations. If a landlord is to be allowed to take the highest rent he can get offered for his land, a farmer the highest price for his wheat, a ma nufacturer for his goods,-why should a capitalist be restricted and fettered in the employment of his stock? Every principle of natural justice, and, we may add, of political expediency, is outraged by such a distinc tion.

"Les loix de ce genre," says M. Say, "sont si mauvaises, qu'il est heureux qu'elles soient violées. Elle le sont presque toujours; le besoin d'enprunter, et le besoin de prêter s'entendent pour les eluder, ce qui devient facile en stipulant des avantages qui ne porte pas le nom d' interet, mais qui ne sont au fond qu'une portion des interêts."

But this miserable anomaly,—this fixing of a maximum on the rate of interest, while every thing else is allowed to find its own level in the market,— will, we should hope, be ere long put an end to. The market rate of interest is now fallen below the statutory rate, and the application of a sponge to the whole batch of antiusorious statutes could not, therefore, be attended with any inconvenience to the pecuniary affairs either of the state or of individuals. The following Report on the Usury Laws was presented to Parliament at the close of the last session; and we are happy in being able to support the view now given of their effects, by the authority of the Committee of the House of Commons appointed to inquire into this subject.

Report on the Usury Laws.

M.

The Select Committee appointed to consider of the effects of the laws which regulate or restrain the interest of money, and to report their opinion thereupon to the House; and who were empowered to report the minutes of the evidence taken before them, have, pursuant to the order of the House, examined the matters referred to them, and have agreed upon the following resolutions:

1. Resolved, That it is the opinion of this Committee, that the laws regulating or restraining the rate of interest have been extensively evaded, and have failed of the effect of imposing a maximum on such rate; and that of late years from the constant excess of the market rate of interest above the rate limited by law, they have added to the expence incurred by borrow ers on real security, and that such borrowers have been compelled to resort to the mode of granting annuities on lives; a mode which has been made a cover for obtaining a higher interest than the rate limited by law, and has farther subjected the borrowers to enormous charges, or forced them to make very disadvantageous

sales of their estates.

2. Resolved, That it is the opinion of this Committee, that the construction of such laws, as applicable to the transactions

of commerce as at present carried on, have been attended with much uncertainty as to the legality of many transactions of frequent occurrence, and consequently been productive of much embarrassment and litigation.

3. Resolved, That it is the opinion of this Committee, that the present period, when the market rate of interest is below the legal rate, affords an opportunity peculiarly proper for the repeal of the said laws.

SPECIMENS OF TRANSLATION FROM THE ITALIAN.

No. I.

To every lover of Italian poetry it must long have afforded matter of infinite regret, that the writings of its great masters should have been so completely shut up from the greater proportion of readers in our own country, by the general poverty, as well as fewness of our translations. With the exception, perhaps, of Fairfax's version of the Jerusalem Delivered, there is not one translation of any of the greater works of the Italian poets that is worth reading; and even this has long been supplanted by the more modern, but infinitely inferior, work of Hoole, to the extensive circulation of whose translations, as much, perhaps, as to any other cause, may be attributed the neglect into which Italian poetry has of late years fallen amongst us. Nothing, indeed, could have been more unpropitious to its growth in our soil, than that the transplanting of it should have fallen into such miserable hands as those of Mr Hoole. He has no poetry in himself, and, of

course, no

beauties of his author. He cuts and true perception of the mangles the finest thoughts and most glowing images for the sake of a rhyme, and there is, withal, a degree of awkwardness and constraint in his language and versification, which destroys at once all the boldness, vivacity, and freshness of colouring, which are so characteristic of the originals. Who that has read the Orlando Furioso in the Italian could of Hoole, the poet whom he had been recognize, in the contemptible version accustomed to admire, not more for the warm glow of sunshine which he the scenes and has thrown over thoughts of this our every-day existence, than for the graceful ease of his

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