Monday, January 26, 2015

#25.20 A SCIENTIFIC SOLUTION OF THE MONEY QUESTION – Arthur Kitson – Part 20

CHAPTER XVIII.
THE SOLUTION.

The time has come for the wise to choose their course, and prepare for reconstruction." — Proudhon.

This chapter shows somewhat better than any other, how similar were the solutions offered by Kitson and Riegel. In particular, we draw attention to their reliance on the notion of a dollar as a suitable means for continuance of a new money system. With all due respect, even in 1895, dollars were not universal money and even after the Bretton Woods attempt to make of them such, due to the underpinnings of the entire system in usury and spurious debt to certain special people called bankers, rather than arising naturally out of anyone's and everyone's actual need to split barter and trade, there is no reason why a dollar, any dollar, need be used further as any kind of standard unit for new money. Besides which, the monopolists have had laws and regulations passed against doing so; they claim to own the very use of the word “dollar” as some others now claim to own the name Riegel for a proposed unit of money. In fact Riegel guessed as much when he described his as a Value Unit or Valun, even though his idea was to base its exchange rate at inception on some known dollar. Again, Kitson and Riegel had nearly identical views of money units being units of purchasing power rather than units of any “intrinsic” value, which both agreed no money can ever possess and scientifically be called money. We will use this chapter to once again outline our proposal as we compare it with the ideas Kitson presented 120 years ago.

We are now in a position to solve for all time this question, so stupendous in its results, so far reaching in its consequences. During the course of this investigation, we have seen that the one great obstacle against which the science of economics has always to contend, is law. No matter what may be the branch of its investigation, no matter how strongly it may dictate the righteousness and wisdom of a certain line of action, in its progress it is invariably brought to a final standstill by the lawmakers' edict, "Thou shalt not." Our view is that “law makers,” so called, who act to cause laws, edicts, policies, statutes, judgements, regulations, etc. to gain FORCE in society, who act against nature are NOT making law, they are in fact making lawlessness and sooner or later their acts by FORCE shall fail. We have indicated our doubts concerning any law attempting to monopolize money for example. Oh, they can try and succeed for a long time, bringing poverty and misery in their wake, and not care about the consequences of their senseless and brutal actions, but eventually it will fail. We have therefore in this series, issued a call, indicated a need for all true students of law, lawyers, to become actively involved in alternative solutions to the present monetary system, because we want any new system to be lawful in the sense of being in accord with the laws of nature, rather than the diktats of certain special interests.

We have seen that the precariousness of supporting life, that which causes most of our anxiety, that raises the question in the minds of millions as to whether life is really worth the living, in fact, that which necessitates economy, is the scarcity of the means of living. It is this very issue that stands athwart and opposed to the phony science of ecology, as well as the phony social science known as economics. We want it broadly known by the vast majority of humanity, that those who stand for such “science” are merely apologists for the notion that certain special people, elitists, have determined that the best thing for the vast majority of humanity would be to go off somewhere and die quietly, without molesting their privileged existences. Indeed in their “public” schools, they teach “the masses” guilt for their mere existence. Is it much wonder then that suicides are at epidemic proportions, especially in the developed world? You see, most people do act realistically to the presence of arrayed FORCE and tragically actually do as they are told.

And we have also seen that the tendency — nay, the economic goal of civilization — is to increase these means, bringing them nearer to nature's gifts; in the language of Adam Smith, “to enable the people to provide a plentiful revenue for themselves.” Even Smith did not say, to government, to bankers, to some elitists who live from the poisoned fruits of usury, no, for themselves. In short, the object of economics may be said to be to abolish scarcity, so far as the means of living are concerned. Indeed, and in order to do that, Riegel set forth his ideas as “private enterprise money,” not “public” money, not government money, not banker money, not usurer's money, no, PRIVATE money belonging to each private individual human being. He also was able to determine, as was Kitson before him, that such money could and would ultimately be universal in scope, as it could be easily spread. It might become public in the sense of everyone using it, but it would always emanate from private sources.

We have also seen that the evils of our monetary system may be summed up in that one word, scarcity, a condition arising solely from the operation of restrictive laws, — laws which give to the few absolute power over the lives and fortunes of the masses. We have every reason to ask and wonder whether such “laws” are in accord with natural law or are they really only arbitrary edicts of FORCE to make certain people's lives more worthy than others for no apparent reason than that they have control over the levers of monopoly money in society. That's a question perhaps for astute lawyers to pursue. The operation of these laws is utterly opposed to the aim of civilization. They tend to restriction instead of to freedom, to the limitation of supply instead of to a condition of plenty.

The solution of the money question, like the solution of the tariff question, is to be found in the removal of all restraints which governments have placed upon exchange and its mechanism. It is, in short, but enlarging the field of human liberty. It would be, except that those who acquire their wealth and privilege through unjust means then have leverage and liberty many times that of any average man or woman and therefore exercise their liberty to cheat, swindle and otherwise pauperise whole societies under cover of their supposed freedom to action, denied to others.

Having acknowledged the right of all men to life, we have to acknowledge their right to support life; in fact, the one implies the other. But laws that restrict trade, that interfere with the issuance of money, deny this right. "Commerce," says Proudhon, "exists only among free men.” We can transpose this aphorism and assert that men are only free where commerce is free; and as we have seen, commerce is only free where the mechanism of exchange is free. Practically considered, two distinct operations are necessary; one of demolition, the other of reconstruction.

The work of demolition consists merely in abolishing that fiction known as the standard of value, and repealing all laws relating to the issuing and tendering of money. In other words, the solution of the money question will be found in free exchange; exchange freed front tariffs and taxes of every description, unobstructed by custom houses and licensed banking houses, by law makers and usurers. Get it? If you don't, go back and consider everything that went before this point. Then you'll see whether you are part of the problem or could be part of the solution. Our message remains, “come out of her, my people, lest you be associated with her crimes.”

The ground must be entirely cleared of all the dirt and rubbish which now obstruct it, in order that a strong and stable edifice may be reared in place of the present rotten and unstable one. We have been slowly learning of late years a truth which wise men recognized long ago: that the more restricted the powers and functions of governments, the better for society. Of all the powers that have been conferred upon sovereigns or states, that of regulating and controlling the currency is by far the most dangerous and most menacing to the liberties of the people. There is probably nothing of greater importance to our present civilization, than freedom in exchange. Riegel writing nearly 60 years later certainly thought so, and so do we.

Life is dependent upon industry, and industry is dependent upon ability to exchange the products of industry, and this, under our present industrial system, is dependent upon the mechanism of exchange, i. e., money.

Those who see in the present system of tariffs the evils, oppression and unjust privileges which its operation gives rise to, and who fail to perceive the inequity in a governmental control of the currency, are strangely blind to principle. Of what benefit is it to a nation to abolish its customs houses, so long as the medium of exchange is left to the control of a few government licensed banking houses? Tariffs are taxes levied upon certain special commodities, and affect special exchanges; but a restricted currency, whether it be limited by the supply of a special commodity such as gold, or by the arbitrary rulings of a government, is a tax upon all exchanges, a burden placed over the entire field of industry. Unrestricted commerce is impossible with a restricted currency. In other words, free trade is only possible with free money. All so called trade agreements are anything but free. Their intention from the outset is to restrict trade, not make it free. So it is likewise with many kinds of enactments that claim to support or promote something they in fact seek to restrict or even extirpate. It's simply part of the double-speak of modern public opinion making, that all had nefarious roots in the greedy hearts and minds of certain “special” men.

The prevailing idea that a nation's currency must necessarily be restricted in volume, is entirely due to the fallacy that money is necessarily something valuable; or, as it is commonly stated, money must be "intrinsically valuable,” — a fallacy which, as we have already seen, is attributable to a false conception of the term value. Money is not, scientifically speaking, a thing of value; it is not wealth. It is the symbol of wealth, the evidence of debt, a convenient means of reckoning and expressing the values of commodities. Money is not a standard of value, nor a measure of value, neither is it a commodity. It is a common denominator of values and a measure of purchasing power. We accept these statements as both Kitson and Riegel understood them. However why quibble? In most people's minds, purchasing power and value in a trade are equivalent concepts. When Riegel described a Value Unit, he was describing a means to measure values in a trade; purchasing power in a trade. He never implied that the money itself contained in itself any value, and this is the same sense in which Kitson understood it.

I have shown how impossible it is, scientifically speaking, to make of money a commodity. I have shown how physically impossible it is to make of any material a common denominator of values. Gold can no more "measure" values than a bushel basket can square the circle.

And now let us see what would be the effect of demolishing the standard of value. The one great result it would accomplish, would be to divorce money from its unnatural alliance with the precious metals. The only plea urged by economists and legislators for basing money upon specie, is that it is necessary to do so in order that money may perform the function of a standard of value. Abolition of this so-called function, removes at once all necessity and every excuse for the specie basis. The question arises, what then will take its place? What will the monetary system be? To begin with, the nomenclature would be the same. A dollar will still remain the monetary unit; but instead of being determined by a certain fixed weight of gold, it will simply be a unit of purchasing power. It would represent no fixed amount or quantity of any particular commodity. Its power would be represented in all commodities. Goods would still be prized by the dollar system. The market reports would be printed in similar terms as now, the only difference being that prices of commodities would not be subjected to the fluctuations of gold or silver. These metals might be hoarded, exported, imported, cornered or thrown upon the market with the utmost impunity, without affecting the prices of any other commodities in the slightest degree. Every commodity would then stand upon its own base. A general fall or rise in prices would be utterly impossible. At the present time, under our present inequitable and unscientific system, the price of every commodity is dependent, first, upon supply and demand of commodities themselves; and second, upon supply and demand of money. Very well then, just replace the word “dollar” in everything above, with Valun (or whatever else it ends up becoming known as) and everything else would stand the same. All the commodities prices would be in Value Units and a valuable private enterprise service might actually produce reports on commodities as markets for them emerge. One would never have to assess these prices in terms of how many Value Units were in demand or in existence because every last one of these units would be issued with the same purchasing power as any of the others, thus defeating commodity basis for money once and for all. That was Riegel's intention and it was Kitson's too. We would predict that commodities would be subject to far less variation in price due to speculation than at present. To those who claim otherwise, let me just point out that the business of commodity speculation is precisely to move prices rather than to keep them stable, as speculators make no money when prices never change. Arguments to the effect that speculators perform a valuable economic service in keeping prices stable are entirely bogus, misleading and mere excuses for people getting paid to do nothing but gamble with money, theirs and that of others living off the proceeds of usury and chicanery, rather than real production.

Variations in these two classes (money and commodities they price) may occur separately or simultaneously, and the fortunes and lives of men are affected far more by the second than the first. The former are controlled by the latter, and bankers control to a large extent the destinies of producers and merchants. Today, a merchant may find the value of his stock suddenly diminished one-half, without any change having taken place in the cost of production or supply of the goods themselves, merely through the conjoint action of a number of bankers in cornering the supply of money. Observe, for instance, how the cornering of gold precipitated the general panic known as Black Friday! No cornering of commodities could possibly create a general panic, so long as money is not confined to any particular commodity. Correct! Notice that in our proposal, gold and silver are used only for purposes of exchange with other money. Within the Value Unit sphere of prices, operative in a Valun Exchange Network (VEN), their prices float about as required by supply and demand relative to the fixed purchasing power of each Valun as established at inception.

Under the system I propose, variations in supply and demand of money could have no effect upon prices, because the supply would always be ample to meet the demand. By making all commodities equal, that is, putting them on the same footing, all would be alike able to be monetized. Industry, trade and commerce would then assume their natural position and would become independent of finance. This would be most likely within the VEN, especially concerning labour which would all be self-financing. A Value Unit earned into existence would in fact be YOUR money, not that of some bank or some state or some fake commodity like bitcoin.

The fortunes of manufacturers and merchants would cease to be the shuttlecocks of money brokers and speculators. Again, getting Wall Street the City of London, Frankfurt and other such places off the necks of everyone everywhere would be a great relief to the human race.

A dry-goods merchant would find it as easy to monetize his stock, and the builder his house, as the gold miner his gold. With freedom to monetize all commodities alike, the monopolization of money would be as impossible as the monopolization of all commodities. Further, the supply of money would be so abundant that interest for the use of money would rapidly disappear. Interest is only possible with a restricted currency. Since usury as we have defined it would not be legal within the VEN, any caught would be thrown out perhaps forever, such would definitely be a thing of the past. There would likewise be no way to profit from usury or live off its proceeds, so people would actually have to work for a living.

In the chapter on Purchasing Power, I showed how an invariable unit of purchasing power may be provided. The operation of estimating the relation of all commodities in terms of these units, involved, as we saw, the use of an endless number of figures. By using the dollar method, this difficulty vanishes. The exchange relations of all goods are now expressed in terms of dollars and cents. It is only necessary, therefore, to abolish the standard of value in order to make the dollar an invariable unit of purchasing power. As we said, just substitute Valun for dollar and it all holds; the Valun method, etc.

But, I am asked, what is a dollar apart from its gold basis? Simply an arbitrarily selected unit of purchasing power, in simple multiples or fractions of which the exchange relations or values of all commodities may be expressed. Such a dollar is merely ideal. By selecting any commodity, its power is at once made known by the quantity of the commodity which it will purchase. The ideal dollar is invariable, inasmuch as it does not fluctuate, per se, from supply and demand. The gold dollar, the commodity dollar, is continually varying. The way to stop the variation of course is by selecting the TIME that such a currency unit starts; its inception. Our experiment began on 2 November, 2011, an easy day to remember at $1,738.09 for an ounce of gold or a bid price of $2,160 or $2.16 the Valun. Edwin Vieira, an intelligent lawyer, in Pieces of Eight, understood the Constitutional dollar to be a silver coin (not gold) of 371.25 grains of silver and that would have sufficed for an adequate definition if Congress had stated that all future references to its purchasing power were to reflect changes back to the last day of business in 1792. Without the TIME basis, this so called Constitutional dollar is nothing but a token made out of some commodity the value and purchasing power of which is determined by some speculators in far away foreign cities, not where dollars are actually required, spent and saved. It has come to our attention that a proposal to make the Valun's day of inception correspond with gold's highest price in dollars would be the most logically consistent choice for its inception. That date was 5 September, 2011 when gold topped $1,900 an ounce. That would have made for a Value Unit at $2.375 at inception and a comparable exchange value over $3 today. We aren't far off as it is. What makes up for the difference is the fall in the prices of gold and silver since their highs in late summer of 2011; simply put, gold and silver do not buy as much as they did back then, so anyone wanting to trade for a Valun today would have to pay the difference in more gold or silver, since no exchange within the VEN would or could keep dollars or any other public money. Again, gold and silver per se have no interest for us except as a means of exchange with all other money, period! Proposed Value Units are not “backed” by any precious metals the exchanges would acquire, nor are any tokens representing Valuns to be exchanged for any gold or silver coins. If you want to buy and hold gold and silver as a speculative investment, then do that, but don't expect Valuns to be the same thing.

Although to many this idea of what the dollar should be may seem novel, a few moments' reflection will show them that almost all people, outside of bankers and money dealers, do, in practice, use dollars in this ideal sense, although unconsciously. Not one person in ten thousand ever stops to think of what a dollar is, expressed in gold. All they think of is its purchasing power, expressed in the particular commodity they need, and as they do not need gold, they never think of ascertaining the gold value of a dollar. "How much of this can I buy with my dollar, or how much of that?" is the question that immediately concerns them. That's the same question we're asked, and when we tell them that on our experimental basis, one Value Unit equals nearly 3 of their dollars, they can form some idea of what one is worth in terms of purchasing power.

Neither do the merchant and store-keeper bother their heads about the so-called "intrinsic value" of money. In fact, it is doubtful if one man in ten thousand could tell from memory how many grains of gold the dollar represents. It is only the money speculators and usurers who are really concerned on this point, and who use it from time to time to intimidate the public and create a panic. Exactly! Don't want inflation, panics, etc. Switch to Value Units, help form the VEN and make it work with all your purchases, and so doing, help drive certain forms of absentee ownership businesses with no  responsibility for their actions, from the face of the earth. Or, just look at your wallets and swipe cards and admit that none of it was or ever can be really yours and admit that you are a dutiful slave of their system. Bow down and take it, etc. and when they're through with you, please just go off somewhere and die quietly, as it is your ecological duty to mother earth to do, etc. (what rubbish!)

Evidence of the use of ideal money is furnished from experience, in this and other countries, by the inconvertible note currency. "Governments," says Francis Walker, "have frequently issued paper money without adequate provision for its redemption in gold and in silver, without such redemption, in fact, taking place, and sometimes without redemption being promised, and yet that paper money has circulated as rapidly as gold or silver would have done, has been taken as freely in exchange for commodities and services, and even in some instances has maintained an actual value equal to that of the amount of the precious metals to which it was nominally equivalent: The paper money of Massachusetts, for the greater part of the period 1690 to 1710 20 years only; the paper money of Russia for the twenty years following 1768; the so-called continental currency of the American revolution which was deliberately sabotaged by British (Bank of England) counterfeiting and for NO OTHER REASON, for a year and more after the first emission; the paper money of Prussia for no inconsiderable period of time, all circulated freely, even without discount in specie." And again he says, "The so-called greenbacks of the American Civil War, never, from 1862 to the close of 1878 16 years, lost their currency in the smallest degree. At their price they were always taken readily, eagerly. Men never sought to avoid their use by taking gold at a premium, or by resorting to barter or credit." This last statement is remarkable, owing to the fact that the United States government dishonoured this currency by the famous — or rather infamous — exception clause, refusing to accept it in payment for duties and interest on bonds. The reason being of course that the BANKERS holding those bonds did not own that money, it was not theirs, so they would not take it. Are you getting the point yet? ... And now, having dissolved the immoral partnership of bankers with the government, on what basis will they in future operate? How and by whom will money be issued? How shall it be redeemed? The first thing to be said is this: that with the field entirely free and untrammelled by legislative obstructions, there is room for the best possible financial system to grow up which will be the natural outgrowth of industry. The best, most useful, most stable institutions have grown up under the least restricted conditions. Such institutions, coming into existence under perfectly natural conditions, must necessarily be better adapted to the wants of men than artificial hot-house methods of governmental institutions. Certainly, but there's only one problem; certain people who think themselves superior to “the masses” will not have it so. They must control where they cannot possibly command. And they have and they will until people everywhere wake up to the reality of their situation and JUST SAY NO.

It is difficult — in fact unnecessary — to predict what banking system would take the place of the present National banks were they swept away. At this point we do not advocate ANY political action whatsoever to sweep anything away. We advocate “come out of her, my people” as the only just solution. Good systems of finance, like all good social institutions, are things of growth, and they conform naturally — if let alone by law-makers — to the needs of the people. What those needs will be ten, twenty, fifty years hence no man can foretell. To arbitrarily fix a system of banking which is incapable of variation or adaptation to social growth, is like the Chinese method of keeping their women's feet encased in children's shoes. 
No offence intended to any modern Chinese. 
Banking methods should adapt themselves to the requirements of trade, and not trade to the fixed systems of bankers. Banking should exist to facilitate commerce. Under our present system, commerce exists for the benefit of bankers and is compelled to adapt itself to their whims and opinions. Numerous plans have been proposed to supplant the present system, and there is no question but that experience would soon determine what system was best fitted for the conditions. The scheme which appears to me the most scientific, most capable of variation and expansion, and in accord with the principles I have described, is that known as the Mutual Banking System. This system is a co-operative plan by which the members of a community organize themselves into a Mutual Banking Company, the business of which consists in issuing notes, or paper money upon goods which are pledged for its redemption. Every member of the community may become a member of the company, providing he has acceptable goods and desires to monetize them. (It is evident that certain goods are by their nature more difficult of monetization than others. Thus goods readily perishable, such as fruit, vegetables, dairy products, etc., are less available than houses, steamships, machinery, etc. With the destruction of commodities, money issued upon them would have to disappear. Money would not long remain in circulation after the wealth of which it was the symbol had ceased to exist.) Every member of the company agrees to accept its notes in payment for services and commodities. No regular rate of interest for borrowed money is exacted, but a charge just sufficient to defray the running expenses of the bank. In other words, there is no bank stock and therefore there are no dividends. 
  
Everything here is what we expect each of our independent exchanges within the VEN to do. Riegel never got into it much, but Kitson summarized quite a lot here. The only difference is this: accepting commodities in exchange for Valuns would be apart from the business of accounting and transaction clearing, therefore it would be distributed among various separate private entities that would each have accounts within a local exchange and each such exchange of Valuns for commodities would be summarized in the form of standard debt instruments; a bill out to a year, a note out to seven years and a bond out to forty-nine years, the fiftieth being a jubilee year. In all instances, commodities would have to pre-exist; we are not going into the hazardous business of issuing Valuns for commodities that may exist in the future or for crops that have not yet even been planted. Self-financing methods for agricultural production as for labour may be entertained as required; the individual farmer might even be considered analogous to an individual artisan craftsman who is paid up front a certain percentage and the rest at harvest.

Return of the bank notes borrowed releases the goods pledged. These bank notes would be issued as now, in units, multiples and fractions of the dollar. Present monopolistic law in this regard would disallow the creation of any coins or of anything that is to be circulated having less purchasing power than a dollar. The smallest fraction likely would be the ½ Valun, then the 1 Valun, 2 Valun, 5 Valun and 10 Valun. These would take the visible form of V-Checks which would be advertising on one side and the standard design for each exchange on the other, all approved by the proposed International Valun Exchange Society or IVES. There would be so many designs that counterfeiting any of them would be a frustrating undertaking. We will not have ourselves set up like the American Continental or the French Assignat, both deliberately destroyed by Bank of England counterfeiters! They would constitute money in the strictest sense; that is, they would be merely the medium of exchange divided into units of purchasing power. This system would place all commodities on an equality with gold. In other words, it would do for commodities what it was once supposed republicanism would do for a nation, provide equality of conditions and of opportunities for all its members. Yes, recall that Riegel was a Democrat, not that it ever mattered, as he regarded all political activism as a waste of time. Too bad he didn't see past the appeals to public approval of attempting to gain the support of bankers and politicians. They have made their own deals and shall sink or swim by them. The way anyone becomes socially irrelevant is for more people to stop listening to them. Such has already become their fate to a great extent, so much so that it is a recognized trend.

Mutual banking (See " Mutual Banking " by Wm. B. Greene. Published by New England Labour Reform League) is not a very modern idea. It was proposed years ago by Beck, Proudhon and others. The former suggested the application of what is known as ''Credit in Account," the latter "Bills of Exchange.” In attempting to solve this gigantic question, I disclaim any intention of inventing a banking system. I claim that the money problem will be solved as soon as governments cease monopolizing and interfering with the currency. Repeal of all laws prohibiting and restricting the issuing of money, would call into existence numerous systems, competition among which would lead to the survival of the fittest, which is the natural solution of the banking and currency question. Well, 120 years has passed. We have endured many fallacies, lunacies and follies brought on by bankers wielding tremendous clout over governments to see it their way and do as they are told, or else. In this way, millions of people have died, perhaps more in the last century needlessly dying than in all the other centuries of recorded history combined. And their projected philosophers, apologists and opinion makers continually dare to proclaim that wars were the reslt of religious conflict (the usual target for blame) when in fact it was the bankers who masterminded these schemes in order that they reap profits while other men died. The real tragedy is that men so willingly went along with it rather than seeing that war is a scam, revolution is also a scam, and that behind it all are the merchants of death who know they'll manage a way to escape to reap the profits and live lavishly while other people's lives and property are sacrificed. So we are about devising another banking system, except we'll call it an exchange system as banking is not even a word that belongs to us to use. Even the word exchange may be subjected to the usual phony intellectual property garbage that plagues the world today, as we move forward. After all, there are people with their interests out there who seemingly are in positions to demand that they own the words we use and are therefore entitled to some consideration for their use, astonishingly STUPID as that is!

That strenuous objections will be urged against the repeal of laws relating to currency, and the taking from governments the power to issue and control money which I have herein advocated, is both natural and inevitable, since it means nothing less than the dethronement of gold, of money monopoly and privilege. It will be the old Temple of Diana question over again: "Sirs, ye know that by this craft we have our wealth and our craft is in danger to be set at naught." To those also who believe in the paternalistic functions of government, protectionists, socialists, nationalists and greenbackers, this proposal will be met with ridicule. Like the Parisian in the 17th century, who, hearing it said that Venice was governed without a king, died from laughter at the absurdity of the thing; so the idea that money can be issued and circulated without the force of law, will seem to many preposterous. Freedom seems preposterous to those conditioned to be slaves. The story of Plato's Cave comes immediately to mind and yes, there are more people who would rather exist in Plato's Cave than try freedom outside it. Will it take another 120 years, or do we even have that long before the existing follies of the present world destroy us all?

To those, however, who can regard the subject calmly and dispassionately in the light of reason which contrary to sceptics we have not yet even tried, they will see nothing visionary or impracticable in the suggestion. They will see how the great industries of the country, the manufactures, means of transportation, facilities for insurance, etc., are operated successfully by individuals, corporations, and voluntary associations, to a degree of perfection so far unattainable by any form of government. Recognizing that the perfection of these various operations is due to free competition among individuals and groups of individuals, and to the absence of restriction regarding voluntary associations, they will naturally infer that a similar standard of perfection should be reached in regard to money and currency, providing free competition among bankers and banking systems, be permitted. Nay, more, they will recognize that since present governmental control of the currency is the true cause of the insecure and unstable system of credit upon which at least 95 per cent of the business of this country is now transacted, and that the uncertainty and insecurity surrounding modern commerce is entirely due to this unreliable basis, that abolition of governmental restrictions will lead to the adoption of a sound and stable foundation for exchange, and of a system that will be naturally fitted for, and adapted to the growth of trade and industry. I certainly wouldn't count on it. For one thing, since at least 1913, the year the Federal Reserve system came into existence, government has become the property of the banking monopoly. This was a fact that Riegel, Kitson and all idealists on the subject of money neglect to be reminded of and therefore much of what they say concerning implementation or who should be involved or what should be done about it is frankly rubbish! Talk is cheap, action is dear and the right action, potentially priceless or lethal depending on whose toes are pinched or ox is gored. Whole categories of business go by the board and are expected to survive simply because they have succeeded so far. Far too much is simply taken for granted, per usual. But what of those who live from usury? Those are people who assume they have rights and privileges that will ultimately be challenged as the bigs devour each other in order to survive, for Kitson was right concerning usury, as both a practice and a system; it devours itself.

Today money, in the form of credit notes, are issued by individuals and firms to an enormous extent, most of which consist of promises to do the impossible; viz., to redeem them in a certain commodity, or a certain special kind of money, the supply of which is far less than that necessary to meet the demand. The result is, as I have already shown, that the world is constantly in danger of financial panics. All that is necessary in order to precipitate a panic is for a certain proportion of the creditor class to demand of the debtor class fulfilment of its obligations. It is precisely analogous to those panics that the cry of "fire" gives rise to. And just as the chances for and horrors of panics increase, as the number and size of building exits are reduced, so the danger and devastations of financial panics are relatively great, the more the currency of nations is limited and restricted. The truth of this is hardly ever touched upon in the lengthy and pompous productions of professional academic economists, who I suppose would prefer students to assume that these great debacles never happen or happened to someone else long ago or far away and that nothing of the like may ever happen again. I can remember my own days as a young student of economics, when I certainly thought as much. Well, these events did happen and they destroyed countless lives of real people, some of whom had real stories to recount of what happened to them, even if they were bewildered concerning what actually caused them. All it takes to cause the music to stop is either someone saying, “I have no more money to pay you,” or “I will no longer take your money,” and then terrible things begin to happen as a rude Rube Goldberg chain reaction of real events unfolds until where once stood an apparently impervious economic edifice now stands nothing, where only smoke and ash remains. And yet, things might have been different and better and still could be, if it weren't also true that people stubbornly and stupidly tend to rebuild the same institutions on the same shoddy models as those that went before and proved fatal to society, basing them on structural impossibilities like fractional reserve lending, absentee ownership corporations, limited liability, intellectual property, government monopoly of money issue, and especially at the base of it all, usury.

It will be objected that by giving to the people full control of the currency with the right to issue money, the chances for dishonesty will be enormously increased. What will prevent banking institutions from issuing money far in excess of their ability to redeem? That's exactly what fractional reserve lending is. What difference if the notes are those of the local bank or of a national bank or the central bank? It is always just the same. In reply, it may be asked, what is it that today prevents individuals and corporations from over issuing promissory notes, and incurring liabilities beyond what they can properly discharge? This too is done all the time; obligations are assumed when there is no guarantee that a single soul will live to see tomorrow, let alone have a job, let alone be able to pay back what's owed. The error was not to separate these lending activities from the transaction clearing process to begin with. The other was to lend what one didn't have to lend, that's cheating and swindling on the part of the lender. Kitson says - First, their honesty. Second, the fear of the shame and disgrace that dishonesty incurs upon individuals in all civilized communities. Under the guise of law, officials are now able to practice dishonesty without reaping the penalty and stigma which would otherwise attach itself to them, were they acting as individuals or as private bodies. Third, difficulty in incurring liabilities beyond a certain limit, which is gauged by their credit. Under free conditions, whilst there would be no physical force to restrain one from attempting to make excessive issues, at the same time there would be no power compelling people to accept them. At the present time the legal tender act virtually compels acceptance of government currency, but in the absence of governmental interference, persons would be free to refuse payment in a form that was not entirely satisfactory. This would lead to as much discrimination the correct use of the word, not its more modern interpretation and care in financial transactions as is now shown in the purchase of commodities. It would lead to a better public sentiment, and stimulate a greater demand for honesty than now prevails. Kitson said earlier that one cannot expect an honest monetary system where people are dishonest, and since that is absolutely true and there's no way around that folks, even a specie based one could be rendered dishonest simply by dishonest tendering of faked specie that might not even be detected until it was melted down years later, as with the tungsten core gold bars and similar capers; those involving “whizzing” of gold coins (less often with silver) and then collecting the minute fractions for further smelting into more gold coins. If purchasing power to buy “stuff” is worth it to someone to steal, where there is the will, there will be a way. However that may be, all of it is and will always be criminal activity, which is to say that despite the same be countenanced by “laws” that exclude “privilege” or “the too big to fails.” Hence and by no coincidence, Kitson continues:

To make right conduct the sine qua non of commercial success, is the surest means of establishing the practice of right conduct. A people, who seek to become virtuous by force of law, will end by becoming a nation of hypocrites. On the other hand, it is but too well known that legislation creates and perpetuates the necessity for dishonest practices. There is scarcely a law passed that does not create some crime. Tariff laws produce lying and deceit; liquor laws corruption and adulteration; game laws murder; Sunday laws promote drunkenness, disease and death, and so on. Acts which in themselves are not immoral are made offences by law.

"The garden of the laws," says Séverine, "is full of ironical plants of unexpected flowers; and by no means its slightest charm is this subversion of the natural order, whereby appear at the end of stems and branches fruit just the opposite of that which is promised by the essence of the tree or bush. The apple-tree bears figs, and the cherry-tree medlars; violet-plants yield sweet potatoes, and hollyhocks salsify. It is delicious."

We want it understood that just because dishonest lawyers have given the practise a bad reputation down through the centuries doesn't mean that lawyers as a group are not particularly suited to seek the truth. We seek those who are honest to help bring about the lifeboat solution this blog and its ideas represent. Under free conditions, the war between honesty and dishonesty — between the powers of light and of darkness — may be waged with full assurance that the powers of good will prevail. Under our present legalized systems, the conditions strongly favour trickery and the activities of rascals. The chances are in favour of the evil succeeding. Look at the extremely wealthy classes of today. Are they conspicuous for honesty and integrity? Are they very noble in character? And do they owe their possessions to adherence to sound ethical principles? On the contrary, are not the most wealthy usually conspicuous for the questionable methods by which they have achieved their riches? Would anyone in their right mind out there be able to say with any seriousness that hedge fund managers who are worth billions, acquired their wealth by honest means, or that said required actual productivity of anything worthwhile?

Would it not provoke a smile to be told by a modem plutocrat that "honesty was the surest means for acquiring wealth?" Of the great fortunes that have been amassed during the last fifty years, there is not one that may not be traced, directly or indirectly, to some special privilege created by law by which individuals have been furnished with the power to exploit their fellow citizens. Instance the tariff laws, which by checking imports and cutting off foreign competition, have permitted manufacturers to reap enormous profits; instance land grants made to railroad contractors; franchises and monopolies granted to street car companies, to gas, water, and electric light corporations; and lastly to national banks, by which the few are permitted to use the nation's credit by paying a low rate of interest, whilst charging the public whatever their exigencies — which bankers strive to raise to the highest degree possible — compel them to pay. Look, too, at the history of the railroads in this country! What else is it than a history of plunder, brigandage and blackmail, committed by men under the immediate protection of law! That more and more people know these realities brings both lawyers and law itself into low repute. Ultimately, even though it has gone on now for a couple hundred years at least, it cannot end well.

Speaking of the dishonesty that characterizes public affairs -and this from 120 years ago, proving it was just the same as today, and the protection the law affords to those guilty of immoral acts, Mr. Isaac L. Rice says, in the Forum, October, 1893: "All our public affairs having become permeated with the poison of dishonesty, it necessarily has affected our quasi-public relations as well. Indeed, our great public corporations, such as railroads, are in themselves species of communities, of which the security holders are the citizens; and in these communities the right to steal under certain legal forms and sanctions has, in certain directions, become fully recognized.

Whatever frauds are perpetrated under advice of counsel or by resolutions duly passed by a majority vote at a regularly constituted meeting, security holders have long since come to regard as unobjectionable, or at least as beyond the reach of successful attack. Limited liability. Here, too, the line between private honesty and public honesty is sharply drawn. Many a director who would exercise the most scrupulous care, if any of his constituents had appointed him trustee in a private matter, has not the slightest hesitation to vote in his own private interests for acts that, from a moral point of view, are nothing less than sheer robbery of those who have confided to him the management of their corporate affairs.

"Indeed, quite frequently, as soon as a board of directors is elected, it considers itself the absolute owners of the property, to manage or mismanage as its private interests may dictate. These private interests sometimes are in such direct conflict with the interests of the corporation as to involve it in bankruptcy. Whenever this happens, the courts are appealed to in order to continue in irresponsible power the very men who have now administered their trust. And the courts generally entertain favourably such an appeal, as they have gradually succumbed to a growing custom not to enter into any inquiry in such cases as to the causes bringing about the bankruptcy. In fact, the courts are in such cases considered as little more than instruments for registering the wishes of those whose dishonesty is responsible for the ruin of the corporation.'' Both underlined and italiized in the original.

Here we find recognition of the fact that under protection of and by virtue of law, men will commit acts which in their relations with each other upon matters not affected by law, they would be ashamed of committing. May we not say with Thoreau that "law never made men a whit more just, but by means of their respect for it, even the well-disposed are daily made the agents of injustice!"

It is notorious that of all debts contracted by men, none are paid more promptly nor with less effort to evade, than those debts that the law refuses to recognize, viz., gambling debts. Oh, but this has changed as debts representing bets on speculations; derivatives are given higher priority than more classically “senior” that is honest debt. The necessity for taking all affairs pertaining directly to industry and finance out of the hands of the government, out of the power of legislators — in short, reducing government to its sole rightful function of administering justice, of protecting life and property, is well given by the same writer, Mr. Rice, in the following words: "It seems paradoxical to say that the individuals composing a nation may in the main be honest, while the nation in its public capacity may be dishonest. But the paradox vanishes when we remember that in its public capacity a nation is represented by its rulers, and these may be dishonest while its constituents are honest. In the struggle for political preferment many factors enter into play, and not the least of them is the political apathy of the electors occupied with their private affairs, who drift more or less carelessly with the current, forced into devious channels by the energy of dishonest demagogues.

"We are the fortunate possessors of a land of inexhaustible resources, able to maintain in prosperity a rapidly increasing population, and should therefore enjoy continuous progress and prosperity, with only occasional reactions when the development may have become over-rapid. Why, therefore, are we subjected to panics so frequently recurring with growing intensity, so that we seem to be beset by adversity, rather than in the enjoyment of that prosperity which, in view of natural conditions, ought to be our portion?

"To me the reason seems clear. Notwithstanding the well established fact that in our private capacity we are an essentially honest people, and indeed our private honesty stands unexcelled among all peoples, the same cannot be said of us in our public capacity; and this deficiency in public honesty begets want of confidence, and want of confidence is the cause of all commercial panics."

The solution we must naturally infer from this is, to take away from public bodies the privileges and monopolies they now enjoy by law, privileges which permit them to reap the rewards without having to bear the social responsibilities which should accompany all such privileges. By repealing those laws under which such privileges are maintained, individuals and corporations undertaking business will be compelled to shoulder all the responsibilities pertaining thereto, and will therefore be held accountable by the public for their conduct. We too call for an end to limited liability, but don't hold your breath.

In conclusion I claim to have demonstrated:

1st. That the present orthodox system of political economy is a false and fraudulent system, and is based upon principles utterly fallacious and immoral. Yeah we know, and after 120 years, much is just the same.

2d. That the true science of economics, dealing as it does with economic conduct, is essentially a moral science, and its principles must agree with those of ethics. We agree and hopefully this blog will be consistent with that.

3d That an ideal standard of distribution is as important in economics as is a moral standard in the science of ethics. Maybe, but we disparage the use of the word “ideal” on philosophical grounds as inappropriate to describing the real world. This is not necessary. A better distribution would result from an honest monetary system but would gradually appear over time, probably not too much time either.

4th. That a scientific definition of wealth must be in positive terms. The usual definition in terms of the ability for exchange leads to a contradiction. We agree, but Kitson never saw it completely our way; true wealth can only be that which provides an income; there is a distinction between that which is capable of providing a living and mere “stuff.”

5th. That values are ideal creations, abstract relations, and cannot possibly be "measured” nor can they be expressed save by numbers; hence, gold can neither measure nor express values. Agreed, but the word “abstract” is certainly preferable to the word “ideal” any day. Furthermore numbers can and do help people measure their choices in pursuit of what to purchase all the time. It's “as close as we please” without actually saying we are measuring any value with our money. We routinely understand this as “getting our money's worth,” even though our money has no “intrinsic” value; what we are constantly seeking is how to close a transaction with our money for either goods or labour that we sold (opened a transaction with) to obtain that money.

6th. That a standard of value is an absurdity — a nonentity. Agreed. The best we can ever hope to achieve is a reference transaction, a “Figure 1,” a “compared to what” that involves some other money at a specific point in time; the inception point of our Value Units, every last one of them!

7th. That whilst there is no such thing as an invariable unit of value, there may be an absolutely invariable unit of purchasing power. I have shown how such a unit may be obtained. Riegel and Kitson both sought to use a specific dollar at a specific time as a standard. Through experience we understand that a monetary language must be far more universal than that and at the same time slay the dragon of precious metals at the same time. There's only one way to do it, by choosing as our reference transaction, a specific date at which a specific quantity of gold (and silver) sold for a specific number of dollars (or any other currency) and make that equal to 1,000 Value Units. As time changes and the speculators have their way with dollars (and all other currencies) and specie (silver, gold, platinum, whatever), since everything else is a commodity, the number or quantity of these to exchange for a Value Unit may change, while the Value Unit remains invariant to its own price structure; how anything is monetized in Value Units.

8th. That in omitting the element of TIME from their definition of a unit of purchasing power, and instituting a material unit — a commodity unit, economists have left the industrial world at the absolute mercy of a clique of speculators, whose incomes are derived from alternately depressing and stimulating production. Agreed! This is a fundamental truth reinforced by this blog and the reason for suggesting something else.

9th. That money is not, scientifically speaking, a part of the national wealth, but becomes wealth to individuals only by the power which its monopolization gives to its holders to exploit industry. Agreed! This also is a fundamental truth reinforced by this blog.

lOth. That the monopolization of money is due solely to special laws, restricting and prohibiting the issuance of money except by privileged institutions. Agreed! This too is a fundamental truth reinforced by this blog.

11th. That the Gresham Law is a ridiculous fallacy. Disagree, and Kitson should have known better too. Gresham intended it to be assumed that “good” money was the more expensive which would of course be driven out of circulation by “bad” money, but in fact when restated, “cheap money drives out of circulation more expensive money,” it becomes a natural law right away and quite incontestable!

12th. That money can properly discharge the functions of a medium of exchange, and a just standard of deferred payments, only by being freed from its unnatural alliance with specie, and being legally unrestricted. Agreed! This too is a fundamental truth reinforced by this blog.

13th. That financial panics, under our present usurious, monopolistic, monetary system are inevitable. Agreed! They may not only be inevitable, they may be necessary in order to keep the same terrible old system going.

14th. That the parent of interest and the cause of poverty, involuntary idleness, over-production, general rises and falls in prices, is a monopolized currency. Agreed! We offer a solution that accomplishes a few things right from the start that assures that all the money actually belongs to those who issue it, that makes savings a matter of greater personal importance since no money is ever involuntarily used as a “reserve” to base usury lending practices, thst provides a money free from the commodity speculator, that ultimately would end war.

15th. That since these evils which afflict society are directly due to laws, under the fostering care and protection of which they have grown to their present gigantic proportions, their removal is possible only by abolishing all laws restricting, hampering or interfering in any way with the issuance of money. We are willing to work alongside the present system until that system fails once more. Then we will be in a position to have our say, our day and our way! Not until. Those who have figured it out, and they are few, are admonished to help us right now, especially lawyers.

16th. Finally, since the power to issue and to control the currency of nations has been arrogated by governments and always employed by them as a means of enriching a privileged few, and as an instrument of oppression against the people, this power should be taken from them and revert to the people to whom it rightfully belongs. Agreed! But this too requires political action and there can be NO COMPROMISE with the present system, therefore the only reasonable course is “come out of her, my people.” Mystery Babylon shall certainly fall. We look forward to that day, but we shall do nothing whatsoever to hasten it as we have no power nor seek any in that regard. 

Sunday, January 25, 2015

#25.19 A SCIENTIFIC SOLUTION OF THE MONEY QUESTION – Arthur Kitson – Part 19

CHAPTER XVII (Part 2).
USURY.

Every certain period there is a universal breakdown; panics and bankruptcy become worldwide; interest-bearing wealth is swept away, and equilibrium is restored only after interest-bearing capital has been greatly reduced. “In fact, capital is being constantly devoured to pay interest on other capital. Here is a builder whose vacant house refuses to pay the ground rent; finally the house is seized for the rent. There, a manufacturer, unable to pay the interest on borrowed money, is compelled to assign his machinery, buildings and grounds to the usurer. This is of such ordinary and everyday occurrence that it excites no comments and scarcely any notice; yet it is only by the continual destruction of capital that rent and interest are maintained. Wealth under usury devours itself. Startling as it may seem, it is an indisputable fact that panics, bankruptcies and failures are absolutely necessary in order to keep alive the system of usury. Wealth cannot be produced at a sufficiently rapid rate to meet its demands; hence capital, after devouring its own children, devours itself. What monster in fable or history can rival this modern monster known as usury? The first mistake is to assume that the problem is of modern origins when it is of very ancient origins. It was, was not and is again and it shall pass on to its demise.

The first capital sacrificed to this Moloch is that which is the least strongly entrenched. It is the small capitalist who goes under first, then the next, and so on, until the wealth lent on usury is reduced to balance production. The most strongly entrenched is that which devours the less powerful. By this means national debts and government bonds bear interest in times of greatest panics and business depression; and this is why they are considered the most desirable and safest kind of investment. Usury, like gravitation, causes large bodies to attract and eventually absorb smaller ones. The small capital of individuals is being constantly absorbed by the greater capital of corporations. This is its inevitable tendency. The forces of attraction and absorption are as strong, constant and relentless in the monetary as in the physical world. The analogies are exactly correct and the consequences in the mergers and acquisitions line are the inevitable result. Such things are NOT good.

Usury," says Lord Bacon, "bringeth the treasure of a realm into few hands."

Usury is suicidal, and abstinence leads to death. The more abstinence is practised, the more capital is piled up; the more capital, the greater the amount swallowed by interest; the greater the volume of wealth taken on interest, the heavier the burden on labour; and the heavier the burden upon labour, the less wealth labour is capable of producing. Usury is, therefore, its own destruction. Abstinence leads to stagnation; consumption to wealth production. Consumption of wealth by the factors of production increases productiveness. Abstinence is unnatural, wasteful and contrary to sound economic laws. “There is that scattereth," says the wise man, “and yet increaseth; there is that withholdeth more than is meet, but it tendeth to poverty."

The difficulty economists have experienced in justifying usury is nowhere better shown than the way in which Bastiat's illustration has been made to do universal duty. So often has it been quoted that one is almost led to believe that the right of usury stands or falls with its verification or disproof. The story concerns two carpenters, James and William, one of whom, at the expense of ten days' labour, produces capital in the shape of a plane. The plane is a common hand tool used for planing wood. The other, for some unaccountable reason, instead of making a plane borrows his neighbour's, proposing at the end of twelve months to return him a new one. To this James, the capitalist, objects, on the ground that by lending it he deprives himself of the advantage its use affords in lightening his toil, and for which he is entitled to compensation over and above the return of a new plane. He demands, additional to the new plane, a plank. The agreement is concluded, and at the end of the year James receives a plane and a plank. He lends the plane again for another year, receiving another plane and plank, and continues to lend, year after year, until his son becomes possessed of the plane, and he in turn acts the part of capitalist by lending the plane on interest. This annual gift of a plank is called by economists a natural and just remuneration for the "power which exists in the tool to increase the productiveness of labour." William, the borrower, is said to be no worse off than if he had not borrowed the plane, since its use has made his labour more productive. This is substantially the celebrated argument of Bastiat, that has been cited thousands of times as a clinching demonstration of the justice of usury. Would to God the system could be as easily and effectually annihilated as this weak and stupid argument!

It will be noticed that the illustration puts the very best phase on the creation of capital. It is the carpenter who, by his own labour, makes his own capital. This is not illustrative of the modern plan. Carpenters are nowadays hired to make capital for others, never for themselves. However, to return to the story. Its refutation is contained in its want of probability, its absurdity. Why should James lend the only plane he has?  He made it to use. What is he going to do without it? Make another? Then who supports him while he is making planes? Again, William is also a plane maker, since he must make and return a new one at the end of the year. Why does he not make one at the beginning of the year and avoid borrowing? Why cannot William turn capitalist? The illustration is absurd on its very face. Men do not lend that which they have themselves immediate use for. It is the surplus wealth that is converted into capital, not that necessary for immediate consumption. In order to make the story analogous to that which it is intended to illustrate, James should have at least two or more planes for which he has no immediate use; in which event his demand for a plank in compensation for the loss of advantage which the use of a plane affords him, is nonsense. He is merely lending that which he has no use for; hence, the act of lending entails neither loss, deprivation, nor inconvenience of any sort. He gets back a new plane and is no worse off at the end of the year for having made the loan. On the contrary, he is much better off — better in several ways. First, in receiving a new plane he preserves its value. Were he to keep his own it would gradually deteriorate. The wood might warp and split, the steel rust, and ultimately the plane become useless. Second, by lending, he helps William. William is a member of society just as James is, and the condition of society is dependent upon its members. The more William advances, the better for society and the better for James. This is a point that capitalism as a cult looses sight of in its attempt to legitimate selfishness. Sorry, it cannot be done. We are all on this tiny planet together and each one's success helps us all and each one's failure hurts us all.

The condition of individuals affects society, and the condition of society reacts on all its members. This fact the gospel of selfishness is utterly blinded to, notwithstanding its vast economic importance. So you see, it wasn't new in Rand's day. Third, James, although a carpenter and a capitalist, is supposed to be a man. A man is a being possessed of feelings and sympathies; hence he will be gratified in being able to assist William, especially since it costs him nothing. He will therefore be a gainer morally and materially. Current political economy entirely loses sight of the fact that under the terms capital and labour, it is really dealing with flesh and blood and not with machines. Unfortunately for those who have uncritically bought into the Ayn Rand philosophy, which is really the usurer's philosophy, if economic dealings are more or less a matter of getting over on others, then of course “sacrifice,” in the bourgeois morality sense of it, is weakness and the ability to cold bloodedly swindle someone out of their property, criminal activity par excellence, is lionized (celebrated as though they were people to look up to; idolize). This is where virtue and vice are turned upside down in pursuit of personal gain at everyone else's expense; real selfishness.

If James finds no satisfaction in helping William, and in promoting the welfare of society, he is not a fit nor useful member, and the sooner he, and his kind, die out, the better for society. Got that? That is the appropriate response, not to lionize (celebrate or idolize) such and so as someone great just because they have managed to swindle billions from everyone else. Understood? A system that tends to encourage and promote the growth of such a useless class the “useless eaters” in fact (choice among their usual tactics is projection – blaming someone else for evils of their own cause), is altogether contrary to the development of a higher and better condition of things. It is a system that perpetuates the survival of the least useful members of society. And here is the root of the whole system of usury. It springs from an anti-social spirit — a spirit of the meanest and most despicable form of selfishness. Usury is not the payment for loss of advantage which the usurer suffers by depriving himself of the use of the thing lent, it is a tax upon the advantage which the borrower is assumed to derive. Its spirit is that of petty jealousy, of envy — that "eldest-born of hell." It is a fitting response to want to distance oneself from such as these as much as is humanly possible; not to associate with them on any level, not to socialize with them, seek their counsel, have anything whatsoever to do with them as far as it is possible - “come out of her, my people.”

Our modern usurers never urge their own deprivation by lending, in justification of their demands for usury. It is the advantage such a loan will be to the borrower that they figure on, and it is this that governs their demands; hence they strive to increase the urgency for the need of their possessions among others. The more needy, the more helpless, the more precarious the condition of society, the higher the usury which they can command. So long as production is sufficient to meet the demands of usury, usurers are benefited by social destitution, since it gives them power over the lives and property of others. THAT is what they seek, to rule others by sheer FORCE. Their understanding of society is a despotism only covered by a veneer of civilization. To all the great advances made concerning our understandings of the “rights of man” before any government over the past few hundred years, they offer wry acceptance until such time as they can remove their gloves and smash in the faces of the lowly. Rand's philosophy is that might makes right or the man with the biggest muscles (pretending he's got the most brains) wins the right to rule over or ruin others.

That the interest of usurers is antagonistic to social welfare, a moment's reflection must show; for the welfare of society is promoted by the creation of wealth and its equitable distribution, in the independence and well-being of all its members, and in their freedom from debt. On the other hand, usurers live upon the indebtedness of society — they are constantly encouraging the creation of debts in order to make society and its members subject to them. In proportion as men grow in wealth they cease to be borrowers; they escape a condition of bondage into which usury places them. Witness the zeal with which money lenders urge governments of nations, states, counties and municipalities to incur liabilities. Every scheme that can be devised for launching public bodies into debt and keeping them in that condition, receives the hearty support of those who live on usury. Expensive and often needless public buildings, law courts, enormous standing armies, costly navies, experimental ordnance works, salaried officials, pensions, in fact every measure that increases taxation is heartily favoured by this class. Witness, too, the determination with which usurers are preventing the United States from paying off its national debt, by means of the gold standard, compelling the nation to be a perpetual debtor to the moneyed class. Of course this is all continuing to this very day, the crash of 2008-9 bought off by more government red ink, the next will be just the same, while meanwhile those unable to keep up their payments have their assets seized. They'll say that wasn't their intention: no, it was always their plan.

The interest on the public debt of the United States amounts to $40.41 million annually," says the Arena writer before quoted. "The interest on municipal, school, country and township debts in the United States is $56.75 million per year. The expenses of the United States, exclusive of interest and the paying off of the standing indebtedness, are now about $350 million yearly, and the cost of state, county and municipal government is $450 million per year. At the very lowest estimate, $897 million must be charged yearly to government in the United States, not including the payment of the principal of public debt. This, representing money spent outside of regular business, amounts to $8.97 billion in a decade. Adding it to the former sum, the excess of interest on private obligations over the increase of wealth, we have $16.97 billion as the sum which the citizens of the United States fall behind their indebtedness every ten years. -and this was just 120 years ago, we're considerably worse off today- In view of such figures as these, it is not difficult to see why we have periods of business depression every ten years, and terrible financial panics every twenty years." We have them more often, but the books are cooked and more and more people go on “government relief” all the time, otherwise there'd be a … something far worse, and nowadays barely one in ten thousand understands all the reasons why, let alone having anything like a sound solution.

"The tendency under such conditions is to have all the wealth which is not used to feed and shelter and clothe the race, pass into the hands of the money lender. There is a comparatively trifling exception to the rule. About five per cent of all who start in business leave it with more than they began with, and but a portion of their gains can be charged to interest. The more stable, and the largest houses of business, however, realize large returns from interest-taking. What wonder is it then, that the business of a country has to go periodically into the hands of a receiver in order to straighten out its accounts and begin anew?"

Talk of interest being an economic factor in distributing social wealth! It is a mill-stone hung about society's neck! A weight that grows heavier day by day — a cancer that takes all the nourishment from the body politic and which will inevitably destroy society, unless society destroys it. -which also has happened and shall happen again! Usury has woven a chain that has enslaved the whole human race -except perhaps the “rogue states” which is why they are “rogue states”-, and owing to the insidiousness of the system, its results appear to have hitherto escaped detection. This is where the Mystery in Mystery Babylon comes from; most people have no clue as from whence the evil comes.

Let us take another view of this most important of all the branches of economics. In the treatment of social problems affecting different classes, economists have laid themselves open to a charge of inconsistency and of injustice. In no instance is this inconsistency more conspicuous than in their different methods of treating usury and measures for the relief of the poor. We are told that usury or interest is the reward of abstinence, and that this is a just reward for forbearing to consume; and that profit is a surplus left to the capitalist after he has been indemnified for his outlay, "the amount of which he can afford to spend in necessaries or pleasures, or from which, by freely saving, he can add to his wealth." (Ibid, Mill)

In the chapter on Economics and Ethics, I showed the absurdity of the phrase, "reward of abstinence;" that this so-called "reward" was unnatural, and merely a thin disguise for hiding what is in reality nothing else than a system of robbery and extortion. Abstinence never did and never can create wealth; it is absolutely unproductive. All that it takes in the shape of reward, is taken from the producer. Economists insist, however, on the wisdom and necessity of giving rewards over and above actual indemnification for outlay. Rewards and gifts to capitalists are economically advantageous they say. Observe, now, the contrast in dealing with the labourers. In treating of popular remedies for low wages, both Malthus and John Stuart Mill expatiate (spend a tremendous amount of effort in words) upon the evils attending all schemes which offer gratuities (freebies) to the working classes, as tending to pauperise them. Rewards, gifts and gratuities are exceedingly mischievous when the recipients happen to be the wage-earning class, but socially beneficial when they go to the capitalist. Therefore, and since this is manifestly the case right up to the present day, should traditional “academic” economics be justified by the term “social science?” Or had it best be regarded as what it is; the publicising of the wrongdoing of a certain class of individuals to justify their activities in the eyes of the general public, to prevent a revolt that could prove personally disastrous for them? The abstinence of the rich merits reward, a reward that is conferred upon them by laws; but what of the abstinence of the poor? “Well, they have no money, be that gold, silver or paper, so who cares about them?” has been the usual response, and until society sees their money for exactly what it is and what it isn't and comes to grips with the ugly truth, not much will change for the better.

What of the forbearance on the part of the labourer to consume all he produces? For observe that all wealth is the production of labour, so that lack of abstinence on the part of labourers would lead to the starvation of the usurers. Surely this abstinence merits reward. Does it obtain it? Not at all. Legislators have found a very simple plan for dealing with this. They allow labour no choice in the matter. They assert that the labourer is naturally intemperate, a spendthrift, a gourmand. So they enforce abstinence upon him by depriving him of the greater portion of his production, which they divide amongst the various classes of usurers, — usurers of land, usurers of houses, usurers of money, etc. In hard times when production fails, if the labourer attempts to collect his reward for abstinence by begging, he is arrested and imprisoned. Many consider state welfare programs (socialism) to be an improvement over the way things used to be, while they are nothing but buying off what would normally be a social revolution against organized capital. The real difference between abstinence of usurers and abstinence of labour is this: the one practices it from choice and is rewarded, the other from compulsion and goes unrewarded.

But where does the reward of the usurer come from? Naturally enough, from the one and only source of wealth — labour. So that the producer is compelled to reward the usurer for abstaining to consume the wealth that he, the producer, originally produced. This was underlined in the original text. Now why, this being manifestly so, would the John and Jane Galts of this world want to side with such people against the rest of us? Ayn Rand's book was more of a sell-out than anything else.

Hence, labour is not only robbed of its fruits, but compelled to pay a reward to the robber for abstaining to immediately consume that which was taken from him. This was underlined in the original text.

The reward of abstinence is the reward of idleness; the reward of idleness is the punishment of industry; the punishment of industry is the discouragement of wealth production, and this is opposed to every sound economic doctrine. But now let us see how economists deal with the question of the right of men to be supported at the public expense.

"Every one," says John Stuart Mill, "has a right to live. We will suppose this granted. But no one has a right to bring creatures into life to be supported by other people. Whoever means to stand upon the first of these rights must renounce all pretension to the last. If a man cannot support even himself unless others help him, those others are entitled to say that they do not also undertake the support of all the offspring which it is physically possible for him to summon into the world. Yet there are abundance of writers and public speakers, including many of most ostentatious pretensions to high feeling, whose views of life are so truly brutish, that they see hardship in preventing paupers from breeding hereditary paupers in the very workhouse itself. Posterity will one day ask with   astonishment what sort of people it could be among whom such preachers could find proselytes." (Ibid, Mill)

According to Mill, any system that tends to promote hereditary pauperism is brutish and dangerous to society. Now pauperism is that condition in which persons are supported by some public provision, or by the labour of others; and economists and writers of every class are agreed that all gifts have an inevitable tendency to pauperise the recipients. But usury, or "the reward of abstinence," is, as I have shown in the first chapter, even when, taken in the very best light, nothing short of a compulsory contribution; that is to say, that whatever is paid merely for the use of a thing, over and above the actual compensation for wear and tear, is given without any equivalent. It is never better than a gift. Taking it in the most charitable light of giving, it tends to pauperise the recipients, and is, therefore, as contrary to the science of economics as poor laws are, or any forms of legalized relief. I need hardly point out the injustice of giving to money a privilege not accorded to commodities, by which the one is endowed with the principle of life, that is to say, is made to increase, while the other is not. It will also be noticed that interest is made a tax upon the mere act of converting commodities into money, the inevitable result of a legalized and restricted currency. Indeed, and how few there be that see this as clearly!

Economists are singularly blind to principle and to correct generalization; otherwise they would have seen that usury inevitably results in hereditary pauperism. That class who live on their "means," on rent and interest, are they any the less public burdens than those who live in alms houses? Brought up to date: are the billionaire hedge fund operators living on their country estates any less burdens on society as the countless thousands living in section 8 housing?

Are they restricted in the number of their offspring? Has any economist dared to say that they have "no right to bring creatures into life to be supported by other people?" "Yet there are abundance of writers and public speakers, including many of most ostentatious pretensions to high feeling, whose views of life are so truly brutish, that they would see hardship in preventing such paupers from breeding hereditary paupers." And one of these writers was John Stuart Mill. So much for the “genius” of such men as Mill, Malthus, etc. They are Scrooge, the usurer, personified.

There can be no doubt that posterity will one day ask, with astonishment, what sort of people it could be who tolerated a system of extortion and infamy so long!! We're asking it right here and now.

I fear I do the poor paupers an injustice when I class them with usury paupers. In fact, there can be no doubt about it. Our indigent poor take what is given to them; their demands are small. They dispossess no one for what they receive. They do not themselves enforce their demands for support by threat and bribery and intimidation. -or blackmail and the threat of a ruined reputation, etc. as do the usurer class. They do not hoard up substance and prevent others from using and enjoying what they cannot. They -the poor- do not, as a rule, lie and cheat and deceive. They -the poor- do not endow professorships for the corruption of learning, preach heresies, bribe voters and legislatures, subsidize the press -nay own the press, issue warrants of distraint, eject widows and orphans from their homes, grind the faces of the poor, enforce idleness, persecute honest reformers, make criminals and harlots of the needy, make hypocrisy a virtue, debase morality -that means YOU, Ayn Rand!, pile up the debts of the nations mountains high, enslave people, promote discord, hatred and war, and hold back civilization until hope sinks despondent, sickens and despairs ! All this usury does, all this and much more.

The fact is that the pauperism of the wealthy is the cause of the pauperism of the poor. "Taxation for the support of the poor," cries Mill in alarm, "would engross the whole income of the country." Well, taxation for the support of the rich has already engrossed the whole income of the country. Which is the greater evil? Charity is the cause of the former; usury of the latter. If the whole income of the country is to be engrossed in taxation for support, better a thousand times to give it in charity than in usury. There is at least the satisfaction of knowing that the one is a virtuous act. Virtue, in our definition, is that which cannot help but be good. Obviously NO interest payment, despite the blandishments of the so called “Austrians” to the   contrary (our apologies to all real Austrians who may read this) can ever by itself be considered virtuous despite continual and resolute attempts to make such seem so; all the emphasis on credit scores, etc.

It is not at all surprising,” he adds, "that Mr. Malthus and others should have concluded against all poor laws whatever. It required much experience and careful examination of different modes of poor-law management, to give assurance that the admission of an absolute right to be supported at the cost of other people could exist in law, in fact, without fatally relaxing the springs of industry and the restraints of prudence." The manner in which the poor are berated by economists — are compelled to shoulder blame for the evils of society — reminds one of the way in which the devil is made responsible for the sins of mankind. As if the poor were the devil, when in fact the rich probably are more fit to be so characterized.

The fact is, that from an economic standpoint there is little difference in principle between the laws for the relief of the poor and those for the support of the rich. Both tend to encourage idleness, extravagance and pauperism. Poor-laws and rich-laws come within the same category. All that economists assert as to the incompatibility of any system of poor-law — in which a right to relief is recognized — with the permanent interests of the labouring classes and posterity, is a thousandfold more certain when made in reference to usury and the interests of society. The one is merely a drop in the bucket when contrasted with the other. If the one be erroneous, it errs on the side of beneficence; the other is an enforced demand accompanied by threats of punishment unless complied with. Exactly as was done in 2008 and for all we know in closed doors in many foreign and distant places since then and will be again.

Usury is the murderous demand of the highwayman, "Your money or your life.” We hung highwaymen didn't we? You have some idea of the depth and seriousness of the charges made here.

I have said that the principle of usury is unnatural. It increases that in which the conditions for growth are absent. It gives to inert matter that which nature only accords to life. Usury clothes the material with immortality. It says to wealth, "Thou shalt never die." It breathes into the nostrils of capital the breath of life, and furnishes it, not with a soul, but with a stomach and an insatiable appetite; hence labour is incessantly creating produce which goes as a peace offering to this insatiable monster. Conflicting as it does with nature, we may expect that nature retaliates; and so she does, for we find the wealth producer dying for want of that which he produces — store-houses bursting with grain, warehouses overflowing with goods, and the people standing outside, naked, cold and hungry! This is the condition known by economists as “over-production.” Instead of wealth production being a blessing, it becomes, under the system of usury, a calamity and a curse. The reason for this is usury's evil cousin, commodity speculation.

The principal object which political economy seeks to achieve, viz., large production of wealth, proves destructive to society. Like Midas, society is destroyed by a superabundance of that which it is ever craving. And why? Because those who can consume productively have not the means to purchase. Wealth production is made possible only by wealth consumption. Not any kind of consumption, but that consumption that tends to reproduction - in other words wealth consumption by wealth producers. All wealth that is consumed by idlers and non-producers is non-productive, absolutely wasted.

Now usury takes by far the greater portion of the wealth produced, and gives it to the small minority of non-producers. These are unable to consume it as rapidly as the many consume theirs. The result is that the masses stand hungry, waiting for the few to eat out the vast abundance of goods with which they are already gorged. It is like the owner of lands who employs his farmers on these conditions: First, that they shall cultivate no more soil and produce no more crops than he stipulates; and second, that they shall receive but  one-fourth of the produce. The effect is that the few hundred or so mouths must make their one-fourth hold outuntil he and his friends have consumed their three-fourths; for he has no object in further production so long as his barns are filled.

The inequitable distribution of wealth is the true cause of  over-production. For, under equitable conditions, how can there be over-production whilst labourers are poor? How can there be too much of that which millions stand in need of? Had producers a fairer share of what they earn, they would consume more, and therefore create a demand for far greater production. "Over-production" ought to be synonymous with "excessive happiness." Such a condition, instead of a calamity, should be the greatest blessing. It should mean little work, general diffusion of abundant wealth and absence of poverty. Were the sources of wealth supply controlled by the masses, by the many instead of the few, how different would be the results. Production would then be gauged by the healthy appetite of industry, not the surfeited and diseased stomach of idleness.

Look at France with her thousands of eight-acre farms and her comparative freedom from abject want; and then look at the “hardly human horrors” of English and American cities, where the sources of production are controlled by the few! Over-production for the few; destitution, hunger and death for the many!

If I allow my baker but one pound of bread out of every hundred pounds that he bakes, how can he avoid surfeiting me with bread in order to keep himself alive? This is a phase of a false and fraudulent system of economy. Look for a moment at the wealth production of Europe, and how it is divided among the various classes, In 1880, Italy, one of the poorest of States, divided £28 million among 233,816 families, averaging £120 or $575 per family -or in that time there were 4.79 dollars per British pound, whilst £214 million was divided amongst 5,432,100 families, averaging only about £37 per family, per annum. In Germany 807,061 families received £198 million whilst the masses, comprising 8,581,947 families, received only £652 million. The average income of the former was, therefore, £247 per annum; or, roughly speaking, $1,200, and the latter less than £7S or $360. In Russia 147,946 families received £117 million, whilst 16,254,100 families received £526 million; that is £800 per family in one class, and but £32 per family in the other class. (And yet we marvel at Nihilism!) Out of the annual production of £1.25 billion in Great Britain, usury — that is, rent, interest and profits — takes £850 million. The working classes take only £400 million. Wealthy idleness is represented in Great Britain by 222,500 families, and is rewarded with £5.728 billion of property, which is an average of £25,800 or $125,000 per family -and that was back in the early 1880's. 4,650,000 families represent the wealth producers, and their industry is rewarded with the possession of £400 million of property, or about £85; i. e., $400 per family.

But these averages do not nearly picture the enormities of the inequalities of distribution. There is no greater liar than "average,” says a writer; for within each class there are greater differences than those existing between the two classes. In the United States there are several thousand men whose property represents millions, and there are millions whose possessions do not reach one hundred. One man is said to receive $1 million per month income. (John D. Rockefeller, Pres. of the Standard Oil Co.) A skilful mechanic receives no more than $75 per month. The services of the former, therefore, ought to be equivalent to those of 13,333 skillful mechanics! Similar complaints arise today with the same rebuke as was handed down by Ayn Rand in her John Galt speech, that the supposed “men of the mind” would simply pull away from the rest of society were they not allowed their more than lavish remunerations. We have news for them, they aren't the John or Jane Galts they suppose themselves to be and the real John and Jane Galts should be knowing this by now. Usurers have no future, because most of them never knew how to do an honest day's work. They just don't know that yet.

No such condition would be possible but for the inequitable laws of distribution, laws which are as much opposed to the science of economics as they are to the science of morality. Further evidence of the immorality of usury may be found in the fact that all the ancient religions, as well as the ancient philosophers condemned it. The laws of Moses forbade usury. "If thou lend money to any of my people that is poor by thee, thou shalt not be to him as a usurer, neither shalt thou lay upon him usury." (Ex. xxii. 25.) And again, "Thou shalt not lend on usury to thy brother; usury of money, usury of victuals, usury of anything that is lent upon usury.” (Deut. xxiii. 19.) The term "brother" applied even outside of the immediate Jewish family. Thus, "Thou shalt not abhor an Edomite; for he is thy brother," etc. Whilst usury was permissible among Jews and Gentiles, it should be remembered that this very license served to show its obnoxious character, for strangers were regarded by the Jews as the objects of legitimate plunder. "Unto a stranger thou mayest lend upon usury; but unto thy brother thou shalt not lend upon usury." (Deut. xxiii. 20.) We will pass on these references for the time being, though some may have trouble with them.

Aristotle, in his essay on politics, says: "But since these riches may be applied, as we have said, to two purposes, the one to make money of, the other for the service of the house; of these the one is necessary and commendable, the other, which has to do with traffic, is justly censured, for it has not its origin in nature, but amongst ourselves; for usury is most reasonably detested, as the increase of our fortune arises from the money itself and not by employing it to the purpose to which it was intended. For it was devised for the sake of exchange, but usury multiplies it. ... Usury is merely money born of money; so that of all means of money making, this is the most contrary to nature." We have stuck with this narrower, more limited definition of usury as pertinent to the question whether it should ever be lawful to ask in return from that which was never created in the first place. One might with justification ask back more of any other possible commodity except for money (as long as specie are excluded from the definition), which we hasten to restate further is that money is not in our conception a commodity.

The Koran, the Mohammedan Bible, expressly forbids it. The fathers of the Christian church condemned interest, because, as they argued, money was unproductive. "Quid quid sorti accrescit usura est,'' (Literally: What are some of the lowest interest accrues, in typical Latin is meant to suggest that the lowest types of people demand interest) said the theologians. Likewise the Catholic church pronounced its anathemas against usury. Of modern writers none have done more to expose the evil and immorality of interest than John Ruskin. In the Fors Clavigera, for instance, he says: “Now, the law of Christ about money and other forms of personal wealth is taught, first in parables, in which He likens himself to the masters of this world, and explains the conduct which Christians should hold to him, the Heavenly Master, by that which they hold on earth to earthly ones. He likens himself in these stories, several times, to mankind or unjust masters, and especially to hard and usurious ones, and the gist of the parables in each case is, 'If ye do so and are thus faithful to hard and cruel masters in earthly things, how much more should ye be faithful to a merciful master in heavenly things?' Which argument evil minded men wrest, as they do also the other Scriptures, to their own destruction. And instead of reading, for instance, in the parable of the usurer, the intended lesson of industry in the employment of God's gifts, they read in it the justification of the crime which, in other parts of the same Scriptures, is directly forbidden."

On the other side, however, has appeared Mr. Henry George 1939-1897, who finds in the rent system of land the cause of all our woes, and a most indefensible system of robbery; but in rent system of money, or of capital, a perfectly just and proper claim. (“Progress and Property,” Law of Interest, George) Mr. George is as   inconsistent, or as obtuse, as the theologians who always opposed usury, but admitted the legitimacy of rent. "Rent," said Bossuet, the French theologian, "is as far from usury as heaven is from earth." "Interest," says Mr. George, in effect, "is as just as rent is unjust." By making a subtle distinction between what are identical in principle, the Christian church ended by recognizing the legitimacy and morality of both rent and usury, in flat defiance of the teachings of Scripture. That Mr. George should practice the same feat of jugglery is the natural and inevitable consequence of failing to recognize and follow principle. After demonstrating that land is not, properly speaking, wealth, he proposes a scheme under which land is essentially a part of wealth, viz., state recognition and appropriation of what he terms "land values." For if land is not wealth, "land values" cannot exist, it being not exchangeable and therefore of no value. "The value of land," he says, "is the price of monopoly," and he concludes by proposing to immortalize this monopoly by means of the single tax. After denouncing rent as iniquitous, he seeks to perpetuate it by making society, instead of individuals, the recipients of the ill-gotten plunder. And yet he gravely informs us, that what is wrong in the individual, is wrong in society. 
  
After exposing the weakness of the current arguments in favour of interest, Mr. George proceeds to furnish economists with one which he evidently thinks impregnable. I will not waste time in following him in his wretched apology for an argument, by which he endeavours to bolster up the system of interest. (Mr. George's defence of interest is merely a revival of Turgot's Fructification Theory.) He refutes himself so completely, that it is only necessary, in order to confound his reasoning, to place two or three sentences from "Progress and Poverty," side by side.

“Now, what gives the increase in these cases, is something which, though it generally requires labour to utilize it, is yet distinct and separable from labour — the active power of nature; the principle of growth, of reproduction, which everywhere characterizes all the forms of that mysterious thing or condition which we call life. And it seems to me that it is this which is the cause of increase, or the increase of capital over and above that due to labour ... Thus, interest springs from the power of increase which the reproductive forces of nature, and the, in effect, analogous capacity for exchange, give to capital.

It is not an arbitrary but a natural thing; it is not the result of a particular social organization, but of laws of the universe which underlie society. It is, therefore, just.” (Ibid, George, Book III, Chap. III.)

It is safe to say that if Mr. George's arguments in favour of interest be correct, his attack upon “This right of ownership that springs from labour, excludes the possibility of any other right of ownership. If a man be rightfully entitled to the produce of his labour, then no one can be rightfully entitled to the ownership of anything which is not the produce of his labour, or the labour of some one else from whom the right has passed to him . . . Hence, as nature gives only to labour, the exertion of labour in production is the only title to exclusive possession.” (Ibid, George, Book VII, Chap. I.)

individual ownership of land is both illogical and unjustifiable. We consider this a leap right off of the balcony of reason itself, as any other feasibility for land ownership is certainly bogus. Bundling this together with usury discredits much, but certainly not all, of his argument; to Kitson, “YOU are being here both illogical and unjustifiable!” The very reasons by which he shows the iniquity of the one, he employs in justification of the other. Against this miserable surrender of principle by one who professes "to follow truth wherever it may lead,” let me quote the opinion of one who with less pretensions has not failed to discern nor lacked courage to proclaim the truth. "But usury,” says Ruskin, "is worse than theft, in so far as it is obtained either by deceiving people or distressing them; generally by both; and finally by deceiving the usurer himself, who comes to think that usury is a real increase and that money can grow of money; whereas all usury is increase to one person only by decrease to another; and every grain of calculated increment to the rich, is balanced by its mathematical equivalent of decrement to the poor. The rich have hitherto only counted their gain; but the day is coming when the poor will also count their loss — with political results hitherto unparalleled." (Ibid, Ruskin) That one sentence "all usury is increase to one person only by decrease to another," sums up the entire interest question.

I have dwelt at length upon this branch of our subject because it is the root of all the evils under which nations are groaning. Under it every nation, every community, every state, is either bankrupt or is rapidly rushing into insolvency. It is the cause of the perversion of money from its original design of assisting exchange, to that of enslaving mankind. On all this we are agreed.

"Under the old slave system, property in man held a sceptre more despotic than was ever wielded by Napoleon or Caesar; its abolition brings us into a greater presence, which overshadows presidents, courts and pulpits, and is master of majorities and armies — usury. As a loyal representative of that perishable fruit of labour, wealth, money designates the unadjusted balance in exchange, and serves all parties to the transaction. Enacted into a monopoly, endowed with exclusive power, the servant becomes legal dictator over the principal, renders workers dependent on idlers, exacts   impoverishing tribute to its centralizing power, and forces a progressive inequality of wealth.” (Col. Greene on Mutual Banking.)

All governments are burdened with inextinguishable debts, and, as a rule, the debt grows every year in a terrible progression." (Count Tolstoi “On Money.") What could be more fitting descriptions of these modern times?

It is this remorseless system of usury that is the cause of the inversion of all our social problems which the present system of economics presents, and which was noticed in our opening chapter. Usury falsely asserts that money and wealth are naturally productive; nay more: it asserts that they are more productive than labour, since it claims for capital a greater share of production than it allows to labour. This very simply has always been the cause of the inversion. For the Ayn Rands of this world to assert, as they continually do, that the labourer is only worth the cost of feeding him, or that he does not contribute his fair share to any productive enterprise, is to fall for the eternally bad joke that the so called “smart” person would have anything without him. Capital, aided by telecommunications technology may continue to race ahead of labour around the world, forever chasing after that lowest labour coefficient in order to squeeze the greatest possible profit from every possible enterprise, but in the end, all usurers have to live somewhere. As awareness grows, profits shrink, people stop paying, etc. then their days as a specie of criminal shall be numbered.

The result is that capital employs labour; in other words products are recognized as giving employment to men, instead of man employing his own products. Industry is subjected to idleness. The workers are slaves to the drones. Property and wealth are far more highly esteemed than human beings, and machinery than flesh and blood. Yes, all this has certainly become true.

To recapitulate: I have shown that usury is contrary to nature, religion, morality, and to economics. It has been condemned by thinkers, teachers, moralists, religions, philosophers; in fact by the human conscience and intellect of all ages and in all nations. Judaism forbade it, Christianity forbade it, Mohammedanism forbade it. Paganism forbade it. It has not a single just reason or logical basis for its support. It has no foundation in equity or expediency for its existence. Finally, as a scientific principle it is utterly impossible. It destroys itself. It jeopardizes society. It eats up wealth and drives men away from production. It is to industry what the locust is to vegetation. It is founded upon a lie. It is, in short, a legalized system of insidious swindling. Religion, economics and ethics unite in demanding its abolition. It remains to be seen whether we are capable of devising a system of finance to replace it.