Sitting of 19 June 1828

USURY LAWS AMENDMENT BILL.
Mr. P. Thompson moved the second reading of this bill.
Mr. Davenportsaid, he should oppose the bill, as he considered it to be highly injurious both to the landed and commercial interests. Gentlemen when they now mortgaged their property, knew that as long as they paid their five per cent limited interest they were all safe; but if this bill were passed there would be no end to the extortion practised upon
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them. Many merchants had risen to opulence from nothing but upon borrowed money, for which they paid five per cent. If money had, in their days, been made a merchandise, as it was now proposed to be made, those merchants would never have attained the situation they at present filled. This plan of making money merchandise was tried in France by the National Convention, in 1793;but the extortion became so general, that the very same assembly was obliged to revoke this decree within twenty-three days. He would move as an amendment, that the bill be read a second time upon that day three months.
Mr. Irvingapproved of the principle of the bill; and, with regard to the object of affording facilities to the mercantile world for borrowing money in times of momentary pressure, he thought the suggestions of the hon. member deserved the best consideration; but, at the same time, he thought the measure ought to be confined to commercial concerns, and that real or landed securities should remain untouched. The hon. member for Dover deserved the thanks of the country for what he had done; but the subject was one which ought to be taken up by the government.
The Chancellor of the Exchequersuggested the propriety of postponing the bill to the next session; not from any unfriendly feeling towards its principle, but from a wish that it should be rendered as perfect as possible, and the public mind prepared for any change which might be deemed expedient.
Mr. Heathcoteconcurred in recommending postponement.
Sir G. Philipsthought, that unless the right hon. gentleman would give a distinct pledge, on the part of the government, to bring forward a measure of this sort next session, or unless he would promise to support the measure when again produced by the hon. member for Dover, that hon. member ought not to withdraw his bill at this moment.
Mr. K. Douglassaid, that the laws relating to usury had been referred to a committee in 1818, and that committee had made a report which was extremely favourable to their repeal. Since that time four different bills had been brought in for the repeal of the Usury-laws; and the principle of all of them had been admitted and recognized by the House. Considering the particular situation in which the chancellor of the Exchequer had

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been placed during the present year, he thought the hon. member for Dover ought not to press the right hon. gentleman to a hasty decision upon the question. At the same time, he thought the hon. member had a right to demand the same acknowledgment from the House to the principle of his bill as had been given to it upon former occasions.
Mr. Sugdensaid, he had been a close observer of the operation of the Usury-laws, and was convinced of their injurious effects. The commercial body and the landed interest were both equal sufferers by them. The commercial body evaded them by tricks; and the landed interest by borrowing money on annuities. Annuities not only raised the rate of interest against the borrower, but also locked up a certain amount of capital, which would otherwise be producing its effect on the marketable industry of the community. The Usury-laws, were also bad in another respect. They were framed in the most general terms, in order to avoid any evasion of them; and the consequence was, that many transactions, in which the parties had no intention to take usurious interest, had been declared tainted with usury. He was therefore anxious to see the present laws altered; although the alteration which he was anxious to see effected was very different from that which the hon. member for Dover now proposed. Any person who had read Mr. Bentham's "Defence of Usury," would agree, that the argument which that learned person had employed against the present laws was unanswerable. But men found, in many cases, that theory went one way and practice the other. Indefensible as the present laws were in theory, it was impossible to deny that some benefit had arisen from them. There was no inconvenience Celt from the Usury-laws, when the market rate of interest fell below the legal standard: the inconvenience arose when the rate of interest exceeded it. The advantage of the Usury-laws in such a contingency was, that they studied and controlled the rate of interest; especially so far as the landholders were concerned. It was by thus looking at the working of the Usury-laws, that he had come to the conclusion, that though they were, in many cases, injurious to all classes of the community, the total repeal of them would be injurious. His objection to the bill before the House was, its
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tendency to authorise an evasion of itself. He would much rather vote in favour of the total repeal of the Usury-laws, than in favour of this bill.
Mr. Robinsonobserved, that the hon. member for Cheshire had founded his objections to the bill on the ground that it would be disadvantageous to the landed interest. Now, in order to make out a fair case of opposition, the hon. member should prove, that the laws which it intended to repeal worked favourably to the public at large; for though the landed interest was entitled to a large protection, he could not admit that laws so penal in their consequences should be allowed to remain on the Statute-book, merely because it was stated, that they acted unfavourably on that particular class. If hon. gentlemen would look at the report of 1819, they would see that more conclusive documents in favour of the repeal of the Usury-laws could not be placed before any legislative assembly. Now, what was the use of that report, if this bill were now to be opposed on the ground that the country had flourished under the operation of these laws? The fact was, that the country had flourished in spite of them. As his hon. friend could not effect any practical good by his bill at that period of the session, he hoped that the recommendation of the hon. member opposite would be adopted. At the same time he would vote for the motion if pressed to a division.
Mr. L. Fostercontended, that the bill was as sweeping a repeal of the Usury-laws as any that had ever been proposed to parliament. He agreed that intolerable hardships arose to the commercial body from the existence of these laws; and to any plan that could remove those hardships he should have no objection. The hon. gentleman then referred to the evidence of Mr. Preston, who was examined by the committee on the state of the Usury-laws, and who gave it as his opinion, that the whole landed interest of the kingdom would be seriously injured by the repeal of those laws. What was the extent of the value of the landed interest of England? In 1804, the whole rental of England, that was to say, the whole annual amount of its land, amounted to 38,000,000 l. It was natural to suppose, that that amount had increased considerably, but he would take it at 40,000,000 l. Now, at twenty years' pur-

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chase, those 40,000,000 l. per annum would amount to 800,000,000 l.: the conclusion was, that 200,000,000 l. sterling, was the minimum of capital that would fall into the hands of money-lenders. To the three classes whose interests the repeal or continuance of the Usury-laws would affect, he wished to lend every assistance. To merchants, and those who traded in money as a marketable commodity, he would say, that he felt the great inconvenience under which they laboured, from the law as it stood: and he wished it could be so modified as to meet their views, without doing away altogether with those wholesome restrictions, which prevented the introduction of an usurious rate of interest. To another class who were more needy, but fortunately not so numerous—he meant the annuitants—he would say, be careful how you seek for a change which, after all, may but lead to an imaginary good: and to the third class, the landed interest,—he would say, be cautious how you accede to a measure which would leave you practically at the mercy of moneylenders. If you are driven by the taunts of Jews and jobbers to accede to it—if the arguments of modern philosophers should prevail against your better reason—you will find in the end your estates in Chancery, and your substance wasted beyond the power of redemption.
Lord Palmerstonsaid, that as far as the opinions of all classes could be collected, they were unanimous in reprobating the present Usury-laws. Every body admitted their inefficiency in checking and apportioning the rate of interest for the loan of money. Those laws enacted, that the holders of money shall not make the best use of it, but shall be restricted to a limited rate of interest. When the Usury-laws were first enacted, it was considered right to regulate the rate of interest payable for the loan of money, and to inflict penalties, if-more interest were taken than the law allowed. The reign of Henry 8th was full of examples of a mischievous interference with respect to this subject. Penalties the most oppressive were had recourse to, to regulate and control the affairs of men of business. But the present time was essentially different from that to which he had referred. Every man should now be left to the care of his own individual interest; and no vexatious impediments should interfere to prevent
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the free and fair exercise of mercantile speculation. If we were net disposed to fix a maximum on the price of labour or of merchandise, upon what fair principle ought we to fix an arbitrary standard for the interest of money? With respect to commercial speculation, it was generally admitted, that no harm could arise from making the best use of money; which, in point of fact, was a merchantable commodity. He had heard no objection to that part of the proposed measure. Now, with respect to the landed interest, he was equally disposed to consider, that the proposed change would inflict no injury upon that body, but, on the contrary, that it would be beneficial to them; for, when money bore a high rate of interest, the land-owners were obliged to evade the law, by paying extravagant sums in the shape of premiums and interest upon mortgages effected to assist their necessities. The law as it at present stood was more pregnant with evil than the alterations which were now proposed. When a bill upon this subject was introduced upon a former occasion, it was objected that it was too general; and now it was said, that the present measure was equally objectionable, because its objects were too limited. He was ready to vote for the present bill, until something better was introduced.
Mr. D. W. Harveywas surprised that the noble lord should be so strenuous in supporting the interest of one class only of those who were most interested in the present question. He differed from the noble lord, and conceived that the measure would not have the effect of benefitting the landed interest. It was said, that if some such relief were not afforded, the proprietors of land, when in want of money, must have recourse to annuities to raise it; but he would venture to assert, that if the Annuity-office were searched, instances would be rarely found where fee-simple estates were encumbered with annuities. He thought that the law respecting annuities might be altered with advantage; and, as far as the penalties under the present Usury-laws could with propriety be modified, he would wish to see it done. If juries, for instance, instead of being obliged to return their verdicts upon the bare wording of the act of parliament, were obliged to judge, not only of the law but of the fact also, it would in a great measure disarm the effects of the penal-

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ties which the law inflicted. Although opposed to the bill, he was favourable to any measure tending to abate the rigours of the present law.
Mr. Brightopposed the bill. It was assumed that money was like any other commodity; but he contended that it was not. No man could go into the market to borrow money openly as he could go to buy commodities. The hon. member read a passage from Mr. Rothschild's evidence, to show that doing away the legal standard of interest would be an injury to the landed interest.
Mr. P. Thompsonobserved, that though he intended to press the bill to a second reading that evening, he would not carry it further during the present session, on the understanding that the chancellor of the Exchequer would, in the course of the next session, introduce some measure on the subject.
Mr. Herriessaid, that though he agreed with the hon. mover that something ought to be done, yet it would be necessary to draw a wide distinction between some classes of the community and others: he, however, was willing to admit, that it would be beneficial to all, if those Jaws were greatly modified, if not entirely repealed. On the understanding that further proceedings on the bill would be abandoned during the present session, he should vote with the hon. gentleman, and had no doubt that, in the course of the next session, some measure would be proposed by the government, that would make a considerable improvement in the law as it now stood.
The House divided: For the second reading 52; Against it 40. The bill was read a second time, and the committee put off for three months.