§ Mr. Serjeant Onslow
rose to move for leave to bring in a bill to repeal the Usury Laws. After the repeated explanations he had given, upon former occasions, of his views upon this subject, it would be unpardonable were he now to occupy the time of the House in stating, he said, the reasons upon which his proposed plan was formed. He must, however, express his very sincere regret, that the House rejected his bill last session, because he was certain that, if they had allowed it to pass into a law, the late panic and its attendant distress, would have been much mitigated, and, in some of the great manufacturing districts, many difficulties would have been removed which were now severely felt. He could prove that, in many instances, more than 100 per cent had been given for money in the city of London, notwithstanding the operation of the usury laws. It was said on a former occasion, that his bill would injure the landed interest. He denied that this would be its effect; on the contrary, it would materially serve that important class. He concluded by moving for leave to bring in a bill "to repeal the laws which prohibit the taking of interest for money, or limit the rate thereof."
§ Mr. Davenport
renewed his opposition to the measure, and would continue to resist it so long as he had a seat in that House. He saw no necessity for giving leave, year after year, to bring in a bill, which, in a future stage, they were determined to reject. His opposition was not out of discourtesy to the learned Serjeant, but to shorten the journey of this bill. His firm belief was, that nothing could be devised more mischievous for the landed interest than the proposed measure. It would necessarily disturb the whole mortgage system, affecting the property of the kingdom, and substitute a wild theory in the room of practical experience. He called upon the government to take a part in stopping the eagerness for introducing such bills, and to look to themselves in time, before a perseverance in error brought ruin upon the country.
§ Mr. Bright
was glad that the bill was thus early opposed. It was most extraordinary, that ministers should be absent from the House when such a discussion was coming on. The bill could not be a matter of indifference to them, with re- 410 ference to their commercial and financial projects; and he trusted that they would take an opportunity either to avow or disavow it. It was not fitting that they should be absent when a question was under consideration which so materially affected the most important interests of the country. The measure must be either a very good or a very bad one; and, in either view of it, it ought to receive the most serious consideration of government. The landed interest ought not to be thus treated. In his opinion, if this bill were now passed, money upon mortgage could not be raised except at a most enormous rate. He hoped the country gentlemen would give their most strenuous opposition to a measure which, if passed, would be attended with the most injurious consequences to their interests.
Mr. C. Grant
said, that his right hon. friend, the President of the Board of Trade, would have attended, had he not been confined to his house by indisposition.
§ Mr. Irving
said, that the bill would not have the injurious effect which some gentlemen apprehended. On the contrary, had it been in operation during the late crisis, the sacrifices made by individuals would have been much lighter than they unfortunately had been; and the House would not have heard of such enormous sums lost in the attempt to maintain the credit of individuals. He, for one, thought that in place of the present crisis affecting the introduction of such a bill, it was rather in favour of its justice and policy. At the same time he was ready to admit that there were a variety of considerations to be well weighed before it passed into a law. He certainly was prepared to vote for bringing in of the measure, and having it amply debated; the House would not take a stand against it in that early stage.
§ Mr. Benett
observed, that it was often necessary for those who were in want of money to borrow it at an extravagant rate, purely in consequence of these usury laws. By the repeal of those laws, the security for fair and liberal dealing in the transactions of borrowing and lending would be much increased. Persons of the most honourable characters would not then be deterred from coming into the market as lenders, and in this the borrowers would find their advantage. The proposed measure should have his cordial support.
§ Mr. Sykes
thought that his learned friend 411 had not been fairly dealt with, when it was thus attempted to stop the progress of the proposed bill in limine. Instead of endeavouring to defeat it at once, they had better have allowed it to be brought in, that it might be examined in all its bearings, especially with reference to the present crisis. The question was one of the greatest importance, and ought certainly to attract the most serious attention of government. And he was the more anxious that government should turn its attention to it, because he was convinced that the project could not be carried into execution without its co-operation. He confessed his surprise that, among their measures for the regulation of the currency, and for preventing the recurrence of the late calamitous scenes, this subject had not come under their consideration, and that ministers had not proposed to repeal the usury laws. It was most unaccountable, that gentlemen should think the bill would act against the landed interest. What was the situation of that interest at this moment? By law they were interdicted from paying more than 5 per cent interest for money; but the law was frequently evaded by resorting to the system of annuities—a system which had brought some of the noblest estates in this country into complete dilapidation. He supported this bill, because he thought, that so far from prejudicing the interests of the landed proprietors, it would be most advantageous to them. The policy of the measure was perfectly clear; and, as to its justice, why should any man be prevented from going into market with his commodity—for money was a commodity—and getting the highest price for it? Let his learned friend be permitted to bring in his bill, and he trusted that ministers would see good reason to carry it through, as one of their own regulations.
Mr. R. Gordon
said, he must continue to oppose this bill. It had been said, that it was unusual to oppose the bringing in of a bill. So it might be, were it a new measure; but this was the identical bill which they had already, year after year, rejected. Why, therefore, allow their time to be further taken up with unavailing discussion? It was a waste of time to permit the preliminary stages of a bill, which they knew would, on the second reading, be rejected. If ministers chose to adopt the measure, and rest it on their own responsibility, then they ought to permit the bill to be brought in; but, 412 when a private individual attempted to introduce it, it ought to be immediately resisted. An hon. member had adverted to the beneficial operation which the repeal would have on the condition of the country gentlemen. But it would be quite as well to allow the country gentlemen to judge for themselves, since they might naturally be supposed to be the best judges of their own interest.
was decidedly opposed to the bill, because he thought it impossible to calculate the effect which it might have upon the landed interest. His objection was, however, principally to the time of introducing the measure; and it was an additional instance of the reckless spirit of experiment which prevailed, and which had entailed already so much mischief on the community.
said, he would suggest a mode by which the objections of the country gentlemen to the repeal of these laws might be obviated. If they were so enamoured of the usury laws, as to prefer granting annuities at a most extravagant rate, to the borrowing of money on reasonable terms, let a clause be introduced into the bill, excluding the country gentlemen from its operation. If they were so desirous of raising money on annuities, at 15 per cent, rather than borrow at a little more than 5 per cent, let them be permitted to do so.
§ Mr. Monck
adverted to instances in which money might have been borrowed at little more than 5 per cent, but the law opposing this, the parties were reduced to the necessity of raising money by the sale of their goods, at a ruinously low rate. This would be a common occurrence, as long as these absurd laws remained upon the statute-book. He agreed, however, that the landed and trading portions of the community stood in different situations, and that the repeal of the usury laws might affect the one interest, in a different manner from that in which it would operate on the other. Money on mortgages was borrowed for a length of time; but a tradesman might want a loan for two months, and for that loan it might be worth his while to give a high consideration. The borrowers and lenders in these cases had different objects; and why should they have one measure for credit and security. If money could be raised at 5 per cent on the best landed security, how could those, who had only personal security to offer, expect to raise money 413 at the same rate? The present crisis had thrown considerable light on the subject, and had proved how much better it would have been for many unfortunate persons, if they had been permitted to borrow money at a little more than 5 per cent, instead of being obliged to sell their goods at a most ruinous loss. The state of the law was most extraordinary. It, in effect, said this, to those who were in want of money:—"You cannot be permitted, whatever your difficulties may be, to borrow money at more than 5 per cent, because any thing above that would be exorbitant, and bring you to ruin. But, you may borrow money, by the sale of your property, at any rate you please, however destructive." Such was the state of the law; and it was of great importance to the commercial portion of the community, that it should exist no longer.
§ Mr. John Smith
said, that since the discussion of this bill last session, much light had been thrown upon the subject. The House was aware of the panic in the money market last December, and he could state, of his own personal knowledge, the enormous sum which had been paid for pecuniary loans. He knew an instance in which, for a very large sum, no less than 75 per cent had been paid. What good purpose could the usury laws serve, when, in spite of those laws, money was, in cases of necessity, raised at such an immoderate rate. He thought the learned serjeant deserved the thanks of the country for his perseverance in this most important measure.
gave his entire support to the proposed bill; and, in doing so, he felt that, instead of injuriously interfering with the landed interest, he was conferring a boon upon that body. He had known many instances of the bad effect of the usury laws, and particularly one about ten years ago, when a person, possessing a large landed property, had a mortgage which was standing for thirty years. The security was for 40,000l., and 20,000l. had been paid off, when the remainder was called in. It was impossible, at the time, to get this sum at the usual rate of interest, and 9 per cent was obliged to be paid by annuity to take off the unredeemed mortgage. This annuity-interest continued for a considerable time, until money could be obtained under more favourable circumstances. When the committee sat upon the usury laws, they had before them several eminent solicitors, who con- 414 curred in opinion, that the landed interest would be benefitted by the change. A great deal had been said about the wisdom of our ancestors, and the authority of ancient statutes; but, let any one examine the state of the laws generally when such statutes were framed, and they would see that it was attempted at that time to regulate by law the price of every article of consumption. Nay, to such an extreme was this spirit of interference carried, that the lord chancellor had the power, even since the Restoration, of regulating the price of wine. Deeming it essential to the interests of the country generally, that these laws should undergo an alteration, he should give his cordial support to the measure.
said, that when government itself gave 6 or 7 per cent for money, it was not surprising if private individuals sometimes found it difficult to borrow at 5 per cent. With respect to the proposed bill, if ministers would take upon themselves the responsibility of supporting it, he would not oppose its introduction; but, if it was to be considered merely as the measure of an individual, teazing the House with the discussion, session after session, then he would undoubtedly oppose it in limine. An hon. member had stated, that he knew of transactions in the city, in which money had been borrowed at as high a rate as 75 per cent. Why, it was a common practice in the city to borrow money in that way, upon continuation. These were mere gambling transactions; and, if he were to state all that he knew about these matters, he could present a scene of gambling which must appal those who had paid no attention to such matters. But these gambling bargains had nothing to do with this bill. The passing of it would have no effect upon them whatever. Let the learned gentleman withdraw this bill, and introduce another, of which the operation would be confined to trade, excluding money lent on mortgage. Then, if the trading bill worked well, perhaps the landed interest would consent to participate in the experiment. The only result of such a bill as this would be, generally, to increase the rate of interest. They were for ever told of the terrible operation of annuities, and spendthrifts would still be found, even if this bill were passed, to fly to annuitants to satisfy their cravings; but the amount of annuities, as compared with mortgages, were small indeed; not 415 in a greater proportion than as forty to one. So that if they entertained the subject, they would be passing a law for the exception, and not for the rule. He was sorry the learned gentleman had not been made a judge during the vacation; for, if he had been removed out of that House, no other member could have been found to foster his bantling. At all events, he must deprecate the discussion of this important question, unless it was gravely taken up by ministers, and considered in a calm and dispassionate manner. The minds of the people were too full of the dangers which surrounded them, to be diverted from fitter considerations by the agitation of such a question as this. If such a bill were passed, was it likely that the Bank would permit the 1,200,000l. which they had now out at 4 per cent to remain at that rate of interest? The Bank proprietors would not allow the thing to remain, even if the directors were so inclined. Indeed, every man who had money out upon mortgage would, in such a case, recall it, and demand better terms. It was a very impolitic step to bring forward this measure, when money matters, so far as the interest of mortgages was concerned, were in a satisfactory state. Those who were really interested were perfectly satisfied with their present condition. Why, therefore, disturb it? Unless he heard that this measure was to have the sanction of ministers, he would take the sense of the House on the motion, if pressed. He hoped, however, that he should not be driven to this course, but that the learned serjeant would withdraw it.
Mr. Secretary Peel
said, that as he was not present at the commencement of the discussion, he was but imperfectly qualified, if qualified under any circumstances, to give an opinion upon the measure. That it was one which was entitled to serious consideration, he readily acknowledged; and all must feel that the manner in which it had been disposed of last session afforded no satisfactory proof of the sense of the House upon it. His right hon. friend, the chancellor of the Exchequer, had been too much engaged on important matters connected with the state of the country, to allow him to give the subject that attention which it required. He hoped, therefore, that the learned gentleman would postpone the measure for a short period, in order allow his right hon. friend time for its consideration. On the 416 second reading of the bill, his right hon. friend would be prepared to give the House his views with respect to an alteration of these laws. No one, he apprehended, could have the least doubt as to the principle of the bill which the learned serjeant sought to amend; and he felt bound to say, that it was with him a very serious question, whether the operation of the usury laws had not contributed, in a most unfortunate degree, to increase the late distress.
said, that after what had fallen from the right hon. gentleman, he would withdraw his opposition to the introduction of the measure.
§ Leave was given to bring in the bill.