184 BANKING THEORIES IN UNITED STATES

demand more than the legal rate of interest, are at once withdrawn
 from the market.” The result is a greater monetary
stringency, forcing illicit interest rates still higher.! This is all
the more regrettable because people borrow at such times, not
to make profit, but to avert disaster by meeting existing debts.
This writer commended the English act of 1833, which exempted
the Bank of England from the usury laws with respect to its
loans of less than ninety-day length.?
Hildreth thought that only the banks failed to evade the usury
laws, being deterred by fear that they would lose their charters.?
Inability to raise their rates compels the banks to pass abruptly
from lending freely at six per cent to lending none at all, or only
small amounts. Repeal of the usury laws would remedy this.
By increasing the rate of interest whenever they found themselves beset
by a multiplicity of borrowers, the banks would check the disposition to
borrow in a much less violent and safer way, than by sudden and apparently
capricious refusals to discount.*

Nathan Appleton added his protest against usury laws “so far as
relates to notes of hand and bills of exchange,” and cited the
opinion of Norman, Tooke, and Lloyd as to the benefits England
derived from the partial repeal of her usury law.’
The crisis of 1857 was followed by an increased number of
protests against the usury laws. The New York Chamber of
Commerce, which had already begun to make the matter a subject
 of annual petition to the legislature in 1855, now pressed the
point with renewed insistence.® The Massachusetts bank commissioners
 emphasized the value of a flexible discount rate in
checking speculative movements,” while J. S. Ropes wrote that
U “The Public Distress,” American Quarterly Review (1834), xv, 528.
2 Andreades, History of the Bank of England, p. 261.
3 For evidence that the banks found abundant means of evasion see Cooper,
Lectures (1826), p. 142; Gouge, Short History of Paper Money (1833), p. 31; Tucker,
in Hunt's Merchants’ Magazine (1858), xxxviii, 150; (1857), xxxvii, 575 ff.
Hildreth, Banks, Banking, and Paper Currencies (1840), p. 168.
5 Appleton, Remarks (1841), p. 47. For a curious proposal to lengthen bank
loans by means of a graduated usury law, see Dwight, “The Financial Revulsion,”
Hunt's Merchants’ Magazine (Feb., 1858), xxxviii, 162, 163.
6 Bankers’ Magazine (1858), xii, 832.
7 Report (Oct., 185%), pp. 80, 90.

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