Question 354.— (1) In what shape did the usury bill pass?

(2)   How will it affect banks re-discounting private bankers' paper? Many private bankers take notes, say at six months with interest at 10 per cent.

(3)   If a note representing a loan is drawn for a lump sum representing the principal and interest at a higher rate than 6 per cent., without any mention of the rate on the face of the note, would the new law apply?

Answer.— (1) The interest bill as passed provides in effect that unless the rate per cent. per annum is expressed, interest at 6 per cent, per annum only can be collected.

(2) The Act will apply to private bankers' paper held by a bank if the terms of any note so held brings it within the scope of the Act—that is, if a bank takes from a private banker a note which bears a rate of interest per diem and not per annum, it can only regard the note as a security bearing 6 per cent. per annum.

(3) The note described may be, as between the maker and the lender, a note which includes interest, but so far as any other holder of the note is concerned, it is a bare promise to pay the amount of the note at maturity, without any reference to interest at all, and would, in the hands of a holder in due course, constitute a valid claim for its face amount. The Act does not interfere with contracts of this kind. If, for example, a man should sell a private banker a note of $100 for $100, there is nothing to interfere with his right to claim the $100 at maturity, and any subsequent holder, who acquired the note in good faith before maturity, would be, if possible, in a better position than the payee.