« PrécédentContinuer »
money from the subject, and place the distribution of it in the hand of the minifter.
It is the object of the publication under review to take money out of the hands of the minister and to diftribute it among the people; he however, only wishes him to fow, that he may reap more abundantly.
Repeated and various observation has fully convinced our author, that industry of every kind with its unnumbered effects on private happiness, would be most effectually excited, and generally diffused throughout every part of the British Empire, by a new and proper regulation of the intereft of money-And he is of opinion, that such a regulation, according to the true principles of loans, would be attended with no public expence, but, on the contrary, would be a fource of public revenue ; in the first inftance, as an institution; and in the second, as a promoter of general industry.
In order to prepare the way to the plan which he lays down for the regulation of money, our author thews, how much better industry is than the precious metals ; analyses the causes and the nature of wealth ; and on this subject, clearly refutes the opinion of Dr. Adam Smith and other writers on trade and finance, who hold, that it is not in the power of any nation by any act of legislation to encrease its capital and industry, and that money finds its own way into the preper channels with greater readiness and effect, than would result from the application of the greatest human fagacity. Having exainined the nature, and traced the history of the interest of money, he concludes, that the “ Laws of England respecting interest, are neither equitable nor politically expedient.” Here he adds, a consideration which places the deficiency of the present laws respecting interest, and the necessity of enacting new ones, in a very striking point of view, namely the nature and circumstances of the national or public loani, which subject the stock of the nation to the chance of a very speedy and very great diminution. He, farther affirms, and demonstrates, that the burthen of the loan falls first and heaviest on a class of men the least able to bear it; he means men, who, either in whole or in part, carry on business with borrowed money. Our author justly observes, that it is not in the power of manufacturers to extend their business so widely as those merchants known by the name of factors, who can call to their aid the wealth of other men by affording equal security. From this subject, he passes on to that of security on mortgage, which he confiders as “a bounty on goods for home consumption, and consequently as an embargo on foreign trade.”
It is above all things necessary to our author, before he proposes his plan, to remove the prejudice, and take off the odium against what is called usurious interest. Among other arguments intended to thew the equity of taking interest for money above the legal rate of five per cent. he reasons from the large discounts which are given for ready money, and from the history and laws of PAWNBROKING, which leads him by a natural transition to propose his plan for raising money, to which that of raising money on pledges bears fome affinity.
• When money is lent on undoubted security, the borrower pays, first, the intereit of the money borrowed ; and, secondly, for the trouble of transacting the loan. As to the interest of the loan, it is always, in all cases, exactly proportioned to the extent of the sum borrowed. But it is not so with respect to the trouble of tranf. acting the business of the loan: for, in borrowing one hundred pounds for the space of only one year, there is almost as much trouble as in borrowing ten thoufand pounds for ten years. Hence, the lending of small fums is less advantageous than that of lending great ones.
• In granting loans on doubtful security, there is, besides the two above-mentioned expences, a third, not indeed certain, but con, tingent; namely, the expence of a riique of loss which may attend it.
• The true principle, then, of a fair loan, without adhering either to law or cultom, would be, as in the following instance :
d. Capital fum lent, Intereit, at five per cent.
5० Expence of tranfaction Insurance mutually agreed upon, two and an half per cent.
1075 15 ! In order that the three different sums may follow the true proportion, they should be separately charged, as in the above instance, the interest always being regulated by the sum and the time; the expence of transacting the business being neither regu. lated by the sum and the tiine, (for it would be nearly the
fame were it only half the fum), but by what it is judged it really may cost, or by what is has been found by experience to coft. And the insurance being regulated by the risque that it is supposed will be run, according to the best information that can be had, re- lative to the circumstances of the borrower.
• As finall loans do not afford fufficient profit for the time and trouble that would be required to examine with sufficient minuteness into the circumstances of the borrower; for that, as well as several other reasons, the risque incurred is greater than in larger transactions, and ought to be paid for accordingly. It is reasonable, therefore, that an higher interest should be paid for small loans than for large ones.
It very fortunately happens, that those who borrow finall fums, and but for a short time, can in fact, afford to give higher interest than the borrower of a larger sum.
In considering loans, therefore, regard ought to be had to their extent and amount, as well as to the credit of the borrower.
• These things being premised, it is suggested, that a fund night with great advantage be established, for the purpose of supplying individuals with sums of money, in a lawful manner, upon fuch principles, and upon a plan, which, from the balis on which it Thould be founded, might turn out to be very different in its advantages from any of those that have hitherto been instituted,
The first regulation, in an institution of this fort, would require to be.
• That no loan should ever be granted which did not appear to be for the advantage of the borrower, whatever other circumitances night warrant the expediency of granting it
. That as the minds of men are often too apt to be biassed by eire cumstances, there should be a limit fet to the highest rate of interest that may be taken, which must be regulated by the extent of the loan; that is to say, the power of granting usurious loans not to be left to the directors of such a bank.
! The extent of the loan should be estimated by the interest which it produces during the whole time of the existence of the loan. Thus 500l. for two years should be reckoned the same as 1000l. for one year.
* That the principal management be in the hands of men who þare no interest in exacting too high a premium of insurance, nor of increasing the expence of the negotiation.
. That men of character should be employed to inquire into the particular circumstances of borrowers, under the beft regulations that can be devised for coming at the true state of their affairs.
• That a certain time elapfe, between the asking a loan and the granting of it, unless it be under fych particular circumstances as may be excepted from the general regulations.
That, in order to avoid making any kind of monopoly of the lending of money, where seçurity is so good as noț to require much premium of insurance, this bank be never allowed to lend money without a premium, nor ynless that premium amounts to twofifths of the interest,
• That, in order also to render the institution quite competent to the equalizing the monied affairs of the kingdom, and without re; fpect, in this instance to public revenue, any person may be allowed to take, for the loan of money on uncertain security, two-fifths premium of insurance more than what, at the time of such loan being granted is given for the loan of money on mortgage. This latt general licence for taking premia not to extend to loans above a certain amount:
Registers of all transactions to be so kept, that the circum: stances attending them may be known at any tiine afterwards.
• Probably the regulation of the institution might with advantage be subjected in fome degree to the yearly inspection of a committee
of the House of Commons; and, at all events, as there would be a good deal of discretionary power vested in the managers, it ought to have every posible check, wbich frequent and minute inspection into the exerci e of such an office might afford.
• To attempt laying down regulations now for a company of this fort would be ab urd, as it could not be done with any kind of propriety by an individual; and as it wouid also be very usele is, the whole intention being fimpiy to suggest the out lines, and demonstrate th: expediency of the plan.
• The intention of such a plan is public good, and as such it ought to be promoted as far as the nature of things will allow in obtaining that end.
• A high rate of interest will be taken because it is only meant to be applied to cases where a high rate can be afforded, and where on account of the risque run, it is required. As every man who has either property, industry, or character, ought to have some degree of credit, however limited, this plan ought to extend to debtors in prison, when circumstances are such as to warrant it in any degree. This would, if it proved to answer, be a noble purpose.
Even debtors in confinement have fome degree of credit, and they ought not to be excluded from the common privilege of humanity, that of using the little credit they poffefs. In this, how. ever, as in every other case, the invariable rule of not granting alfiílance unless it appeared that it would be of advantage to the borrower in the end, cught strictly to be adhered to.
• This last, however, if well attended to, would make one very material part of the plan; and it ought not to be considered as a matter of indifference, but, on the contrary, of very great importance, as the increase of national wealth and individual happiness ought ever to be pursued.”.
This plan for raising money our author recommends by very solid and unobjectionable arguments. In general, as he obferves, the circumstances most in favour of a project are, when it can be tried at a Imall risque, and upon a small scale that allows, and this is another argument in its favour, and admits of alterations and increase as it goes on, and does not involve the whole prosperity of the projector. In the formation of any project it is also a considerable circumstance that the. nioney laid out in making a trial, be laid out on such things as may be of use in case of failure. Now our author shews beyond contradiction that all these circumstances concur to recommend the plan he proposes.
Our author disclaims all pretensions to literary fame, or to that eloquence which fets off and inculcates with effect schemes already suggested. But he proposes a plan entirely new, a plan that may be tried by the nation without any lofs, and whose benefits, if they should exist in any degree would be extensive: this plan he has laid in a deep know, ledge of the principles that govern trade, commerce, manufactures and general industry; a knowledge derived from books, from reflection, and from actual observation on the busy walk of life, in which, it would appear that he has not been unconcerned. For it is, from practice alone that such minute information, on numberless particulars could have been acquired. The philosopher who speculates on trade, for the most part wants experience, and the man of business, on the other hand, funk in minutiæ or particulars, is incapable of ascending the higher grounds from whence he may take a view of what is general and comprehensive. Ourauthor, to various and minute observation adds a faculty for abstraction fitted for the contemplation of the grandest as well as the minuteft objects.
There are two ways only, by which an individual, or a fociety can improve their fortune: either by retrenching their expences, or enlarging their revenue. But all the favings that can be made by a mighty nation, are but trifling when cast in the balance with the enormity of its necessary disburscments. It is the gradual extension of commerce, since the revolution, which has enabled England to bear bürthens which the writers of every period almost unanimously predicted muft foon overwhelm her.' There is a mystery in the faculty of bearing such an accumulation of national debt, not yet clearly unfolded. It is certain, that the money levied on the people returns to them by a thousand channels, and operates as a general capital to stimulate general industrv. It is undoubtedly true policy to increase the national force by exciting and supporting the industry of individuals. And our author's plan for this purpose, is the most feasible of any that we have found among all the political productions that we have perufed. Something similar to what our author proposes is carried into execution every day by landlords, who improve their eftates by advancing money to their induftrious tenants, or making discounts of rent, where improvements are made, that must redound to the advantage of both tenant and master. A particular example of improving an estate, by ad. vancing money on pledges, is given by the Duke of Bedford, in the buildings in Bedford-square and other parts of his eftate in London.
Our author considers his plan, justly, as connected with an extension of civil liberty. As liberty, which is but another name for justice protects property, so increase of property nourishes a spirit of liberty and opposes a growing bulwark against the gradual encroachments of the executive on the deliberative or legislative part of government, and the rights and privileges of the people.