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It is, however, chiefly against the agricultural improvement of the country that public loans operate. The high profits of trade enable persons of good credit to elude the laws against usury, by expedients which custom authorizes, and which actual circumstances render absolutely necessary. The shortness of the period too, to which their temporary accommodations generally extend, while it enhances the rate of interest, leaves the money-lender at all times the ready command of his capital. The case is widely different with those who have occasion to borrow money for agricultural speculations, which afford but moderate profits, and which, from their slow returns, require loans of a more permanent nature. This is felt severely in the present times, even by those who have landed security to offer, and who, accordingly, are frequently reduced to the ruinous resource of raising money on annuities; consequences, undoubtedly, of the most alarming sort to the country in general, but which necessarily result from the high rate of interest obtainable upon government securities.

Although, therefore, it seems to be impossible for a statesman, by an arbitrary reduction of the legal rate of interest, to accelerate the national prosperity at pleasure, it is equally clear, on the other hand, that the general plan of its policy may influence, to a great degree, this essential requisite to improvement.

How much the inconveniences, which have just been mentioned as resulting from public loans, are aggravated by the Anti-usurious Laws, is sufficiently evident. The tendency of such restraints on the commerce of money being obviously to raise the rate of interest in the market. M. Turgot has made some good observations on this point, in his Essay on Money Loans, formerly referred to, [supra, p. 157.]

I shall conclude this subject with remarking, that the prejudices and laws with respect to Compound Interest are entirely of a piece with those which have been now under our consideration, originating in the same idea, that the protection of the borrower requires the interposition of the legislator, in every instance, in a greater degree than that of the lender.

VOL. IX.

N

It appears from an Epistle of Cicero to Atticus, that compound interest was not then, in every case, contrary to law; for he says, that usuræ centesimæ cum anatocismo anniversario might be enacted.1 But this law was abrogated by Justinian;2 and in modern Europe compound interest is almost universally reprobated as the worst species of usury and extortion. In reason and equity, however, there seems to be no foundation for this opinion; the same principles which justify simple interest, concluding decisively in favour of compound interest, when the principal is withheld after being demanded; and, accordingly, Henry de Cocceii pronounced, long ago, that usuræ usurarum, or anatocismus, is perfectly agreeable to the law of nature.

"Jure naturæ usuras usurarum semper deberi, puto, etsi promissæ non fuerint. Is enim qui mea pecunia utitur, ac pro eo usu annuas usuras promittit, nec solvit has ipsas usuras, plus suo habet; utitur jure alieno; mihi aliquid abest, unde lucrum capere possem si debitor usuras solvisset: adeoque ex natura obligationis sequitur, æstimationem ejus, quod facto debitoris mihi abest, id est, usuras usurarum, solvi debere.” The argument, however, is stated much more forcibly by Mr. Bentham, who has allotted a separate section of his Treatise to the discussion of this very question. The substance of his reasoning may be collected from the following abstract:

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"If the borrower pays his interest at the day, and thereby performs his engagement with punctuality, the lender has it in his power to secure compound interest, by lending it out again immediately. If he fails of receiving it, he is by so much a loser. The borrower, by paying it at the day, is no loser; if he does not pay it at the day he is by so much a gainer; and what is worse, the gain which the law in its tenderness thus bestows on him, is a reward which it holds out in many cases for breach of faith, for indolence, and for negligence. The loss, on the other hand, which it thus throws on

1 Lib. V. Epist. ult.

2 See Grotius, Lampredi, and H. Cocceii.

3 [H. Cocceii ad] Grotium, De Jure Belli, &c., Lib. II. cap. xii. ? 22. [Edit. Lausannæ, 1751, Tom. II. p. 721.]

the forbearing lender, is a punishment which it inflicts on him for his forbearance; while the power which it gives him of avoiding that loss, by prosecuting the borrower upon the instant of failure, is a reward which it holds out to him for his hardheartedness and rigour.

"It may indeed be, in many cases, impossible for the borrower to pay the interest at the day; but what is the obvious inference? That the creditor should not have it in his power to ruin the debtor for not paying at the day, and that he should receive a compensation for the loss occasioned by such failure. The spirit of our existing laws is precisely the reverse of this. The creditor has it in his power to ruin him, and he has it not in his power to obtain such a compensation. On the contrary, if the debtor has recourse to law, and resolves to fight his creditor through all the windings of mischievous delay, he purchases a respite at ten times, perhaps at a hundred times, the expense of compound interest; while, of the money thus thrown away, no part falls to the share of the individual he has injured, but is consumed by the legal agents who conduct the litigation."*

[SECT. IV.-ON SUBJECTING THE COMMERCE OF LAND TO THE REGULATION OF LAW.]

(Interpolation from Notes.)—I proceed next, agreeably to the arrangement formerly laid down, [Political Economy, Vol. I. p. 45,] to make some remarks on the expediency of restraints on the Commerce of Land.

The pre-eminent importance of landed property, and the various effects connected with its distribution, will justify me sufficiently for treating of it separately from the other constituents of National Wealth. From the observations which I formerly had occasion to make, it appears how intimately this subject is connected with the advancement of that species of wealth which gives existence to all the others, furnishing to the various classes of manufacturers and artists, both the mate* [Defence of Usury, Letter xi.; Works, Vol. III. p. 18.]

rials of their subsistence, and the rude materials on which their industry is employed. "Il faut cependant observer," to borrow the words of a French writer, "que le laboureur fournissant à tous l'objet le plus important et le plus considérable de leur consommation, (je veux dire leurs aliments, et de plus la matière de presque tous les ouvrages,) a l'avantage d'une plus grande indépendance. Son travail, dans l'ordre des travaux partagés entre les différents membres de la Société, conserve la même primauté, la même pré-éminence qu'avait, entre les différents travaux qu'il était obligé dans l'état solitaire de consacrer à ses besoins de toute espèce, le travail qui subvenait à sa nourriture. Ce n'est pas ici une primauté d'honneur ou de dignité ; elle est de nécessité physique. Le laboureur peut absolument parlant se passer du travail des autres ouvriers, mais aucun ouvrier ne peut travailler si le laboureur ne le fait vivre."* This general proposition I endeavoured to illustrate in a former part of my course.† The remarks which I have now to offer, relate entirely to the policy of different nations, with respect to the distribution and commerce of landed property.

In the codes of the ancient legislators, one of the leading objects of attention appears to have been to secure as great an equality as possible in the appropriation of lands, by establishing various expedients to obviate the effect of those circumstances which have a tendency to disturb this equality.-For this purpose, Moses prohibited the perpetual alienation of landed property, and ordered that every fiftieth year, the land which had been sold during the preceding period should return to the former proprietor or his family.-In the laws of the Athenians, we meet with a variety of provisions, plainly proceeding from the same views as influenced the Jewish legislator. Such were those which restricted the citizens in the power of making testaments,-those which established an equal division of property among the male children,-those which put it out of the power of the same person to succeed to two

[Turgot, Sur la Formation et la Distribution des Richesses, § v.; Euvres, Tom. V. p. 6.]

t[Supra, Political Economy, Vol. I. (Works, Vol. VIII.) p. 258, seq.]

[Leviticus, xxv. 10.]

inheritances, and many other regulations of a similar nature. On the subject of the laws of succession among the Greeks, a great deal of most important light has been thrown by Sir William Jones, in the Commentary annexed to his Translation of the Speeches of Isæus.

Among the ancient Germans, according to a passage in Tacitus, there appear to have been some regulations which tended to accomplish the same object, by a process still more simple and direct. The nation was considered as the proprietor of all the lands, which individuals held for a time; and at the end of each year, a new distribution of land was made, according to the varying circumstances of the population.* It is remarkable, as Mr. Hume observes in his History of England, that" among the Irish, as far down as the seventeenth century, land was divided in a similar way. If any of the sept died, his portion was not shared out among his sons, but the chieftain, at his discretion, made a new partition of all the lands belonging to that sept, and gave every one his share."†

The earliest laws of the Romans deserve attention in the same point of view. By an examination of these, it is evident that their leading idea was to prevent the original number of proprietors from being diminished. This was more particularly the case with their laws relating to the succession of females, which have been very ingeniously illustrated by Montesquieu.‡

In modern times, the state of society which arose in Europe after the subversion of the western empire, gave rise to a very opposite policy, by suggesting as a necessary expedient against the rudeness and violence of the time, two institutions, which have both had a most extensive influence, not only on the distribution of land, but on the whole system of modern manners. These are the right of Primogeniture and the practice of Entails.

That a certain preference should be given by a parent to his first-born, who, in the order of nature, is marked out as the protector and guardian of his younger children, is so agreeable to the most obvious suggestions of the mind, that it is not sur

* [Germania, cap. xxvi.] +[Chap. xlvi. James L.]

[Esprit des Loix, Liv. xxvii. Partie

II. p. 167, ed. Genève, 1749.]

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