But everywhere the market rate of interest is liable to incessant fluctuations, according to the variations in the supply or the demand for capital.

Thus, interest rises when there is a deficiency in the supply of money, as where, from any cause, it has been largely exported. Capital is also scarce, and interest proportionally high, in countries where the exactions of the government prevent the accumulation of capital, both by discouraging industry, and lessening the little it does earn. By reason of this insecurity of capital, interest, both in India and China, is 10 or 12 per cent. per annum. The same effect is produced by an increased demand, whether it be caused by the opening of new branches of trade which promise great profits, or by an unwonted enlargement of the old branches.

Sometimes, again, the augmented demand is caused by the indebtedness of the community, in consequence of previous over-trading. This occurred in New York, and some other States, in 1837, when the market rate of interest was unusually high, though the currency was confessedly more distended than usual. These two facts seemed, to the New York Commissioners of the Safety Fund, inconsistent with the received doctrines of political economy; but the apparent inconsistency was readily explained by the fact, that the increase of debt (in consequence of the very extensive speculations in the public lands,) tended to raise the rate of interest yet higher than the increased currency tended to lower it.

The market rate of interest is also affected both by the amount of the loan, and the time for which it is made. Interest is generally less in loans for large sums than for small ones. The difference is the result of several circumstances. There are many more persons who are both willing and able to borrow a small amount than a large one. The field for safe investment of great capitals is a limited one; and of the greatest, governments are the principal borrowers - private individuals, though they might be willing enough to borrow, not often being able to give the required security. Governments can commonly borrow at an annual interest of 3 or 4 per cent., while individuals pay a much higher rate, according to the amount and the estimated risk.

It is said that there are individuals in London who make a livelihood by lending £10 or £12 to the women who sell oranges, cakes, etc. Five shillings is the sum lent to each one, for a day, for which she pays sixpence, which is at the enormous rate of more than 3000 per cent, in a year.

The effect of the duration of the loan on the rate of interest is not uniform. As a general rule, large loans, where the security is undoubted, are made at a lower rate than small ones. This arises from the known difficulty of lending large sums with satisfactory security, by reason of which the capitalist will take a lower rate of interest rather than be soon compelled to seek a new investment, and to incur a loss of interest by the delay. Thus Congress, when, in 1824, it voted a liberal pecuniary donation to La Fayette, for the purpose of enhancing its value, created a stock for the special purpose, and made it payable at a distant day; in consequence of which, it was sold in the market above par. A similar course, from a similar motive, was pursued by the States of South Carolina and Louisiana, in their donations to the daughter of Mr. Jefferson; and the stock, of which those donations consisted, was sold for 10 per cent, above its par value.

But where the sums lent are of a small or moderate amount, a different rule often prevails, and lenders will take a less interest for a small term than a long one. There are always sums of money, in a wealthy community, which are for a time unemployed, and which the owners are not willing to put long beyond their control. They are therefore willing to lend them for a short time at a low interest, on condition that the money will be returned when demanded, but which they would not lend for a long term, even at a high interest, such as may always be commanded from a portion of the community.

In newly settled fertile countries, like many of these States, the raw products of the soil are abundant and cheap, from the large supply of good land, while the price of labor and the market rate of interest are both high, from the wide field open to both for profitable employment; and the general tendency of both labor and capital is to decline with the increase of numbers. But there is no necessary connection between the two. If, from any cause, capital does not increase with the population, - whether from high taxes, a decline of industry, or a want of frugality, - then interest will remain unchanged, though labor has fallen. Such is the condition of China and Hindostan. On the other hand, the supply of capital may increase faster than that of labor, as it does in England, and, consequently, the market rate of interest may there continue to fall, though the price of labor, from its undiminished field of employment, may be unchanged in value.

While the rent of land and wages of labor are left everywhere to regulate themselves according to the laws of supply and demand, the profits of capital, or interest of money, has been, in almost all countries, regulated by law; which, aiming to protect borrowers from the extortion of the lenders, fixes the highest rate of interest, which lenders are forbidden to exceed, under a penalty. This prohibition has probably arisen partly from the ancient prejudice against taking any interest at all, and partly from the general sympathy of mankind with borrowers and debtors rather than with the lenders. But as these laws interfere with the freedom of individual action, and impose a restraint on the terms of hiring capital, which is manifested toward no other voluntary contracts, they have been vehemently opposed as repugnant both to policy and justice. They, however, still retain their place in most codes; and the questions which still present themselves are, What are the present effects of these usury laws, and what would be the consequences of their repeal?