passage on the legal interest of money, and the limited rate of it in different cases, with an exception in regard to adventures at sea;-an exception," says Sir William Jones, "which the sense of mankind approves, and which commerce absolutely requires; though it was not before the reign of Charles I. that our English jurisprudence fully admitted it in respect of maritime contracts." In this, however, as in many other instances of the information we have lately received from that quarter of the globe, we can only indulge our wonder, without possessing sufficient data to serve as a groundwork for satisfactory speculation.

The low state of commerce in Greece and Rome, and the contempt in which it was held by those who governed public opinion, sufficiently account for the prejudice against loans for interest, so strongly expressed by their philosophers and statesmen; and this authority sanctioned by some passages in the Mosaic Law, naturally produced a still greater detestation for the practice in modern Europe, at a time when its commerce was confined to a few cities in Italy, or to the Hanse Towns, and when the only persons who exercised this trade, were held in universal odium on account of their religious principles. Indeed, abstracting entirely from these accessory circumstances, loans for interest can scarcely be looked on in a favourable light, except in connexion with an active and enterprising commerce; and it is only during the last three centuries that this has become an object of universal and of ardent pursuit, giving a commencement to those mighty changes which it seems destined to accomplish in the condition of the human race. The commerce of money among different nations, so wonderfully facilitated by bills of exchange, is a branch of trade altogether of modern origin.

In a state where there is little or no commerce, the great motive for borrowing is necessity; and the only motives for lending must be humanity or avarice. In the former case, as the lender only advances a sum of money which would otherwise have remained useless in his chest, the same disposition which induced him to succour the distressed will, in general,

prevent him from accepting a premium for an act of beneficence. In the case of lenders of a different description, who are anxious to turn to their own account the necessities of their fellow-creatures, it is reasonable to presume that their dealings will be governed by the same spirit which, in a commercial country, characterizes pawnbrokers, and others who make a traffic of the miseries of the poor. The value of a loan to an individual who is in want of bread, cannot be ascertained by calculation, as it may be when money is borrowed for the purposes of trade. The relief of the present moment seems cheaply purchased at any price, of which the payment is to be delayed to a distant day; and it is not judging too harshly of human nature to suppose, that the demands of the lender, whose temper leads him to make a profession of this species of gaining, will rise in proportion to the distress of the borrower, and to the risk he runs of losing the principal. In a country, therefore, where there is no commerce, every money-lender who accepts of interest will be regarded in the same odious light in which pawnbrokers are considered among us; and the man who putteth out his coin to usury," will be naturally classed (as he is in the words of Scripture) with "him who taketh a reward against the guiltless."

"

66

A very striking illustration of the effects which are naturally produced on the character by that sort of speculation, which has for its object the necessities of the poor, occurs in the history of the charitable corporation which was established about the year 1730, with the professed view of lending money to the poor upon pledges, so as to prevent their oppression by pawnbrokers. Many characters, respectable from rank, fortune, and reputation, belonged to this corporation; but, in a short time, they were so corrupted by the trade they carried on, and the public cry was so loud against the iniquity of their transactions, that the House of Commons found it necessary to make a parliamentary inquiry into their conduct, the consequence of which was, that the corporation was broken, and three of the managers who were members of the House were expelled.

*[See Psalm xv. 5.]

These remarks, while they account for the origin of the opinions concerning the practice of taking interest for money among those nations of antiquity whose commercial transactions were few and insignificant, will be sufficient, at the same time, to establish its reasonableness and equity in countries where money is most commonly borrowed for the purposes of commercial profit, and where, of consequence, the use of it has a fixed and determinate value, depending, like that of any commodity in general request, on the circumstances of the market at the time. In such countries both parties are benefited by the transaction, and even the state is a gainer in the end. The borrowers of money are frequently among the most opulent of the community, who wish to enlarge their capitals and extend their trade, and who, by doing so, are enabled to give farther encouragement to industry, and to supply labour and bread to the indigent.

It is not a little remarkable that John Calvin appears to have been one of the first who extricated himself entirely from the ancient prejudices on this subject. "Pecunia non parit pecuniam. Quid mare quid domus, ex cujus locatione pensionem percipio ? an ex tectis et parietibus argentum proprie nascitur? Sed et terra producit, et mari advehitur quod pecuniam deinde producat, et habitationis commoditas cum certa pecunia parari commutarive solet. Quod si igitur plus ex negotiatione lucri percipi possit, quam ex fundi cujusvis proventu: an feretur qui fundum sterilem fortasse colono locaverit ex quo mercedem vel proventum recipiat sibi, qui ex pecunia fructum aliquem perceperit, non feretur ? et qui pecunia fundum acquirit, annon pecunia illa generat alteram annuam pecuniam? Unde vero mercatoris lucrum? Ex ipsius, inquies, diligentia atque industria. Quis dubitat pecuniam vacuam inutilem omnino esse ? neque qui a me mutuam rogat, vacuam apud se habere a me acceptam cogitat. Non ergo ex pecunia illa lucrum accedit, sed ex proventu. Illæ igitur rationes subtiles quidem sunt, et speciem quandam habent, sed ubi propius expenduntur, reipsa concidunt. Nunc igitur concludo, judicandum de usuris esse, non ex particulari aliquo Scripturæ loco, sed tantum ex

"

aequitatis regula. To those who are acquainted with the prevailing sentiments of Calvin's time, this passage cannot fail to be an object of curiosity.

Notwithstanding, however, this diversity of circumstances in the condition of ancient and modern nations, and the important changes it has operated on their opinions, it has by no means produced universally the effects which might have been expected. A certain rate of interest is indeed allowed by law, and no person doubts of its being perfectly fair and honourable to receive it; but everything above this legal rate is reprobated under the name of usury, as a crime of a very heinous nature, and, till the time of Queen Anne, was punished with confiscation of the usurer's whole moveables, the punishment being mitigated, since that period, to the forfeiture of thrice the sum usuriously lent. In order, too, to repress the crime still more effectually, our law allows of methods for the probation of it, which are contrary to the general maxims of common law. If there is a written bond in the hands of the usurer, he may be forced to exhibit his own bond in order to convict himself, contrary to the common maxim, nemo tenetur edere instrumenta contra se. And where the crime cannot be proved otherwise, it may by the usurer's oath, contrary to the maxim which is received in other cases, nemo tenetur jurare in suam turpitudinem.

There can be little doubt that these laws originated at first in prejudices which took rise in a very different state of society, but they have been powerfully supported by some considerations which have been generally supposed to demonstrate their political and commercial expediency. A few writers only have ventured to call this in question, and to express their doubts, whether the rate of interest should not be left, like the terms of other contracts, to be adjusted by the discretion of the parties. Among these, Mr. Bentham, of Lincoln's Inn, has particularly distinguished himself, in a very ingenious Treatise, entitled, A Defence of Usury, [1787,] in which he attempts to prove, "that no man of ripe years and of sound mind, acting freely and with

* [Epistolæ. Quoted also in Dissertation, (Works, Vol. I.) p. 530.]

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 anybody hindered from supplying him upon any terms he thinks proper to accede to."* The late Dr. Reid, too, in an Essay, read a good many years ago before a literary society in Glasgow, maintained nearly the same proposition, and argued in support of it upon principles very similar to those employed by Mr. Bentham. Nor has the opinion been confined to our own country; for it is maintained by several very eminent French writers, by M. Turgot, for example, and the whole sect of the Economists; and it has been actually brought to the test of experience in different commercial states, particularly in Holland and at Hamburgh.

The following passage from Turgot deserves to be quoted, as it states with equal clearness and conciseness the point on which the question turns:—

"It is an error to believe that the interest of money in trade ought to be fixed by the laws of princes. It has a current price, like that of all other merchandise. This price varies a little, according to the greater or less security which the lender has; but, on equal security, he ought to raise and lower his price in proportion to the abundance of the demand; and the law no more ought to fix the interest of money than it ought to regulate the price of any other commodities which have a currency in trade."

I quote this passage from Turgot's Reflections, &c.;† but he has treated the subject at much greater length in a separate Essay, entitled, Mémoire sur le prêt à Intérêt et sur le Commerce des Fers.

At a much earlier period I find the same doctrine advanced by the celebrated Mr. Law, in a memorial presented by him (before his elevation to the ministry) to the Regent Duke of Orleans. This paper is entitled, Mémoire sur l'Usage des Monnoyes, et sur le Profit ou la perte qu'il peut y avoir pour un Prince et pour un Etat, dans l'Altération du Titre des bas Monnoyes, et dans l'Augmentation ou la Diminution de leur *[Letter I. Works, Vol. III. p. 3.] [Euvres, Tom. V. p. 88.]