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our increase of wealth, that is, by hindering foreigners to come here, and buy land, and settle amongst us. Whereby we have this double loss; first, we lose their persons, increase of people being the increase both of strength and riches. Secondly, we lose so much money; for, though whatever an Englishman gives to another for land, though raised to forty years' purchase, be not one farthing advantage to the kingdom; yet whatever a foreigner, who purchases land here, gives for it, is so much every farthing clear gain to the nation : for that money comes clear in, without carrying out any thing for it, and is every farthing of it as perfect gain to the nation, as if it dropped down from the clouds.
But farther, if consideration be to be had only of sellers of land, the lowering of interest to four per cent. will not be in their favour, unless by it you can
. raise land to thirty years' purchase, which is not at all likely: and I think nobody, by falling of interest to four per cent., hopes to get chapmen for their land at that rate. Whatsoever they have less, if law can regulate interest, they lose of their value of land, money being thus abased. So that the landed man will scarce find his account neither, by this law, when it comes to trial. And at last, I imagine, this will be the result of all such attempts, that experience will show that the price of things will not be regulated by laws, though the endeavours after it will be sure to prejudice and inconvenience trade, and put your affairs out of order.
If this be so, that interest cannot be regulated by law, or that, if it could, yet the reducing of it to four per cent. would do more harm than good : what then should there (you will say) be no law at all to regulate interest? I say not so. For,
1. It is necessary that there should be a stated rate of interest, and in debts and forbearances, where contract has not settled it between the parties, the law might give a rule, and courts of judicature might know what damages to allow. This may, and therefore should be regulated.
2. That in the present current of running cash, which now takes its course almost all to London, and is engrossed by a very few hands in comparison, young men,
, and those in want, might not too easily be exposed to extortion and oppression; and the dexterous and combining money-jobbers not have too great and unbounded a power, to prey upon the ignorance or necessity of borrowers. There would not be much danger of this, if
money were more equally distributed into the several quarters of England, and into a greater number of hands, according to the exigencies of trade.
If money were to be hired, as land is; or to be had as corn, or wool, from the owner himself, and known good security be given for it; it might then probably be had at the market (which is the true) rate, and that rate of interest would be a constant gauge
trade and wealth. But, when a kind of monopoly, by consent, has put this general commodity into a few hands, it may need regulation, though what the stated rate of interest should be, in the constant change of affairs, and flux of money, is hard to determine. Possibly it may be allowed, as a reasonable proposal, that it should be within such bounds, as should not, on the one side, quite eat up the merchant's and tradesmen's profit, and discourage their industry; nor, on the other hand, so low, as should hinder men from risquing their money in other men's hands, and so rather choose to keep it out of trade, than venture it upon so small profit. When it is too high, it so hinders the merchant's gain, that he will not borrow; when too low, it so hinders the monied man's profit, that he will not lend; and both these ways it is an hinderance to trade. But this being, perhaps, too general and loose a rule,
a let me add, that if one would consider money and land alone, in relation one to another, perhaps it is now at six per cent. in as good a proportion as is possible ; six per
cent. being a little higher than land at twenty years' purchase, which is the rate pretty near, that land has generally carried in England, it never being much over, nor under. For supposing 1001. in money, and land of 5l. per ann. be of equal value, which is land at twenty years' purchase; it is necessary for the making their value truly equal, that they should produce an equal income, which the 1001. at 5l. per cent. interest is not likely to do.
1. Because of the many, and sometimes long intervals of barrenness, which happen to money more than land. Money at use, when returned into the hands of the owner, usually lies dead there, till he gets a new tenant for it, and can put it out again; and all this time it produces nothing. But this happens not to land, the growing product whereof turns to account to the owner,
, even when it is in his hands, or is allowed for by the tenant, antecedently to his entering upon the farm. For though a man, that borrows money at Midsummer, never begins to pay his interest from our Lady-day, or one moment backwards; yet he, who rents a farm at Midsummer, may have as much reason to begin his rent from our Lady-day, as if he had then entered
it. 2. Besides the dead intervals of ceasing profit, which happen to money more than land, there is another reason why the profit and income of money let out should be a little higher than that of land; and that is, because money out at interest runs a greater risque than land does. The borrower may break, and run away with the money, and then not only the interest due, but all the future profit, with the principal, is lost for ever. But in land a man can lose but the rent due, for which usually too the stock upon the land is sufficient security: and if a tenant run away in arrear of some rent, the land remains; that cannot be carried away or lost. Should a man purchase good land in Middlesex of 5l. per ann. at twenty years' purchase, and other land in Romney-marsh, or elsewhere, of the same yearly value, but so situated, that it were in danger to be swallowed of the sea, and be utterly lost, it would not be unreasonable, that he should expect to have it under twenty years' purchase; suppose sixteen and a half: this is to bring it to just the case of land at twenty years' purchase ; and money at six per cent where the
: uncertainty of securing one's money may well be
allowed that advantage of greater profit; and therefore, perhaps, the legal interest now in England at six per cent. is as reasonable and convenient a rate as can well be set by a standing rule, especially if we consider that the law requires not a man to pay six per cent. but ties
. up the lender from taking more. So that if ever it falls of itself, the monied-man is sure to find it, and his interest will be brought down to it.
High interest is thought by some a prejudice to trade; but if we look back, we shall find that England never throve so well, nor was there ever brought into England so great an increase of wealth since, as in queen Elizabeth's and king James I. and Charles the First's time, when money was at ten and eight per cent. I will not say high interest was the cause of it. For I rather think that our thriving trade was the cause of high interest, every one craving money to employ in a profitable commerce. But this, I think, I may reasonably infer from it, That lowering of interest is not a sure way to improve either our trade or wealth.
To this I hear some say, That the Dutch, skilful in all arts of promoting trade, to out-do us in this, as well as all other advancements of it, have observed this rule, viz. That, when we fell interest in England from ten to eight, they presently sunk interest in Holland to four per cent. And again, when we lowered it to six, they fell it to three per cent., thereby to keep the advantage, which the lowness of interest gives to trade. From whence these men readily conclude, that the falling of interest will advance trade in England. To which I answer,
1. That this looks like an argument rather made for the present occasion, to mislead those who are credulous enough to swallow it, than arising from true reason, and matter of fact. For, if lowering of interest were so advantageous to trade, why did the Dutch so constantly take their measures only by us, and not as well by some other of their neighbours, with whom they have as great, or greater commerce than with us? This is enough, at first sight, to make one suspect this
to be dust only raised to throw in people's eyes, and a suggestion made to serve a purpose. For,
2. It will not be found true, That, when we abated interest here in England to eight, the Dutch sunk it in Holland to four per cent. by law; or that there was any law made in Holland to limit the rate of interest to three per cent. when we reduced it in England to six. It is true, John de Witt, when he managed the affairs of Holland, setting himself to lessen the public debts, and having actually paid some, and getting money in a readiness to pay others, sent notice to all the creditors, that those who would not take four per cent. should come and receive their money. The creditors finding him in earnest, and knowing not how otherwise to emply their money, accepted his terms, and changed their obligations into four per cent. whereas before they were at five, and so (the great loans of the country being to the state) it might be said in this sense, That the rate of interest was reduced lower at that time: but that it was done by a law, forbidding to take higher interest than four per cent., that I deny, and require any one to show. Indeed, upon good security, one might lately have borrowed money in Holland at three, and three and a half per cent. but not by virtue of any law, but the natural rate of interest. And I appeal to the men, learned in the law of Holland, whether last year (and I doubt not but it is so still) a man might not lawfully lend his money for what interest he could get, and whether in the courts he should not recover the interest he contracted for, if it were ten per cent. So that, if money be to be borrowed by honest and responsible men at three, or three and a half per cent., it is not by the force of statutes and edicts, but by the natural course of things; which will always bring interest upon good security low, where there is a great deal of money to be lent, and little good security, in proportion, to be had. Holland is a country where the land makes a very little part of the stock of the country. Trade is their great fund; and their estates lie generally in money: so that all, who are not traders, generally