Some Considerations of the Lowering of Interest [32]
one side quite Eat up the Merchants, and Tradesman's Profit, and discourage their Industry; nor on the other hand so low, as should hinder Men from Risquing their Money in other Mens Hands, and so rather chuse to keep it out of Trade, than venture it upon so small profit. When it is too high, it so hinders the Merchants 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 a hinderance to Trade. But this being perhaps too general, and loose a Rule, 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 100 l. in Money, and Land of 5 l. per Annum, be of equal value, which is Land at Twenty Years Purchase: 'Tis necessary for the making their value truly equal, that they should produce an equal Income, which the 100 l. at 5 l. 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 return'd 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 allow'd for by the Tenant, antecedently to his entring 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 entred upon 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 5 l. per Annum, at Twenty Years Purchase, and other Land in Rumney-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 an 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 ones 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 it self, 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 King Charles I. 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 ofhigh Interest, every one craving Money to employ in a profitable Commerce. But this I think I may reasonably infer from it, That lowering of