Mr. Calcraftsaid, he felt it his duty to oppose this measure, which had now, for some time been annually brought under the consideration of parliament. The present prosperity of the country, and the convenient state of the money market, furnished of themselves, in his opinion, a strong argument against the repeal of the existing laws. It had been said, that it was impossible to oppose this measure on general principles of policy, for that it was the soundest policy to allow every man perfect liberty to dispose of every description of property in any manner he thought fit. In the expediency of that general principle he was disposed to concur. But, to this principle they had numerous exceptions daily before their eyes. For instance, a man in building a House was compelled to build his wall of a particular thickness to guard against fire. A man was not allowed to keep a gambling table. Both the gamblers and the keepers of those Houses were restricted by law. Only a few days ago the court of King's-Bench had imposed a fine of 5,000l. on an individual for this very offence. According to the principle of the learned serjeant, that man ought to have turned round on the chief justice and said, "You have no right to punish me for this conduct; it is an unjust interference with my disposal of my own money." But the chief justice would answer—"It is my duty to punish you; you have transgressed a law which was made for the good of the community." If we traced the current history of the country, we should find, that these laws 532 had had a most beneficial effect. Under these laws it was, that the country had attained its present extraordinary state of prosperity.—The hon. member then referred to the spirit of speculation which at present prevailed; and said, that if it was true that there should be an unlimited privilege of disposing of money, there would be no justice in the proposed interference of a noble and learned lord in another place, whose experience was greater than that of any other man in this country, and whose knowledge was more extensive, in consequence of his having so long presided over the Chancery court. But, say gentlemen on the other side of this argument, it is a mutual accommodation to the lender and borrower to remove those laws. He was prepared to admit, that in times of difficulty these laws might be found inconvenient in their operation; but his answer was, that no legislature in the world could guard against these extraordinary emergencies. Another argument was, that by repealing those laws we should do away with the expense of insurances and annuity process; but let gentlemen consider the very small quantity of money transactions that came under this denomination. He contended that it would be most injurious to interfere with those salutary regulations. Was it nothing, that under these laws the country had attained its present exalted situation?
§ Mr. Humesaid, he was clearly of opinion that the House would do well to adopt the recommendation in the king's Speech, and remove all those restrictions which interfered with commercial transactions. He remembered, that when it was proposed to remove the restrictions on the trade between England and Ireland, it was argued by some gentlemen, that to do so would be ruinous to the country. But, the consequence was, that when only a part of them had been removed, the beneficial result was so manifest, that the Irish merchants petitioned for the entire removal of the restrictions; and this cause, perhaps more than any other, had enabled Ireland to bear that full tide of prosperity which was now flowing in and upon her. The hon. member next alluded to the measure said to be in progress in the other House, with respect to the speculations now afloat in the city. His hon. friend had described the proposed measure to be the project of a wise man; but he must state, that it appeared to him exceedingly absurd, and it would surprise him very 533 much if it should ever pass into a law. What right had any man to interfere in the concerns of another? What right had he to prevent that other from embarking in whatever speculations he pleased? No doubt any man who suffered his name to be implicated in the institution of a scheme which was to be carried into execution by means of a company, took upon himself a certain responsibility. Nothing could be more unworthy than for such a person, be his situation that of director or proprietor, to desert the scheme, and place the property of many persons in a state of jeopardy. It was a paltry act; and he was sure no man whose conduct and character were before the public would be guilty of such an unworthy and unprincipled proceeding. To that extent he was prepared to discountenance these projects; but, if the growing commerce of this country required projects of public improvement; and, if any man, no matter what his station or his wisdom, should tell him that it was proper to compel the parties to pay up at once three-fourths of the money, which, perhaps, might not be required for ten years, he should have no hesitation in saying that such an opinion was most absurd and injurious. Formerly it was urged, that it would be inexpedient to make the alteration when the rate of interest was high. Why, then, now was the very time; and he felt persuaded, that during his life time the rate of interest would never again reach five per cent. He thought the House would do well to follow the king's advice, and remove the remaining restrictions. Why continue to fetter the money-market, when they conceded the principle of unrestrained traffic in every other commodity? Why was not money to be treated like all other commodities, which the possessor had the privilege of turning as he pleased to his own advantage? What would the country gentlemen think if a bill were introduced into that House for the purpose of fixing the maximum of rent at 15s. per acre? Would they not deem the measure a most unjust and impolitic interference with their rights? As matters stood, the rent of land generally corresponded with its value. The same observation applied to houses. What, then, prevented any gentleman from asking 10l. an acre for his land, and double the value for his houses? Nothing, but the certainty that he could not be paid. Was it not fair to conclude 534 that money would be likewise lent on the same principle? Me should give his warm support to the bill.
Mr. Crippssaid, he should oppose the bill. The country had experienced the benefits of the Usury laws. Under them it had attained its present height of prosperity and glory. Would they, then, with a rash hand, break down a system which had been attended with such beneficial consequences?
§ Mr. John Smithsaid, that the argument of the hon. gentleman was a curious, and to him an inconclusive one. Because, during the existence of these laws the country had prospered, therefore it would be unwise to touch them. Surely, the hon. gentleman did not mean to say, that every law which was in operation during the period when the country was in a flourishing state, was so perfect, that it would be endangering that prosperity to alter or repeal it. A noble lord had just made a proposition respecting turnpikes and tolls, which he was satisfied would prove of benefit to the community. Now, would it not be deemed an irrational mode of proceeding, if some gentlemen were to say, that, because the country was in a flourishing state during the existence of the turnpike laws, it would be very hazardous to interfere with them. The only question was this—will the repeal of these laws be useful or hurtful to the community? AH other arguments were idle. In his opinion, the restriction was mischievous. Money was a commodity which would be sure, like other commodities, to obtain its value; and if a law settled the rate at which the use of it was to be paid for below its value, its owners would find means of evading that law. Take, for example, the case of a tradesman who was pressed for money, and supplied his immediate wants by drawing a bill, and had not the means of taking up the bill when it became due. This was a case which frequently occurred, and as the law was imperative on him, what did he do? Why, he went to the banker or holder of the bill, requested him to keep it another week, and offered to give nine or ten guineas for the accommodation. If this man could have borrowed the money of his neighbour, at six or seven per cent, he might have been saved from this sort of ruin. This question had been agitated several years ago, out of the House; and there, at least, it had been finally settled. Mr. Bentham had 535 shewn, unanswerably, that the restrictions on the use of money were unwise. The question had been discussed by many enlightened men on the continent, and many clever men in this. Mr. Mill, and Mr. M' Culloch were of one opinion, that the use of money, like the use of other commodities, should be left unrestricted.' As a philosophical question it had been set at rest. The repeal might not take place this session, nor the next; but, it was a measure which, like Catholic emancipation, the abolition of the Test act, and many other measures which had long been debated, must be carried at last.
The Solicitor-Generalbegan by saying, that he meant to propose, by way of amendment, that the bill be read a second time this day six months. He had read the works mentioned by the last speaker twice over; he had also read the evidence and the report of the committee, and he had come to the conclusion, that the repeal of the Usury laws would be injurious. He did not say, therefore, "continue these laws, because the country has prospered under them;" but, "continue them because the repeal would be injurious." If it could be proved to him that the repeal would be beneficial, he would give his vote for it. He met the hon. member, therefore, entirely on the ground of utility, and would endeavour to shew that on this ground the law ought not to be repealed. The borrowers might be divided into three classes —mercantile borrowers, landed borrowers, and persons who did not belong to either of these classes, and who might be considered as general borrowers. He would first take the case of mercantile borrowers, and, if the law applied only to them, he would not deny that the repeal would be injurious. Mercantile borrowers generally obtained a loan to make a profit of it. They did not borrow of necessity, but they borrowed to trade; and if they could make 10 or 12 per cent on the money borrowed, he saw no reason why the lender might not ask them to pay him 7 or 8 per cent. But if they were allowed to demand this, was there any landed gentlemen so ignorant, did any member of that House possess so foggy an understanding, as not to see that, if the monied man could lend to the trader, at a higher rate than five per cent, he would not lend to him at that sum? It was one advantage to the lender, that he could recal his capital at pleasure, or get it back at a short notice. Now, when a man lent 536 capital to a trader, he was generally enabled to command the use of his capital when he pleased. Very often he received as security transferable property, which he could turn into money when he pleased. But, if he lent his money on land, he could not get it back at his pleasure; there was all the trouble and inconvenience of mortgage; he could not recal it for two or three years, and therefore, in proportion as he could not command the use of his capital, when he lent it to the landed gentleman, he would thus make them pay a higher rate of interest for it than the trader. The landed gentleman would find no money-lender so pleased with his physiognomy, as to lend money to him at a lower rate of interest than he could get elsewhere; and, if this repeal enabled him to get more from the trader, was it not evident, that it would enhance the difficulty of borrowing to the land-owner He believed he was not wrong when he stated that eight out of every ten estates in the kingdom were loaded with debt. Now, under what circumstances did the country gentleman borrow money? Was it to speculate upon? Was it to employ it at some seasonable crisis, when by a little prudence and dexterity he might obtain vast profit? Was it to sink it in some scheme where it would fructify to his unbounded advantage? No. The benefits which he could receive as its produce were fixed. He never could obtain from a borrowed sum beyond a determined profit. And here were the great distinctions between these two species of borrowers. Could any one say, that the repeal of the Usury laws would be beneficial to the latter class? But, if the terms of borrowing were so unfavourable to the landed class, what expectation could the general borrower entertain of being able to obtain a Joan under any other than oppressive terms? The persons who formed this class generally stood in need of but small sums; their necessities were pressing, and therefore they were exposed to the most grinding demands. However, they had no choice; they were without, perhaps, the sufficient security, and they must submit to the terms imposed upon them, be they ever so oppressive. If there was any gentleman present who, before he became a member, happened to have owed a tailor's bill—if that gentleman had a scintilla of recollection of any such transaction, he would, perhaps, remember that he had been for a time an involuntary 537 borrower, and that he was obliged to yield to the ad libitum demands of the lender to whom he made application.—But, there was another most material point. It would have the effect of making capitalists engross the profits of most lucrative trades, without incurring the risks of partnership. If a man could get 10 or 12 per cent for his money by lending it on good security to a person engaged in a profitable trade, he would not become a partner in the trade, where the whole of his property would be liable, in case of failure, to the partnership debts. He would rather lend it, and then he was sure of a certain portion of the profits, if the trade succeeded; and if not, he would have a guarantee for his money advanced, to the prejudice of all other creditors. He would take the case of a brewery. A capitalist might embark his 50,000l. or 60,000l. as a loan on good security, at 10 or 12 per cent in it. The profits of the trade would be perhaps 20 per cent. He would thus secure more than half the profits of the trade without the risk; and, if the trader failed, the other creditors must be the losers. This showed not only the great inconvenience, but the evil of the proposed change. An hon. member had said, that there was no restriction on the rent of land; that the landed gentlemen might ask what they pleased for the use of it. But, he would ask the hon. member if the law, which allowed corn to be imported into this country, when the price was 80s., was not fixing a maximum on rent? Beyond that, the landed gentlemen could not demand a rent. It was because he thought the repeal proposed unseasonable in time, and pernicious in principle, that he should move, that it be read a second time this day six months.
§ Mr. Serjeant Onslowcombatted the illustration of the Solicitor-general, drawn from the corn laws, and contended, that this was meant not as restriction against, but in favour of, the landed interest. He hoped his learned friend would not raise this argument in favour of the corn laws, as he would find it not very palatable to the country gentlemen. His learned friend had talked as if money-lenders were men who never looked but at the rate of interest promised them. Such a class of men had never existed. All who had money to lend, looked both at the rate of interest and the security for paying it; and it had long been the case, that men with a less certain security, such as mercantile men, 538 could not borrow on as favourable terms as those who, like landed gentlemen, had better security. The learned member seemed also to think, that a lender could at all times have what he asked, and that the rate of interest was entirely fixed by the wish of the lenders. He had taken no notice of the competition of lenders. If this were as the learned gentleman had stated, how was it, that at present, when the legal rate of interest was 5 per cent, men lent their money much below that rate? It was clear, therefore, that some other principle besides the will of the lender, settled the rate at which the rent of money was to be paid. This principle was partly the competition among the lenders. Money was like land or houses, which, when men borrowed, they paid for the use of; and as the rent both of houses and land was unrestricted, he did not see why the rent of money—for there was nothing magical in the term interest—should not be equally so. It could not be denied that the best and readiest security which could be offered for money at the present day was land. The fact was, that money could be at all times obtained on good security, at its fair market value. To reduce it to that value, or to prevent its being carried higher than that value allowed, the present measure was introduced. The land-owner and the merchant could now obtain it at its fair price; but as to the person who had no security to give, he did not know any change of the law which could put him into a better situation with respect to the terms on which he could obtain a loan, than he was at present. He contended, that, on the ground of good policy, there was no just cause for continuing the present laws. We had been in the habit of lauding the wisdom of our ancestors; but that wisdom did not introduce any law for fixing any rate of interest for money until the reign of Henry 8th. This act was repealed in the reign of Edward 6th; but the statute of Henry 8th was renewed in the reign of Elizabeth. But it was the opinion of the ablest men in that and the preceding reign, that no interest ought to be taken for money. So much for the wisdom of our ancestors. Since those days, however, the principles of commerce were better under stood, and a value was fixed upon money. That value, he would contend, ought to be left to the effect of competition in an open market, without any legal restriction whatever.
Mr. Robertsonopposed the proposed repeal, and contended that it would be highly impolitic to do away with a fixed rate of interest. Such a principle was at variance with the doctrine of Adam Smith, which it had of late been too much the fashion to condemn. He would lay down a rule which he thought would satisfy all who were conversant with this subject. There was in every country a certain rate of profit in commercial transactions. In this country he took it to be about 7 per cent. In retail trade it was, of course, more. Now, a man who borrowed at 5 per cent had 2 per cent profit; but if he gave 7 per cent interest, he must be inevitably ruined. Yet if the usury laws were repealed, he would be induced to do so; and once driven into that condition, there would be no escape for him. It was the duty of the legislature to protect this class, and he should therefore vote against the repeal. He contended, that all civilized nations had found it necessary to protect their subjects from usury, and fix the rate of interest. It was a departure from this salutary principle, in some of the free states of the continent, where a higher rate than 5 per cent had been allowed by the law, which had caused their ruin.
Captain Maberlysupported the bill, because he considered the present system of laws to be unjust, impolitic, and open to constant evasion.
Mr. Alderman Heygateopposed the bill, as injurious to the various interests of the country, and especially ruinous to the small traders. The present law was not constantly evaded. If it were, this bill would not have been deemed necessary by those who had now pressed it upon the House.
§ Mr. T. Wilsoncontended that no case had been made out for the bill; and that, if carried, it would unhinge all the existing pecuniary relations in the country.
§ Mr. W. Smithcontended, that the bill would not be detrimental to the interests of the country, since none of the ministers, who were the guardians of those interests were present to oppose it. He looked upon their absence to be a convincing proof that there was no danger in the measure.
Mr. Wynnsaid, he had so often stated his sentiments to be favourable to this bill, that he should not have risen to say a word in defence of it, had it not been for 540 the allusion to the absence of his hon. colleagues. He believed that all of them considered the bill as one which would greatly advance the public interest. His right hon. friends, the chancellor of the Exchequer, and the president of the Board of Trade, had on more than one occasion, defended the policy of it; and he was confident that all his colleagues, with the exception, perhaps, of the right hon. Secretary for Foreign Affairs, who, to the best of his knowledge, had never taken the question into his consideration, were strongly in favour of it. They had left the House, because they anticipated that the division on the bill would not take place till a late hour, and that their presence would not be wanted to render the question successful. He had stayed behind at the request of his right hon. friend, the president of the Board of Trade, to declare the opinion of ministers on this bill, in case such a declaration of opinion should be rendered necessary. Much had been said of the wisdom of our ancestors. These acts, however, were in the spirit of other acts passed at the same time, which we had now beneficially got rid of. The constant mistake in former times was, the belief, that those transactions could be regulated by law, which, it was now found, were better regulated by themselves.
§ Mr. Brightwas exceedingly afraid of the removal of these laws, not on account of the country gentleman or merchant, but the influence they had on the comforts of the middling and lower classes.
§ The House divided: For the amendment 45. Against it 40. Majority 5. The second reading was accordingly put off for six months.