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was strongly disposed to repeal the usury laws of this State. A committee, to whom the matter was referred, embodied Jeremy Bentham's "Defence of Usury" in their report, for the purpose of having it printed in great numbers, as a legislative document—and it was so printed. Before the expiration of the session, however, the great monetary crisis of 1837, resulting in the general suspension of specie payments by the banks of the United States, had begun; and the same Legislature, instead of repealing the usury laws, passed enactments greatly increasing their severity and the means for their enforcement. With the exception that they have been repeatedly relaxed as to some railroad corporations, who have by special act been authorized to sell their bonds in the market for such prices as could be obtained, these statutes remain in full force in the most commercial State of the Union. The great reason for retaining them is, that immense sums, loaned upon the mortgage of real estate, are always outstanding, liable to be called in at a moment's warning. It is apprehended that, if the restrictions were removed, the payment of such loans would be demanded upon the occurrence of every commercial crisis, and the borrowers be compelled to pay exorbitant interest for their renewal, or submit to an immense sacrifice of property by forced sales. Movable property can be transported from a poor market to a better one, but land cannot go in search of a purchaser. At times, when the value of money is suddenly advanced, the decline in the price of land is for this reason much greater than in property which can evade a local cause of depression. The usury laws thus serve as a barrier, to prevent the storms which strew the haunts of commerce with wrecks from wasting the rural districts. The agricultural class, whose operations never originate these convulsions, will naturally maintain all the defences which guard them against liability to share the ruin thence resulting.

Money is the sole means of preserving credit in a commercial crisis; and commercial credit depends not upon ultimate payment, with interest for delay, but on payment at the stipulated moment, whatever may be the circumstances or the cost. Its value in mercantile appreciation is such, that there is scarce a limit to the pecuniary sacrifice that will be made for its preservation. To ride out a storm in which the majority founder, is a distinction which promises

great future advantage, and for its sake men will struggle, and drain themselves of the means, which might, if husbanded, have paid their creditors, if they left no surplus. The price which is paid for the use of money under such circumstances is enormous, and bears no other relation to profit, than the price of bread during famine in a besieged city does to the cost of raising it before the hostile forces sat down under its walls. If laws against usury are effectual to prevent its being borrowed, the same result can be reached, and is reached, by selling goods at auction, where no law prohibits the vendor from submitting to what sacrifice he chooses. The true remedy must be sought in efforts to obtain security against such crises-diseases in the economical condition-not in attempting to regulate the conduct of men during the paroxysm.

We find the interest of money denuded as far as possible from all premium for risk, ordinarily, in the rate of interest paid by a government to its own subjects. The security of such loans is a matter of public knowledge, while the security of a loan upon individual credit is known to but few, and that of a loan upon landed security, however ample, requires verification, attended with trouble and expense. The stock of a government in good credit is, for this reason, the most readily convertible of all descriptions of property, and furnishes a convenient means of investment for those sums which individuals have in their possession, intending to employ them after some brief interval, but without having determined upon the mode, or having not quite matured their arrangements. In the year 1848 there were 96,415 persons holding portions of the national debt of England so small, that the dividend did not exceed £5 at each payment. Such fund-holders are probably for the most part of the class to which we have referred; and no day passes without a large number selling out and a large number buying in. Persons thus circumstanced are content with the lowest rate of profit; and the existence of a numerous class of such persons in a community enables a government to borrow at the lowest interest.

The interest of money varies from one country to another with the degree of security which its institutions afford, and in the same country it is found varying at different periods for the same reason. A confidence that the fruits of labour may be securely enjoyed, is

the prime stimulus to exertion, and to that abstinence for the sake of future enjoyment, which leads to accumulation. Where that confidence is weak, labour will be unproductive, and capital increase slowly. Where the aggregate of profit is small, the rate of profit is large; capital then secures a large proportion. Interest is therefore high, where, from the absence of security, production is trifling. It is high in Egypt, where the fellah is robbed by the agents of his government the moment he becomes worth plundering. It is high, whenever despotism, anarchy, or war, puts the rewards of industry in peril, and retards the increase of wealth. It was higher than ten per cent. in England before the Parliament of Henry VIII. legalized it at that rate, and it has continued to fall from that time with the progress of national well-being. England was getting rich more rapidly when the rate of profit had fallen, and interest was restricted by a statute, passed in the twenty-first year of James I., to eight per cent. In the reign of his grandson, Charles II., it was reduced to six per cent., and in that of Queen Anne to five, which is now the legal rate, and is from one to one and a half per cent. higher than can be obtained for permanent investments upon good security. The tendency to a fall in the rate of profit and of interest with the progress of wealth is so generally admitted, and the fact that they have everywhere fallen with that progress so well known, as to require no further illustration.

It is proper to remark that, in denying the proposition that the prosperity of a country is to be measured by the rate of profit prevailing in it, we are supported by the authority of Adam Smith. His doctrine upon this point is, that the rate of profit "is naturally low in rich and high in poor countries, and that it is always highest in the countries which are going fastest to ruin."* Mr. M'Culloch characterizes this as a most erroneous statement, and regards it as inconsistent with the opinion maintained elsewhere in the "Wealth of Nations," that those countries in which capital is increasing with the greatest rapidity, are, cæteris paribus, the most prosperous. It is not for the purpose of fecalling attention to the distinction which reconciles these doctrines, which, though nowhere clearly expressed

* Wealth of Nations, Book I., chap. 11.

by Dr. Smith, was manifestly felt by him, that we refer to this criticism. It is because Mr. M'Culloch distinctly perceives and remarks, that another doctrine, in which nearly if not quite all the modern English Economists are at variance with the author of the "Wealth of Nations," is dependent upon that we have stated—the doctrine that individual advantage is not always a true test of the public advantageousness of different employments of capital. The successors of Smith maintain that it is, and strenuously deny what he teaches, that domestic trade is more productive, and maintains a larger industry than foreign trade. The consideration of this point will naturally occupy us in the following chapter.

CHAPTER VII.

EXCHANGE.

EXCHANGE arises from the division of labour. From the moment that men have attained the power to protect themselves and their crops from the wild beasts, agriculture begins to yield a surplus beyond the subsistence of those engaged in it. It would appear, from the prominence given by the traditions of most nations to the mighty hunter in their early history, that the struggle of man with the ferocious animals has been severe, and may for a time have seemed dubious. From Hercules down to St. George, the dragon-killer, prowess in the destruction of savage animals has been so marked a feature in the character of legendary heroes, as to afford evidence that men put a very high estimate upon services of this kind; an estimate naturally proportionate to the danger which such service averted. There are portions of the world at this day, in which carnivorous beasts divide the occupation of the earth with the human race, and greatly impair its power to multiply and find subsistence. The beasts of prey require graminivorous animals for their food, and the latter require vegetation, which is thus abstracted from the nourishment of human beings. The crisis of humanity is in the warfare by which the carnivorous animals, whose subsistence exhausts great tracts of land, are exterminated. An end once put to their joint occupation of the territory, there is no assignable limit to its power to maintain human population, and a surplus beyond the wants of its actual occupants at once rewards their toil. A portion of the community is then found withdrawing itself from the culti vation of the land, and employing its industry in the mechanic arts. The blacksmith and the weaver obtain their food by bartering their services and their wares with the farmer. Even before this stage of social advancement is reached, exchange of services is established in the domestic relations. The savage husband procures food and the wife dresses it; he hunts the fox and the beaver, and she makes their skins into clothing. Both are producers of services, which

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