LEGAL RATE OF INTEREST.
The convention proceeded to the considera-
tion of the report of the committee on interest
and the usury laws, as follows :
Section —. The legal rate of interest in
this State shall be six per centum per annum,
except in cases where a different rate may be
agreed upon between contracting parties;
and in all cases of private contract, the rate
of interest agreed on, or contracted for, shall
be recoverable; and the general assembly
shall pass all laws that may be necessary to
carry this section into effect.
The pending question was on the adoption
of the amendment submitted by Mr. DANIEL,
as follows:
Strike out the word "six," in the first line,
and insert the word "seven."
Mr. PURNELL gave notice that at the proper
time, he would submit the following amend-
ment;
Section —. The rate of interest in this
State shall not exceed six per centum per
annum, and no higher rate shall be taken or
demanded; and the general assembly shall
provide by law all necessary forfeitures and
penalties against usury,
Mr. CUSHING. The question before the
convention is one of finance alone; not to be
argued upon the old ground of Jewish enact-
ments, or old prejudices against usury and
money lenders.; not to be declaimed against
byrepresenting all men, of means, and all in-
dividuals connected .with banking institutions
as Shylocks; not to be rejected for the bene-
fit of a few borrowers in the rural localities,
nor upon the ground that an increased rate
of interest or an unrestricted ability to make
contracts to any amount may be the cause
of financial ruin to a few spend thrifts anxious
to procure the means to indulge in their ex-
travagance, and foolish enough to pay any
amount of interest necessary to secure the
gratification of their present desires.
it is a question affecting the future welfare
of our State; a question whether our mer-
cantile classes and laboring men shall receive
at your bands due protection, or whether you
will on the other hand, go again to the old
superstitious and old world fables, and come
here and raise the cry so popular among
demagogues, of the antagonism between the
rich and the poor. It is a question whether
you desire to protect in your State, men of
means, or whether, when means have been
brought here, you will allow capital to be
employed in the State of Maryland on an
equality with the neighboring States, so as
to give the lender a fair compensation for the
use the borrower makes of his money.
It is to-day a notorious fact that but a
small part of your banking capital remains
in the city of Baltimore. More of it is used
to-day in .discounting New York paper by
telegraph, than is used in discounting Mary- |
and paper. Your banks, for instance, having
$500,000 to loan this morning, do notoriously
loan by telegraph some $400,000 of that in
New York; and when their boards meet at
10 o'clock in the morning, there is but
$100,000 left to divide among the customers
of the bank, with applications possibly for
the loam of the whole amount of $500,000.
Why is that? It is because New York banks
can discount paper at seven per cent., and in
Maryland, they are restricted to six.
Who borrow from your banks? The com-
mercial classes in your State; the very class
referred to by the gentleman from Howard
(Mr. Sands,) the men of small means, but of
good reputation, who desire money which
they can use profitably at a fair rate of inter-
est. They come to your banks; and the
money which under the provision of the
amendment would be loaned to them at
seven per cent. by the banks of the city of
Baltimore, has been transferred lo New York,
to be used at the rate of seven per cent., and
these poor men have no chance left them.
The men who stand high in your banks, and
whose necessities are imperative, get all the
money that is left in the hanks to be used for
purposes of discount at home; and the men
of moderate means, whatever their necessities,
are thrown out.
The national banks in the State of Mary-
land, that are now or may hereafter be cre-
ated, are by law, and in fact not on an equality
with those in New York, because by the
terms of the law under which they exist, they
are allowed only to charge the rate of interest
that is the legal rate in the State in which
they are located. So that while in Maryland
they can only use their money at six per
cent., they have not the means of transferring
it to New York, and using it at seven, it
is notorious to gentlemen of the convention
acquianted with mercantile usages—among
whom I do not count the gentleman from
Howard—that the merchants from your State
are now putting nearly the whole of their
surplus means on deposit in New York city.
The extra rate of one per cent, interest is a
sufficient inducement to them to pay one-half
of one per cent. exchange and transfer their
money to New York, and keep it there on
deposit.
That the question of the increased rate of
per centage of interest allowed to be asked,
is against your poor men and in favor of the
rich, is, with all due deference to the gentle-
men who advocated it, merely an absurdity.
The rich men who want to use their money
at .seven per cent,, can use it to-day in New
York city; and they will not lend if to your
poor men in the State of Maryland, at six.
The question resolves itself into this, whether
your poor men shall have any money at all,
and not whether rich men shall receive more
or less, because they can make their extra one |
