Jeremy Bentham and Adam Smith on the usury laws: a ‘Smithian’ reply to Bentham and a new problem
- 1 December 1999
- journal article
- research article
- Published by Taylor & Francis in The European Journal of the History of Economic Thought
- Vol. 6 (4) , 523-551
- https://doi.org/10.1080/10427719900000042
Abstract
Adam Smith justified the contemporary usury laws and was severely criticised by Bentham and most modern writers with the important exception of J.M. Keynes. We argue that pace Bentham, Smith did not intend to preclude loan financing of all ‘risky’ ventures and give a ‘monopoly’ to safe investments and did not neglect the potential emergence of black credit markets. Yet Smith ought to have modified his position independently of Bentham's criticism, considering a marked rise in the rate at which governments borrowed in the late 1770s.Keywords
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