Reminiscences of an octogenarian in the fields of industrial and social reform/17
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A careful review of the discussion in the previous chapter, will I think enable the reader to discover that it was carried on under mutual misapprehension. Mr. Tucker conceived that Mr. Ingalls denied that freedom in banking would make possible the procuring of capital without paying for its use; when Mr. Ingalls had only asserted that no banking device could wholly "eradicate interest," "kill interest," altogether. The latter had imagined that Mr. Tucker had denied that "economic interest" existed at all, when he had: only said that it would "disappear as an economic factor," and could have nothing but a "sporadic" life under a conceivable system of Mutual Banking. Hence the debate on parallel lines without satisfaction to either. The issue turned really upon the third question, as no difference arose on the other two, although Mr. T. claimed their admission as distinctly sustaining his position. Mr. I. not being a metaphysician or "master of logic," like his opponent, was slow to apprehend the little game, which had been put up on him; "this little campaign of question and answer for the purpose of silencing this gun," which had been annoying Mr. T. so long. That he may "have effectually done it." must be so, for he is "an able and sincere writer." To my lay mind however, a deduction from a hypothetical premise, acknowledged to be "paradoxical," falls far short of being a scientific demonstration. That he is right, is still probable, since mutual friends think with him; notably comrades Henry Cohen who avers we cannot avoid going in debt, but can avoid paying interest on it; A. L. Ballou, Geo. H. Coursen, Jr., Francis D. Tandy, author of Voluntary Socialism and Joseph A. Labadie. The latter was called to account, by the way, for writing so loosely as to allow "J. K. Ingalls  and others to put nonsense into his words." Mr. Tandy has not yet been brought to book, although he gives away the mutual bank hypothesis, by assuming that banking will become under equal freedom, mainly an individual affair.
But there can be no doubt as to the silence of the gun, so far as the columns of Liberty are concerned. My name has not appeared in its columns, but once for two years, and that only to designate as "nonsense," a little notice I sent it commending Labadie's lecture at Detroit, one word of which, it was not allowed the readers of Liberty to see.
After the great triumph in his "campaign of questions," had ended this matter," he promised to answer me "on certain incidental points," of the facts and science of banking, at a later day. This was repeated once or more in the course of the debate and by letter and also personally to me; yet a prudent silence has remained unbroken, even as to "the extraordinary statement" attributed by me to Col. Greene. But there were other mediums through which my pen was able to reach some of Liberty's readers. When Westrup's book appeared I wrote a lengthy criticism upon it, exposing its fallacy in placing the money question before the land question; the impossibility of making "the abolition of usury unavoidable," and showing that while denouncing the idea of a standard of value as a gross absurdity, he had, in successive sections, proved that labor furnished both such measure and standard.
When Cohen's edition of Greene's Mutual Banking was issued, I was requested as a member of the A. W. Corps, to write a notice of it. I did, and sent it to Mr. Cohen. He returned it saying he could not use it, as he did not agree with me on the subject of debt; that debt was the order of the day, and any banking system must provide for it.
When Mr. Tandy's book appeared, I wrote a notice commending the general scope and treatment of the subject, but pointing out an error or two where he had followed Tucker and Bilgram in regard to failure to perform contracts, who claimed it was an invasion and to be punished as crime, and showing that while he had appeared to favor the Mutual Bank fad, had actually given it away.
These were all brought to Mr. Tucker's attention; he has ignored  them all, as he had a perfect right to do; but which I feel certain he would not have done, if he had thought he could have answered them satisfactorily, or worked another little campaign of questions.
Still much consideration should be shown him for his over tasked hours, in his endeavors to keep Liberty afloat, and to promote the great principle for which it stands, and to which his hobby is not a very serious obstacle.
That economic rent will continue under Freedom as under conventional statutes, a positive factor, there seems no doubt. That it will also prove, and perhaps as often, a negative one does not invalidate the position, but strengthens it. Mr. T. does not think it probable that economic rent will wholly disappear. Nor is it more probable that economic interest will do so.
Say the economists, "who so holds land of a better quality than such as would be worked without rent, holds rent, and the only question is whether he shall enjoy it himself or sell it to another." It is the same with capital. That legal money more readily commands interest than commodities, is because it is a lien on every kind of property and commands that especial commodity, which is best fitted to the requirements of the user, and to his ability to use. Mr. Tucker recognizes the tendency of rent to disappear, yet admits it improbable that it will ever do so wholly. But when I show that interest is not likely to wholly disappear for the same reason, he assumes that this ingenious, not ingenuous questioning, has compelled me to demonstrate that my contention was disproved.
With his contention, tendency to disappear, means possible but not probable disappearance. With mine it always means positive disappearance; and nothing else!
The only noticeable point of difference between us is, as to whether monopoly of land or of money is the greater evil. But this difference is more in the statement than in the substance. Whether there is a greater robbery through the ground rent, or through the rent of money and capital in buildings and plant, there can be no question; but whether the ground rent is the fundamental rent, on which the other depends, or is, as Kellogg contended, dependent on the interest rate, is another question. Assuming the disappearance or great reduction of interest on money and capital, through the repeal of unequal  legislation about money and capital, while unlimited ownership, or dominion of land remained, it would not have the slightest effect on the amounts of ground rent collected. It would enormously increase the price of land; but a farm rented on the Metayer System and yielding to the owner 500 bushels of grain, or its equivalent, would still rent for the same.
The fatal fallacy in the case as held by Mr. Tucker is, the ignoring of the voluntary borrowing and paying of interest on the part of many persons in business and out of business, where "an inducement is given to the endorser of a note," and as a bonus, where the importunate spendthrift, who desires immediate means, and the gambler with money, stocks or speculative enterprise, who can, or thinks he can increase his chances by the use of large funds, eagerly accepts any terms to obtain the means to follow his bent or fancy.
Were all men judicious, free from vice and error or hallucinations of any kind, a possibility of the disappearance of interest, might be argued with some plausibility. There seems but one possibility of stopping interest; that of stopping borrowing, and that one not a thing probable ever to occur. There is no need however that laws should compel its payment, since borrowing is not business, but a weakness and subject to ethical not economic consideration. A contract is either equitable or inequitable in itself, without reference to the conditions and restrictions under which it is made. If not sp it would be impossible to judge whether the restrictions were baneful or salutary. The organized invasion consists in enforcing an unjust contract, whether made under freedom or under duress, for although the existence of duress vitiates the contract, it proves nothing but a presumption as to its justice.
Would I then deny freedom of contract to borrower and lender? Certainly not. But I do deny most emphatically that by such contract they can rightfully bind me, or any other member of the body politic, to the obligation of coercing the fulfillment of an agreement, which is in itself inequitable. Our Courts of Law no longer hold valid contracts to render service. The single exception of Seamen's indentures is being contested, and both the justice and utility of their enforcement is being questioned.
That mutual banks would benefit anybody but members is greatly  problematical; that they would not do so except indirectly is admitted by their advocates. With the great number of mutual insurance companies in our country, the rates of insurance have increased instead of diminished, and the multiplication of mutual banks, might have no better effect on the discounting of notes, except to those able to discount their own through the combination. Those needing discount the most, in most need of borrowing, would still have to go to the state or private bank and stand the shave. To take from the state however the power to enforce usurious contracts, would make the payment of interest voluntary, and prove the only means of avoiding the enforcement of injustice.
A year or more before the appearance of the first article in this controversy, an article was sent to Liberty and printed with comments by Mr. Tucker, which shows the narrow margin open to discussion but which he made the most of. It was as follows:
INTEREST JUST AND UNJUST.
In the address of Mr. Hugo Bilgram (Liberty of April 22) is found much to approve. What he says about the interest on privileged money can be questioned by no honest criticism. It is simply unjust. Whether there is not interest of another kind, and other sources which produce monopolistic interest, are quite other questions. To me it seems plain that there are economic conditions which produce interest independent of monopoly, and that there are several monopolies, besides that of money, which bear an unjust interest.
Patent right, government privilege to follow certain productive callings and to buy and sell goods, are joint factors with privileged money in yielding onerous interest. And beneath all these lies the, legal protection to unlimited dominion of the land. Whether "the government prescribes the number of shoes in the country." or prescribes the number of shoemakers, the people will have to pay the interest or profit, and suffer the inconvenience, caused by unjust legislation, the same as when compelled to hire money from a privileged banker. It is far worse when the government yields up to the control of the class who are able to buy into it, the dominion, of all; the fruit-yielding land to the exclusion of the people, who have now to hire the natural sources of all wealth.
Nor do I quite agree with him that the interest-bearing power of  money confers the profit-bearing power upon capital. On the contrary, I am quite sure that capital, particularly land, could not be bought at all with money which bore no interest, because, in the absence of all money, monopolized land would be let to the laborer, as has been done in all time, without valuation in the terms of money at all, for a part of the annual produce of the labor applied. I doubt not that interest would continue, if lawful money was abolished and the circulation of credits left free. If one owns a farm from which he cannot raise more than a bare subsistence, he can pay no interest to mortgagee or banker. No one hires money for its own sake. All know it to be barren. So far as a direct exchange is concerned, it matters not whether money be cheap or dear. The simultaneous exchanges will be affected in the same way. The terms in money make no difference to the relative values of the things exchanged. It is only when one wants to buy and has nothing to buy with that he needs to borrow money. It is not the producer as such, but only the borrower, who suffers wrong. It is only the lender who is benefited.
But there is a variable rate of interest, profit, or rent, arising from the use of capital, not at all attributable to legal monopolies of any kind, but which capitalism has succeeded by the aid of "appropriate legislation" in engrossing. It is the whole product of labor, save a bare support to the laborer, or, what is nearly the same thing, the difference between what he would produce co-operating with the capital, or by working without it. This is more particularly true of the land, without which labor can pay no interest on money legal or free, or indeed effect any product whatever. Hence unconditioned dominion of the land is the ultimate source of all tributary interest, rent, or profits, the three being different only in name.
Besides the tributary increment, the same thing appears under economic law, released from the State class laws, and which arises from the ability of labor to produce more than it consumes, and which normally, under equal freedom, becomes the property of the laborer, and is therefore not inequitable or unjust, because promotive of the general industrial prosperity. J. K. INGALLS.
A NEW CONCEPTION OF INTEREST.
The article on interest by J. K. Ingalls, printed in another column,  does not seem to me to be written in its author's usual clear style. Some of his positions are true without qualification, but others can be regarded as true only by using the word interest in an entirely new sense.
If rent and profit are to be considered interest, then it is true that "there are several monopolies, besides that of money, which bear an unjust interest;" I presume that this would be readily admitted by Mr. Bilgram, whom Mr. Ingalls is criticising. This, however, is not a very serious departure from economic terminology.
More violent is the use of the word interest to express the entire extra product resulting from labor's use of capital. If I, who can produce only ten without a spade, succeed in producing twenty with a borrowed spade, for the use of which I pay six, then in Mr. Ingalls's view, if I understand him, the interest on the spade includes not only the six paid for its use, but the entire extra ten produced by its use. This is intelligible, but to me it is novel. So defining interest, one finds no difficulty in granting, again, that "there are economic conditions which produce interest independent of monopoly." And since Mr. Ingalls appears to admit that under equal freedom the entire extra ten would fall to me as laborer, and that six would no longer go to the owner of the spade, I am not at all disposed to dispute the justice of interest so defined, and, far from desiring to abolish it. hope to see it vastly multiplied.
But I wonder if Mr. Ingalls uses the word in this sense when he says that "capital, particularly land, could not be bought at all with money which bore no interest." If so, then still again can I understand and agree with him. For in this sense money that bears no interest means simply money that does not contribute to labor's power of production and such money is necessarily representative of no property whatsoever, has no power to circulate, and will not be taken in exchange for anything of value. But thus interpreted the statement is so insignificant that Mr. Ingalls must, it seems to me, have used the word in its usual sense. In that ease, however, insignificance is simply replaced by absurdity. For what can be more absurd than to say that a non-interest-bearing note, based upon specific property and for the redemption of which said property can be legally seized, will not be taken in exchange for other property  approximating in value that of the property serving as security for the note? It is indeed conceivable that, if the money monopoly w ere abolished and land monopoly remained, land would rise in value; but it cannot be held for a moment, with any show of reason, that it would bear no price. T.
I am sure the reader will congratulate me on the favorable criticism of an article written really in my usual obscure style; for he makes my meaning not only very plain; but readily admits it, for himself and Mr. Bilgram, as a not "very serious departure from economic terminology." Although he thinks my use of the word interest more violent, by an illustration shows it to be not only intelligible but "novel." He is "not at all disposed to dispute the justice of interest so defined," but wonders if I use the word in the same sense, in a statement with a trifling bearing on the main question, as to whether non-interest-bearing money would buy rent bearing land. Now since money is a mere counter or tally of commodity values, and which values as of land and productive plant, are based upon the increase they will yield, a money commanding only property without increase could not possibly purchase property bearing increase. His illustration is not to the point. "A non-interest bearing note based upon specific property," which is subject to seizure through governmental aid in ease of default, is not a money of redemption, is merely a certificate of a deposit of specific property, which requires no bank of any kind to make but only a warehouse. A money which accrues no interest corresponding to rent of land and to the increase from capital in the different employments in which business men are engaged, is not representative, and could not circulate as a medium of exchange.
If Mr. Tucker's property upon which his non-interest bearing note is based, is property bearing rent or interest on profit above cost of service, on what principle of equity or simple economy can he refuse to render such rent interest or profit, or a portion thereof to the holder of the note, by use of which he has been enabled to appropriate such increase to himself? If such "specific property should chance to be Mr. T.'s home, working tools, necessary plant to effect his annual production, I think he can have no clear apprehension of what that involves; mortgage of home and opportunity to work. A  mortgage is simply an instrument to legalize invasion; and was once what its name still signifies, a death-gage or pledge, following from the gage of battle, in which the vanquished was saved from death on condition of yielding himself a slave to the victor, with power of life and death over him. The "sacredness" of the contract secured unquestioning obedience to all the master's commands, and whose power was thus perpetuated. At once it became an instrument also of reducing freemen to bondage, allowing no defense to invasion, and more effectual than the sword. Death was the penalty for failure to discharge a debt, at the option of the creditor.
And it is difficult to see how it is possible to decree the payment of debt without involving the loss of home, liberty and even life. To take away one's environment and possessions involves all this. If one refuses to pay, redress can only be obtained by seizing his person and compelling his labor, which potentially reduces him to slavery and holds his life at hazard.
We should consider the distinction between the money of commerce, and the money devised by governments to effect the enslavement of labor. Such money is wholly different from the money of exchange, as it tends to obstruct rather than promote exchange. Lending and borrowing has no relation to commerce in any way. Commerce deals with exchange of commodities, not pledges nor forfeitures. Banks for hoarding and lending, deal in "evidences of debt," not commodities, and have no economic significance. They in no wise promote completion of the art of exchanging wealth or advance production but retard both. No equation can be made with usury, unless it be as a penalty for deferring completion of an exchange, or a charge for services. If the latter, the borrower can have no reasonable complaint against paying its price.
Mortgages of land and homes, mean all the term implies; forfeiture of land, of home, of happiness, of liberty, of life. Anarchy cannot hinder knaves and fools from entering into such contracts, farther than to refuse to enforce them and so decline to contribute to the "reversion to type," brutal and barbaric, which now threatens our civilization.
There can be no justification for enforcing contracts of indebtedness other than upon the ground that such use of force would tend  to reduce the repudiation of such indebtedness arising from misfortune or fraudulent purpose. Enforcement can be effected only by enslaving the debtor. "The borrower is slave to the lender" is axiomatic, as verified by the unvarying testimony of history. Borrowing and lending is not only hazardous to both parties, like the primitive gage of battle, but a public calamity. Leaving the creditor without legal redress will reduce borrowing to a minimum. The lender acts under no duress, and acts voluntarily, and should not have power to put or keep the borrower in duress. This would vastly increase the stability of the commercial credit, which is simply a confidence that a purchaser will complete the exchange; and so make fraudulent and "plunger" transaction nearly impossible. Personal liberty and public prosperity both require that all enforcement and invasion should be abandoned, and the whole matter be placed beyond the control of government, or even of the inconsiderate impulse of anarchistic juries.
When it is understood by the lender, that he cannot fall back upon the law or comrades to enforce payment, borrowing is no invasion of equal freedom, though annoying solicitation might become invasive. Reduction of the rate of interest, would afford only temporary relief even to the borrower in financial trouble, since the chronic borrower would only he encouraged by it to take a deeper plunge. The great mass of bankruptcies are of those who have barrowed at low rates, as well as those who have borrowed at extra high rates, and includes those who through favor or forbearance, pay no interest at all. The fraud and dead beat does not hesitate to offer impossible rates. In the hundreds—thousands, I have lent without interest in the last 40 years, I do not call to mind but one borrower, who was in the least benefitted thereby. The only time I was ever benefitted by borrowing, was when I was paying 8 per cent on a considerable sum.
The utter folly of enforcing lender's and barrower's contracts, is seen in the attempts to remedy the mischief they have done in deranging business and enslaving labor by more law—stay law, bankrupt law, exemption laws and laws of limitation, by last of which, if on a "book account" payment is deferred 6 years, not only the penalty far delay but the debt itself is cancelled. Even a written  contract under all "the solemnity of a seal" is set aside if by neglect payment is successfully deferred for 20 years.
To trust out goods at all is the reverse of an economic act—a business vice. To put capital into the hands of a man incapable of administering it is to subvert its economic use, and to injure not benefit the recipient. The competent user of capital has little difficulty in obtaining it. It is more difficult for capital to find a judicious operator. From the debt side of the financial situation, disasters, defalcations and bankruptcies mainly proceed.
It is such points as these Mr. Tucker proposes to discuss with me later. I am a patient man, and soon he can possibly have opportunity to discuss the issues by himself. At eighty-one I can hardly expect to have a two or three year's term many times repeated.
 " The principle of the metayer system, is that the labourer, or peasant, makes his engagement directly with the landowner, and pays, not a fixed rent, either in money or in kind, but a certain proportion of the produce, or rather of what remains of the produce after deducting what is considered necessary to keep up the stock. The proportion is usually, as the name imports, one-half; but in several districts in Italy it is two-thirds." John Stuart Mill, Principles of Political Economy, (London: Longman's, 1885) p. 183.
 J. K. Ingalls, Liberty, Jun 10, 1893, p. 1.
 Hugo Bilgram, "Is Interest Just?" Liberty, April 22, 1893, p. 1.
 Benj. R. Tucker, Liberty, Jun 10, 1893, p. 3.