Forced loan

“ Soon these Government promises to pay, made a legal tender in the payment of debts, went from hand to hand, and became the only current medium of exchange in all business transactions, and the whole American people stepped into the places of the original lenders to the Government. Thus the issue of legal-tender notes became a forced loan, without interest, levied upon the American people. ”

“ And many money-lenders were forced through sheer compulsion to restore to their debtors their contracts without having received back any part of their loan, and many persons not at all willingly set their slaves free. ”

“ Would not this destroy all private credit at one blow? Would it not have the effect of preventing, among individuals, the loan upon interest altogether? What would become of the bank of England, and all other banks, whose paper in circulation is all in the hands of private people? Is not every man who has a bank note, a creditor on the bank, and would not the same interest which moves other creditors to exact their debts, under such circumstances, also move many holders of bank notes, to demand payment of them? ”

“ It can hardly be said that there is any profit in loaning money itself; for the interest obtained is generally no more than a fair price or equivalent for the crops, rents, or other incomes, which the property that might be purchased with the money, would yield. But in the loan of credit, there is an actual profit of the whole amount that is received as interest, after paying the trouble and risk of banking. ”

“ In few or no cases would any considerable portion of the loan be stunk by mismanagement, or erroneous judgment, on the part of the debtor-for as loans would usually be made for no longer than three or six months each, there would not be opportunity for much waste of capital, unless by mismanagement that was so gross as to be culpable, or by misfortunes of rare and extraordinary character. In all other cases, then, capitalists would either obtain the whole of their loans with interest, or at least the greater part of their loans. ”

“ Yet, in the teeth of this well-known capability on his part, the man whose surplus productions enable others to get loans, and repay both capital and interest, is the only man who can get no loan for himself, because, by our atrocious system, the Credit as well as the Land of the country is hermetically sealed against him. ”

“ Every kind of loan proves infirmity in the State and a want of understanding of the rights of the State. Loans hang like a sword of Damocles over the heads of rulers, who, instead of taking from their subjects by a temporary tax, come begging with oustretched palm of our bankers. Foreign loans are leeches which there is no possibility of removing from the body of the State until they fall off of themselves or the State flings them off. ”

“ If they are competent to do their other business for themselves, government pays their capacity a poor compliment in undertaking to help them in the single matter of making loans; and the borrowers in turn have reason to pray to be delivered from their friends, since they, of all others, would be the men especially injured if all the lenders obeyed the usury laws. Suppose that a borrower is in great need of a loan, and that for some reason his credit is now a little weak. ”

“ No one can deny that they materially change the contract of loan and borrowing previously existing between the government and the railroad companies, and change it at the will of the creditor alone. Nor can it be denied that they impose upon the debtors new and onerous burdens that they never agreed to assume. Practically, they enforce payment of the debt before, by the terms of the contract, it is due. The act seizes the half-compensation, which the government agreed should not be retained, and covers it into the treasury, appropriating it to the payment of the debt. ”

“ Creditors, as a class-men who have money and capital to loan-have an interest that their customers, the borrowing class, should cancel their debts, by paying what they can, as soon as they find themselves in serious arrears, not only for the reason that their arrears will then usually [*22] be many times less than when settlements are postponed, as now, to the latest possible period, but because the debtors will then become good and safe customers to the money lenders again. ”

“ The newspapers have of late revealed many instances of the heartless behaviour of money-lenders towards their victims, but where one of the latter finds courage enough to go to a magistrate and explain the wrong he has endured, there are fifty who are so completely crushed and ruined, alike in spirit and worldly estate, that they sink and are passed over and heard of no more. It is appalling the amount of mischief these petty loan-office people work. ”

“ He may charge what interest he pleases, and make his own terms as to repayment. For a loan of ten pounds it is his common practice to obtain as security, in addition to a note of hand, a bill of sale for at least twenty-five, that not only the amount still unpaid of the advanced money, but also the "attendant expenses" may be covered; and attendant expenses means just anything that the rapacious creditor may please to name. Besides, it is impossible to hold a more potent screw over a poor fellow than authority to break up and destroy his home. ”

“ They asked that their loan be perpetual, like the English loan; that they should be freed from the burdens of the government; that their loan should be free from taxation; that they should receive their interest semi-annually, and not in the common legal tender, but in coin; that they be permitted to issue their own notes as currency to be loaned to their customers; that the government discredit its own issues and endorse theirs; and that they be given a monopoly by taxing out of existence all opposition. ”

“ In spite of the example of practically every nation in Europe for generations, the lending of money on mortgage in America still remains largely a mere brokerage business unrestricted by proper governing laws, either by individuals or corporations, while mortgages continue to be drawn up for three or five years, when experience shows that the average life of a loan is far in excess of that period and needs to be renewed time and again, with added expense to the debtor and trouble for the creditor. ”

“ It has no more right than a common carrier to use its powers specifically to build up or to destroy other businesses. The granting or withholding of a loan should be determined, so far as concerns the borrower, solely by the interest rate and the risk involved; and not by favoritism or other considerations foreign to the banking function. Men may safely be allowed to grant or to deny loans of their own money to whomsoever they see fit, whatsoever their motive may be. But bank resources are, in the main, not owned by the stockholders nor by the directors. ”

“ Not one in five knows how to arrange a loan. They permit themselves to be governed by some dealer, who, in almost every instant, is the worst grafter possible. They will make a loan with a life of three years, at eight per cent interest, and five per cent commission. Now you know that no loan running three years, on property that poor people are trying to buy on the installment plan, is practical. Yet that is the kind of loan that most of these cheap sharks offer to the masses of our people, who have no judgment. A Negro is unable, as a rule, to realize that three years is a very short time. ”

“ To call in this loan, at the rate of eight millions a year, in addition to the interest on the whole, and to take away, at the same time, that circulation which constitutes so great a portion of the medium of payment throughout that whole region, is an operation, which, however wisely conducted, cannot but inflict a blow on the community of tremendous force and frightful consequences. The thing cannot be done without distress, bankruptcy, and ruin, to many. ”

“ But, Miss Reed, you must remember that a bank loans other people’s money, so they have to take every care to protect it. And it has come to our ears that you have severely suffered from rustlers, so if the man who holds the sight note for twelve thousand insists on immediate payment, and unless you can prove that you have sufficient cattle to satisfy all claims, the bank, which has the first claim, will be forced to start foreclosure proceedings,” Raine explained. ”

“ If without the debtor’s permission he removes one srang, he forfeits his entire claim on a loan of a hundred srang; if he remove two, on two hundred srang, and so on in the same proportion. Nobody, be he a public officer, landlord, master, or creditor, can, for any kind of pecuniary claim, exercise violence on the people. ”

“ So, when there is a sudden demand for loans, a rate higher than the legal one will certainly be paid, and the law violated, if the getting of a loan is absolutely necessary to save the borrower from commercial ruin. The effect of a legal rate is to stop loans at the very time when loans are most essential to the business public. ”

“ When a debtor is unable to pay what he owes, and has no relation or friends capable of doing it for him, or when the children of a deceased person do not find property enough to discharge the debts of their parent, they are forced to the state which is called mengiring, which simply means to follow or be dependent on, but here implies the becoming a species of bond-slaves to the creditor, who allows them subsistence and clothing but does not appropriate the produce of their labour to the diminution of their debt. ”

“ Direct loans are always voluntary on the part of the lender; treasury note loans may be a forced borrowing from the government creditor—as much so as if the bayonet were put to his breast; for necessity has no law, and the necessitous claimant must take what is tendered, whether with or without interest—whether ten or fifty per cent. ”

“ They will use every means in their power to get hold of their money, or, without mercy, clutch the property that secures it, and foreclosures, executions, sheriff's sales will be the order of the day. The creditor, to save himself, will appear in his most relentless temper, and in thousands of cases the debtor, thus getting rid of his indebtedness, together with his property, in the manner most disastrous to him, will have reason to curse those who pretended to relieve him by “making and keeping the volume of the currency equal to the wants of trade.” ”

“ Moreover, the law which vests a creditor with power over the person of his debtor so as to convert him into a slave, is likely to give rise to a class of loans which inspire nothing but abhorrence—money lent with the foreknowledge that the borrower will be unable to repay it, but also in the conviction that the value of his person as a slave will make good the loss; thus reducing him to a condition of extreme misery, for the purpose sometimes of aggrandizing, sometimes of enriching, the lender. ”

“ These mortgages are ironclad, and put the people at the mercy of the man who holds them. In the course of fifteen months, under cover of this loan of ten dollars, this firm managed to squeeze forty dollars out of the hard earnings of these people; and then they came to foreclose the mortgage and take away the furniture, and would have removed every household article they possessed, had not the police-officer on the beat, a man of noble heart and generous instincts, stepped in and agreed to be responsible personally for the amount. ”

“ This may be made a condition of the loan. If a state shall think proper to borrow money of its own citizens, in sums of five, ten, or twenty dollars, may it not do so? If it be unable to meet the claims of its creditors, shall it be prohibited from acknowledging the claims, and promising payment with interest at a future day? ”

“ A more utterly irresponsible debtor than Congress never asked for a loan or offered a promissory note. For the security of a creditor there was only the moral probability that in case of success the people would be honest enough to pay their debts; and there was much danger that the jealousies between the States as to their proportionate quotas might stimulate reluctance and furnish=306= excuses which might easily become serious in so unpleasant a matter as paying out hard cash. ”

“ Whatever was granted on loan should always be strictly recovered in due time. "The power of lending is only to be exercised where the guardians think fit to do something less than absolutely give the relief applied for in cases where the application is lawful." [479] As examples of occasions suitable for relief on loan, the Central Authority adduced that of a mentally defective person having a regular and sufficient income, but yet occasionally destitute from incapacity to manage his expenditure. ”

“ When a foreign loan has been contracted in the name of a municipality or provincial government, at the expense of the people at large, but is used purely for party or even private ends, it is at least comprehensible that an opposing party should regard the loan as an unwarrantable exploitation of the public, and should think it justifiable to allow the creditors to suffer instead of their- 18 - own countrymen, who were no party to the transaction. The policy and ethics of such a view are another matter. And it is, as usual, the honest who suffer. ”

“ Precious friends of the people those are who, under pretense of protecting the debtor against the creditor, rob the laborers of hundreds of millions of their hard-earned savings and despoil even those who have suffered for their country.
But is not a large portion of the middle class, small business men and farmers, in debt, and would they not be relieved by an expansion and depreciation of the currency? No doubt there are many of that class burdened with liabilities, although the number of mortgaged farms is much smaller than generally supposed. ”