Chapter L: Part II: Present Day Problems (4)

_Professor Francis Bowen_, Harvard (“American Political Economy,” page 280): “The whole process of exchange may be compared to the process of weighing a well-poised balance, the money and the merchandise being placed on the opposite arms of the lever. Increase the weight on the money side, and the merchandise is sure to rise.” Page 281: “The equalization of money is but another name for the equalization of prices.” Page 244: “The probability of the notes being redeemed at some future day, more or less remote, is not the cause even of the depreciation in the value of paper money, ... but solely on the relative amount of the currency compared with the needs of business. How great are these needs? Commerce needs money or currency enough to enable it to perform its peculiar function; that is, to make the prices of commodities in the home market equal or as nearly equal as possible to the prices of the same commodities in foreign markets.” Page 245: “If there is only $100 to buy flour with, and only ten barrels of flour offered for sale, the competition of buyers and sellers must fix the price at $10 a barrel. If there was twice as much flour, the number of dollars being the same, the price must be reduced to $5. On the other hand, double the quantity of money; there would be $200 available for this purpose, and, as at first, only ten barrels to be sold; the price would rise to $20 a barrel.” Page 301: “The general principle is that the value of money falls in precisely the same ratio in which its quantity is increased. If the whole quantity of money in circulation was doubled, prices would be doubled; if it was only increased one-fourth, prices would rise one-fourth.”

_President Steel_, Lawrence University: “The conventional unit of lineal measure must not be a line which averages a foot, though it may be fourteen inches to-day and nine inches to-morrow; for the same reason it is desirable that the unit of value should have the same purchasing power next week as it has now.”

_Prof. Francis Wayland_ (“Elements of Political Economy,” page 297): “If there is more money in a country than is needed for its exchanges, the price of goods is raised and it is sent abroad for new purchases. If there is a scarcity of money in a country, the price of goods declines, and money comes in from other lands to be exchanged for them.” Page 298: “If money is abundant because business is stagnant and exchanges are few, it is a sign of adversity rather than of prosperity.”

_Edwards Pierpont_ (_North American Review_): “When currency is small it is always easy for a few lords of corporations and rich money-lenders to combine and lock it up, and thus throw down the price of stocks, wheat, cotton and other commodities, and work a corner on the currency. Thus the market is made tight and extortion easy.”

_John Sheldon_ (_New England Yale Review_, March, 1890): “This is of supreme importance, for prices tend to carry with the amount and not simply with the kind of legal-tender money in circulation. The greater the amount the higher the range of prices; the less the circulation the lower the prices. Prices tend ever to follow up and down the amount of legal-tender money in circulation; they do not tend to fixity of the particular kind of money or standard used.”

_Alexander Baring_ (before the committee, House of Lords, 1819): “The reduction of paper would produce all those effects which arise from reduction in the amount of money in any country.”

_Sir Robert Peel_ (May 6, 1844, speaking of the act to regulate the currency): “There is no contract, public or private, no engagement, national or individual, which is unaffected by this.”

_Lord George Bentinck_ (Parliamentary Debates, about 1847): “Of all the subtle devices which the wit of man has contrived to despoil the community of their property, nothing equals the contrivance of laws which limits the currency to gold.”

_Lord Beaconsfield_ (“Agricultural Depression”): “Gold is every day appreciating in value, and as it appreciates in value the lower become prices.”

_Sir Walter Scott_ (speaking of abundant currency): “It is not less an issue that the consequences of this banking system as conducted in Scotland have been operated with the greatest advantage to the country; have converted Scotland from a poor, miserable and barren country into one where, if nature has done less, art and industry have done more than in perhaps any country in Europe, England itself not excepted.”

_Encyclopedia Britannica_ (1859): “A fall in the value of precious metals, like a fall of rain water after a long course of dry weather, may be prejudicial to certain classes. It is beneficial to an incomparably greater number, including all who are engaged in industrial pursuits, and is, speaking generally, of great public or national advantage.”

_North British Review_ (November, 1861): “Metallic money, whilst acting as coin, is identical with paper money in respect to being destitute of intrinsic value.”

_William Jacob, F. R. S._, gives statistics of the world’s volume of money from the year 14 A. D., when it was $1,790,000,000, to 806, when it had fallen to $168,000,000. The price of a horse in England then was £1 15_s_ 2_d_; an ox, 7_s_ 2_d_; a cow, 6_s_ 2_d_; sheep, 1_s_ 2_d_; goat, 4_d_.

_Ernest Seyd_ (1867, speaking of a reduction in volume): “Throughout the world a fall in prices will take place, injurious alike to the owners of solid property and to the laboring classes, and advantageous only, and unjustifiably so, to the holders of state debts and other contracts of that kind.” (“Bullion,” 1868:) “On this one point all authorities are agreed: that the large increase in the supply of gold has given a universal impetus to trade, commerce and industry, and to greater social development and progress.”

_Baron Rothschild_ (French Monetary Convention, 1869): “The suppression of silver would amount to a veritable destruction of values without any compensation.”

_Ricardo, M. P._ (high priest of the bullionists), in his reply to Bauset, said: “The value of money in any country is determined by the amount existing.... The commodities would rise or fall in price in proportion to the increase or diminution of money. I assume that as a fact that is incontrovertible. However debased a coinage may become, it will preserve its mint value.... A well-regulated paper currency is so great an improvement in commerce that I should greatly regret if prejudice should induce us to return to a system of less utility.... By limiting the quantity of money it can be raised to any conceivable value.”

_John R. McCulloch_ (commenting on Ricardo): “He explains the circumstances which determine the value of money ... and he shows ... its value will depend upon the extent to which it may be issued compared to the demand. This is a principle of great importance, for it shows that intrinsic worth is not necessary to a currency.”

Speaking in favor of a gradual reduction in the burden of debts, through the natural increase in the volume of precious metals, McCulloch said: “It promotes industry and diminishes the weight of obligations which press upon the producing classes, whether employer or employed.... Thus it appears that, whatever may be the material of the money of a country, whether it consists of gold, silver, copper, iron, salt, cowries, or paper, and however destitute it may be of any intrinsic value, it is yet possible, by sufficiently limiting its quantity, to raise its value in exchange to any conceivable extent.”

_Samuel Bailey_ (Sheffield): “However some men doubt the advantage of an increase of the currency, no one can deny the ruinous effects of a decrease.”

_Sir James Stewart_: “Money is nothing more than a scale of equal parts for the measurement of things vendible.”

_Sir James Graham_ (British statesman): “The value of money is in the inverse ratio to its quantity, supply of commodities remaining the same.”

_William E. Gladstone_ (1876, speaking of the banks issuing money): “It will be exactly the same thing, so far as the money is concerned, to grant a legislative privilege to a person or to pay over to him a considerable sum from the consolidated fund.”

_London Economist_ (1883): “England being the chief creditor nation of the world, it is to her interest to keep the volume of money as small as possible in countries from which debts are due, in order to get more of their product in payment of interest due to her citizens.”

_The Royal British Commission_, appointed August, 1885, to inquire into the causes of the depression of business, made world-wide inquiries and was composed of twenty-three members, a number of whom were distinguished statesmen and economists. They agreed that gold had greatly appreciated in value and that the rise in the value of gold was caused by the demonetization of silver and the falling off in the supply of gold, and it was the leading cause of the general depression in trade and industry. But it was added:

“This country [England] is largely a creditor country of debts payable in gold, and any change which entails a rise in the prices of commodities generally—that is to say, a demonetization of the purchasing power of gold—would be to our disadvantage.”

_Archbishop Walsh_ (Dublin, 1893): “Of all conceivable systems of currency, that system is sure to be the worst which gives you a standard steadily, continually, indefinitely appreciating, and which, by that very fact, throws a burden upon every man of enterprise and benefits no human being whatever but the owner of fixed debts.”

_Count Leo Tolstoi_ (Russian philanthropist): “Only by means of money do some people command the labor of others nowadays; that is, into slavedom. Money tribute has become a chief means of the subjugation of men, and by it are determined all the economic relations of man.”

_Cernuschi_ (French economist): “The purchasing power of money is in direct proportion to the volume of money existing.”

_Professor Chevalier_ (France), speaking of the increase of money, says: “Such a change will benefit those who live by current labor and enterprise; it will injure those who live upon the fruits of past labor.... It has been wisely said that there is no machine which economizes labor like money, and its adoption has been likened to the discovery of letters.”

_Sauerbeck_ (German statistician): “The propositions of some economists, that we have quite enough money in our country, or that there is sufficient gold to carry on the trade of the world, are valueless. They assume that there is a certain quantity required that need not be increased. Of course there is enough gold, and we could perhaps do with half the quantity. It only depends upon the state of prices.”

_Fichte_ (German philosopher): “The amount of money current in a state represents everything that is purchasable on the surface of the state. If the quantity of purchasable articles increases while the quantity of money remains the same, the value of the money increases in the same ratio. If the quantity of money increases while the quantity of purchasable articles remains the same, the value of money decreases in the same ratio.”

_Herr von Barr_, speaking of the loss to German miners by the demonetization of silver, says: “This direct loss, important as it is, is nothing, however, compared with the indirect loss resulting from the fall of prices.”

_M. Edouard Cazalet_, banker of Milan (“Bimetallism,” page 14): “Since the value of all articles of commerce is represented by the currency, the value of these articles must fall in proportion to the reduction in the volume of the currency. Otherwise the moneyed currency could not possibly do the work which the two metals combined have previously performed.”

_Dr. Soetbeer_ (German statistician): “The value of money has fallen through the issue of paper money as well as through the increased production of gold and silver.”

_Leon Fouchet_ (1843): “If all the nations of Europe adopted the system of Great Britain the price of gold would be reduced beyond measure. The government could not decree that legal tender should be only gold, for that would be to decree a revolution, and the most dangerous of all, because it would be a revolution leading to unknown results.”

_M. Wolowski_ (French Institute, 1868): “The suppression of silver would bring on a veritable revolution. Gold would augment in value with rapid and constant progress, which would break the faith of contracts and aggravate the situation of all debtors.... If by a stroke of the pen they suppress one of these metals [gold or silver] in the monetary service, they double the demand for the other metal, to the ruin of all debtors.”

_John Locke_ (“Considerations, etc., in Relation to Money,” 1691): “The greater scarcity of money enhances its price and increases the scramble, and makes an equal portion of it exchange for a greater of any other thing.” 1690: “Money is really a standing measure of the falling and rising value of other things. If you increase or lessen the quantity of money current, then the alteration of value is in the money. The value of money in any one country is the present quantity of the current money in that country in proportion to the present trade.”

_Adam Clark’s_ commentary on II. Matthew: “The scarcity of money in England in 1351 influenced Parliament to pass an act fixing a day’s labor at 1_d_. Twenty-four eggs sold for 1_d_; a pair of shoes 4_d_; wheat 3_d_; a fat ox 80_d_.”

_Copernicus_, the astronomer (treatise “Monete Cudende Ratio,” addressed to the King of Poland): “Numberless as are the evils by which kingdoms, principalities and republics are wont to decline, these four are, in my judgment, most baleful: civil strife, pestilence, sterility of the soil, and corruption of the coin. The first three are so manifest that no one fails to apprehend them; but the fourth, which concerns money, is considered by few, and those the most reflective, since it is not by a blow, but little by little, and through a secret and obscure approach, that it destroys the state.”

_Daniel Watney_, of England: “I cannot suppose that everybody is wise. Must think of the folly of the United States, when they were a debtor nation, in adopting a gold standard. They knew nothing about currency matters; they did not know it was going to increase their debt enormously.”

_Paulus_ (Roman jurist, third century): “Money circulates with a power which is derived, not from the substance, but from the quantity.”

_Blackstone_ (vol. I., page 2761): “As the quantity of precious metals increases they will sink in value and become less precious. If any accident were to diminish the quantity of gold and silver they would proportionately rise.”

_Faucet_ (“Handbook of Finance,” page 146): “The decline of prices since 1872 and 1873 is explained by the increased value of gold. The first effect was to cause a collapse of speculative securities, namely, bonds of railroads, etc.”

_Professor De Colange_ (“American Encyclopedia of Commerce”): “The rate at which money exchanges for other things is determined by its quantity.”

_Beasey_: “Slavery is the inevitable result of poverty. Poverty is the inevitable result of low wages. Low wages are the inevitable result of a scarcity of currency.”

_A. H. Gaston_: “Money is simply a measure of value, and as a nation contracts its circulation it contracts the value of all property in like proportion.”

_Colton’s Public Economy_ (page 224): “We hold that money enough for the demands of trade is the tool of trade to a nation.” Page 193: “It is very desirable that there should not be sudden and great fluctuations, as such changes affect the value of incomes. For example, when the products of the American mines had raised the general prices on comforts of life as 4 to 1.”

_Silver Commission Report_ of 1876, page 49: “Whenever it becomes apparent that prices are rising and money falling in value in consequence of an increase in its volume, the greatest activity takes place in exchange and productive enterprises. Every one becomes anxious to share in the advantages of a rising market, and the inducement to hoard gold is taken away; its circulation becomes exceedingly active; labor comes into great demand and at remunerative wages. It not only increases production, but increases consumption.” Page 50: “Falling prices and misery and destitution are inseparable companions. It is universally conceded that falling prices result from the contraction of the money volume.” Page 50: “Money is the great instrument of association, the very fiber of social organism, the vitalizing force of industry, the pure, true organ of civilization, and as essential to existence as oxygen is to animal life. Without money civilization could not have had a beginning.” Page 51: “It is estimated that the purchasing power of the precious metals increased between 1809 and 1840 fully 145 per cent.... They had come to regard money as an institution fixed and immovable in value, and when the price of property and wages fell they charged the fault not to the money, but to the property and the employer. Their prejudices were aroused against labor-saving machinery; they were angered against capital.” Page 53 (effects of a decreasing volume of money): “It circulates freely in the stock exchange, but avoids the labor exchange. It has in all cases been the worst enemy with which society has had to contend.” Page 56: “However great the natural resources of a country, fertile its soil, intelligent, enterprising and industrious its inhabitants—if the volume of money is shrinking and prices falling, its merchants will be overwhelmed with bankruptcy, industries paralyzed, and destitution and distrust will prevail.” Page 59: “All respectable authorities agree as to the relative effects of an increasing and decreasing money.... History records no such disastrous transition as that from the Roman empire to the dark ages. In the Christian era the metallic money of the Roman empire amounted to $1,800,000,000. By the end of the fifteenth century it had shrunk to less than $200,000,000. Population dwindled, and commerce, arts, wealth and freedom all disappeared.”

_Henry C. Carey, LL. D._ (“Social Science,” page 297): “Money tends to diminish the obstacles interposed between the producer and the consumer precisely as do railroads and mills.... The most necessary part of the machinery of exchange being that which facilitates the passage of labor and its products from hand to hand, any diminution of its quantity is felt with tenfold more severity than is the diminution of the quantity of railroad cars or steamboats.”

Before the Congressional committee: “We next find him [Secretary McCulloch] issuing the destructive Fort Wayne decree, by means of which we were made to know that the currency was in excess and prices too high; that the policy of the treasury was to be one of contraction; and that unfortunate debtors must as speedily as possible place themselves in a position to meet the shock to be thus created. In other words, all debtors were required to sell, capitalists meanwhile being advised not to buy, the government being determined that labor, lands, houses, stocks and property of all other descriptions should be promptly reduced to gold values.”

Treatise on “Wealth”: “A period of contracted currency is one of embarrassment, difficulty, and generally, in the end, of insolvency to the small farmer and moderate landholder.... It will rise in price from that scarcity, and become accessible only to the more rich and affluent classes.”

[This greatest of American political economists, the late Henry C. Carey, estimated the cost of contraction in order to secure resumption between the years of 1873 and 1879 at thirty billion dollars.]

_Henry Carey Baird_ (March 13, 1882): “The man who has the greatest horror of the inflation of the currency generally has no horror of the inflation of bank credits. He likes it because it increases his power over his fellow men. What he objects to is the inflation of the people which causes an increase of their power.”

September 3, 1889: “People know that the expansion of the currency means life, and equally well that contraction means death.”

_Henry Carey Baird_ (“Money and Bank Credit,” page 14): “The first and greatest need of a man is that of association and combination with his fellow men, and the daily life of a civilized people involves such countless myriads of acts of association or commerce that a medium having the quality of universal acceptability is absolutely necessary to that life. That medium is money.... In its absence in sufficient volume in Great Britain and Ireland, thousands of millions of dollars of labor power annually in those islands perish. While the Trenholms, the Russell Sages, the Pearsalls, the Fahnenstocks and the Seligmans wrangle over the efforts of the people to secure a sufficient supply of ‘current money,’ more labor power will go to waste than will represent the value of the capital of all the banks in the city of New York many times over.”

_Peter Cooper_: “Contraction in finance is not the same as economy in private life. Contraction in the finances of a country means a stoppage of a certain amount of the industry and exchanges, by reason of the contraction of the credit by which these are sustained. Nothing can be more certain than that a contraction of the currency by our government has been followed by a reduction of all values, so that a wrong has been inflicted upon all the enterprising business men of this nation, whose property has been virtually confiscated by this process of contraction.”

_B. F. Butler_ (August, 1875): “I am informed that Mr. Duncan, of Duncan, Sherman & Co., went to Washington when the currency bill was before the President to advise him to veto it because it was necessary to depreciate values. The President did veto the bills. Values have been depreciated, I trust, to an amount entirely satisfactory to Messrs. Duncan, Sherman & Co.” [The firm of which John Sherman was a member was bankrupted by the depreciation.]

_Solon Chase_: “I bought a yoke of steers a year ago for $60; fed them all summer and winter, and in the spring was offered but $60 for them in the market. Who got the hay? So long as the owners of funded wealth control the volume of money they control the price of a day’s work down east and the price of a bale of cotton down south. The higher the price of hogs and corn, the easier the people can pay the debt. The farmer cannot pay off his debt on a falling market. The fight of the men who deal in money is not for the metal, but to control the volume.”

_James D. Holden_ (President National Citizens’ Alliance): “So magical is the operation of this wonderful device known as money that by simply restricting its issue wealth is transferred from the hands that created it to the possession of those not in the remotest degree responsible for its production. Let the reader who does not indorse this view give himself, if possible, a reason why a people who by their laws create the supply of money should limit the issue.”

_A Georgia editor_ (speaking of the effects of contraction) says: “In 1868 there was about $40 per capita of money in circulation; cotton was about 30 cents a pound. The farmer then put a 500-pound bale of cotton on his wagon, took it to town and sold it. Then he paid $40 taxes, bought a cooking stove for $30, a suit of clothes for $15, his wife a dress for $5, 100 pounds of meat for $18, one barrel of flour for $12, and went home with $30 in his pocket. In 1887 there was about $5 per capita of money in circulation; this same farmer put a 500-pound bale of cotton on his wagon, went to town and sold it, paid $40 taxes, got discouraged, went to the saloon, spent his remaining $2.30 and went home dead broke and drunk.”

_Arthur Kitson_ (“Scientific Solution of the Money Question,” 1894, page 284): “A restricted currency means restricted commerce; restricted commerce means restricted production, and restricted production means poverty, misery, disease and death.” Page 396: “The gold standard is a device of the bankers for the measuring of everybody else’s corn with their bushel.”

_Sealy_ (“Coins and Currency,” 1853): “The commerce of the country is now in the power of the Bank of England as it was before in the legislature.”

_Doubleday_ (“Financial History of England”): “We have already seen the fall of prices produced by this universal narrowing of the paper circulation. Distress, ruin and bankruptcy which took place were universally among the landholders whose estates were burdened by mortgages. The effects were most marked. Owners were stripped of all and made beggars.”

_President Andrews_ (Eaton University): “Demonetization of silver was the hardest, saddest blow to human welfare ever delivered by the action of states. So long as gold is the sole standard of that money, so long these wrongs and sufferings must continue.”

_James Mill_ (father of John Stuart Mill): “In whatever degree the quantity of money is increased or diminished, other things remaining the same, in that proportion the value of the whole and every part is reciprocally diminished or increased.”

_Herbert Spencer_: “Barbarians do not want any money but hard money; semi-civilized people want hard money and convertible paper; but when the world becomes civilized and enlightened no other kind of money will be used but paper money.”

VI.
INTEREST AND USURY.

“It is against nature for money to breed money.”—BACON.

THE great Napoleon said, after studying a set of compound interest tables: “There is one thing to my mind more wonderful than all the rest, and that is, that the deadly fact buried in these tables has not before this devoured the whole world.” The ethical sense of mankind saw at an early day the wrong of usury. The Mosaic law was very explicit on the subject. Cicero mentions that Cato, being asked what he thought of usury, made no other answer to the question than by asking the person who spoke to him what he thought of murder. The Christian Church, in its early days and until the end of the Middle Ages, utterly forbade the exaction of interest. In the reign of Edward VI. a prohibitory act was passed, for the stated reason that the charging of interest was “a vice most odious and detestable and contrary to the word of God.” It was not until the time of the Reformation that this interpretation of the divine law was ever questioned. Calvin was one of the first to contend that the sentiment against exacting interest arose from a mistaken view of the Mosaic law. A series of enactments, known as the Usury Laws, restricted the maximum rate to be charged in England. By Act 21 James I. this rate was fixed at 8 per cent. During the Commonwealth this rate was reduced to 6 per cent., and by Act 12 Anne to 5 per cent., at which rate it stood until 1839. In the United States the legal rate of interest varies, nearly all the States having passed statutes fixing a maximum rate.

“Usury bringeth the treasures of a realm or state into a few hands; for the usurer being at certainties, and others at uncertainties, at the end of the game most of the money will be in the box; and ever a state flourisheth when wealth is more equally spread.”

This quotation is from the essay “Of Usury,” by that wisest of philosophers, Francis Bacon. The reader must bear in mind that while nowadays the term “usury” is applied generally only to excessive interest, in Bacon’s time the word was used for any rate of premium or interest for the use of money. The word _usance_, now obsolete in that sense, conveyed the same meaning, and is used in Shakespeare’s “Merchant of Venice.” The provocation which Antonio first gave Shylock was that—

“He lends out money gratis and brings down
The rate of usance here with us in Venice.”

All are familiar with the conditions which Shylock exacted of Antonio:

_Shylock._ This kindness will I show.
Go with me to a notary, seal me there
Your single bond; and, in a merry sport,
If you repay me not on such a day,
In such a place, such sum or sums as are
Express’d in the condition, let the forfeit
Be nominated for an equal pound
Of your fair flesh, to be cut off and taken
In what part of your body pleaseth me.

_Antonio._ Content i’ faith: I’ll seal to such a bond
And say there is much kindness in the Jew.

_Bassanio._ You shall not seal to such a bond for me:
I’ll rather dwell in my necessity.

_Antonio._ Why, fear not, man; I will not forfeit it;
Within these two months, that’s a month before
This bond expires, I do expect return
Of thrice three times the value of this bond....
Come on; in this there can be no dismay;
My ships come home a month before the day.

But Antonio’s ships did not come in—just as the farmer’s crop often fails and the artisan’s employment gives out just when the mortgage is due—and Shylock claimed his pound of flesh. “The Merchant of Venice” is a comedy, and Shylock, Bassanio and Antonio are mere creatures of imagination; but there are thousands of tragedies enacted every day in real life in which real Shylocks play a part. The Shylocks of to-day are quite unlike the Shylocks of fiction, however. Banker Morgan, who negotiated with Grover Cleveland the star-chamber bond deal by which the American government sold to the Rothschilds at a premium of only 4½ per cent. $100,000,000 of interest-bearing gold bonds which were immediately after quoted at a premium of 21 per cent., is a philanthropist. As soon as possible after the deal was made his portrait appeared in many of the great dailies with a fulsome account of his many charities! It will take many a pound of human flesh, many a drop of life’s blood, to pay the interest on the bonds which he negotiated, and out of the sale of which he made a cool million in one day.

The Bible has much to say on the subject of usury. The writer has never heard a sermon preached on any of the following texts, however—perhaps because bankers and money-lenders rent the best pews. Remember that usury here means simply interest—not excessive interest:

Exodus 22:25: “If thou lend money to any of my people that is poor by thee, thou shalt not be to him as an usurer, neither shalt thou lay upon him usury.”

Deuteronomy 23:19-20: “Thou shalt not lend upon usury to thy brother; usury of money, usury of victuals, usury of anything that is lent upon usury. Unto a stranger thou mayest lend upon usury, but unto thy brother thou shalt not lend upon usury, that the Lord thy God may bless thee.”

Nehemiah 5:7: “Then I consulted with myself, and I rebuked the nobles, and the rulers, and said unto them: Ye exact usury every one of his brother. And I set a great assembly against them.”

Psalms 15:5 (David describes a citizen of Zion): “He that putteth not out his money to usury, nor taketh reward against the innocent.”

A Chapter from “Cæsar’s Column.”

I cannot do better here than quote a significant chapter from Ignatius Donnelly’s powerful novel, “Cæsar’s Column,” which certainly did as much as any book ever printed to set people thinking:

“But what would you do, my good Gabriel,” said Maximilian, smiling, “if the reformation of the world were placed in your hands? Every man has a Utopia in his head. Give me some idea of yours.”

“First,” I said, “I should do away with all interest on money. Interest on money is the root and ground of the world’s troubles. It puts one man in a position of safety, while another is in a condition of insecurity, and thereby it at once creates a radical distinction in human society.”

“How do you make that out?” he asked.

“The lender takes a mortgage on the borrower’s land, or house, or goods, for, we will say, one-half or one-third their value; the borrower then assumes all the chances of life to repay the loan. If he is a farmer, he has to run the risk of the fickle elements. Rains may drown, droughts may burn up his crops. If a merchant, he encounters all the hazards of trade: the bankruptcy of other tradesmen; the hostility of the elements sweeping away agriculture, and so affecting commerce; the tempests that smite his ships, etc. If a mechanic, he is still more dependent upon the success of all above him and the mutations of commercial prosperity. He may lose employment; he may sicken; he may die. But behind all these risks stands the money-lender, in perfect security. The failure of his customers only enriches him; for he takes for his loan property worth twice or thrice the sum he has advanced upon it. Given a million of men and a hundred years of time, and the slightest advantage possessed by any one class among the million must result, in the long run, in the most startling discrepancies of condition. A little evil grows like a ferment—it never ceases to operate; it is always at work. Suppose I bring before you a handsome, rosy-cheeked young man, full of life and hope and health. I touch his lip with a single _bacillus_ of _phthisis pulmonalis_—consumption. It is invisible to the eye; it is too small to be weighed. Judged by all the tests of the senses, it is too insignificant to be thought of; but it has the capacity to multiply itself indefinitely. The youth goes off singing. Months, perhaps years, pass before the deadly disorder begins to manifest itself, but in time the step loses its elasticity; the eyes become dull; the roses fade from the cheeks; the strength departs, and eventually the joyous youth is but a shell—a cadaverous, shrunken form, inclosing a shocking mass of putridity; and death ends the dreadful scene. Give one set of men in a community a financial advantage over the rest, however slight—it may be almost invisible—and at the end of centuries that class so favored will own everything and wreck the country. A penny, they say, put out at interest the day Columbus sailed from Spain, and compounded ever since, would amount now [A. D. 1890?] to more than all the assessed value of all the property, real, personal and mixed, on the two continents of North and South America.”

“But,” said Maximilian, “how would the men get along who wanted to borrow?”

“The necessity to borrow is one of the results of borrowing. The disease produces the symptoms. The men who are enriched by borrowing are infinitely less in number than those who are ruined by it; and every disaster to the middle class swells the number and decreases the opportunities of the helpless poor. Money in itself is valueless. It becomes valuable only by use—by exchange for things needful for life or comfort. If money could not be loaned it would have to be put out by the owner of it in business enterprises, which would employ labor; and as the enterprise would not then have to support a double burden—to-wit, the man engaged in it and the usurer who sits securely upon his back—but would have to support only the former usurer, that is, the present employer—its success would be more certain; the general prosperity of the community would be increased thereby, and there would be, therefore, more enterprises, more demand for labor, and consequently higher wages. Usury kills off the enterprising members of a community by bankrupting them, and leaves only the very rich and the very poor; but every dollar the employers of labor pay to the lenders of money has to come eventually out of the pockets of the laborers. Usury is therefore the cause of the first aristocracy, and out of this grow all the other aristocracies. Inquire where the money came from that now oppresses mankind, in the shape of great corporations, combinations, etc., and in nine cases out of ten you will trace it back to the fountain of interest on money loaned. The coral island is built up of the bodies of dead coral insects; large fortunes are usually the accumulations of wreckage, and every dollar represents disaster.”

How Wealth Accumulates.

As proof of the fact that it is a mighty fortunate thing for humanity that the Rothschilds did not conduct a bank in the year 1 A. D., I reprint from the _Twentieth Century_ the following article by H. C. Whitaker, which shows the beauties of interest-drawing:

“Had one cent been loaned on the 14th day of March, A. D. 1, interest being allowed at the rate of 6 per cent., compounded yearly, then, 1894 years later—that is, on March 14, 1895—the amount due would be $8,497,840,000,000,000,000,000,000,000,000,000,000,000,000,000 (8,497,840,000 decillions). If it were desired to pay this in gold, 23.2 grains to the dollar, then, taking spheres of pure gold, each the size of the earth, it would take 610,070,000,000,000,000 of them to pay for that cent. Placing these spheres in a straight row, their combined length would be 4,826,870,000,000,000,000,000 miles, a distance which it would take light (going at the rate of 186,330 miles per second) 820,890,000 years to travel.

“The planets and stars of the entire solar and stellar universe, as seen by the great Lick telescope, if they were all of solid gold, would not nearly pay the amount. A single sphere to pay the whole amount, if placed with its center at the sun, would have its surface extending 563,580,000 miles beyond the orbit of the planet Neptune, the farthest in our system.

“It may be added that if the earth had contained a population of ten billions, each one making a million dollars a second, then to pay for that cent it would have required their combined earnings for 26,938,500,000,000,000,000,000 years.”

VII.
DEBT AND SLAVERY.

“And ye shall hallow the fiftieth year, and proclaim
liberty throughout the land unto all the inhabitants
thereof.”—_Leviticus_ 25:10.

“Debt is the fatal disease of republics, the first thing and
the mightiest to undermine government and corrupt the
people.”—WENDELL PHILLIPS.

FROM the earliest dawn of history debt has ever borne a close relationship to slavery and servitude. “It is worthy of remark,” says Grote (History of Greece, vol. III., p. 144), “that the first borrowers must have been for the most part driven to this necessity by the pressure of want, contracting debt as a desperate resource without any fair prospect of ability to pay. Debt and famine run together in the mind of the poet Hesiod. The borrower is in this unhappy state rather a distressed man soliciting aid than a solvent man capable of making and fulfilling a contract; and if he cannot find a friend to make a free gift to him in the former character he would not under the latter character obtain a loan from a stranger except by the promise of exorbitant interest and by the fullest eventual power over his person which he is in a position to grant.”

“This remark,” says Professor Nicholson in the _Encyclopedia Britannica_, “suggested by the state of society in ancient Greece, is largely applicable throughout the world until the close of the early Middle Ages.” The conditions of ancient usury find a graphic illustration in the account of the building of the second temple at Jerusalem (Nehemiah 5:1-12). Some said: “We have mortgaged our lands, vineyards and houses that we might buy corn, because of the dearth.” Others said: “We have borrowed money for the king’s tribute, and that upon our lands and vineyards, ... and lo, we bring into bondage our sons and our daughters to be servants, ... neither is it in our power to redeem them, for other men have our lands and vineyards.”

In ancient Greece we find a law of bankruptcy resting on slavery. In Athens, about the time of Solon’s legislation (594 B. C.), the bulk of the population who had originally been small proprietors became gradually indebted to the rich to such an extent that they were practically slaves; those who nominally owned their property owed more than they could pay, and stone pillars erected on their land showed the amount of the debts and the names of the lenders. Solon’s remedy for this state of affairs was to cancel all debts made on the security of the land or the person of the debtor, and at the same time he enacted that henceforth no loans could be made on the bodily security of the debtor, and the creditor was confined to a share of the property.

In Rome’s early history practically the same conditions prevailed as in Greece. About 500 B. C. an attempt was made to remedy the evil by providing a maximum rate of interest, no alteration being made, however, in the law of debt. In the course of a few centuries the free farmers were utterly destroyed. The pressure of war and taxes and usury drove all into debt and into practical, if not technical, slavery. The old law of debt was not really abolished until the dictatorship of Julius Cæsar, who then practically adopted Solon’s legislation of more than five centuries before, but too late to save the middle class.

In the course of centuries and the evolution of civilization chattel slavery has been abolished; but the slavery of debt still remains, and usury is now, as it was in all the history of mankind, the tool with which debt forges the chains of nations. It is not the province of this work to examine into the conditions of other countries than our own, but the facts now to be presented will convince the thoughtful reader that the American people are bound by chains of debt which it will require the wisest statesmanship to break.

Representative Warner of Massachusetts (Republican), in a speech delivered in Congress in 1894, stated that the interest-bearing debts of the United States, public and private, aggregated a grand total of $32,000,000,000 (thirty-two billions of dollars). This would be bad enough, but careful estimates by conservative students of political economy show that the amount is very much larger.

W. H. Harvey, author of “Coin’s Financial School,” makes the following itemized estimate of the interest-bearing debts of this country, public and private. Most of the figures are derived from recognized official sources:

The national debt, according to the official
census of 1890, was $ 891,960,104

State and municipal debts (census 1890). 1,135,210,442

Railroad bonds, 1892 (“Poor’s Manual,” 1893) 5,463,611,204

Debt on farms and homes occupied by owner (R. R.
Porter, Supt. Eleventh Census, in _North
American Review_, vol. 153, p. 618) 2,500,000,000

Mortgaged indebtedness of business realty, street
railways, manufactories and business enterprises
(estimated from partial reports of 11th census) 5,000,000,000

Loans from 3,773 national banks (Statistical
Abstract of the United States) 2,153,769,806

Loans from 5,579 State savings, stock and private
banks and trust companies (Statistical Abstract
of the United States) 2,201,764,292

These are figures on which something definite has
been obtained; also the ratio of increase from
1880 to 1890, which was from $6,750,000,000 in
1880 to $19,000,000,000 in 1890. By computing
the same ratio of increase we should now add 8,000,000,000

Mortgage debts on homes not occupied by owner
(estimated) 1,000,000,000

Overdue accounts due merchants, wholesale and
retail, drawing from 6 to 10 per cent. interest
(estimated) 5,000,000,000

Debts due pawnbrokers, drawing from 60 to 120 per
cent. per annum or 5 to 10 per cent. a month
(estimated) 1,000,000,000

Private debts due from individuals to individuals
and of which there is no public record or other
data for census officers to obtain information
(estimated) 1,000,000,000

Maritime debts (estimated) 1,000,000,000

Overdrafts, judgments, overdue taxes and
miscellaneous items not included in the
foregoing (estimated) 4,000,000,000

———————-

Horrible total $40,346,315,848

In commenting on his figures, Mr. Harvey says: "Debts, a non-producing industry, growing to such a magnitude that the profits derived from all the producing industries of the country will not more than pay the interest on these debts, make the producers thereafter work for the benefit of the money-lending or non-producing class. When such a condition as to debts arises as we now have, all money nearly gravitates into the hands of the money-lenders and piles up in the money centers. The effect of debts upon civilization has never been understood generally. A prosperous country can carry about a certain proportion of debt among its people without apparent injury, but when it reaches the present proportion—a proportion only reached three times before in the known history of the world—it produces commercial paralysis and the financial enslavement of the people. All the people make goes to pay the money-lenders their interest.

“When you pay money to a merchant or a manufacturer that you may owe, the money you pay him is paid by him to others for material and other products of his business, with no charge or embargo upon it; but when you pay back to a money-lender a debt you owe him, the money stops there until it is loaned out again to come back with interest. When this grows to such an extent as to require all or most of the money in the country to pay the interest on debts, then commerce slackens and there is little or no money among the people except as loaned out by the banks and others whose business it is to loan money. They are dealing in the blood of commerce, and when they take it from the arteries of commerce there is commercial sickness and distress.”

The Abstract of the Eleventh Census (page 189) gives the true valuation of all real and personal property in the United States as only $65,037,091,198. Against this we have an interest-bearing debt of forty billions.

But Mr. Harvey’s figures are by no means complete. He says nothing about the capital stock of the great railroad, telegraph, telephone, insurance and other corporations, most of which is “water.” The reader may say that this is not debt. But it is debt, as it represents what the companies owe to their stockholders; it draws interest; it must pay salaries and dividends. To say that we pay interest every year on forty-five billions is a very conservative statement. And the debt is constantly increasing, for the reason that there is not in circulation, of all kinds of money, enough to pay this interest. Let us figure it out. The average rate of interest is 6½ per cent. Let us say 6 per cent. At this rate we pay each year $2,700,000,000—over $40 per capita. Think of it! Forty dollars interest for every man, woman and child! Two hundred dollars for every family! And this exclusive of taxation, which adds still more to the burdens of life. The most blatant gold-bug does not claim that there is $40 of money per capita in circulation. There can be only one result, and that result is abject, hopeless slavery—slavery under the guise of freedom, but still slavery—unless this burden of debt is thrown off before the patient people succumb entirely.

VIII.
THE LAWS OF PROPERTY.

BY LYMAN TRUMBULL.

“Property, or the dominion of man over external objects,
has its origin from the Creator, as his gift to
mankind.”—BLACKSTONE (Dunlap’s Manual of the General
Principles of Law).

IT is chiefly the laws of property which have enabled the few to accumulate vast wealth while the masses live in poverty. For many generations our laws have been framed with a view to the claims of property rather than the rights of man. For ages the money power has controlled legislation the world over, and, I am sorry to say, has exercised a controlling influence in our own land for many years. In the language of the Declaration of Independence: “All men are created equal and endowed by their Creator with certain inalienable rights; that among these are life, liberty, and the pursuit of happiness.” If a man has an inalienable right to life, then he has a right to the means which sustain life, and of which he cannot be justly deprived by laws which permit one man, or set of men, to so absorb the means of life as not to leave sufficient to sustain the lives of all. If man has an inalienable right to liberty, then he cannot be justly deprived of liberty by another who assumes the right at his mere discretion to abridge it. If man has an inalienable right to the pursuit of happiness, then he cannot be justly deprived of that right by laws interposed in the way of its pursuit.

Do such laws exist, and if so, how came they into existence?

In Great Britain, whence we have derived most of our laws of property, the policy is to build up great estates. Hence, by the laws of that country, land descends to the eldest son, to the exclusion of the other children. The effect of this is to limit the ownership of land to a few persons. Thirty-four persons in that country own six million two hundred and eleven thousand acres of land. The Duke of Sutherland is said to own one million three hundred and fifty-eight thousand acres, and a few other dukes and earls own a great proportion of the land of the United Kingdom. What has brought about this wide difference in the ownership of land? Certainly the few who own the millions of acres, from which they derive revenue, in some instances of more than five hundred thousand dollars annually, in rentals, have not earned these vast estates by their own industry, but, on the contrary, it is by force of statutory enactments that these vast estates have been accumulated and perpetuated in few hands.

In this country we have abolished the law of primogeniture, by which the eldest son inherited the landed estate of his ancestor, but here vast estates are being rapidly accumulated in few hands, and this is especially true during and since the War of the Rebellion. In 1860 there were few millionaires and few large fortunes in this country, but since then a rich class has sprung up, so that in 1890, according to reliable statistics, ten per cent. of the people own as much wealth as the other ninety per cent. In 1890 there were 12,690,182 families in the United States, and according to George K. Holmes, in the _Political Science Quarterly_, 4,047 of these possessed about seven-tenths as much as do 11,593,887 families. Just think of it. One family possessing the wealth of 2,000 families the country over! In the city of New York alone there are said to be five men whose aggregate wealth exceeds $500,000,000. How many hundred millions are held by various wealthy corporations, coal and oil syndicates and other trusts, I am unable to state. In the cities of New York and Chicago hundreds of thousands of men and women, willing to work, were out of employment last winter, many of whom must have perished from want but for charity’s aid. These conditions another winter promise to be no better.

The richest corporations and persons on earth are probably in the United States. How have they accumulated their vast fortunes? Surely not by their own industry and thrift, but by the aid of statutes regulating the rights of property, generally statutes providing for the transmission of property by descent or by will, or the creation of monopolies.

It is only by virtue of statutory law that man is permitted to make disposition of his property by will, and it is only by virtue of statutory law that one person is permitted to inherit property from another, and it is by virtue of statute law that great corporate monopolies have been built up.

No man has a natural right to dispose of property after death, nor has one person a natural right to inherit property from another. As Blackstone says: “There is no foundation in nature or in natural law why the son should have the right to exclude his fellow creatures from a determinate spot of land because his father did so before him, or why the occupier of a particular field or of a jewel, when lying on his death-bed, and no longer able to maintain possession, should be able to tell the rest of the world which of them should enjoy it after him.”

Under Illinois laws, the owner of real estate is permitted to lease it for an indefinite period, and compel future generations who occupy the premises to pay rent to unborn generations. Leases for ninety-nine years are quite common in Chicago. It is by no divine law that the occupant of land to-day is allowed to compel its occupant one hundred years hence to pay tribute for its use. The statutes of Illinois have given to the owner of property the right to dispose of it by will, not wholly, but to a certain extent. If married, neither the husband nor wife can give away the homestead or dower rights of the other, nor can creditors, heirs or devisees take from the widow her allowance.