Some Considerations of the Lowering of Interest [3]
will rather lend it to the Banker, at the legal Interest, than to the Tradesman or Gentleman, who when the Law is broken, shall be sure to pay the full natural Interest, or more; because of the ingrossing by the Banker, as well as the Risque in transgressing the Law. Whereas were the natural Use suppose Seven per Cent. and the legal Six; First, the Owner would not venture the Penalty of the Law for the gaining one in Seven, that being the utmost his Money would yield: Nor would the Banker venture to Borrow, where his Gains would be but One Per Cent. nor the Money'd Man lend him, what he could make better Profit of legally at Home. All the Danger lies in this, That your Trade should suffer if your being behind-hand has made the natural Use so high, that your Tradesman cannot live upon his Labour, but that your Rich Neighbours will so undersell you, that the Return you make will not amount to pay the Use and afford a Livelihood. There is no way to recover from this, but by a general Frugality and Industry; or by being Masters of the Trade of some Commodity, which the World must have from you at your Rate, because it cannot be other where supplied. Now I think the Natural Interest of Money is raised two ways: First, When the Money of a Country is but little in proportion to the Debts of the Inhabitants one amongst another. For suppose Ten thousand pounds were sufficient to manage the Trade of Bermudas, and that the Ten first Planters carried over Twenty thousand pound, which they Lent to the several Tradesmen and Inhabitants of the Country, who living above their Gains had spent Ten thousand pound of this Money, and it were gone out of the Island. 'Tis evident, that should all the Creditors at once call in their Money, there would be a great scarcity of Money, when that employed in Trade must be taken out of the Tradesmens Hands to pay Debts; or else the Debtors want Money, and be exposed to their Creditors, and so Interest will be high. But this seldom happening, that all, or the greatest part of the Creditors do at once call for their Money, unless it be in some great and general Danger, is less and seldomer felt, than the following, unless where the Debts of the People are grown to a greater proportion, for that constantly causing more Borrowers, than there can be Lenders, will make Money scarce, and consequently Interest high. Secondly, That which constancy raises the Natural Interest of Money, is, when Money is little in proportion to the Trade of a Country. For in Trade every Body calls for Money according as he wants it, and this disproportion is always felt. For if Englishmen owed in all but One Million, and there were a Million of Money in England, the Money would be well enough proportioned to the Debts: But if Two Millions were necessary to carry on the Trade, there would be a Million wanting, and the price of Money would be raised, as it is of any other Commodity in a Market, where the Merchandize will not serve half the Customers, and there are two Buyers for one Seller. 'Tis in vain therefore to go about effectually to reduce the price of Interest by a Law; and you may as rationally hope to set a fixt Rate upon the Hire of Houses, or Ships, as of Money. He that wants a Vessel, rather than lose his Market, will not stick to have it at the Market Rate, and find ways to do it, with security to the Owner, though the Rate were limited by a Law: And he that wants Money, rather than lose his Voyage, or his Trade, will pay the Natural Interest for it; and submit to such ways of Conveyance, as shall keep the Lender out of the reach of the Law. So that your Act, at best, will serve only to increase the Arts of Lending, but not at all lessen the Charge of the Borrower: He 'tis likely shall with more trouble, and going farther about, pay also the more for his Money; unless you intend to break in only upon Mortgages and Contracts already made, and (which is not to be supposed) by a Law, postfactum, void Bargains lawfully made, and give to Richard what is Peters Due, for no other Reason, but because one was Borrower,