can receive the most profitable investment, it
is going just as surely, just as certainly as
that water will run down hill. If in the
State of Pennsylvania a higher rate of inter-
est were allowed than in the State of Mary-
land, as a consequence capital would be lent
where the owner could make the most out of
it. I know that in my own county $6,000
have absolutely gone to Ogle county, Illinois,
to seek investment there at ten per cent. Seven
per cent. is the legal interest and they are
allowed by private contract to run it up to
ten. This capital never would have gone
there if the parties had been allowed to make
such a bargain here. It would have remained
in the county. So in Baltimore city, I have
no doubt that thousands upon thousands of
dollars go out of the city to seek investment,
where the money receives a higher rate of in-
terest.
You do not avoid the very thing which
you aim to avoid. It is utterly useless by
any legislative means to attempt to prevent
the obtaining of more than six per cent. I
know hundreds of cases; I know cases in
my own county. What do the parties do?
A wants money, and B has got it. Here is
a constitutional provision that A shall not
pay more than six per cent. But they go
into a room and make a contract. A gives
B his note for $1,000 at the legal rate of in-
terest payable six months after date, and B
hands him $950, If you would allow A to
go out in the street and contract for himself;
if you would allow him to go openly and
above board, and make inquiry, and make
an open, fair, legal contract, he would not
have been asked, and would not have been
compelled to pay those $50. This is done
continually. I know one of the wealthiest
men in the county of Washington, who loans
out the most of his property, and he never
loans it at six per cent. He always gets
more; but be gets it in advance, and he man-
ages in this way. There is the note. The
parties are by themselves. How can you get
at it?
Why not leave this open? Why impose
arestriction? It has a bad effect. It demor-
alizes the public. It holds out inducements
to men to do that clandestinely and illegally
which the law does not permit them to do.
It has a bad effect upon the public morals.
I am in favor of this section as reported by
the committee to let the legal rate of interest
be six per cent.; but then, in God's name,
allow a man the liberty of making a bargain
for himself. Why do yon insert six per cent.?
Why is there a necessity for the insertion
of any amount at all? Simply because if
there were no stipulation in the contract, and
a question were to go before the jury, it
would be necessary to adduce testimony to
show how much money was worth at the
time; and it would lead to interminable liti-
gation, and a great deal of cost in adjusting |
the rate of interest. Hence it is always bet-
ter that a legal rate of interest should be
fixed to apply to all cases where the parties
leave it a blank. Then when they come into
court and introduce testimony, the rate will
be according to the instrument itself or if no
rate is mentioned, the legal rate. Beyond
that, let this question be open as you let
everything else be open. Let me, if I want
money go and contract for it, just as you
allow me to go ad contract for a horse. I
know something of my county, and if these
rebel invasions continue much longer they
will want horses infinitely more than they
want money, and they will be more likely to
be imposed upon in the purchase of horses
than in borrowing money; and therefore I
respectfully recommend to this convention, if
they will restrain my ability to borrow money,
that they should put the same limitation
upon the men who come to Washington
county to sell our people horses, that they
shall not charge more than such a price for
them. They have an equal right to do it,
and can do it with just as much propriety.
The history of the world, and the history
of the age, shows that this species of legisla-
tion is the very worst kind. The curse of
over-legislation is infinitely worse than the
curse of under-legislation. Too much legis-
lation is infinitely worse than too little.—
This is one of those delicate question of po-
litical economy, that the price of money is
governed by the same law that governs every-
thing else. If this convention acts wisely it
will do as our sister States have done; it will
leave this question open. It will fix a legal
rate of interest; and after fixing that, it will
allow parties privately to contract at least
up to a certain amount, say 10 per cent.—
You may put on that limit if you think proper ;
but there is no harm in leaving it open to any
extent, I conceive. If a man chooses to squan-
der his property he will do it. A young main
who has a disposition to waste his estate will
do it, not by borrowing money at larger rates
than 6 per cent, but will do it in every possi-
ble way in which men do spend money, going
to restaurants and having magnificent din-
ners, calling for wines of extravagant price,
and inviting his friends in.
It will not do to pass laws to hedge in men
in their rights in this way. You must leave
men free. You must provide in your schools
to make moral men. Teach them their duty,
that when they grow up they may be a law
unto themselves. That is the way to rule
these things, and not by legislation; not by
cutting off one branch and leaving the others
to flourish in undisturbed luxuriance.
Therefore, sir, I am opposed to this amend-
ment for 7 per cent. Yet I do not conceive that
we should lose by it. New York allows 7
per cent, and I think Pennsylvania allows 6.
Mr. DANIEL. Many of the States allow more
than 7. |
