CHAPTER XVII (Part 2).
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.