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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, that it makes fewer merchants: for were it not for this lazy trade of usury, money would not lie still, but it would in great part be employed upon merchandising,* which is the vena porta3 of wealth in a State: the second, that it makes poor merchants; for as a farmer caDnot husband his ground so well if he sit at a great rent, so the merchant cannot 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 estates,4 which ebb or flow with merchandising: the fourth, that it bringeth the treasure of a realm or State into a few hands; for the usurer being at certainties, and the other 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 merchandising, or purchasing; 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 howsoever5 usury in some respects 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 as6 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, men's necessities would draw upon them a most sudden undoing,7 in that8 they would be forced to sell their means (be it lands or goods) far under foot,1 and so, whereas usury doth but gnaw upon them, bad markets would swallow them quite up. As for mortgaging, or pawning, it will little mend the matter; for either men will not take pawns2 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 mortgages 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 will ensue, if borrowing be cramped: therefore to speak of the abolishing 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.
1 Discommodities. Inconveniencet. See page 379.
1 Merchandising. Trading. 'The Phenicians, of whose exceeding merchandising we read so much in ancient histories, were Canaanites, whose very name signifies merchants.'—Brerewood.
* The great vein. * Estates. Stales. See page 147.
s Howsoever. Altfiouqh. See page 2. * As. Thai. See page 26.
7 Undoing. See page 320.
8 In that. Inasmuch as. 'Things are preached not in that they are taught, but in that they are published.'—Hooker.
To speak now of the reformation and reglement4 of usury, how the discommodities of it may be best avoided, and the commodities 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 quickening5 of trade. This cannot 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,6 the way would be briefly thus:— that there be two rates of usury; the one free and general for all, the other under licence 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 to be 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 good 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 licenced to lend to known merchants upon usury, at a high 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 no 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 regard3 of certain suspicions. Let the State be answered4 some small matter for the licence, and the rest left to the lender; for if the abatement be but small, it will no whit5 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 this trade of usury, and go from certain gains to gains of hazard. Let these licenced lenders be in number indefinite, but restrained to certain principal cities and towns of merchandise; for then they will be hardly able to colour6 other men's monies in the country, so as the licence of nine will not suck away the current rate of five; for no man will lend Lis monies far off, nor put them into unknown hands.
1 Under foot. Too low. 'What a stnpidness is it, then, that we should deject ourselves to such a sluggish, and underfoot philosophy.'—Milton ^
1 Pawns. Pledgee.
'Her oath for love, her honour's pawn.'—Sliakespere.
3 Use. Interest. * Reglement. Regulation.
b Quicken. To give life to. 'You hath He quickened, who were dead in trespasses and sins.'—Ephes. ii. i.
• Intention. Object. 'The principal intention (in chronic distempers) is to restore the tone of the solid parts.'—Arbuthnot.
1 Whosoever. Whoever. 'Whosoever should give the blow, the murder would bo his. We are guilty of all the evil we might have hindered.'—Bishop Hall. a Mislike. Didike.
'And Israel, whom I lov'd so dear, Midiked me for his choice.'—Milton. * In regard. On account. See page 330.
4 Answer. To pay.
'Who studies day and night
5 Whit. In (he least; in the smallest degree. 'I was not a whit behind the very cliiefest apostles.'—2 Cor. zi. 5.
'We love, and are no whit regarded.'—Sidney. 'Colour. To pass for their own. 'To colour a stranger's goods is, when a freiuian allows a foreigner to cuter goods at the Custom-house iu his name.'— J'lullipe.
If it be objected that this doth in any sort authorise 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.
It is wonderful how late any right notions on this subject were introduced; and not even now have they been universally adopted. I have already remarked in the notes to the Essay on 'Seditions and Troubles,' that the error of over-governing always prevails in the earlier stages of civilization, even as the young are more liable to it than the experienced. And that Bacon shared in this error is evident from his advocating sumptuary laws—the regulating of prices—the legislating against engrossers—prohibiting the laying down of land in pasture, &c. All these puerilities are to be found in the earlier laws of all countries. In this Essay on 'Usury,' he does not go the whole length of the prejudices existing in his time, though he partakes of them in a great degree. In his day, and long before, there were many who held it absolutely sinful to receive any interest for money, on the ground of the prohibition of it to the Israelites in their dealings with each other; though the Mosaic law itself proves the contrary, since it allows lending at interest to a stranger; and certainly the Israelites were not permitted to oppress and defraud strangers.
'Since there must be borrowing and lending, and men are so hard of heart as they will not lend freely'
It seems strange that a man of Bacon's acuteness should not have perceived—but it is far more strange that legislators in the nineteenth century should not have perceived—that there is no essential difference between the use of any other kind of property, and money, which represents, and is equivalent to, any and all kinds. It never occurred to Bacon, seemingly,
that no man is called hard-hearted for not letting his land or his house rent-free, or for requiring to be paid for the use of his horse, or his ship, or any other kind of property.
As for the lending of money making 'fewer merchants,' and 'causing money to lie still,' it is evident that this is the very reverse of the fact; as indeed is hinted in the Essay. Great part of the trade and manufactures in every prosperous country is carried on with borrowed capital, lent by those who have not the skill and leisure to carry on such business themselves; and who, if they were prevented from thus investing their capital, would be driven either to let their 'money lie still' in a strong box, or else to engage in a business for which they were not fitted.
If I build a mill or a ship, and let it to a manufacturer or merchant, every one would allow that this is a very fair way of investing capital; quite as fair, and much wiser, than if, being ignorant of manufactures and trade, I were to set up as a manufacturer or merchant. Now, if instead of this, I lend a merchant money to buy or build a ship for himself, or advance money to the manufacturer to erect his buildings and machinery, he will probably suit himself better than if I had taken this on myself, without his experience.
No doubt, advantage is often taken of a man's extreme necessity, to demand high interest, and exact payment with rigour. But it is equally true that advantage is taken, in some crowded town, of a man's extreme need of a night's lodging. And it is but too well known, that where there is an excessive competition for land, as almost the sole mode of obtaining a subsistence, it is likely that an exorbitant rent will be asked, and that this will be exacted with unbending severity. But who would thereupon propose that the letting of land should be prohibited, or that a maximum of rent should be fixed by law? For, legislative interposition in dealings between man and man, except for the prevention of fraud, generally increases the evil it seeks to remedy. A prohibition of interest, or—which is only a minor degree of the same error—a prohibition of any beyond a certain fixed rate of interest, has an effect similar to that of a like interference between the buyers and sellers of any other commodity. If, for example, in a time of scarcity it were enacted, on the ground that cheap food is desirable, that bread