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Jeremy Bentham and Adam Smith on the usury laws: a 'Smithian' reply to Bentham and a new problem

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  • Samuel Hollander

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.

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  • Samuel Hollander, 1999. "Jeremy Bentham and Adam Smith on the usury laws: a 'Smithian' reply to Bentham and a new problem," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 6(4), pages 523-551.
    • Handle: RePEc:taf:eujhet:v:6:y:1999:i:4:p:523-551
    DOI: 10.1080/10427719900000042
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    References listed on IDEAS

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    1. Vasilev, Aleksandar & Maksumov, Rashid, 2010. "Critical analysis of Chapter 23 of Keynes’s Notes on Mercantilism in The General Theory of Employment, Interest and Money (1936)," EconStor Research Reports 155318, ZBW - Leibniz Information Centre for Economics.
    2. Nathan Rosenberg, 1960. "Some Institutional Aspects of the Wealth of Nations," Journal of Political Economy, University of Chicago Press, vol. 68(6), pages 557-557.
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    Cited by:

    1. Laurie Bréban & André Lapidus, 2019. "Adam Smith on lotteries: an interpretation and formal restatement," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 26(1), pages 157-197, January.
    2. Nathalie Sigot & Laurie Bréban, 2020. "The influence of laws on informal rules: a reassement of the controversy between Jeremy Bentham and Adam Smith on usury [L’influence des lois sur les règles informelles : une relecture de la contro," Post-Print hal-03825528, HAL.
    3. Alfred Duncan & Charles Nolan, 2023. "Adam Smith and the Bankers: Retrospect and Prospect," Working Papers 2023_08, Business School - Economics, University of Glasgow.
    4. Laurie Bréban & André Lapidus, 2019. "Adam Smith on lotteries: an interpretation and formal restatement," Working Papers hal-00914222, HAL.
    5. Diesel, Jonathon, 2021. "Adam Smith on usury: An esoteric reading," Journal of Economic Behavior & Organization, Elsevier, vol. 184(C), pages 727-738.
    6. Arvind Ashta & Laurence Attuel-Mendès & Zaka Ratsimalahelo, 2015. "Another “French paradox”: explaining why interest rates to microenterprises did not increase with the change in French usury legislation," European Journal of Law and Economics, Springer, vol. 40(3), pages 479-509, December.
    7. Constant Mews & Adrian Walsh, 2011. "Usury and its Critics: From the Middle Ages to Modernity," Chapters, in: Mohamed Ariff & Munawar Iqbal (ed.), The Foundations of Islamic Banking, chapter 11, Edward Elgar Publishing.

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