“And in this case so much goes away as every man in his own calling might, and usually does, make of his money; allowance being made for hazards, which in some cases are more, and in others less. With this, I so far agree: that no man can complain, if his debtor makes a vast and unexpected return of his money; but yet there is no doubt but I may demand higher Interest of him that makes a very gainful trade, than I can of another who drives a poor one.”
These are the opinions of men learned in the science of political economy; and are entitled to weighty consideration; but it seems to me, they do not, any of them, reach quite far enough into the subject. All of them appeared to be fettered by the pressure of that same generally recognized opinion to which I have before adverted.
The proposition I am inclined to favor on this much mooted point is aptly expressed in the words of Jeremy Bentham. It is, “that no man of ripe years, and of sound mind, acting freely, and with his eyes open, ought to be hindered, with a view to his advantage, from making such a bargain in the way of obtaining money, as he thinks fit, nor, (what is a necessary consequence,) anybody hindered from supplying him, upon any terms he thinks proper to accede to.”
There are but two definitions which can be given to Usury. One is, taking a larger rate of Interest than the law allows; this is the legal or, political definition. The other is taking more Interest than is usual for other people to give and take; this is the moral one. And now, in order that the law may touch the point, and actually prohibit Usury, it is needful first that the law should supercede morals, or conventional custom, and fix that point.
One thing is certain, that antecedently to custom, which has grown to be established conventionally, there could not be such a thing as Usury. For what rate of interest is more right than another? In one land ten per cent. is the legal and therefore (as the advocates of limitation would say) the proper rate; in an another five per cent. is the utmost which the tender consciences of the legislators will allow. Even in the same country, from time to time, the rates are and have been varied as the wants of the community, the exigencies of the times, or the whims of the legislators prompted.
It is, then, convenience which has produced whatever there is of custom in the matter. “And what, (asks Bentham appropriately,) is there in custom, to make it so much more deserving of observance than convenience, which first gave it birth?”
It is convenient for me to give 8 per cent. for money. “No,” says the law, “you shall not.” Why? “Because it is not convenient for your neighbor to give more than 6 per cent. for it.” Can anything be more absurd?
Then again, as to the opprobrious name. No appellation or particular stigma of disrepute affixes to a man who being the owner of a house, gets as high a rent for it as he can. Indeed this is the common practice with such persons, and nobody is ashamed to do so, or professes to do otherwise. Now, why a man who possesses money, and takes as much as he can get for it, say 8, 10 or 12 per cent. should be loaded with vile epithets, any more than if he had bought a house with it, and then made the same profit from renting the house, is more than I can see.
Another point, in which the good policy of the existing restrictive laws upon this subject, seems doubtful, is that they operate in only one direction. If it is wrong, and worthy of punishment, to take more than the fixed maximum of interest for the use of money, why not make it a penal offence to offer less than that amount, as well as to accept more?
There are divers reasons given by the advocates of the laws restricting the rates of Interest why they are beneficial and ought to be enforced. Among these are: that they prevent prodigality, and protect the poor and simple from extortion and imposition.