Reminiscences of an octogenarian in the fields of industrial and social reform/16
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It is proper that I should give some experiences with the individualist group of the radical movement. I was drawn to the teachings of Proudhon more especially by his stand upon the question of interest, and so inclined to accept his theory of government, or rather of no government. An elder brother of mine, Seth H. Ingalls, had many years ago said to me: "There will be no tolerable condition for the people who labor for their living and no permanent success to the honest business of the country, as long as the power of taxation is permitted to the government." I deemed this at the time a saying too radical for serious thought but admitted that the taxing power should be more thoroughly defined than it ever had been and narrowly limited. Somewhere about 1872 I became acquainted with Benja. R. Tucker, who subsequently published the Radical Review, in which was printed my essay on Work and Wealth, afterwards issued by him in pamphlet form. Since my first advocacy of land reform, I had realized the necessity of urging it on rational and economic grounds, rather than by inviting legislation to formulate and enact statutes. The Land Limitation advocated by Mr. Evans and his confreres, I regarded as a very rational method, since it did not multiply or complicate the legislative function; but merely applied the principle of "limitation to estates in land," which now is without condition as to extent, or in its ability to deprive men of all access to the use of elemental nature, essential to both life and liberty. Mr. Tucker, who had absorbed Proudhon, in his early study of the French, and translated his "What is Property," also his "Economic Contradictions," subsequently started the publication of Liberty, a  paper devoted to Anarchy; not the Anarchy of John Most and the physical force propagandists, but of the scholarly and philosophic radical, who seeks to convince by logic and reason, not by force and outrage. He sought the patronage of the Land Reformers for his paper and to this end had an interview with myself, William Rowe, Col. Beeny, and others in New York. Our aims and measures appeared to coincide except in one point; that of asking legislation to limit the ownership of land. When asked by Mr. Rowe whether he would do this, he scornfully replied that he would not. He was asking legislators for nothing, but to stop their interference in human affairs. The others saw in this answer what I did not, that he was opposed to withdrawing from the landlord the power to exact rent. I saw that the abolition of law, not more law, was what was needed in land and all other reforms, and that his paper was likely to prove a most useful medium through which to proclaim the freedom of the earth to the use of Man. They became reconciled, and Mr. Rowe continued a hearty supporter of Liberty until his death, some ten years since, as did many others. Its eight or ten years of heroic struggle against most adverse conditions has fully justified my estimate.
In a letter to the 20th Century, giving some account of the early Land Reformers, I mentioned Liberty as having been a great help to me and to others, in enabling us to discharge our minds of the fallacy that political action, and the humble petitioning of government for the amelioration of human conditions was essential to the triumph of free land. On this I received a personal letter expressing his great pleasure at my recognition of the service Liberty had been to me in clearing my mind of the delusion that through statute law any substantial reform could be promoted.
While never identifying myself with any distinctive school of thought, and while seeing that government of some kind will get itself acknowledged and enforced until men are wise enough to do without it, I nevertheless think that the tendency now is greatly toward the increase of the rule of laws and of collective control, and that the conscientious reformer is likely to show himself upon the side of liberty, and the rule of reason, rather than the rule of force. When Mr. Stephen T. Byington, inaugurated the Anarchist Writing  Corps, I gave him my name as a member, without however subscribing to any creed, or to any essential doctrine of the anarchistic school; acceding only to the hypothetical "Equal Freedom" as the measure and standard of judgment in matters of social advancement or of industrial or commercial endeavor.
But with Mr. Tucker's admiration of Proudhon, he had imbibed a blind devotion of Proudhon's "Mutual Bank" hobby (and we all have hobbies) which the French philosopher had adopted as a means to right all wrongs to labor by uprooting the upas tree of usury, and which he deemed so important, that he would effect a bouleversement of the planet if necessary to accomplish it. How mutual banking is related to equal freedom any way other than is mutual insurance, mutual farming, mutual house-keeping, co-operative store-keeping, or co-operation in any field of production or exchange, neither M. Proudhon, Col. Greene nor Mr. Tucker or any of his disciples, who are many and able, have deemed it necessary to explain.
As early as 1888, in the investigation of Mr. George's method with rent, and his contradictory position on interest, the distinction between the terms under economic law, and statute law became apparent; and in a New York journal I made plain the contrast, showing, that what arose as rent, interest and profit economically, was salutary and tended to equalize compensations, while that arising under conventional enactments was of the nature of tribute, and the principal cause of the unequal compensations obtained by useful labor, as compared with that obtained by privileged idleness and the scheming greed of those who were enabled by legal devices to avoid the necessity to work and thus escape the operation of nature s economic laws. I showed that the contention of the moralists of ancient and modern times was against the forced usury, law sustained. The interest, rent and profit which the economists endorsed was a wholly different thing. That what the latter approved the former did not condemn, and that what the former condemned, the latter did not approve. All forms of tribute and invasion are as much opposed to economic law, which has normal operation only under equal freedom, as to the moral law.
In 1889 I sent to Mr. Tucker the article following: 
INCREASE: ECONOMIC OR TRIBUTARY.
To the Editor of Liberty:
For more than a half a century I have contended that rent, interest, and profits were wrong and should be abated. I had all that time a half-latent idea that something was lacking to an exact conclusion, and constantly anticipated having it pointed out to me; but no advocate of capital has ever done so. Through my own investigations, aided by comparing the pro and con of the discussion among Socialists, Single Taxers and Anarchists, I have arrived at the conviction that these forces, so potent in social and industrial life, are economic as well as monopolistic.
Economists treat rent, interest, and profit as if solely embraced within the principles of exchange. Moral, and, generally, religious reformers have classed them with the tribute-gathering of despotic power. Now from neither of those suppositions alone can any satisfactory conclusion be deduced, because the terms embrace wholly contradictory and incompatible things under the same name.
It has been suggested to me by Mr. C. L. James that this distinction has been noticed by Proudhon and also by Karl Marx; but he gives me no quotation or specific reference by which I can ascertain whether they also point out that, on their economic side, rent and interest are salutary as well as inevitable in their operation. All this may, perhaps, be inferred from the "Economic Contradictions" of Proudhon, but has he anywhere put it in clear form? If Karl Marx has his whole scheme of State Socialism becomes a complete non sequitur. For then it is economic law, not human misdirection and misgovernment, he essays to rectify and reform. I do not see either how Proudhon could demand the abolition of economic rent and usury. With the broad distinction between the economic and the monopolistic force involved in these terms, we have to notice the adulatory motion of the ratio of values, and the mean or point of rest. This mean, as I distinctly stated in "Social Wealth" and more fully showed in "Economic Equities," is zero.
Economic rent is confined to the more fertile soils and the more eligible location, But the less fertile soil becomes the more fertile by a change of culture, discovery of new uses and new methods, and nothing is more fluctuating than the valuations of location, which a  thousand incidents may reverse or change. In cities the relative value of location is one of constant variation. Advantage from use of capital is balanced often by glut in market. That from growth of animals and things is balanced by their subsequent decrease and decay. There is an appearance of increase when labor of care is bestowed on them in process of growth and of loss when bestowed on them in process of decay, and these on the whole, balance each other. That which is reaped as profit under our system of legislative interference is a wholly different thing, and results from class law. Rent of land is now tribute to privilege for the use of nature's forces and opportunities. Under a system of ownership where occupancy was the sole title it would disappear, and rent would then be a vibrating quantity, and subject to that modulating law which governs movement in every department of nature would secure always the cultivation of the best land. The grand distinction between the economic value and the monopolistic price of things is that the first constantly seeks the level, zero, from whatever cause of disturbance it may have become elevated or depressed, while the other forces an artificial level, as a dam prevents a stream from following its normal drift to the sea. Interest on money is held to a positive ratio, because of "legal tender" and exclusive currency laws, as well as by a monopoly of land, tariffs, patent rights, and other forms of privilege.
But the land, the plant, the stock, and even the currency require "care and keep," corresponding to, indeed constituting, the value of their use. Such service and such use are the complements of and balance each other. Demand and supply regulate the value of such service and use, the same as of other services and commodities, and constantly tend to bring them into equilibrium. Whenever stock is in excess, the service demanded for its care, or its conversion into more desirable or more durable forms, will command a premium. But such premium will tend to divert labor from other fields to this, until equilibrium is restored, after many vibrations in which will occur increased demand for stock and a premium for its use. This will tend to attract labor to lines most favorable to itself and to all. Herein appears the reciprocity principle between the use and the care of things. I have not space for further illustration. Care and  use are exchangeable and therefore economic, and will bear alternate direct and inverse ratios to each other, as do other things exchangeable, the mean of which ratio is zero. That is, the service which does or procures the use will equal it in price, subject to the fluctuations from plus to minus, caused by the relative supply to the demand.
Thus a distinction conclusive of the incompatibility of economic with monopolistic increase is found in their different effects on equitable exchange. Variations in price do not involve permanent loss to any party. Prof. Summer attempts to emphasize the equities of trade by saying: "The earnings of commerce are not taken from that which any one ever had." I quote from memory. He wishes to be understood that the values added by ecommerce may be equitably taken by those who perform the services of commerce, and this is or would be true under freedom; but a patent untruth under, the reign of privilege: for even he would not admit that prices under protective tariffs or government subsidies were other than robberies of labor. In rent and interest under monopoly of land and class currency laws the steal is still more certain and quite as apparent. It is only by the use of terms capable of such opposite meanings that legal monopolism is able to appear other than it is, an organized despoiler.
STATEMENT OF THE PROBLEM,—ECONOMIC.
Care and maintenance of productiveness = Use of land.
Service of superintendence and conservation = Use of stock, plant, etc.
Care in preservation from decay = Growth of things.
Labor cost of production = Mean prices of commodities. Cost is not the limit, but the mean of price.
STATEMENT OF MONOPOLY INVOLVED.
Rent = Privilege arising from monopoly of land.
Interest = Privilege from legal tender and currency class laws, giving a monopoly.
Profits = Governmental subsidies and protection from the economic law of supply and demand.
By their very terms these are excluded from any equation with values effected through labor. 
I shall be glad to have these general propositions criticized, the more severely the better. J. K. INGALLS.
Glenora, New York.
This he published, commenting upon it as follows:
Mr. Ingalls calls for severe criticism of the general propositions advanced in his article on "Increase." From Liberty he will certainly receive support rather than opposition, for it never entertained a view different from that which he now holds. If it has any criticism to offer, it is that Mr. Ingalls is not justified in claiming originality and novelty for his important distinction. Even those who seemingly dissent from his main conclusion and who insist that cost is the limit of price do not in reality mean to contradict him. From the standpoint of economic logic, Mr. Ingalls's phraseology is doubtless to be commended as superior in point of exactness and accuracy. But it should be borne in mind that, when Warren and Andrews spoke of cost as the limit of price, they did so because they aimed at emphasizing the ethical side of their doctrine and the contrast which equity presents to commercial cannibalism. T.
Subsequently, I sent an article to Twentieth Century, showing six positive distinctions between the rent arising economically and that which sprung from legal privilege. On its appearance I received another personal letter from Mr. Tucker, characterizing the performance as splendid. It seems only gradually to have dawned on Mr. Tucker's mind that my contention about Interest and rent was dangerous to the claims of the Mutual Bank, for as late as 1894, in a discussion with Mr. Byington occurs this passage:
"It must not be supposed, however, that I share Mr. Robinson's view that economic rent is not a reality. I believe that economic rent exists now, and would under freedom, but then with a tendency to decrease and a possibility (though not a probability) of ultimate disappearance."
Had he considered that rent and interest were the same, and identical in their source and in their relation to the awards of labor, he would not in the same No. of Liberty with the above have contended that "free and mutual banking will cause interest to "disappear as an influential economic factor." December 15, l894 the following appeared in Liberty from me. 
There is an economic interest as well as rent, and it differs from that which is captured by the stronger and more cunning from the weaker and more stupid through the enforcement of barbarous (not economic) laws and customs. Since the days of Jeremy Bentham, the nature of usury has been argued, pro and con, on parallel lines; nether party discovering that what he approved was not at all the thing which the other condemned. Neither traced interest to its source.
Interest is derived from the increase of any labor over its bare support; the natural wage of Adam Smith, where it exceeds the starvation wage of David Ricardo. For, without such increase, rent, interest, or profit could have no existence. Some labor, from unfavorable location, inefficiency, or lack of knowledge, is unproductive. In the application of new discoveries in machinery, and in new processes of production and exchange, and in opportunity to co-operate with others in effort, the one who holds to the old method works at a disadvantage in comparison with the one who first adopts them, and' there seems neither utility nor equity in requiring the alert man to share his surplus with the laggard, as the State Socialist would recommend, and as the Anarchist must do before he can abolish economic interest.
In the recent discussion in Liberty more than one disputant follows grooves which prevent him from seeing the true position of his opponent. From the standpoint of the sentimentalist, interest is tribute captured from the increased wealth due to labor, by the help of State interference. But the economist sees the economic increase from successful labor, and thinks it just; and, whether just or not, it is unescapable,—not because, as he imagines, property is productive (unless, indeed, it is made to embrace the land or the laborer), but because of the uncertainty of all human endeavor, and because men are willing to pay a premium for the opportunities and instruments which best assure success, or the immediate gratification of desire. Now, that official circulating credit could eliminate the uncertainties and variability of productive industry is quite problematical. Could it affect the rate of interest in any way, it could not abolish it for the reasons given. That mutual banking, or freedom to engage in the issue of circulating credit, can eradicate usury  has never been demonstrated or logically made to appear. The legal or market rate of interest is at present greatly increased by the charge for the endorsement of one firm by another. A premium of from one to three per cent., and even more, is voluntarily given to a party of well-known soundness by a party not as well known, though sound in point of fact.
Had each party the freedom to circulate their credit at will, it could in no wise alter this relation of the parties in such transactions. The credit more widely receivable would command a premium over that confined to a narrow and local circulation.
It is when contrasted indebtedness is subjected to enforced settlement that the true inwardness of our governmentalism is manifest. In soliciting the State to collect his debts, however contracted, the Archist exposes his true position. But, when the Anarchist calls upon his comrades to help him enforce his contracts, because they are contracts, and assumed to be made under freedom, in what important respects does he differ from the Archist? To me it seems quite immaterial whether abundant money makes the rate of interest higher or lower, or whether a three-cent piece could do the business of the world,—as evidently it could, were it sufficiently divisible and all other money effectually prohibited. What utility requires is material, and whether the interest we are investigating is economic or the fruit of capture and exploitation. If economic, it is necessarily variable and undulating, and yet inexpungable. If exploitive, it is Archic and involves interference and physical enforcement.
Economic interest is inevitable from the uncertain award of labor in production and the variations in the ratio of supply to demand; besides, there is a large proportion of the laborers unable and wholly disinclined to employ themselves. This state is likely to continue for generations, and they will continue to sell their labor at a rate which will yield profit to the employer, out of which he can pay interest. Government might despotically attempt to prevent this by law, with punitive sanction; or by wholesale employment of labor, at no profit. How an Anarchist could imagine a scheme of circulating credit would deviate the defects of ignorance and negligence, and the variations of values in exchange, is too deep for me. 
The importance of circulating credit, or of any credit whatever, except the unavoidable balances of reciprocal commerce, is greatly overrated by fiat-money men, and by paper-money men of all classes. All time credits, all loans on bonds, etc., are but compounding the penalty for deferred payment; are not only unnecessary, but vicious, with little compensative benefit for the incalculable harm they do. Even the Christian formula: "Lord, hoping for nothing again," proves oftener a curse than a help to the borrower. To discount the future results of one's labor can only result in loss. This is particularly true of the wage-worker, who finds himself often under the necessity of requiring his wages before they are earned. Neither government nor comradeship can usefully interfere here. The form or material of money can in no way change the relation between borrower and lender, unless, through contraction or inflation by those holding the authority, it is made to favor the one at the expense of the other, which violates both equity and utility.
The State, as an arbitrary potency, has created and sanctioned the appropriation of the land by private greed, and of the laborer as well; has devised for a class the monopoly of opportunities of production, exchange, and finance. To divest it of the powers thus used is the only logical plan for restoring economic equity. With; the taxing power unrestrained, it can be exercised to the fattening of favorites by starving the laborer. It can tax the issues of your mutual banks out of existence, as it has already those of your State banks.
The operation of economic interest, as of rent and profit, tends to equilibrium, equality in compensations and of conditions. There is no occasion to antagonize it or decry it. Liberty has accorded to this theory of interest the merit of novelty. Will any of its writers or readers attempt to show that "what is new in it is not true?"
To this he replied that I had given no clear definition or measure of the term. He must know what was the poorest capital in use and how it was recognized as such, or "Mr. Ingalls' economic interest was a decidedly indeterminate economic factor." He offers no help: in ascertaining the unknown quantity, or to the method of determining what is the poorest land in explaining economic rent; but insists  on direct answers to three other questions, which he puts "straightway:" 
1. If a thousand men engaged in different lines of business unite to form a bank of issue; and if the bank of issue unites with other similar banks for clearing purposes; and if said bank lends its naturally well-known circulating credit to its members (or to others, for that matter) against conditional titles to actual and specific values given by the borrowers,—do these loans of the bank's credit cost the bank anything beyond the salaries of manager and assistants, rent of building, expenditure for paper and printing, losses by depreciation of securities, and sundry incidentals?
2. Do not statisticians and economists agree that a discount of one-half of one per cent. covers the expenses referred to in the preceding questions?
3. If men were free to unite in the formation of such banks of issue, and subject to no penalty or lax whatsoever for so doing, would not competition between the banks thus formed force the price of the service rendered by them down to cost,—that is, one-half of one per cent.,—or to a figure closely approximating it?
Now, I insist, and I have a right to insist, that Mr. Ingalls shall answer these three fair and pertinent questions directly, without extraneous discussion, without any mingling of considerations or speculations not absolutely essential to the answers. For either these direct answers will be what I think they must be, and then the case of the Anarchists (so far as finance is concerned) is established; or else they will be something else, and then the case of the Anarchists falls. T.
In January, the controversy was continued:
NARROWING THE INTEREST ISSUE.
To the Editor of Liberty:
To the three questions propounded to me in your issue of December 15, I make answer and say:
To the first: That the loans of the banks supposed would cost them nothing but running expenses and incidental outlays and losses. But such banks are only possible under the three conditions mentioned, neither of which is supposable without a motive to derive some profit or advantage therefrom; unless indeed they were  compelled by penalty, which is in accord neither with economy or equal freedom.
To the second: It is probable that a discount of one-half of one per cent. per annum would meet the cost of such banking. But why should bankers, or their employees, be expected to work for bare support, while producers should have, when in excess of such support, the whole product of their labor, and so add to their capital the interest, not of the capital, but of their labor?
To the third: In the absence of State or collective meddling, competition would tend unquestionably to reduce discount to its lowest rate, which would ordinarily be something above cost. Otherwise at the vanishing point the banks also would disappear, though under the impulse of fierce competition they might sometimes discount, "sporadically," at cost, or even at a loss. The editor's words on economic rent seem appropriate here: "I believe that economic rent exists now, and would continue under freedom, but then with a tendency to decrease." Substitute interest for rent, and you have the case of economic interest, as distinguished from plutocratic interest.
Where land is embraced in the term capital, no casuistry can show a distinction between interest and rent; for where interest is paid on mortgaged premises. The measure of both is the same. This measure, as given by economists, is highly misleading. Superior and inferior soils have very little to do with it. One man will starve on land of the same quantity and quality as those of the land from which another will obtain an increase over his support. Rent from urban and suburban places, and even much rural rent, has absolutely nothing whatever to do with the quality of land. In the latter case it is largely owing to the necessity for restoring exhausted fertility and decaying premises. Increase is determined by facility for co-operation and the practical division of labor, by the degree of utility of novel appliances employed, and by wise adaption of capacity to special work. Bankers no more than laborers can rationally be expected to work without reasonable expectation of having their capital stock increased thereby. But, whatever the associated banks do for each other, it is illogical in the extreme to suppose that they will discount gratis the non-circulating credits of others with their well-established circulating credits. Those who have little credit or capital  will be taxed, not according to cost of doing business, but according to their needs, under freedom as under law. Legal or combination rule may mitigate or aggravate, but cannot help their condition permanently. Their only escape is to cease borrowing.
It is quite true that without capital or credit the laborer might not be able to earn starvation wages; but it does not follow that therefore there must be some increase which arises from capital. And if such increase arises from capital, Why not allow capital to have it? The editor must be aware that there is an obverse side to the capital and increase question. In a majority of eases the capital "comes home missing," or is not maintained intact. Failures are not especially experienced by those who start in their industrial career without capital, but rather by those who start with borrowed or inherited capital. Not capital, then, in kind or quality is the measure of interest, but the capacity and adaptability of the labor to it. Since the editor's principle premise is found to be erroneous, my contention is relieved of the several dilemmas in which the other five questions seek to involve it. The intrepid and ingenious worker, under freedom, will find or create the conditions and helps necessary to increase his wealth, or more desirable satisfaction, while the indolent or unwise one may only see his inherited or borrowed wealth disappear. Is it the capital or labor which has made or failed to make the increase? Surely, capital proves a most indeterminate factor as a self-creator.
I submit that, in distinguishing between economic interest and that which is the fruit of monopoly, the earning of the toiler from the plunder of the spoiler, I have invaded no right to use the old term without the qualifying phrase; I oppose that as strenuously as Liberty can. My idea explains many phenomena in wealth acquirement unexplainable by any extant theory, and is not to be accounted for as sporadic or epidemic. To me it appears the key which will open the doors of prosperity and happiness to the misguided and plundered toilers, who have but the sense and the courage to enter.
I should deeply regret the discontinuance of Liberty, or to see the doughty knight disheartened who has so long, and against fearful odds, upheld the hopeful standard, and helped me at advanced age to jump the ruts of absurd politico-economic superstitions. I should  equally deplore seeing Liberty become authoritarian, or philosophical Anarchy a fossilized ism.
The power of the State or collectively to levy tribute, collect rack-rent, evict from land and home, enforce exhaustive usury, and aid plutocrats to plunder the increase labor has produced, is no non-essential, past, present, or future. The "common consent" to the exercise of these powers must be withdrawn ere we can have any salutary change in our industry, commerce, or finance. I trust that this assumption w ill not imperil Liberty or Anarchy. Let us have freedom, whether it will give us circulating credit without paying for its use or no. J. K. INGALLS.
Glenora, N. Y.
[Narrowing the Interest Issue] 
Intent upon my purpose of keeping the issue narrowed, I shall ignore for the present everything, in the foregoing article except the answers to my three questions.
To my first question Mr. Ingalls answers that the bank of my hypothesis could issue its notes at a cost not exceeding its running expenses and incidental losses. So far, then, my claim is sustained.
But he answers further that such a bank could not exist in the absence of a motive for its existence. It remains for me, then, only to supply the motive. The task is easy. The thousand business men of my hypothesis would unite to form a bank of issue, and would connect this bank of issue with other similar banks for clearing purposes, because thereby they could establish a collective credit having circulating power, which each of them could obtain in exchange for his equally good but less reputable individual credit, having to pay therefore nothing but the cost of this exchange of credits. In other words, these business men would form such a bank as I describe in order to borrow money at less than one per cent. instead of paying, as they do now, from four to fifteen per cent. Is the motive sufficient?
To my second question Mr. Ingalls answers that the cost above referred to would probably be met by a discount of one-half of one per cent. Sustained again. I have not to discuss here why bank employees "should be expected to work for bare support." It suffices for the argument to know that what these employees are now willing to accept for their services can be paid to them out of funds provided  by a discount of one-half of one per cent. And this Mr. Ingalls admits. When we have exhausted the present issue, then I will consider with him how many tears I can afford to shed over the sad fate of those bank presidents for whom a discount of one-half of one per cent. provides salaries of only ten, fifteen, and twenty thousand dollars. [I did not contemplate such salaries when I said one half of one per cent. would probably pay the cost. Did he when he put the question?]
The discussion now centres, therefore, upon the following question, which I put to Mr. Ingalls:
Is the desire to borrow money at less than one per cent., instead of at four per cent. or more, a sufficient consideration to induce business men to form such banks as I have described?
If Mr. Ingalls answers that it is not, he must show why it is not. If he answers that it is, then the proposition which, according to Mr. Ingalls, has never been demonstrated, will have received its demonstration,—the proposition, namely, that free and mutual banking will make it possible to procure capital without paying for its use (the discount being charged, not for the use of capital, but to meet expenses incidental to the transfer of capital). T.
In March this communication and answer appeared.
THE INTEREST QUESTION NARROWED TO A POINT.
To the Editor of Liberty:
To your question: "Is the desire to borrow money at less than one per cent. instead of more than four per cent. a sufficient consideration to induce business men to form such banks as I have described?" I answer: Yes! unquestionably, so far as the borrowers are concerned.
Having thus released myself from the unilateral inquest, I will add that, had you not excluded from the subject the lender, an equal factor with the borrower and complementary to him, I could not have made the answer you sought. Banks deal in "evidences of debt," They sell as well as buy credits. Indeed, they "create them out of nothing" to sell and exchange for other credits, and buy them back to decreate into nothing again. Fiat credit is possible, not fiat money. To obtain four or more per cent. interest is, therefore, an inducement of equal strength with the one you describe, and cancels  it. Interest at zero would leave the formation of your banks economically motiveless. Otherwise, they would have been formed long ago. Col. W. B. Greene informed me forty-five years since that he was pressed by borrowers to form his mutual bank, but found no lenders, except a few philanthropists who would lend their money without interest anyway, and these he was unwilling to risk sacrificing in an untried experiment. The member who had more capital than he could use, and all that he could use, would be wholly indifferent to the rate, high or low, because he would get back in dividends all he paid out in discounts, less expense of the business, and no more. The members of all classes, contemplating lending to outsiders, would desire a high rate, and so turn the scale in favor of the high rate.
The great Rochdale Association found it impracticable to sell their goods at cost, and so adopted the method of selling at the market price and dividing the profits among the members or adding to their capital. The mutual banks would find the same difficulty in selling their credits, and would doubtless adopt the same method of charging the current rate of interest, making dividends according to capital invested.
None but members could borrow at cost, or get their discounts returned in dividends.
What banking would be under industrial and commercial freedom can be foretold, I think, with some degree of certainty. What Anarchy would be under organized bank rule, mutualistic or otherwise, is as difficult to foresee as what government itself will become under our present plutocratic regime.
But what I have said I am not to be understood as affirming that some payments of interest may not be escaped, for they are now, and the costs as well, through forbearance of creditors, bankrupt acts, and other devices, honest or fraudulent. What I do mean is that in a general way interest is unescapable, like rent, profit, or taxes. The only question is whether comrades and governments shall enforce the economic or the monopolistic principle. While we have laws to enforce rent, interest, or profit-bearing contracts, other than as to the matters of equity, there is no safety for the debtor.
Whether your positions or mine have been sustained, or whether  we are mutually progressing on converging lines toward the point where they coincide, can be of only personal interest. What the readers of Liberty are interested in knowing is whether Anarchy is to take along with it into the coming era rack-rent, evictions, mortgages, foreclosures, and the forces and methods of invasive power, in defiance of the public good, the economies and Isonomics of social science. J. K. INGALLS.
Glenora, N. Y.
With apology to Mr. Ingalls for my persistence, I must continue the "unilateral inquest" a little further, regretting that I have not been relieved from doing so by an unequivocal answer to my last question. The qualified answer that Mr. Ingalls gives is this: The desire to borrow at less than one per cent. is a sufficient motive to business men as borrowers to induce them to embark in mutual banking, but the desire to lend at more than four per cent. is a sufficient motive to business men as lenders to keep them from embarking in mutual banking. Now I must ask for answers to the following questions:
(1) Does the business man who has capital but lacks cash—that is, the business man who wishes to borrow—sacrifice, by engaging with others in mutual banking, any opportunity of lending (at four per cent. or any other rate) which he enjoys before so engaging?
(2) If so, what?
(3) If not; if the business man in question, by embarking with others in mutual banking, does not thereby damage himself as lender,—is not the desire to borrow at less than one per cent. a sufficient consideration to induce him to so embark?
I respectfully insist on answers to these questions. Mr. Ingalls is a very able and sincere writer on economic problems. He deservedly exercises an influence on the class of people to whom Liberty appeals. Repeatedly during its publication he has come forward with a denial of the position that mutual banking will make it possible to borrow money without interest. I have now determined to force him, once and for all, to make good this denial by proof, or else to retract it. Only by refusing to answer me can he avoid a choice between these two courses; and, as he is an eminently frank and honest man, he will not refuse to answer me. When he has acknowledged his error,  or by his answers has forced me to acknowledge mine, I will discuss with him the other points which he raises, and especially the extraordinary statement which he attributes to Colonel Greene. T.
In May the conclusion:
POINT OF THE INTEREST QUESTION.
To the Editor of Liberty:
Before replying to your questions as amended, but still so ambiguous as to invite equivocal answers, I will briefly attempt to ascertain where we are (at) in this discussion. At the conclusion of my brief essay on "Unescapable Interest" I had invited discussion of the truth of what was new in it. I confess to surprise that, "instead of a book" or even a paragraph of argument, I was met by a string of questions, with claim of a right to force answers, and refusal to discuss the question until there were no question to discuss and until I should retract or refuse to retract a denial I had never made,—viz., that "mutual banking will make it possible to borrow money without interest;" or that a free market will have a tendency to reduce the rate of interest to an equilibrium, zero. It does not seem to have occurred to the editor that a "free market" embraced anything more than liberty to divide, coin, and circulate credits and commodities, or that freedom to produce, possess, and exchange wealth were necessary before free banking could have more than a theoretical existence.
To your early question I answered that it was based on three conditions, neither of which was even supposable without a desire to derive some advantage, profit, or interest therefrom. In the editor's eagerness to make me "fess," he did not become aware that, in establishing the existence of a motive for mutual banking, he at the same time established the existence of economic rent or interest for the use of capital, since the reduction of the percentage would be so much gained to capital or to the increased profit of labor in the use of capital. His contention that the use of capital increases production is an admission of the same kind.
In order to avoid misuse of terms, I think we should use the word usury for monopoly interest, which is its exact meaning, while interest proper should be called interest still, as that is its original meaning,—"premium for the use of capital" being only one, and the fifth in order, of Webster's definitions. It might also he used to indicate  that portion of interest after it has been captured from the rightful holder; but usury is a better term for that. Rent, which is synonymous with interest or usury, is also used to denote the normal advantage of superior soil or location, whether held by the occupier or captured by a landlord; and rent from use of more or better capital, whether enjoyed by user, or plundered by lord of money or capital, is still called rent, as in France, or annuity, as in England.
The discussion seems to have arrived at a point capable of reduction to a syllogism something like this: Interest, or increase of labor's production from use of capital, or saving of the same, is the efficient motive for forming mutual banks; but mutual banks will kill interest; therefore, mutual banks will kill the motive for their formation.
A deduction less absurd would be; the interest constituting the motive to form mutual banks is a wholly different thing, or a different relation of the same thing, from the thing the banks were formed to kill. But this deduction would give the case to economic rent, interest, etc.
I can now proceed to answer the questions last propounded, in which the ambiguity still lingers. "Business men" are not all borrowers, unless they are all lenders as well. The first question relates to borrowers only. I should say that a borrowing business man would lose no opportunity he ever had to lend at any rate of interest, because to be able to lend would make him a lending business man, to whom the question does not refer; but to be able to borrow at one per cent. might increase his opportunity greatly (as a lender). For example the national banks, who borrow at one per cent., or less, of government (yet do not lend at a less rate on that account.)
The second question is made unnecessary by the answer to the first. The third requires also an alternative. The borrowing business man would have a reasonable consideration for forming a mutual bank; a lending businessman would have none. National Bankers, with little cash and considerable capital (bonds), are induced to form national banks; but there are many private banks and State banks who have more cash than capital, who do not avail themselves of the opportunity, and many national banks have thrown up their charters and gone again to private or State banking, some of whom are now paying their depositors three per cent. on their deposits, and even six per cent. 
I shall be ready to recant my heresy whenever it is shown that the "saving grace" of mutual banking for discount purposes, and the capitalization of debts, is a cardinal doctrine of the Anarchistic church; but I think the editor will first retract his endorsement of economic rent, or else his denial of the existence of economic interest, unless he is able to compromise on the "sporadic" in both. I am certain he will be unable to show wherein rent and interest differ; which I would be glad to have him attempt. It would also greatly gratify me to have him explain the nature of the "appropriate legislation" by which he will prohibit the ignorant and shiftless worker from exchanging a part of his natural wages (the increase) with a boss, dealer, pawn-broker, or lender who will relieve him from a little care, exertion, or responsibility, or discount the fruits of his toil before ripening, and on such terms as the two may agree upon. [That would consist with despotism not freedom.] I think the editor mistakes greatly the character of the labor dollar of Andrews, the labor note of Warren, and particularly the labor check of the Labor Exchange. The purpose is not, as I understand, to create a bank of discount, or a loan association, but to employ an instrument or tool, to effect a ready completion of commodity exchanges, in order to counteract the evil to commerce of our present financial credits, which operate to aid the forestaller to hold commodities out of market for a rise, resulting in periodical gluts, financial panics, and industrial crises.
Lending has not the remotest relation to exchange. I can understand that completion of one side to an exchange can be deferred and usury charged up as a penalty therefore. But how a loan can become an exchange without compounding the penalty—in itself a misdemeanor—I do not see, or how it can even then become a factor in exchange. Credit other than the strictly commercial adds in no way to the circulation of commodities, to the amount of land, or to the capacity to labor. Credit and money are economic factors only as they become instruments in facilitating the completion of exchanges, [not when deferring it.]
It becomes necessary, first, to show an economic necessity for borrowing, which at the same time will prove the impossibility of killing interest, either economic or monopolistic. Indebtedness and  usury are inseparable, except through repudiation or a bankrupt law. Now, if a necessity exists for borrowing, or if there be even an unreasoning demand for loans, the same remuneration, including increase, will be commanded by the lender as that which is received in other lines of business. If no such necessity exists, there can be no necessity for banks of discount. If lending be a benefit to the borrower, or compatible with the public weal, which I in general terms deny, it cannot be had without paying its market price. If it is not a benefit, but, as a rule, an injury, there is no call for interference to enforce its agreements.
I trust the editor has exaggerated his position by intimating that he has no use for Liberty, unless it will enable mutual banks to abolish interest. It is no exaggeration to say that the correspondent has no occasion for an anarchy which is to become the instrument of invasive barbarisms, bonds, mortgages, foreclosures, evictions, forfeitures of land, home, opportunity to labor, and even of personal freedom. The enslaving "sacred contract" has no attraction for me. "The light it sheds saves not, but damns, the world."
If my answers suit the editor, and he feels sustained in his positions, and that he has demonstrated theoretically what I declared had never been demonstrated positively, my general positions still remain, unquestioned and unquestionable,—viz,
First, that from labor, through use of land and capital, all increment, economic interest, is derived.
Second, that all hiring of land, of capital (or of money, if you will), under monopoly, is tribute extracted from the interest earned by labor.
Third, that such tribute under such dependence is inevitable while the monopolies are legally sustained.
And I will add a fourth by way of suggestion: The abolition of land rent would greatly reduce the tribute now exacted by all other monopolies. Abolition of other rents could not in any way reduce tribute from the use of land or ownership of labor, but would rather tend to increase them. J. K. INGALLS.
Glenora, N. Y. 
THE VANISHING POINT REACHED.
Mr. J. K. Ingalls seems to imagine that the answers which he now gives to my last series of questions are as equivocal as his answer to my previous question. Not so. The terms in which he answered my previous question implied two opposite motives influencing at the same time a business man fulfilling a double capacity, as borrower and lender,—and canceling each other. As my question did not concern men who, as individuals, were in the market as lenders, but only those who were in the market as borrowers, this answer was equivocal. But the answers now given to my last question distinctly recognized the borrowing business man and the lending business man as two individuals, and this recognition removes all the equivocation; for the desire of a lender to lend at a high rate cannot cancel the desire of a borrower to borrow at a low rate, provided the borrower, by association with other borrowers, can provide himself with a source from which to borrow at a low rate,—a condition not as paradoxical as it seems, since the fact of association creates a credit that before had no existence.
The present answers, then, being straight-forward and satisfactory, let us review the admissions which I have secured. Mr. Ingalls has admitted that business men desiring to borrow have an adequate motive for embarking in mutual banking (see his article in the present issue); he has admitted that the loans of a mutual bank's credit would cost the bank nothing but running expenses and incidental outlays and losses (see No. 305); he has admitted that this cost would probably be covered by a discount of one-half of one per cent. (see No. 305); and he has admitted that, "in the absence of State or collective meddling, competition would tend unquestionably to reduce discount to its lowest term, which would ordinarily be something above cost" (see No. 305). I have interpreted this last admission as meaning that in banking the force of competition would have a tendency of the same strength as that which it has in other businesses similarly free from physical limitations,—in other words, that the tendency would be strong enough to cause the price to hover around the cost limit, now rising a little above it, now falling a little below it, but averaging cost, or perhaps a shade more. In neither of the two articles which Mr. Ingalls has written since this [l41] interpretation appeared has he taken any exception to it. I am justified therefore in assuming that he admits this also.
Now, this series of admissions constitutes the entire ease for mutual banking. Whether or not it was ever demonstrated before that mutual banking would abolish the payment of interest for the use of borrowed money, I have now led Mr. Ingalls to demonstrate this himself. His declarations show that under freedom the rate of discount would fall to nearly one-half of one per cent. This is equivalent to the abolition of the payment of interest, for in such a money market an individual ease of interest payment would cut no figure economically, any more than one's occasional payment of a quarter to an urchin for delivering a letter cuts a figure now that letter-postage has fallen to two cents. Mr. Ingalls has formally allowed that mutual banking will do all that it claims for itself, and he is forever debarred from repeating that denial or doubt of its claims which has been heard from him at intervals for many years. I began this little campaign of question and answer for the purpose of silencing this gun, and I have effectually done it.
Thus ends this matter. Now Mr. Ingalls desires me to discuss with him the question of the existence of what he calls economic interest,—that is, the question whether people can do more with capital than without it. He asks me to retract my "denial of the existence of economic interest." I pledge him my word that I will retract it as soon as he shall quote to me the passage in which the denial occurred. There exists no such passage. To have denied so trite a truth would have been no less remarkable than Mr. Ingalls's grave persistence in affirming it. I do not approve the new use that Mr. Ingalls makes of the word interest, but I have nothing to say in dispute of the entirely undisputed idea which he expresses by the phrase "economic interest." When he denied my position, I had a right to expect him to answer my questions. When he shall show that I have denied his position, he will have a similar right to expect me to answer his questions. And, if he drives me into a corner, I swear that he shall hear no complaint from me that he is trying to "force answers."
But, while I have as yet no occasion to discuss "economic interest" with Mr. Ingalls, it is fitting that I should answer him on certain  incidental points that he has made concerning the manner in which mutual banking may be put into practice, and with these matters I purpose to deal in a later article. T.
 See Appendix ___
 See Appendix ___
 Liberty, Oct 5, 1889. Vol. 6, Iss. 21; p. 6.
 "On Picket Duty," Liberty. Oct 5, 1889; 6, 21; p. 1.
 Twentieth Century, ?????
 "Neglected Factors in the Rent Problem," Liberty, Dec 15, 1894; 10, 16; p. 1.
 "Narrowing the Issue," Liberty, Dec 15, 1894; 10, 16; p. 2.
 "Unescapable Interest," Liberty, Dec 15, 1894; 10, 16; p. 4.
 "Narrowing the Issue," Liberty, Dec 15, 1894; 10, 16; p. 2.
 "Narrowing the Interest Issue," Liberty, Jan 26, 1895. Vol. 10, Iss. 19; p. 4.
 Narrowing the Interest Issue, Liberty, Jan 26, 1895. Vol. 10, Iss. 19; p. 4.
 Ingalls, "The Interest Question Narrowed to a Point," Liberty, Mar 9, 1895. Vol. 10, Iss. 22; p. 4. Tucker's response follows Ingalls' letter in the original, just as it does here.
 I have never been able to find confirmation of this statement, but documentation of Greene's practical reform attempts is scarce. There is certainly no reason to assume that Greene did not attempt to form a mutual bank.
 Josiah Warren explicitly distinguished the method of his Time Store from that of the Rochdale cooperatives.
 Liberty, May 4, 1895, p. 6.
 Liberty, May 4, 1895, p. 4.