Reflections on the Formation and Distribution of wealth [23]
assisting, should sell him what he needed, would be equally deficient in the duties of christianity and of humanity. In such circumstances, charity does not only require us to lend without interest, she orders us to lend, and even to give if necessary. To convert the precept of charity into a precept of strict justice, is equally repugnant to reason, and the sense of the text. Those whom I here attack do not pretend that it is a duty of justice to lend their money; they must be obliged then to confess, that the first words of the passage, mutuum date, contain only a precept of charity. Now I demand why they extend the latter part of this passage to a principle of justice. What, is the duty of lending not a strict precept, and shall its accessory only, the condition of the loan, be made one; it would have been said to man, "It is free for you to lend or not to lend, but if you do lend, take care you do not require any interest for your money, and even when a merchant shall require a loan of you for an undertaking, in which he hopes to make a large profit, it will be a crime in you to accept the interest he offers you; you must absolutely either lend to him gratuitously, or not lend to him all? You have indeed one method to make the receipt of interest lawful, it is to lend your capital for an indefinite term, and to give up all right to be repaid it, which is to be optional to your debtor, when he pleases, or when he can. If you find any inconvenience on the score of security, or if you foresee you shall want your money in a certain number of years, you have no other course to take but not to lend: It is better for you to deprive this merchant of this most fortunate opportunity, than to commit a sin by assisting him." This is what they must have seen in these five words, mutuum date nihil inde sperantes, when they have read them under these false prejudices. Every man who shall read this text unprejudiced, will soon find its real meaning; that is, "as men, as Christians, you are all brothers, all friends; act towards each other as brethren and friends; help each other in your necessities; let your purges he reciprocally open to each other, and do not sell that assistance which you are mutually indebted to each other, in requiring an interest for a loan which charity requires of you as a duty." This is the true sense of the passage in question. The obligation to lend without interest, and to lend, have evident relation to each other; they are of the same order, and both inculcate a duty of charity, and not a precept of rigorous justice, applicable to all cases of lending.
76. The rate of interest ought to be fixed, as the price of every other merchandize, by the course of trade alone.
I have already said, that the price of money borrowed, is regulated like the price of all other merchandize, by the proportion of the money at market with the demand for it: thus, when there are many borrowers who are in want of money, the interest of money rises; when there are many possessors who are ready to lend, it falls. It is therefore an error to believe that the interest of money in trade ought to be fixed by the laws of princes. It has a current price fixed like that of all other merchandize. This price varies a little, according to the greater or less security which the lender has; but on equal security, he ought to raise and fall his price in proportion to the abundance of the demand, and the law no more ought to fix the interest of money than it ought to regulate the price of any other merchandizes which have a currency in trade.
77. Money has in commerce two different valuations. One expresses the quantity of money or silver we give to procure different sorts of commodities; the other expresses the relation a sum of money has, in the interest it will procure in the course of trade.
It seems by this explanation of the manner in which money is either sold or lent for an annual interest, that there are two ways of valuing money in commerce. In. buying and selling a certain weight of silver represents
76. The rate of interest ought to be fixed, as the price of every other merchandize, by the course of trade alone.
I have already said, that the price of money borrowed, is regulated like the price of all other merchandize, by the proportion of the money at market with the demand for it: thus, when there are many borrowers who are in want of money, the interest of money rises; when there are many possessors who are ready to lend, it falls. It is therefore an error to believe that the interest of money in trade ought to be fixed by the laws of princes. It has a current price fixed like that of all other merchandize. This price varies a little, according to the greater or less security which the lender has; but on equal security, he ought to raise and fall his price in proportion to the abundance of the demand, and the law no more ought to fix the interest of money than it ought to regulate the price of any other merchandizes which have a currency in trade.
77. Money has in commerce two different valuations. One expresses the quantity of money or silver we give to procure different sorts of commodities; the other expresses the relation a sum of money has, in the interest it will procure in the course of trade.
It seems by this explanation of the manner in which money is either sold or lent for an annual interest, that there are two ways of valuing money in commerce. In. buying and selling a certain weight of silver represents