Some Considerations of the Lowering of Interest [33]
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 lower'd 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 constancy 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 Peoples 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 publick Debt, 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 other Wise to employ 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 shew. Indeed upon good Security one might lately have borrowed Money in Holland at Three, and Three and an half per Cent. but not by vertue 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 an 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 ofMoney 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 speaking, are Lenders: Of which there are so many whose Income depends upon Interest, that if the States were not mightily in Debt, but paid every one their Principal, instead of the Four per Cent. Use, which they give, there would be so much more Money than could be used, or would be ventured in Trade, that Money there would be at Two per Cent. or under, unless they found a way to put it out in Foreign Countries. Interest, I grant these Men, is low in Holland: But it is so not as an effect of Law, or the politick Contrivance of the Government, to promote Trade; but as the Consequence of great Plenty of ready Money, when their Interest first fell. I say when it first fell: For being once brought low, and the Publick having borrowed a great part of private Mens Money, and continuing in Debt, it must continue so though