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 ABSTRACT OF ARGUMENT 
 
 ON 
 
 THE LAW OF USURY 
 
 DELIVKRET.) BEFORE THE JOUST CO.MMITTEE 
 
 SENATE & HOUSE OF REPRESENTATIVES, 
 
 ON TOE 
 
 DISTKIOT OK COLUMBIA. 
 
 NOYEMBEK 13, 187t), 
 BY BEISrj. J^i DA^KNEILLE. 
 
 (a MEMJiEE OF THE WA8HINGTON BAR.) 
 
 WA8rII^GTO^;: 
 
 TUtASIiKARS' STEAM I'UESS, (i-jl I.A. A\K. 
 1877. 
 
 ?i WASH 
 
;r -J .,J^., :« > * . v' 
 
 
THE LAW OF USURY. 
 
 Mr. Ohatrman: The present state of the law in the 
 District of Columbia on the subject of usury would seem at 
 this juncture of our affairs to require reconsiueration and 
 reform. Wiien, if at all, Congress will take action upon it is 
 uncertain; but it has been thought piudent at this time to 
 submit to you, as advisers of that body, some reflections in 
 behalf of such reform. 
 
 It is apprehended that innovation in that branch of our 
 laws would not be effected without difficulty. To attempt 
 it would be to war upon one of the strongest legal prejudices 
 of the country. The existence of a statute in the Fedral 
 Code prohibiting more than a fixed rate of interest for the 
 loan or forbearance of mone.y, is a feacful testimony of that 
 power by which the superstition of a dark age may transmit 
 its errors from generation to generation. But that power 
 exists, and we are compelled alike to admit it and to deplore 
 it. Under its influence falsehood becomes so venerable that 
 \ we (ear to approach into its presence and examine its founda- 
 tions. It subordinates the understanding to the dogmas of 
 antigaity, and makes a thousand years a stronger argument 
 than a good reason. We see it in all the walks of life, from 
 the erudite senator to the illiterate, peasant, and whenever 
 we see it, its footsteps are directed to evil. Fortunately for 
 the wellfare of our race, this species of tyranny is not wholly 
 impi-egnable. Though still potent, it has been gradually 
 •waning and disappearing before the growing light of truth. 
 One by one its strong places have surrendered, and we have 
 reason to hope that science and observation will continue to 
 break down its bulwarks, until it shall either become ex- 
 tinguished, or shall, at the least, be no longer formidable. 
 
 The subject before us is the proper consideration for the 
 use of money. We say that money is fairly to be regarded 
 as a necessary of life. If we abolish the use of it, commerce 
 must perish. But the wants of commerce are so far beyond 
 
tlic means of its agents that capital must be borrowed; and 
 capital cannot beboiTO\ved unless a consideration is paid for 
 its use. Payment of interest then for the use of money is 
 as much a necessity as the use of capital- — for on that con- 
 sideration only can capital be bad. Men will not and should 
 not forego the use of their nioney and hazaid its loss without 
 any consideration. To limit the measure of that consideration 
 is a problem, a grave problem, one whose solution belongs, 
 not to legislative bodies, but to those who, respectively, pa,y 
 and receive that consideration, 
 
 i'he practice of usury, or interest or compensation for 
 the use of money, is very old. Its history reaches far back 
 to a very remote period of the world. And the approving 
 judgment of men of different ages and nations, ai'gues that 
 It it reasonable and moral. It is probable that it has been 
 piacticed in most, if not all civilized nations, ancient and 
 modern. Under the law of Moses, the Jew was allowed to 
 practice it upon strangers, though not upon his brethren, 
 a distinction clearly political, and which argues the abstract 
 morality of the practice, for if not moral, it probably would 
 not have been allowed even upon strangers. It is said the 
 Jews have been monej^ lendeis on interest, usurers, in all 
 ages ; and as they have long been a bated people, it is 
 probable that much of the odium of usury is attributable 
 to the odium of that usurious race. 
 
 By the laws of the Twelve Tables usuiy was allowed in 
 Eome at the rate of oue-pejceut. pei' annum ; and more than 
 one hundred years belore that period, Solon, the great 
 Athenian legislator, estabhshed the rate of interest among 
 the Athenians at twelve per cent, per annum. At the time 
 of Grotius, iuterest in Holland v/as eight per cent, on common 
 loans, and twelve per cent, on loans to merchants; and it 
 was the wish of Lord Bacon to introduce that policy into 
 England, but it was not done. In England the rate of 
 iuteiest Ijas fluctuated. In the reign of Henry VIII, and 
 of Elizabeth, it was limited to ten per cent. In the reign 
 of James 1. it was I'educed to eight per cent. In the reign 
 of Charles II. it was still further reduced to six per cent. 
 And by the statute of 12 Anne it was again reduced to five 
 per cent., which was the limit in the time of George III. 
 In the year 185G, the British law of usury was abohshed. 
 There is now, also, no law against usury in the American 
 
States of Colorado, California, Arkansas, Florida, Georgia, 
 Maine, Massachusetts, Mississippi, Nevada, Rhode Island, 
 South Caroli-na and Texas. In the different States of the 
 American Union in which usury laws stih exist, the rate of 
 interest is widely different. And according to the successive 
 variations which may be expected in the financial and 
 commercial interests of these States, and of foreign States, 
 may we expect fluctuation from time to time in their 
 respec4:lve rates of interest. 
 
 Looking back at this experience of so many* enlightened 
 nations, protracted through so long a range of time, we may 
 well conclude, if experience is evidence, that there is in the 
 commercial relations of the world a constant necessity for 
 pecuniary loans, and that the obvious interest of both 
 borrowers and lenders has required and justified, respectively, 
 a compensation to the lender for the use of his money. No 
 State can prosper without commerce; commerce cannot 
 exist without credit ; and credit cannot exist without interest 
 in some form. It is true that Aristotle, as well as the gi-eat 
 Jewish lawgiver, is said to have condemned usury; the 
 former on the ground that money is naturally barren, and 
 that to make it breed mone}' is preposterous and a i)erver- 
 sion of its object, whicli was to be a medium of exchange. 
 But in answer to all this it may be said, first, that this 
 passage of Aristotle has been suspected to be spurious; 
 and secondly, that if genuine it is absurd, in as much as the 
 like may be said of machinery, vessels, houses and other 
 such things. Nevertiieless, it may be well briefly to inquire 
 if it is not, in the nature of things, reasonable and just to 
 take interest for the use of money. In this inquiry we 
 premise that our money, like anything else that we own or 
 possess, is by law and light our exclusive property; and 
 being thus exclusively our property, we are thereby entitled 
 to the exclusive use, disposition and enjoyment of it as of 
 any other property, in every respect, manner and form in 
 which it is susceptible of use, disposition and enjoyment. 
 We may convert it into jewelry and use it for the ornament 
 of our persons; or we may buy with it the necessaries of 
 life for our sustenance, or we may employit in the purchase 
 of property, to be resold at a profit. Take the last case. 
 Suppose a man owing $10,000 of capital employs it for 
 twelve months in the purchase and sale of merchandize, and 
 
thereby realizes a profit of $3,000. ISTow take the proper 
 value of the persoual services of the proprietor of the money 
 from the total profits of the year's opeiations, and the 
 remainder will express tlie value of the capital during that 
 time. Say the services would be worth $1,000, tiien the 
 remainder of 12,000 would be the distinct and iseparate 
 product of the money. Thus the nse of that capital for 
 twelve months would be worth $2,000. That use is the 
 property of the owner of the capital, and if so, he can rightly 
 sell it as any-other propeity which he owns, the sale of the 
 use being a mode ot enjoying the use which is his pioperty. 
 This is as clear as that a man may take hire from another 
 for the use of a hoise which he migiit have lidden himself. 
 But the sale of sucli a use is only a loan on interest, and it 
 follows that the payment of interest is strictly reasonable 
 and right. 
 
 We say further, that under different circumstances money 
 is more or less valuable and is worth different rates of interest. 
 These circumstances it is impossible to foresee. No man, no 
 combination of men, can at any one period of time definitely 
 foiesee the weight and character of the ciicumstances tliat 
 will attend a transaction at another period afar off in the 
 future. Legislative bodies have no propiietic sagacity beyond 
 that of the individuals who compose them, and it is there- 
 fore very plain that to fix by law the late of interest on a 
 loan to be made in the distant future, and in advance of the 
 unknown circumstances which should properly settle that 
 Fcite, is an absurdity which ought now to be antiquated. 
 We hold that where money is abundant its use should be 
 cheaper than where it is scarce. This is tenable in theory 
 as well as in practice. When the amount of money for 
 loan is very great, and borrowers can use it to but little 
 advantage, it is clear that the interest on it should be but 
 little ; but when on the contrary there is but little money 
 to be loaned, and much profit can be made by its use, it is 
 then plain enough that the interest upon it should be higher. 
 These fluctuations^ are ever occurring. They cannot be 
 anticipated, and parties whose interest they involve, and 
 who see and appreciate them when they occur, should be 
 allowed to judge for themselves. It would be a ludicrous 
 speculation for Congress, if it. had the power to do so, to 
 undertake in the year 1876, to determine and fix the market 
 
pi ice of cotton and tobacco for the year 1880; and yet that 
 body will fix tbe future rate of interest on money in the 
 District of Columbia, although it is a subject alike beyond 
 the range of its sagacity. In the State of Virginia 
 at a recent period, when the contract rate of interest 
 allowed by law was twelve per cent., the usual I'ate of 
 interest at the First National Bank of Eichmond was not 
 over nine per cent. It might be conceived in support of 
 tiie present law that on establishing the rate of interest at 
 any fixed per centum, there would be no occasion to change 
 it at any time, by reason of an increase or decrease in the 
 value of money ; because there would always be a rise or tall 
 in the value of the interest proportioned to that of the 
 principal, so that the iutei'est would, in effect, always be the 
 same. But this is the merest sophistry, for whether the 
 value of money remains constantly the same or not, a greater 
 2)er centum can be realized on its use at some times than at} 
 others, and the rate of interest should of course vary accord- 
 ingly. It is the value of the hazard of loss, and the temporary 
 use of tbe money, and not the value of the money, that 
 should regulate iuteiist, and the hazard is greater or less 
 in different cases, just as the use is, according to.cirenmstances, 
 more or less valuable. Tlie gieat benefit of the law limiting 
 the rate of interest is supposed to lie in the protection of 
 the borrower against the extortion and oppression of the 
 lender. But in this District no such protection is necessaiy; 
 and our usuiy law is in that regard a superfluous rule. It 
 is no doubt true that many loans are negotiated on interest 
 at 6 per cent which would have been made at a higher rate 
 if this law were out of the way. But that does not pi'ove 
 that to contract for a higher rate would be extortion or 
 oppression. On the contrary the law may operate unjustly 
 to the lender by compelling him to take a less rate of interest 
 than his money is worth. On what principle is it determined 
 that interest at the rate of eight or ten per cent, is extortion? 
 It might result in great gain to the borrower. How can it 
 be extortion when we see the borrower realize twenty per 
 cent, on the use of the money? Extortion argues injury, 
 how then can a clear piofit of twelve per cent, be extortion? 
 But if a loan were> made at such a rate of interest, and 
 under such circumstances as really to amount to extortion, 
 still the enactment of a usuiy law is not necessary to give 
 
6 
 
 relief. If the extortion is made to appear on that perfectly 
 sufficient ground, and on that alone, the iniquitous contract 
 may he avoided in a couit of equity. What amounts to 
 imposition or extortion must depend upon the circumstances 
 of each case, and so, what might under some circumstances 
 be a case of extortion, might under others be a perfectly 
 just and fair transaction. But by the enactment of a law 
 of usury all regard to circumstances is proscribed. The 
 Legislatui'e without knowing the fiicts, from which alone the 
 just or unjust character of the transaction is determinable, 
 decides arbitrarily and in advance of tlie case, what will be 
 right and what will not. It has established a Procrastean 
 rule, and its operation oftener plagues than profits tlie 
 necessitous borrower. Under the law of the District it is 
 allowable to buy and sell debts due by bond or note, at rates erf 
 discount gi'eater than the legal rate of interest. A is indebted 
 to B by bond with security in the sum of $1,000, payable 
 twelve months after date. The debt is good ; but B liaving 
 present need of money andbeing unable to awaitthe maturity 
 of the bond, sells it to 0, for cash, at a discount of 20 per 
 cent. This is a heavy loss ; but the transaction is legal and 
 perfectly valid. Kow, in effect, what is tbe difference 
 between this transaction and a loan of |800, on interest at 
 the rate of twenty-five per cent, per annum. The borrower 
 giving bond and good security for tlie payment of the money? 
 In each case there is an advance- of $800; in each case the 
 party advancing the money receives twelve months after 
 date of the advance, $200 for the amount advanced ; in each 
 case there is bond and security to pay the sum of ^1,000 at 
 the maturity of the bond ; there is in each case an advance 
 of money on credit; and in each case, it the bond is not paid 
 exactly when it becomes due, it runs on -at interest at the 
 rate of six per cent, per annum. What then is the diffei'ence 
 in effect to the lender or to the borrower between the cases? 
 There is no material difference, and yet, under the law, the 
 one transaction is tolerated, while the other is condemned 
 and made" void. As to the obligation of the assignee to 
 prosecute the assigned debt according to law, that may be 
 waived by the contract. It is true that the assignor of a 
 bond is a surety only to the, amount of the purchase money 
 paid for it and thus to the amount of the discount, the 
 assignor is not a surety to tbe assignee. But notwithstanding 
 
this, the whole debt is supposed to be good withoiU this 
 security; and tlius between a loan and an assignment there 
 would be a difference of $152 in favor of tlie assignment; 
 and this difference is supported by no adequate reason. 
 Under tlie doctiine of the law the sum of |800, and the 
 six per cent, upon it, would be all that the assignee should 
 recover from the assignor, if there should be no recovery on 
 the bond. Tliis would make the transaction equivalent to 
 a loan at six per cent, without including the light to make 
 the discount over and above the six per cent. |)y action on 
 tlie bond. So the extra right to craim and receive' the 
 discount, in addition to the money advanced and six per 
 cent., is an advantage allowed by the law to the assignee, 
 which is not allowed to the lendei, though the ccmsideration 
 moving from the one is exactly equal to that moving from 
 the other. This alone makes the inconsistency very plain. 
 But there is another view of the matter. If A. lends to B. 
 a sura of money, and B. executes to him his bond payable 
 twelve months thereafter for the amount loaned, with legal 
 interest, the effect of the transaction is that for the sum 
 loaned, the loanee conveys to the lender a cliose in action 
 of" a given amount, payable as aforesaid. Now if on the 
 other hand B. assigns to A. for a sum of money equal to 
 that borrowed in the other case, a bond of 0., payable at 
 the same time, but which" with interest amounts to ten per 
 cent, more at maturity than the bond for the borrowed 
 money with legal interest, there the effect of the transaction 
 is as in the other case, that in consideration of the payment 
 by the assignee to the assignor of a certain sura equal to 
 the amount of the money borrowed in the other case, the 
 , assignor conveys to the aasiguee a a chose in action.; but in 
 this case the chose is of much greater value than in the 
 other. The difference is obvious ; the consideration paid in 
 the two cases being eciual, but the choses in action bought 
 being of very unequal value. Yet the one'^s tolerated by 
 law, and the other is not. The fact that the debt assigned 
 is the debt of a third person makes nob the least difference, 
 for the transaction is upon credit in both cases, and the 
 assigned bond may be better than that of the assignor would 
 be if executed by him for a loan. 
 
 Another consideration which weighs against the law of 
 usury is the fact that it isopposed to ihe genius and 
 
 ^ ot^.y^CJ.uj^^'/^t^ ^"sc^^-^ ^^yC 
 
 - ^ ■ < < , * ^ 
 
8 
 
 policy of the great principle of free-trade. It is one of 
 tbe great political theories of this age that trade ought 
 to be free. The levy of customs for revenue is no 
 exception to the principle. It is a theory whose operation 
 has pleased the country. It is founded in justice and good 
 sense, and it deserves to be popular. But the least reflec- 
 tion will show us that a nsury law, such as that under 
 consideration, is directly opposed to tliis principle and is 
 in fact behind the age. Free trade proclaims to the 
 borrower and to the lender: Make your own contracts; 
 demand and pay, I'espectively, such interest for the use of 
 money as you may judge to be right and proper — only taking 
 care in this as in all otiier transactions, to deal honestly. 
 And what more than this is necessary? For if men deal 
 not honestly in contracting loans of money their fraudulent 
 conduct therein can be corrected as well as their fraudulent 
 dealings in other contracts. Why should a man be more 
 protected against tlie fraud or imposition of a money lender 
 than that of a merchant or mechanic? Yet plainly without 
 reason, and against reason, the distinction is made by the 
 law, and men are told that they shall not lend their money 
 at more than ten per cent, per annum, aUhougii a gieater 
 rate may be reasonable and fair. If the usury laws were 
 abolished and men were allowed under the usual checks to 
 loan their money at such rates of interest as they might 
 deem right, it is probable that the rate of discount on 
 assigned debts would be reduced much below tlie present 
 average. More money also would be found seeking invest- 
 ment in loans, and this would keep down the rates of interest 
 and discount on loans and transfers of debt. Capitalists 
 now make large investments in stocks, which do not always, 
 pay as much as six per cent., whereas if they could lend their 
 money at rates ranging from eight to fifteen per cent., more 
 or less, according to circumstances, they would willingly do 
 so, to the commqn advantage of both borrower and lender. 
 It would turn the current of private capital. Some over 
 cautious persons might think it expedient if the present 
 usuiy laws should be repealed, to retain some limit of the 
 rate of interest. But that would be found to be unnecessary. 
 The rate of inteiest on money would be found to regulate 
 itself as do other articles of commerce and by virtue of the 
 general law. It is a general rule, as true in one case as iu 
 
9 
 
 another, that the usual or the market price of an article is 
 its value. If this is so what possible ground is there to 
 except the use of money? And if tlie use of money is 
 worth a given per cent, per annum, ought nut the borrower 
 to pay it? It might be supposed also that the repeal of the 
 law of usuiy would be burdensome to the indebted portion 
 of the people by compelling payment or by increasing the 
 interest on their debts, but it w^ould not be so. The 
 enlarged competition of capitalists seeking to invest their 
 money in loans would operate to prevent such a result. 
 But if these laws should be repealed, how, it may be inqured, 
 would it etfect the progress of our internal improvements t 
 Would not the power to lend money at higher rates 
 of interest divert the private capital of the country from 
 these improvements into more lucrative investments? This 
 in some degree might be an effect of the change ; but it 
 would not probably have so much effect as to prevent or 
 greatly to impede any truly valuable public improvement. 
 The utility of such works would reasonably promise the 
 equivalent of a high interest, and in respect of such there 
 would seem to be.no need of fear. As to those worse than 
 idle efforts at improvement that are sometimes pressed upon 
 the country, we should have no sympathy with them. But 
 whatever might be the effect of such a measure upon any 
 class of public improvements, still if it were the result of 
 justice to the private rights of the people, let the result 
 come. A virtuous people should never fear the consequences 
 of justice. The truly patriotic will not seek tlie public 
 good through private wrong; and were they to do so they 
 would not find it. 
 
 Again, there have been other serious objections alledged 
 against the repeal of this law. It has been said tliat money 
 was created by legislation for the convenience of the people 
 and should not be allowed to be perverted from its uses as 
 a medium and standard of value, to their oppressioii. The 
 proposition may be strictly correct and at the same time it 
 does not follow that there is any necessity for a law to limit 
 the rate of interest on money. As before said, our law, 
 apart from any special law of usury, will prevent or remedy > 
 such oppression if it should occur; and if so, wherefore a 
 law of usury? The theory of Whipple of Rhode Island 
 has been referred to and has been relied on as an argument 
 
10 
 
 in support of usury laws. But judging it by the best lights 
 before us, it seems to lend but inadequate aid to such a 
 defence. The show of ingenuity which he exhibits appears 
 to us to be fallacious, and he has drawn distinctions which 
 seem to give but little if any support to liis doctiine. He 
 holds that if money were merchandize as money, that a 
 yard-stick wrtuld be merchandise as a measure ; and that 
 the cloth would measure the yard-stick as much as the yard- 
 stick the cloth. Well, the yard-stick may be merchandize 
 as a measure. It is as fair and proper an article of commerce 
 as any other. One will pay for the increased value of the 
 stick, as a measure, as certainly as for the original value 
 when not a measure. It may have been propcTly merchandize 
 when not a measure, and it is but the more valuable when 
 it becomes a measure. It is then worth the total of these 
 two values, and in respect of both, it is merchandize. But 
 the argument that if the. yard-stick were merchandize the 
 cloth would measure it as much as it would measure the 
 cloth is a refinement in logic too subtle for the ordinary 
 understanding. How a yard-stick in measuring cloth is as 
 much measured as it measures, it certainly is not easy to 
 see. The cloth is no measure, and yet he says it measures. 
 Common sense would certainly say that it is only the measure 
 that measures. But why may not money be mei'chandize ? 
 What reason or authority is there to say that it is not in 
 fact merchandize 1 That it is intrinsically valuable is beyond 
 question ; and its use as a medium of exchange only makes 
 it the more valuable. It could not be such a medium if it 
 were valueless. Tlie total of these two values is the total 
 value of the money, and it may be bought or sold or ex- 
 changed for either one of these values as certainly and as 
 reasonably as in respect of the other. For what do we 
 purchase any article? Is it not for its uses! And do we 
 .Dot limit the price we pay for an article by the number and 
 magnitude of those uses! On what principle then, if we 
 buy an article which is susceptible of several uses, can we 
 be said to pay for it in respect of one of those uses and not 
 the other? Such a doctrine does not hold good as to any 
 other article, and it should not as to the uses of money. 
 The doctrine is plainly absurd. 
 
 This author further says, that money is the creation of 
 government, while merchandize is that of individual industry 
 
11 
 
 and that their origin is therefore different. Now suppose 
 all this to be true, wliat follows ? Does this remotely prove 
 that property in money is not as absoUite as in nny other 
 article f If one man acquires money from anotiier or from 
 tiie government, is not tliat money as perfectly and uncon- 
 ditionally his property, to all intents and purposes, as lands 
 or any other property bought in like manner? When a 
 man receives money from the government in payment of 
 debts or otherwise, does he take it subject to any condition 
 or qualitication whatever? If not, then he may use it and 
 dispose of it on the same principles and to the same extent 
 as an}^ other property; for if he cannot do so, then lie must 
 have received the money subject to some condition or 
 limitation ; and this, neither the Government nor the people 
 ever remotely contemplated. If it should be conjectured 
 that the law against usury is an evidence that the Govern- 
 ment, by implication, puts a condition on money, it may be 
 answered that the like argument would apply to ordinary 
 merchandize, tlie sale of which is taxed by law. But apart 
 from all tliis tlie matter is on principle, distinct and clear. 
 When the Government transfers its money in payment of 
 its debts to an individual, it is understood to be a transfer 
 of the whole interest of tlie Government in the money to 
 the party to whom it is paid. The payee is supposed to 
 have rendered to the Government a consideration equivalent 
 to the money paid. But the value of the money consists, 
 in part, in its character as money; and therefore the payee 
 has rendered a consideration, as well for the peculiar value 
 of the money, as money, as for the natural value of the 
 metal of which it consists, and so the payee is entitled to 
 the money absolutely. . And furthermore, was it ever known 
 that a legislative body asserted its power to limit the 
 rate of interest, on the ground that such supposed 
 property of the Government in money follows it into the 
 hands of private individuals receiving it as aforesaid? 
 Whipple holds that if raone}^ were put, on a level, in all 
 i-espects, with merchandize or other property, no rational 
 objection could be made to a change of the law ; but that 
 equality of function and power is not proposed. Now we 
 ask, wherein is money on any higher level than any other 
 property? Is it because it has a special value, as moneij, 
 over and above the natural value of its material f That 
 
12 
 
 cannot be, for many natural productions are fashioned by 
 the liand of art into forms which give them a far greater 
 vahie tlian they have in their natural state. AVhen thus 
 modified they are sold in the market and bring not only 
 their natural value, but; also the acquired value which is 
 put upon them by the hand of art; and still these articles, 
 thus increased in value by the skill of the artist, are not 
 supposed to be on any higher commercial level than the 
 crude products of nature from which they were formed, 
 that is to say, no arbitraiy advantage or preference is given 
 to them. It is unreasonable to say that one article is 
 privileged over another, or is put on a higher level, when 
 each is left free to bring its true and proper value. But it 
 may be said there is this difference between the cases, viz: 
 that in the one the skill of the artist is employed on his 
 own mate-rial, and the skill and the material being both his 
 own, he may properly receive the value of both ; whereas 
 in the other the crude material is invested with the skill of 
 workmanship and power of the Government. Grant it all; 
 and yet it is true that this whole investment of the Govern- 
 ment is worth only its market value, just as is the skill of 
 the individual expended on his own material; and whoever 
 acquires the money thus fashioned and endowed by the 
 Government, pays for it tlie full amount of its value. He 
 does the same where he buys any merchandize. In each 
 case the article is worth its market value, and that is what 
 it brings and all it brings. And in each case the whole 
 property purchased is divested out of the vendor and vested 
 in the vendee, and it is thus placed entirely beyond the use, 
 enjoyment and control of the vendor. In each case the 
 Government gets the value of the crude material fashioned 
 by it into coin ; in the other the private individual gets the 
 worth of his personal skill expended on his crude material. 
 If on the crude material no art is expended, it is worth so 
 much the less, and accordingly sells for less. What then is 
 the difference between the level of money and that of other 
 property! The power and form of money, communicated 
 to it by the Government, are not at all arbitrary or unreal. 
 All the value which the Government communicates to money 
 is real and substantial. There is no legerdemain in the 
 operation. The value of money consists piimarily in the 
 metal of which it is constituted; and secondarily in its form, 
 
13 
 
 Its privilege and the guarantee of the Government stamped 
 upon it to insure it to be what it professes to be. The 
 precious metal thus modified goes forth with increased 
 value. This increment of value it receives from, the 
 Government, and for it the Government receives a fair 
 equivalent from him who receives the money. Metal so 
 constituted, fashioned and stamped is money exclusively. 
 The Government for public convenience has chosen certain 
 metals which alone it converts into money. The mere metal 
 of which it is constituted is worth no more after than before 
 it is coined. The whole difference in its value consists in 
 what the Government has expended upon it. It is a great 
 matter to have a fit and convenient medium of exchange 
 and to have that well certified to us; and such a medium 
 the Goverhment gives us and assures it to be genuine. 
 Adequate pecuniary compensation for this service is all that 
 the Government ought to receive or does receive; and this 
 compensation being received and the money paid away, the 
 power of the Government over it is entirely gone. After 
 that the Government has no more control over the money 
 than it has over the property of an individual in a patent 
 right. Furthermore, by so endowing certain metals only, 
 the government does not raise or lessen the value of other 
 metals or other kinds of property. The greater fitness of 
 the metals selected for coin is a part of their intrinsic value. 
 It is no injury to the real value of the oak that the pine is 
 a more beautiful wood, fitter for certain uses, and therefore 
 wrought by the mechanic into forms which give it a value 
 far beyond its natural worth. The artificial value which is 
 given to it is a real addition to its natural value. If then, 
 the owner of the improved material does not receive the 
 total of both these values, he sustains an actual loss. And 
 so it is as to money. If the Government or individuals do 
 not receive the total value of the money which they pay, 
 they sustain loss. Platinum and zinc cannot complain that 
 they are not coined, for there is no obligation on the Gov- 
 ernment to coin either. And on the other hand gold and 
 silver cannot boast that they are coined, in as much as all 
 the peculiarities of money are separate and distinct from 
 their intrinsic value. So money has no undue or arbitrary 
 advantage over any other property. 
 
 Another point of the argument for the law of usury is, that 
 
14 
 
 if money should bave all tbe piivileges of mercliandize, tlien 
 merchandize should iiave all the privileges of niuney ; and 
 a debtor should be at liberty to pay his debt in goods as 
 Avell as in money. But to attempt to give to merchandize 
 by legislation tlie privileges of money would present a 
 solecism. It might as well be attempted to equalize trans- 
 portation by wheel-baiTOWs with that by lailroads and 
 canal. The thing is impossil:)le. If merchandize in general 
 were fit and convenient to become a medium of exchange 
 as money is the Government would make it so. But why 
 tax the Government to do a vain thing? And if money is 
 peculiarly fit and convenient to be such a medinm, as it is, 
 then it has a peculiar value, which it would be useless to 
 deny, or to attempt to take from it. As to a debtor's being 
 allowed to pay his debt in goods as well as in money, that 
 is alike absurd, for a debt is money. In the language of 
 Judge Blackstone, "a debt is a sum of money due by 
 certain and express agreement;" and therefore to pay a debt 
 it is necessary to pay money. If A. contracts to pay B. 
 |1(J0, he cannot discharge the contract by deliveiing him a 
 horse of any value whatever. That is not the agreement. 
 
 It is said also that as tbe law confers gi'cater privileges 
 on money than on merchandize; it should therefore impose 
 on it greater restraints. But it is not true that the law 
 gives such advantage to money. This dictum wants support. 
 If money is more privileged than merchandize, still it does 
 not follow that it should be more restrained. The idea 
 seems to involve the inconsistency of punishing for merit, 
 as merit must be supposed to be the ground of the privilege. 
 
 It is said also tliat money exists only as a relative agent 
 to measure the value of other things; l3ut that merchandize 
 is piized for what it is in itself. But this is an error. As 
 before stated, money is intrinsically valuable and may be 
 applied to vaiions uses. It is as certainly worthy to be 
 piized for what it is in itself as any other merchandize ; 
 though its character and special value as money would be 
 lost it it should be converted into other forms and applied 
 to other uses. The distinction is not just. 
 
 It has been said also that several States of the Union 
 have abolished the law of usury and have been obliged to 
 letnrn to it. It is no doubt true that several States have 
 abolished it and afterwards restored it. But the renewal 
 
15 
 
 of the law docs not prove that there were abuses of the 
 right of dealing in money. Nor is it shown that adequate 
 time was allowed to test the effect of the repeal, or that 
 the renewal of the law did not result more from old prejudices* 
 than from any evils in the monetary dealings of the people. 
 
 Again, it is asked, first, whether or not on the supposition 
 that men deal honestly, it would be better to repeal the law 
 of usury ; and secondly, whether in the absence of a law 
 of usury, bargains in monetary transactions are usually as 
 fair as those in regard to merchandize, To the first it may 
 be answered, that in the business affairs of life generally, it 
 would seem most piobable that the parties to the trans- 
 actions would know better than others what would most 
 promote their interest ; and to the second, that there seems 
 to be no good reason to believe that the dealings of men 
 in money are conducted less fairly and honestly than those 
 in- relation to merchandize. On what sound principle can a 
 difference be supposed? In circumstances of distress, men 
 will sometimes pay too much for the use of money; and 
 under hke circumstances they will sometimes pay too much 
 for other kinds of property. The principle appears to be 
 the same in every case. 
 
 Lastly, as to banks. On principle, there should be no 
 difference between them and natural persons ; but as cor- 
 porations are creatures of the law, and of course are created 
 as to the law seems good, they cannot complain a^ natural 
 persons, if conditions are imposed upon them in their incor- 
 poration. As to banks, tlie law is umeasonable; but in 
 respect to natural persons, it is both unreasonable and unjust. 
 
 In conformity with these views, it is proposed to let interest 
 remain as at present, where there is no contract ; bikt' to leave 
 the people as free to contract upon the rate of interest upon 
 money, as they are in regard to ail other rights of property. 
 

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