A breed of barren metal, or; Currency and interest, a study of social and industrial problems

Contents

PAGE

Chapter I 13

Introduction — The importance of studies in sociology — Man a social animal — The correct method — Social and economic, compared to physical science- Natural law the foundation of both — All science speculative — Happiness the object of existence — Happiness development — Must be general — Ideal state is happiness to all — In sociology as well as art and science the ideal is the standard — The ideal is that which corresponds most closely with natural law — Natural law must be obeyed — The first business of social and economic science is to find underlying natural principles — Ethics the foundation of these sciences — Present practices and institutions to be tested by ethical axioms — Unsatisfactory results to be explained by economics — Knowledge for the use of man.

CHAPTER II i 9

Disastrous Phenomena— Periodic panic— Distress of laborers— Paralysis of business — Borrowing by the government in times of peace and prosperity — These phenomena seemingly occult — Varied explanations contradictory and unsatisfactory — Periodic distress seemingly incident to our industrial organization — The optimist-conservative— His absurd empirical restrictions to the use of intelligence — The conservative a real anarchist as to all but police power — His inconsistency— His dogmatic stand — The mass of citizens think otherwise.

Chapter III

The Distribution of Wealth — Distribution dependent on the elements entering into the production of wealth — What these elements are— Land, the Laborer and Capital— Problem, to ascertain what portion of product goes to Landlord, Laborer and Capitalist— The term "Laborer" defined — Wages defined.

Chapter IV 28

The Laborer— Is he overpaid?— What he receives — What it costs to live — Common experience rather than made conditions— The census figures— Bread and soup economists— The pay of clerks— The remuneration of laborers— Farmers — The remuneration of sweaters and shop girls — The social evil and its relation to wages — A reform work for women — The army of unemployed — The conclusion that the remuneration of the laborer is not too great — If he is entitled to more, he needs it — The only means by which higher wages may be paid.

Chapter V 33

The Margin of Profits— Some figures on the actual shares of the products of industry received by the several classes — Mr. Atkinson's cotton mill — The share of the laborer — The remainder goes to keep up wealth and remunerate the capitalist and landlord — Ten to fifteen per cent upon capital employed, the probable margin of profits — This includes interest and rent — It applies to successful enterprises only- -Census figures— Their indefiniteness— The margin small — To whom shall it go? the vital question.

O CONTENTS

PAGE CHAPTER VI 35

The Landlord — His right to remuneration — Land defined — Ricardo's definition — The significance in which it is here used — Mines not land in the same sense as farming land or building sites — Forests not land, unless cultivated — The natural basis of property — What one produces is primarily his own — What he does not produce or what another produces is not primarily his own — Land not produced by individuals — Does not belong to individuals — Belongs to the community in usufruct only — Community can give no greater title than it possesses— The collection of rent does not aid productivity — No return given by landlords for rent taken — An imposition — Royalties in the same category — Landlords and royalty- takers levy a billion of dollars or more per year on industry — They take that much of the annual product — It does not justly belong t o them, must therefore belong to laborer or capitalist or both.

Chapter VII , 39

Terms — The necessity for an exact use of words— Wealth, capitalist and laborer defined — Interest and capital — Profits — No necessity for distinguishing between them in this inquiry — Arguments based on an ambiguous use of terms — Capital held to be labor — The use of terms in their ordinary signification not so necessary as their use in the same signification in the same discourse — Is capital stored labor? — The fallacies based on this erroneous conclusion — A jugglery of terms— Neither capital nor labor has rights— Rights belong to persons, not things— The basis of the capitalist's claim for remuneration — The basis of the laborer's claim.

Chapter VIII 44

Is Wealth Essentiallt Productive — The observed essential principle of decay in all wealth — Specific instances — The pyramids — Rome — A dynasty of kings— Articles of common use— The life of a machine— Without the exertion of the laborer the country would turn into a wilderness — What we eat and drink and wear — We live from hand to mouth— The independence of the capitalist — Labor alone the preserver of wealth — No exception to the rule of decay in wealth — Interest-taking must be founded on the assumption of the spontaneous growth of wealth— The absurdity of the assumption.

Chapter IX 51

The Productive Power of Wealth— Instances and objections— Is capital productive? — How it differs from wealth — The productive power of a machine — Interest not a charge for a machine's effectiveness — Interest a charge for use of wealth — Is the borrower alone benefited by that use?— Men should be paid for what they relinquish, not for what they can extort— A scientific test of the productive power of wealth — How we determine the cause of steam — The verdict against the productivity of wealth— Wealth an advantage to the laborer, but that is not the question— The toiler is heir to all the ages, has a right to the use of ideas of inventors applied through wealth— Unfinished product— Other instances of decay not growth in wealth— The house— The mill— The horses.

Chapter X 60

Objections and Instances Continued— The argument of Bastiat— Its importance— Founded on the assumption of spontaneous productivity of wealth — Reciprocal services— The mistakes of Bastiat— Money not wealth— Bastiat's illustrations — The house and ship— The crowns and sixpences— Mondor's house— Peculiar conditions — Malthurin and the sack of corn— The same old fallacy — Malthurin and the man with eggs — James and the plane — The interesttaker's demands—What he gives up— The power of wealth and the laborer contrasted — In the light of man's origin— Thora's question as to crowns and Bastiat's answer— Spontaneous growth again— The advantage of the interest-taker as told by Bastiat— The conclusion drawn therefrom— Indefinite and fixed remuneration— Hoarding— Our addresses to laborer and capitalist— Interest generally applied — Things making themselves— Modern necromancy.

CONTENTS 7

PAGE

Chapter XI 75

Objections Continued — Without interest, it is said, there would be no motive for saving— The falsity of this proposition pointed out — A sufficient motive- Will the capitalist lend without interest? — The reason why he will, if he cannot get it— The effect upon the producer of the discontinuance of interest-taking— The only remedy for low wages.

Chapter XII 80

Interest-taking Wrong— A scientific test — Phenomena explained — Industrial panics— The rapid accumulation of wealth in the hands of the few— Poverty of toilers, etc., etc.

Chapter XIII 82

Financial Panics— The explanation of their causes— Rent and interest charges too large to be met — What they are — What we have to meet them — Country compared to a great business concern — The difference — Estimates and figures — Interest concluded to be the cause of financial distress — Another way of reaching the same conclusion — Objections — Necessary charges of production — What is saved by wage-earners— A summing up.

Chapter XIV 97

The Social Extremes — Why wealth accumulates so rapidly in the hands of a few — Is it for services rendered by the rich?— What they do to serve the producing masses — The method of accumulating a fortune — Explanation of the increase of wealth — The same in detail— Industrial and financisl groups — What figures show — How wealth is transferred — The rapidity of the process — Checks.

Chapter XV 104

Extreme Poverty — What the interest-taker demands — What he receives — Its effect on the toiler — The yearly product limited — No way of increasing the share of the laborer without diminishing the share of some one else — How limited inquantity the product is — Make producers of non-producers.

Chapter XVI.. 108

Improved Machinery — Its failure to ameliorate the condition of the laborer — Wages now and in 1450 — The increased producing power of the laborer — Why does he not get the benefit of this power?— Interest-taking is to blame — The demands of interest increase geometrically, producing power does not — Capitalists take all increase — The inventor not rewarded — Men are thrown out of employment, and competition keeps wages down so that the capitalist can take all increase.

CHAPTER XVII in

The -Large Salaries of Non-Producers — How accounted for— The limit of tangible production — The wages of superintendents— Measure of remuneration — The principle that one has a right to all that he can get — The measure of remuneration thereunder — Brain work — The standpoint of the discussion — The great money-getter — Remuneration for mental and physical exertion — The lawyer — The doctor — The literary man — Works of art — The inventor — The range of talent— Ability — What is the source of large incomes— Are the people interested in the size of salaries of private coporation officials? — Wealth and its responsibilities.

The Yeomen of America — The passing of the independent farmer — The change in the character of the agricultural class— Causes — A peasantry being formed — Danger to institutions — How it may be avoided.

Chapter XXII 133

Mortgage Indebtedness — Its rapid increase — Is it an evidence of prosperity?. — Arguments to that effect analyzed— Debts and assets — Increase in wealth as a whole not necessarily a sign of national prosperity — A specimen of plutocratic reasoning- Figures as to the relation of farm-mortgage debt to prosperity — Value of product, not of capital, the measure of debt-paying power — Census figures analyzed — The conclusion — Mortgage debts in general — General conclusions.

Chapter XXIII 140

Historical Testimony — The wrong of interest-taking always recognized by thinkers— The Mosaic law— Objections — The Greeks— The Romans— The medieval Church— The early Church — Europe of the Middle Ages — Reformers and usury— Shakespeare's idea — The Jews and the movements against them — Legislation — Penal statutes — Prohibitive statutes— The statute of Queen Anne — France— General conclusions— Objections— The fact of a thing having existed no proof of its righteousness.

Chapter XXIV 149

Accumulated Wealth— It may be used as a means of exacting interest — The necessity of borrowing — Millions born into the world without wealth —Tools and machinery scarcely less necessary than land — The necessity of borrowing in the commercial world — Interest-takers control the currency — Glut and overproduction — Supply and demand — Illustrations.

Chapter XXV 155

Our Currency System — The effect of hoarding continued- -How it cripples industry — An illustration — Results— Interest divided— Symptoms and causes — The adaptability of our present currency to the ends of the usurer — Value and volume — Metallic currency inadequate in volume to the country's needs- Figures — Volume of circulation here and in Europe— Gold product all necessary to supply the arts — Fluctuation in value and volume — Has the price of gold appreciated? — Silver — The single silver standard — No commodity can be made a non-fluctuating money standard— Value and supply and demand — Our currency well adapted for fluctuation — Redeemable currency — Demonetization of silver— Bimetallism — A will-o'-the-wisp — Gresham's law — Composite standard — Evils of fluctuation.

Chapter XXVI , 168

Our Banking System — The bank as an instrument for controlling currency — Money a close monopoly — Its effect — The importance of governmental control of the currency — Fraud or cunning, and force — The effectiveness of the bank — The weaknesses of the banking system — Its effect on the community — Action of banks in time of panic — Their withdrawal of money from trade — A souud currency system — The present banking system from the standpoint of financiers — No solution for the currency question while the banking system is controlled by private individuals — Banking the peculiar province of government.

CONTENTS '9

PAGE

Chapter XXVII , . . 172

A Real National Banking System — How it may be established — A detailed plan — The essential principles — Its effect on usury — Further provisions against interest-taking — A complete remedy.

Chapter XXVIII , 177

The System — Its practical working — Regulation of the money volume — Supply and demand — A convertible currency ideal — Gold and silver — A paper currency — Coin certificates — The money unit — What fixes its value — Volume and the unit— Price of the metal and the money unit — Gold a constantly appreciating money unit — A mixed currency — The value of the commodity money unit depends on the market price of the material of which the money is composed- Auxiliary currency — Silver — Intrinsic value not necessarily an attribute of money — The proposed money a paper money — The weakness and strength of paper currency — Historical instances — Paper money always resorted to in desperate national crises — Metallic money always fails in time of national need — The bankers' proposition — The proposed currency and supply and demand — Incapable of fluctuation.

Chapter XXIX 191

The System Continued— The money standard of the proposed system— Gold as a standard — Its fatal defects — Contracts made for payment in gold — Gold not a standard, but a value denominator— A fluctuating standard radically faulty — The real standard— Objections noticed— A fixed quantity of human effort the real standard — How to arrive at such a standard — Buying and selling— But two factors in production.

Chapter XXX ..... 197

Objections Answered— Impracticability— Deception in weight and measure — Pricesof goods — Security a deterrent to trade — A refusal to sell goods after money had been issued thereon — Would increase the army of office-holders — Political corruption — A remedy for that — The development of the principle of local self-government — Distrust of the people and its result — The basis of the spoils system— The appointive power — An irresponsible judiciary — Election by select bodies — The Electoral College — Money in politics — Warehouse receipts — Security — Bonds and stocks — Goods in transit — Revenue — Silver and gold.

Chapter XXXI 212

Objections Answered — Why it is necessary to have a special form of currency for the purpose of preventing interest-taking — Prohibitive statutes — Reasons why they are so often ineffective— The proposed regulation not a prohibitive statute in the sense that other usury laws are — Prohibitive statutes not always ineffective — The testimony of Bentham — The statute of Queen Anne — Testimony as to effectiveness — The sort of a usury law whichwould not be ineffective — Specific provisions — Has the state a right to regulate contracts between citizens? —It is done every day — Bentham — Hoarding money — How it may be prevented — Specific provisions — Adam Smith — All interestwrong— The borrower's profit — Will interest-taking cease of itself?— Is interest falling? — Is risk the basis of excessive interest?— Observed facts.

CHAPTER XXXI 1 224

Interest-Taking and Wage-Earners — The conclusion — But one way of increasing wages — Must strike at unearned incomes — These must be reached through interest-taking — Capital profits unearned— Something for nothing — The laborer and Malthus.

CHAPTER XXX III 227

A Feasible Currency System — Some of its advantages — A destroyer of usury- Vested interests— Our reform friends— The single-tax — Its theory and practice — The dilemma of the assessor— Exchange value of land— Land reform not a panacea — The single-tax theory from a philosophical standpoint— Land and minerals — The postal savings bank.

10 CONTENTS

CHAPTER XXXIV 239

Results — The destruction of interest-taking — What would follow — Division of wealth — Not fanciful — The advantage of the possessor of surplus wealth— Its results — The problem we must solve— Important natural truths— Applied— The rank and file of toilers — They must work out their own salvation— The mistake of reformers— Tariff-reform— The same mistake with currency reform must be avoided— Insist on principles, not on details— Objectors— Their disinterestedness — Some interesting questions — The millionaire — The woman of fashion — The Solon— Financiers— The opposition— Interest-taking before the tribunal of Intelligence.

CHAPTER XXXV 250

A Vision — A promised land— The armies of toil— The attendant specter— Two goals — The giants of the furnace — The pale-faced, cunning man — The specter of want and the specter of sham— Why?— The solution— "Toil or perish"— The crisis — A transformation — The end.

Preface

I give this book to the public in the hope that it may aid in bringing about a re-examination, in the light of modern intelligence, of one of the principles lying at the foundation of our industrial and social organization. If the effort shall have any influence in bringing about such a consummation, its mission will be accomplished. The foundation must be secure if the fabric is to stand, and I believe that finance and industry now rest on an insecure foundation. The line of argument pursued in this work has never, to my knowledge, been presented by any other person. The reason of the wrong has never before been fully explained. If I am mistaken, he who points out the error will confer a favor on me and thousands of other seekers after truth. But we want reason and not dogma.

The practical application of the truth here presented would be so far-reaching in its effect as to be revolutionary. But it would be a peaceful and beneficent revolution, doing wrong to no one, and bringing justice to oppressed millions.

In the work here presented I have endeavored to call things by their right names. No social wrongs are impersonal, and in denouncing or merely pointing out a wrong those who gain by such wrong must expect to receive some of the censure. I criticise classes for what they do, not for what they are. If the average day laborer who tries to keep body and soul together on a dollar per day should change places with the man who

12 PREFACE

makes a million a year, that laborer would be just as grasping and unscrupulous in money-getting as he. The wealthy are not villains, nor the poor oppressed saints. But that is no reason why the wrong practiced by one class upon the other should not be condemned. We are all as good as we know how to be. I do not believe that any being is perversely or malignantly bad. The trouble is, we are too ignorant to recognize the right and do it. I think that the words of the "Melancholy Dane" should be changed into "blundering fools all." Ignorance is the root of all evil ; perfect knowledge is perfect morality.

Then it is necessary to look all questions square in the face and try to learn the truth about them. I hope that I have done this; it is what I have attempted.

The key to the interest question, the topic which I discuss, is the currency of the nation. For that reason I have added a discussion of the currency question and set out a plan for a scientific currency. It is practical and suited to the times. To all liberal-minded persons, it is worthy of most careful consideration. The idea of using wealth in the process of exchange as the basis of a currency system is old. Holland did it successfully. The means of applying that principle are my own. I offer the work to an earnest, truth-seeking public,in the hope that it will further the cause of justice and truth. Examine it. It will repay the trouble.

J. W. B.

A BREED OF BARREN METAL.

Chapter I

Introduction. — The importance of studies in sociology— Man a social animal— The correct method — Social and economic, compared to physical science — Natural law the foundation of both — All science speculative — Happiness the object of existence — Happiness development — Must be general— Ideal state is happiness to all — In sociology as well as art and science the ideal is the standard — The ideal is that which corresponds most closely with natural, law— Natural law must be obeyed — The first business of social and economic science is to find underlying natural principles — Ethics the foundation of these sciences — Present practices and institutions to be tested by ethical axioms — Unsatisfactory results to be explained by economics — Knowledge for the use of man.

The most important chapter in the book of nature is man.

There must be an excuse for all things. My friend the artist tells me why he painted this picture and not that. My scientific acquaintance has the best of reasons for following his particular line of investigation. My clerical friend can give a reason for every sermon, and I feel that I must give a reason for this book. I find it in the condition of fellow men about me. The lot of the average human seems a strangely unhappy one. Why? is an interesting and important study. This volume is intended to wrestle with that problem, from the material standpoint. It will try to discover the why of man's material discomfort. If that is discovered, the discovery will doubtless lead to a clearer understanding of the psychological questions which confront us. From the tangible we will try to arrive at the intangible and to throw light on some of the all important questions which harass social man. It is because these problems are unsolved, that this book is undertaken, for I still believe,

"The proper study of mankind is man."

The epigram is as true to-day as when written by

Pope or practiced by Byron or Shakespeare. The field is unlimited, the possibilities unbounded. The relations of man to man are less understood than any other branch of knowledge. A correct knowledge of what these should be is the ultimate end of all mental effort. The humblest worker in the field is engaged in the grandest of occupations.

Man is essentially a social animal. All that he has, all that he is, comes from association with his fellow men. The most profitable study of man, then, is in his social relations. As we learn the physical laws of the universe by studying the relations of things, so we may learn the social laws of mankind by studying the relations of man to man. If we would profit by the study of the physical universe, we must learn its correct laws, the great principles on which are builded the harmonies of nature. It is the study and determination of these that has enabled man to harness steam, to chain lightning to his triumphal car, and count and measure and weigh untold worlds. It is by putting himself in harmony with nature's laws that man has made all material advances. Just in the same way we must learn and put in practice, the great natural laws of harmony between man and man. If we would make social and moral advances, we must put ourselves in harmony with the eternal laws of justice on which all stable social and political institutions must be founded.

Sociology and political science have more to do than to catalogue the facts of the rise and fall of prices under this or that condition, or to measure the influence of competition on this or that branch of business. There are great laws to be discovered in the social as in the physical world. We have still to formulate the gravitation and conservation laws of sociology, the foundation principles of social relations. Fortunately for us, Galileo, Kepler, Newton, Laplace and the thousands who have lived before and after them, thought that discovery was a part of the province of science. They did not content themselves with motiveless classifying of cold unrelated facts. Neither should the devotees of social science. They should try to lay a.

foundation of principles, and they must find these principles in nature. From that which is they should determine what should be.

Happily or unhappily, man can for a time disobey moral law, provided he be content to pay the penalty, and what he does is no criterion of what he should do. He may fail through ignorance to take advantage of nature's social laws, as he has failed and still fails through ignorance to apply the physical laws of the universe. To dissipate this ignorance is the business of the sociologist of to-day.

The foundations of sociology go to the very bed-rock of society; its problems are the problems of social and individual existence. If we can determine why we live and labor, and why we organize society, we have the principles for determining how we should live and labor and how we should organize society.

Looking at the problems of human life by the dim light of man's flickering reason, we are led to conclude that happiness is man's aim and object here below. The pursuit may be conscious or unconscious, the goal may be sought in this world or the next, but ask whom you will, you will find that his energies are bent in the pursuit of happiness. All happiness is relative, not absolute. Experience teaches us that the greatest positive happiness lies in the fullest development of all of man's natural powers and capabilities and the fullest enjoyment of these developed powers. It is this and not freedom from trivial pain which men seek. Every individual among the myriads born to mother earth has a right to this free and untrammeled development and enjoyment of the powers which he possesses equal to that of any other of earth's children. There can be no real, just or lasting happiness unless every human being is included. Our reason revolts at the idea of some being born the puppets of others. In practice, both classes are unhappy.

The ideal state of society is that state which secures all the greatest measure of happiness here below, and any state of society or any institutions, political or economic, which tend to develop a few at. the expense of the many, are founded on wrong principles — principles which contradict the natural underlying law of all human society. For society is organized to aid men in reaching the ends to which they all aspire. It is a means of securing happiness to man.

While an ideal state of society is not easily attained, it is to the ideal in sociology as well as in every other branch of knowledge that we must look if we would perform anything worthy. It is the divine ideal in the sculptor's mind, carefully and painfully wrought out under his chisel, which gives the enduring beauty to the piece of rough, coarse stone. It is the sublime ideal in the poet's soul which, fashioned into words, thrills and ennobles and elevates the human heart. All art strives toward the ideal, all science toward the perfect, and it is only as they approach this goal that they produce anything of practical value. The deduction of law is the end and aim of all classification and observation. If we would determine how far they are adapted to the ends for which they are intended, institutions must, then, be tried by ideal standards. We must not expect to find them perfect, but we must find them tending to perfection and not in the opposite direction; otherwise they are founded on false principles and certain to fall.

The natural laws under which men live are superior to man. As part of the universe, man is governed by the laws of the universe. His laws must be in harmony with the laws of the universe. If they are they are aided and strengthened by natural law, if they are not they are annihilated and their supporters crushed. There seems little doubt that the laws of the universe are working for good, but whether for good or bad, they must be obeyed. In their overmastering might they are forcing us onward to some distant goal, to some great beyond, and if we do not wis'h to court annihilation we would do well to place ourselves in harmony with nature's onward march. We may then use our energies in enjoying our surroundings and developing our powers, instead of wasting them in resisting the inevitable. The smallest natural law can no more be resisted with impunity than the mighty current of Niagara,

If, then, we are ruled by an overpowering force; if grooves are set and an invisible but inexorable power is driving us along these grooves, our first business is to locate these grooves and see that we keep on the track. In other words, we must discover the natural laws which rule us as a social body, and see that our social fabric is reared in harmony with these natural Jaws. We should find out what is, only for the purpose of knowing what should be. When a principle is once clearly established as a natural law, all other laws must bow to that principle.

Ethics, the science of correct human relations, is the natural foundation stone of the whole social fabric, and I propose to test with the principles of ethics some of the principles applied in society.

As the mathematician finally puts the test of axiomatic truth to every principle of his science, and by that test determines whether that principle must stand or fall, so I propose to test with ethical axioms the institutions as I find them, and thus determine their conflict or harmony with natural law.