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the money lenders. The middling and small traders, &c., must then be ruin ed, either by inability_to_borrow, or by the high terms of the lenders. To place before the lenders of money, an irresistible temptation to refuse loans, and demand a ruinous rate of inte rest, at all times when the whole of the merchants, manufacturers, and tradesmen, shall be enduring heavy losses, and be compelled to give any rate of interest that may be asked, would be, in our judgment, one of the most fatal errors that the State could commit.
While it is essential that the Banks, in times of general distress, should lend as far as their own safety will permit, it is much more essential that they should not lend farther. If a Bank ruin itself by lending, it does a grievous injury to the community, even though its loans save two or three trading houses from ruin. Its loans cannot save so many, as its fall will destroy. The abolition of the Usury Laws will, in such times, place before the Banks almost irresistible temptations to lend beyond their means. They will be entreated and bribed; they will be supplicated to fix their own terms on satisfactory se curities; while they will be exposed to this, they will know that they possess money which they shall not want, in case they be not assailed with run, and, as a run never gives warning, they will think they are in little danger of one. They will be tempted, and then a run will compel them to stop payment. That they will benefit from the ability to borrow at high interest, is what we cannot subscribe to. A Bank could scarcely offer to do this, either to friends or strangers, without blasting its credit. The abolition of the Usury Laws will tend powerfully to increase the number of failures amidst Banks in times of distress.
This country is at present in the enjoyment of peace; but how long will the peace continue? No man, whose judgment is of any value, will venture to say in reply two years. Thanks to that destructive system by which we have been in late years governed, war is almost unavoidable. It is not for us to know what the present Ministers will do, but we cannot be ignorant, that do what they may, it will be scarcely possible for them to preserve peace without sacrificing
not the honour of the empire, for that has been done already-but the interests and security of the empire. In time of war, the whole of the mortgage borrowers will be compelled to pay 8 or 10 per cent, and many of them will have to pay more. What will be the effects? Such of them as now have to pay half their rents for interest, will then have to pay about the whole. How widely this will operate, may be judged of by the fact, that half the whole land of the coun try is estimated to be under incumbrances. A vast portion of them will be deprived of income. Their incumbrances must be greatly increased in. extent, if even the amount remain unaltered; their property must suffer an enormous loss of value; and many them must be stripped of property.
In war, the mortgage borrowers are the great competitors of the State in borrowing. The rate paid by the latter must rise, as their rate rises; and it must always be the highest. If they have to pay 8 or 10 per cent, the State will have to pay more; the public funds must be low, in proportion as the rate on mortgage money is high. The increase of interest paid by the mortgage borrowers universally will, by its inroads on rents, and its creation of arrears of interest, add mightily to the scarcity of money caused by the war. What will be the consequences here? This will perhaps be the best answer to the question-if such had been the state of things during the last war, the State would, in all probability, have been compelled to borrow one-third more, in respect of the amount of its debt; and to levy one-third more of taxes. Whether it could have done this-and what the fruits would have been to both itself and the community, whether it could have done it, or could not have done it-are matters which we leave to the decision of the reflecting.
If an empire like this, which is frequently for a long term of years embroiled in such war as compels it to borrow an enormous suin annually, do that which has the effect of almost doubling the rate of interest during war, it does what madness could only be expected to do even if it do it when it is in the enjoyment of peace, which is likely to be of long duration. But if such an empire do so, when, like this, it is, if not on the eve of
war, at least in danger of war, it is guilty of such ruinous conduct as madness never exhibited. The effects are not confined to times of war; they are felt always, and their pressure is often the greatest during peace.
Do the merchants, manufacturers, and tradesmen expect they will escape that they will be able to borrow at 5 per cent when the mortgage bor rowers and the State will have to pay almost twice as much? Let them not deceive themselves-the Banks will not lend them money at 5 per cent, when they can obtain 8 or 10 for it on government securities. They must at any rate pay as much as the State. At the best, they will have to pay this high rate of interest; and the fluctuations of trade will frequently compel them to pay one much higher. Let them beware of believing those who tell them that the repeal of the Usury Laws is a question between them and the Landed Interest, and that it will benefit them however much this Interest may suffer from it. They are as much benefited by these laws, as the landowners; in time of peace they are more so; and consequently they will be the greatest sufferers by the repeal.
The farmers, &c. who borrow on personal security, will in both peace and war, but especially in the latter, be ground to powder by exorbitant interest. The effects of this on their own interests, and on those of the State, we need not describe.
Questions, like this, deeply affect in one way or another the interest of the working classes. Great numbers continually rise from these classes, and begin business in different lines, through the ability to borrow a little money at a low rate of interest. Give them a high rate, and place them at the mercy of lenders, and this will be prevented; or at any rate they will then only borrow to their own ruin. If the merchants and manufactures generally have to pay a much higher rate of interest, they must add the increase to the price of their goods, or subtract it from the labour which enters into such price. The merchants will raise their goods. The manufacturers will have their interest and raw produce raised; they will be unable to raise their prices in foreign markets, and in consequence they will be compelled to reduce wages, Husbandry wages will suffer in a similar manner.
A high rate of interest must tend materially to diminish manufactures and foreign trade, both by diverting capital from them, and by raising prices so, in some branches, as to prevent exporting. It must operate most balefully on the home trade.
A high rate of interest must almost constantly diminish the national capital. At its commencement, it must, by lowering the public funds and the price of land, annihilate hundreds of millions of property. It must continually plunder the many for the be nefit of the few; and much of its plunder must be destroyed in the course of transfer, by litigation, expenses, and losses. By impoverishing the mass of the community, it must constantly narrow the field of the lenders, and destroy the general profits which to a very great extent supply them with money to lend. It will injure a vast portion of the lenders much more in one way, than it will benefit them in another. Such a rate of interest must therefore generally operate to increase scarcity of money, and raise itself.
How Mr Thompson means to deal with the pawnbrokers, we do not know. It will be an uncouth anomaly to make money a commodity to every one else, and to refuse to make it one to them; it will be monstrous injustice to deny to them a right granted to all the rest of the community. If they be allowed to make the most of their money, a rate of 100 per cent will not satisfy them. They will be. rendered a scourge to the poor in
We do not know whether it be necessary to notice the example of Holland and Hamburgh, on which the usurers place so much reliance. Are they circumstanced like this country? Are they so extensively engaged in trade and manufactures, that fluctuations in these can produce such scarcities of money as they produce here? Are they frequently involved in long wars which compel them to borrow vast sums annually? Their example bears in a very small degree on the question; and, in so far as it does so, it is in favour of the Usury Laws; in them the rate of interest fluctuates violently, and when money is scarce, it is perniciously high. We too may cite an example. In 1793 the National Convention in France declared that “ ney was merchandise," and abolished
all restraints on usury. What follow ed? The consequences were so fatal, that twenty-three days afterwards, the enlightened measure was revoked. From this example our Turgots and their followers will draw no instruc
But then Mr Thompson, in compassion to his illiberal and bigoted opponents, does not ask for the total abolition of the Usury Laws, although he is exceedingly anxious for it. He still will not suffer the usurers to ob tain more than 5 per cent by law, not withstanding that he suffers them to obtain any rate they please without it. If the House of Commons adopt his measures, we trust it will scoff no more at the ignorance and barbarism of former ages. To declare that men have a clear right to do a thing, and then to incapacitate them for exercising this right by law to declare con tracts to be just and necessary, and then to prohibit the law from being called on to enforce their fulfilment to encourage men by law to violate their agreements, to borrow money on false pretences, and to vest money on promises made only to be brokento make the law the source of lying and cheating-to proclaim that a prin ciple is wholly at variance with knowledge, right, justice, and the public weal, and then to fashion it into a negative law all this forms such a specimen of barbarous, blind, childish ignorance and folly, as never disgraced any former Parliament.
Now, what will be the real effect of this reservation? To a great extent in the discounting of bills, the discount is deducted when the money is advanced; the borrower here pays the interest before he is suffered to touch the principal; in truth, the former never comes into his hands; therefore it makes not the least difference to him, whether the laws be wholly abolished, or be thus far spared. If the Banks grant discounts and loans at a higher rate than 5 per cent to those who keep accounts with them, they will, instead of giving credit for the interest to the end of the half year, or year, exact it at the moment when they advance the money. If they lend to chance cus tomers, they will have the interest in advance, instead of giving credit for it until the time for receiving back the principal. Here Mr Thompson's boon places the borrowers in a worse situation than they would be in, should the
laws be wholly abolished. Those who borrow on mortgage, or personal secu rity, at a higher rate than 5 per cent, will be compelled to pay the interest constantly in advance: and they will be deprived of all indulgence in respect of time. The lenders will not be able to give them much indulgence, without losing the power of recovering the rate agreed on by law. Here again the borrowers are placed in a much worse situation, than they would be in should the laws be wholly abolish ed. It is absurd to suppose that lenders will lend to borrowers on terms, which the latter, after they have had the use of the money, may pay or not, as they think proper; and it is wicked to give to men the power of violating solemn engagements, by which they obtain the money of others. But, however, the lender in many cases could recover usurious interest by law in one way, if he could not in another. He could arrest, or foreclose, for his principal; and this would be sufficient for obtaining any interest he might claim, provided he would let the prin cipal remain. If it be right for bor rowers to covenant to pay, and to pay voluntarily, more than 5 per cent, it must be equally right to place them under legal compulsion to pay more when they agree to do it: In genero sity to them, let the Usury Laws be abolished wholly, rather than to the extent contemplated by Mr Thompson.
And now when the repeal of the Usury Laws will manifestly produce such gigantic evils, what do the usu rers promise as countervailing benefits? Assuming that all they promise will be realized, do they offer anything work thy of being put into the balance against these evils? Do they prove that the repeal will, in general, make loans more plentiful to all classes, or any class, of borrowers? They cannot; for the common complaint is, that under the laws, lending even to the poorer borrowers is carried to excess. They admit-they even make an ar gument of the admission-that during peace the laws place no restraint whatever upon the mass of borrowers of all classes, except for a few months occasionally. They here stand on the exception to the general rule. They do not plead that even in these few months the repeal will benefit borrowers in general; they only aver that it will benefit a comparatively small
number of individuals. Here again they stand on the exception to the rule. They do not assert that during war the laws injure borrowers in general; they merely maintain that they injure an insignificant portion of them. Again they stand on the exception to the rule. Do they prove that the laws prevent lenders from making just and equitable profits? They cannot, for it is notorious that no regular trade will afford more than 5 per cent for borrowed money: we doubt whether at present any such trade will fairly afford 5 per cent; land will never af ford more than 3 or 4 per cent; farming, when times are good, will scarce ly afford 5 per cent, and in these days we fear it will not afford anything. It is manifest that if the lenders could obtain more than the legal rate, they would deprive the borrowers of their just and equitable profits: it would be the gain of the few, to the loss of the many. The usurers cannot say that business in general will afford more than 5 per cent; and they can only aver that occasional speculations will. Again they stand on the exception, and a very indefensible one, to the rule. They own that in gene ral during peace, the lenders cannot obtain the legal rate, and they cannot deny that if the latter could always obtain a higher rate, it would be ex tremely injurious to the mass of the community and the interests of the empire. They cannot prove that in times of trading distress, the mer chants and manufacturers can afford to pay more than 5 per cent; or that in time of war the mortgage borrowers can afford to pay more; on the con trary, it is notorious to all, that if in either case more be paid, it is paid, not out of profits, but out of capital; it is at the best, the incurring of one loss, to avoid another. The whole they promise in the way of benefit is in reality this-In general none shall be benefitted; occasionally a few shall be benefitted, by being allowed to choose one loss instead of another, at the risk of grievously injuring the many. A little litigation shall be prevented, a little expense shall be saved, a few bankruptcies shall be avoided, certain estates shall be preserved from the hammer, and a small number of money lenders shall be permitted to make large profits, no matter what evils it may bring on the community and the empire.
According, therefore, to the confession of the usurers, laws ought to be destroyed, which are only injurious in the exception and the special case. On the ground that the exception and the special case should be followed instead of the general rule, eternity should be disregarded for the sake of the passing moment, the body should be sacrifi ced to the individual, and the sepa rate and collective interests of the community should be made subservient to abstract principle.
This forms the general ground of fashionable legislation, and one of its most baleful characteristics is, its evils fall the most heavily on the lower and middle classes. All the new laws made, or projected, touching trade, currency, pauperism, &c., are calcu lated to injure these classes far more in proportion than the higher ones. One takes away business-another de stroys employment-a third annihi lates capital-a fourth cuts down wa ges-and a fifth seizes the means of subsistence in distress; all operate harmoniously to second each other; and to enable one to destroy, what another may overlook or be unable to reach. The repeal of the Usury Laws will benefit largely a part of the rich, while it will do comparatively small injury to the remainder; but it will injure the rest of the community in proportion to their want of riches, and it will have the most pestilential effects on the interests of the most needy. It is a measure to sacrifice the body of the population, to a few indi, viduals.
Before this article will see the light, the question, as far as appearances go, will be decided in the House of Commons; and we think it will be decided as we have described. How it will fare in the House of Lords, is a matter on which we will offer no con jecture. This House may, like the Lower One, rush to the most perilous conclusions, on no better evidence than erring abstract propositions; it may, like the literary teachers of the Lower One, decide measures to be wise and necessary, merely because they emanate from this individual or that party, or one dubbed with this or that gorgeous party appellative; it may, in imitation of the great egotists of the age, pronounce laws to be pernicious, because they have been longer than five years in existence, and have never been sanctioned by those whose legis
lation has filled the empire with evils: -it may do all this, but we hope it will do something far more consistent with justice and wisdom. We hope it will decide at once, that no case--that not the shadow of a case has been produced to justify the repeal; and that reason and experience are wholly in favour of the Usury Laws. If it will not do this, we hope that, at the least, it will institute an inquiry altogether different from that of 1818. Parliamentary inquiries, when proper ly conducted, yield vast benefits; but when improperly conducted, they yield only delusion and evil. It has been asserted, that of the twenty-one witnesses, who were examined touching the Usury Laws, by the committee in 1818, two were lawyers, nine were attorneys, six were merchants, and one was a stockjobber. Now, in the name of common sense, ought the evidence of witnesses like these-witnesses having, in their own estimation, a deep personal interest in the repeal to decide the question? They gave no information touching several essential parts of the question, and on other essential parts, they gave no information that was satisfactory. committee acted, as Parliamentary committees too often act: it was led by those whose object was, not to collect facts to enable them to make a just decision, but to collect evidence to support a decision which they had made previously. If the Lords find themselves compelled to institute an enquiry, let it be a proper one; let it embrace the interests of all classes of borrowers, and particularly of those which are the most numerous and valuable; and let it apply chiefly to facts, without attaching too much importance to individual opinions.
: We will conclude with saying a few words to the Duke of Wellington, who, we think, is not publicly pledged against the Usury Laws: they flow from that spirit which prompted us, not many months ago, on more than one occasion, to employ our pen in his favour. We are the friends of him and his Ministry, but we are not their
menials; our limbs were not made for fetters, and we neither have had nor will have cause to regret it; we are sure we shall render far more service to both by steadily opposing them when they do what is calculated to work their own injury, than by daubing all their measures with panegyric. It has been most truly said, that the Duke enjoys a greater share of public confidence than any other Minister has enjoyed since the days of Mr Pitt. Does he know why the country reposes this confidence in him? Is it on account of his splendid military talents and services? No! Is it on account of his past political labours? No, he never before was placed in a situation to acquire fame as a statesman. It is because the country HOPES that he will employ his great powers in the right manner-it is because the country believes him to be a man of business, a practical statesman-a Minister whose acute, solid, straight-forward understanding will terminate that system of frantic quackery and destructive experiment, from which it has suffered so long and so deeply. On this momentous point, let him not deceive himself. If he continue this system, he will soon be as little confided in by the country as any Minister ever was, since the death of Mr Pitt. Proofs surround him in abundance. What stripped such a Ministry as the Liverpool one of public confidence in the latter days of its existence, in spite of nearly the whole Press? What stripped Mr Canning of public confidence when he was made the Premier, in spite of nearly the whole Press? Why was the Goderich Ministry shook to pieces by public contempt and derision, in spite of the chief part of the Press? And why has the retirement of Mr Huskisson been made almost a matter of national rejoicing? The answers to these questions are pregnant with instruction to his Grace, of inestimable value; and he may find in them what his duty is, touching the Usury Laws. They may suggest to him that this duty is―
TO DECLARE THAT HE WILL NOT COUNTENANCE SPECULATIVE CHANGES WHICH ARE NOT CALLED FOR BY PUBLIC NECESSITY; AND THAT NO EVIDENCE EXISTS TO PROVE THAT SUCH A CHANGE OUGHT TO BE MADE IN THESE LAWS AS WOULD IN THE FIRST MOMENT OF ITS OPERATION DERANGE AND EMBARRASS AGRICULTURE, MANUFACTURES, COMMERCE, AND DOMESTIC TRADE-ADD LARGELY TO THE SUFFERING WHICH ALREADY EXISTS AMIDST THEM AND, IN ALL PROBABILITY, PRODUCE A MORE TERRIBLE FIT OF RUIN AND DISTRESS THAN THAT OF 1825, AND THE FOLLOWING YEAR.