Front Page Titles (by Subject) LETTER XII.: Maintenance and Champerty. - Defence of Usury
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LETTER XII.: Maintenance and Champerty. - Jeremy Bentham, Defence of Usury 
Defence of Usury; shewing the Impolicy of the Present Legal Restraints on the Terms of Pecuniary Bargains; in Letters to a Friend. To which is added A Letter to Adam Smith, Esq. LL.D. on the Discouragements opposed by the above Restraints to the Progress of Inventive Industry; and to which is also added, A Protest against Law-Taxes (London: Payne and Foss, 1818).
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Maintenance and Champerty.
Having in the preceding letters had occasion to lay down, and, as I flatter myself, to make good, the general principle, that no man of ripe years, and of sound mind, ought, out of loving kindness to him, to be hindered from making such bargain, in the way of obtaining money, as, acting with his eyes open, he deems conducive to his interest, I will take your leave for pushing it a little farther, and extending the application of it to another class of regulations still less defensible. I mean the antique laws against what are called Maintenance and Champerty.
To the head of Maintenance, I think you refer, besides other offences which are not to the present purpose, that of purchasing, upon any terms, any claim, which it requires a suit at law, or in equity, to enforce.
Champerty, which is but a particular modification of this sin of Maintenance, is, I think, the furnishing a man who has such a claim, with regard to a real estate, such money as he may have occasion for, to carry on such claim, upon the terms of receiving a part of the estate in case of success.
What the penalties are for these offences I do not recollect, nor do I think it worth while hunting for them, though I have Blackstone at my elbow. They are, at any rate, sufficiently severe to answer the purpose, the rather as the bargain is made void.
To illustrate the mischievousness of the laws by which they have been created, give me leave to tell you a story, which is but too true an one, and which happened to fall within my own observation.
A gentleman of my acquaintance had succeeded, during his minority, to an estate of about 3,000l. a year; I won't say where. His guardian, concealing from him the value of the estate, which circumstances rendered it easy for him to do, got a conveyance of it from him, during his nonage, for a trifle. Immediately upon the ward's coming of age, the guardian, keeping him still in darkness, found means to get the conveyance confirmed. Some years afterwards, the ward discovered the value of the inheritance he had been throwing away. Private representations proving, as it may be imagined, ineffectual, he applied to a court of equity. The suit was in some forwardness: the opinion of the ablest counsel highly encouraging: but money there remained none. We all know but too well, that, in spite of the unimpeachable integrity of the bench, that branch of justice, which is particularly dignified with the name of equity, is only for those who can afford to throw away one fortune for the chance of recovering another. Two persons, however, were found, who, between them, were content to defray the expence of the ticket for this lottery, on condition of receiving half the prize. The prospect now became encouraging: when unfortunately one of the adventurers, in exploring the recesses of the bottomless pit, happened to dig up one of the old statutes against Champerty. This blew up the whole project: however the defendant, understanding that, some how or other, his antagonist had found support, had thought fit in the mean time to propose terms, which the plaintiff, after his support had thus dropped from under him, was very glad to close with. He received, I think it was, 3000l.: and for that he gave up the estate, which was worth about as much yearly, together with the arrears, which were worth about as much as the estate.
Whether, in the barbarous age which gave birth to these barbarous precautions, whether, even under the zenith of feudal anarchy, such fettering regulations could have had reason on their side, is a question of curiosity rather than use. My notion is, that there never was a time, that there never could have been, or can be a time, when the pushing of suitors away from court with one hand, while they are beckoned into. it with another, would not be a policy equally faithless, inconsistent, and absurd. But, what every body must acknowledge, is, that, to the times which called forth these laws, and in which alone they could have started up, the present are as opposite as light to darkness. A mischief, in those times, it seems, but too common, though a mischief not to be cured by such laws, was, that a man would buy a weak claim, in hopes that power. might convert it into a strong one, and that the sword of a baron, stalking into court with a rabble of retainers at his heels, might strike terror into the eyes of a judge upon the bench. At present, what cares an English judge for the swords of an hundred barons?—Neither fearing nor hoping, hating nor loving, the judge of our days is ready with equal phlegm to administer, upon all occasions, that system, whatever it be, of justice, or injustice, which the law has put into his hands. A disposition so consonant to duty could not have then been hoped for: one more consonant is hardly to be wished. Wealth has indeed the monopoly of justice against poverty: and such monopoly it is the direct tendency and necessary effect of regulations like these to strengthen and confirm. But with this monopoly no judge that lives now is at all chargeable. The law created this monopoly: the law, whenever it pleases, may dissolve it.
I will not however so far wander from my subject as to enquire what measure might have been necessary to afford a full relief to the case of that unfortunate gentleman, any more than to the cases of so many other gentlemen who might be found, as unfortunate as he. I will not insist upon so strange and so inconceivable an arrangement, as that of the judge's seeing both parties face to face in the first instance, observing what the facts are in dispute, and declaring, that as the facts should turn out this way or that way, such or such would be his decree. At present, I confine myself to the removal of such part of the mischief, as may arise from the general conceit of keeping men out of difficulties, by cutting them off from such means of relief as each man's situation may afford. A spunge in this, as in so many other cases, is the only needful, and only availing remedy: one stroke of it for the musty laws against maintenance and champerty: another for the more recent ones against usury. Consider, for example, what would have respectively been the effect of two such strokes, in the case of the unfortunate gentleman I have been speaking of. By the first, if what is called equity has any claim to confidence, he would have got, even after paying off his champerty-usurers, 1500l. a year in land, and about as much in money: instead of getting, and that only by an accident, 3000l. once told. By the other, there is no saving to what a degree he might have been benefited. May I be allowed to stretch so far in favour of the law as to suppose, that so small a sum as 500l. would have carried him through his suit, in the course of about three years? I am sensible, that may be thought but a short sum, and this but a short term, for a suit in equity: but, for the purpose of illustration, it may serve as well as a longer. Suppose he had sought this necessary sum in the way of borrowing; and had been so fortunate, or, as the laws against the sin of usury would stile it, so unfortunate, as to get it at 200 per cent. He would then have purchased his 6000l. a year at the price of half as much once paid, viz. 3000l.; instead of selling it at that price. Whether, if no such laws against usury had been in being, he could have got the money, even at that rate, I will not pretend to say: perhaps he might not have got it under ten times that rate, perhaps he might have got it at the tenth part of that rate. Thus far, I think, we may say, that he might, and probably would, have been the better for the repeal of those laws: but thus far we must say, that it is impossible he should have been the worse. The terms, upon which he met with adventurers willing to relieve him, though they come not within that scanty field, which the law, in the narrowness of its views, calls usury, do, in the present case, at twenty years purchase of the 3000l. a year he was content to have sacrificed for such assistance, amount, in effect, to 4000 per cent. Whether it was likely that any man, who was disposed to venture his money, at all, upon such a chance, would have thought of insisting upon such a rate of interest, I will leave you to imagine: but thus much may be said with confidence, because the fact demonstrates it, that, at a rate not exceeding this, the sum would actually have been supplied. Whatever becomes then of the laws against maintenance and champerty, the example in question, when applied to the laws against usury, ought, I think, to be sufficient to convince us, that so long as the expence of seeking relief at law stands on its present footing, the purpose of seeking that relief will, of itself, independently of every other, afford a sufficient ground for allowing any man, or every man, to borrow money on any terms on which he can obtain it.
in White Russia,