[Footnote 192-7: He must insure him against the usury laws. (_Adam Smith._) According to _Krug_, Staatsökonomie, the usury laws should be called so because they promote usury, not because they prevent it. Compare to some extent, _Montesquieu_, Esprit des Lois, XXII, 18 ff.] [Footnote 192-8: When Catherine II. reduced the rate of interest in Livonia, in 1785, from 6 to 5 per cent., it soon became impossible, even on the best security, to borrow at less than 7 per cent. (_Storch_, Handbuch, II, 26.) And so, when in New York, in 1717, the rate of interest was reduced to 6 per cent., it became necessary, the following year, to raise it again to 8 per cent. The merchants, themselves, petitioned that it might be so raised, because they found it impossible to get any loans whatever. (_Ebeling_, Geschichte und Erdbeschreib. von Nord Amerika, III, 152.) In Chili, the legal rate of interest is 6 per cent., the actual rate, however, never under 12 per cent., and frequently 18 to 24 per cent. In Peru, on the other hand, the repeal of the usury laws rapidly reduced the rate of interest from 50 to 24 per cent., and finally to 12. (_Pöppig_, I, 118.)] SECTION CXCIII. INTEREST-POLICY.--EFFORTS TO AVOID THE EVIL EFFECTS OF A FIXED RATE. It has been thought possible to avoid the evil effects of a fixed legal rate of interest, by regulating it in such a way as to make it coincident with the rate customary in the country.[193-1] But there are numberless transactions in which an insurance premium, or premium for risk or certain expenses of administration[193-2] on the part of the loaner is inseparable from the true interest. Here, even the law which entered most into detail could never properly provide for the infinite gradations or shades of risk and trouble; and the rate in a great many transactions would, therefore, be placed below the natural height. Turgot long since observed that the value of a promise of future payment is different not only for different persons, but at different times. Thus, for instance, it is really less after there have been numerous cases of bankruptcy than at other times.[193-3] If, now, it was desired to fix the maximum rate of interest in such a way that it should equal the rate customary in the country, where the security is good, the best real property security for instance, the consequence would be, that those persons who had no such guaranty to offer (leaving the loaning "among brothers" out of the question) would either be unable to borrow money at all, or, by evading the law, only at an artificially higher rate. Hence the legislator causes injury where he wished to favor. This has been observed in England in almost all past commercial crises.[193-4] The man who makes it his business to loan his capital, on short time and in small sums, undertakes a trade which the examination,