paid by him leaves him sufficient to remunerate him for his time and trouble, it is a good operation. If the amount he can realize be not enough to pay the interest, he will generally, if prudent, decline entering into the transaction at all; or, if he has embarked in it and is disappointed, he only meets one of those results which so often happen to men in business-viz, disappointment, which is of use in one respect, if no other, in leading to increased care and watchfulness.

To restrain the rate of interest, is very often to prevent young and enterprising people from making business transactions of great advantage to themselves. The capitalist will usually be content with a moderate share of the gains of a trade, as there is generally an indisposition on the part of men of wealth to exert themselves much in the drudgery of business. But where he finds himself restrained by law to six or seven per cent, and the prospect of a large profit is tempting, he is apt to engage in business himself, in order to obtain legally that remuneration for the use of his money to which he is fairly entitled-consequently, the effect upon the enterprising and industrious is bad.

Restraints upon the rate of interest tend to promote monopoly in business, and drive persons of small means from competition with overgrown houses. The rate being fixed by law, persons who are lenders naturally look about to see in whose hands they may most safely venture to place their property. They naturally look to houses of high standing, and generally put it into the hands of such houses; for the simple reason that where all persons of high credit or low credit can only offer the same price, they naturally look only to see who is best and most trustworthy among them all. The command of money enables these parties to monopolize business to the prejudice of their less wealthy neighbors. In times when speculation prevails, they are easily tempted to adventure beyond their means, and should any great convulsion take place, frequently bring ruin on themselves and those who have confided in them.

If the reader has noticed the course of events during the four past years, he will have observed that the crash of 1837 first overwhelmed individuals and houses who were supposed to possess great wealth themselves, and who had unlimited command over the property of others; while houses of smaller means, who managed discreetly, generally passed through the storm at the expense of some trifling damage to the sails and rigging, but saved themselves from foundering. It is difficult to find a satisfactory reason for this state of things, excepting in the tendency of our laws to turn the current of floating capital into the hands of persons of high reputation for wealth; thus stimulating them to too great an extension of business, and tempting them to engage in risky and hazardous undertakings.

Governments, in cases where they are themselves interested, as well as in many other cases, recognise credit as a commodity, although they rigidly restrain individuals from making free use of it in that character. In time of war or rebellion, when the state is subject to heavy demands and is under the necessity of borrowing money, its scrip is sold according to the circumstances under which it is brought into market. If the government is in danger of being overturned by revolution, or if lenders of money have not full confidence in the public faith, the compensation to be made them for their capital must be proportionally increased in some form or other. The usual way has been to create stock bearing something near the legal rate of interest, and disposing of that stock below or above par, according

to circumstances. For example, if the English government wish to borrow money at 3 per cent, when no lender can be found at less than 4 per cent, a stock must be created for £100, which the lender takes at £75, the government thus binding itself to pay £3 per annum for all time to come, or extinguish the debt by a payment of £100. In the same way have the bonds of several of the states been sold in London at a rate which not only makes the money cost the state seven or eight per cent during the time for which the loan is made, but compels them to reimburse the lenders a larger sum than was advanced by them. That this mode of effecting loans is wasteful and improvident, is quite evident enough without any ar gument to prove it. Nothing would show the absurdity and impolicy of usury laws better than a demonstration of the superior advantages accruing to government by appearing openly in market, and borrowing at such rate of interest as it may be able.

In many of the charters now granted for internal improvements, provision is made that the state may assume the rights of the corporators by paying the cost of them, and a rate of interest equal to 8 or 10 per cent.* This rate of interest is always considerably above the legal rate. Can any thing show more fully an acknowledgment on the part of government that the owners of the money should be paid for the risk that may attend the proposed investment? The allowance of a high rate of interest on mari. time loans is also an acknowledgment, on the part of government, that the value of the use of a sum of money loaned in this form depends in some degree upon the greater or less certainty of its reimbursement.

Advocates of usury laws advance many reasons why such laws should exist, to answer which, would extend these remarks to an undue length. It is said "there is no more money in the world to be loaned at one price than another." True enough, perhaps, but this money is not always equally or evenly distributed; there may be a deficiency in one place, and a redundancy in another; and, consequently, it may be more valuable in one place than in another. It is said "the experiment of repealing usury laws has been often tried, and found to be pernicious." The contrary would certainly seem to be the fact so far as we can judge ourselves, for it is presumed we are not to receive the opinions of by-gone generations, except so far as to give them such weight as the opinions of those generations may be supposed to be entitled to upon this question, when their opinions upon many other questions of political economy have been found erroneous, and decided to be so by universal consent. In Louisiana there is no restriction of the rate of interest excepting in regard to banks, and each bank has its restriction contained in its charter, beyond which it may not go. No complaint has ever been heard from New Orleans of evils attendant upon the want of usury laws. Mr. Samuel Jones Lloyd tells us that the partial repeal of the usury laws in Englandt has been of incalculable advantage to the commercial community, and mentions an instance of recent occurrence, of a large institution effecting a heavy loan at a rate of interest equal to 9 or 10 per cent, thereby averting a severe and wide. spread disaster to the commercial community. In Bengal, the rate is

* This provision is incorporated into all the railroad charters granted in Massachusetts.

+ Contracts having less than twelve months to run are exempt from the operation of the usury laws in England.

The institution here referred to is the United States Bank.

fixed by law, but at a very high point-twelve per cent-which is about three times the usual current rate. This is nearly equivalent to free trade in money, and the rates range usually from three to five per cent.

The class of persons who object to a free trade in money whose objections deserve more serious notice, are the farmers and proprietors of land. Opposition to the repeal of usury laws comes principally from them. They fear to be subjected to the extortions of rapacious usurers, and they imagine they should be so subjected because there are few heavy capitalists in country towns, and a consequent absence of competition among those of them who loan money.

In few words, it may be said in reply to these objectors that the farming interest generally have no need of being in debt; or rather, a floating debt of the character of the commercial debt in the cities, is unknown among them. A farmer, if in debt at all, is generally in debt for some part of the purchase money of his estate. When he buys his estate, he generally stipulates that the credit he is in want of shall be granted to him upon the security of a mortgage at a reasonable interest. If the seller of the estate cannot grant it, it can be obtained from some of that class of persons who are timid, and desirous of loaning their money upon real property because of the superior security of land. If a farmer borrows upon mortgage afterwards, it is owing in most cases to his bad management, whereby he has become impoverished. It is because he needs the money to discharge debts contracted for current expenses, or in consequence of losses in operations he may have been tempted into. As a general rule, it has been ascertained by inquiry that there is usually no more difficulty in the way of effecting loans of this kind than in making loans of any kind. And even with the usury laws for a protection, the farmer is frequently obliged to pay a higher rate when the money is worth it, in some way by which the law is evaded, as by taking some article he does not want, or some article he does want, at a high price. As many persons who believe the laws unwise, have, nevertheless, a conscientious respect for them, the borrower, under these circumstances, is driven to make the best bargain he can, with persons less scrupulous, and at a higher rate than he would have had to submit to if there could have been a free competition.

Indeed, the borrowers generally, for whose benefit these laws are supposed to operate, and on whose account they are now kept in force, are almost universally sensible that, instead of being a benefit they are a positive injury, and generally are desirous of their repeal. Just in proportion to the penalty of the law is the risk of disregarding it, and just in this proportion will the lender charge for the risk he assumes. In Massachusetts the penalty is three times the interest taken. In New York it is a loss of the whole principal and interest, and fine and imprisonment also. Last fall money ranged from six to twelve per cent per annum higher upon commercial securities in New York than in Boston. There is no way of accounting for this, except that the difference was the premium upon the increased risk. Securities of the very highest class, such as Treasury notes, were selling at the same moment at about six per cent per annum in both cities. If any difference, they could be negotiated at a lower rate of interest in New York than in Boston.

A volume might be filled with arguments going to show the impolicy and folly of laws restraining free trade in money, but it seems unnecessary to pursue the subject further. After all the demonstrations that have been

made of a public sentiment adverse to them; after the general expression of an opinion on the part of money borrowers in favor of their repeal, (no one doubts the ability of the money lenders to take care of themselves ;) after their injurious effects upon the best interests of the business community have been so repeatedly and in so many ways pointed out ;-that they should be permitted to stand on the statute book, is indeed a matter of wonder.

ART. III. CAUSES OF UNSTEADINESS OF THE CURRENCY, AND THE REMEDY THEREFOR.

NUMBER FOUR.

OF THE CURRENCIES OF FRANCE, GREAT BRITAIN, AND THE UNITED STATES.

HAVING thus shown that that portion of the currency which consists of circulating notes, bears in France a much greater proportion to the amount of exchanges performed, than in England, and in the latter a far greater proportion thereto than in New England, we will now proceed to an examina. tion of the condition of the total currencies of France, England, and the United States, with a view to ascertain

I. What is the proportion which capital remaining unproductive to the owners, in the form of gold and silver coin, and deposits, bears to production or trade?

II. What is the tendency to equality of profit?

III. What is the amount of power exercised by individuals over the amount and value of the currency?

IV. What is the tendency to steadiness in its amount and value?

If the views we have submitted are correct, it will be found that where the currency bears the least proportion to the amount of trade, there is the greatest tendency to equality of profit, and to steadiness in the amount and value of the currency; and that there individuals or associations have least power over the actions of the community, over the prices of labor, and those of commodities. If, on the contrary, those views are incorrect, a small currency will be associated with frequent and great changes in its amount, inequality of profit, and unsteadiness of prices, and individuals will be found exercising a large amount of power.

In FRANCE, we find a single institution that has, until quite recently, exercised uncontrolled dominion over the currency. To it has been granted a monopoly of the right of furnishing to the trading community facilities in the form of circulating notes, the exercise of which has been limited to sums of five hundred francs and upwards.

The precious metals existing in that country, in the form of coin or bullion, amount, as we have shown, to about six hundred millions of dollars, of which from twenty to fifty millions lie idle in the bank. The deposits in that institution usually amount to about twelve millions of dollars, but are liable to great increase, when the owners of capital become alarmed and withdraw it from temporary employment. The circulation of bank notes varies from forty to fifty millions of dollars.

The apparent amount of currency is as follows:

The annual production of France being about fourteen hundred millions of dollars, the currency is equal to 45 per cent thereof, or one hundred and thirty-five days' labor; and thus almost one half of a year's product remains in a form in which it adds, says M. Chevalier, "nothing to our comforts, our enjoyments, or our productive power.'

We shall have occasion to show that the total currency of New England amounts to about 5 per cent of the annual product, at which rate the sum required to perform the exchanges of France would be seventy-seven millions of dollars. If the exchanges of New England be, as we have already suggested, six times as numerous, in proportion to the product, as those of France, 5 per cent would bear a smaller proportion thereto than would 1 per cent in the latter country. Allowing for the cumbrous character of the medium of exchange, it is probable that one hundred millions might be found necessary; leaving five hundred and twenty-seven millions subject to the will of the owners, to determine if it should or should not act as currency, and what should be the difference between the real and apparent amount thereof.

The capital of the Bank of France is nominally ninety millions of francs, or about seventeen millions of dollars, but a part of this has been purchased up by the institution, so that its present capital is only about fourteen millions. The following may be taken as an approximation to the average state of its opperations :

The following table will show how far the operations of this institution tend to promote steadiness in the amount of currency. In the first column is given the total amount of bills discounted in the year. In the second, the average amount of commercial loans, supposing all to have been at sixty days: