THE USURY PREVENTION BILL.

Feilding Star, Volume XVIII, Issue 37, 12 August 1896, Page 2

THE USURY PREVENTION BILL.

This measure embodies a curious theory. It prohibits and declares illegal any rate of interest higher than 8 per cent in any conceivable case except in that of pawnbrokers who j are to be entitled to charge from 25 to 40 per cent per annum A rate of interest represents the charge for the use of money plus risk. In the case of British Consols we may say that 2i per cent represents the value of money with no risk. A Colonial Loan at :> per cent seems to imply 21 percent for money ancl _ per cent for risk. From these rates up to S per cent gives a margin providing for a great number of shades of risk. Risks representing these numerous gradations mounting by ] por cent, or less, at each step, from 8 to S per cent the promoter of the bill finds it possible to conceive. He also recognises the propriety of charges of from 2-1 to 40 per cent in the case of pawnbrokers. But he finds it impossible to conceive of a class of risk that would justify a charge above S per cent and less than 25. As an instance of the working ol this bill, if it become law, a lender of £5 for a month on personal security, with a chance of losing his money, would be held to be sufficiently compensated for risk and use of money by a payment of Bd, but a pawnbroker advancing £1 for the same period on security of a chattel worth H5 would be entitled to the same amount.