its being felt by the people of the State, very
generally, in one way or another, for good
or for evil. The provision in the old consti-
tution required that "the rate of interest in
this State shall not exceed six per cent, per
annum; and no higher rate shall be taken or
demanded and the legislature shall provide
by law all necessary forfeitures, fines and
penalties against usury." That has received
judicial construction and interpretation by
the court of appeals, to the effect that it is a
valid defence only in case a plea of usury is
set up, in which case the surplus will be for-
feited. Our old usury laws of the State of
Maryland dating back, I think, as far as 1715,
provided, that the rate of interest should be
six per cent., and the contract should be for-
feited if any higher rate was taken or de-
manded, and it imposed a severe penalty upon
parties for contracting to pay a higher rate.
The present constitution changed that to the
extent of saying that six per cent. should be
the rate of interest and nothing more should
be taken or demanded, and imposing upon
the legislature the right to fix the penalty for
usury; which was considered to mean taking
more than six per cent. The legislature pro-
vided that in that case, the lender could re-
cover his principal and the legal rate of in-
terest. And the courts have decided that
you can go into a court of law and enforce a
contract, unless usury be pleaded against the
contract, in which case you can only recover
six per cent. and the principal. That has
been the policy of the State of Maryland for
a long number of years.
Some of the States of the Union have
adopted a different rate of interest from six
per cent. About one-third of the States have
adopted a rate exceeding six per cent. I
have been furnished by my friend from Balti-
more county with a list of the States, by
which it will be found that New York, South
Carolina, Georgia, Michigan, Wisconsin and
Minnesota allow seven per cent. as the legal
rate of interest; Alabama, Florida, and
Texas eight per cent.; California, Kansas,
and Oregon ten percent.; Louisiana five per
cent.; and all the other States in the Union
six per cent.
There should be some good reason urged
upon the convention, I submit, why we
should change the rate of interest as proposed
by this report. I do not care so much, as
the gentleman from Kent (Mr. Chambers)
says, about the change of the rate of interest,
from six to seven per cent., to make it con-
form to New York and other States, allow-
ing, as the gentleman from Prince George's
(Mr. Clarke) proposes, existing contracts to
stand at six per cent., although I think that
six per cent. with the taxes and dues paid by
the borrower, is enough for the borrower to
pay.
They have tried in same of the States the
provision that is contained in this report, of |
allowing parties to make such contracts as
they please with regard to the rate of interest
on money. It has worked a great injury
upon the interests of the State, and they have
repealed it. I think it was so in the State of
Georgia. I remember reading in my Georgia
reports a case that occurred there, in which
the law allowed them to make such a con-
tract as they pleased; and two parties came
together and made a contract tor a loan of
$4,000, upon such a rate of interest demanded
by the lender and agreed by the borrower to
be paid, that in the course of ten years a de-
cree was passed by the court setting off from
the man's estate the amount of $40,000 to
pay the loan of $4,000.
It is to that provision of this bill that 1
especially object. It must be remembered
that money is not like any other commodity
which men can deal with as they please. It
is the measure or standard of value, by which
the intrinsic worth of all other commodities
is measured. The divine law prohibited the
Jews from taking usury from each other, al-
though it allowed them to take as much as
they pleased from the heathen or the gentiles.
It is against this provision of the report, that
1 protest. The gentleman from Kent has
well stated the objection.
A contract in law is an agreement of two
minds to one particular thing. It is a con-
sent. When men come to contract for the
loaning of money, the man who goes to bor-
row and the man who has the money to lend,
do not meet on equal terms. Hence the bor-
rower requires the protection of usury laws,
In many cases he is under necessity. His
pressing wants require that he should have
this money. Or he thinks that he can make
money enough to pay almost any rate of sac-
rifice which the lender may choose to de-
mand . He flatters himself with the idea that
in a short time he will be able to pay this
money back and save his credit. But he is
under the pressure of circumstances; and his
mind is not in that clear and calm mood
which is required for him to make such a con-
\ tract as that. His creditors may be pressing
upon him. He may think that he will in a
few weeks be able to pay off the money at an
enormous rate of interest. But in nine cases
out of ten it is far better that that man
should just take his property and put it into
liquidation and pay his creditors off and start
the world anew than to go into the hands of
sharpers, and finally let them get all his
property while his honest creditors are cheated
out of it, it is far better that that man
should be protected by law against making
such a contract as that, than that he should
have the privilege of going on, and borrow-
ing money, and that the courts should enforce
such contracts as he may make under such
necessitous circumstances.
It is for that that I object especially to the
provision put into the latter part of this sec- |
