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No one has a natural right to the trade of a money lender, but he who has the money to lend. Let those then among us who have a moneyed capital and who prefer employing it in loans rather than otherwise, set up banks and give cash or national bills for the notes they discount. Perhaps, to encourage them, a larger interest than is legal in the other cases might be allowed them, on the condition of their lending for short periods only.

Thomas Jefferson#167

BankingMoneyInterest

About this quote

What does it mean?
Jefferson states that lending money is not a natural right but a privilege for those who have capital. He suggests allowing higher interest rates for short-term loans to encourage private banking.
In plain terms
Only people with money can lend it. Let them run banks if they want, even with higher interest for quick loans.
What can you take from it?
Private capital should drive banking, not state monopolies.

Where it applies

  • banking regulation
  • interest rate debates
  • private finance

Putting it to work

  • encourage private lending
  • limit usury laws
  • promote competition

Questions to consider

  • Should lending be regulated?
  • Who benefits from high interest?

Another view

It may overlook the risks of unregulated lending.

More from Thomas Jefferson

  1. But it will be asked, are we to have no banks? Are merchants and others to be deprived of the resource of short accommodations, found so convenient? I answer, …

    Permalink to quote #166
  2. If the debt which the banking companies owe be a blessing to anybody, it is to themselves alone, who are realizing a solid interest of eight or ten per cent on…

    Permalink to quote #168
  3. The art and mystery of banks... is established on the principle that 'private debts are a public blessing.' That the evidences of those private debts, called b…

    Permalink to quote #165

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