The Gift_ Creativity and the Artist in the Modern World - Lewis Hyde [83]
The pro-usury argument goes even further. In 1867 Richard Henry Dana, Jr., the man who wrote Two Years Before the Mast, gave a speech in the Massachusetts House arguing against all laws restraining usury. He maintained that such laws do not help the poor. First of all, when interest rates are fixed by law, the poor cannot attract capital because they are forbidden to offer the higher interest that their weaker security would warrant.
Take the case of the poor, honest debtor. Sickness or misfortune has left him in debt, and a hard creditor … is pressing him to an execution. If he could borrow a thousand dollars … he could pay the debt and have a little with which to begin again. But with his poor security, and the high state of the market, he cannot get the money at six percent. You prohibit him from giving seven, even he must sell the land under his feet, the house over the head of his wife and children …, and sell it all at a ruinous loss, as is always the case in forced sales, —a loss of at least twenty-five percent! The debtor might have saved this by a loan … at the market value of his security. What shall we say of such legislation? … Is it not a shame upon our intelligence, and public spirit, and humanity?
And who, he asks, are the debtors of the modern world? “It is mostly enterprise that borrows, and capital borrowing more capital.” Who are the creditors? Ever since “a benign Providence put it into the heart and head of some person early in this century” to establish savings banks, it is the poor themselves who lend money, “the day-laborers, the seamstresses and household servants, the news-boys in the streets, have become capitalists and lend to the rich and great.” If savings banks are inhibited from lending at the highest rate the market will bear, then it is these “poorer classes” who suffer.
Having laid aside the question of the poor, Dana sketches further reasons for lifting all restraint on usury. “The market of the world,” he writes, “moves with the irresistible power of ocean tides …” Moralists cannot fix the value of capital, and to pretend they can only cheapens moral discourse. Legislated interest rates violate the “immutable laws of trade.” When the market rate falls below the legal rate, usury laws have no effect at all, and when it rises above that rate they dry up trade and drive the poor to loan sharks or make criminals out of honest creditors.
Finally, in the modern world, it seems that interest charged for the use of money no longer sets up a boundary between people. Even in tribal life, usury was a way of having some intercourse with strangers. Now the entrepreneur and the man with ready cash seek each other out. Interest is the sign of a lively community. “A live country calls for capital and can pay for it,” Dana declares, “a dead country cannot.”
So in this odd way almost all that was once said against usury may now be said in its favor. The gifts of nature and the wealth of society are now kept in motion and grow through usury; interest on capital feeds the widows and orphans, and allows the poor to start anew and share in the wealth. Prohibitions on usury deaden trade and force rich and poor alike to compromise themselves ethically. And finally, interest on capital bears the same hallmarks as a commerce of gifts—it brings people together and ensures the liveliness of the group.
So reads the post-Reformation argument in favor of removing all restraint on usury.
To reply in favor of gift exchange we shall have to widen the frame of the argument. When Calvin speaks of judging each situation by its inherent equity, he is articulating an ethic of “balanced reciprocity,” one in which trade is marked by neither exploitation nor gift, neither affection nor animosity. The debate over usury has usually assumed a world clearly divided into brothers and others, friends and enemies. But most social life is not so rigorously symmetrical. Even in tribal groups,