Nothing has more perplexed political economists and mankind at large, Fitzhugh says, than the subject of usury:
That it was right, proper, and laudable for every man to get the highest market price for the use of his money, as for the use of every other article, was an obvious deduction from the axioms of the economists. The instincts and common sense of mankind, whilst admitting the premises, stubbornly denied the unavoidable conclusion. Convicted in argument, but not convinced; they still fought on. In truth, the error lay in the premises, in the axioms and first principles of political economy. That systematic selfishness that inculcates the moral duty to let every man take care of himself and his own selfish interest, that advises each to use his wits, his prudence, and his providence, to get the better of those who have less wit, prudence and providence, to make the best bargains one can, and that a thing is worth what it will bring, is false and rotten to the core. It bears no sound fruit, brings forth no good morality. “Laissez nous faire,” and “Caveat Emptor,” (the latter the maxim of the common law,) justify usury, encourage the weak to oppress the strong, and would justify swindling and theft, if fully carried out into practice. But it is not safe or prudent to swindle or steal; one incurs the penalties of the law; and it is not politic, for one scares off customers and subjects. The man who makes good shaving bargains, will in the long run grow rich; the swindler and the thief never do. Mankind have ever detested the extortionate usurer who takes advantage of distress and misfortune to increase his profits, more than a Robin Hood who robs the rich to relieve the poor. There is always at bottom some sound moral reason for the prejudices of mankind. Analyze their motives, their feelings and sentiments closely. The man who spends a life in dealing hardly and harshly with his fellow men, is a much worse and meaner man than the highway robber. The latter is chivalrous, and where there is chivalry there will be occasional generosity.
The law should protect men, as well from the assaults of superior wit as from those of superior bodily strength. Men’s inequalities of wit, prudence, and providence, differ in nothing so much, as in their capacity to deal in and take care of money. This creates the necessity for laws against usury. Under occasional circumstances, a heavy rate of interest is morally right, but it is generally wrong, and laws are passed for ordinary and not extraordinary occasions.
I think he has made a better case against complex contracts and financial derivatives than against high interest rates.