Smith and Bentham on usury laws: The terms of the debate

This article deals with the controversy between Smith and Bentham on usury laws. Unlike traditional interpretations that provide strictly economic explanations, it is argued that the differences between the two authors rest on a divergence concerning the psychology of the actors involved in the credit market. Although Smith and Bentham used the same words to point them out these psychological mechanisms, they described them quite differently so that the debate could hardly make sense (part I). Emphasising the specificity of each author's psychological hypothesis, an other specificity concerning trading interactions between actors on the market of credit is brought to the fore (part II). Therefore, I conclude that neither the upholding of usury laws - for Smith -, nor their abolition - for Bentham -, give a final solution to the problem of coordination between lender and borrower. Classification JEL : B100.