An Argument from Adam Smith. "The statesman who attempts to direct private people in what manner they ought to employ their capital, not only loads himself with an unnecessary attention, but assumes an authority which can safely be trusted, not only to no single person, but to no senate nor council whatever; and which is no where so dangerous as in the hands of one who has the folly and presumption to fancy himself fit to exer

cise it."

Impost an Acknowledged Deception. As a historical fact an impost is an acknowledged deception-a fraud upon the people-a tax in disguise upon consumers-divided between the government and its collectors on the one side, and the home manufacturers on the other.

In ancient times the impost tax was based upon the common maxim that, if the people wish to be deceived, then the government should deceive them. But such a basis for a tax is a disgrace to an intelligent people.

Protection, a Bounty on Mediocrity. An impost of thirty per cent, if it do not in part go to enrich the home manufacturer, is clearly, to that extent, a dead weight on the spirit of enterprise, invention, and improvement, which would otherwise be stimulated to rival and compete with foreign skill. So long, therefore, as such impost continues, it will stamp home skill as thirty per cent behind that of the foreign artist.

Facility of Collecting Taxes. Facility of collecting taxes leads to proffigacy of expenditures-corruption of public officers-gives dangerous strength to governments-suggests war as a remedy for national disputes-and treacherously oppresses the people.

Facility, therefore, instead of being an argument in favor of indirect taxes, is an argument against them.

Let the people know and feel their taxes, and watch the legislators who impose them. People should be jealous of governments, for their interests are at variance.

The people who would defend their liberties, must guard their pockets. Indirect Taxes Unequal and Unjust. Indirect taxes are unequal, and therefore unjust. For it is an argument used in their favor that they allow large numbers individually, and masses collectively, to escape taxes altogether, at the same time that they exercise an equal power in imposing them. Now, it is a fundamental principle in a just republican government that no man's property shall be taken from him without his consent--a principle that lay at the foundation of two revolutions, losing the House of Stuart a throne, and the House of Brunswick an empire. Those who pay taxes should impose them; and those who impose should pay them. Any deviation from this rule is oppression. Thus the argument in favor of indirect taxes, by admitting their inequality, demonstrates their injustice.

Direct Taxes Best. A Direct tax is recommended by simplicity, honesty, and economy. It carries with it all the blessings of a free commerce; and will in the end be found, to the laborer, the lightest tax; and to all the most equal and just.

The People Accustomed to Direct Taxes. To attempt to excite popular odium against direct taxes, by appealing to popular prejudice, is to appeal to ignorance and passion, instead of to intelligence and reason; and those who make the appeal pay small compliment to the understanding of the people. For in each of the United States direct taxes were originally established, and have always been the chief reliance for revenue to pay the civil expenses of the State.

Small Expense of Collecting Direct Taxes. As to the expense of collecting a direct tax, the same system of raising taxes, for State expenses, is equally adequate to raise the revenue for the support of the general government. During the last war with Great Britain the direct tax was collected wholly in South Carolina and Ohio, aud partly in New York, New Jersey, Pennsylvania, Virginia, Kentucky, and Georgia, without the aid or intervention of any United States officers.

Direct Taxes Easiest Paid. Commerce, by increasing wealth, and multiplying means and facilities of paying taxes, renders their payment easier in proportion to its extent. Therefore, to give freedom to commerce is to give ease to taxes.

FOUR RULES FOR THE PRODUCTION OF WEALTH.

I. Wealth by home production is most increased when the total amount of labor in the Commonwealth is a maximum, and the total cost of production a minimum.

II. Wealth, by foreign exchange, is most increased when labor is directed to the production of those commodities whose foreign exchangeable value most exceeds the cost of production.

III. Generally, the great secret of wealth is, diminished cost of production. The greatest value must be produced with the least labor. For, labor is like money, the less of it required to produce the commodity, the more of it will remain for other purposes.

IV. Buy in the cheapest market, and sell in the dearest. For general wealth will be most increased when nations emulate the example of private individuals.

Aggravating Prices an Unsound Principle. Whatever aggravates prices retards wealth. For the higher the price, the greater must have been the cost; and the greater the cost, the greater must have been the labor; and the greater the labor, the less the total amount produced.

If aggravating prices be a sound principle, then must increasing the labor of production be a sound principle; and those who believe in it should oppose all labor-saving machines, the clearing of rivers, the use of railroads and steam, and inventions and improvements generally.

On the contrary, reduction of prices implies diminished labor of production; and the greater the reduction, the less the labor. The less the labor required to produce a commodity, the more the labor that is released to operate in other enterprises, as in the production of exports for foreign. markets.

Releasing and transferring labor from old to new employments-(or throwing labor out of employment," in the ad odium parlance of protectionists)--and the reduction of prices are the only positive and tangible evidences of improvement and progress. These are the known and certain ef fects of all labor-saving machines--of all increased facilities of transit—and generally of all improvements. And if free trade were not followed by like evidences of progress and improvement, there would then be less argument in its favor.

Aggravating Prices Depresses Wages. The legislation which aggravates the price of commodities to the level of profitable domestic manufacture, does nothing but depress the wages of domestic labor to the level of foreign labor. For to aggravate prices of consumption to the laborer is equivalent to depressing his wages.

Free Trade favors Population. Population is the first element in the wealth of a State, and constitutes its strength. Within the borders of the United States are immense tracts of land alike destitute of population and of cultivation. So long as this is true, labor can never lack employment, nor can commerce be justly charged with reducing either its employment or its

wages.

Territorial Division of Labor. Territorial division of labor is important to the general production of wealth, and the principle should be respected by communities, states, and nations, as well as by smaller bodies of men. Foreign commerce is therefore eminently conducive to the general wealth and prosperity of nations, by enabling them to import and export those commodities, for the production of which, the soil, climate, capital, industry, and habits of each country are best calculated.

Liberty is able to Remedy the Greatest Evils. In conclusion, the friends of free trade have strong confidence that commercial freedom will not only soften the general spirit of war and international hostilities abroad, but, that at home, it will remove serious grievances complained of for thirty years in certain geographical divisions of our own American Union; and thus by removing a leading cause, avert the consequences of agitating the question of disunion, if not of disunion itself. Indeed, the agitation of the question of free trade, at the present period of our national history, may be regarded as peculiarly auspicious; and the happiest consequences, in allaying public excitement on more dangerous topics, may be anticipated from a general discussion of the subject.

As man progresses in civilization, he spontaneously becomes more amenable to the great principles of justice, and less under the influence of civil law as a motive to rectitude. In an enlightened public opinion, new force is continually given to the common maxim that "we are governed too much." Freedom from legal restraints and disabilities is, therefore, incidental to human progress; and the statement of a respected author comes to command our confidence that "LIBERTY IS ABLE TO REMEDY THE GREATEST EVILS. It is the soul of a state; and was with justness called by the Romans Alma mater."*

S. B.

Art. VI.-THE LAW OF USURY.

USURY is defined to the taking or reserving of more than legal interest for the loan or forbearance of money, goods, or things in action.

The law of usury is established by the statutes of each State, and these, in general, are copied substantially from the English statute of Anne.

In the construction of the act, a distinction has always been made between the reserving and taking of usurious interest. Illegal interest may be taken without invalidating the contract, if done after the agreement is made, and there was no previous understanding that it should be paid. This is upon the principle that a subsequent unlawful act cannot affect an existing lawful obligation, if in no way connected with its inception. But if usurious interest be reserved in the agreement, it of course renders it void. Hence two classes of usurious contracts are recognized by the courts. The first is where a debt already exists, and an agreement is made giving further time for payment, with the reservation of more than legal interest during

* Vattel, page 88.

the period of forbearance. A contract of this kind does not affect the original indebtedness, but is simply void in itself. Therefore, if a loan is made, and an instrument given to secure lawful interest only, and afterwards an usurious agreement is made for the extension of the time of payment, and a note given for the usury, the latter instrument would be void, while the former would remain a valid security, unaffected by the subsequent unlawful arrangement. If, however, in such a case, the old security be taken up, and a new one given, the last is invalid, and no action can be maintained upon it; but the creditor has a right to disregard the usurious agreement, and sue upon the consideration of the primary indebtedness.

The requisites to form a usurious contract, in the other case, are three :First, a loan either express or implied; 2d, an understanding that the money shall, or may be returned; 3d, that a greater rate of interest than is allowed by law shall be paid.

It is absolutely essential that there should be a loan, in fact, or what amounts to such, in legal effect; although it is not necessary that the transaction should be a loan in form, if some other shape is given to it for the purpose of avoiding the statute; as where the parties adopt the device of purchasing an annuity, or a ground-rent, or connecting a sale with a loan, for the purpose of securing more than legal interest. In all these cases, the courts endeavor to ascertain the true intention with which the money was advanced; and if it appear that it was to be returned to the lender, at all events, and that such form was adopted in order to get more than lawful interest, or to impose a loss upon the necessities of the borrower, whatever disguise the contract may assume, it is usurious.

To constitute usury, it is not necessary that more than the legal rate of interest should be stipulated for, and agreed in terms to be given. It is sufficient if more than that be taken at the time of the loan with the knowledge of the parties to the contract. The paying and receiving of more than legal interest, would show the implied agreement, and the true intention of the lender. If, however, the excess was paid by reason of miscalculation, or mistake, it would, of course, afford no evidence of a corrupt agreement. There can be no usury without an intention to take more than legal interest, and it cannot exist if either of the parties remain ignorant of the usurious reservation. Even where more than lawful interest is reserved with the knowledge of the lender, but without that of the borrower, the transaction is not usurious. Ignorance of the law, however, affords no excuse, if the parties are aware of all the facts; and where more than legal interest is reserved, or taken by a party to a contract, upon a mistaken supposition of a legal right to do so, it is nevertheless a corrupt agreement within the statute. Therefore if a mode of calculation be adopted which gives to the creditor more than legal interest, and the lender knows it will have that effect, he is guilty of usury, although he may not suspect that he is violating law.

Where a usurious contract exists, the mere change of securities for the same loan, to the party who received the usury, or to a person having notice of it, does not purge the original illegal consideration so as to give a right of action on the new obligation. Every subsequent security, no matter how remote, or how often renewed, is absolutely void. But this must be understood as relating to mere substituted paper, which is tainted with the original usury. If, therefore, the illegal contract be mutually abandoned, and the securities are cancelled or destroyed, so that they can never be made the foundation of an action, and the borrower subsequently promise to pay the

amount actually received by him, such promise is valid and binding. It is founded upon an equitable and moral obligation, which is subat to support an express promise. The money actually lent, when spartel froin the usurious premium, is a debt in equity and conscience, which ought to be repaid. But as long as the usurious contract remains in force, unrecluded by the parties, it seems a promise to repay the money actually hated, or any part of it is not binding on the borrower. It is but a promise to perform, pro tanto, the original agreement, every part and parcel of which

is void.

Where a preexisting valid debt is incorporated in a security, given in part for a usurious loan, the instrument is void. The lawful and u-urious considerations cannot be separated so as to uphold the security in part, in proportion to the amount of the valid indebtediess. The whole is a nullity. But the legal debt, we have seen, is not affected, and may be recovered, without regard to the usurious contract.

Taking interest in advance, on an instrument payable at a future day, would, in strictness, come within the letter of the statute, inasmuch as interest is charged upon the amount of interest paid at the time, and on which there is no forbearance. The general custom, however, established by banks and individuals, in discounting paper, has been sanctioned by judicial decisions, and, with certain qualifications, is allowed for the benefit of trade. The instrument thus discounted must be such as usually circulates in the ordinary course of business; for instance, a negotiable promissory note, made payable at no very distant day. With this restriction, the taking of interest in advance, either by a corporation or individual, in the usual course of trade, is not unlawful.

Where, on the loan of money there is an usurious agreement, it is not material whether the illegal premium be actually paid, or only promised. The contract is entire, and upon its terms, taken together, depends the question of usury. The amount of money, therefore, in fact paid, is of no consequence whatever, provided there is an understanding between the parties that the illegal premium shall in future be advanced. Nor is it a matter of any legal importance, whether the contract is contained in a single instrument, or embraced in several writings. The law cannot be evaded by any attempt at divisibility. All the acts of the parties at the time, are regarded as a single transaction, forming but one agreement. Consequently, if one note be taken for the sum actually loaned, and another for the usurious premiums, both securities are equally void.

It is not necessary to bring a case within the statute, that the usurious agreement should be in writing, although a written security was given at the time. The contract may be partly in writing, and partly by parol, in which case oral evidence is admissible, to show the real agreement. So that if a note is given merely for the sum lent, with lawful interest, if there be a verbal agreement to pay usury, the instrument is illegal and void.

As a general thing, in discounting a bill or note, the advance must be made in cash, or its equivalent; and if made wholly, or in part, in depreciated paper, which is received at par; or if the loan is advanced in post-notes, or bills on time, which are taken by the borrower as money, the transaction, in either case, would, under ordinary circumstances, be deen.ed usurious.

But the fact that the loan was advanced in depreciated paper, is not always evidence of usury. It should appear satisfactorily that this mode of payment was adopted as a device to avoid the statute. The paper, although