Book I: Chapter 9 - Page 2

This prohibition,
however, like all others of the same kind, is said to have produced no
effect, and probably rather increased than diminished the evil of usury. The
statute of Henry VIII. was revived by the 13th of Elizabeth, cap. 8. and ten
per cent. continued to be the legal rate of interest till the 21st of James
I. when it was restricted to eight per cent. It was reduced to six per cent.
soon after the Restoration, and by the 12th of Queen Anne, to five per cent.
All these different statutory regulations seem to have been made with great
propriety. They seem to have followed, and not to have gone before, the
market rate of interest, or the rate at which people of good credit usually
borrowed. Since the time of Queen Anne, five per cent. seems to have been
rather above than below the market rate. Before the late war, the government
borrowed at three per cent. ; and people of good credit in the capital, and
in many other parts of the kingdom, at three and a-half, four, and four and
a-half per cent.

Since the time of Henry VIII. the wealth and revenue of the country have
been continually advancing, and in the course of their progress, their pace
seems rather to have been gradually accelerated than retarded. They seem not
only to have been going on, but to have been going on faster and faster. The
wages of labour have been continually increasing during the same period,
and, in the greater part of the different branches of trade and
manufactures, the profits of stock have been diminishing.

It generally requires a greater stock to carry on any sort of trade in a
great town than in a country village. The great stocks employed in every
branch of trade, and the number of rich competitors, generally reduce the
rate of profit in the former below what it is in the latter. But the wages
of labour are generally higher in a great town than in a country village. In
a thriving town, the people who have great stocks to employ, frequently
cannot get the number of workmen they want, and therefore bid against one
another, in order to get as many as they can, which raises the wages of
labour, and lowers the profits of stock. In the remote parts of the
country, there is frequently not stock sufficient to employ all the people,
who therefore bid against one another, in order to get employment, which
lowers the wages of labour, and raises the profits of stock.

In Scotland, though the legal rate of interest is the same as in England,
the market rate is rather higher. People of the best credit there seldom
borrow under five per cent. Even private bankers in Edinburgh give four per
cent. upon their promissory-notes, of which payment, either in whole or in
part may be demanded at pleasure. Private bankers in London give no