Front Page Titles (by Subject) LETTER VIII.: VIRTUAL USURY ALLOWED. - The Works of Jeremy Bentham, vol. 3
LETTER VIII.: VIRTUAL USURY ALLOWED. - Jeremy Bentham, The Works of Jeremy Bentham, vol. 3 
The Works of Jeremy Bentham, published under the Superintendence of his Executor, John Bowring (Edinburgh: William Tait, 1838-1843). 11 vols. Vol. 3.
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- Errata—vol. III.
- Defence of Usury; Showing the Impolicy of the Present Legal Restraints On the Terms of Pecuniary Bargains; In Letters to a Friend.
- Letter I.: Introduction.
- Letter II.: Reasons For Restraint—prevention of Usury.
- Letter III.: Reasons For Restraint—prevention of Prodigality.
- Letter IV.: Reasons For Restraint—protection of Indigence.
- Letter V.: Reasons For Restraint—protection of Simplicity.
- Letter VI.: Mischiefs of the Anti-usurious Laws.
- Letter VII.: Efficacy of Anti-usurious Laws.
- Letter VIII.: Virtual Usury Allowed.
- Letter IX.: Blackstone Considered.
- Letter X.: Grounds of the Prejudices Against Usury.
- Letter XI.: Compound Interest.
- Letter XII.: Maintenance and Champerty.
- Letter XIII.: To Dr. Smith, On Projects In Arts, &c.
- A Manual of Political Economy: Now First Edited From the Mss. of Jeremy Bentham.
- Chapter I.: Introduction. *
- Chapter II.: Analytical Survey of the Field of Political Economy.
- Chapter III.: Of Wealth.
- Chapter IV.: Of Population.
- Chapter V.: Of Finance.
- Chapter VI.: Operation of a Sinking Fund On the Production of Wealth.
- Chapter VII.: Noscenda.
- Observations On the Restrictive and Prohibitory Commercial System; Especially With a Reference to the Decree of the Spanish Cortes of July 1820.
- Preface.: Observations, &c.
- Section I.: Nature of the Prohibitory System.
- Section II.: Mischiefs of the Prohibitory System.
- Section III.: Causes of the Prohibitory System.
- A Plan For Saving All Trouble and Expense In the Transfer of Stock, and For Enabling the Proprietors to Receive Their Dividends Without Powers of Attorney, Or Attendance At the Bank of England, By the Conversion of Stock Into Note Annuities.
- Chapter I.: Plan For the Creation, Emission, Payment, and Eventual Extension, of a Proposed New Species of Government Paper, Under the Name of Annuity Notes.
- Chapter II.: Form of an Annuity Note. (see Table II.)
- Chapter III.: Comparison of the Proposed, With the Existing Government Securities, &c.
- Chapter IV.: Grounds of Expectation, In Regard to the Proposed Measure.
- Chapter V.: Financial Advantages.
- Chapter VI.: Advantage By Addition to National Capital.
- Chapter VII.: Advantage By Addition to Commercial Security.
- Chapter VIII.: Particular Interests Concerned.
- Chapter IX.: Rise of Prices—how to Obviate.
- Chapter X.: Reduction of Interest—proposed Mode Compared With Mr. Pelham’s.
- Chapter XI.: Moral Advantages.
- Chapter XII.: Constitutional Advantages.
- Chapter XIII.: Recapitulation and Conclusion.
- Appendix A.: Government Ought to Have the Monopoly of Paper Money, As Well As of Metallic Money.
- Appendix B.: Paper Money—causes Why Not Circulated By Government Without Interest, As Well As By Individuals.
- General View of a Complete Code of Laws.
- Chapter I.: General Division.
- Chapter II.: Relations Between the Laws Concerning Offences, Rights, Obligations, and Services.
- Chapter III.: Relation Between the Penal and Civil Code.
- Chapter IV.: Of Method.
- Chapter V.: Plan of the Penal Code.
- Chapter VI.: Of the Division of Offences.
- Chapter VIII. Titles of the Penal Code.
- Chapter IX.: First General Title of the Civil Code, * of Things.
- Chapter X.: Second General Title of the Civil Code. of Places.
- Chapter XI.: Third General Title of the Civil Code. of Times.
- Chapter XII.: Fourth General Title of the Civil Code. of Services.
- Chapter XIII.: Fifth General Title of the Civil Code. of Obligations.
- Chapter XIV.: Sixth General Title of the Civil Code. of Rights.
- Chapter XV.: Seventh General Title of the Civil Code. of Collative and Ablative Events.
- Chapter XVI.: Eighth General Title of the Civil Code. of Contracts.
- Chapter XVII.: Ninth General Title of the Civil Code. of the Domestic and Civil States.
- Chapter XVIII.: Tenth General Title of the Civil Code. of Persons Capable of Acquiring and of Contracting.
- Chapter XIX.: Of the Particular Titles of the Civil Code.
- Chapter XX.: Of Elementary Political Powers.
- Chapter XXI.: Of Elementary Political Powers— Subject Continued.
- Chapter XXII.: Plan of the Political Code.
- Chapter XXIII.: Plan of the International Code.
- Chapter XXIV.: Plan of the Maritime Code.
- Chapter XXV.: Plan of the Military Code.
- Chapter XXVI.: Plan of the Ecclesiastical Code.
- Chapter XXVII.: Plan of Remuneratory Laws.
- Chapter XXVIII.: Of Political Economy.
- Chapter XXIX.: Plan of the Financial Code.
- Chapter XXX.: Plan of Procedure Code.
- Chapter XXXI.: Of the Integrality of the Code of Laws.
- Chapter XXXII.: Of Purity In the Composition of a Code of Laws.
- Chapter XXXIII.: Of the Style of the Laws.
- Chapter XXXIV.: Of the Interpretation, Conservation, and Improvement of a Code.
- Pannomial Fragments.
- Chapter I.: General Observations.
- Chapter II.: Consideranda.
- Chapter III.: Expositions.
- Chapter IV.: Axioms.
- Nomography; Or the Art of Inditing Laws: Now First Published From the Mss. of Jeremy Bentham.
- Chapter I.: The Subject Stated.
- Chapter II.: Relations.
- Chapter III.: Proper End In View.
- Chapter IV.: Imperfections Primary.
- Chapter V.: Explanations Relative to the Imperfections of the Second Order.
- Chapter VI.: Of Remedies. *
- Chapter VII.: Of Language.
- Chapter VIII.: Of the Perfections of Which the Legislative Style Is Susceptible.
- Chapter IX.: Of Forms of Enactment.
- Appendix. Logical Arrangements, Or Instruments of Invention and Discovery
- Equity Dispatch Court Proposal; Containing a Plan For the Speedy and Unexpensive Termination of the Suits Now Depending In Equity Courts. With the Form of a Petition, and Some Account of a Proposed Bill For That Purpose
- Section I.: Purpose Explained. Jeremy Bentham to the Honest and Afflicted Among Equity Suitors.
- Section II.: Equity Suitors’ Petition For Dispatch Court. to the King’s Most Excellent Majesty, —
- Section III.: Dispatch Court Bill—some Account of It.
- Section IV.: Information Requisite From Petitioning Suitors.
- Equity Dispatch Court Bill: Being a Bill For the Institution of an Experimental Judicatory Under the Name of the Court of Dispatch, For Exemplifying In Practice the Manner In Which the Proposed Summary May Be Substituted to the So Called Regular Sy
- Editor’s Note.
- Part I.—: Judiciary.
- Section I.: Judge Located, How.
- Section II.: Remuneration.
- Section III.: Registrar, &c.
- Section IV.: Eleemosynary Advocate.
- Section V.: Judges’, &c. Deputes.
- Section VI.: Judge’s Powers—exemptions—checks.
- Section VII.: Prehensors and Messengers.
- Section VIII.: Consignees; * Or Say, In-trust-holders.
- Section IX.: Grounds of Decision For the Dispatch Court Judge.
- Section X. ‡: Suits’ Comparative Suitableness; and Order of Cognizance.
- Section XI.: Auxiliary Judges and Accountants.
- Section XII.: Sittings, Times Of.
- Part II.—: Procedure.
- Section XIII.: Definitions. *
- Section XIV.: Examination of Solicitors.
- Section XV.: Initiatory Examination of Parties, &c.
- Section XVI.: Appropriate Intercourse, Constant and Universal, Secured.
- Section XVII.: Mutual Security For Forthcomingness of Persons and Things. ‡
- Section XVIII.: Evidence-procuring Money, How Provided.
- Section XIX.: Subsequential Evidence, How Elicited.
- Section XX.: Execution, How Performed.
- Section XXI.: Equity Court Costs, How Disposed Of.
- Section XXII.: Dispatch Court Costs, How Disposed Of.
- Section XXIII.: Eventual Retrotransference of a Suit to the Equity Court.
- Section XXIV.: Expense of the Court, How Provided For.
- Supplemental Sections:—
- Section I. Or XXV.: Bankruptcy and Insolvency.
- Section II. Or XXVI.: Henceforward Dispatch Court.
- Schedules to the Bill.
- Plan of Parliamentary Reform, In the Form of a Catechism, With Reasons For Each Article: With an Introduction, Showing the Necessity of Radical, and the Inadequacy of Moderate, Reform.
- Section I.: History of the Ensuing Tract—alarming State of the Country and the Constitution.
- Section II.: Most Prominent Present Grievance, Gareisoning France.
- Section III.: Causes of the Above and All Other Mischiefs:—particular Interests Monarchical and Aristocratical, Adverse to the Universal—their Ascendency.
- Section IV.: Sole Remedy In Principle—democratic Ascendency.
- Section V.: Remedy In Detail: Radical Parliamentary Reform: Elementary Arrangements In This Edition of It—their Necessity.
- Section VI.: Differences Between This and the Original Editions of Radical Reform.
- Section VII.: Virtual Universality of Suffrage Further Considered.
- Section VIII.: Virtual Universality of Suffrage—its Undangerousness.
- Section IX.: Freedom of Suffrage Further Explained—seductive Influence—its Forms, Instruments, &c.
- Section X.: Bribery and Terrorism Compared.
- Section XI.: Purchase of Seats—in What Cases Mischievous—in What Beneficial.
- Section XII.: Secresy of Suffrage—its Importance Further Developed.
- Section XIII.: Exclusion of Placemen, &c. From the Right of Voting—mischievousness and Profligacy of the Opposite Arrangement.
- Section XIV.: Universal Constancy of Attendance—its Importance.
- Section XV.: Representatives—impermanence of Their Situation—its Importance:—objections—their Groundlessness.
- Section XVI.: Moderate Reform—its Arrangements—their Inadequacy.
- Section XVII.: Trienniality Inadequate;—annuality Necessary.
- Section XVIII.: Interests Adverse to Adequate Reform—support Given By Them to Moderate, to the Exclusion of Radical: Tories—whigs—people’s Men.
- Catechism of Parliamentary Reform; Or, Outline of a Plan of Parliamentary Reform; In the Form of Question and Answer; With Reasons to Each Article.
- Section I.: Ends to Be Aimed At On the Occasion of Parliamentary Reform.
- Section II.: Means, Conducive Towards These Ends.
- Section III.: Means—their Uses, With Reference to Their Respective Ends.
- Section IV.: Means Conducive to Aptitude In Members: I. Placemen Not to Vote, Nor to Be Seated By Election.
- Section V.: Means, &c. Continued.—ii. Placemen Seated By the King, With Speech and Motion, Without Vote.
- Section VI.: Means, &c. Continued.—iii. Elections Frequent—annual.
- Section VII.: Means, &c. Continued.—iv. Speeches Authentically and Promptly Published.
- Section VIII.: Means, &c. Continued.—v. Attendance, Punctual and General, Secured.
- Section IX.: Inconveniences Incident to Elections, and Election Judicature.
- Section X.: Election Inconveniences—means For Their Removal.
- Section XI.: Collateral Advantages, Referable to the Situations of Electors, Placemen, Lords, &c.
- A Sketch of the Various Proposals For a Constitutional Reform In the Representation of the People, Introduced Into the Parliament of Great Britain, From 1770 to 1812.
- Radical Reform Bill, With Extracts From the Reasons.
- Preliminary Explanations.
- Title of the Proposed Act.
- Section 1.—: Seats and Districts.
- Section 2.—: Electors, Who.
- Section 3.—: Eligible, Who.
- Section 4.—: Election Offices.
- Section 5.: Election Apparatus.
- Section 6.—: Promulgation of Recommendations In Favour of Proposed Members.
- Section 7.—: Voters’ Titles Pre-established.
- Section 8.—: Election, How.
- Section 9.: Election Districts and Polling Districts, How Marked Out.
- Section 10.—: Vote-making Habitations, How Defined.
- Section 11.—: Members’ Continuance.
- Section 12.—: Vacancies Supplied.
- Section 13.—: Security For the House Against Disturbance By Members. †
- Section 14.—: Indisposition of Speakers Obviated.
- Appendix, Including General Explanations.
- Radicalism Not Dangerous. Extracted From the Mss. of Jeremy Bentham. *
- Part I.—: Introduction.
- Section I.: Radical Reform Bill Recapitulated.
- Section II.: Persuasion of the Dangerousness of Radicalism—cause of It, and of the Vituperative Expression Given to It.
- Section III.: Terms of the Accusation,—speeches From the Throne, 16 Th July and 21 St November 1819.
- Section IV.: The Accusation In General Terms—counter-averment.
- Section V.: Plan of This Defence.
- Part II.—: Deference From the General Nature of the Case.
- Section I.: Conditions Necessary to a Man’s Embarking In Such a Design.
- Section VII.: Concurrence In Any Other Extensive Plan of Spoliation Impossible.
- Section VIII.: Concurrence of Any Constituted Authorities Impossible.
- Section IX.: Accomplishment Impossible—design Impossible.
- Section X.: The Talked-of Spunge No Proof of the Design.
- Part III.—: Defence From Experience In the Case of the United States.
- Part IV.: Defence From Particular Experience In the Case of Ireland: Years 1777 Or 1778, to 1783.
- Section I.: Analogy Between This and the Previous Case.
- Section II.: Democratic Ascendency, How Produced.
- Section III.: Fruit of Democratic Ascendency a Golden Age.
- Section IV.: Coincidence of Its Characters With Those of Radicalism.
- Section VI.: Extinction of Democratic Ascendency and Reform—restoration of Monarchico-aristocratical Ascendency, and Its Consequences.
VIRTUAL USURY ALLOWED.
Having proved, as I hope, by this time, the utter impropriety of the law’s limiting the rate of interest in every case that can be conceived, it may be rather matter of curiosity than anything else, to inquire how far the law on this head is consistent with itself, and with any principles upon which it can have built.
1. Drawing and re-drawing is a practice which it will be sufficient here to hint at. It is perfectly well known to all merchants, and may be so to all who are not merchants, by consulting Dr. Smith. In this way, he has shown how money may be, and has been, taken up at so high a rate as 13 or 14 per cent.; a rate nearly three times as high as the utmost which the law professes to allow. The extra interest is in this case masked under the names of commission, and price of exchange. The commission is but small upon each loan—not more, I think, than one half per cent.: custom having stretched so far but no farther, it might be thought dangerous perhaps, to venture upon any higher allowance under that name. The charge being repeated a number of times in the course of the year, makes up in frequency what it wants in weight. The transaction is by this shift rendered more troublesome indeed, but not less practicable, to such parties as are agreed about it. But if usury is good for merchants, I do not very well see what should make it bad for everybody else.
2. At this distance from all the fountains of legal knowledge, I will not pretend to say whether the practice of selling accepted bills at an under-value would hold good against all attacks. It strikes my recollection as a pretty common one, and I think it could not be brought under any of the penal statutes against usury. The adequateness of the consideration might, for aught I know, be attacked with success, in a court of equity—or perhaps, if there were sufficient evidence (which the agreement of the parties might easily prevent,) by an action at common law, for money had and received. If the practice be really proof against all attacks, it seems to afford an effectual and pretty commodious method of evading the restrictive laws. The only restraint is, that it requires the assistance of a third person, a friend of the borrower’s: as for instance, B, the real borrower, wants £100, and finds U, a usurer, who is willing to lend it to him at 10 per cent. B has F, a friend, who has not the money himself to lend him, but is willing to stand security for him to that amount. B therefore draws upon F, and F accepts a bill of £100, at 5 per cent. interest, payable at the end of a twelvemonth from the date. F draws a like bill upon B: each sells his bill to U for £50; and it is endorsed to U accordingly. The £50 that F receives, he delivers over without any consideration to B. This transaction, if it be a valid one, and if a man can find such a friend, is evidently much less troublesome than the practice of drawing and re-drawing. And this, if it be practicable at all, may be practised by persons of any description, concerned or not in trade. Should the effect of this page be to suggest an expedient, and that a safe and commodious one, for evading the laws against usury, to some, to whom such an expedient might not otherwise have occurred, it will not lie very heavy upon my conscience. The prayers of usurers, whatever efficacy they may have in lightening the burthen, I hope I may lay some claim to. And I think you will not now wonder at my saying, that in the efficacy of such prayers I have not a whit less confidence, than in that of the prayers of any other class of men.
One apology I shall have to plead at any rate—that in pointing out these flaws to the individual who may be disposed to creep out at them, I point them out at the same time to the legislator, in whose power it is to stop them up, if in his opinion they require it. If, notwithstanding such opinion, he should omit to do so, the blame will lie, not on my industry, but on his negligence.
These, it may be said, should they even be secure and effectual evasions, are still but evasions, and, if chargeable upon the law at all, are chargeable not as inconsistencies but as oversights. Be it so. Setting these aside, then, as expedients practised or practicable only behind its back, I will beg leave to remind you of two others, practised from the day of its birth, under its protection, and before its face.
The first I shall mention is pawn-broking. In this case there is the less pretence for more than ordinary interest, inasmuch as the security is in this case not only equal to, but better than, what it can be in any other; to wit, the present possession of a moveable thing, of easy sale, on which the creditor has the power, and certainly does not want the inclination, to set such price as is most for his advantage. If there be a case in which the allowing of such extraordinary interest is attended with more danger than another, it must be this: which is so particularly adapted to the situation of the lowest poor, that is, of those who on the score of indigence or simplicity, or both, are most open to imposition. This trade, however, the law, by regulating, avowedly protects. What the rate of interest is, which it allows to be taken in this way, I cannot take upon me to remember; but I am much deceived if it amounts to less than 12 per cent. in the year, and I believe it amounts to a good deal more. Whether it were 12 per cent. or 1200, I believe would make in practice but little difference. What commission is in the business of drawing and re-drawing, warehouse-room is in that of pawnbroking. Whatever limits, then, are set to the profits of this trade, are set, I take it, not by the vigilancy of the law, but, as in the case of other trades, by the competition amongst the traders. Of the other regulations contained in the acts relative to this subject, I recollect no reason to doubt the use.
The other instance is that of bottomry and respondentia: for the two transactions, being so nearly related, may be spoken of together. Bottomry is the usury of pawnbroking: respondentia is usury at large, but combined in a manner with insurance, and employed in the assistance of a trade carried on by sea. If any species of usury is to be condemned, I see not on what grounds this particular species can be screened from the condemnation. “Oh, but,” says Sir William Blackstone, or anybody else who takes upon himself the task of finding a reason for the law, “this is a maritime country, and the trade which it carries on by sea is the great bulwark of its defence.” It is not necessary I should here inquire, whether that branch, which, as Dr. Smith has shown, is, in every view but the mere one of defence, less beneficial to a nation than two others out of the four branches which comprehend all trade, has any claim to be preferred to them in this or any other way. I admit, that the liberty which this branch of trade enjoys, is no more than what it is perfectly right it should enjoy. What I want to know is, what there is in the class of men embarked in this trade, that should render beneficial to them, a liberty which would be ruinous to everybody else? Is it that sea adventures have less hazard on them than land adventures? or that the sea teaches those who have to deal with it, a degree of forecast and reflection which has been denied to landmen?
It were easy enough to give farther and farther extension to this charge of inconsistency, by bringing under it the liberty given to insurance in all its branches, to the purchase and sale of annuities and of post-obits; in a word, to all cases where a man is permitted to take upon himself an unlimited degree of risk, receiving for so doing an unlimited compensation. Indeed, I know not where the want of instances would stop me: for in what part of the magazine of events, about which human transactions are conversant, is certainty to be found? But to this head of argument, this argument ad hominem, as it may be called, the use of which is but subsidiary, and which has more of confutation in it than of persuasion or instruction, I willingly put an end.