LETTER I.

INTRODUCTION.

Crichoff, in White Russia, January 1787. AMONG the various species or modifications of liberty, of which, on different occasions, we have heard so much in England, I do not recollect ever seeing anything yet offered in behalf of the liberty of making one's own terms in money-bargains. From so general and universal a neglect, it is an old notion of mine, as you well know, that this meek and unassuming species of liberty has been suffering much injustice.

A fancy has taken me, just now, to trouble you with my reasons: which, if you think them capable of answering any good purpose, you may forward to the press or in the other case, what will give you less trouble, to the fire.

In a word, the proposition have been accustomed to lay down to myself on this subject is the following one, viz. that no man of ripe years and of sound mind, acting freely, and with his eyes open, ought to be hindered, with a view to his advantage, from making such bargain, in the way of obtaining money, as he thinks fit: nor (what is a necessary consequence) anybody hindered from supplying him, upon any terms he thinks proper to accede to.

This proposition, were it to be received, would level, you see, at one stroke, all the barriers which law, either statute or common, have in their united wisdom set up, either against the crying sin of Usury, or against the hard-named and little-heard-of practice of Champerty; to which we must also add a portion of the multifarious, and as littleheard-of offence, of Maintenance.

On this occasion, were it any individual antagonist I had to deal with, my part would be a smooth and easy one. "You, who fetter contracts. you, who lay restrains on the liberty of man, it is for you," I should say, "to assign a reason for your doing so." That contracts in general ought to be observed, is a rule, the propriety of which, no man was ever yet found wrong-headed enough to deny: if this case is one of the exceptions (for some doubtless there are) which the safety and welfare of every society require should be taken out of that general rule, in this case,

as in all those others, it lies upon him, who alleges the necessity of the exception, to produce a reason for it.

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This, I say, would be a short and very easy method with an individual: but, as the world has no mouth of its own to plead by, no certain attorney by which it can come and defend this force and injury," I must even find arguments for it at a venture, and ransack my own imagination for such phantoms as I can find to fight with.

In favour of the restraints opposed to the species of liberty I contend for, I can imagine but five arguments:

1. Prevention of usury.

2. Prevention of prodigality.

3. Protection of indigence against extortion. 4. Repression of the temerity of projectors. 5. Protection of simplicity against imposition.

Of all these in their order.

LETTER II.

REASONS FOR RESTRAINT- PREVENTION
OF USURY.

I WILL begin with the prevention of usury: because in the sound of the word usury lies, I take it, the main strength of the argument: or, to speak strictly, of what is of more importance than all argument, of the hold which the opinion I am combating has obtained on the imaginations and passions of mankind.

Usury is a bad thing, and as such ought to be prevented: usurers are a bad sort of men, a very bad sort of men, and as such ought to be punished and suppressed. These are among the string of propositions which every man finds handed down to him from his progenitors which most men are disposed to accede to without examination; and indeed not unnaturally nor even unreasonably disposed, for it is impossible that the bulk of mankind should find leisure, had they the ability, to examine into the grounds of an hundredth part of the rules and maxims which they find themselves obliged to act upon. Very good apology this for John Trot: but a little more inquisitiveness may be required of legislators.

You, my friend, by whom the true force of words is so well understood, have, I am sure, gone before me in perceiving, that to say usury is a thing to be prevented, is neither

more nor less than begging the matter in question. I know of but two definitions that can possibly be given of usury. One is, the taking of a greater interest than the law allows of this may be styled the political or legal definition. The other is, the taking of a greater interest than it is usual for men to give and take: this may be styled the moral one and this, where the law has not interfered, is plainly enough the only one. It is plain, that in order for usury to be prohibited by law, a positive description must have been found for it by law, fixing, or rather superseding, the moral one. To say, then, that usury is a thing that ought to be prevented, is saying neither more nor less than that the utmost rate of interest which shall be taken ought to be fixed, and that fixation enforced by penalties, or such other means, if any, as may answer the purpose of preventing the breach of it. A law punishing usury supposes, therefore, a law fixing the allowed legal rate of interest and the propriety of the penal law must depend upon the propriety of the simply-prohibitive, or, if you please, declaratory one.

One thing, then, is plain: that, antecedently to custom growing from convention, there can be no such thing as usury; for what rate of interest is there that can naturally be more proper than another? what natural fixed price can there be for the use of money, more than for the use of any other thing? Were it not, then, for custom, usury, considered in a moral view, would not so much as admit of a definition: so far from having existence, it would not so much as be conceivable; nor, therefore, could the law, in the definition it took upon itself to give of such offence, have so much as a guide to steer by. Custom, therefore, is the sole basis, which either the moralist in his rules and precepts, or the legislator in his injunctions, can have to build upon. But what basis can be more weak or unwarrantable, as a ground for coercive measures, than custom resulting from free choice? My neighbours, being at liberty, have happened to concur among themselves in dealing at a certain rate of interest. I, who have money to lend, and Titius, who wants to borrow it of me, would be glad, the one of us to accept, the other to give, an interest somewhat higher than theirs: why is the liberty they exercise to be made a pretence for depriving me and Titius of ours?

Nor has blind custom, thus made the sole and arbitrary guide, anything of steadiness or uniformity in its decisions: it has varied, from age to age, in the same country-it varies, from country to country, in the same age, and the legal rate has varied along with it; indeed, with regard to times past, it is from the legal rate, more readily than from any other source, that we collect the customary

Among the Romans, till the time of Justinian, we find it as high as 12 per cent.: in England, so late as the time of Henry VIII., we find it at 10 per cent.: succeeding statutes reduced it to 8, then to 6, and lastly to 5, where it stands at present. Even at present, in Ireland it is at 6 per cent., and in the West Indies at 8 per cent.; and in Hindostan, where there is no rate limited by law, the lowest customary rate is 10 or 12. At Constantinople, in certain cases, as I have been well informed, 30 per cent. is a common rate. Now, of all these widely different rates, what one is there, that is intrinsically more proper than another? What is it that evidences this propriety in each instance? what but the mutual convenience of the parties, as manifested by their consent? It is convenience, then, that has produced whatever there has been of custom in the matter: what can there, then, be in custom, to make it a better guide than the convenience which gave it birth? and what is there in convenience, that should make it a worse guide in one case than in another? It would be convenient to me to give six per cent. for money: I wish to do so. "No," says the law" you shan't." Why so?"Because it is not convenient to your neighbour to give above five for it." Can anything be more absurd than such a reason?

Much has not been done, I think, by legislators as yet, in the way of fixing the price of other commodities: and, in what little has been done, the probity of the intention has, I believe, in general, been rather more unquestionable than the rectitude of the principle, or the felicity of the result. Putting money! out at interest, is exchanging present money for future: but why a policy, which as applied to exchanges in general would be generally deemed absurd and mischievous, should be deemed necessary in the instance of this particular kind of exchange, mankind are as yet to learn. For him who takes as much as he can get for the use of any other sort of thing, a house for instance, there is no particular appellation, nor any mark of disrepute: nobody is ashamed of doing so, nor is it usual so much as to profess to do otherwise. Why a man who takes as much as he can get, be it six, or seven, or eight, or ten per cent. for the use of a sum of money, should be called usurer, should be loaded with an opprobrious name, any more than if he had bought a house with it, and made a proportionable profit by the house, is more than I can see.

Another thing I would also wish to learn, is, why the legislator should be more anxious to limit the rate of interest one way, than the other? why he should set his face against the owners of that species of property more than of any other? why he should make it his business to prevent their getting more than a certain price for the use of it, rather