THE CAUSE AND CURE
OF
PA NICS:
THE REMEDY FOR HARD TIMES.
By BENJAMIN SKINNER.
PUBLISHED BY THE AUTHOR. |
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L. O. W. E. L. L.
STONE, HUSE & Co., BOOK PRINTERS, 130 CENTRAL STREET.
1874.
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THE CAUSE AND CURE
or
PANICS:
oR,
THE REMEDY FOR HARD TIMES.
By BENAMIN SRINNER
PUBLISHED BY THE AUTHOR.
-
LOW E L L :
STONE, HUSE & Co., Book PRINTERs, 130 CENTRAL STREET.
1874.
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ſ?. Troc fºr


P. R. E. F. A. C. E.
This little pamphlet is made up chiefly of letters which have been printed
in various newspapers, and quotations from some of the most able thinkers
who have written on the subject of Political Economy. We do not pretend
that this tract is a symmetrical treatise, but we do claim that the Cause of
Panics is fully given, and that the Remedy for Hard Times is herein pre-
sented in such a manner as that all who choose can see the way clear to
the abolition of general poverty of the producing classes.
No attempt has been made to avoid repetition; but we have labored to
bring some few points clearly to view touching the great central question
of the Compensation of Labor. B. S.
INTRODUCTORY REMARKS.
IN this age of progress, when everything in the mate-
rial world seems to be on the high road to something
more desirable; when science is determining the constit-
uent elements of suns and stars; when time and space
are being, practically, reduced to the smallest fractions;
when the forces of nature have been harnessed, tamed,
and placed in positions to do the work of untold millions
of men; when wealth has been, and is being accumulated
in such vast quantities as to cause the wonder of all
beholders—why is it that we should be satisfied with the
old pod-auger economy of the barbarous past, and con-
sider that the best possible achievement of the highest
human excellence as regards the compensation of labor,
and the distribution of the products of labor? Whatever
is in the world has a right to be here, but if a something
new and better shall come and displace the old and effete,
that, too, is right in its time. Might is right, after all.
Now, we rise to assert the right of moral law. We
seek to introduce the moral element into politics. A con-
test ensues. It becomes a question of power in kind and
extent. Intelligent self-interest and the highest humani-
tarianism terminate at the same point. So that it mat-
ters not whether we appeal to pure selfishness or to self-
-

4.
sacrifice; for, when carried to the ultimate, they are found
to be identical. Whatever is right is best. -
In a poor, blind way this lesson has been presented
through many a century, but has never been believed to
be a truth. The old conception of right was the best
possible at the time of its prevalence; but we are forced
on to a plane of greater activities, so we must discard the
old implements and seek the new, which will meet the
requirements of our time and our surroundings. Now, it
is just as reasonable to suppose that improvements in
methods and means of exchange would result from supe-
rior knowledge and experience, as that the methods and
means of locomotion should change under like circum-
stances. As to the latter, we know ; while as to the
former, many persons suppose that we must, metaphori-
cally speaking, forever go horseback.
Primitive methods are always wrong. Artificial means
must continually change, from the very nature of things.
Laws last forever; but institutions and modes of action
are like individuals—they come, they live, they die. For,
be it known that, as relates to individual persons and
things, there is no perpetuity of identity in all this world
of ours.
Our theme is Political Economy. It is an important
branch of social science—the grandest study known to
man. I wish to consider the modes by which we can
exchange the products of labor, and if possible select the
best. Our subject begins to take form in the considera-
tion of the practical affairs of every-day life.
THE SITUATION.
IN looking abroad over our country we see there is an
abundance of everything required for the comfort of all
the people. The granaries are well filled; the store-
houses of commerce are fully supplied with every article
of necessity, convenience and luxury; and there appears
to be no lack in any direction of those commodities which
go to make up the good things of life. The means and
methods of communication and transportation are, as
regards regularity, security and excellence, such as the

5
world has never seen before. Yet with all our boasted
wealth, there is suffering in the land. While millionaires
are multiplying to an unprecedented extent, paupers and
poor-houses appear in proportionate ratio.
It is estimated that there were a million of able-
bodied men in a condition of enforced idleness, within
the United States, during the whole winter of 1873–4.
This army would have produced two million dollars'
worth of commodities every day, had the opportunities of
labor been presented; so that our panic cost us two
millions of dollars daily for a period of months—and
the end is not yet. This pecuniary point is only one item
in the bill of charges we bring against the stupendous
phenomenon called “Panic.” With the political “rings,”
among the clergy, in social circles of the first rank, and
especially with bank managers, does corruption break
forth in appalling intensity and magnitude. Many of the
desperately poor terminate their own lives with violence,
and crime in all its hideous forms stalks through the land
apace. All these various phenomena are due to some
central cause. The system is off its proper equipoise.
Nature’s effort to return to a just balance of things causes
a painful friction, which is made manifest by wails of woe
from many a suffering mortal. The wrong, implied in the
present condition of labor and the inequalities among
men, consists of an ignorant and brutal disregard of the
universal law of compensation.
In all material things, wherever we find a movement
in one direction, we know there must be a return current.
Every system or arrangement put into operation by man,
which does not practically recognize this law of Nature,
must surely come to a disastrous termination. No matter
who suffers, Nature will forever insist upon payment in
full. Discount, except to balance discount, will not be
tolerated at her “Clearing House.” And right here the
question naturally presents itself: In our immediate past,
who has been inadequately compensated, and what classes
have received that which they were not, in equity, entitled
toº. The answer must turn upon the compensation of
labor, for the following reasons:–If one man obtains a
dollar, or a dollar's worth, which he has not earned, some
º
1-

6
other person has earned a dollar and lost it; for, without
any argument here, I postulate that labor is the source of
all wealth.
Isaac Butts, in the North American Review for Jan-
uary, 1873, enunciated the correct doctrine in this wise:
“Two forces, and only two, are indispensable to the pro-
duction of wealth—human labor and the forces (including
the raw materials) of Nature.” In reference to the claim
of capital, he very truthfully remarks: “The use of cap-
ital increases almost immeasurably the efficiency of these
two forces or factors; but is not, like them, absolutely
irdispensable to production, since there was a time when
no capital existed, and the beginning of production must
have been made without its assistance.” The fact that
“man” and “nature” are the only real producers is duly
recognized by John Stuart Mill in his “Principles of
Political Economy,” and in fact all writers of whom I
have any knowledge, are agreed on this point. -
It seems clear, then, that the laws of Nature, the ma-
terial things of earth and labor constitute all the original
factors in the production of wealth. Nature asks for no
recompense for materials. The forces of Nature are gra-
tuitous, so that all compensation whatever is due to labor.
All other claims are spurious. Talk about “capital and
labor!” The very statement is a monstrosity. The idea
of “capital,” the product of labor, putting in a claim of
equality with its creator, is something so outrageous that
everywhere decent men should unite to hiss and hoot it
out of all good society.
I make the foregoing statement for the reason that all
systems of theft, such as chattel slavery, the plundering
of the industrial classes in large cities through the opera-
tion of high rents, the driving of the farmer from his
home by the tyranny of land monopoly, the practical
confiscation of the poor man’s little all by the exactions
of the usurer's unrighteous demand, are all based upon
the popular fallacy of which I speak. It works havoc in
every department of society. This erroneous idea, in
practice, is the cause of our panic. We must remove the
cause of panics by educating the people in regard to the
compensation of labor. The people must learn that labor

7
can never be properly paid while “capital” takes that
which it is not entitled to, and that it will continue to
gather to itself unjustly so long as monopoly is tolerated.
Public opinion must be brought to bear upon the fact,
that the monopoly of money implies a monopoly of every-
thing that money will buy. When this subject shall have
been fully met, fairly considered, and intelligently acted
upon, then Panics will no longer be possible.
CREDIT, MONEY, INTEREST.
IN all the affairs of life, nothing is of more vital im-
portance than credit. It is a power indispensable in every
department of human thought and action. The cost of
credit is, like everything else, commensurate with the
worth or value of it. This refers to human production,
for Nature's raw materials and her forces are absolutely
gratuitous. Credit is not a thing of substance, neither is
it a product of nature outside of man's scope of action.
Briefly stated, the acquisition of credit requires the most
comprehensive application of effort; muscular, mental
and moral power; ability, genius, talent, character, per-
sistency, consistency, continuity, all these are required
to obtain credit with the world. With different men,
credit may vary in form, and extend to limits altogether
unknown and indefinite.
What I have said thus far is well known, considered
and acknowledged almost universally; but what I desire
to make appear at this point, chiefly, is not so well known,
seldom considered, and never acknowledged to any ex-
tent, worthy of mention, in the practical dealings between
man and man. After credit has been once acquired, there
is no item of cost, loss or expense attendant upon the use
of it. This is assumed to be the truth as related to a just
and natural condition of society. That it is not true to-
day under the system most prevalent throughout the
world, we all know full well; and this is the turning point
between the wrong that is and the right which should be.
Only a few persons, comparatively, are allowed the op-
ortunity of using their own credit unobstructed by legis-
ative interference and hindrance.

8
When writers like Proudhon say that credit costs
nothing, they cannot justly be considered as intending to
convey the idea that wealth, the base of credit, is gratui-
tous, or that credit itself is or can be obtained without
labor and sacrifice, because that would be absurdly false
on the most superficial glance; but their thought must be
just what I am contending for and not what they techni-
cally assert. A complete statement, and one which none
can successfully controvert, is, that credit is the most
costly power known, the most valuable; it is absolutely
indispensable in society, and yet once acquired, the use of
it costs the possessor nothing.
Two poor men, each of whose situation is precisely
identical, except in the matter of having credit at “the
store,” find themselves, on some Saturday night, in want
of goods, without money or other means of procuring the
necessaries of life for their families. One has the credit
of being good pay, the other has not. The former buys
his goods on trust, the latter cannot. The one is happy
in having a good name, obtains the comforts of life on the
credit of past effort and self-denial; but still, to use that
credit within proper limits, is not an item of cost or ex-
pense. Now, should he sell his credit to his worthless
neighbor, there is introduced another consideration, viz:
insurance. Using one's credit is one thing, and selling it
for a profit is altogether something else. I am speaking,
not on forty different themes at once, nor of two things,
but just one, and that is: the cost of using one's own
credit, which I affirm is precisely zero.
The man who borrows money of a bank on a mortgage,
furnishes the credit himself; and what he pays as interest
over and above the cost of the bank-bills and transacting
the banking business, is wholly a monopoly-price of and
for the privilege of using that which is his own. That is
pure plunder. He cannot by any possible contrivance
pay this himself, continuously, except but by collecting
the same from laborers in some form more or less direct;
so that those who really pay this tax, called interest on
money, do not borrow the money, nor do they enjoy the
benefits supposed to be derived from the traffic in credit.
The notes of the Bank of England are secured by the

9
endorsed notes of those who borrow of the bank. The
gold in the bank’s vaults acts only as a blind to the vic-
tims who furnish the real security, not only to make the
bank safe, but the very notes they obtain from the bank
are good and safe, because of the credit furnished by
business men and others who borrow the bank-notes.
In other words, business men, farmers, workingmen, and
the useful classes generally, furnish credit and pay inter-
est on that same credit to those who shuffle the cards and
nothing more.
As a rule, when this business has been reduced to a
system, it will be found to be universally true that who-
ever pays interest is paying it on his own credit. This
must be correct, for no man, as a matter of business, will
lend money, which is credit, without a pledge of real
wealth, which is credit also, covering, and generally much
more than covering the amount. Borrowing money, on
good security, is an exchange of credits: The borrower
gives property credit, or private credit, for public credit.
Now, why should a citizen be called upon to pay any
difference as interest, except for the cost of the transac-
tion? Why should instruments representing value, in the
form of a medium, be limited 2 Why does not the gov-
ernment undertake to limit the amount of property which
may be represented by mortgages as well?
The man who is destitute of credit is a slave. He is
a slave, and in the nature of the case must ever remain
a savage or a slave, until he rises above the condition of
destitution in this respect. No statute law can help him.
He has no claim upon any particular spot or parcel of
land, and at every corner, on every road, within every
State, wherever he may travel, the owners and occupants
all greet him with the inevitable exclamation, “move on,”
which means that he must move off those premises. But
it may be said, “The man can work.” But where?
If perchance he meets with some one who desires to
exchange past labor, in the form of money, which is credit,
for present labor, and he holding that commodity in his
muscles, just so soon is he possessed of credit, and can
proceed to act the part of an independent man. Still,
|. independence rests on the contingencies of his sur-

10
roundings, and the tenure of his manliness hangs on a
frail support. It is at this point where the few rich men
step in with their legislative monopoly, and say to this
man in destitute circumstances, “deliver or die,”—“give
us the larger part of what you produce or starve.” And,
sad as it is to contemplate, the poor dupes are doing both
to a large extent. The present conflict between what are
called capital and labor, does not rest on any inherent
wrong in either power or party, but it consists wholly of
the relations of the two contending elements.
Thus, to remove the wrong by introducing the right,
it is only required that past and present labor are brought
into their normal relations. Neither power can be
degraded absolutely, nor as compared to the other, but
simply that each shall occupy its own appropriate sphere.
This can only be effected by an intelligent and compre-
hensive elucidation of the nature of money, the cost of
credit, and the uses and abuses of the same.
It is painful to think what frivolities occupy the public
mind, when the great and vital questions of our time,
which rise for a solution, hardly obtain a hearing.
EQUAL RIGHTS AND CURRENCY.
Currency is certified credit. Now, what is the real
cost of furnishing this circulating medium? In the first
place, there is required the real existing wealth to guar-
antee the payment of the notes. The promise to pay
should be convertible at some time, in some place, by
somebody and into some form of real existing wealth.
An indefinite promise to pay, which no one is bound to
respect, is a humbug and a fraud. Gold coin does not
constitute a first-class medium of exchange because it can
be “inflated” and “contracted.” It can be diluted by
the introduction of a greater quantity, and it can be
hoarded to such an extent that the price will be thereby
enhanced. The same cannot be said of good notes
secured by mortgages on real estate; because, practically,
there is no limit which can affect their value. They can-
not be monopolized—they cannot be diluted by an over-
issue. Now, the cost of this kind of money is, what? As

11
the wealth remains for use which secures the notes, it will
be seen that the security costs nothing, and the printing
of the bills and the labor of transacting the business con-
stitute all the expense of a good and permanent currency.
How easily all this might be brought about if the farmers
should by some chance obtain this idea! And they cer-
tainly will do so very soon after the popular press shall
have commenced a discussion of the subject. The “plan”
is very simple and at the same time it is scientific. Let
me present a “case” to give the idea in operation. Mr.
A, having a farm which is worth $10,000 in gold—all paid
for-wishing to build a barn, buy stock, hire help and ex-
tend his business, finds it impossible to proceed without
money. As things are he must pay about eight per cent.
interest. As things are he cannot pay any such rate for
money and prosper—so he does nothing. Now suppose
the monopoly abolished which gives a few bond-holders
that which in nature belongs to all classes alike. This
man's farm being worth $10,000 would certainly be good
security for $5,000. Now, let the bank–Government
bank, State bank, or mutual coöperative bank—take a
mortgage of this farm and loan Mr. A $5,000 in notes
running to maturity, at, say, one per cent. per annum, not
as interest, but in the form of interest, to pay for printing
the bills and transacting the banking business. Those
notes or bills cannot deteriorate as compared with real
estate. They must be as good as land and the products
of the land. They must be as good as wheat or gold.
There is sufficient wealth to furnish an abundance of this
kind of certified credit, and the cost would be an insigni-
ficant item. Please do not refer me to anything in the
past as a parallel to what I have here presented, as it
never existed in the world, except in a small way, and
then it was a perfect success. It must be seen, without
any illustration, that the farmer can go on with his work,
and live by his labor, just so soon as he can borrow money
on as easy terms as the banking bond-holders do now.
PAPER MONEY.
There is much talk about “paper money,” but I am at
a loss to know what is meant by the term. If Mr. A

12
gives his note, promising to pay $1000 for value received,
and secures the payment of the same by a mortgage on
real estate, the note may be indorsed by the receiver and
passed to the third person, and so on through any number
of hands. That note is good—cannot deteriorate—it is
an instrument and medium of exchange. It is real money,
whether the material used be paper or parchment. Now,
suppose the General Government should indorse notes of
that description, sufficient to serve the purposes of the
whole trade of the country, what harm would result there-
from? If the payment of every dollar promised was
fully secured by a pledge of two dollars’ worth of real
wealth, would persons holding those promises part with
them for anything less than a realization of their full face
value? I think not. If I hold a promise of a gold dol-
lar's worth of labor, in any form, and that promise is a
lien, or legal claim to that extent, on some specific prop-
erty, no matter how many other notes there may be in
circulation, my “paper” dollar is just as good as gold,
º always, that the government is what it should
e. One characteristic of money is certified credit. Gold
will no more build a railroad than will paper; but the
former has the preference from the fact that its credit is
good the world over. Our credit should be as good as
the barbarian's; whether it be stamped upon gold, silver,
copper, or printed on vellum, silk or paper. Gold is
shipped to other countries as a commodity, but never as
money. It is, simply, so much merchandise. When we
exchange bread for gold, or gold for iron, that is barter.
A scientific medium of exchange implies a system and
method of business elevated many degrees above the
direct exchange of commodities. In the “Clearing
House” we have the idea in practice, which is that paper
balances paper, or, more properly speaking, promise pays
promise. In other words, the note against me balances
the note in my favor. The “green-back” fails to meet
the requirements of the time, mainly because there is no
legal connection between the representative and the real.
The promise is void, and the legal tender characteristic of
the green-back is a fraud. Towns and cities borrow
money. They give notes that are collectable for notes

13
that are not collectable, and then pay a difference, which
is called interest, amounting in about ten years, to the
whole sum involved. If we live and do well we shall
learn a better way, some time.
THE DISTRIBUTION OF MONEY.
That the currency is not justly distributed throughout
the different parts of the country seems to be generally
admitted, yet the remedy for the difficulty does not appear
to be so evident. At the start we naturally ask why it is
that money is plenty in the city and scarce in the country.
The city is full of country produce for which money must
be paid, and the city produces next to nothing with which
to pay for what is received from the country, except
money. Now, it seems mysterious that the agricultural
districts are not well supplied with money. When this
puzzle shall be fully unravelled to the enlightenment of
farmers and other producers, then there will come a revo-
lution in society such as the world has never seen. And
what, to the knowing ones, appears to be the most won-
derful thing about it is, the solution is so simple. It can
be told in a minute. Money-lenders have plenty of
money; borrowers don’t. This is true the world over,
modified or intensified by the rate of interest. The more
money Western farmers borrow of Eastern bankers, the
less money will the borrowers hold after the lapse of a
short time; for they pay it all back as interest, and the
lenders not only obtain all the money loaned, but finally
they get the farms as well. To apply the remedy, people
must learn that money is not capital. The farmer cannot
borrow money unless he has the capital or wealth to secure
the payment of the money borrowed. We, as a nation,
borrow money of Europe, and instead of receiving any-
thing, covering a term of years, we are called upon to
part with all the gold we dig, all the cotton we have to
spare, in fact, whatever surplus we produce; and after
all, we are in debt. Now, this is true of every borrowing
nation, however rich in natural and artificial products.
Interest on money and poverty go together. Poverty
may be the occasion of interest, but interest is always the
2

14
cause of poverty, where it—interest—exists. In other
words, people are poor because they borrow money, rather
than, they borrow money because they are poor. Well,
if it is a fact that “interest” determines that the tendency
of money is from the borrower to the lender, the remedy
for the present unequal distribution of the currency must
be some arrangement by which every portion of the
country shall furnish its own instruments of exchange.
God bless the idiots/
Why should one nation borrow money of another na-
tion? Why should one portion of a country be depend-
ent upon another portion of that country for tickets to
represent the wealth which is in that part of the country
first named * The answer is one the world over. Cupid-
ity on the part of the ruling class, and stupidity on the
part of the poor dupes who know no better than to sub-
mit to the imposition.
THE TESTIMONY OF ABLE WRITERS.
THAT capital by right should claim a share of the
product of labor, Is A PURE Assumption. There are no
arguments for it. John Stuart Mill has taken both sides
of the question. That is to say, he has assumed the cor-
rectness of the old barbarous notion that capital has a
right to compensation in the form of dividends, profit,
and interest on money; and he has given arguments and
facts to show, most conclusively, that labor is entitled to
all it produces. In his “Principles of Political Economy,”
Vol. I, page 95, Mr. Mill says: “The only productive
powers are those of labor and natural advantages.” Here
we have a concise and lucid statement of fact, which not
only does not accord with his assumption previously men-
tioned, but is a flat contradiction to it, and a fact which
he nowhere admits in his “theory.” It might in reason
be asked: If capital has no productive power, why place
it on a plane with labor when we make up the account of
debt and credit? Again, on page 509 Mr. Mill says:
“The cause of profit is, that labor produces more than is
required for its support,” which is equivalent to, and is
substantially the identical doctrine put forth by the Na-

15
tional Labor Union, that “Labor produces, and Interest
steals.”
If the men who work and vote could open their eyes
to see this truth as stated by Mr. Mill, that the cause of
profit is their labor, and that the centralization of wealth
in the hands of a few men is the result, not of the natural
tendency of things, but the result of a device of cunning
cupidity; if they could see that a proper compensation of
labor would give no margin for dividends to idlers and
schemers, then a revolution in our modes of transacting
business, at once radical and permanent, would so arrange
the affairs of society that what Thomas Carlyle presented
as a sentiment would become a reality, viz.: “Let the
loafer go seek a planet of his own; this earth belongs to
the workers.”
Now, I wish to quote from first-class thinkers and
writers, to show that the idea of giving compensation to
capital is wrong, by presenting facts of history, and call-
ing the attention of the people to the philosophy of those
who stand high in all the world of thought and literature.
I claim that “interest” is wrong, because the results are
universally disastrous to individuals, to communities and
nations in all times, the world over. To this point Mr.
Mill speaks with clearness and certainty, as follows: “All
the inconveniences, physical, moral, and political, produced
by maintaining taxes for the perpetual payment of inter-
est, are incurred in pure loss.”—(Vol. I., page 112.) A
more radical and sweeping statement could hardly be
made. Is it true? Does anybody question it? Adam
Smith sums up the same truth in a little different manner,
as follows: “The rate of profit is naturally low in rich
and high in poor countries, and is always highest in the
countries that are going fastest to ruin.”
It would be merely re-affirming the same thing to
assert that wherever a high rate of interest prevails, there
the people are going to ruin. Although this fact did not
appear to be a fact in the earlier settlement of the West-
ern States of this Union, yet it is developing itself in this
year of our era to a fearful extent, and it is quite time
that business men should know the truth in this respect.
I wish to say to the poor man who works for wages that

16
this is a subject of vital importance to him, for whatever
the interest-receiver obtains is wholly at his expense. On
this point Mr. Mill says: “We thus arrive at the conclu-
sion of Ricardo and others, that the rate of profit depends
upon wages, rising as wages fall, and falling as wages rise.”
Here we have the testimony of Mill, Ricardo and others,
and I wish to again ask–Does anybody question the
correctness of the statement 2
It may be noticed that I have referred to popular
authors only. These men could not have realized the
importance of what they were saying, for the natural de-
ductions from their facts do not appear in their writings.
If I were to seek the testimony of later writers, those who
have made this subject a special study—such men as
Albert Brisbane, Stephen Pearl Andrews, Lewis Masqu-
rier, Edward Kellogg, and their compeers—I could fill
volumes. No matter how this is twisted and turned, the
one great fact comes to the surface—if interest is high
the people starve. It is true in Boston to-day; it was
true in India previous to the Christian era; it is true in
India now; it is true in China, in Ireland, in Turkey. It
is true, and must continue to be the truth, because it rests
upon arithmetic.
FURTHER TESTIMONY.
First, I claim that money is not wealth; in support of
which I present the following from “Social Statics” by
Herbert Spencer, page 258:
** Money is wealth’ was the dogma universally held by legislators and
economists before the days of Adam Smith, as a self-evident truth; and in
conformity with it acts of Parliament were, by general consent, framed to
attract and retain in the country as much coin as possible. Mr. Mill, in the
introduction to his recent elaborate work, assumes that this belief is now
extinct. It may be so among philºsophers, but it is still prevalent in the
trading world. we continue to hear acts praised as tending to “circulate
money”; and on analyzing the alarm periodically raised that "the money is
going out of the country, we find such an ºccurrence regarded as a disas-
ter in itself, and not simply as indicating that the country is º in some
ñº commodity. Is there not occasion for a little “enlightenment?
cre?
Here we have the testimony of Adam Smith, John
Stuart Mill and Herbert Spencer. Yet the editor of a
popular newspaper not far from Boston continues to assert

17
that money is wealth. I repeat the question as applicable
to our so-called teachers: “Is there not occasion for a
little enlightenment here?” Another point on which
my critics take exception is, that the people as a
whole loan money to the banks without interest, and then
borrow it back and pay interest. J. S. Mill, in his “Prin-
ciples of Political Economy,” Vol. II., page 206, says:
“A bank which lends its notes lends capital which it borrows from the
community and for which it pays no interest.”
This refers to banking as it is in England, and as it
was in this country before the war. In respect to our
present system, Albert Brisbane says:
“The Government now lends some three hundred and fifty millions to
the national banks, and for nothing.”
Every intelligent man knows this to be true, just as
well as Albert Brisbane, but only a small proportion of
the people are intelligent touching this currency question,
and I refer to Mr. Brisbane because he is known to be a
student and a trustworthy man in relation to this subject.
Another position, or postulate of mine, has been attacked,
viz: That wages are governed, other things being equal,
by the rate of interest on money or profit on stocks.
That is to say, if interest is high wages must be low.
Mr. Mill is with me in this respect, and he presents the
facts and arguments to support the theory, by the use of
the most apt and convincing illustrations. I quote from
his great work, previously referred to, Vol. I., page 12:
“We thus arrive at the conclusion of Ricardo and others, that the rate
of profit depends upon wages, rising as wages fall, and falling as wages
rise.”
And again, in Vol. I, page 264: “A rise of general
wages falls on profits. There is no possible alternative.”
For further historical proof I will quote from Buckle's
“History of Civilization in England,” Vol. I., page 53:
“It fºllows that if am ng any people rent and interest are both high,
wages must below.”
I think this testimony quite sufficient. And I wish to
ask if we do not see an illustration of this truth in the
application of it to house-rents in Boston. Rents cannot
come down until interest comes down; or if rents do fall,
there will be less profits for the “landlords.” Cheaper
2*

18
money implies cheaper house-rent. Supply and demand
will not regulate this matter until it strikes at the root of
the system, which is profit. There is no practical compe-
tition sufficient to effect any great good, except between
wages and the rate of profit. The prevailing rate of
interest governs profits in all large transactions which are
continuous from year to year, and the rate of interest is
dependent upon monopoly, artificially instituted, and per-
petuated by legislation.
AN HISTORICAL ILLUSTRATION.
The following remarkable compendium is from the
pen of Horace Greeley. He is speaking of the public
debt of England; but we can see, as he clearly states in
one paragraph, that it is merely is TEREst and the inevit-
able concomitants of interest which constitute the subject
matter of his thought; for the public debt of England
has never been reduced in volume, but the interest of that
debt has reduced the laboring people to a situation most
deplorable to contemplate. I know not how any words
of mine can add to the emphatic statement here given.
“Here, in a few periods” we see the cause of hard times
in England, and why is it we cannot see that like causes
must bring like results everywhere? The remedy? Pay
the debt, but not the interest!
“The commencement of the period of Public Debt in England found
the people in a comparatively hanny condition; a numerous class of small
landed proprietors; an independent yºkºmanry; an industrious and well-
paid manufacturing population, dimusé'ſ through several districts. The
agriculural laborers lived, for the most part, in their own cottages, on the
borders of the common lands belonging to every township. Every man
able and willing to work had good, substantial fare, and strong, home.
made clothinº. The poor-rates were small in amount, though distributed
with liberality. Bankruptcies seldºm occurred for the gºins of labor and
of trade were sure and constant. As the debt increased in magnitude the
smalº-anded proprietors disappeared, as well as the cottages and gardens
on the borders of the common lands; the very name of “yeoman” was
lost; the laboring population, agricultural and manufacturing, was crushed
into pauperism and crime, and the traders were continually driven into
bankruptcy. Out of this wide-spread ruin and desolation grew up a class
of speculatºrs in funds, loan mongers, contractors and commissaries, who
drew into great heaps the wealth of which the people were despoiled by the
customs-officers and tax-gatherers. The umber of bankrupts increased
fivefold, while population doubled. The cost of living—the barest subsist
ence—increased twofolº, but wages. were enhanced only one-half; and,
while wages thus lagged behind prices, taxes increased in fearful ratio. A
constant and corresponding increase in the poor-rates testified to the ruin-
ous nature of the revolution going on, and afforded an exact measure of the

19 -
descending career of the people, indicating faithfully the successive levels
of degradation to which they were forced.
* Here, in a few periods, are the outlines of the history of a people
loaded with a great Public Debt. Let those who speak flippantly of fasten-
ing this national malady upon the people of this country explore the heart-
rending details of this epitomized account of a nation’s woes.
* The phenomena here exhibited are the inevitable concomitants of a
great Public Debt. The tax placed upon the commodities which enter into
general consumption is sure to come mainly from the people of small or
moderate means, and is so much dead weight placed upon labor, only
increasing the gains ºf those who have money to lend. The system, in its
perfectiºn, is the denial to the working people of adequate wages and
proper food, and yet requiring them to supply the revenues of the state.”
ANOTHER ILLUSTRATION FROM HISTORY.
Some years since, the people living on the Island of
Guernsey were in want of a market-house. The governor
was appealed to by the citizens for aid in procuring funds.
The governor inquired if they had the required materials,
lumber, bricks, &c., and he wished to know if there were
skilled workmen and laborers to construct the building.
“O yes,” was the reply, “we have everything but the
money.” “Well,” says the governor, “I think we can
arrange all that without any difficulty.”
Did he borrow the money at a high rate of interest?
No! He knew a better method. He caused to be printed,
and duly signed and stamped, four thousand pound notes.
With these notes the materials were purchased, and the
workmen paid. These market-house notes circulated
among the people as money. When the building was
finished the stalls were let, and the rent was paid in these
notes, which were retained as paid in, until, in the course of
time, they were all returned to the original issuer. Then,
with some little ceremony the governor and the people,
with music marched in procession to the public square,
and burned the notes by way of cancelment. The work
was accomplished; the market-house was there; it was
paid for; it belonged to the people. Nobody had been
wronged; no interest had been paid. Now I wish to ask
if interest on money is just, reasonable, and indispensable,
who should have paid interest on those notes? Don't try
to answer the question! You cannot inform me where
interest should come in. If not there, why anywhere?
This little operation clearly elucidates what is intended
when I say that the people should furnish themselves

- 20
with an honest currency, through the government, at cost.
Not that those notes were scientific money in every
particular, but the idea, so far as it was carried, is unim-
peachable. If the people can once obtain a clear mental
grasp of the great truth, that it is their credit which forms
the base of all money, it will be no difficult task to form-
ulate a monetary system at once scientific and just.
Is it not clearly seen that the people of Guernsey
employed their own credit; and that it cost them nothing
but the expense of furnishing the bills and transacting the
banking business?
Edward KELLogg studied this subject for a lifetime,
and about the last and best point made by him is given by
his daughter—who edited the last edition of his cele-
brated work—in the following words: “The most import-
ant new point is the criterion of a just rate of interest,
derived from the expense of instituting and circulating
the money.”
ALBERT BRIs BANE, another student, who not only has
been a life-long reformer, but one who has investigated
this subject of money under the best advantages afforded
by the French Academy, begins where Kellogg left off
He says: “It (the government) must loan the currency
direct to the industrial and commercial interest of the
country. It must loan it at cost of issuing and manage-
ment, not at fictitious rates of interest.”
CoL. W.M. B. GREENE more than twenty-five years
ago published a treatise on banking, in which he reduces
this idea to a system in all its fulness. To those who
care to look further for facts, and to examine the
philosophy of this great and newly discovered truth, I
would refer to Col. Greene's pamphlet, entitled “Mutual
Banking.” It is the most complete, comprehensive, and
scientific treatise within my knowledge. It has been
before the public in various forms for a quarter of a cen-
tury, and I have never seen it adversely criticised.
THE POLITICAL ECONOMY OF THE BIBLE.
Assuming that the compensation of labor is determined
by the amount of tribute which labor pays to capital, in

21
the form of interest, it is important to know what the
Bible says in reference to the subject. It will be observed,
on a close examination, that the Bible gives forth no un-
certain tone, in this respect, and that the teachings of the
book are uniformly in one direction. In “The Complete
Analysis of the Holy Bible” by the Rev. Nathaniel West,
we find in one chapter all that is said in the Bible on any
given subject. Having the above named work before me,
I will give a few quotations to show with what force and
direction this great doctrine of right and justice is en-
joined upon those who accept the Bible as the Word of
Gol.
* If thou lend money to any of my people that is poor by thee, thou
shalt not be to him as a usurer, neither shalt thou lay upon him usury.”
Ex. xxii, 25.
* Take thou no usury of him or increase: but fear thy God: that thy
brother may live with thee.” Lev. xxx, 36.
“Thou shalt not give him thy money upon usury, nor lend him thy
victuals for increase.” 37.
“Thºu shalt, not lend upon usury to thy brother; usury ºf money,
usury of victuals, usury of anything that is lent upon usury." Deut.,
Xxiii, 19.
And every verse and every line teaches the same, and
commands the same thing, except that “unto a stranger
thou mayest lend upon usury,” which implies that the
“stranger” here referred to is an enemy. It may be said
that the old Jewish law has no binding force with us, and
that the New Testament does not inculcate the anti-usury
doctrine of the Old. Superficially considered, the state-
ment is correct; yet, on a further investigation it must be
acknowledged that no other conclusion can be arrived at,
than that the New Dispensation was not intended to con-
flict with any principle of right previously propounded,
but, whereas, the old method had become to be outgrown,
in the life of the “child” man, a new, and, in its applica-
tion as regards time and appropriateness, a better mode
of that which was and is and ever must be the truth.
There appears to be no direct command in the New
Testament touching this point, but evidence is not want-
ing to show that the utmost harmony prevails throughout
the entire Bible as regards usury, or interest. It is dis-
tinctly stated that:—
“Think not that I am come to destroy the law, or the prophets; I am
not come to destroy, but to fulfil.” Mat. v., 17.

22
In the parable of the talents, it would seem at first
thought that usury was recommended; it is, indeed,
in the way of illustration, but the lesson itself subverts
the whole theory of increase by lending. Jesus was
teaching the º that all should work; that none
should be idle, whether they were possessed of few or
many talents. My Bible must accord with reason. Now,
if the New Testament commands all to work, it cannot
permit a system to continue which shall compel one por-
tion of the people to labor for the suffport of an idle class.
If usury is tolerated, all will not be required to work: for
the rich money-lender can and will live on the interest of
his money. The Word of God cannot contradict itself;
it does emphatically condemn usury, therefore the Bible
does not support nor favor interest on money. If any
one should be in doubt as to the teachings of Christianity
in reference to the right or wrong of interest, that doubt
can be easily dispelled by noting a fact of history outside
of the Bile.
For centuries the early Christian church did not sup-
port nor tolerate usury in any form. Many of the Popes
anathematized it; and to this day the Catholic church
has a standing rule against it. We are told to “Render
therefore unto Caesar the things which be Caesar's,” and
to “Owe no man anything,” than which there is no bet-
ter economy. If the people could be induced to accept
the economic teachings of the Bible, then indeed would
result a happy condition of human affairs, such as the
rophets foretold and the poets have pictured in song.
t is generally believed that this world was intended to
be a “vale of tears,” a “slough of despond,” and that hap-
piness is something not to be expected on this side of the
grave. A more primitive error does not exist. It is a
fatal mistake.
Whatever mankind desires in this life, is in this life
obtainable. For this died all the martyrs of the past. It
never was just as it is; the future must be different from
the present; and as the present is better than the past,
we conclude that the future must be something more
desirable than the present. “The good time coming” is
no chimera, but it is a philosophical necessity. To hasten

23 -
that day of equity and love, we only need to study those
grand old truths which we find in the Bible, and learn to
apply them to every-day life, in all the various transac-
tions of civilized society.
“THE TRUTH WILL OUT.”
The following letter not only explains itself but it ex-
plains and exposes to public view the heart and centre of
the most momentous question which is agitating the minds
of the American people:
Editor CoMºMoswealth:-I was more than pleased
with the communication of Mr. C. Stearns in the Com-
monwealth of Sept. 19th. I am glad that somebody has
discovered the real difficulty in the Southern States. Color
and race are only incidental, not the cause of the disturb-
ances. As some readers may not have the article of Mr.
Stearns to refer to, I will quote a few sentences from his
very excellent and remarkable letter :
“It is my opinion that nine tenths of these outrages have their origin in
industrial wrongs to the black man. Hardly a planter cares to fully remu-
nerate him at the end of the year for his 'abors.”
Here we have the truth, which is that avarice on the
part of the so-called capitalists is the cause of the wrong.
Now, what is the remedy? Mr. Stearns says:
“Thinning the ranks of the laborers is the only remedy for these
wrongs, the world over.”
Some writers advocate the thinning of the ranks of
labor by shooting the laborers; J. S. Mill, by reducing the
supply; but it is evident that Mr. Stearns contemplates
thinning the ranks of the laborers by giving them employ-
ment. But I dislike that statement of the idea. What
we all seek is the abolition of theft on the part of the
black man and the white man, whether contrary to statute
law or by law; whether by the methods of chattel-slavery
or that of profit made possible only through monopoly.
Consequently, we really desire to enlarge and consolidate
the ranks of the laborers by annihilating the ranks of the
loafers, both rich and poor, and black and white. As to
the how to do it, I further quote:

- - 24
“But what better measure could Congress adopt than
to loan to a well-organized company of responsible citizens
a sum of money to be used for this purpose? The deeds
of the land could be made to the government, so that
there would be no risk on its part, and a moderate rate of
interest could be charged, out of which could be paid the
expense of purchasing and collecting the installments.”
To all of which I say, Eccellent / Excell ENT | But
this is nothing new. It has been all thought out and
written out years ago. I beg leave to refer the reader to
a pamphlet written by Wm. B. Greene, entitled “Mutual
Banking,” where this plan, as presented above, has been
reduced to a system. I claim that it is scientific. It has
been discovered and rediscovered many a time. I rejoice
that it can find utterance in so popular a journal as the
Commonwealth.
A FINAL SUMMING UP OF THE WHOLE
MATTER.
The cause of panics the world over is, the people give
away their money, and then buy it back at a high price.
They give special privileges to a few bankers, thus making
a monopoly which no after effort can obviate; for the
monopoly of money implies a monopoly of everything
that money will buy. Interest on money is perpetuated,
and carried to an extravagant point by this artificial mo-
nopoly. We have seen that if interest is high, wages
must below. Therefore, the remedy for hard times must
be a reduction of the rate of interest to a just figure;
which figure must be that which represents the cost of
furnishing the notes, and transacting the banking busi-
ness.
This can be done by abolishing all favoritism, and
granting to all persons alike the same facilities for pro-
curing money or currency at cost.