§ Order of the Day for the Second Reading read.
§ THE MARQUESS OF LANSDOWNEmoved the second reading of this Bill, and said, that it might be in the recollection of their Lordships that the inconveniences which had been found to result from the operation of the laws against usury had been so many and so great that, notwithstanding strong prejudices on the subject of usury and usurers, it had been found necessary to relax those laws from time to 582 time. At the time of the great commercial failures in the years 1836 and 1837 it was found that the greatest relief which was experienced from the pressure was the result of a provision which had been introduced not long previously into the Act for the renewal of the Bank Charter, enabling the Bank of England to charge a higher rate of interest than those fixed by the usury laws. In consequence of this, ho (the Marquess of Lansdowne) had been induced to take charge of a Bill in that House, by which, with respect to bills of exchange, and other securities of that description, the rate of interest was indefinitely extended. This he had proposed as a permanent Act; but considerable apprehension was expressed as to the probable effect of such a law; and it was only passed at that time as a temporary measure. Nor at the end of that time were these apprehensions removed, although the difficulties and inconveniences which had been anticipated were not found to result from it. People could not be brought to believe that money was as much a commodity as any ordinary article of produce—that its value must be regulated, like the value of any other commodity, by the ordinary principles of demand and supply—and that it was as impossible to fix the rate of interest at which it should be lent as to fix the price at which corn and butter should be sold. This prejudice, however, had gradually disappeared, and the object of this Bill was, as the same considerations applied to land and other property as applied to bills of exchange, to apply to them the same legislation. People were not deterred from raising money upon such securities at a higher rate of interest than five per cent by the present state of the law; but they had recourse to collusive practices and fraudulent proceedings in order to evade its operation. The inconveniences to which this led were very seriously felt in England, but they were felt much more seriously in Ireland, where the circumstances of many estates were such that it was impossible to borrow money upon them within the limits which the usury laws present. The result was, that annuities were granted, and various subterfuges and contrivances were resorted to; and, in the end, a much higher rate was paid than if the money could have been had at its market value, upon a mortgage in the ordinary way. The usury laws, in fact, did no good whatever, but they produced great inconvenience; they affected to do what all the powers of the 583 Legislature could not do—to apply a different principle to one description of commodity from that which was applied to every other—and they interfered with the principle of supply and demand. Having referred to Calvin as among the distinguished men who had doubted their policy, and to Jeremy Bentham as having dealt the first great blow against them, the noble Marquess concluded by expressing an earnest hope that their Lordships would consent to the second reading of the Bill.
Moved, That the Bill be now read 2a.
LORD CAMPBELLexpressed his great satisfaction that the usury laws were about to be entirely swept away. From his long experience in courts of justice, he could bear testimony to the mischievous effects which they produced. They had been practically swept away in all cases except where real security was given; but in the cases in which they were retained they led to a good deal of litigation, and proved most disastrous, and even ruinous, to those whom they were avowedly intended to protect. They had given a great deal of employment to the Incumbered Estates Court in Ireland, and he believed that many estates in Ireland which might otherwise have been disincumbered had been brought to the hammer through the operation of those laws.
LORD BROUGHAMsaid, it was almost needless to express his concurrence in what had fallen from Lord Campbell; the usury laws were not merely bad commercially, but also morally, and on grounds both commercial and moral nothing could be worse than those laws. The usury law had been denounced by Bentham, and in the same volume he also demonstrated the policy and injustice of law taxes, which it was to be hoped would soon meet with the same fate as the usury laws were about to meet with.
THE LORD CHANCELLORalso supported the Bill. The usury laws could always be defeated by a person who was willing to resort to something which bordered upon fraud. Building societies had been exempted from their operation in order to encourage the industrious classes to make small weekly or monthly investments out of their earnings. But the exemption had been taken advantage of by people who had capital to lay out, and who found that, by making use of these societies, they could obtain real security for their money without being subject to the restrictions which the usury laws imposed. 584 This fact had been brought prominently before him in a case which had occupied his attention in the Court of Chancery during the last two or three days, and he thought it was a strong reason for placing these laws upon a rational footing, and for enabling people to do openly and directly what they could now accomplish by indirect and crooked means.
§ LORD REDESDALEwould not oppose the second reading of the Bill, but thought it ought to have been introduced earlier in the Session, that there might have been more time for consideration.
§ THE MARQUESS OF LANSDOWNEsaid, every matter of detail had been omitted from the Bill, and the principle was one which did not require any long discussion.
Bill read 2a accordingly; and committed to a Committee of the whole House To-morrow.