Deration, had never been able to dis- cover, in any one piece of money, any organs for generating any other such piece. Emboldened by so strong a body of negative proof, he ventured at last to usher into the world the result of his observations, in the form of an univer- sal proposition, that all money is in its nature barren. You, my friend, to •whose cast of mind sound reason is much more congenial than ancient phi- losophy, you have, I dare to say, gone before me in remarking, that the prac- tical inference from this shrewd obser- vation, if it afforded any, should have been, that it would be to no purpose for a man to try to get five per cent, out of money — not, that if he could contrive to get so much, there would be any harm in it. But the sages of those days did not view the matter in that light.
A con- Prejudices against Usury. 101 A consideration that did not happen to present itself to that great philoso- pher, but which had it happened to present itself, might not have been altogether unworthy of his notice, is, that though a daric would not beget another daric, any more than it would a ram, or an ewe, yet for a daric which a man borrowed, he might get a ram and a couple of ewes, and that the ewes, were the ram left with them a certain time, would probably not be barren. That then, at the end of the year, he would find himself master of his three sheep, together with two, if not three, lambs; and that, if he sold his sheep again to pay back his daric, and gave one of his lambs for the use of it in the mean time, he would be two lambs, or at least one lamb, richer than if he had made no such bargain.
These 102 LETT. X. Grounds of th& These theological and philosophical conceits, the offspring of the day, were not ill seconded by principles of a more permanent complexion.
The business of a money-lender, though only among Christians, and in Christian times, a proscribed profes- sion, has no where, nor at any time, been a popular one. Those who have the resolution to sacrifice the present to future, are natural objects of envy to those who have sacrificed the future to the present. The children who have eat their cake are the natural enemies of the children who have theirs. While the money is hoped for, and for a short time after it has been re- ceived, he who lends it is a friend and benefactor: by the time the money is spent, and the evil hour of reckoning is come, the benefactor is found to Imve changed his nature, and to have put Prejudices against Usury. 103 put on the tyrant and the oppressor. It is an oppression for a man to reclaim his own money: it is none to keep it from him. Among the inconsiderate, that is among the great mass of mankind, selfish affections conspire with the so- cial in treasuring up all favour for the man of dissipation, and in refusing jus- tice to the man of thrift who has sup- plied him. In some shape or other that favour attends the chosen object of it, through every stage of his career. But, in no stage of his career, can the man of thrift come in for any share of it. It is the general interest of those with whom a man lives, that his ex- pense should be at least as great as his circumstances will bear: because there are few expenses which a man can launch into, but what the benefit of it is shared, in some proportion or other, by those with whom he lives.
In 104 LETT. X. Grounds of the In that circle originates a standing law, forbidding every man, on pain of infamy, to confine his expenses within what is adjudged to be the measure of his means, saving always the power of exceeding that limit, as much as he thinks proper: and the means assigned him by that law may be ever so much beyond his real means, but are sure never to fall short of them. So close is the combination thus formed be- tween the idea of merit and the idea of expenditure, that a disposition to spend finds favour in the eyes even of those who know that a man's circum- stances do not entitle him to the means: and an upstart, whose chief recom- mendation is this disposition, shall find himself to have purchased a permanent fund of respect, to the prejudice of the very persons at whose expense he has been gratifying his appetites and his pride.
Prejudices against Usury. 105 pride. The lustre, which the display of borrowed wealth has diffused over his character, awes men, during the season of his prosperity, into a sub- mission to his insolence: and when the hand of adversity has overtaken him at last, the recollection of the height, from which he has fallen, throws the veil of compassion over his injustice.
The condition of the man of thrift is the reverse. His lasting opulence procures him a share, at least, of the same envy, that attends the prodigal's transient display: but the use he makes of it procures him no part of the fa- vour which attends the prodigal. In the satisfactions he derives from that use, the pleasure of possession, and the idea of enjoying, at some distant pe- riod, which may never arrive, nobody comes in for any share. In the midst of his opulence he is regarded as a F 3 kind 106 LETT. X. Grounds of the kind of insolvent, who refuses to ho- nour the bills, which their rapacity would draw upon him, and who is by so much the more criminal than other insolvents, as not having the plea of inability for an excuse.
Could there be any doubt of the dis- favour which attends the cause of the money-lender, in his competition with the borrower, and of the disposition of the public judgment to sacrifice the interest of the former to that of the latter, the stage would afford a com- pendious, but a pretty c6nclusive proof of it. It is the business of the drama- tist to study, and to conform to, the humours and passions of those, on the pleasing of whom he depends for his success: it is the course which reflec- tion must suggest to every man, and •which a man would naturally fall into, though he were not to think about it.
He Prejudices against Usury. 107 He may, and very frequently does, make magni6cent pretences, of giv- ing the law to them: but woe be to him that attempts to give them any other law than what they are disposed already to receive. If he would at- tempt to lead them one inch, it must be with great caution, and not with- out suffering himself to be led by them at least a dozen. Now, I question, whether, among all the instances in which a borrower and a lender of mo- ney have been brought together upon, the stage, from the days of Thespis to the present, there ever was one, in which the former was not recom- mended to favour in some shape or other, either to admiration, or to love, or to pity, or to all three j and the other, the man of thrift, consigned to infamy.
Hence 108 LETT. X. Grounds of the Hence it is that, in reviewing and adjusting the interests of these appa- rently rival parties, the advantage made by the borrower is so apt to slip out of sight, and that made by the lender to appear in so exaggerated a point of view. Hence it is, that though prejudice is so far softened as to ac- quiesce in the lender's making some advantage, lest the borrower should lose altogether the benefit of his assist- ance, yet still the borrower is to have all the favour, and the lender's advan- tage is for ever to be clipped, and pared down, as low as it will bear. First it was to be confined to ten per cent, then to eight, then to six, then to five, and now lately there was a re- port of its being to be brought down to four; with constant liberty to sink as much lower as it would. The bur- then Prejudices against Usury. 109 then of these restraints, of course, has been intended exclusively for the lender: in reality, as I think you have seen, it presses much more hea- vily upon the borrower: I mean him who either becomes, or in vain wishes to become so. But the presents di- rected by prejudice, Dr. Smith will tell us, are not always delivered ac- cording to their address. It was thus that the mill-stone designed for the necks of those vermin, as they have been called, the dealers in corn, was found to fall upon the heads of the consumers. It is thus — but further examples would lead me further from the purpose.
110 LETT. XI. Compound Interest.
LETTER XI.
Compound Interest.
A Word or two I must trouble you with, concerning compound interest; for compound interest is discounten- anced by the law; I suppose, as a sort of usury. That, without an ex- press stipulation, the law never gives it, I well remember: whether, in case of an express stipulation, the law al- lows it to be taken, I am not absolute- ly certain. I should suppose it might: remembering covenants in mortgages that interest should become principal. At any rate, I think the law can- not well punish it under the name of usury.
If LETT. XI. Com/mind Interest. 1 11 If the discountenance shewn to this arrangement be grounded on the hor- ror of the sin of usury, the impro- priety of such discountenance follows of course, from the arguments which shew the un-" sinfulness 0/*that sin" Other argument against it, I be- lieve, was never attempted, unless it were the giving to such an arrange- ment the epithet of a hard one: in doing which, something more like a reason is given, than one gets in ordi- nary from the common law.
If that consistency were to be found in the common law, which has never yet been found in man's conduct, and which perhaps is hardly in man's na- ture, compound interest never could have been denied.
The views which suggested this denial, were, I dare to suy, very good: the 1 12 LETT. XI. Compound Interest.
the effects of it are, I am certain, very pernicious.
If the borrower pays the interest at the day, if he performs his engage- ment, that very engagement to which the law pretends to oblige him to con- form, the lender, who receives that in- terest, makes compound interest of course, by lending it out again, unless he chooses rather to expend it: he ex- pects to receive it at the day, or what meant the engagement? if he fails of receiving it*, he is by so much a loser. The borrower, by paying it at the day, is no loser: if he does not pay it at the day, he is by so much a gainer: a pain of disappointment takes place in the case of the one, while no such pain takes place in the case of the other. The cause of him whose con- tention is to catch a gain, is thus pre- ferred LETT. XI. Compound Interest. 113 ferred to that of him whose conten- tion is to avoid a loss: contrary to the reasonable and useful maxim of that branch of the common law which has acquired the name of equity. The gain, which the law in its tenderness thus bestows on the defaulter, is an encouragement, a reward, which it holds out for breach of faith, for iniquity, for indolence, for negli- gence.
The loss, which it thus throws up- on the forbearing lender, is a punish- ment which it inflicts on him for his forbearance: the power which it gives him of avoiding that loss, by prose- cuting the borrower upon the instant of failure, is thus converted into a re- ward which it holds out to him for his hard-heartedness and rigour. Man is not quite so good as it were to be wished he were; but he would be bad indeed, 114 LETT. XI. Compound Interest.
indeed, were he bad on all the occa- sions where the law, as far as depends on her, has made it his interest so to be.
It may be impossible, say you, it often is impossible, for the borrower to pay the interest at the day: and you say truly. What is the inference? That the creditor should not have it in his power to ruin the debtor for not paying at the day, and that he should receive a compensation for the loss oc- casioned by such failure. — He has it in his power to ruin him, and he has it not in his power to obtain such compensation. The judge, were it possible for an arrested debtor to find his way into a judge's chamber instead of a spunging-house, might award n proper respite, suited to the circum- stances of the parties. It is not possi- ble: but a respite is purchased, proper or LETT. XI. Compound Interest. 115 or not proper, perhaps at ten times, perhaps at a hundred times the ex- pense of compound interest, by put- ting in bail, and fighting thecreditor through all the windings of mischiev- ous and unnecessary delay. Of the satisfaction due either for the original failure, or for the subsequent vexation by which it has been aggravated, no part is ever received by the injured creditor: but the instruments of the law receive, perhaps at his expense, perhaps at the debtor's, perhaps ten times, perhaps a hundred times the amount of that satisfaction. Such is the result of this tenderness of the law.
It is in consequence of such tender- ness that on so many occasions a man, though ever so able, would find him- self a loser by paying his just debts: those very debts of which the law has recognized 116 LETT. XI. Compound Interest.
recognized the justice. The man who obeys the dictates of common honesty, the man who does what the law pre- tends to bid him, is wanting to him- self. Hence your regular and securely profitable writs of error in the house of lords: hence your random and vin- dictive costs of one hundred pounds, and two hundred pounds, now and then given in that house. It is natu- ral,.and it is something, to find, in a company of lords, a zeal for justice: it is not natural, to find, in such a company, a disposition to bend down to the toil of calculation.
LETT. XII. Maintenance, &Vr. 11?
LETTER XII.
Maintenance and Champerty.
HAVING in the preceding letters had occasion to lay down, and, as I flatter myself, to make good, the general principle, that no man of ripe years, and of sound mind, ought, out of loving kindness to him, to be hindered from making such bargain, in the way of obtaining money, as, acting with his eyes open, he deems conducive to his interest, I •will take your leave for pushing it a little farther, and extending the appli- cation of it to another class of regula- tions still less defensible. I mean the antique 118 LETT. XII. Maintenance antique laws against what are called Maintenance and Champerty.
To the head of Maintenance, I think you refer, besides other offences which are not to the present purpose, that of purchasing, upon any terms, any claim, which it requires a suit at law, or in equity, to enforce.
Champerty, which is but a particu- lar modification of this sin of Mainte- nance, is, I think, the furnishing a man who has such a claim, with regard to a real estate, such money as he may have occasion for, to carry on such claim, upon the terms of receiving a part of the estate in case of success.
What the penalties are for these offences I do not recollect, nor do I think it worth while hunting for them, though I have Blackstone at my elbow. They are at any rate, sufficiently se- vere and Champerty. 119 vere to answer the purpose, the rather as the bargain is made void.
To illustrate the mischievousness of the laws by which they have been created, give me leave to tell you a story, which is but too true an one, and which happened to fall within my own observation.
A gentleman of my acquaintance had succeeded, during his minority, to an estate of about 30001. a year: I won't say where. His guardian, con- cealing from him the value of the estate, which circumstances rendered it easy for him to do, got a convey- ance of it from him, during his non- age, for a trifle. Immediately upon the ward's coining of age, the guardian, keeping him still in darkness, found means to get the conveyance confirm- ed. Some years afterwards, the ward discovered the value of the inheritance he 120 LETT. XII. Maintenance he had been throwing away. Private representations proving, as it may be imagined, ineffectual, he applied to a court of equity. The suit was in some forwardness: the opinion of the ablest counsel highly encouraging: but mo- ney there remained none. We all know but too well, that, in spite of the un- impeachable integrity of the bench, that branch of justice, which is parti- cularly dignified with the name of equity, is only for those who can af- ford to throw away one fortune for the chance of recovering another. Two persons, however, were found, who, between them, were content to defray the expense of the ticket for this lot- tery, on condition of receiving half the prize. The prospect now became en- couraging: when unfortunately one of the adventurers, in exploring the recesses of the bottomless pit, happenand Champerty. 121 and Champerty. 121 ed to dig up one of the old statutes against Champerty. This blew up the whole project: however the defend- ant, understanding that, some how or other, his antagonist had found sup- port, had thought fit in the mean time to propose terms, which the plaintiff, after his support had thus dropped from under him, was very glad to close with. He received, I think it was, 30001.; and for that he gave up the estate, which was worth about as much year- ly, together with the arrears, which were worth about as much as the estate.
Whether, in the barbarous age which gave birth to these barbarous precautions, whether, even under the zenith of feudal anarchy, such fetter- ing regulations could have had reason on their side, is a question of curiosity rather than use. My notion is, that G there 1&2 LETT. XII. Maintenance there never was a time, that there ne- ver could have been, or can be a time, when the pushing of suitors away from court with one hand, while they are beckoned into it with another, would not be a policy equally faithless, in- consistent, and absurd. But, what every body must acknowledge, is, that, to the times which called forth these laws, and in which alone they could have started up, the present are as opposite as light to darkness. A mischief, in those times, it seems, but too common, though a mischief not to be cured by such laws, was, that a man would buy a weak claim, in hopes that power might convert it into a strong one, and that the sword of a baron, stalking into court with a rabble of retainers at his heels, might strike terror into the eyes of a judge upon the bench. At present, what cares and Champerty. 123 cares an English judge for the swords of an hundred barons? — Neither fear- ing nor hoping, hating nor loving, the judge of our days is ready with, equal phlegm to administer, upon all occasions, that system, whatever it be, of justice, or injustice, which the law has put into his hands. A disposition so consonant to duty could not have then been hoped for: one more con- sonant is hardly to be wished. Wealth has indeed the monopoly of justice against poverty: and such monopoly it is the direct tendency and necessary effect of regulations like these to strengthen and confirm. But with this monopoly no judge that lives now is at all chargeable. The law created this monopoly: the law, when ever it pleases, may dissolve it.
I will not however so far wander from my subject as to inquire what G 2 measure 124 LETT. XII. Maintenance measure might have been necessary to afford a full relief to the case of that unfortunate gentleman, any more than to the cases of so many other gentle- men who might be found, as unfortu- nate as he. I will not insist upon so strange and so inconceivable an ar- rangement, as that of the judge's see- ing both parties face to face in the first instance, observing what the facts are in dispute, and declaring, that as the facts should turn out this way or that way, such or such would be his decree. At present, I confine myself to the removal of such part of the mischief, as may arise from the general conceit of keeping men out of difficulties, by cutting them off from such means of relief as each man's situation may af- ford. A spunge in this, as in so ma- ny other cases, is the only needful, and only availing remedy: one stroke of it and Champerty. 125 it for the musty laws against mainte- nance and champerty: another for the more recent ones against usury. Con- sider, for example, what would have respectively been the effect of two such strokes, in the case of the unfortunate gentlemen I have been speaking of. By the first, if what is called equity has any claim to confidence, he would have got, even after paying off his champerty-usurers, 15001. a year in land, and about as much in money: instead of getting, and that only by an accident, 30001. once told. By the other, there is no saying to what a de- gree he might have been benefited. May I be allowed to stretch so far in favour of the law as to suppose, that so small a sum as 5001. would have carried him through his suit, in the course of about three years? I am sen- sible, that may be thought but a short sum, 126 LETT. XII. Maintenance sum, and this but a short term, for a suit in equity: but, for the purpose of illustration, it may serve as well as a longer. Suppose he had sought this necessary sum in the way of borrow- ing 5 and had been so fortunate, or, as the laws against the sin of usury would style it, so unfortunate, as to get it at 200 per cent. He would then have purchased his 60001. a year at the price of half as much once paid, viz. 30001.; instead of selling it at that price. Whe- ther, if no such laws against usury had been in being, he could have got the money, even at that rate, I will not pre- tend to say: perhaps he might not have got it under ten times that rate, perhaps he might have got it at the tenth part of that rate. Thus far, I think, we may say, that he might, and probably would, have been the better for the repeal of those laws: but thus far and Champerty. 127 far we must say, that it is impossible he should have been the worse. The terms, upon which he met with adven- turers willing to relieve him, though they come not within that scanty field, which the law, in the narrowness of its views, calls usury, do, in the present case, at twenty years purchase of the 30001. a year he was content to have sacrificed for such assistance, amount, in effect, to 4000 per cent. Whether it was likely that any man, who was disposed to venture his money, at all, upon such a chance, would have thought of insisting upon such a rate of interest, I will leave you to ima- gine: but thus much may be said with confidence, because the fact demon- strates it, that, at a rate not exceeding this, the sum would actually have been supplied. Whatever becomes then of the laws against maintenance and champerty, 128 LETT. XII. Maintenance, Kc.
champerty, the example in question, when applied to the laws against usu- ry, ought, I think, to be sufficient to convince us, that so long as the ex- pense of seeking relief at law stands on its present footing, the purpose of seeking that relief will, of itself, inde- pendently of every other, afford a suf- ficient ground for allowing any man, or every man, to borrow money on any terms on which he can obtain it.
Crichoff, in White Russia, LETT. XIII. To Dr. Smith. 1*9 LETTER XIII.
To Dr. Smithy on Projects in Arts, Xc.
SIR, I Forget what son of controversy it was, among the Greeks, who hav- ing put himself to school to a professor of eminence, to learn what, in those days, went by the name of wisdom, chose an attack upon his master for the first public specimen of his profi- ciency. This specimen, whatever en- tertainment it might have afforded to the audience, afforded, it may be sup- posed, no great satisfaction to the mas- ter: for the thesis was, that the pupil G 3 owed ISO LETT. XIII. To Dr. Smith, owed him nothing for his pains. For my part, being about to shew myself in one respect as ungrateful as the Greek, it may be a matter of prudence for me to look out for something like candour, by way of covering to my in- gratitude: instead therefore of pre- tending to owe you nothing, I shall begin with acknowledging, that, as far as your track coincides with mine, I should come much nearer the truth, were I to say I owed you every thing. Should it be my fortune to gain any advantage over you, it must be with weapons which you have taught me to wield, and with which you yourself have furnished me: for, as all the great standards of truth, which can be ap- pealed to in this line, owe, as far as I can understand, their establishment to you, I can see scarce any other way of convicting you of any error or over- sight, on Projects in Arts, Kc. 131 sight, than by judging you out of your own mouth.
In the series of letters to which this will form a sequel, I had travelled nearly thus far in my researches into the policy of the laws fixing the rate of interest, combating such arguments as fancy rather than observation had suggested to my view, when, on a sudden, recollection presented me with your formidable image, bestriding the ground over which I was travelling pretty much at my ease, and opposing the shield of your authority to any ar- guments I could produce.
It was a reHection mentioned by Ci- cero as affording him some comfort, that the employment his talents till that time had met with, had been chiefly on the defending side. How little soever blest, on any occasion, with any portion of his eloquence, I may, 132 LETT. XIII. To Dr. Smith, may, on the present occasion, however, indulge myself with a portion of what constituted his comfort: for, if I pre- sume to contend with you, it is only in defence of what I look upon as, not only an innocent, but a most merito- rious race of men, who are so unfortu- nate as to have fallen under the rod of your displeasure. I mean projectors: under which invidious name I under- stand you to comprehend, in particu- lar, all such persons as, in the pursuit of wealth, strike out into any new channel, and more especially into any channel of invention.
It is with the professed view of checking, or rather of crushing, these adventurous spirits, whom you rank with " prodigals," that you approve of the laws which limit the rate of in- terest, grounding yourself on the ten- dency, they appear to you to have, to keep mi Projects in Arts, Kc. 133 keep the capital of the country oat of two such different sets of hands.