Western states relaxed usury law to attract money for cheap land

Evidence

By and large it was economic interest, not ideology, that called the tune. In the first place, statutory interest rates varied tremendously from state to state. In the West, where hard money was scarce, statutes allowed far higher rates than in the East, and penalties for usury tended to be milder. This suggests that states raised their rates to a point where they would not interfere too much with the flow of credit to farmers and land dealers. States that abolished usury laws generally did so at the end of their territorial period, or at the very beginning of statehood. At this point in a state’s career, the government dumped public lands on the market, at a relatively low price. Low, but not zero. Squatters and speculators needed money for cash down payments. The land was a bargain; the money was not. It was in the interests of the settlers, then, to relax rules about interest rates, and attract eastern money, even at high rates; only in this way could the settlers get money to buy land at bargain prices. — Lawrence M. Friedman, A History of American Law, 3116

Categorization

• XREF: connects to: States weaponize legal difference to attract commerce as a wealth source — Lawrence M. Friedman, A History of American Law, 3767; American courts embraced western miners’ customs over English common-law doctrines — Henry M. Hart, Jr. and Albert M. Sacks, The Legal Process: Basic Problems in…, 976

Broader Connections

• States weaponize legal difference to attract commerce as a wealth source #exemplifies (0.90) — Lawrence M. Friedman, A History of American Law, 3767
• American courts embraced western miners’ customs over English common-law doctrines #exemplifies (0.75) — Henry M. Hart, Jr. and Albert M. Sacks, The Legal Process, 976