To understand Locke's contention on the first point, it must be borne in mind that in his time, and down even to the middle of the present reign, the maximum rate of interest allowable in all ordinary transactions was fixed by law. By the statute 12 Car. II. (passed in 1660) it had been reduced from eight to six per cent. Sir Josiah Child, whose _Observations concerning Trade_ had been reprinted in 1690, and who probably represented a very large amount of mercantile opinion, advocated its further reduction to four per cent. He maintained, quoting the example of Holland, that low interest is the cause of national wealth, and that, consequently, to lower the legal rate of interest would be to take a speedy and simple method of making the country richer. Against this proposal Locke argued that the example of Holland was entirely beside the question; that the low rate of interest in that country was owing to the abundance of ready money which it had formerly enjoyed, and not to any legal restrictions; nay, in the States there was no law limiting the rate of interest at all, every one being free to hire out his money for anything he could get for it, and the courts enforcing the bargain. But, further, suppose the proposed law to be enacted; what would be the consequences? It would be certain to be evaded, while, at the same time, it would hamper trade, by increasing the difficulty of borrowing and lending. Rather than lend at a low rate of interest, many men would hoard, and, consequently, much of the money which would otherwise find its way into trade would be intercepted, and the commerce of the country be proportionately lessened. Excellent as most of these arguments are, Locke unfortunately stopped short of the legitimate conclusion to be drawn from them. He did not propose, as he should have done, to sweep away the usury laws altogether, but simply to maintain the existing law fixing the maximum of interest at six per cent. Sir Dudley North, in his admirable pamphlet, _Discourses on Trade_, published in 1691, just before the publication of the _Considerations_, but too late, perhaps, to have been seen by Locke, takes a much more consistent view as to the expediency of legal restrictions on the rate of interest. "As touching interest of money, he is clear that it should be left freely to the market, and not be restrained by law." Notwithstanding the opposition of men like North and Locke, to whom may be added an earlier writer, Sir William Petty, the arguments of Child partially triumphed in the next reign. By the 12th of Anne, the legal rate of interest was reduced to five per cent., and so continued till the Act of 1854, repealing, with regard to all future transactions, the existing Usury Laws. There can be little doubt that public opinion had been prepared for this measure mainly through the publication of Bentham's powerful _Defence of Usury_, the telling arguments of which had gradually impressed themselves on the minds of