tection; and, hence, the price, in a few days, may become doubled or trebled. And, at the same time, although the real value of money may be fifteen or twenty per cent. ; yet, because the legal price is six per cent., there is no inducement for capital to come in from abroad, to supply the demand. Hence, the change in the money market has, by reason of this law, no tendency whatever to regulate itself.

It is I presume needless to add that such laws can never be enforced. Men in want of money will pay what they please for it, and those who choose to pay enough for it, can generally borrow. The effect then of the usury laws, is, merely to drive the best and most conscientious lenders out of the market, or else oblige them to lend by means of subordinate and less scrupulous agents. For this agency the borrower must pay and hence the additional rate of interest. To this it is objected, that money is not like other things, inasmuch as it is a necessary of life to the merchant, and therefore society must step in to deliver him from the effects of extortion. To this it may be answered as follows:

1. It is manifest that this interference does not render the merchants' condition the better, but rather the worse. Though the assistance therefore be well intended, he may very well dispense with it.

2. The greater the necessity of money, the more urgent is the necessity of leaving it undisturbed by legislative interference. It makes small difference to the community, whether the price of jewelry be fixed by law or not. But, suppose that when flour would bring ten dollars a barrel, the government forbade it to be sold for more than seven dollars. Who does not see that the flour would be all driven away and the people starved? The same principle, for aught I see, applies to the rate of interest.

Hence, I believe all enactments, establishing a legal rate of interest, are injurious and unwise. The only enactment of any value would be one which should define the usual rate, when nothing was said

on the subject in the contract. The use of this would be to prevent disputes. This is always an advantage to both parties.

I shall conclude this chapter, with a few remarks on the nature and price of stocks.

I have already remarked, that, when a company is formed for any purpose requiring capital, and yielding interest, the capital is divided into portions called shares, and, that any one has a right to subscribe for as many of these as he pleases. If the shares, for instance, are one hundred dollars each, he who takes one share, pays one hundred dollars, and so of any other number. For every share he receives a certificate of ownership, and, so long as he owns this certificate, he is a member of the company; his proportion of the capital is governed by the laws of the company; he is entitled to the same rights as the rest; and receives his proportion of the profit. These certificates are called stocks. They are transferable, like any other property, and the owner, as in any other case, sells them, if he wishes to do so, for whatever they will bring. The owner for the time being, is the stockholder; is amenable in his proportion, to all the rules of the company; and is entitled to his proportion of all the benefits accruing from the use of the capital. Such is the nature of bank, insurance, railroad, canal, and other stocks.

The same principle is frequently applied to loans. Suppose a government wishes to borrow five millions of dollars at five per cent., for twenty years, the interest to be paid quarterly. The conditions of the loan are specified, and subscription books opened, in different places throughout the nation. The whole sum is divided into shares of which every one may subscribe for as many as he will. Every subscriber thus, in fact, loans to the government, on the terms proposed, as much as he subscribes for. When his subscription is paid, he receives a certificate, which contains an obligation of the government to pay the

money at the appointed time, and which entitles him to receive the interest for the sum which he has loaned, at the rate and times specified. These certificates are also called stocks, and are transferable, like any other property. Hence, they are an article of merchandise, like any thing else; and, as persons are wishing both to buy and sell, every day, they are every day bought and sold, in great numbers, in all commercial capitals.

Now suppose money to be loaned in this way; it is so much capital at interest, and it is affected by the same circumstances as other capital at loan. As the convenience of investment is, however, generally the same, the rate at which such stocks sell, will be affected wholly by profit and risk.

1. Supposing the risk to be the same; these stocks are affected by the profit annually paid on the investment. Thus, suppose the risk to be nothing, and the common rate of interest in a community to be six per cent. If I own a share equal to one hundred dollars, and it pay-six per cent. interest, this share will always sell for one hundred dollars. Suppose that the ordinary rate of interest being the same, this share pays twelve per cent. interest. I can then sell it for two hundred dollars; because, he who pays two hundred dollars for it, will receive interest at the rate of six per cent., which is as much as he would receive from any other investment. On the contrary, if this share paid but three per cent. interest, I could get but fifty dollars for it; since three dollars is the interest of no more than fifty dollars. Thus, other things being equal, the price of stocks will always depend upon the interest which they pay; and they will always sell for that sum, of which the dividend which they pay is the regular interest.

This, however, is sometimes affected by the anticipations of men. A stock which pays very little now, may be expected to pay largely, at some future time. Its price may therefore, be kept up by this

circumstance. On the other hand, a stock may pay largely now, but there may be a fear that it will soon become worthless; this will, of course, depreciate it in value.

So, also, of risk. The profit of stocks being the same, their price is inversely as the risk. If a stock pay the usual interest, but is in danger of sinking the principal, it will be depreciated accordingly. If a government pay good interest for a loan, but there be danger that it will be overturned by a revolution, the stock will, of course, fall. Thus, insurance stock never rises to the value of bank stock, when it pays the same interest, on account of the greater risk. Thus, also, steam-boat stock may pay twenty or thirty per cent., and yet sell at no advance; that is, it will be at par, because of the danger from fire and other accidents, and from the rapid wear of the principal.

It is by circumstances like these, that the prices of stocks are determined. When a stock sells for what it cost; that is, when a hundred dollars' worth of the original capital sells for one hundred dollars, that stock is said to be at par. When it sells for more than this, it is said to be above par; and when it sells for less, it is said to be below par. Thus, if stock be sold for thirty-seven per cent. above par, a share that cost one hundred dollars, sells for one hundred and thirty-seven dollars; that is, one hundred dollars receives an interest, which, at the ordinary rate of money, is as much as one hundred and thirty-seven dollars would receive. And so of any other case.

Now, it must at once be perceived, that the opinion of the value of stocks is made up very much from expectations of profit or loss, or anticipations of increase or diminution of risk. Hence, the rumor of a war; of the failure of a company, or of a bank; of the probable insolvency of a government; or the news of the gain or loss of a battle, may make a very considerable difference in the price of those

stocks which would be affected by such information. Hence, the great liability to fraud, in all the operations of the stock market. If a capitalist can get up a rumor which will depress any stock two per cent., and buy one hundred thousand dollars' worth, during this depression, he may sell it again the next day for its original value, and thus, in the course of twenty-four hours, realize two thousand dollars, without either risk or trouble; while the unfortunate seller is cheated out of this amount, without reason and without remedy. I do not say that all rumors affecting the price of stocks are thus fabricated. I only say, that such is the liability ; and it is not very unlikely, that what can so readily be done, has actually happened. And, when such rumors actually arise without collusion, it requires great sagacity to judge of the probability of their truth, and thus to buy or sell, according to the true judgment to be formed from the facts actually in possession of the community.

And, besides this, another method may frequently be resorted to, for the sake of transferring money from the pockets of one class of citizens, into those of another class. Suppose a particular stock to be worth no more than fifty per cent.; that is, to be capable of yielding no more than three per cent. on the original interest. Suppose there be only two or three hundred thousand dollars' worth of this stock in the market. If, now, a few individuals of large wealth combine together, they may easily buy up the whole of it, at this reduced price. The scarcity will at once excite inquiry, and will tend to create some demand. If, now, by means of other agents, they put small quantities of it into the market, and buy it in themselves, at gradually increasing prices, every one will become desirous of buying this stock, which, for a succession of days, has been rapidly rising in value. By careful management, it may thus be raised, in a few days, to seventy-five or one hundred dollars per share. If, then, these present