USURY LAWS REPEAL BILL. (Hansard, 10 February 1819)

Mr. Serjeant

Onslow, in rising to move for leave to bring in a bill to repeal the laws which restricted the rate of interest, said, that as there were now in the House many members who were not present during the former discussions of this subject, he might be permitted to say a few words as to the grounds of his motion. An opinion in favour of the measure, similar to that which he proposed, had been expressed, not only in England and on the continent of Europe, but by the most enlightened citizens of the United States of America. In the year 1817, a motion was made in the House of Delegates of Virginia for a repeal of the Usury Laws, and the speech of Mr. Hays, the gentleman who brought forward the measure, was an evidence of the talents of the supporters of it in the United States. 421 The laws against usury had, in fact, their origin in a blind and fanatical perversion of the words of scripture; and the opprobrium which had been cast upon those who in modern times took more than the legal rate of interest, was formerly thrown on all those who took any interest for money lent. The term usury, in fact, was applied to the receiving of any use or interest on money. The act of Henry 8th, the origin of the present usury laws, was not an act of restriction, but an act of enlargement; for as it was found impossible to enforce the absurd prohibition on the taking of interest, the rate was limited to 10 per cent. In the reign of Edward 6th that act was repealed, and the taking interest prohibited; but the consequence was, that the rate of interest which before was below 10 per cent rose to 14 per cent. In the reign of queen Elizabeth, the law fixing the rate at 10 per cent was revived, while, at the same time, the taking any interest was declared sinful and detestable. Since that time the rate had been gradually reduced; but it was remarkable, that while the taking interest above a certain rate subjected the lender to treble penalties, it did not appear that the law prohibiting the taking of any interest had been repealed. The disapprobation of the habit of taking any interest on money was repeated in the act of queen Anne, though in different terms. The learned Serjeant then recapitulated the various inconveniencies with which the usury laws were attended, as had been fully proved before the committee which had been appointed to inquire into the subject. It had been proved, that in consequence of fixing a legal rate, which had often been below the market rate of interest, the landholder, when incumbered by debts, was forced to a disadvantageous sale of his estate, or compelled to raise money byway of annuities, on lives named by the grantee, at from 10 to 15 per cent. Although during the period at which these inconveniences were felt by the landholder, the same inconveniences were not felt by the holders of bills of exchange: that was to be attributed to the Bank restriction, which enabled the Bank to discount bills to an unlimited extent. As some observations of Dr. Adam Smith had been alluded to, which were at variance with his view of the subject, and, indeed, with other parts of that distinguished writer's own work; it was satis- 422 factory for him to state, as he was enabled to do, that Dr. Smith, with the candour which distinguished great minds, had confessed, after having read Mr. Bentham's work, that the view he had taken of the subject was not correct. His bill was simply to repeal the restriction on the rate of interest under special contracts,—the rate of interest under orders of courts of law or equity remaining as at present. He then moved, "That leave be given to bring in a bill for repealing the Laws which prohibit the taking of Interest for Money."