Usury Part 22

In the fifteenth century, under Henry VII, the penalty was fixed at one hundred pounds and the penalty of the church added, which was excommunication.

Attorney General Noy, in the reign of James I, thought the taking of money by usury was no better than taking a man's life. He said: "Usurers are well ranked with murderers."

In the sixteenth century, under Henry VIII, it was enacted that all interest above ten per cent. was unlawful. Less was not collectable by law, but was not a punishable offence.

Edward VI revived the old laws condemning all interest.

Mary I, next following, executed these laws with extreme severity.

Elizabeth restored the laws of Henry VIII, in which usury less than ten per cent. was not a punishable offence. This edict of Elizabeth adds: "In the interpretation of the law it shall be largely and strongly construed for the repression of usury."

This law of Henry VIII and Elizabeth, with the rate of interest reduced, was the statute law of England until 1854, when all the usury laws were repealed.

In 1694 William and Mary II entered into a contract to secure a permanent loan and pledged the kingdom to pay interest on it forever.

The loan marked the turning point in the popular mind with regard to usury. As it was approved in their necessity by the king and queen at the head of the Protestant world, ecclesiastics began to s.h.i.+ft their ground and to apologize for, and excuse, that which had been formerly unequivocably condemned. As the crown was the head of both the church and the state, the condemnation of usury seemed tinged both with disloyalty and heresy. The courts too began to modify their decisions to bring them into harmony with the action of the crown.

The change in the usury laws were not made by enactments of Parliament, but by the decisions of courts. The precedents were gradually acc.u.mulated and the statutes were merely made to conform to them.

CHAPTER x.x.xVII.

FRANCIS BACON.

From the short dissertation on usury found in the works of Bacon we learn that the taking of usury was a recognized evil and odious in his time.

It will be noticed that he eliminates risk from usury and sees that "In the game of certainties against uncertainties" usury is sure to win. It will be noticed also that he mentions only economic arguments against usury. He does not give ethical and moral reasons. He does not mention the want of sympathy for the poor and their oppression.

In his statement of the arguments in defence he implies that the usurer is less grasping than the man he knew who said "The devil take this usury."

This is the very opposite of the picture of the usurer given by his contemporary, Shakespeare, in his character, Shylock.

His specious argument for the regulation of the evil "For some small matter for the license" is familiar to modern reformers in connection with other sins. He speaks of the reduction of the usury rates as a general good and believes "It will no whit discourage the lender."

Wrong-doers in all the ages have been ready to part with a portion of the profits of an unlawful business for the cover of the authority of the state.

The following is his discussion in full

OF USURY.

"Many have made witty invectives against usury. They say that it is a pity the devil should have G.o.d's part, which is the t.i.the. That the usurer is the greatest Sabbath breaker, because his plough goeth every Sunday. That the usurer is the drone that Virgil speaketh of:

"_Ignavum fucos pecus a praesepibus arcent._

"That the usurer breaketh the first law that was made for mankind after the fall, which was, _in sudore vultus tui comedes panem tuum; non in sudore vultus alieni_; (in the sweat of thy face shalt thou eat bread--not in the sweat of another's face.) That usurers should have orange-tawney bonnets, because they do Judaize. That it is against nature for money to beget money; and the like. I say only this, that usury is a _concessum propter duritiem cordis_; (a thing allowed by reason of the hardness of men's hearts): for since there must be borrowing and lending, and men are so hard of heart as they will not lend freely, usury must be permitted. Some others have made suspicious and cunning propositions of banks, discovery of men's estates and other inventions. But few have spoken of usury usefully. It is good to set before us the incommodities and the commodities of usury, that the good may be either weighed out or culled out; and warily to provide, that while we make forth to that which is better, we meet not with that which is worse.

"The discommodities of usury are, first, it makes fewer merchants. For were it not for this lazy trade of usury, money would not lie still, but would in great part be employed upon merchandising; which is the _vena porta_ of wealth in a state. The second, that it makes poor merchants. For as a farmer can not husband his ground so well if he sit at a great rent, so the merchant can not drive his trade so well, if he sit at great usury. The third is incident to the other two; and that is the decay of customs of kings or states, which ebb or flow with merchandising. The fourth that it bringeth the wealth or treasure of a realm or state into a few hands.

"For the usurer being at certainties, and others at uncertainties, at the end of the game most of the money will be in the box; and ever a state flourisheth when wealth is more equally spread. The fifth that it beats down the price of land; for the employment of money is chiefly either purchasing or merchandising; and usury waylays both.

The sixth, that it doth dull and damp all industries, improvements and new inventions, wherein money would be stirring, if it were not for this slug. The last, that it is the canker and ruin of many men's estates; which in process of time breeds a public poverty.

"On the other side, the commodities of usury are, first, that howsoever usury in some respect hindereth merchandising, yet in some other it advanceth it; for it is certain that the greatest part of trade is driven by young merchants upon borrowing at interest; so as if the usurer either call in or keep back his money, there will ensue presently a great stand of trade. The second is, that were it not for this easy borrowing upon interest, man's necessities would draw upon them a most sudden undoing; in that they would be forced to sell their means (be it lands or goods) far under foot; and so, whereas usury doth but gnaw upon them, bad markets would swallow them quite up. As for mortgaging or p.a.w.ning, it will little mend the matter; for either men will not take p.a.w.ns without use; or if they do, they will look precisely for the forfeiture. I remember a cruel monied man in the country that would say: 'The devil take this usury, it keeps us from forfeitures of mortagages and bonds.' The third and last is, that it is a vanity to conceive that there would be ordinary borrowing without profit; and it is impossible to conceive the number of inconveniences that would ensue if borrowing be cramped. Therefore, to speak of the abolis.h.i.+ng of usury is idle. All states have ever had it, in one kind or rate, or other. So as that opinion must be sent to Utopia.

"To speak now of the reformation and reiglement of usury; how the discommodities of it may be best avoided, and the commodities of it retained. It appears by the balance of commodities and discommodities of usury, two things are to be reconciled. The one, that the tooth of usury be grinded that it bite not too much; the other, that there be left open a means to invite monied men to lend to the merchants for the continuing and quickening of trade. This can not be done except you introduce two several sorts of usury, a less and a greater. For if you reduce usury to one low rate it will ease the common borrower, but the merchant will be to seek for money. And it is to be noted, that the trade of merchandise, being the most lucrative, may bear usury at a good rate: other contracts not so.

"To serve both intentions, the way would be briefly thus: That there be two rates of interest; the one free and general for all, the other under license only, to certain persons and in certain places of merchandising. First, therefore, let usury in general be reduced to five in the hundred; and let that rate be proclaimed free and current; and, let the state shut itself out to take any penalty for the same.

This will preserve borrowing from any general stop or dryness. This will ease infinite borrowers in the country. This will, in great part, raise the price of land, because land purchased at sixteen years'

purchase will yield six in the hundred and somewhat more; whereas this rate of interest yields but five. This, by like reason, will encourage and edge industrious and profitable improvements; because many will rather venture in that kind than take five in the hundred, especially having been used to greater profit. Secondly, let there be certain persons licensed to lend to known merchants upon usury at a higher rate; and let it be with the cautions following: Let the rate be, even with the merchant himself, somewhat more easy than that he used formerly to pay; for by that means all borrowers shall have some ease by this reformation, be he merchant or whosoever. Let it be bank or common stock, but every man be master of his own money. Not that I altogether mislike banks, but they will hardly be brooked in regard of certain suspicions. Let the state be answered some small matter for the license, and the rest left to the lender; for if the abatement be but small, it will no whit discourage the lender. For he, for example, that took before ten or nine in the hundred, will sooner descend to eight in the hundred than give over his trade in usury, and go from certain gains to gains of hazard. Let these licensed lenders be in number indefinite, but restrained to certain princ.i.p.al cities and towns of merchandising; for then they will be hardly able to color other men's monies in the country. So as the license of nine will not suck away the current rate of five; for no man will lend his monies far off, nor put them into unknown hands.

"If it be objected that this doth in a sort authorize usury, which before was in some places but permissive; the answer is, that it is better to mitigate usury by declaration, than to suffer it to rage by connivance."

(Works of Francis Bacon, Vol. 12, Page 218.)

CHAPTER x.x.xVIII.

WHY THIS TRUTH WAS NEGLECTED.

That we may find the way of return, we must consider the reasons of our wandering. We must reverse our direction and retrace our steps.

These reasons are not occult or hard to find.

1. The departure had its root in man's depraved nature. The natural tendency is evil, while the graces must be cultivated with great diligence. Evils grow as weeds grow in the garden, as thorns and thistles and briers cover the untended fields. This evil has not been disturbed by any book exposing its harm for a hundred years, and it has been two hundred since it was treated as a violation of the Eighth Commandment. This evil, thus left undisturbed, has flourished and spread over all the world.

2. Two and three hundred years ago the great doctrines were occupying the thought of Christendom. The doctrines of free grace, by repentance and an exercise of faith, were receiving close attention. The creeds of the denominations were being unfolded, and their defense and proof absorbed the thought of the wise and good. What shall we believe was the question?

3. Other great evils stood before the faces of those who labored for the uplifting of the race. Practices attached to the ecclesiastics, and degrading the organized church, were flaunted before the eyes of those who stood for true faith and pure living. These were attacked with vigor, while this evil, which had been especially the sin of the Jew, crept in and entrenched itself.

4. Covetousness is one of those secret sins that may lurk in the heart while there is maintained a fair outward life. Few will admit this sin. Priests declare that this is the one sin that is never voluntarily confessed. Usury is the common outward activity of this inward state, and when usury was made lawful by the statutes of the realm, the voice of conscience was silenced. The conscience that would cry out in protest against a rate of interest forbidden by law, will permit the same rate when the statutes of the state are changed.

5. Early education and natural buoyancy have led the debtors to be less sensitive to the burdens of usury upon them.

A large portion of our present arithmetic is taken up with percentage.

The position of the student, in mind, is that of the creditor. This is presumed in the statements of the problems and lies in the thought of the student in all the calculations. If the statements of propositions and their conclusions were made to place the student on the debtor side, then the study of percentage would educate him to a horror of this sin.

When a loan is made, the attention of the borrower is seldom called to the rapidity of increase and the dangers of acc.u.mulation. If this were done, and a prompt return of both princ.i.p.al and interest required, at the end of the term the borrower would soon be alarmed at the hopelessness of permanent gain through debt.

Peter Cooper, it is said, taught this lesson to a friend who was talking of borrowing for six months at three per cent. We clip the following story:

"Why do you borrow money for so short a time?" Mr. Cooper asked.

"Because the brokers will not negotiate bills for longer."