Abstract
In this paper I approach one of Smith's most discussed exceptions to the liberty principle. Numerous authors have treated the tension between Smith's endorsement of a ceiling on interest rates and his system of natural liberty. Almost all authors take Smith at face value. I argue that, given the religious underpinnings of usury policy and its firm standing in prevailing opinion, Smith wrote esoterically on the matter, in part to ensure that his works and his legacy would remain temperate, widely agreeable, and alive. One notable feature of Smith's esotericism is that as soon as he states his argument for the ceiling he subverts that argument by saying that under the regulatory ceiling lenders “universally prefer” “sober people” to “prodigals and projectors” and are able to discriminate accordingly, which leaves the discerning reader wondering why that wouldn't also be the case in the absence of any ceiling.
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