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LOWERING OF INTEREST,
RAISING THE VALUE
SIR, These notions concerning coinage having, for the main, as you know, been put into writing above twelve months since; as those other, concerning interest, a great deal above so many years: I put them now again into your hands, with a liberty (since you will have it so) to communicate them farther, as you please. If, upon a review, you continue your favourable opinion of them, and nothing less than publishing will satisfy you, I must desire you to remember, that you must be answerable to the world for the style, which is such as a man writes carelessly to his friend, when he seeks truth, not ornament; and studies only to be in the right, and to be understood. I have, since you saw them last year, met with some new objections in print, which I have endeavoured to remove; and particularly I have taken into consideration a printed sheet, entitled, “ Remarks upon a Paper given in to the Lords, &c.” Because one may naturally suppose, that he, that was so much a patron of that cause, would omit nothing that could be said in favour of it. To this I must here add, that I am just now told from Holland, “ That the States, finding themselves abused, by coining a vast quantity of their base [schillings] money, made of their own ducatoons, and other finer silver, melted down, have put a stop to the minting of any but fine silver coin, till they should settle a mint upon a new foot.”
I know the sincere love and concern you have for your country puts you constantly upon casting about, on all hands, for any means to serve it; and will not suffer you to overlook any thing you conceive may be of any the least use, though offered you from the meanest capacities : you could not else have put me upon looking out my old papers, concerning the reducing of interest to 4 per cent. which have so long lain by forgotten. Upon this new survey of them, I find not my thoughts now to differ from those I had near twenty years since: they have to me still the appearance of truth; nor should I otherwise venture them so much as to your sight. If my notions are wrong, my intention I am sure is right; and whatever I have failed in, I shall at least let you see with what obedience I am,
Your most humble servant. Nov. 7, 1691.
Sir, I have so little concern in paying or receiving of “ interest,” that were I in no more danger to be misled by inability and ignorance, than I am to be biassed by interest and inclination, I might hope to give you a very perfect and clear account of the consequences of a law to reduce interest to 4 per cent. But, since you are pleased to ask my opinion, I shall endeavour fairly to state this matter of use, with the best of my skill.
The first thing to be considered is, “ Whether the price of the hire of money can be regulated by law ?" And to that I think, generally speaking, one may say, it is manifest it cannot. For since it is impossible to make a law, that shall hinder a man from giving away his
money or estate to whom he pleases, it will be impossible, by any contrivance of law, to hinder men, skilled in the power they have over their own goods, and the ways of conveying them to others, to purchase money to be lent them, at what rate soever their occasions shall make it necessary for them to have it; for it is to be remembered, that no man borrows money, or pays use, out of mere pleasure: it is the want of money drives men to that trouble and charge of borrowing; and proportionably to this want, so will every one have it, whatever price it cost him. Wherein the skilful, I say, will always so manage it, as to avoid the prohibition of your law, and keep out of its penalty, do what you can.
What then will be the unavoidable consequences of such a law?
1. It will make the difficulty of borrowing and lending much greater, whereby trade (the foundation of riches) will be obstructed.
2. It will be a prejudice to none, but those who most need assistance and help; I mean widows and orphans, and others uninstructed in the arts and management of more skilful men, whose estates lying in money, they will be sure, especially orphans, to have no more profit of their money, than what interest the law barely allows.
3. It will mightily increase the advantage of bankers and scriveners, and other such expert brokers, who, skilled in the arts of putting out money, according to the true and natural value, which the present state of trade, money, and debts, shall always raise interest to, they will infallibly get what the true value of interest shall be above the legal; for men, finding the convenience of lodging their money in hands, where they can be sure of it, at short warning, the ignorant and lazy will be forwardest to put it into these men's hands, who are known willingly to receive it, and where they can readily have the whole, or part, upon any sudden occasion, that may call for it.
4. I fear I may reckon it as one of the probable consequences of such a law, that it is likely to cause great perjury in the nation; a crime, than which nothing is more carefully to be prevented by law-makers, not only by penalties, that shall attend apparent and proved perjury, but by avoiding and lessening, as much as may be, the temptations to it; for where those are strong, (as they are, where men shall swear for their own advantage) there the fear of penalties to follow will have little restraint, especially if the crime be hard to be proved : all which, I suppose, will happen in this case, where ways will be found out to receive money upon other pretences than for use, to evade the rule and rigour of the law: and there will be secret trusts and collusions amongst men, that though they may be suspected, can never
be proved, without their own confession. I have heard very sober and observing persons complain of the danger men's lives and properties are in, by the frequency and fashionableness of perjury amongst us. Faith and truth, especially in all occasions of attesting it, upon the solemn appeal to heaven by an oath, is the great bond of society. This it becomes the wisdom of magistrates carefully to support, and render as sacred and awful, in the minds of the people, as they can. But, if ever frequency of oaths shall make them be looked on as formalities of law, or the custom of straining of truth, (which men's swearing in their own cases is apt to lead them to) has once dipped men in perjury, and the guilt, with the temptation, has spread itself very wide, and made it almost fashionable in some cases, it will be impossible for the society (these bonds being dissolved) to subsist. All must break in pieces, and run to confusion. That swearing in their own cases is apt by degrees to lead men into as little regard of such oaths, as they have of their ordinary talk, I think there is reason to suspect, from what has been observed, in something of that kind. Masters of ships are a sort of men generally industrious and sober, and I suppose may be thought, for their number and rank, to be equally honest to any other sort of men; and yet, by the discourse I have had with merchants in other countries, I find that they think, in those parts, they take a great liberty in their custom-house oaths, to that degree, that I remember I was once told, in a trading town beyond sea, of a master of a vessel, there esteemed a sober and fair man, who yet could not hold saying, “ God forbid that a custom-house oath should be a sin.” I say not this to make any reflection upon a sort of men, that I think as uncorrupt as any other, and who, I am sure, ought in England to be cherished and esteemed, as the most industrious and most beneficial of any of its subjects : but I could not forbear to give this here, as an instance how dangerous a temptation it is to bring men customarily to swear, where they may have any concern. ment of their own. And it will always be worthy the care and consideration of law-makers to keep up the opinion of an oath high and sacred, as it ought to be, in the minds of the people: which can never be done, where frequency of oaths, biassed by interest, has established a neglect of them; and fashion (which it seldom fails to do) has given countenance to what profit rewards.
But that law cannot keep men from taking more use than you set (the want of money being that alone which regulates its price) will perhaps appear, if we consider how hard it is to set a price upon wine, or silks, or other unnecessary commodities : but how impossible it is to set a rate upon victuals, in a time of famine; for money being an universal commodity, and as necessary to trade as food is to life, every body must have it, at what rate they can get it; and unavoidably pay dear, when it is scarce; and debts, no less than trade, have made borrowing in fashion. The bankers are a clear instance of this : for some years since, the scarcity of money having made it in England worth really more than six per cent. most of those that had not the skill to let it for more than six per cent. and secure themselves from the penalty of the law, put it in the bankers' hands, where it was ready at their call, when they had an opportunity of greater improvement; so that the