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Valley of the Shadow

Valley Virginian: May 5, 1870

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Usury Laws--Twelve Per Cent!
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Summary: This article serves as a warning to any person considering borrowing money at twelve percent. Recent laws have allowed northern "shylocks" means by which they can offer loans at these exorbitant rates of interest. The author calculates the amount the borrower will actually pay over a six year period. He also outlines the near certain ruinous results that will befall all those (with the exception of short term speculators) who borrow at these rates. His particular concerns rest with how ruin will compromise not only the man, but the family as well.
Full Text of Article:

There has been a great difference of opinion in regard to the wisdom of laws restricting the rate of interest on money to six per cent. The debtor class have generally been anxious to stay the hands of the grasping creditor. Men who have money to lend, have, on the other hand, contended that they ought to have the right to dig the people as deeply as they chose. In the radical convention the wishes of the moneyed men prevailed, and the Legislature is now prohibited, by the Constitution, from passing any law limiting the rate of interest to less than twelve per cent, where the parties choose to contract for it.

We are among those who regarded this change in our system as disastrous. The experience of the world has been, that the money lender will oppress the borrower, unless the law intervenes for his protection. And we apprehend it will be found that our views are correct. Creditors will now take debtors by the throat, and say "pay me what thou owest," or give a new bond for 12 per cent instead of six. Men having money to lend, will avail themselves of the pressure in the money market, and demand the highest premium allowed by law. Debtors are proverbially sanguine. They think, if they can only get relief from the present pressure, or obtain the command of a little active capital, they can do wonders. Misled by this delusive hope, they will borrow, at extravagant rates of interest, and put off the evil days as long as they can. But it must come at last, and come with all its accumulated burthens. Ruin will be the consequences; and then men will begin to see the folly of their course, and the iniquity of the laws which let lose the Shylocks to prey on the community. Better, far better, let loose so many lions and tigers in our streets, than half a dozen money lenders, with full liberty to fatten on the distresses of the community. The lions and tigers might rend a few unfortunate individuals before they were shot, but the money lenders will devastate whole households, and bring ruin and anguish to the hearthstones of helpless women and children.

Under the present disastrous law authorizing 12 per cent, we expect northern usurers to become, as it were, absolute landlords of a large portion of our landed estates.--The sanguine land-holders will mortgage them at a rate of interest which will be equal to a fair rent, and thus in effect, become mere tenants. When the seasons are good, the tenant may pay his rent (called interest) but when an unlucky frost or drought comes, or from any cause, the crop fails, the rent (alias interest), cannot be paid, and then the mortgage will be enforced, and the unhappy tenant sold out of house and home.

Have our readers thought of what a fatal cancer interest at 12 per cent is?

Make the calculation, and you will find that the man who borrows $100, at 12 per cant payable annually, will, if it be so compounded have to pay, at the end of six years, more than $198 to discharge his debt. If the interest be payable semi-annually, the debt will be more than doubled in six years!

We warn our people to beware of this ruinous rate of interest. It will be fatal to all who borrow, for any length of time, at that rate. A trading man may borrow, for 60 or 90 days, at that rate, to make a speculation, which will yield a quick return. But no regular business will bear it. Merchants cannot borrow at that rate and thrive. Mechanics cannot. And woe! to the farmer who makes the rash experiment! Ruin is to him a certainty. Large farms will not, as a general rule support a family will hardly suffice to pay family expenses.

We implore our farmers then "to touch not, taste not, handle not" the unclean thing. It is worse than leprosy or the small pox. These loathsome diseases waste the body, and bring death in their train. But twelve per cent interest impoverishes the family--saps the foundation of the moral nature--turns wives and children out of house and home--drives the desperate to drunkenness, and spreads misery and ruin broad-cast over the land. Where people are involved in debt, it will be far better to face their difficulties squarely, at once, and sell property, at a heavy sacrifice, rather than submit to the torture of protracted suffering. Better sell half you own, and have the residue clear of all incumbrance, than hold the whole, subject to a mortgage for half its value. The classic fable represents that Prometheus stole fire form Heaven, and as a punishment, he was condemned to live always, with vultures constantly tearing his vitals. We incline to think that this fable typifies the man who borrows money at 12 per cent! The vultures will gnaw his very heart-strings, as long as he lives!

Public Meeting
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Summary: A public meeting was held in Staunton's Court House to express grief for the disaster in Richmond in which a number of people were killed and injured when the floor of the capitol court room collapsed. A committee was appointed to raise relief funds.
(Names in announcement: N. K. Trout, A. H. H. Stuart, W. H. H. Lynn, H. W. Sheffey, Robert W. Burke, Gen. John Echols, James Bumgardner, Col. Bolivar Christian, J. C. Marquis, John B. Evans, Col. M. G. Harman, Col. George Baylor, R. G. Bickle, D. A. Kayser, E. M. Cushing, H. H. Peck, William H. H. Lynn, P. Byron Hoge, D. C. McGuffin, R. Mauzy)

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[No Title]
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Summary: A large number of people attended a soiree to benefit the Richmond sufferers. The event raised $25.
[No Title]
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Summary: The paper announces that the new registration act requires that those previously registered must re-register in order to vote.
[No Title]
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Summary: Businesses closed and churches held services in mourning for the tragedy in Richmond.
(Column 02)
Summary: Julia F. Schmitt, daughter of Mathias Schmitt, and John J. McMahon, both of Staunton, were married in the Catholic Church on May 3rd by the Rev. Father Weed.
(Names in announcement: Julia F. Schmitt, Mathias Schmitt, John J. McMahon, Father Weed)
(Column 02)
Summary: Mrs. Agnes W. Logan, wife of Robert C. Logan, died near Fishersville, Augusta County, on April 21st. "She died as a christian."
(Names in announcement: Agnes W. Logan, Robert C. Logan)
(Column 02)
Summary: Francis M. McComb died near Stuart's Draft on April 28th after a brief illness. He was 24 years old.
(Names in announcement: Francis M. McComb)
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Summary: Henry Carrier, Jr., son of the late Henry Carrier of Rockingham, died at the Western Lunatic Asylum on April 7th after a protracted illness of "affection of the brain."
(Names in announcement: Jr. Henry Carrier)
Tribute of Respect
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Summary: A committee representing Staunton Lodge No. 45, I. O. O. F., issued a tribute of sympathy and respect upon the death of fellow-member H. H. Forsythe.
(Names in announcement: Nicholas K. Trout, James W. Newton, James D. Hopkins, T. N. Argenbright)

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