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apply this law to the case of paper money, seeing that it is a sort of capital which can be created with the greatest facility, and thai a fertile source of wealth is found to lurk in a stereotype plate. Now, it has become the fashion to consider, if this capital should become dormant or he permitted to lie unemployed, that much evil must result to the community at large. The man who chooses to purchase a hundred or a thousand gold sovereigns, and to lay them past for some future emergency, or for the wants of old age, is stigmatized as a hoarder, a miser, or something worse. It is difficult, however, to perceive where the guilt of such a transaction lies. If the “hoarder" has given real value for his gold, society has certainly no right to complain, for he has put something valuable in its place. We can easily perceive why credit men, or borrowers and lenders, should cry out against such proceedings. I know many men who clear six per cent and upwards by inducing frail people to let their money pass through their hands, and those who indulge in borrowing money will of course be always anxious that there should be no stoppage of the supplies. Hence has arisen the notion that if a sum of money is permitted to lie unemployed for a few days, it is so much lost interest. This idea, it will be perceived, is associated exclusively with usury, for if no usury existed traders would no more distress themselves about a few pounds lying unemployed than they would do about a few yards of cotton. All this reacts ultimately in an evil way upon the matter of prices. The more lenders there are, and the more money there is lent, the greater the enhancement of prices, and the greater the strain upon producers
. Another evil is, that vast quantities of goods are manufactured, which become speedily unsaleable through change of fashion. These goods, however, must be paid for one way or another, else they could not be produced, and this is done in a way so evident that I need not specify it.
The impetus thus given to carry transactions far beyond the wants and means of society, and the tendency thus given to enhance prices far beyond the necessary and ordinary limits regula ed by demand and supply, and associated as these are with a spurious currency, cannot but periodically result in panic and convulsion Bank credits have their share in bringing about these results, for they perform the very same functions as bank notes, and so far as they operate in payments, so far do they operate as currency or money; whatever will in reality pay a debt or recompense a sale, must be considered, to all intents and purposes, as perfect a currency as gold or silver. That, and that only, is the idea the public have of bank notes and bank credits, a fact which is abundantly demonstrated by every commercial crisis. It is beyond the power of the wealthiest corporations, or the most powerful governments, to prevent the recurrence of these panies, so long as business is carried on so generally by the present means of credit.
Tliat commercial transactions are carried by debt and credit far beyond what they ought to be, will be evident from the following calculation. If we estimate the daily payments throughout the United States at $100,000,000, it exhibits to us each family purchasing and selling commodities every day to the extent of twenty dollars, or over seven thousand dollars per annum. If we take the payments at $200,000,000, which is nearer the truth, it gives us each family buying and selling property every day to the value of forty dollars, or over fourteen thousand dollars per
annum! Surely a tenth part of this sum should be considered a good trade-all the rest may be set down to the speculation sustained and fostered by lending on usury, or the facilities afforded by discounts. A state of things such as this cannot go on long without reaction. The greater portion of the tax incurred on this head will go to augment the prices of articles entering into daily consumption-a part of the loss will also fall upon those who engage in this wild game.
What an oppressive and grinding system must that be which leads to such a state of things. The abolishment of usury would prune off almost all this unhealthy growth. It would arrest the progress of that putrid stream which now flows through the land, draining it of its strength, and spreading pestilence on every side. People will be very cautious with their speculations when they come to use their own money, the value of which they bave fully learned by the labor they have given for it.
The reader will perceive, from what has been now stated, what a fat pasture is afforded for usury by our present system of commerce. If commercial convulsions can only be warded off, the pecuniary success of the lenders will be in proportion to the amount of the tax, in the aggregate, laid at last upon labor A large portion of the net profit of the trade and of the producer thus passes into the pockets of the money lenders. Usury could not exist a day without speculation, for speculation, in its worst feature, begins the moment a person becomes a borrower, or fails to stand exclusively on his own resources. It is thus the interest of usury to build up a vast foreign commerce, to sustain large houses at the outports, and to foster the concentration of large manufacturing establishments in a few great cities. It is, on the other hand, the real interest of the community at large to encourage home manufactures of all kinds, and to have these manufacturing establishments distributed throughout the country, in some measure commensurate with the natural facilities afforded, and the general distribution and wants of the population. In all the adjustments of our social condition there is a healthy limit, which can never be overstepped with impunity.
There is another element bearing an important influence upon this question, which must not be overlooked. If it be true that a season of profusion and plenty of agricultural products indicates a state of general prosperity, it must be also true that the same rule applies to everything which ministers to the ordinary wants of the human race. The free and full development of the labors of each individual are requisite to attain tbis desirable end. Of the distribution of the products thus produced we need not now speak, as those rules which, from their nature, tend to equalize prices, will, if allowed unfettered operation, transmit them through their proper channels. Anything acting as a barrier to these popular energies must react perniciously upon trade and society. If, for example, one-half of the community were suddenly to experience some sort of physical calamity which would reduce them to the condition of paupers, a double strain would be put upon the other half to feed, clothe, and shelter these paupers. There is great wisdom in the necessity which has been imposed upon us, to earn our bread by the sweat of our brow. When multitudes are thrown out of employment, as during the periods of commercial convulsions, a dangerous element is in the ascendant. The introduction, therefore, of any division of labor, the practical result of which is to create and sustain a condition of idleness, cannot but operate injuriously upon the material interests of society. The usury or banking system has practically this effect. A very large class of idlers thus pension themselves off upon society. They add neither to its wealth, its labors, nor its comforts. They are not traders--they are not producers. It is alleged, in favor of this portion of society, that, as a class, they are afflicted with a sort of chronic incapacity to engage in the active pursuits of business. We may let that pass for what it is worth, simply remarking that the objection comes with a bad grace from a profession proverbial for its acuteness and ingenuity. It is of no use to tell us that some bave done well under this system, or that, through some sort of pseudo charity generally considered to associate with lending on interest, some have been occasionally rescued out of their difficulties. The same can be said as regards any questionable occupation. We must look at the system as a whole in its general results upon the human race. And the evil is not, strictly speaking, measured only by the actual number of idlers thus sustained by the community in general. The amount of the money invested in usurious transactions must be taken into account. The amount of actual pressure upon the community is thus measured by the actual amount of debt, and this pressure is exercised mainly by means of prices.
I have spoken as if these lenders had lent nothing but the pure gold --nothing but what they had attained as the fair and proper reward of their labors. But what shall we say of this class when we find that, instead of lending the good and solid coin, they fabricate a spurious paper money? If they lent something valuable, something more tangible than their “ credit,” they would only stand related to society in the position of idlers. They would in that case have lent what they or their forefathers had honestly labored for and honestly earned. But in regard that they lend, not the valuable coin, but the worthless so called representative of what they do not possess, whether in the shape of bank credit or bank circulation, they not only pension themselves off upon society as men of credit, but introduce the very element of its destruction.
Let us now turn our attention, briefly, from the consideration of the effects of usury on commerce, to its effects upon the interests of agriculture.
Thousands of cases are continually occurring, especially in the recently settled parts of this new country, of poor emigrants laying out all they possess in the purchase of wild or brush farms at those exorbitant rates imposed by usurious governments, land speculators, or monopolists. They are compelled to pay, for God's wild acres, sums ranging from one hundred to four hundred dollars, in order to attain a farm of sufficient size for the wants of a family, and this for land upon which no labor or expense has been put, except perhaps that of a general and superficial survey, or the chalking out of a trunk road. They find themselves, after getting into possession, absolutely without means to sow, cultivate, or clear the land. But in every neighborhood some may be found to respond to such cases of distress. In this dilemma, the man of wealth steps forward, and after the ordinary panegyric on the value of money, the risk of the undertaking, and so forth, the disinterested lender closes the transaction by advancing the needful supplies of wheat, oats, barley, or money, at a return at the year's end of twenty to one hundred per cent. I have specified no uncominon case. Throughout the rural districts of this country it is difficult to find any section where such things are not extensively done, or where the lands tbus mortgaged are not falling rapidly into the hands of the lenders. Now, what are the results of this system? The people thus indebted—and they are by no means a small classmust sell the produce they raise at a price enhanced equivalent to the average rate of interest in general imposed, in order to pay the money lender, and also vield to themselves that return of profit without which no labor or employment can be continuously exercised. A tax is placed upon the farm produce so that the lender may be paid. The effects are exactly the same as in the case of manufactured goods. In both cases a tax is imposed inimical to the interests of the consumers at large. If the lender is largely engaged in the cultivation of the same agricultural products, he will share in the advantage which his own act gives to the enhancement of prices. The agricultural borrower and his family are placed under a serious disadvantage, in the necessity imposed upon them io compete with those around them who are in better circumstances or under less indebtednesss. The wealth of the usurers in such cases, whether represented by lands, buildings, stock, money, or effects, is measured by the amount of labor thus taken from the community.
These remarks apply with equal truth and force to the case of rent or hire of land. There is no difference in principle--the parallel is perfect. The rent of land is just the usury of land, neither less nor more; and is exactly equivalent to the rent of money. In countries where the usury of land largely prevails, we behold the same result as in commercial communities—the many taxed for the support of the few. Let no timid reader imagine that we are about to advocate anything like the subdivision of vested rights. Our conservatism points all the other way. If the evils of usury, whether in regard to money or land, have become too vast, or the interests involved too powerful, to be mended by legislative action, they must first be endured till they are settled in some other way, concurrent with the natural course of events. We find no fault either with the possession of land or money, so far as fairly acquired. Our remarks have reference only to the usurious use to which each is put. Lending on interest is, in every case, at variance with the interests of the commonwealth. Even were it possible that the well being of the commonwealth should require particular rights to give way, no man has any right to challenge legislative authority in such a case. If the anti-usury principles advocated in these pages were in full vigor throughout the world, I should be very content to leave unwieldy estates and unwieldy fortunes to take care of themselves. If they could not hold their own against the working of these peaceful, reasonable, and orderly principles, it would be better both for their owners and the community that they should in some measure be shorn of their strength, or reduced from their unwieldy proportions.
Wherever the usury or renting of land prevails, a tax is placed upon the farmers, or ratber the laborers--for labor in this, as in many other cases, is the last resort—to support the landowners. The tax thus placed upon the farmers of England, Scotland, and Ireland, is equivalent to the amount of the rental of these countries. In Ireland especially, where middlemen prevail—who may be compared to the speculators in comVOL. LXIII.-NO. II.
merce-this tax grinds down the laborers to the last degree. It is a useless, burdensome, and pernicious tax, for whilst elevating the few to a dangerous height of wealih and power, it depresses the many, in a corresponding degree, to a condition, comparatively speaking, of pauperism and bondage, and introduces a system of caste almost as rabid as that of India. It a landowner rents out ten farms at £200 apiece, the amount drawn from the produce of these farms to satisfy the demands of the Jandlord will be £2,000. No doubt this sum is either added to the price of the produce raised by the people on these farms, and thus comes out of the pockets of the consumers, or it is deducted from the wages of those employed in raising the produce. The laborer's wages are thus not only reduced, but the very products they are instrumental in raising are enhanced to them in price. It is not, strictly speaking, so many farmers or farm workers supporting one landlord by their labors. The evil must be measured by the amount of rental which is paid to the landlord. It necessarily varies in intensity from the most violent rack rent down to the simplest fee. If, in the case supposed, each of the ten farmers clears £200, the landlord clears £2,000, ten times more than each of the farmers, or as much as all the ten combined. This sum the landlord spends amongst surrounding tradesmen, land factors, or lawyers, perhaps in ministering to the luxury of distant cities, or in adding improvements to his estate, that the market value of it may be increased, and thus a larger rental or tax got from the next tenants; or it may be, like my Lord Ilarkaway, in borse racing, hunting, grooms, horse jockies, or such like. So, instead of the ten farmers only supporting one landlord, they do in reality support every one supported by the landlord, or as far as the rental goes. Price affords always an easy means of accomplishing these results, The money compact between landlord and tenant is, through the aid of price, taken out of the pocket of a third party, the consumer, who has no interest in that compact.
The unthinking multitude are prone to jump to the conclusion that they are directly benefited by this increased price of their commodities, just as some wise merchants would like to see a bank placed at each of their backs. The source of this transparent error I need not pause to point out to the readers of this Magazine.
The capitalist who lends suns of money on interest to ten different traders is to all intents and purpose in the same position as the landowner who hires out farms to ten different farmers. The farms represent the principal, the rental is the interest paid for the use, and the lease is the period of the loan, or represents the discounted paper. At the expiry of the lease, the landlord resumes possession of the ground, renews the lease, or transfers it to another; at the maturity of the note, the capitalist either renews it, resumes possession of the money, or transfers it to another. The only material difference is this—that, with regard to renting of land, no general panic can occur through the destruction of credit or borrowing powers, except in so far as the fictitious money of commerce has passed into the hands of the agriculturists. If a farmer should get into the background, and be unable to pay his rents at the stipulated terms, the landlord may resume possession and recover arrears by a process of poinding and sequestration of the farmer's crop, stock, and effects. But no general panics can ever occur similar to those wbich periodically put commerce out of course, because the land is there and cannot be bartered away like ordinary merchandise, and it must always be in de