§ Mr. Poulett Thomson
wished to postpone the discussion on the second reading of this Bill; but the sense of the House was evidently against it. The hon. Member then proceeded to say, that in the present Bill he had endeavoured to meet the objections which had been made to the measure he had introduced last Session. These objections were directed to two points; namely, that in borrowing upon the security of real property, great inconvenience arose from persons tying themselves down to the payment of a rate of interest from which they were never afterwards able to relieve themselves; and secondly, that young men of good expectations were in 57 the danger of casting themselves into difficulties for their whole lives, to meet the exigencies of a moment. Now, in his Bill, he proposed to meet both these evils; for, in the first place, he proposed to give as much facility as possible for the discounting of bills, and obtaining loans of money, while, in the next place, he wished that nothing except legal interest should be recoverable in a court of law. But as he did not anticipate any objection to the principle of the measure, he would not trouble the House at greater length on that occasion, but would merely move the second reading of the Bill.
declared, that nothing should induce him to relax in his exertions to prevent the Bill from passing into a law. Even the reservations in the Bill were more injurious than would be the abolition of the Usury Laws altogether. His hon. friend proposed to exempt mortgages from the operation of the Bill. If money were lent on mortgage for more than five per cent, the borrower might bring the case into a court of law, and the lender could not recover more than five per cent. But of what advantage would that be to the borrower? For although the lender could not recover more than five per cent, he might recall the mortgage. Was the present a proper moment at which to bring forward such a proposition? If any interest in the country were at the present moment in a prosperous state, it was the monied interest. The low price of every article, the change that had taken place in the currency, had all been favourable to the capitalist, yet at such a time his hon. friend proposed to allow the capitalist to take what might be considered as unlimited interest. If it were true that the time for such a change was inexpedient as respected the state of the monied interest, it was still more true, that it was inexpedient as respected the state of the agricultural interest; oppressed as that interest was with want of confidence, and with other difficulties, which his hon. friend's Bill must tend to enhance. All bills of this description had hitherto had an unfortunate termination; and he would venture to prophesy that this measure would share the fate of its predecessors. As he was persuaded that the sooner it was got rid of the better, he should certainly divide the House upon the present Motion.
regretted that his hon. 58 friend the member for Wareham, under whose banner he had so frequently fought, in opposition to bills of a similar nature which had formerly been proposed by an hon. and learned Serjeant, and who had invariably shown himself one of the most able and persevering opponents of those bills, had not spoken on the present occasion. Besides the old objections which applied to the Bill under the consideration of the House, there was the additional one, that it sanctioned a little treachery—a little fraud. A borrower might deceive a lender by offering ten or fifteen per cent, while there was no legal obligation upon him to pay more than five. This was an inducement to fraud. He hoped his hon. friend, the member for Wareham, would state his sentiments on the Bill; and trusted that it would eventually be thrown out.
§ Mr. Calcraft
did not intend to trouble the House on the present occasion, but, as his hon. friend had called upon him, he had no hesitation in saying, that he maintained the same opinions upon the subject as he had formerly held. He had been induced to believe that the Bill of the hon. member for Dover was somewhat different in its provisions from the bill of the learned Serjeant. The hon. Member said, that the Bill would not affect mortgages, but in this he did not concur. He could not agree with him, that it would leave them in the same state in which it found them; since it legalized the loan of money at a higher rate of interest than five per cent. But he objected on general grounds to so great a change in the money system of this country. There already existed, he thought, sufficient anxiety and want of confidence in all money transactions; and the effect of suddenly changing the law concerning them would be to add considerably to the difficulties of every class in the country except that class which laboured under no difficulty at all. If his hon. friend had not called upon him he should not have troubled the House upon the question, as he had not read the Bill, and had not conceived that it tended to make so great an alteration in the money system of the country as he now found. He should therefore oppose the second reading, and continue to pursue the same course as formerly, which, though it might be called the result, of ignorance, he should persevere in, until some new light should be thrown on the question, and induce him to change his opinion.
§ Mr. Robinson
maintained that the present system operated most injuriously on large classes of commercial and trading-men. At the time when the existing laws were passed, there were reasons why money should not bear a higher interest than five per cent. Capital was at that period less abundant than it was at present; for it was a great mistake to suppose that capital was not at present abundant, not only in this country, but over the whole world. Under such circumstances, was it not a great hardship that both lenders and borrowers should be limited in their transactions? It was a great mistake to suppose that means were not at present resorted to, such as annuities and others, by which money was borrowed and lent at a rate greater than that which the law allowed. His hon. friend's Bill would do away with all the evils into which borrowers were driven by the absurd existing regulations. Having said so much in favour of the principle of the Bill, he must add, that he was decidedly adverse to that clause in it which, having allowed parties to borrow and lend at a greater rate than five per cent, held out a temptation to the borrower to go into a court of law for the purpose of violating his contract.
§ Lord Althorp
was of opinion, that if the Usury Laws were to be changed, there could be no more convenient time for the alteration than the present. As to the fraud which it was said the Bill would sanction, it should be remembered that the same means of fraud existed at present, nay greater; for if a party borrowing money at usurious interest brought the party lending into a court of law, he could refuse not only to pay the interest, but the principal also. He did not believe that the repeal of the Usury Laws would be disadvantageous to the landed interest; as it would not subject them to pay more for money than they did at present. He should support the Bill, as he had done all others of a similar description.
§ Sir C. Wetherell
was not surprised that the Bill should be supported by the laity; but should have been exceedingly surprised if any lawyer had supported a measure which contained so gross an inconsistency as a repeal of the Usury Laws, while it preserved a clause, which allowed a contract to be made for unlimited interest, but permitted the borrower to bring 60 the contract into a court of law for the purpose of having it repudiated and disallowed. The Bill contained another clause, which was scarcely less absurd; namely, that whenever more than five per cent had been voluntarily paid, it could never be got back. What was voluntary payment? Suppose money had been obtained by action or arrest, was that voluntary payment? How very rarely had any evil resulted from the present laws? If an adequate substitute could be found for them he would not object to it; but he had not yet met with any such substitute. The repeated discussions which had taken place on the subject had, in his mind, established the utter impossibility of looking at money as at other articles of trade, and of letting its possessor do what he chose with it. That was a principle disclaimed both by the ancient and by the modern world. It was a principle which no writer of character had ever maintained. He was convinced that if the hon. Gentleman's Bill were agreed to, it would render the landed interest an easy prey to the capitalists.
§ Mr. O'Connell
rose, in answer to the assertion of the hon. and learned Gentleman that no lawyer would be found to support the Bill. His only objection to it was, that it did not go far enough; he wished to see the Usury Laws abolished entirely. All attempts to put a maximum price upon any commodity—and money was a commodity—were absurd. Laws of that description could not be executed; they had never been executed. He had known instances in Ireland in which annuities of fourteen, fifteen, or eighteen per cent had been granted for money, when, if there had been no violation of the law, eight or nine per cent would have been the utmost that would have been given for it. The hon. and learned Gentleman had stated that the cases of persons suffering from the law as it at present stood was extremely rare. He, however, could not agree to that, for he had known many cases of persons in Ireland who, by taking more than the legal rate of interest, had lost the principal, and in one particular instance he knew of a family having been ruined by such a circumstance. The law, as proposed by the hon. member for Dover, at least secured the principal. The only possible loss would be the additional bonus. But this was said to prove the absurdity of the proposition. 61 He could see no absurdity in it. Its principle was to do away with the penalty of the Usury Laws, while it left the legal sanction to paying five per cent at least. Another mischief that arose from the present state of the Usury Laws was, that they tempted juries to strain their conscience, and, in a manner, gave an incitement to perjury. The Bill now proposed would amend this, and it would, at the same time, be the means of affording a higher value to the characters of individuals, as the facility of borrowing money would greatly depend upon that.—The only fault that he had to find with the measure was, that it did not go far enough.
The Solicitor General
said, he had never been an advocate for the total repeal of the Usury Laws; but now, on further consideration, he doubted whether they ought not to be altogether repealed. At all events, however, they needed alteration; and then the question was, what that alteration ought to be. He agreed with the noble Lord, that if ever there was a happy moment for the alteration, the present was that moment, the interest on money being not above two per cent. To allow men to ask twenty when they would be obliged to lend at two, did not certainly appear to be a very great evil. With regard to mortgages, parties generally undertook to pay legal interest, and generally were enabled to borrow money at that rate, the evasions which occurred being only exceptions to the general rule. If, therefore, they should have a law, making the legal interest recoverable in a court of justice upon such contracts five per cent, the great majority of mortgages in this country would still be effected at that interest. If the House were not prepared to do that, and the matter were left open, the interest would be generally taken at the market price. The great evil of the Usury Laws was felt in times of pressure: and he must admit, that it fell heaviest upon those whom they were intended to favour. With these sentiments he should not divide against the Bill, though he did not think that it was one which would ever pass into a law. The learned member for Clare had adverted to that which had been long felt as an injurious consequence of the present Usury Laws—the cutting down of contracts which, perhaps, had been drawn up under the direction of the best lawyers, and where it was afterwards discovered that the interest taken was illegal. 62 It was not, however, necessary to repeal the Usury Laws, in order to get over this inconvenience. He was decidedly opposed to a total repeal of the Usury Laws, but he would rather that a total repeal of these laws should take place than that the principle of the present Bill should be adopted. It appeared to him to be quite an anomaly. It was a Bill to enable a party to do something which he could not afterwards enforce by law. If they did any thing, they should at least bring it within legal reason, and therefore they ought to make up their minds whether they would repeal wholly, or only in part. Another disadvantage of the present Bill was, that it held out an inducement to persons to be careless as to what interest they promised, as they would think that it would always be in their power to resist the payment of any higher rate than that of five per cent. If there were to be a rate of interest fixed, they ought to meet that question firmly at once, for then parties would know what they were about. It could not be concealed that this Bill was, in point of fact, an indirect repeal of the Usury Laws; for as it was to enable the lender to take what rate of interest he pleased, the operation of that would be, that the borrower would pay whatever rate the lender required till he was ready to pay off the money advanced—the effect of which would be, that the loan would stop as soon as the excessive interest stopped. The moment the borrower said, he would give no higher rate of interest than the law would enforce the payment of, the lender would demand his money. On the whole, he was ready to admit that an alteration was required in the Usury Laws; but he disapproved of the present Bill.
The Altorney General
said, that he thought this Bill should fix a certain rate of interest for some transactions, by which a jury could be guided in their verdicts when such cases came before them; the Bill should, for instance, fix a rate of interest, say four, or five, or six per cent, where no specific contract had been made, as in the case of a bill of exchange, which, it is always supposed will be paid, up to the last day, when, if not paid, interest commences upon it. That rate of interest should be specified by the law. He, from the first time he had considered the subject, had always been an advocate for the repeal of the Usury Laws, and he 63 never could see any reason why the legislature should affix a rate upon the loan of money more than upon that of lands or houses. The letting of a farm was but the loan of it, and why should the Legislature affix a certain rate upon the loan of 100l. and not upon the loan of 100 acres? If the law were such that a man could not let his house for more than 50l., though it might be worth more, would not that be considered a great hardship? And why should such a principle be applied to the loan of money, which was but a commodity, that was felt to be so manifestly unjust when applied to other commodities? The consequence of such an interference was, that the difference was always made up in the shape of premium; besides which, the system of borrowing money on annuity effectually counteracted the law as it now stood. The Legislature could no more prevent persons from paying the market rate of interest, whatever it might be, than it could prevent a fluctuation in the value of land or houses. If the legal rate were fixed higher than the market rate, the law would be a nullity; if it were fixed lower, it would be continually evaded, and the borrower being the necessitous person, would have to pay the price, or the insurance against the risk of the evasion. Thus the law would add to the hardships of borrowers, who were to be benefitted and protected by it. If the law went a step further, and enacted that no man should borrow on annuities levied on land, beyond the legal rate of interest, whenever that was lower than the market rate, owners of landed property would be unable to borrow at all. That might, by some persons, be thought advantageous; but he believed the gentlemen of England would not like to put such a restriction on their own power. Bankers, by discounting bills, might lend money at any rate of interest, and if the landed gentlemen could not borrow on mortgage, and on annuity, at the market rate of interest, they would frequently be obliged to have recourse to the practice of giving, and renewing bills, which would be found more ruinous than any other method of obtaining a supply of money. Such a state of the law would be injurious to the landed interest, and, as he conceived that it was expedient to alter the present law, he should vote for the second reading of the Bill.