UC-NRLF 
 
 1D1 3EE 
 
LIBRARY 
 
 OF THE 
 
 UNIVERSITY OF CALIFORNIA. 
 
 GIFT OF" 
 
 Received ~ fz^A . I&9..7' 
 
 Accession No . fa () 7% 3 . Class No. 
 
SPIRIOIE, 20 OIEICTTS. 
 
 DEVOTED TO THE BEST CURRENT 8< STANDARD LITERATU 
 
 VOL 8. No. Ill, MAY 15, 1883. ANNUAL SUBSCRIPTION, $25.00 
 
 .ABOR 
 
 CAPITAL, 
 
 EDWARD KELLOGG 
 
 NEW YORK : 
 
 JOHN W. LOVELL COMPANY, 
 14 & 16 VESEY STREET. 
 
 ENTERED AT THE POST OFFICE. N. * . AS SECOND CLASS V.ATTER 
 
LOV ELL'S LIBRARY. 
 
 NUMBERS NOW READY; 
 
 
 Hyperion, by Longfellow, 
 Outre-Mer. by Longfellow. 
 The Happy Boy, by Bjornson, - 
 Arne. by Bjo'rnson. - 
 Frankenstein, by Mrs. Shelley. 
 The Last of the Mohicans, 
 Clytie, by Joseph Hat.ton. 
 The Moonstone, by Collins Pt. I 
 Bo. Part II. -' - 
 Oliver Twist, by Dickens - 
 The Coming Race : or the New 
 
 Utopia, by Lord Lyttou. 
 Lclhi : or the Siege of Granada. 
 The Three Spaniards. Walker. 
 The Tricks of the Greeks Un- 
 veiled, by Robert Iloudin, - 
 I/Abbe Co'iistantin. bv Halevy. 
 Freckles, by R. F. Redcliff. - 
 TheDarkColleen.- 
 They Were Married !- - - 
 Seekers after God, by Farrar. 
 The Spanish Nun. 
 The Green MountaiffBoys, 
 Fleurette. by Eugene Scribe. - 
 Second Thoughts. 
 The New Magdalen, by Collins, 
 Divorce, by Margaret Lee. 
 Life of Washington. - - . - 
 Social Etiquette. 
 Single Heart and Double Face, 
 Irene: or the Lonely Manor, 
 Vice Versa, by F. Anstey, 
 Ernest Maltravers. bv Lytton, - 
 The Haunted House, and Cal- 
 
 deron the Courtier, Lytton 
 John Halifax by Miss Mulock, 
 Hoo Leagues on the Amazon - 
 The ( ryiHogram,by Jules Verne, 
 Life of Marion, - - - 
 
 Paul and Virginia, 
 Tale of Two Cities, by Dicken-, 
 The Hermits, by Kin 
 An Adventure in Thule. and. 
 Marriage of Moira Fergus, - 
 A Marriage in High Life, - 
 Robin, by Mrs. Parr - 
 Two on a Tower, by Hardy. 
 Rasselas. by' Samuel Johnson. - 
 Alice: or the Mysteries, being 
 
 Part II of Ernest Mali; 
 Duke of Kandos. by A. Mathey, 
 Baron Muncliausen - 
 A Princess of Thule. - 
 The Secret Despatch, Grant, 
 Earlv la\s of Christianity, bv 
 canon 'Farrar, D. D., Part 1. 
 ' II, 
 
 Vicar of Wnkefield - 
 :;v, 
 ] . by J. F. Cooper, 
 
 Last l.\ inn', by Mr-. Wood, 
 A Sir:. tton, ' 
 
 Adam I.ede. l.v Gco. Eiiot. P't I. 
 --II. 
 
 .l.l.-n Shaft, by Gibbon, 
 Portia: or by I'assions Pocked, 
 
 - 
 
 Tin- Two |)i, - - 
 
 'Coin Urowii at liiiL'by. 
 Tin- Wooing O't, by Mrs. .\le\-- 
 , ander. I'art I. - 
 
 Do. Part II. - - 
 
 .10 
 
 .10 
 .20 
 
 .20 
 .20 
 .20 
 .20 
 .10 
 .20 
 .10 
 .20 
 .20 
 .20 
 .20 
 .20 
 .20 
 .15 
 .10 
 .20 
 .20 
 .20 
 
 .10 
 .20 
 .10 
 .10 
 .20 
 .10 
 .20 
 .20 
 
 .10 
 
 .20 
 .20 
 .10 
 
 .20 
 .10 
 
 .20 
 .20 
 
 .20 
 .20 
 .10 
 
 .20 
 .20 
 
 .18 
 .15 
 
 .20 
 
 63. The Vendetta, by Balzac, 
 
 04. Hypatia, by Kingsley, Part 1, - 
 
 Do. Part II. - - - 
 . 65. Selma. by Mrs. J. G. Smith, - 
 
 66. Margaret and Her Bridesmaids, 
 
 67. Horse Shoe Robinson, Part I - 
 
 Do. Do. Part 11 - 
 
 68. Gulliver's Travels, by Swift. - 
 
 69. Amos Barton, by Gco. Eliot. - 
 
 70. The Berber.by W. S. Mayo. - 
 
 71. Silas Marner. by Geo. Eliot, 
 
 72. The Queen of the County. 
 
 73. Life of Cromwell, by Hood. - 
 ?'4. Jane Lyre, by Charlotte Bronte, 
 7."). child's History of Kngland, 
 
 76. Molly Bawn. by The. Duchess, 
 
 77. Pillone, 
 
 78. Phyllis, by The Dnche 
 
 79. Romola, by Geo. Kliot. Part I. 
 
 Do. Do. " Part IL 
 
 80. Science in Short Chapters, 
 
 81. Zanoni. by Lord Lvlton - 
 
 82. A Daughter of Heth, . 
 
 83. The Riirht andWrong Uses of the 
 
 Bible. Rev. R. Heber Newton, 
 
 84. Niirht and Morning. Part I. 
 
 Do. Do. Part II, - 
 
 a 1 ). Shandon Bells, by Win. Black, - 
 
 86. Monica, by The Duchess. - 
 
 87. Heart aid Science. 
 
 88. The Golden Calf, 
 89-. Dean's Daughter, 
 
 ( .K). Mrs. Geoffrey, by The Duchess, 
 
 91. Pickwick Papers, Part I, - 
 
 Do. Do. Part II. - 
 
 92. Airy Fairy Lilian, - ' 
 
 93. Maclebdof pure. - - 
 
 94. Tempest. Tossed. Part I, - 
 
 Do. " II. - - 
 
 95. Letters From High Latitudes. - 
 
 96. Gideon Fleyce. "i;y Lucv. 
 
 97. India and Ceylon, bv E.Haeckel. 
 
 98. The Gypsy (>ueen. 
 
 99. The Adm'irai's Ward, by'Mrs. 
 
 Alexander, 
 
 100. Nimport, by Bynner. Part I, 
 
 " II. 
 
 101. Harrv Holbrooke, by Sir Randal 
 
 II. 1,'olK'i-ts. Bart.'. 
 
 102. Tritons, by Bynner. Part I, 
 
 Do. ' " 11. 
 
 103. Let Nothing You Disunn. by 
 
 ter Hesant, 
 
 104. Lady AudleyV Seen!, by Miss 
 
 M. E. Braddon. 
 
 105. Woman's : .l.yLillie 
 
 i)e\ereux Blake. 
 
 106. Dunallan, Grace Keir.;- 
 
 Do. J)o. , - If 
 
 107. H<JO8e Keeping and. Home .Mak- 
 
 ing, by Marion Harland. 
 IOK. No New Thing, l>y W. E. Xorris 
 
 lO'.l. The; Spoo]i< li'lvke l',-i 
 icy llinifley, - 
 
 IK). False Hopes. i.\- Uoldwin Smith, 
 111. Capital and Labor, b\ 
 11-J. Waudn, hj oui.la. Par- 
 
 " 11. 
 113. Moro \Vur<1s about the Bihlc, 
 
 by Hev. .J;nnc< l!ii<h, 
 Loys, Lord J'.erosford, V>y The 
 Dnohess. .... 
 
 .20 
 
LABOR AND CAPITAL; 
 
 NEW MONETARY SYSTEM 
 
 THE ONLY MEANS OF 
 
 SECURING THE RESPECTIVE RIGHTS OF LABOR 
 AND PROPERTY, 
 
 PROTECTING THE PUBLIC FROM FINANCIAL REVULSIONS, 
 
 BY 
 
 EDWABD KELLOGG. 
 
 WITH NUMEROUS ADDITIONS FROM HIS MANUSCRIPTS. 
 TO "WHICH IS PREFIXED A BIOGRAPHICAL SKETCH OF THE AUTHOR. 
 
 EDITED BY HIS DAUGHTER, 
 
 NEW YORK: 
 JOHN TV. LOWELL C O M 
 
 14 AND 16 VESEY STREET, 
 1883. 
 

 EJTTERKD according to Act of Congres*. In th year 1361, by 
 MARY KELLOGG PUTNAM. 
 
 Clerk's Office of the District Court ot tte United States for the 
 tttetifet of New York. 
 
$3 
 UI1TIRSITT 
 
 TABLE OF CONTENTS. 
 
 PAOB 
 
 BIOGRAPHICAL SKETCH OF THE AUTHOR xi 
 
 PREFACED xxv 
 
 INTRODUCTION ... 17 
 
 PAET I. 
 
 CHAPTER I. 
 Of Value ........................................................ 41 
 
 CHAPTER II. 
 
 MONEY, THE MEDIUM OF DISTRIBUTION. 
 
 SECTION I. 
 The N ature and Properties of Money .................... 45 
 
 SECTION II. 
 The Power of Money to Represent Value ...... . ........ 46 
 
 SECTION III. 
 
 The Power of Money to Measure Value ................. 56 
 
 ill 
 
IV CONTENTS. 
 
 1<M 
 
 SECTION IV. 
 
 The Power of Money to Accumulate Value by Interest, 6 ) 
 
 SECTION V. 
 
 The Power of Money to Exchange Value, 6 ft 
 
 SECTION VI. 
 
 The Material of Money, and the Distinctions between 
 Money and the Material of which it is made II 
 
 CHAPTER III. 
 
 THE BATES OF INTEREST THE GOVERNING POWER OF DISTR. 
 BUTION TO LABOR AND CAPITAL. 
 
 SECTION I. 
 
 The Power of Capital to accumulate Property and 
 Labor, according to the Rate of Interest, 79 
 
 SECTION II. 
 
 The Wealth of Cities, and the Means of its Accumu- 
 lation, 97 
 
 SECTION in. 
 
 Interest received by the Citizens of New York on 
 Loans to the Country, 107 
 
 SECTION IV. 
 
 The per centage Actual Increase of the Value of the 
 Property of the .States of New York and Massa- 
 chusetts, compared with the per centage Legal In- 
 crease on the Property of these States for the same 
 periods, '. . . Ill 
 
CONTENTS. V 
 
 PAOB 
 
 SECTION V. 
 nterest on National ana Btate Debts, 121 
 
 SECTION VI. 
 
 No Accumulation of Property by Labor equal to the 
 Accumulation by the Loan of Money at seven per 
 cent. Interest, 126 
 
 SECTION VH. 
 Two Per Cent, per annum too high a Rate of Interest, 135 
 
 SECTION vm. 
 
 the Reduction of Interest would be an equal benefit to 
 the Producing Classes, whether Property should Rise 
 or Fall in Price, in consequence of such reduction, . 139 
 
 SECTION IX. 
 
 Effects upon Producers of High and Fluctuating Rates 
 of Interest, 142 
 
 s' 
 
 SECTION X. 
 
 The Oppression of Labor by a Monopoly of Land not 
 so "great as the Oppression by High Rates of Interest 
 on money, 147 
 
 SECTION XI. 
 
 The Rate of Interest determines the Price of Property, 
 and a Rise of Interest increases the Power of Money 
 to command property, 153 
 
 SECTION XII. 
 
 The Rise of the Rate of Interest increases the Liabi- 
 lities of all Debtors, 154 
 
VI CONTENTS. 
 
 D-tatf 
 
 SECTION XIII. 
 
 Rents, whether High or Low, bear the same Relative 
 Value to their Principal; but when the Per Centage 
 Interest on money is Increased, not only is its Rela- 
 tive Proportion to the principal Increased, but each 
 Fractional Part has Increased Yalue, 158 
 
 SECTION XIV. 
 
 To Cheapen Prices by an Unjust Rate of Interest and 
 a Scarcity of .Money, is but to Cheapen the Labor 
 of all producers, and Give their Earnings to Capital- 
 ists without an equitable equivalent, 161 
 
 SECTION XV. 
 
 Voluntary Agreement no Test of a just Rate of In- 
 terest, 164 
 
 SECTION XVI. 
 
 The Law of Interest on Money an Accumulative not 
 a Producing power, 169 
 
 SECTION XVH. 
 Estimate of a just Rate of Interest, 115 
 
 SECTION xvm. 
 
 Beneficial Results to Laborers and Merchants from the 
 Reduction of the Rate of Interest, 178 
 
 SECTION XIX. 
 
 The Low Prices of Labor in European countries not 
 caused by their Low Rates of Interest, 185 
 
 
CONTENTS. 
 
 OXL AFTER IT. 
 
 THE BANKING 
 
 SECTION I. 
 
 MM 
 
 The Nature of Banks, their Institution, and the Prin- 
 ciples by which they are governed, 193 
 
 SECTION n. 
 
 The Amount of Specie owned by the Banks, and the 
 Interest paid by the people on Bank Loans, 203 
 
 SECTION HI. 
 Basis of the Bank of England, 215 
 
 SECTION IV. 
 The Balancing Power of Bank Notes and Deposits,.. 217 
 
 SECTION V. 
 
 The Management of the Banks, and the Effects of 
 their operation upon the Prosperity of Trade and 
 Productive Industry, 219 
 
 SECTION VI. 
 Remarks on the Repeal of the Usury Laws, 249 
 
 CHAPTER Y. 
 
 The Amount of a Currency should be Limited only by 
 the Wants of Business, 254 
 
 CHAPTER VL 
 
 The Necessity of Credit, 261 
 
CONTENTS. 
 
 CHAPTER 
 
 A well regulated Currency Impossible under Present 
 T^ws, ..................................... 263 
 
 Recapitulation, ............... . ................ 266 
 
 PART II. 
 
 -A. TRTIK MONETARY SYSTEM. 
 
 CHAPTER I. 
 The Security of a Paper Currency, ............... 269 
 
 CHAPTER II. 
 
 THE SAFETY FUND. 
 SECTION 1. 
 
 The Formation of tne Money, and the Mode of Issue, 273 
 
 SECTION II. 
 Tne 1 Security of the Safety Fund money, ........... 278 
 
 SECTION in. 
 The Rate of Interest on the Safety Fund money 4 ---- 282 
 
 SECTION IV. 
 Organization and Management of the Safety Fund, . . 286 
 
 SECTION V. 
 The probable Amount of Safety Fund money, ...... 288 
 
CONTENTS. IX 
 
 PAQB 
 
 CHAPTER III. 
 
 The Advantages of the Safety Fund money over 
 Specie, 290 
 
 CHAPTER IV. 
 
 OBJECTIONS TO THE SAFETY FUND CONSIDERED. 
 SECTION I. 
 
 Objections to a Paper Currency on account of Foreign 
 Trade considered, 295 
 
 SECTION H. 
 
 Sundry Objections the Effects of the Safety Fund on 
 our Banking Institutions, etc., considered, 300 
 
 CHAPTER Y. 
 Advantages of the Safety Fund, 307 
 
 CONCLUSION, 318 
 
 APPENDIX, 825 
 
BIOGRAPHICAL SKETCH OF THE AUTHOR. 
 
 As an introduction to the fifth edition of my father's work, and 
 in compliance with repeated requests, I shall offer a sketch 
 though it must be an imperfect one of his life ; chiefly for the 
 sake of telling why and how this book was written. 
 
 Edward Kellogg was born at Norwalk, Conn., on the 18th day 
 of October, 1790. He was the son of a substantial farmer, enjoying 
 the comforts of life ; each child of the numerous family, however, 
 was expected to do its part toward the common support ; and he 
 was early set at work, bringing the cows from the pasture, riding 
 the horse while his older brother ploughed, and doing, when he was 
 ten years old, half a man's work noeing corn. The hired men who 
 harvested for his father, observing the lad's deep set, deep blue 
 eyes, said to each other in their homely phrase that he would make 
 a smart man. Soon after he was of age, he began to buy goods in 
 New York and sell them to country storekeepers in New Jersey, 
 Pennsylvania, Maryland and Virginia, learning a great deal about 
 men and things in the journeys he made for this purpose. In 1817 
 he married Esther F. Warner, daughter of Lyman Warner, of 
 Northfield, in his native State. Two or three years later he was 
 established in New York as a wholesale dry goods merchant ; soon 
 as senior partner of the firm of Kellogg & Baldwin, and later as 
 chief of the firm of Edward Kellogg & Co. of Pearl street. 
 
 When he was about thirty years old his mind was deeply 
 wrought upon by questions of theology and morals, and reading the 
 Bible only, he abandoned the so-called orthodox tenets ; when mat- 
 ters of business were not immediately before him, he studied 
 ardently in his own thoughts the relations of man to his Creator 
 and to his fellow-man ; on his way from one engagement to another, 
 he usually pondered the meaning of some text of Scripture. He 
 read very few books, but he talked much with other men, and 
 
Xll BIOGRAPHICAL SKETCH OF THE AUTHOR. 
 
 always weighed new thoughts that were thrown out. Singularly 
 fearless and free in mind, he was continually investigating opinions 
 to ascertain whether they were true ; and whenever he had learned 
 anything he was quick to communicate it to others. But he chiefly 
 sought to draw out their minds and induce them to think for 
 themselves. To this end he used to talk much with young per- 
 sons ; and, in the intervals of business, with the young men who 
 were employed in his counting-house. Plis thirst for knowledge 
 was so great that he seriously contemplated giving up business and 
 devoting himself to study. At the same time he was eminently 
 practical. No facilities then existed for ascertaining quickly the 
 commercial standing of men, and the firm often sold on credit to 
 persons living in remote parts of the South and West. When a 
 new customer appeared the clerks would call Mr. Kellogg to talk 
 with him a few minutes, and then he would say whether to sell or 
 not. One of these young men, who learned business under him and 
 is now the president of a national bank in the city of New York, 
 says of him : " He was the best judge of men that I ever knew ; his 
 judgment of them was almost infallible." A man of stainless char- 
 acter and reputation, he conducted a large business with honor and 
 success. His advice was frequently sought by younger men ; and 
 he was called upon to fill various offices of trust. During tho.se 
 years he did not speak of business matters at home, but he talked 
 much with friends and neighbors about theological doctrines, 
 principles of morality, about- political questions and the man- 
 agement of the banks. As a child I used to sit down near 
 him to listen, being greatly attracted by his animated and earnesi 
 discourse. 
 
 In 1837, the financial panic occurring, he was unable to make 
 collections from his debtors, and, though having assets largely in 
 excess of his liabilities, was obliged to suspend payment, and saw 
 his affairs thrown into what seemed to be almost inextricable con- 
 fusion. But, gifted with indomitable energy and courage, he met 
 misfortune for himself unflinchingly ; maintaining his integrity and 
 reputation, saying afterward, "If I lost everything I had, 1 was 
 determined not to lose myself." When an old acquaintance, who 
 died a few years ago leaving a princely fortune, came one evening 
 with his wife to drink tea and said, in lugubrious tones, " Mr. Kel- 
 logg, what are we coming to ? " my father instantly replied in his 
 pleasant way, " It is plain what you and I are coming to, Mr. P. : 
 we are coming to our tow trousers again ; " whereupon the ques- 
 
BIOGRAPHICAL SKETCH OF THE AUTHOR. Xlll 
 
 tioner laughed heartily for the first time since the panic, and they 
 spent a cheerful evening. 
 
 Yet, while he thought carefully and anxiously of his obligation;; 
 and attended faithfully to all that was to be done, his mind turned 
 with earnest and eager inquiry to the cause of the great calamity 
 in which he saw so many involved. He perceived that it was the 
 result of the existing monetary system, and he began to study out 
 the origin of the evils. He soon became convinced that the money 
 of a country, being a public medium of exchange, ought not to be 
 put under the control of private corporations, but ought to be 
 instituted by the government for the benefit of the whole people, 
 and so managed that usury could not be exacted, and that losses in 
 exchange in sending money from one part of the country to another 
 should not be incurred. His soul was moved with indignation at 
 the extortions of usurers, which came continually under his notice ; 
 and he caused a friend to write a pamphlet setting forth some facts 
 that he furnished. This was printed in 1841 by Harper & Brothers, 
 and was called "Usury and its Effects: A National Bank a 
 Kemedy. By Whitehook." His idea then was that a national 
 bank should be created with a capital of fifty millions, with 
 branches in every State, limited in dividends to five or six per cent., 
 and compelled when its surplus profits exceeded five per cent, on 
 the capital to reduce the rate of interest on its loans. He had not 
 yet ascertained the real nature of money nor devised the true 
 remedy. 
 
 He still worked in his mind at the problem, for he knew he had 
 not solved it. He saw that money ought not to be made of gold and 
 silver, which cannot be had in sufficient quantities to meet any great 
 financial crisis, and which nobody wants when confidence exists ; 
 that it must be a legal representative of value, and thought it 
 ought to be founded on real estate, or on the public credit resting 
 on the national resources; he saw how to issue it in exchange for 
 mortgages of productive real property there was no great public 
 debt but Low to redeem it ? He tried it in every way he could 
 imagine ; he knew there must be some right way of doing it, but 
 what was it ? it was of no use to point out the evil unless he could 
 show a remedy for it. He thought upon it by night and by day, 
 and at last, after looking for it three years, one night in the spring 
 of 1843, as he lay in his bed revolving once more his problem, it 
 dawned upon him like an inspiration, " REDEEM IT WITH A BOND 
 BEAKING INTEREST." He turned it to and fro ' for a moment 
 2 
 
xiv BIOGRAPHICAL SKETCH OF THE AUTHOR. 
 
 and exclaimed, in the very words of the old philosopher, " / have 
 found it ! " 
 
 Deeply impressed with the value of his discovery, he began at 
 once to write out his ideas. He had had only a common school 
 education, and, as he used to say, " very little of that." He thought 
 himself " the furthest man in the world from writing a book." He 
 disliked to write letters, and made his clerks write for him if pos- 
 sible. But now, morning and evening in the midst of his family, 
 and in moments snatched from business at his counting-house, he 
 set down upon paper the new and stirring thoughts with which his 
 mind overflowed. He had ever been apt to teach, adapting him- 
 self carefully to the minds of others, and taking the greatest pains to 
 make facts and ideas intelligible to them ; and he wrote simply and 
 vividly. But thinking some revision was desirable, and not having 
 the time nor the practice to do it easily himself, he caused one of 
 the young men in his employment to copy and amend for him. 
 One evening I was then seventeen years old and was always 
 hovering about him he showed me some leaves of the manu- 
 script. In my secret heart I thought the amendments were not 
 well made ; but I only said to my beloved father, " I think I 
 could do that." A little surprised, he rejoined, "Do you? well, 
 you may try." The next morning he left some pages with me; 
 at night I had a copy ready for him, which he altogether ap- 
 proved ; and from that day I became his " scribe," and presently 
 his devout disciple. He was intensely moved by the wrongs that 
 he saw everywhere weighing on the workers of the world through 
 this gigantic, hidden power of money ; he knew he had devised the 
 means to overthrow this power, so he worked on at a white heat. 
 Now his relatives and friends began to remonstrate with him. One 
 man of mark, a lifelong friend whom he greatly valued, said to 
 him: "Mr. Kellogg, this is the most difficult part of political 
 economy ; no one has ever understood it. It has puzzled the wisest 
 heads from the beginning until now, and you cannot solve it : you 
 will only succeed in bewildering yourself. Besides, your own 
 affairs are in a very perplexing condition and require all your 
 attention ; and it is against your interest to do anything about it." 
 To which he replied : " I have an interest in the human family, 
 Bnd I have discovered something that is for their benefit. I shall 
 write it ; I should if I knew that I could make a million of dollars 
 if I did not ; and that if I did, I should live on a crust of bread 
 and die in a garret." So the writing went on. 
 
BIOGRAPHICAL SKETCH OF THE AUTHOR. XV 
 
 About the last of July, 1843, enough had been written to cover, 
 as he thought, the important points. He cast about to see whom 
 he could interest in it, and how he should get it printed. Having 
 a high opinion of Mr. Horace Greeley's character and benevolent 
 aims, he invited him to come and hear it read. Mr. Greeley, ever 
 prompt to consider any proposition for bettering the condition, 
 of mankind, accordingly came twice to Brooklyn whither the 
 author had removed in 1838 and my father assigned to me the 
 pleasant task of reading the manuscript to him. The good man 
 heard it through, and said it ought to be published : he seized upon 
 it and carried it away with him, giving it, with my father's consent, 
 to Burgess & Stringer, 222 Broadway, to be published. It was 
 printed at the author's cost, in newspaper form, of which, so far as 
 I know, only the one copy now in my possession is extant. It was 
 entitled, " Usury : the Evil and the Remedy ; " and contained the 
 following paragraphs, this being the original of what is now attri- 
 buted to many different persons and called the interchangeable 
 bonds and money proposition. I quote as follows : 
 
 " For the purpose I have before mentioned [to supply the people 
 with a good and sound currency], the United States should establish 
 an institution, which I shall here call a Safety Fund. I give it 
 this name because I think it will be the means of securing to the 
 producers a fair remuneration for their productions. Ib will save 
 us from the power of any foreign nation over our Internal Improve- 
 ments, or anything else of great importance. It will enable the 
 nation^as far as man can have such control to decide its .own 
 destiny. Therefore it will be a NATIONAL SAFETY FUND. 
 
 " In order to explain the nature of this Safety Fund, I will here 
 write out, in full, two bills, one for a circulating medium, the other 
 for a Treasury Note. By reading these the system may be almost 
 entirely understood. Should such an institution be established, the 
 bills might be more brief, as the laws on the subject would be 
 known, and it would be unnecessary to have as much expressed as 
 in the following : 
 
 (Circulating Medium, or Safety Fund Note.) 
 
 " The United States promise to pay to A. B., or bearer, at their 
 
 Safety* Fund, in the City of - 1 , One Hundred Dollars, in a 
 
 Treasury Note, bearing interest at the rate of two per cent, per an- 
 num, payable half-yearly in gold or silver coin; and until such 
 
XVI BIOGRAPHICAL SKETCH OF THE AUTHOR. 
 
 payment is made this note shall be a legal tender for debts, the 
 same as gold and silver coins are now a tender." 
 
 (Treasury Note.) 
 
 " One year from the first day of May next, or any time thereafter, 
 the UNITED STATES promise to pay to A. B., or bearer, in the City 
 
 of , One Hundred Dollars, in Safety Fund Notes ; and until 
 
 such payment is made, to pay interest thereon half-yearly on the 
 first days of May and November, at the rate of two per cent, per 
 annum in gold or silver." 
 
 "It will be perceived that the note intended as a circulating 
 medium is made a tender for all debts, that it is issued by Govern- 
 ment, and payable in Treasury Notes. The Treasury Notes are to 
 bear interest ; hence there can be no money in circulation but what 
 the holder can at any time put on interest where the loan would be 
 entirely safe, and the interest payable half-yearly in specie ; so that 
 money can, at all times, be loaned for a certain income secured by 
 the nation. One year after the first of May ensuing, the holder can 
 convert the loan again into the legal currency of the country, so 
 there never can be a surplus of money which may not be made 
 productive." 
 
 The newspaper contains no date of publication, but the leading 
 article of the New York Tribune of August 17, 1843, evidently 
 from the pen of Mr. Greeley, had the heading, " Usury : the Evil 
 and the Remedy," and began, " Such is the title of a powerful essay 
 which has recently been published in this city, in a cheap news- 
 paper form designed for general circulation. The intent of the 
 author is evidently to probe the evil to the bottom, and not to rest 
 in mere grumbling at it, but devise and suggest adequate means for 
 its removal." The main features of the plan are clearly and forci- 
 bly stated in this article, with a recommendation to all who think 
 excessive interest an evil to procure and read the paper. 
 
 My father then did his utmost to circulate the essay. He sent it 
 to many editors, the paper itself containing a request that they 
 would copy parts of it for the good of the public. On the 28th 
 of October of the same year, a synopsis of it in four columns was 
 printed in the Tribune ; and, in December of the same year, it was 
 issued, at his cost, as a supplement to the New York Commercial 
 Advertiser. Then he had it put in pamphlet form, with some addi- 
 tions, and stereotyped. It was called "Currency: the Evil and 
 
Of 
 
 BIOGRAPHICAL SKETCH OF THE AUTHOR. 
 
 the Remedy," by Godek Gardwell, these words containing the let- 
 ters of his name. 
 
 About this time or a little later, he gave up business as a mer- 
 chant, and, retaining an office in New York, spent his timS in the 
 care and improvement of his property. He continued to think and 
 to write on the money question. Sometimes he wrote at length, but 
 oftener a few pages only on any point that was in his mind. When 
 a " good idea " occurred to him he set it down. Sometimes the 
 same in slightly varied form appeared often, especially in regard to 
 the representative value of money. The subject was so important, 
 the need of clear ideas and simple illustrations to combat the old 
 errors so evident, it was all so urgent that he could not say it too 
 emphatically or too much. Then the subject ramified in such a 
 way ; it was so vast, touching upon most of the material interests 
 of men ; it lay at the foundation of public justice and good morals : 
 the new system was capable of effecting a beneficent revolution, 
 and would, too, by and by. All these things and more were seeking 
 expression. His mind worked so deeply that he often went along 
 the street, noticing nobody, seeing only the idea that he was pur- 
 suing and endeavoring to seize. 
 
 Some time after the essay was published, when he had a mass of 
 papers thus written, various in subject and length, he told me he 
 wanted me to " arrange them in some order," copy, and get the 
 whole ready for the printer. Though dismayed at being called 
 upon to set in order the subject-matter, it did not occur to me to 
 say I could not do it; I must at least try, if my father expected it. 
 After a time I thought I saw the proper sequence of the argu- 
 ment, and sorted and arranged the papers in chapters and sections 
 accordingly. Perhaps a less formal mode might have been better ; 
 but the author himself found no fault with it : he, with his origin- 
 ating mind, "would rather write ten than arrange one;" and he 
 was occupied in searching out ideas and principles. Almost every 
 day there was something new ; a page or two came home on the 
 back of a letter or on a sheet of paper doubled up in his pocket, 
 and must be assigned to the proper place ; sometimes a section re- 
 written because the new was better, or to introduce fitly a fresh idea 
 or illustration ; then a large part of the chapter on the banking 
 system was written. I used to go over it all again and again by 
 myself during the days while he was away at his office, occasionally 
 suggesting the writing of something on this or that point to fill out 
 the course of thought ; and in the evenings and on Sundays he read 
 
XV111 BIOGRAPHICAL SKETCH OF THE AUTHOR. 
 
 it over, or we read it over together ; sometimes spending hours on a 
 single paragraph, to make it clear and simple. Unwearying thought 
 and care were bestowed on the whole ; but the chapter on the nature 
 of money received specially vigilant and repeated revision. For 
 recreation we used to talk together, often into the midnight hours, of 
 the blessings that would flow to mankind from this grand new truth ; 
 and we said, that some day the nature of money would be so well 
 understood, and the system so much a matter of course, that people 
 would wonder it had ever been needful to write such a book, or take 
 such pains to argue the question. When it was nearly finished he 
 invited a friend to hear it read, who suggested further omissions 
 and condensations. Then my father went over it several times 
 more, always making some emendations, and five years from the 
 time he began to write it, it was copied out for the printer; con- 
 taining then in substance all and in length about one-third of the 
 original matter. 
 
 The book was published in the winter of 1848-' 49, under the 
 title of " Labor and other Capital : the rights of each secured and 
 the wrongs of both eradicated ; or, an exposition of the cause why 
 .few are wealthy and many poor, and the delineation of a system 
 which, without infringing the rights of property, will give to labor 
 its just reward. By Edward Kellogg." It was stereotyped and 
 printed at his expense, and he had it for sale at his office, then at 
 47 Stone street. 
 
 He hoped he had now written something that would awaken the 
 public attention and direct it to this momentous question ; but his 
 book failed to attract much notice, and his plan was called visionary, 
 impracticable, Utopian. Here and there a man read it who per- 
 ceived its power. One old friend of his, president of a bank in 
 Maryland, said, " Mr. Kellogg, I have read your book, and it is all 
 true, every word of it ; but nobody will buy it, nobody will read it, 
 and it will lie on the shelf: but if you will write one on the other 
 side of the question, it will go like hot cakes." A year or two after 
 it was printed, a gentleman, to whom he had lent a copy, said to him, 
 " Mr. Kellogg, your book is true ; it is in advance of the time, and 
 the people of this generation do not appreciate it ; but future genera- 
 tions will raise monuments to your memory." An editor, too, said to 
 him, " Do you know that this book of yours is the most radical one 
 that ever was written?" Yes, he knew it; nothing was new to him 
 in regard to the deep-reaching nature of his work. He remarked, 
 " This will break down every despotism. As soon as the system is 
 
BIOGRAPHICAL SKETCH OF THE AUTHOR. XIX 
 
 adopted in this country and its results are seen, the people of other 
 countries will compel their governments to establish it; these prin- 
 ciples are of universal application, and will be ultimately adopted 
 by all nations ; then ' a nation shall be born in a day. 5 " This last 
 was a favorite expression with him ; he often quoted texts of Scrip- 
 ture in connection with his plan. He said, too, " They cannot bring 
 me any question- relating to this subject that I cannot answer, when 
 I have had a little time to consider it." 
 
 At various times he had written papers expressly for certain 
 public men, setting forth the advantages of his project, hoping to 
 gain the ear of some one who might speak of it effectively to the 
 people. He wrote to Henry Clay, and paid him a visit, making a 
 great effort to interest him ; but nobody cared for this newly-dis- 
 covered truth. He spoke often of the oppression of the laboring 
 classes of England, and wrote an article showing how to remedy it, 
 which he sent to the London Economist, but it was not printed. 
 When the book was first published he sent it to Proudhon, and the 
 prominent members of the French Assembly, as well as to other 
 statesmen in foreign countries ; ever hoping somebody might perceive 
 its worth, who would endeavor to put it in practice for the good of 
 the people. He placed it in the hands of editors, members of Con- 
 gress, and Cabinet officers at home. He used to say, "Some men tell 
 me this is a very good theory, but it would not work in practice ; but a 
 theory is of no value unless it can be put in practice ; the practica- 
 bility of a theory and the good results flowing from it are what 
 make any theory valuable." It burdened his soul that he could not 
 make men understand, nor even fairly look at a subject laden with 
 the liberty and well-being of mankind. The few instances I have 
 noted are almost the only ones I can recall of a cordial recognition 
 of his work. 
 
 He continued to write occasionally when some fresh thought or 
 striking illustration occurred to him ; and he spoke of making a 
 new book ; thinking again that perhaps he could produce something 
 different in expression and illustration, yet the same in principle, 
 which would reach the public ear. But when he considered that 
 the people were not yet alive to the importance of a better monetary 
 system, and that a great deal of thought and labor had been given 
 to the book, he resolved to take it as a basis, and make it more valu- 
 able and interesting by incorporating the new matter with it. Re- 
 marking to him once in reference to a passage, " Father, that is so 
 simple it does not seem as if there were any need of saying it," he 
 
XX BIOGRAPHICAL SKETCH OF THE AUTHOR. 
 
 replied, " It is perfectly simple ; but people do not know it." And, 
 " What astonishes me is that no one has ever found this out before. 
 I cannot see how the world has gone on so long without any one 
 understanding the real nature of money." " I do not need to hear 
 the history of the monetary laws of nations. If I take the present 
 condition of the people, I can tell pretty nearly what sort of money 
 they have had." "Political economists fill their- books with ac- 
 counts of things as they are, but they do not show us any means by 
 which the old evils they depict can be done away." Sometimes he 
 used to call money, because of its present elusive, deceitful, and 
 hidden power, a money-devil, and say that it ought to be chained, 
 so that it could not devour the substance of the producers. 
 
 He was the most companionable of men : and though his conver- 
 sation naturally turned to matters of government, law, or religion, 
 he liked lighter topics too ; was quick at repartee, could tell a good 
 story, was fond of games, and ever loved a joke. He had a great 
 respect for the common mind ; he loved little children and tenderly 
 drew out their thoughts : he had a lively sympathy for the pleasures 
 and occupations of others, and everybody could do his best in that 
 cheerful and inspiriting presence. He was withal a man of an un- 
 usually beautiful and dignified aspect ; of a manly form, above the 
 middle height, having finely cut features, a pure red and white 
 complexion, dark blue eyes, a firm mouth, and soft gray hair lying 
 in abundance on a noble head. His countenance was expressive 
 of power, refinement and benevolence. When he was conversing 
 on some of his favorite topics, and especially when speaking of the 
 excellent results to flow from just laws, his face sometimes assumed 
 the innocent and joyful expression of a child. The moral effect 
 of his system was always uppermost with him. While he foresaw, 
 perhaps as few others can, the physical benefits to follow upon its 
 establishment, the prospect of peace and good-will among men was 
 the one which most delighted him. " The millennium can never 
 come," he would say, " until this system goes into operation ; but 
 then it can come ! " The foundation of contracts being laid in jus- 
 tice, order and beauty in the state and in society could arise. 
 
 As I listened day by day to his conversation, I often thought of 
 making a written memorandum of it, but did not. In arguing a 
 question he frequently began at a distance so remote that one did " 
 not see the connection ; and as he approached the point, he brought, 
 by means of the train of thought, an unexpectedly great force to 
 bear, carrying conviction to the mind of his hearer. He talked of 
 
BIOGRAPHICAL SKETCH OF THE AUTHOR. XXI 
 
 righteousness, and of justice and mercy, drawing much from the 
 Bible: how often he quoted, "Justice and mercy have met to- 
 gether ; " adding, " There is no justice without mercy ; it is just to 
 be merciful." He said he had thought a very great deal more 
 about religion than he ever had about the currency, and that he 
 could not have written the book if his mind had not been free on 
 religious subjects. He spoke of writing a book on faith, but he 
 never began it. He said, too, that he could write a code of laws ; 
 but he always added, " When my system goes into operation the 
 laws will be very simple ; they will be few and easily understood ; 
 there will be much less litigation." He remarked that if the laws 
 were just it would not make much difference which political party 
 administered them. He conceived that party strife would be 
 diminished; that legislative bodies would come together less fre- 
 quently, and he inclined to favor direct taxation for government 
 expenses. He said it was supposed that a country might be so wide, 
 and a nation so numerous as to fall apart because of the bulk, but 
 if the laws were just, and a true system of money were instituted, 
 the country might enlarge and the people multiply without dis- 
 advantage. 
 
 It was during the later years of his life, while his mind was 
 occupied with these subjects, that a committee of gentlemen in- 
 vited him to take the presidency of a bank, urging that if he would 
 consent, such confidence was felt in his management that the stock 
 would be taken immediately ; and the United States Government 
 appointed him to appraise the value of some lands ; but he declined 
 these offices, as he had previously declined a minor political one. 
 I mention these otherwise trivial incidents to show his reputation 
 as a practical man. 
 
 In the summer of 1857 it became evident that his hitherto vigor- 
 ous health was declining, and a few months later the presence of a 
 painful and fatal disease was disclosed. During the financial pres- 
 sure of the autumn he felt intensely for the general suffering, which, 
 in his then weak condition, seemed almost beyond his endurance : 
 and said, " It is not the trouble in my own affairs, but it is the cause 
 of these calamities that wears me out." He wrote an article for the 
 New York Tribune, copied in the appendix of this book. The an- 
 nouncement of his approaching departure he received with the 
 equanimity that distinguished him ; saying, " It is usually our duty 
 to prepare for life, but circumstances change ; there is a debt of 
 nature that we all must pay, and I have considered our duty in re- 
 
XX11 BIOGRAPHICAL SKETCH OF THE AUTHOR. 
 
 lation to it for many years ; and it does not alarm me at all not a 
 bit. I shall still be in the presence of the same Being before whom 
 I have lived ; there will be no change in that." 
 
 He continued to go to his office as his strength permitted, and to 
 attend to his affairs. At home he caused me to read his book 
 through to him, after the lapse of seven or eight years listening to 
 it with marked satisfaction, and saying that it was much better than 
 he had thought it. When we came to the passage where it is said 
 that those who neither lend nor borrow money, and have not the 
 mental grasp to understand how the rate of interest affects the re- 
 ward of their labor, shall yet benefit by the institution of the new 
 system, he was visibly affected, and said, " If I did not know who 
 wrote that book I should say, that sounds like Christian legisla- 
 tion!" He changed the title for the present one, made some 
 amendments, dictated a few paragraphs, and from time to time 
 spoke to me of some points which he desired to have enforced ; es- 
 pecially that the rate of interest ought not to exceed the expense of 
 instituting and circulating the money ; but he added that at one 
 per cent, it could not be made oppressive to the producers. He 
 had previously said that no doubt an attempt would be made to 
 lower the rate of interest gradually ; but, in his judgment, it would 
 be much better to bring it at once to the just standard ; then every- 
 thing would adjust itself to that, and there would not be a series of 
 readjustments consequent upon lower and lower rates. He said, 
 " If there should be a war in this country, my system would be much 
 more likely to go into operation ; for the government would be com- 
 pelled to issue a large amount* of paper money to carry it on." * 
 In those days of physical weakness and suffering, when greatly 
 oppressed by the general lack of appreciation for this truth, it 
 soothed him to have me talk to him with faith and hope of the 
 coming day of recognition for it. I promised him that I would 
 print a new edition of his work, and make additions to it from his 
 manuscripts. He gave me all his manuscripts, though long ago 
 I had often said to him -that those were my perquisite, valuing 
 them highly, and he had assented, remarking, "There are some 
 good ideas in those old papers that you have not got out yet." But 
 now he gave them to me definitely, and the copyright, and all the 
 
 * Those who proposed and earned the legal tender act can tell what strength 
 they derived from the facts and arguments of the New Monetary System, which 
 was freely circulated among members of Congress and others at "Washington. 
 
BIOGRAPHICAL SKETCH OF THE AUTHOR. XX11I 
 
 remaining copies of the essay and the book and I received them 
 as one who takes a sacred trust for the people. He said, " Mary, 1 
 love my friends, I love my family ; I take a great interest in theii 
 welfare ; but I care more for that book than for any thing else, it is 
 of such vast importance to the world." 
 
 Soon after this he could no more go out, nor go to his writing- 
 room, and for three weeks his family watched beside his dying-bed. 
 He bore intense suffering with resolution and uncomplaining forti- 
 tude. Once as he lay apparently asleep I heard him say, " That is 
 shortly expressed," and asking what he said, he replied, smiling, 
 " I was dreaming about usury, I guess." Again when -I heard 
 some word, he said again, " I was dreaming pleasant dreams all 
 my thoughts are pleasant." To an old and valued orthodox friend, 
 who, knowing he did not hold the usually received religious opin- 
 ions, asked him how he should appear before a just God, he replied, 
 in tones of solemn sweetness and serenity, " In regard to that I feel 
 a perfect peace. You may think strange of it, Judge, but I do." 
 Each day until the very close he gave directions respecting his 
 affairs; in the extremity of death he did not neglect to greet a 
 friend ; and in perfect possession of his faculties up to the instant 
 of his departure, on the 29th day of April, 1858, this great soul 
 went hence. 
 
 We who sat beside him day and night, and saw his grand com- 
 posure, could but think of the old philosophers, to whom, in 
 mind, he always seemed to me akin. My spirit went up with him 
 to the company of the saints and reformers of every age. We laid 
 the wasted body in a grave on Chestnut Hill in the Greenwood 
 Cemetery ; but not until a cast of his head had been taken, that 
 the sculptor might reproduce in marble his lineaments, for those 
 who shall some day desire to see his face. 
 
 I have now told, according to my ability, who and what he was 
 who wrote this book, and how he was moved thereto ; trusting that 
 it may comfort and encourage those who are to endure the stress of 
 the coming struggle ; that they may know more intimately their 
 pure and benign leader, to whom was denied this conflict which he 
 so ardently sought ; that he was njDt a closet thinker, as some have 
 called him, but up to the close of a long life actively engaged in 
 affairs ; mingling freely with men and partaking of the ordinary 
 cares and joys ; though having endured toil and hardship, not a dis- 
 appointed, but, in the main, a successful man ; known to most of his 
 business acquaintances in no capacity but as one of themselves, yet, 
 
XXIV BIOGRAPHICAL SKETCH OF THE AUTHOK. 
 
 with his deep nature, having, as he himself said, " an inspiration of 
 the truth " on this all-important subject. In closing I must add, 
 that a few days before his death I said something to him, I do not 
 remember what, about writing some recollections of his life, and he 
 answered me, " I don't think much of these biographies. Every 
 child thinks its .own father and mother the best in the world. My 
 book will show what my character was." 
 
 M. K. P. 
 ELIZABETH, N. J., December, 1874. 
 
PREFACE. 
 
 THE laboring classes of all civilized nations have 
 been, and are, as a body, poor. Nearly all wealth is 
 the production of labor ; therefore, laborers would 
 have possessed it, had not something intervened to 
 prevent this natural result. Even in our own country, 
 where the reward of labor is greater than in most 
 others, some cause is operating with continual and 
 growing effect to separate production from the pro- 
 ducer. The wrong is evident, but neither statesmen 
 nor philanthropists have traced it to its true source ; 
 and hence they have not been able to project any 
 plan sufficient for its removal. 
 
 The design of the present volume is to show the 
 true cause ; and to illustrate its operation so plainly 
 and variously, that any ordinary mind may easily 
 perceive how it has produced and continued this un- 
 natural oppression of laborers. It will also be shown, 
 with equal clearness, that a simple and effectual rem- 
 edy can be applied to the removal of the evil. A 
 good government must have some system by which 
 it can secure the distribution of property according 
 to the earnings of labor, and at the same time strictly 
 
 xxv 
 
XXVI PREFACE. 
 
 preserve the rights of property : and no government, 
 whether republican or not, that fails in these particu- 
 lars, can insure the freedom and happiness of the 
 people and become permanent. The plan proposed 
 to secure this distribution is obviously safe and cer- 
 tain ; and it contemplates no agrarian or other similar 
 distribution of property, nor any interference in con- 
 tracts between laborers and capitalists, or in the usual 
 course of business. Fulfilling these requirements, it 
 can hardly fail to recommend itself to all thinking 
 men. Therefore, it is confidently believed that when 
 the plan shall become generally known, it will be 
 quickly put into operation, and thus save the produc- 
 ers of this nation from the oppression, degradation 
 and misery which have befallen the laboring classes 
 of all other countries. 
 
A NEW MONETARY SYSTEM. 
 
 INTRODUCTION. 
 
 All civilized nations enact certain fundamental laws. 
 These are governing powers, and subsequent laws are 
 intended to carry them out into practical use. The most 
 important fundamental law in any nation is that which 
 institutes money ; for money governs the distribution of 
 property, and thus affects in a thousand ways the rela- 
 tions of man to man. If wrongly instituted, it cannot 
 be rightly governed by any subsequent laws ; and the 
 wrong distribution of property consequent upon it must 
 corrupt society in all its branches. The evils engendered 
 can never be remedied except by altering the funda- 
 mental law. Changes in the subsequent laws, so long as 
 they are founded on a wrong base, can only result in the 
 exchange of one evil for another. The proposition that 
 wrong premises will produce wrong conclusions is often 
 stated, yet it is seldom fully understood and properly 
 appreciated. We will therefore, by means of one or 
 two simple illustrations, show the governing power of a 
 fundamental principle. A good house cannot be built 
 except upon a good foundation. The mason-work above 
 may be laid of the best material and by the best work- 
 men ; but if the foundation be not sounc., and sink at 
 each corner from five to twenty inches, although the 
 
 17 
 
18 
 
 INTRODUCTION. 
 
 house shouid not fall, yet this movement of the founda. 
 tion will distort the floors, ceilings, roof and rooms from 
 their proper shape ; and no propping or patching up of 
 floors, ceilings, roof or rooms will ever make the house a 
 good one. It will be directly the opposite, it will be a 
 poor one ; and as the foundation continues to move, will 
 constantly need repairs. A valuable machine cannot be 
 invented except upon true mechanical principles. Let a 
 man invent a machine founded upon a false principle. 
 Every part of it may be well made of the best ma- 
 terial, and when finished it may present a plausible ap- 
 pearance, yet it either will not work at all or it will 
 work imperfectly, and can never be good until it is 
 founded on true mechanical principles. The stability of 
 a house shows the character of its foundation ; the 
 results produced by a machine show the worth or worth- 
 lessness of the principle on which it was invented ; and 
 with equal certainty the centralization of property in a 
 nation shows the character of its monetary laws. If 
 great wrongs prevail while there is a general conformity 
 to laws apparently designed to secure justice, there 
 must be, in spite of appearances, some defective law or 
 institution, which is a sufficient cause of those wrongs. 
 The general evils naturally and inevitably flowing from 
 it are easily seen, like the parts of the building above 
 ground, and like the wheels of the machine that are open 
 to view, while the great radical defect in the ground- 
 work may be so hidden from public sight as to attract 
 comparatively little attention. 
 
 One of the chief objects for which governments are 
 constituted, is to insure the protection of the rights of 
 property. x The security of these rights is essential to 
 the welfare of a people. Their infringement is the cause 
 of nearly all legal procedures. Such crimes as theft, 
 gambling, fraud in business, bribery in courts of law, 
 etc., consist in unjustly obtaining property without ren 
 
INTRODUCTION. 19 
 
 dering an equivalent. To obtain labor without rendering 
 a fair equivalent, is also a violation of the rights of 
 property. 
 
 Property is almost entirely the product of labor, for 
 even food of spontaneous growth in the seas or on the 
 land cannot be gathered without labor. Labor has 
 effected every improvement in our country ; it has built 
 our cities ; cleared, fenced, and improved our farms ; 
 constructed our ships, railroads and canals. In short, 
 every comfort of life is the fruit of past or present labor. 
 If any one is in doubt whether labor is the actual pro- 
 ducer of the wealth, let him consider what would be the 
 situation of this or any other civilized nation, if the 
 laborers should cease their toil for the brief term of five 
 years, letting the earth for that period bring forth only 
 her spontaneous productions. Let man neither sow nor 
 reap, let manufacturing cease, commerce be suspended, 
 and what would be the condition of our country at the 
 end of the five years ? Would not a large proportion of 
 the people have sunk into their graves from starvation ; 
 and would not many who were living be almost naked 
 like the barbarians ? If the earth should open her 
 chasms and spew out pure and malleable gold and silver, 
 as plenty as the rocks in the mountains, it would afford 
 no relief. But if she should cast out wheat, corn and 
 vegetables, beef, pork, mutton, poultry, besides gar- 
 ments, houses, furniture and so forth, the people would 
 be supplied with the means of subsistence. In such a 
 case we might do without the labor of man. But if we 
 had all the gold and silver money and all the paper obli- 
 gations that have been made from the creation of the 
 world to the present day, they would not be the least 
 substitute for the productions of labor ; and yet our 
 laws make these legal instruments in the hands of the 
 few to trample in the dust the rights of the laborer, on 
 whom we depend for every morsel of food that we eat, 
 
20 INTRODUCTION. 
 
 for the clothing we wear, the houses we live in, and in 
 fact for every comfort and luxury of life. 
 
 A moderate amount of labor readily produces an abun- 
 dant supply of necessaries and comforts for man ; but the 
 present distribution of these products is such, that a large 
 number of those who labor much more than their share 
 in the production, receive a very small proportion of the 
 products, while the larger proportion accumulates in the 
 possession of those who are employed neither in produc- 
 ing nor in distributing them. The greater portion of the 
 human family toil day by day for a scanty subsistence, 
 and are destitute of the time and means for social and in- 
 tellectual culture. The industrious poor, as a class, do not 
 obtain even a competence. Their destitution often in- 
 duces them to trespass against existing laws, to obtain a 
 small proportion of that, which, under just laws, would 
 be abundantly awarded to them as a fair compensation 
 for their labor. All candid men will acknowledge this 
 truth, that the wealth is not distributed in accordance 
 with either the physical or the mental usefulness of those 
 who obtain it. Opposed to the masses who live in toil and 
 poverty, is a small proportion of the human race, sur- 
 rounded by all the appliances of luxury, and living in 
 comparative idleness ; while their abundant means of so- 
 cial and intellectual culture are too often neglected, or ren- 
 dered useless by indolence and self-indulgence. These 
 extremes of wealth and poverty, of luxury and want, of 
 idleness and labor, are great, somewhat in proportion to 
 the antiquity of a nation, or the length of time that its 
 monetary law, or system, has been in operation. 
 
 The wealth of this nation, like the wealth of other na- 
 tions, is rapidly accumulating in the hands of a compara- 
 tively few persons in our large cities. Still it is indispu- 
 table that cities are great consumers of wealth, while 
 they are comparatively small producers. The labor of 
 the country furnishes nearly the whole support of the 
 
rNTBODTJOTION. 21 
 
 cities. The rewards of labor paid by the cities and the 
 country respectively to each other, to be justly recipro- 
 cal, ought to be in proportion to the services rendered to 
 each other ; but the immensely greater amount of wealth 
 flowing to the cities, and the less to the country, is clearly 
 opposed to this just reciprocity. This will be more ap- 
 parent by supposing the large Atlantic cities to be cul 
 off from all interchanges with the country. In a short 
 time their citizens would be destitute of food, fuel, and 
 clothing, for exchanges of their productions among them- 
 selves would do very little toward supplying their wants ; 
 while the people of the country and the small manufac- 
 turing towns, if they had a just medium by which they 
 could exchange their productions with each other, would 
 have an abundant and vastly more bountiful supply than 
 at present of nearly every necessary and luxury of life. 
 They would save for their own use nearly the whole dif- 
 ference between what they now produce for the large 
 pities, and what these cities produce for the country. 
 But even in these cities, where a great part of the na- 
 tional wealth is owned, a majority of the people toil for 
 a scanty subsistence, and thousands of miserable poor are 
 dependent on public charity. 
 
 In all probability, four thousand of the most wealthy 
 citizens of the city of New York own a greater amount 
 of real and personal property than the whole remainder 
 of its inhabitants. Their wealth is vested in real estate 
 in the city and country, in bank, railroad, State, and 
 other stocks, loans of money, etc. Allow five persons to 
 form a family, and the four thousand men and their fami- 
 lies would form a population of twenty thousand, or two 
 and a half per cent, on eight hundred thousand, the pres- 
 ent population of the city. Upon this estimate and a 
 little observation and reflection will show that it is not an 
 extravagant one two and a half per cent, of the popu- 
 lation are worth as much as the remaining ninety-seven 
 
22 INTRODUCTION. 
 
 and a half per cent. Take the disproportion of wealth 
 on a greater amount of population. We may reason- 
 ably estimate that a hundred and fifty thousand of the 
 wealthiest men in the United States own as much real 
 and personal property as the whole remainder of the 
 nation. Allowing five persons in a family, these hun 
 dred and fifty thousand men, with their families, make 
 a population of seven hundred and fifty thousand, or two 
 and a half per cent, on thirty millions, the present popu- 
 lation of the country. This calculation will make two 
 and a half per cent, of the" population own as great an 
 amount of wealth as the remaining ninety-seven and a 
 half per cent. Our government professes to establish 
 laws for the benefit of the whole people ; and such laws, 
 if justly administered, should secure to every individual 
 a fair equivalent for his labor ; yet probably half the 
 wealth of the nation is accumulated in the possession of 
 but about two and a half per cent, of the population, Avho 
 to say the most, have not done more labor toward the 
 production of the wealth than the average of the ninety- 
 seven and a half per cent., among whom is distributed the 
 other half of the wealth. 
 
 Let those who doubt whether two and a half per cent, 
 of the population own half the property of the nation 
 select in their own neighborhood, or in a village contain- 
 ing, say, four thousand inhabitants, the twenty most 
 wealthy men, and see if the twenty are not worth as 
 much as. all the rest. Or, if the village contain ten thou- 
 sand inhabitants, take the fifty most wealthy men, and 
 see if they are not worth as much as all the rest. Allow- 
 ing the families of the fifty men to average five persons 
 each, they would amount to two hundred and fifty indi- 
 viduals just two and a half per cent, of the population. 
 If it be found that the fifty men and their families o\vn 
 one-half of the property, then see if tbey have contri- 
 buted more labor physically, intellectually, or morally, 
 
INTBODtJCTION. 23 
 
 for the general benefit, than the rest of the villagers. 
 We do not now speak of what their wealth may have 
 done in hiring others to make improvements, but of the 
 improvements that the lifty men and their families have 
 effected by their personal labor. If they have not accom- 
 plished as much as all the rest of their townsmen, and 
 yet own half the wealth of the town, some wrong to the 
 majority of the people has been done. Not that these 
 men have not acted in as good faith, or with as upright 
 intentions as other citizens ; or that others would not be 
 equally glad to accumulate wealth in the same manner ; 
 but we ask how it occurs that the comparatively few 
 have so large a proportion ? They have not earned it, 
 for they could not have performed the labor of building 
 half the town, nor of providing half its inhabitants with 
 food and clothing ; nor could they have given half the 
 instruction in the various trades and in the school educa- 
 tion of the villagers. And if they have not done one- 
 half the labor, why is it that they possess one-half the 
 property ? Why is it, too, that we see one industrious 
 man rise from poverty to wealth, apparently because his 
 business is prosperous, and another man, who is equally 
 diligent in an equally useful employment, remaining with 
 a mere subsistence ? 
 
 These facts are sometimes attributed to the ignorance 
 and extravagance of the laboring classes. But if all our 
 people were learned in Greek and Latin, as well as in 
 other languages and in the sciences, the ground must 
 continue to be tilled, and railroads, houses, and so forth, 
 built by labor. JSTot all the education, nor all the money 
 in the world, would make these improvements without 
 the physical labor ; and it ought to secure to those who 
 perform it a just and much larger share than it at pre- 
 sent does of all the comforts of life. Many good scholars 
 and industrious and intelligent men are poor, while very 
 indifferent scholars and rather ignorant men have ofter 
 
24: LNTKODUOTKXN. 
 
 accumulated fortunes. The ignorance ot the laboring 
 classes does not account for their poverty. Nor does 
 want of economy better account for it. What oppor- 
 tunity has the laborer to be extravagant, when the price 
 of his day's work would hardly pay that day's board and 
 lodging in a comfortable house in our cities ? Do the 
 factory operatives in England, France and Germany live 
 extravagantly, or the seamstresses in London and New 
 York ? They earn three, four or five times more products 
 than they actually consume, and these go into the pos- 
 session of that class of persons who live comfortably or 
 luxuriously without performing much, if any, productive 
 labor, or advancing the moral and intellectual well-being 
 of society. The wealthy men of a nation are not usually 
 those whose genius makes improvements in the mechani- 
 cal arts, or who, by any species of labor, contribute 
 much to actual production. Their attention is generally 
 directed to the accumulation of wealth by indirect means, 
 which do not require labor.* 
 
 The injustice of the present distribution of products is 
 still more conspicuous, when we consider that present 
 labor is indispensable to human existence. .Although all 
 discoveries, inventions, and improvements, made by ali 
 previous labor, are transmitted, free of expense, to suc- 
 cessors, yet the property, thus improved and inherited, 
 cannot give support without present labor. The sponta- 
 neous productions of the earth cannot supply one-twen 
 tieth part of the population with food. Clothing can last 
 but a few years, and buildings, unless repaired, must 
 decay. Therefore, each generation must in the main 
 provide its own means of subsistence. If a generation 
 enact .laws through which one-third of the succeeding 
 
 * Labor signifies toil, which produces or distributes something 
 Actually useful ; and this is the sense in which the term is used in this 
 volume. When toil is directed to wrong ends, it does not deserve 
 Uie name of labor. 
 
INTRODUCTION. 25 
 
 generation can live in luxury without labor, then the 
 labor of the other two-thirds, besides supplying their 
 own necessities, must also supply the wants of the lirst 
 third. Although the idle rich man inherits wealth, yet 
 he owes his present support, to the labor of others. 
 Others must raise the grain that he consumes, manufac- 
 ture cloth for his use, build his house, etc. If one-third 
 of a generation own all the property, they have the 
 means of supplying their wants by labor upon their own 
 possessions ; but the two-thirds who have no property, 
 have not even the means of preserving their lives, unless 
 the one-third allow them the use of property on which 
 to expend their labor. 
 
 In addition to this evil of greatly centralized wealth, 
 all civilized nations are every few years visited with great 
 revulsions in trade. Outstanding debts become unsafe, 
 and many debtors bankrupt. There is usually an appa- 
 rent overstock of goods and products, for which there is 
 no ready market ; houses will not sell or rent ; manufac- 
 tured goods lie in the stores and cannot be sold for the 
 cost of making ; and therefore laborers are out of 
 employment, for why should more be produced to 
 decrease still further the ruinous prices at which those 
 already in market must be sold ? At such periods, in 
 our cities, one house is filled with families, one in each 
 room from cellar to garret, and the adjoining house 
 stands empty for want of tenants able to pay the rent. 
 Goods are piled up in stores without sales, while great 
 numbers of the laboring community are ragged and are 
 begging from door to door for old clothes to shield them- 
 selves and their families from the piercing cold, and for 
 the crumbs that fall from the tables of the rich to keep 
 them from starving. When people look about to ascer- 
 tain the cause of these things, seeing houses and stores 
 un tenanted, and great quantities of agricultural product* 
 
26 INTRODUCTION. 
 
 and manufactured goods on hand for which there appears 
 to be no market, they generally come to the conclusion 
 that over-production and over-trading have caused these 
 calamities. If this be really the case, public measures 
 should be taken to avert such disasters, by preventing 
 an excess of labor. Is it not strange that at the times 
 when the amount of surplus production is a subject of 
 national lamentation, the people who produce by their 
 labor the very things which they need for their own use 
 and comfort, are the ones who are often destitute of 
 them ; while a few capitalists who do little or nothing 
 toward the production and distribution, are supplied with 
 all the comforts and luxuries of life at half, or less than 
 half their usual price ? But a surplus of cotton has never 
 remained because no one needed it. In 1844, nearly 
 sixty thousand citizens of New York received the aid of 
 public charity. All these needed additional cotton cloth- 
 ing. At least one-half the population pf the whole country 
 would have made a yearly purchase of five dollars' worth 
 of additional cotton clothing, if they could have spared 
 the means from their earnings. In one year ten millions 
 of persons would have consumed $50,000,000 worth of 
 cotton clothing, in addition to the previous quantity. 
 Cotton would then have maintained a good price, and the 
 crops would have been consumed. If, during the years 
 included between 1837 and 1844, the laborers in the city 
 of New York and its vicinity, whose occupation was the 
 building of houses, had been furnished with the work 
 which they would have been willing to perform, they 
 would have built a house for nearly every poor family 
 in the city. If .the unemployed laborers in the districts 
 where the materials for building, bricks, mortar, timber, 
 boards, nails, etc., are usually prepared, had been set at 
 work, the materials might have been furnished, and the 
 buildings erected and paid for by labor. The laborers, 
 
INTRODUCTION. 27 
 
 too, would have been much happier, for they begged for 
 work without obtaining it, and many were dependent on 
 public charity. 
 
 It is plain that there can be no real over-production 
 unless a large surplus remains after all the people have 
 been fully supplied with the necessaries and comforts of 
 life. The public cannot over-trade by distributing each 
 year's productions among those who really need them to 
 use. Too high prices cannot be paid for labor, unless 
 the laborers in general actually gain more than their 
 equitable share of the year's productions. Neither can 
 there be an over-stock of laborers so long as thousands 
 are suffering for want of the very articles these laborers 
 would gladly produce, if they could be employed. There 
 cannot be too many houses, when they would be filled 
 with tenants able to pay the rent if work could be 
 obtained. We must look for the real cause of these 
 calamities, not in over-production, but in the power that 
 governs the distribution of the products. 
 
 But, taking another view of the subject, it may be 
 said that we are a free people, and many suppose we 
 enjoy all the rights that a government can confer. Every 
 one employs himself in labor, trade, speculation, or other- 
 wise, according to his own choice ; soils his labor or 
 products at such prices as he can obtain, and buys the 
 labor and products of others at prices that he agrees 
 to pay. Our government is also deemed beneficent 
 because poor-houses and schools * are provided for the 
 
 * In the various States, a tax is levied to provide schools for the 
 children of the laboring classes. Under existing laws, this species 
 of charity is, doubtless, very important. But wealth being the pro 
 duct of labor, the laborers should have abundant means to educate 
 their children ; and if a fund be established for the purposes 
 of education, it should be necessary for those only who are unable 
 or unwilling to labor. It is unreasonable for the laws to be such as 
 to compel the producers of wealth to ask alms of non-producers. 
 
 4 
 
28 INTRODUCTION. 
 
 needy. If a farmer or a mechanic should be told that 
 our laws oppressed him, probably he would say, that 
 he worked at what he pleased, and sold either his labor 
 or its products to whom lie pleased, and had no law 
 suits, and therefore, the laws did not in the least 
 infringe his rights, and would not those of any other 
 man who was upright in his dealings. The laboring 
 classes make their own bargains with capitalists, and one 
 another; and all are equally protected in. the property 
 which they lawfully acquire. Why then do not laborers 
 get all they are justly entitled to receive? Looking at 
 the matter in this light, it wears an appearance of freedom 
 and equal justice ; yet results prove the existence of 
 some radical wrong lying below this surface view. 
 For we all know that wealth is produced by labor, and 
 that the people of the country send the best products 
 of their incessant toil to supply the luxuries of the 
 wealthy in cities; and that the laborers in these cities 
 build splendid mansions for the opulent, and poor tene- 
 ments for themselves, most of which are also owned by 
 capitalists, and rented to their occupants. True, all this 
 labor is paid for by capitalists according to their agree- 
 ments with laborers ; yet, notwithstanding these volun- 
 tary agreements according to the law of supply and 
 demand, the wealth of the nation continues to accumulate 
 in large fortunes in the hands of a comparatively few 
 non-producers, leaving a very large number of its actual 
 producers in poverty. These are facts that stand out to 
 public view, and cannot be denied. Freedom of contract, 
 choice of location and occupation, and protection of 
 property, are manifestly proper and right, and ought to 
 be enjoyed by every people ; yet we see they fail, and 
 entirely fail, to secure any equitable distribution of 
 property, and any adequate compensation for labor. 
 They fail for the same reason that good materials and 
 workmanship on a bad foundation Ml to make a good 
 
house. Their foundation is unsound and variable, 
 perverting their natural good tendencies, and engender- 
 ing defects corresponding with their wrong basis. A 
 bad foundation for a house aifects the edifice above, and 
 the few individuals who are interested in its building and 
 use. A machine not founded on true mechaniecu 
 principles, affects the few who own it, and those interested 
 in its working. But a national standard of value iika 
 money, which forms the foundation of contracts, and 
 regulates the award of property, thus greatly modifying 
 and limiting all minor rights of freedom of contract, 
 location and occupation, and which a whole nation is 
 compelled to use, must, if it be variable and uncertain, 
 affect injuriously the interests of every individual, 
 family and association, as far as the money circulates. 
 
 The present rates of interest on money enable the owners 
 of property to demand an undue proportion of the products 
 of labor for the use of property, and laborers are compelled 
 to make their agreements with them under these circum- 
 stances. Undoubtedly both parties are governed by 
 their own interests in making their agreements ; but the 
 circumstances under which contracts are made, render 
 them very unjust toward laborers. Suppose one of the 
 contracting parties to be in water, where he must .drown 
 unless he receive assistance from the other party who is 
 on the land. Although the drowning man might be well 
 aware that his friend on shore was practising a very 
 grievous extortion, yet, under the circumstances, he 
 would be glad to make any possible agreement, to be 
 rescued. The monetary laws of nations have depressed 
 the producing classes to a similar state of dependence 
 upon capitalists, and they are similarly obliged to make 
 their contracts with them under great disadvantages. 
 A very large proportion of the people are actually 
 wronged out of their property, and the earnings, of their 
 labor, by the operation of the laws, although their con- 
 
30 INTRODUCTION. 
 
 tracts are voluntarily made, and honestly fulfilled. 
 Neither of the contracting parties may know that either 
 is injured by the laws, although both may be sensible 
 that justice is really not done them. 
 
 In all ages and nations, philanthropic men have endea- 
 vored to devise some means of securing to labor a better 
 compensation. Labor-saving machines have been in- 
 vented ; associations have been formed for the purpose 
 of producing with less labor, the earnings being equita- 
 bly distributed, according to the work performed. But 
 these benevolent efforts have failed of any general success. 
 The reason is this : no individuals, nor associations of indi- 
 viduals, can withdraw their labor or their products from 
 the influence of the national laws which regulate distribu- 
 tion. The great disparity in the conditions of the rich 
 and poor is the natural result of unjust laws, and, there- 
 fore, this disparity must continue so long as these laws 
 are in force. If, however, a father should so dispose of 
 his property, that all his children, except one, should be 
 compelled to work twelve or fourteen hours a day for a 
 mere subsistence, while one son should receive an im- 
 mense fortune, which would supply him with every luxury 
 without toil, the injustice and injury to both parties 
 would call forth the censure of every right thinking per. 
 son. A government is no more justifiable in legislating 
 so as to produce these results, than a father is justifiable 
 in a similar treatment of his children. Governments are 
 established to protect the just rights of the governed, as 
 much as a father holds his position to protect the just 
 rights of each child. 
 
 Present laborers, who produce present products, 
 should receive a very large proportion of them, and 
 capitalists who do not labor, should receive a corre- 
 spondingly small proportion. How shall this change 
 hi the reward of labor and capital be effected ? Shall 
 laws be made to determine the prices of various kinds ot 
 
INTRODUCTION. 31 
 
 labor, and thus prevent the laborer and employer from 
 making contracts upon their own terms ? This would bo 
 impracticable, and, if practicable, not desirable. Each man 
 should be at liberty to make his own contracts. There 
 is no need of interference with this liberty, in order to 
 prevent capital from taking too large a proportion of the 
 products of labor. 
 
 The unfair distribution of wealth is caused by an un- 
 just legal standard of distribution. Distribution is re- 
 gulated and effected by the standard of value, which is 
 money. Money, as will be hereafter shown, exercises 
 astonishing power throughout every department of busi- 
 ness and industrial occupation. When monetary laws 
 shall be made equitable, present labor will naturally re- 
 ceive a just proportion of present products, and capital 
 will likewise receive a just reward for its use. 
 
 The necessity for the exchange of commodities is gen- 
 erally acknowledged. Few, however, even among think- 
 ing men, are aware how indispensable these exchanges 
 are to the subsistence and comfort of the human family. 
 Men are social beings, and mutually dependent. To 
 appreciate this important truth, we must consider the 
 inability of each man to provide for the numerous wants 
 of his nature ; and the ignorance and discomfort to 
 which each would be exposed, were he not benefited by 
 the labor of others. If every man could build his own 
 house, furnish his own food and clothing, and make all 
 the instruments and utensils that he needs to use : if the 
 materials for all these things were placed upon every acre 
 of land, and every man, woman and child, were endowed 
 with sufficient skill and strength to produce them, there 
 might be no need of an exchange of commodities. 
 
 But all men are, in many, in most things', dependent 
 on the labor of their fellow men. For example, take 
 vhe fanner, who is acknowledged to be the least depen- 
 
32 INTRODUCTION. 
 
 dent of men, and see for how many things even ho is 
 indebted to the labor of others. He must have imple- 
 ments for the cultivation of his farm, a plough, harrow, 
 shovel, hoe, sickle, cradle, scythes, a fan, or fanning-mill, 
 and a cart or wagon. The farmer is dependent on the 
 miner for the iron ore; on the collier to dig the coal ; on 
 the furnace-worker to smelt the iron ; and on the forger 
 and the smith to make his iron and steel instruments. 
 He is dependent on the wagon-maker for his wagon ; on 
 the machinist for his fanning-mill ; on the carpenter for 
 his house ; on the nail-maker for nails ; on the glass- 
 manufacturer for glass ; on the stone-cutter and the 
 mason for mason-work ; on the brick-maker for bricks ; 
 on the cooper for barrels, tubs, and pails ; on the saw- 
 maker for a saw, and on the rolling-mill to roll out the 
 iron or steel for it ; on the tin-plate-worker for kitchen 
 utensils; on the moulder and caster of iron for iron 
 pots; on the miner of copper, and on the copper and 
 brass founder for brass and copper kettles ; on the pump- 
 maker for a pump, etc., etc. He is dependent on the 
 needle-maker, the pin-maker, the button-maker, the' silk 
 grower, the tanner, the shoe-maker, the hatter, the saddle 
 and harness-maker, the cabinet-maker, and the type- 
 maker, type-setter, and printer. Not one of these 
 artisans, in attending to his particular employment, 
 produces his food and clothing ; and all would be desti- 
 tute of them, unless supplied with them by the labor of 
 others The farmer raises all his food, except salt, tea, 
 coffee, sugar, molasses, spices and the like ; these, 
 and the ships to transport them, must be furnished by 
 others. These wants call into employment ship-carpen- 
 ters, sailors, compass-makers, surveyors, chart-makers, 
 etc. The farmer must raise wool, cotton, hemp, or flax, 
 or else be 'dependent on others for clothing. If the 
 farmer, who is the least dependent of men, receives from 
 others so many supplies, how is it with the hatter and 
 
INTRODUCTION. 33 
 
 the shoe-maker ? The former makes an article to cover 
 the head, the latter one to cover the feet ; and all the 
 additional supplies of both must be furnished by the 
 labor of others. Artisans, too, depend upon each other 
 for the different parts of their work ; the cotton manu- 
 facturer must be assisted by others to carry forward his 
 manufacture. Many articles, such as watch-springs, are 
 useless unless they are combined with other parts. It 
 is, then, of paramount importance that no obstacles be 
 thrown in the way of a ready exchange of commodities. 
 A certain quantity of one kind of produce is worth as 
 much as a certain quantity of another kind ; and all 
 civilized nations have adopted some medium by means 
 of which all kinds of produce may be more easily ex- 
 changed than by direct barter. We hear it sometimes 
 asserted that there is no need of a medium of exchange. 
 But the articles of trade could not be divided and distri- 
 buted to supply the numerous wants of a people without 
 a representative of value through which the distribution 
 could be made. For example, a man brings to market 
 five hundred bushels of wheat. The purchaser tenders 
 corn in payment ; and they agree that seven hundred 
 and fifty bushels of corn are worth as much as five 
 hundred bushels of wheat. The seller can use but a 
 small portion of the corn, arid finds a purchaser, with 
 whom he exchanges the surplus for hams. He disposes 
 of the hams for hats and shoes. If he endeavor to 
 divide the hats and shoes, and exchange them for the 
 articles that he needs, he may spend two years before he 
 can return to his farm to raise a second crop of wheat. 
 Yet he is fairly dealt with. All those with whom he 
 exchanges, give him, as nearly as possible, an equivalent 
 of actual value for the actual value that they receive ; 
 and all the articles are such as all need. In fact, all 
 trade is simply a barter of one useful thing for another. 
 A person who produces more of an article than he needs 
 
34: INTRODUCTION". 
 
 for his own use, exchanges his surplus for the surplus 
 articles of others. If the farmer had sold the wheat for 
 money, the money would have been a tender for any 
 other article that he wished to purchase. 
 
 The value and prices of all products are estimated by 
 money, the legal standard of value. In making out a 
 bill, the articles sold are set down at the prices agreed 
 upon, extended and footed up, and they amount to so 
 much money. Plow could contracts for various articles 
 be made, and bills of them be made out and summed up, 
 without money ? Should it be said that a pint of Indian 
 corn was equal to four rows of pins, and a pound of cot- 
 ton to twenty needles ; and, if so, must there not be a 
 description of the quality of the pins and needles, as well 
 as of the cotton and corn ? If it should be said that 
 ten pounds of sugar were of equal value with a boy's 
 cap, would it not be necessary to describe the quality of 
 the sugar ; as well as the material, workmanship, and size 
 of the cap, in order to make the contract just ? A 
 standard of value is manifestly indispensable to a just 
 and convenient exchange of commodities. 
 
 Monetary laws are the most important that are enacted ; 
 tor, by these laws, money is made the tender for debts 
 and the medium of exchange for products. All indi- 
 viduals are compelled to found their contracts for the 
 necessaries of life upon the standard fixed by law. How- 
 ever good the intentions of the parties, their contracts 
 will partake of the evil of the monetary laws upon which 
 they are founded, and every law that goes to support 
 the fulfilment of the contracts will partake of the same 
 evil. We have laws to prohibit the fulfilment of con- 
 tracts made upon certain acknowledged unjust principles. 
 Contracts made in gambling are void in law. In gam- 
 bling, each player stakes a certain sum, and all agree 
 that the winner shall take the whole. This contract 
 would be perfectly fair or just, if the first or fundamental 
 
INTRODUCTION. 35 
 
 principle were just. But the principle upon which 
 gambling is founded is, that what one gains, others lose ; 
 for no production is made by gambling, and no equiva- 
 lent is given to losers for their money. The laws make 
 money the foundation for all business contracts. The 
 value of this foundation is unjust and continually vary- 
 ing ; so that parties in fulfilling their contracts are com- 
 pelled to give either more or less than a just equivalent for 
 their purchases. The results of all contracts are as vary- 
 ing and unjust as their foundation. The continual fluc- 
 tuations in the value of money make a sort of gambling 
 system of all trade. 
 
 For an example of the eifects of variations in the value 
 of money, suppose the bonds of the government be 
 issued, payable in twenty years, and bearing six per cent, 
 interest. If we had no foreign market for these bonds, 
 and the interest on money in our o\vn country were unalter- 
 ably fixed at six per cent., the bonds would be worth 
 exactly par, and would continue of the same value 
 throughout the twenty years. But if the interest on 
 money should rise to nine per cent., and to obtain a loan 
 at that rate the best security were required, the govern- 
 ment bonds would fall, and would not be good security 
 for more than three-fourths of their par value. If the 
 government issue a bond at par, and, by pressure in 
 the money market, the holder be compelled to sell it 
 at three-fourths of its par value to meet his engagements, 
 the government takes, or allows others to take, one- 
 fourth of his money, for which he no more receives an 
 equivalent than the gambler receives an equivalent when 
 he gambles away one-fourth of his money. The govern- 
 ment reserves the right to coin money and regulate its 
 value, and yet allows its value to change incessantly, and 
 thus, by its own acts, deprives a man of a fourth of his 
 money without rendering to him any equivalent. 
 
 Under our present monetary laws, when interest is lo\v 
 
36 INTRODUCTION. 
 
 and money plenty, if a contract be made for the purchase 
 of a farm, of which one-half the purchase money is to be 
 left on mortgage for a term of years, the purchaser runs 
 nearly as great a hazard of losing a large proportion of 
 the money that lie pays for the farm, as if he had staked 
 the amount on the turning of dice. For if, at the time 
 the money becomes due, interest should be as high as it 
 was from 1837 to 1840, it is doubtful whether the farm 
 would sell for enough to pay one-half the purchase money 
 remaining on mortgage. The farmer's loss, in this case, 
 would be owing entirely to the change in the value of 
 the dollar, and not to any change in the actual value of 
 the farm ; for the farm would produce as good a crop 
 as if money had continued to bear a uniform interest of 
 six per cent. The laws of the United States are sup- 
 posed to be highly favorable to productive industry ; but 
 the standard which regulates and eifects distribution is 
 so made as, in a great degree, to defeat its own object, 
 and to exert a disadvantageous influence upon produc- 
 tion. The eifects of high and varying rates of interest 
 upon all classes of producers will be hereafter more fully 
 exhibited. 
 
 Among political economists, the nature and regulation 
 of money appear to have been subjects of the utmost 
 difficulty. We have no full account of its functions, and 
 no satisfactory answer to the numerous and perplexing 
 questions which arise concerning its value and regulation. 
 The alternate abundance and scarcity of money, and the 
 variations of interest, are supposed to be irremediable 
 evils. It would seem that gold and silver coins inhe- 
 rently possess a mysterious power, which defies all regu- 
 lation, and renders impossible a comprehensible monetary 
 system. It is doubtless true, that while the nature of a 
 thing is not understood, all attempts to regulate it must 
 prove ineffectual, and legislative bodies have hitherto in- 
 stituted money in a very imperfect way. The money of 
 
INTRODUCTION. 37 
 
 a nation, instead of being a power by which a few capi- 
 talists may monopolize the greater part of the earnings 
 of labor, ought to be a power which should distribute 
 products to producers, according to their labor expended 
 in the production. 
 
 The labor-saving machines that have been invented 
 within the last half century, have greatly facilitated pro- 
 duction. Improvements in implements of husbandry 
 have materially lessened agricultural labor ; and most 
 articles manufactured by machinery are made with less 
 than one-fourth of the labor that was formerly required. 
 We should naturally suppose that these improvements 
 would be a great relief and advantage to the laboring 
 classes ; and that they would feel grateful to those who 
 have studied out the laws of nature and invented the 
 machines. Yet both the inventors of machinery, and the 
 operatives, in general, continue to toil on in want, and 
 many of them have neither means nor leisure to educate 
 their children. Increased facility in production seems to 
 increase the number and multiply the wants of those who 
 live in idle luxury, instead of affording the desired relief 
 to actual producers. Fifty years ago, the farmers raised, 
 carded and spun their wool ; they raised flax and spun 
 most of their linen; and cotton was also mostly carded 
 and spun by each family to supply its own wants. Now, 
 farmers who raise wool, cotton and flax, sell the raw 
 materials, which often pass through a number of hands 
 before they reach the manufacturer. The manufactured 
 goods again pass through several hands before they reach 
 the consumer. Machinery has collected the people into 
 towns and villages to work in large factories, where they 
 sell their labor, and buy their board and clothing 
 This greatly augments the necessity for the exchange of 
 goods the more machinery the greater the necessity for 
 exchanges of products yet there has been no new inven- 
 tion in financial affairs, by which the exchange may be 
 more equitably and easily made. True, we have increased 
 
38 INTRODUCTION. 
 
 the amount of gold and silver coins, and the number of 
 banks, bank-notes, and money-brokers, but this is no 
 more an improvement in the medium of distribution, than 
 an increase in the number of pack-horses on the old 
 muddy roads would be an improvement in conveying 
 products, while it would still take the same muscular 
 power to convey a given weight. A railroad made and 
 a steam-engine substituted for horses and oxen, are great 
 improvements in the mode and means of transportation. 
 Though the quantity to be conveyed may be increased 
 tenfold, railroads and steam-engines will fulfil all re- 
 quirements; whereas if we depended on an increased 
 number of horses and oxen, want of teams and bad roads 
 would often cause great inconvenience. But no inconve- 
 nience of this kind could equal that experienced by the 
 producers in consequence of the defects of our monetary 
 system. Just monetary laws are of more importance to 
 the laboring classes than all the machinery that has been 
 invented during the last fifty years. And when the 
 needed reformation is made, the producing classes, who 
 will gain the benefit of all improvements, will rejoice at 
 every advance in machinery, and the inventors will be 
 hailed as the benefactors of man. 
 
 Many people seem to be opposed to innovation. 
 They do not consider that all improvements in the mecha- 
 nical arts, or in laws, are innovations upon former things 
 and former laws. The establishment of our republican 
 government was an innovation upon monarchies. Peo- 
 ple do believe that changes may be made for the better, 
 for each year they assemble legislative bodies to remodel 
 old laws, and to make new ones. Every modification 
 of a law is an innovation, and every new law is an innova- 
 tion upon former laws. Every moral improvement is an 
 innovation upon the previous evil. Those who talk 
 against innovation are often great innovators. They are 
 doing, or advocating something to improve the condition 
 of man. 
 
INTRODUCTION. 6\1 
 
 The antiquity of laws and customs is not a proof of 
 their excellence. In all ages, and in all nations the pro- 
 ducing classes have been ill paid for their labor. Let us 
 no longer recur to ancient laws and usages to uphold our 
 unjust standard of distribution. Our producing classes 
 are vastly more interested in knowing how the products 
 of their own daily labor are disposed of, than in knowing 
 k>w the ancients disposed of theirs. We cannot alter the 
 evils of the past ; we must act for the present and the 
 future. Suppose a legislature enact a law which gives a 
 certain part of their constituents great advantages over 
 ihe remainder. They discover the error, and amend the 
 law so as to operate equally upon all. The alteration is 
 not an infringement of the rights of those who received 
 undue advantages from the former law. It only renders 
 justice to those previously injured. Money is as much 
 the representative of the property of the people, as the 
 legislature are the representatives of their constituents. 
 Its erroneous construction and undue power have made a 
 few rich, and have plunged thousands into poverty. 
 They have sent hundreds to premature graves, starved 
 the widow and the orphan, and given untold wealth to 
 the miser. They have been the cause of incalculable 
 moral and social evils. It is not to be understood that 
 those who now possess the wealth are worse than others 
 who do not possess it, or that others, if they could have 
 obtained it, would not have appropriated it in the same 
 manner. But one thing is certain, that an enormous and 
 universal wrong exists, which nothing but an entire 
 change of our laws, respecting money, can remedy. 
 Money is the national standard of distribution, there- 
 fore the evils inevitable upon its present institution, are 
 national evils, which can only be removed by the action 
 of the general government. 
 
 A defective standard will, doubtless, appear to many 
 an inadequate cause for the wide spread wrongs of unjust 
 
4:0 INTRODUCTION. 
 
 distribution ; but the fact can be established by the clear 
 est proof, and such will be adduced in the progress of 
 the work. It will also be shown, that a safe and just 
 monetary system can be easily established by the govern- 
 ment, which will so regulate the standard, that the general 
 distribution of products will be in accordance with actual 
 earnings. When the farmers and mechanics, and other 
 producers, and laborers, understand the system which is 
 to be developed, and perceive its adequacy to secure to 
 them a just compensation for their labor, they will as 
 surely cause it to be put in operation, as they would 
 send their products to Philadelphia or Boston, rather 
 than to New York, if in the former markets they could 
 sell them for a third more than in the latter. 
 
 The correction and due regulation of money will make 
 no change in the present ownership of property. The 
 changes effected by the establishment of a sound mone- 
 tary system will be gentle, immediate, gradual, sure. 
 Only such will ensue as will naturally result from secur- 
 ing to the laborer a fair compensation. Its object will 
 be to protect producers in their rights, and not to re- 
 taliate for past injuries. No agrarian distribution wil/ 
 be necessary, but a just standard, that will at once begin 
 to regiilate the distribution of products, so as to reward 
 the labor performed, and which will in process of time 
 distribute property in accordance with individual and 
 general rights and interests. Although the bearings of 
 money upon labor may be deemed a somewhat dry sub- 
 ject, yet, under its present new aspect, it is believed that 
 it will prove deeply interesting to all classes. The 
 patient and continuous attention of the reader is soli- 
 cited to the important facts and principles now to be 
 presented relative to the uses and abuses of money, and 
 to the new plan to be suggested for its institution and 
 regulation. 
 
PART I. 
 
 THE PRINCIPLES OF DISTRIBUTION. 
 
 CHAPTER I. 
 
 OP VALUE. 
 
 VALUE consists in use / it is that property, or thost 
 properties, which render anything useful. A housi 
 that could not be occupied would be worthless, unlesr 
 its materials could be employed for some other purpose, 
 A horse is valued for his useful qualities; if he become* 
 disabled, he is worthless, for his use is destroyed. So of 
 everything necessary to the support and comfort of man, 
 it is valuable because it is. useful. 
 
 The same is true of ornaments. They are valuable 
 because they are useful for ornamental purposes. If 
 diamonds were deprived of their beauty, their use, and 
 therefore their value, as ornaments, would cease to 
 exist. A valuable portrait might be rendered worthless 
 by erasing the features. The canvas and the paint, the 
 material of the picture, would remain, but its use would 
 be destroyed. 
 
 The value of all property is estimated by its useful- 
 ness. For instance, the income that a city lot can be 
 made to produce, determines its value. The interest on 
 
 41 
 
42 OF VALUE. 
 
 the money that its improvement will cost, must be first 
 deducted, together with the taxes, insurance, and repairs 
 necessary to keep the improvement permanently go o d 
 The surplus it will yield after making these deductions, 
 determines the true value of the lot. 
 
 There are two kinds of value : actual value, and legal 
 value. Actual value belongs to anything that inhe- 
 rently possesses the means of affording food, or which 
 can be employed for clothing, shelter, or some other use- 
 ful purpose, ornamental or otherwise, without being 
 exchanged for any other thing. 
 
 T^egal value belongs to anything which represents 
 actual value, or capital. Its existence depends upon 
 actual value. The worth of things of legal value depends 
 upon their capability to be exchanged for things of actual 
 value. 
 
 The following illustration shows the distinction be- 
 tween actual and legal value, and the dependence of the 
 latter upon the former. The national debt of England 
 exceeds 800,000,000 sterling, say $4,000,000,000. It. 
 bears interest at about an average of three per cent, per 
 annum, amounting to an annual sum of $120,000,000. 
 A hundred and twenty millions of dollars' worth of the 
 products of labor, of actual value, must be sold annually 
 to pay the interest ; to pay the principal would require a 
 large proportion of the wealth of the country. If the 
 pajitr, the legal value which represents and secures the 
 debt and interest, were collected and burned, it would 
 not diminish the real wealth of the nation. It would 
 merely cause a change in the individual ownership ot 
 property. But alter the circumstances, and suppose a 
 similar amount of actual value to be consumed, houses, 
 manufactories, machinery, fences, grain, etc., to the 
 amount of $4,000,000,000, and nearly every improve- 
 ment would be swept from the British Islands. Destroy 
 merely the three per cent, interest of actual value or 
 
OF VALUE. 43 
 
 the debt for one year i. e., products to the amount .of 
 $1 20,000,000, and a famine would ensue ; for actual value, 
 the products of labor, would be destroyed, instead of a 
 legal representative, as in the case of the conflagration 
 of the paper securing the interest. 
 
 The power of money, like the power of a bond anc\ 
 mortgage, is legal. A mortgage upon a specific piece of 
 land gives the owner of this paper instrument a rignt to 
 a certain portion of the value of the land. A mortgage 
 is a specific lien, by which one individual binds a certain 
 portion of his property to another. A Hen on property, 
 in the technical acceptation, is a judgment recorded on 
 the docket of a court, or a mortgage recorded in the 
 county clerk's office. These instruments hold a right 
 over the property of the debtor, in defiance of him, or of 
 any other person who may have the property in posses- 
 sion. Money is a public lien upon all property that is 
 for sale in the nation ; and the holder of money can, at 
 all times, procure with it the amount of property which 
 :t represents, as much as the holder of a mortgage can 
 procure the specified amount of property upon which the 
 mortgage is a lien. Money is, however, a lien superior 
 to all mortgages and judgments; because, if the specified 
 amount of money be tendered, the owner of the mort- 
 gage, or judgment, is compelled to cancel it. 
 
 Notes of hand are deemed by all business men to be 
 liens upon the property of their drawers ; otherwise, 
 although a man owned ten thousand dollars' worth ol 
 property, his note for five thousand dollars would be 
 deemed no better secured than if he owned no property. 
 If money were not a lien on property, it would be value- 
 less, and people would cease to part with their property 
 for it. 
 
 The value of notes of hand, bonds and mortgages, 
 book accounts, and money, depends upon their capabi- 
 lity of being exchanged for property. Their power to 
 
44 OF VALUE. 
 
 accumulate is given by law, and they accumulate a mere 
 legal representative ; that is, interest in money, which is 
 valuable only because, like the principal, it can be ex- 
 changed for a certain amount of actual value. Hence, 
 the value is in the property, and not in the money or in 
 the obligations. Money, and all obligations, are mere 
 representatives, and depend upon property for their 
 value. 
 
CHAPTER II. 
 
 MONET-THE MEDIUM OF DISTRIBUTION. 
 
 SECTION I. 
 
 THE NATURE AND PROPERTIES OF MONET. 
 
 MONEY is the national medium of exchange for pro- 
 perty and products. It must be instituted, and its value 
 must be fixed by the laws of the nation, in order to make 
 it a public tender in payment of debts. No debt can be 
 paid with property or with individual notes, except by 
 consent of the creditor; but when money is tendered, 
 all creditors are compelled to receive it in full satisfac- 
 tion of debts. The aim of legislation in regulating the 
 value of money is to insure to all individuals, in making 
 exchanges of their property for money, the full value of 
 their products or property. Debts are postponements 
 of the time of payment for the property or products 
 received ; and loans of money, and all rents of property 
 are mere rents of the use of certain amounts of legal or 
 actual value, which use is to be paid for at the expiration 
 of a specified period. Money is the legal tender, and 
 must be offered and received in payment for all these 
 debts. 
 
 Certain properties are bylaw given to some substance, 
 which bears the name and performs the functions of 
 money. The term money, then, signifies a legal, public 
 
 45 
 
4:6 THE POWER OF MONEY 
 
 medium of exchange, which possesses all the qualifications 
 necessary to effect a just exchange of property. In the 
 discussion of the nature of money, it will appear that its 
 properties are, in truth, the creation of law, and entirely 
 different from the properties of the things which it ex 
 changes. 
 
 Money has four properties or powers, viz. : power to 
 wjywent valv*, power to measure value, power to accu- 
 mulate value by interest, and power to exchange value. 
 These properties are co-essential to a medium of ex- 
 change : it is impossible that any one of them should 
 exist in such a medium independently of the others. 
 The material of money is a legalized agent, employed to 
 express these powers, and render them available in trade. 
 The powers of money, which alone render it useful, are 
 created by legislation ; therefore, money can possess none 
 but legal value. As all legal value depends upon the 
 actual value which it holds or represents, money must 
 represent actual value that is, the value of property or 
 labor. 
 
 SECTION II. 
 
 THE POWER OF MONEY TO REPRESENT VALUE. 
 
 Money must be a legal representative of property, for 
 it is impossible to find any light and portable material 
 possessing the requisite inherent value to equal and 
 balance the value of the property and products to be 
 exchanged. The real value is in the property and pro- 
 ducts, and the money is only the legal medium by which 
 this value is represented and by which exchanges of the 
 property and products are made. 
 
 Every representative is distinct from the thing which 
 it represents; and its presence implies the absence of the 
 thing represented. A representative has power to act 
 for, or in lieu of something else. The power to represent 
 
TO KEPRIiSENT VALUE. 47 
 
 is always independent of the natural or inherent powers 
 of the representative ; it is superadded and delegated, 
 and cannot alter the original capabilities and qualities of 
 the agent. Delegated authority gives the agent, the 
 person or thing, power over other persons or things, 
 which, with merely his natural capabilities, he cannot 
 possess. Acting for himself alone, his acts are all indi- 
 vidual, and incapable of binding any but himself. For 
 instance, he cannot give a note, bond or deed, which will 
 bind others, or the property of others, unless the power 
 be expressly delegated to him. He may receive authority 
 to give a note or bond binding the property of the peo- 
 ple for its payment. This authority does not diminish 
 or alter his capabilities as an individual ; it is superadded 
 to his natural endowments. An ambassador represents 
 our nation at a foreign court. If he be lost at sea, the 
 nation loses but one individual, although he represents 
 and acts for thirty millions. But if the nation should 
 be annihilated, and the ambassador should reach his des- 
 tination in safety, he would cease to be a representative : 
 he would have nothing to represent. He would, how- 
 ever, possess all his powers as an individual he would 
 lose only his delegated authority as a representative. 
 
 A representative in Congress is chosen by the people, 
 and is empowered to act for or in lieu of them. Still it 
 is not supposable that he possesses as much knowledge 
 and skill as all his constituents. They are farmers, 
 mechanics, manufacturers, and merchants. Of many of 
 the arts with which they are familiar, the member of 
 Congress is ignorant. He is their representative for one 
 specific purpose i. e., to make laws to govern the peo- 
 ple. He has a moral perception of justice corresponding 
 to their perceptions of justice, and this fits him to be 
 their representative in making laws. Money is made 
 solely to facilitate the exchange of products. To be 
 capable of effecting this exchange, it must be endowed 
 
48 THE POWEE OF MONET 
 
 with a legal power to represent actual value ; for it pos- 
 sesses no inherent quality which makes it equivalent to 
 products or labor more than the representative in Con- 
 gress possesses all the knowledge and abilities of his con- 
 stituents. It is held for the time being in lieu of property ; 
 we cannot use it as property, and if we wish to use actual 
 property we must obtain it by giving the legal representa- 
 tive, money, in exchange for it. A representative in 
 Congress has the sole authority to act there ; and the 
 people whom he represents can neither control him, nor 
 be heard in lieu of him. They have no authority nor 
 voice in making the laws except through their repre- 
 sentative ; but the laws which he helps to enact have a 
 binding force on his constituents and others. So of 
 money ; when it is made a representative of value it con- 
 trols and determines the value of labor and property, 
 while these have no power to control and regulate the 
 value of the money. The money is the only legal tender 
 for debts ; and all property and labor are as powerless to 
 discharge an obligation as the constituents of a repre- 
 sentative are to act in Congress after they have delegated 
 their power to their member. The representative of 
 value should no more have power to accumulate pro- 
 perty in the hands of a few than the representative of the 
 people should be allowed to legislate for the benefit of a 
 few of his constituents. Both are mere representatives, 
 endowed with powers for specific purposes ; the former 
 to exchange products, the latter to enact laws. The 
 producing classes elect and support the members of 
 Congress, who are bound to make laws for the equal 
 benefit of the people. The people also furnish the 
 material of money and the property which it represents; 
 and the representative of value should be such as to con- 
 duce in the highest degree to their welfare. 
 
 The following is another example of delegated or re- 
 presentative power : A man gives a note for a thousand 
 
TO BKFRE8ENT VALUE. 4-9 
 
 dollars. He thus delegates to the paper on which the 
 note is drawn a power that increases its legal value mil- 
 lions of times. Before the drawing of the note, the 
 paper possessed a small amount of actual value, "but was 
 not a legal representative of other property; for, as 
 paper only, its worth depended upon its inherent qual- 
 ities. But when the note is drawn, the paper becomes 
 a representative, and has, according to law, a delegated 
 control of a thousand dollars' worth of the property of 
 the drawer. The drawing of the note does not add a 
 fraction to the actual worth of the paper; its value in 
 holding the property is legal, and superadcled to its in- 
 herent qualities ; the same value might be superadded 
 by law to a plate of steel, or of any metal. The note 
 and the property are distinct existences ; but the legal 
 value of the note depends on the actual value of the 
 property. The paper material of a note good for a 
 thousand dollars, is not as valuable as an ounce of flour; 
 but it has a legal power which makes it capable of being 
 exchanged for two hundred barrels of flour, worth five 
 dollars each. A trifling labor will provide the repre- 
 sentative note, but a great amount of labor is required 
 to produce such a quantity of flour, or actual wealth. 
 All individual notes are, however, payable not in flour, 
 nor in actual products or property, but in money, the 
 legal representative of all commodities and property. 
 
 According to law, the owner of an estate represents 
 the value of the estate in his own person ; but by a 
 simple power of attorney, he can give to another the 
 entire control of his property during his life-time. The 
 receiver of the power may not be worth a dollar, but 
 the power of attorney may make him the representative 
 and controller of millions of dollars' worth of property. 
 The paper that secures to him the control of the pro- 
 perty has no greater inherent value after the writing 
 of the instrument, than it had before ; it is merely made 
 
50 THE POWER OF MONEY 
 
 to represent the property and control its use. The 
 actual value which the paper represents, exists in the 
 property, and, without the property, the paper would be 
 worthless. The power of attorney is confined to an 
 individual ; but if a man, instead of making the power 
 to a single person, should make it to bearer, whoever 
 held the paper would have power over the property con- 
 trolled by it. The negotiable power of money is in- 
 separable from it, otherwise it would not be money. 
 The holder of money has power over a certain amount 
 of property for sale, and can appropriate it to himself. 
 Money has a legal power or value as much superior to 
 the natural value of its material, as a paper which 
 secures authority over property has a value superior to 
 blank paper. 
 
 Money is, then, a legal existence, being constituted a 
 national representative of property ; consequently it is a 
 public lien on all property for sale in the nation, a public 
 medium for the exchange of products, and a tender in 
 payment of debts. If money be made a representative 
 of the earth and its productions, it cannot fail to be 
 permanently valuable, for the earth and its products are 
 necessary to the existence of man ; and anything which 
 legally represents them, and can be exchanged for them, 
 must be valuable to its holders. 
 
 It is a popular error that the value of money depends 
 upon the material of which it is made. As this miscon- 
 ception of the nature of money is of long standing, we 
 shall endeavor to point out its inconsistency, in connec- 
 tion with each property of money. The value of money 
 perpetually depends upon its pjwer to represent value, 
 and not upon its material, because money never reaches 
 a point at which it can be used as an article of actual 
 value. Suppose twenty-six individuals owe $100 each, 
 payable on the same day : A. owes B., B. owes C., and 
 so on through the alphabet to Z. la the morning, A. 
 
TO REPRESENT VALUE. 51 
 
 borrows from a bank a bank-note for $100 and pays it to 
 B., B. pays it to C., C. to D., and so on, until it passes 
 down to Z., who owes and |>ays it to the bank from 
 which A. borrowed it. The same bank-bill pays twenty- 
 six debts, and in the evening is in the ownership, and 
 possession of the same bank as in the morning. Suppose 
 that, instead of money, each of the twenty-six persons 
 owes IK the same order a loaf of bread, and each must 
 have the loaf to use on the specified day or suffer from 
 hunger. In the morning A. goes to a baker, borrows a 
 loaf and pays it to B., B. pays it to C., C. to D., and so 
 on through the alphabet to Z., who pays it over to the 
 baker. The money in passing through' this routine an- 
 swers every man's purpose, and in meeting the contract 
 fulfils the function for which money is designed, but the 
 bread does not fulfil the purpose for which bread is de- 
 signed, nor can a single loaf short of twenty-six answer 
 the purpose. But one bank-note pays the twenty-six 
 debts, and is ready to fulfil as many contracts more the 
 next day, whereas twenty-six new loaves would be re- 
 quired to meet an equal number of contracts. It maybe 
 objected that the comparison is not a fair one, because 
 bread is consumed by use and money is not : take then 
 any other article valuable for its material and not con- 
 sumed in the use. Twenty-six individuals have land to 
 plough on the same day ; can they borrow one plough 
 and mafcj it answer the purpose of twenty-six ? 
 
 The <ame of lands and of goods, wares and merchan- 
 dise, does not depend upon any act of legislation, upon any 
 power to represent and exchange, but upon their utility 
 for food, clothing, etc. If the gold or silver material of 
 money be used for any other purposes than to represent 
 and exchange property, if it be used for spoons, or 
 ornaments, it at once ceases to be money : it is no longer 
 a legal representative of value, but finds its level as a 
 commodity. But the inherent properties of all articles 
 
52 THE POWER OF MONEY 
 
 of actual value, are their only valuable properties. How- 
 ever various the employment of articles of actual value, 
 their properties do not change, or become useless. For 
 example, cloth is useful to make a garment, and when 
 made, is a cloth garment. The nature of the cloth does 
 not change ; it is only applied to a specific purpose, and 
 the cloth retains its properties of durability, etc. 
 Metal buttons are used upon the garment, and continue to 
 be metal buttons. But silver money converted intb a 
 spoon, makes a silver spoon, and not a money spoon. 
 The silver is no longer a legal representative of actual 
 value ; it is no longer money, for it has ceased to have 
 the properties of money, which are creations of law. 
 Neither a spoon nor bullion can legally represent, 
 measure, accumulate nor exchange property ; and the 
 mere metal is, consequently, not a medium of exchange, 
 nor a tender in payment of debts. The sole value of 
 gold and silver coins, when not nsed for a currency, con- 
 sists in the worth of their materials for spoons, ornaments, 
 etc., which are a very small part of our actual wealth, 
 and not indispensable to human existence. The metals 
 cease to be money, as the power of a representative 
 ceases when the term for which he was elected expires. 
 He maybe reflected and receive his former power; and 
 the gold may be recoined by the government, and thus 
 be endowed with its former power as money. So, if the 
 paper of a bond or note be ground to dust its value 
 ' ceases ; but it may be remade into paper, and by the 
 requisite writings receive its former value. 
 
 The laws of nations have established money as the 
 standard of value. These laws are immaterial ; they are 
 principles, and not material substances. The power of 
 money is also immaterial : it is its legal authority, and 
 not its material substance that establishes its value and 
 power. The laws have professedly established the value 
 of money in its material substance, but the groundwork 
 
TO KKPBESENT VALUE. ' 53 
 
 being false, they have failed practically to establish 
 money upon this basis; yet they have so far succeeded 
 as grossly to deceive the public. That the worth of 
 money to exchange property does not reside in its 
 material, but in its legal power to represent value, will 
 appear in the following illustrations : A. hires B. and C. 
 to work for him at ten dollars per week each. At the 
 end of the week he pays B. a ten-dollar gold piece, and 
 C. -a ten-dollar bank-note ; taking in both cases a receipt 
 in full for the week's work. B. is now the actual owner 
 of the gold, and C. the actual owner of the paper in the 
 bank-note. C. can buy in the market just as many of the 
 necessaries of life with his paper money as B. can buy 
 with his piece of gold. B. gave no more labor for the 
 gold money than C. gave for the paper money, and can 
 buy no more products with the gold than C. can buy 
 with the paper. If there be any intrinsic value in gold 
 money which does not exist in paper money, B., when 
 he parts with his piece of gold, loses all the dhTerence 
 between the intrinsic value of the gold money and the 
 intrinsic value of the paper money. But all the difference 
 in the intrinsic value of the gold and paper disappears 
 when both are used as money; hence it is evident that 
 it is the immaterial power, that it is its legal authority 
 over other things, and not the intrinsic value of its sub- 
 stance, that establishes the market value of the money. 
 B. did not work the week because he needed the gold, 
 neither did C. work the week because he needed the 
 paper. They both labored for the same object, which 
 was to procure the necessaries of life ; and they both 
 knew that either kind of money was legally competent 
 to pay for these things. A yard of cloth measured with 
 a gold yard-stick is neither longer nor shorter than if 
 measured with a wooden one ; and property purchased 
 with gold or silver money is neither more nor less 
 valuable than if bought with paper money. A person 
 
54 ' THE POWER OF MONEY 
 
 intends to purchase a farm and settle in Ohio. He has a 
 thousand dollars in silver, but, as it is inconvenient to 
 transport the specie, he exchanges it at a bank in New 
 York for a thousand one-dollar bank bills. The bills 
 readily purchase the farm. The individual who receives 
 them in payment lends them on interest, and the bor- 
 rower purchases wheat with them. Thus the bills circu- 
 late as money, and can be loaned for as good an income, 
 or will purchase as much grain, as a thousand dollars in 
 silver. They fulfil every purpose for which money is 
 designed as well as the silver would. If tiie notes should 
 remain permanently in Ohio, and the people should believe 
 the bank secure, the notes would be a much better cur- 
 rency than coins, for they would make purchases as well, 
 they could as well be loaned for an income, and could be 
 much more easily transported. Why could not a thou- 
 sand axes be deposited in Wall street, and a thousand 
 pieces of paper be taken for them, on each corner of 
 which was engraved " one axe," and in the body a written 
 promise to pay one axe on demand, and these paper axes 
 be taken to Ohio, and made to answer every purpose for 
 which axes are designed, in clearing forests, etc., in lieu 
 of the steel axes ? There is as much resemblance between 
 a paper axe and a steel axe as there is between a paper 
 dollar and a silver dollar. If a paper dollar, that repre- 
 sents a silver dollar, is as good for all the purposes for 
 which money is designed as a silver dollar, why is not a 
 paper axe, that represents a steel axe, as good for all 
 the purposes for which axes are designed as the steel 
 axe ? The reason that the paper dollar will answer as 
 well as the silver dollar is, that the silver and the paper 
 dollar are both representatives, the silver dollar equally 
 with the paper dollar. (See Chap. III., The, Banking 
 tiystem.) If the value of money be in the worth and 
 weight of fas material, it cannot be representative ; and 
 if its value be not representative. ^ would be as impos- 
 
TO REPRESENT VALUE. 55 
 
 sible to make paper money fulfil, as it now does, the 
 functions of coins as to make a paper promise to pay a 
 loat of bread on demand as nutritious as the bread ; or to 
 make paper representatives of ploughs promising to pay 
 real ploughs on demand capable of tilling the ground. 
 If a city bank have $100 in coins and issue $600 in bank- 
 notes, the amount of money is as much increased as if 
 $000 in specie had been issued. Each dollar of the bank- 
 notes will pay for as much labor and for as many of the 
 necessaries of life as any one dollar in specie ; and so long 
 as these bank-notes continue to circulate and to be on a 
 par with specie, they continue to hold the same power 
 and value in the market that are held by gold and silver 
 money. Hence, if the value of money is inherent, this 
 must prove that it inheres in bank-notes as well as in 
 coins. The fact that it takes many thousand times more 
 labor to mine the gold and silver and coin them into 
 money, than it does to make the paper and engrave the 
 bank-notes, makes no difference in the market value of 
 the money, because the value of the money depends on 
 its immaterial power that is, upon its legal authority, 
 and not at all upon its material substance. The law can 
 and does designate the substance out of which money 
 shall be made, but human laws do not in the least alter 
 the intrinsic value of any substance. We might as well 
 undertake by legislation to make saw-dust as nutritious 
 as bread, as to undertake to make paper money on a par 
 with specie if the value of the specie were dependent on 
 its material substance. It takes as much labor and 
 material to make a one-dollar bank-bill as it does to make 
 a one thousand dollar bill ; yet the latter is worth in 
 the market precisely one thousand times more than the 
 former. 
 
 The reason that the value of bullion is equal to that of 
 coins is, that coins are made at the expense of the nation. 
 The government coins all the gold and silver offered at 
 
56 THE POWER OF MONEY 
 
 the mint free of charge. It will give, in exchange for 
 them, an equal weight in coins. If the government 
 would take wool, and make cloth at the public expense, and 
 return to those who furnish wool an equal weight in cloth, 
 the cloth and wool would command the same price, 
 because the expense of manufacturing the cloth would 
 be borne by the government. If a charge were made 
 for manufacturing, the wool would be worth less than 
 the cloth ; and if a premium were charged for coinage, 
 the value of bullion would depreciate below that of coins. 
 It is clear that gold and silver have no special inherent 
 value which makes them naturally money ; for they are 
 not money until made so by conversion into coin. 
 
 SECTION III. 
 
 THE POWER OF MONET TO MEASURE VALUE. 
 
 The power to measure value is another property oi 
 money. Measures are definite quantities of length, 
 weight, bulk, and value, by which the amount of length, 
 weight, bulk, and value in any substance is defined and 
 ascertained. 
 
 Length, weight, bulk, and value, must necessarily be 
 indefinite, unless some limit be fixed upon for a standard 
 to which all other lengths, weights, quantities, and values 
 may be referred, and by which they may be computed. 
 Length may be the circumference of the earth, or the 
 unknown distance to a star, or it may be tho one-thou- 
 sandth part of an inch ; therefore, to convey any definite 
 idea of length, reference must be made to a fixed 
 standard. Weight, quantity, and value, are equally 
 indefinite ; hence the necessity for some limit or standard, 
 to which they may be referred, and by which theri 
 amount may be ascertained. 
 
TO MEASURE VALUE 57 
 
 The length, weight, quantity, and value of all articles, 
 in business transactions, are settled by certain measure? 
 fixed upon by the government. The length of the yard- 
 stick measures and determines a before undefined length 
 of cloth ; the size of the bushel measures and defines the 
 before undefined quantity of grain ; and so of the pound 
 weight, it defines the quantity of cotton or other sub- 
 stances. The cloth does not define the length of the 
 yard-stick, neither does the grain determine the size of the 
 bushel, nor the cotton the pound weight. The value of 
 the dollar measures and determines a before undefined 
 value of land, labor, or products ; the value of land, 
 labor, and products, does not measure and determine 
 the already de-fined value of the dollar. When the yard- 
 stick measures cloth, it does not determine its own length ; 
 and when money exchanges property, it does not deter- 
 mine its own value. Both the length of the yard-stick, 
 and the value of the money, were previously determined 
 by the laws which instituted them, and gave them power 
 to measure length and value, which are their sole objects 
 and uses as measures. 
 
 The pound weight, or the standard of weights, deter- 
 mines the amount of the weight of all commodities ; and 
 the dollar, or money, the standard of value, by its own 
 fixed legal value, determines the amount of tho value of 
 all other things. The weight of the pound, the length 
 of the yard, and the value of the dollar, are presumed 
 to be invariably fixed by national laws, and, therefore, 
 every variation from their legal standard is a fraud upon 
 the public. If the yard be variable, the measure of 
 length will commit frauds when it is used ; and if ita 
 value be fluctuating, the measure of value will commit 
 frauds whenever it is used to measure the value of labor 
 or property. If measures be strictly just and uniform, 
 they will equitably determine quantities arid values, 
 whether of land, labor, or commodities. 
 
58 THE POWER OF MONEY 
 
 It appears that the government considers the dollar of 
 more importance than any other measure, for it reserves 
 the right to coin it, and makes it a criminal offence for 
 individuals to coin or issue money, even if it be equal to 
 the government standard in purity and weight. Indivi- 
 duals are also prohibited from making and issuing paper 
 money as a substitute for gold and silver money, unless 
 especially authorized by law ; and when this privilege is 
 granted, the amount that may circulate and the security 
 that shall be given to secure the public against loss, are 
 also prescribed by law. But any individual may make 
 and use any other measures, or may make and sell them 
 in market, the government having merely a supervision 
 over them as to weight, size and length.* 
 
 Money measures its own amount or value of actual 
 property as often as it passes from one individual to 
 another, as the yard-stick measures its own length as 
 often as it passes over the cloth ; consequently a given 
 sum of money measures in a given time more or less pro- 
 perty, according to the frequency of its transfer. In 
 one morning, a dollar, passing through several hands, 
 may be laid out for food, buy various articles of clothing, 
 be loaned out with other dollars on bond and mortgage, 
 and then purchase a dozen articles more. Every time it 
 passes, it determines the market value of the thing that 
 it buys. 
 
 If there were no distinction between measures of value 
 and articles of value, the same principle would apply to 
 Doth ; one yard of cloth, rapidly measured, would answer 
 the purpose of two, slowly measured ; a pound of food, 
 rapidly weighed, would answer the purpose of two, slowly 
 
 * Notwithstanding the care the government has taken to guard 
 the use of money, there is in this nation more litigation, fraud and 
 oppression, growing out of the corrupt use of money, in one week, 
 and often, doubtless, in a single day, than all the evils that occur in a 
 century from the fraudulent u.-o of all other measures. 
 
K) MEASURE VALUE. S9 
 
 weighed. The value of money cannot consist in the 
 amount or kind of the metal in which its properties are 
 embodied ; for, in its rapid circulation, it can be used 
 neither as a utensil nor as an ornament, and is only useful 
 to exchange property. Eagles and dollars are seldom 
 used for ornamental purposes : and when they are so 
 employed they cease to exchange products. 
 
 The value of money balances the value of the commo- 
 dity sold, as the weight of the poimd balances the weight 
 of the thing weighed ; or the yard, the length of the cloth 
 measured. Measures of quantity remain stationary, their 
 only function being to determine the exact quantities of 
 the commodities transferred from the seller to the pur- 
 chaser. But the measure of value passes into the posses- 
 sion of the seller, who holds it as a representative of 
 value in lieu of his commodity. And it is on this account 
 that the measure of value is frequently confounded with 
 articles of value. 
 
 Money, like all other measures, is divisible. The yard 
 is divided into feet and inches, that it may determine any 
 required length. The pound weight is divided into half- 
 pounds and ounces ; the bushel into the peck, quart, etc., 
 that they may accurately determine the various weights 
 and quantities of various substances. Money is divided 
 into pounds, shillings, and pence, dollars, half-dollars, 
 dimes, etc., that it may determine the precise amount of 
 the value of all commodities. 
 
 The government reserves the right to fix the length 
 of the yard, the weight of the pound, the size of the 
 bushel, and the value of the dollar, that they may be fit- 
 ted for public use. Money is the public measure of value ; 
 and the government is bound to make it just and uniform, 
 that it may correctly determine the value of all commo 
 dities. 
 
60 THE POWER OF MONET 
 
 SECTION IV. 
 
 THE POWER OF MONEY TO ACCUMULATE VALUE BY 
 INTEREST. 
 
 Money, the representative and measure of value, has 
 also the power to accumulate value by interest. This accu- 
 mulative power is essential to the existence of money, 
 for no one will exchange productive property for money 
 that does not represent production. The law making 
 gold and silver coins a public tender, imparts to dead 
 masses of metal, as it were, life and energy. It gives 
 them certain powers which, without legal enactment, 
 they could not possess, and which enable their owner to 
 obtain for their use what other men must earn by their 
 labor. One piece of gold receives a legal capability to 
 earn for its owner, in a given time, another piece of gold 
 as large as itself. Or, in other words, the legal power 
 of money to accumulate by interest compels the bor- 
 rower, in a given period, determined by the rate of in- 
 terest, to mine and coin, or procure, by the sale of his 
 labor or products, another lump of gold as large as the 
 first, and give it, together with the first, to the lender. 
 If the borrower of the gold pay interest half yearly at 
 the rate of seven per cent, per annum, he must double 
 the lump in about ten years. If he pay interest half 
 yearly at the rate of six per cent, per annum, he must 
 double the lump in less than twelve years ; at three per 
 cent., in less than twenty-four years ; and at one per 
 per cent., in about seventy years. 
 
 In popular phrase, money is said to be a producer of 
 value; but this expression conveys a false idea, for 
 money possesses no power to produce. The earth pro- 
 duces by actual increase by the growth of additional 
 quantities of the seed sown. But money possesses no 
 
TO ACCUMULATE VALUE BY INTEREST. 61 
 
 natural capability to produce its like. It can only accu- 
 mulate things already produced. When a loan of a hun- 
 dred dollars is repaid with interest, the six or seven 
 dollars given as interest have not grown upon the ori- 
 ginal one hundred. Nothing grows upon the mortgage 
 that bears interest. The interest on the money, or on 
 the mortgage, must be paid in money received in ex- 
 change for property, products, or labor. 
 
 The worth and amount of the interest on the dollar 
 constitute and determine the value of the dollar, and 
 make it equal to a certain amount of actual value or pro- 
 perty, as much as the amount and kind of labor that a 
 man can perform, determine his value as a workman; 
 or as the quality and quantity of the fruit of a tree deter- 
 mine the value of the tree. In the same manner, and for 
 the same reason, if the interest on the dollar be good, 
 the dollar will also be good. The value of the workman 
 and of the tree is natural to them, and consists in their 
 power to produce ; the value of money is artificial, and 
 consists in its arbitrary power to represent actual value 
 and to accumulate by interest. 
 
 Demand and supply are sometimes said to give value 
 to money ; but it would be as reasonable to assert that 
 demand and supply fix the length of the yard, the weight 
 of the pound, or the size of the bushel, as that demand 
 and supply regulate the value of money. One is a legal 
 instrument to determine value, its own value being fixed 
 by law ; the others are legal instruments to determine 
 length, weight, and quantity, their own length, weight, 
 and size being fixed by law. 
 
 Money is valuable in proportion to its power to ac- 
 cumulate value by interest. A dollar which can b 
 loaned for twelve per cent, interest, is worth twice as 
 much as one that can be loaned for but six per cent., jusl 
 as a railroad stock which will annually bring in twelve 
 per cent., is worth twice as much as one that annually 
 
62 THE POWEK OF MONEY 
 
 brings in six per cent. The value of state, bank, rail- 
 road, or any other stock, is estimated by the dividends 
 it will pay during the time it has to rim. Any increase 
 or diminution of the power of money to accumulate by 
 interest, increases or diminishes proportiouably its value, 
 and consequently its power over property, 
 
 Money becomes worthless whenever it ceases to be 
 capable of accumulating an income which can be ex- 
 changed for articles of actual value. Take the following 
 example. Suppose, during the Revolutionary war, A. had 
 lent to B. a thousand dollars in gold or silver coin, at six 
 per cent, interest, for a term of fifty years, and had taken 
 as security a mortgage on B.'s farm, which was worth 
 $10,000. A. had agreed to receive the six per cent, 
 interest from B. in Continental money. This currency 
 soon after proved to be worthless; and the interest 
 proving worthless, the principal would have been worth- 
 less to A. during the fifty years for which he lent it, al- 
 though the loan was made in gold and silver coin, and, 
 at the expiration of that period, the principal would 
 have been paid him in coin. 
 
 Now reverse the circumstances, and suppose A. had 
 lent to B. a thousand dollars in Continental money on 
 the same farm for fifty years, and had made the interest 
 payable in gold and silver coin. Although the principal 
 was lent in Continental money, which soon after became 
 worthless, it would have continued as valuable to A. for 
 fifty years, as the interest in coin wnich he received upon 
 it. The interest continuing valuable, the mortgage 
 would have been a binding lien upon B.'s farm for the 
 fifty years, and would have taken a part of the yearly 
 produce of the farm for that period. At the expiration 
 of the fifty years, the principal would have become 
 worthless, for it could not have brought in a further in- 
 come. But in the former case, in which specie was lent 
 and the interest made payable in Continental money, the 
 
TO ACCUMULATE VALUE BY INTEREST. 63 
 
 interest being worthless, the contract would not have 
 been an encumbrance upon B.*s farm ; for no part of its 
 yearly products would have been required to pay the 
 interest. At the expiration of fifty years, the principal 
 could have been demanded in specie. 
 
 The value of money as much depends upon its legal 
 power to be loaned for an income, as the value of a farm 
 depends upon its natural power to produce. If the 
 Continental money, or the assignats of France, had been 
 made representatives of property, and capable of being 
 always loaned for a good and uniform income, they 
 would have been as permanently valuable as a mortgage in 
 perpetuity on a farm, which could yearly collect from 
 the farmer a certain quantity of products, as interest, or 
 income. The value of a horse depends upon his ability 
 to perform useful labor for his possessor ; and the value 
 of money depends upon its capability to earn for its 
 owner by being loaned on interest. Take twenty mort- 
 gages for ten years on twenty different farms. Suppose 
 each of these farms to rent for sixty dollars a year, just 
 the interest on each of the mortgages. It would take 
 the whole produce of each farm to pay the interest on 
 each mortgage. The twenty mortgages would take the 
 rent or produce of the twenty farms for ten years. In 
 one month, one thousand dollars could be easily loaned 
 so as to take the entire income of twenty farms for ten 
 years. Consequently, each time the money was lent it 
 would accumulate an income which would be as valuable 
 to its owner as a farm of equal value leased for the same 
 period ; for the income on the money would yearly 
 purchase the whole yearly produce of the farm. 
 
 The difference between money and the farms is, that 
 the former is a legal representative and measure of value, 
 and the latter are of actual value. The money is as capa- 
 ble of representing and measuring its own amount of 
 
 value a hundred times in a year, and creating a hundred 
 
 7 
 
64 THE POWER OF MONEY 
 
 incomes, as the pound weight is of determining its own 
 amount of weight a hundred times. The quantity of 
 cloth measured, and the weight of things weighed, can- 
 not be increased by the number of times that the mea- 
 sure is applied to them. But money being a representa- 
 tive of value, and being endowed by law with the power 
 to accumulate by interest, makes an income whenever it 
 is transferred from one to another as a loan. 
 
 Anything that exists in perpetuity, is valuable in exact 
 proportion to the income it will yearly bring to its owner. 
 The market value of a house, store, or farm, rises or falls 
 with the rise or fall of its yearly rent ; and the value of 
 the dollar rises or falls with the rise or fall of its rent or 
 interest. If we admit both the property and the money 
 to be merchandise, this principle cannot be true in one 
 case without being equally true in the other ; therefore, 
 whether we assume money to be of actual, or of legal 
 value, to keep its value uniform, the rate of interest must 
 be kept uniform. Doubling the capability of the dollar 
 to accumulate, doubles the value of the dollar. Its 
 nominal value may, and does remain the same that 
 is, it retains the name of dollar, although it possesses 
 twice its ordinary value, or power over property and 
 labor. 
 
 The same principle applies to all measures. The length 
 of the yard-stick being doubled, although it might still 
 retain its name, it would measure twice as much cloth as 
 with its present limits. And money, while its denomina- 
 tions remain the same, measures more or less property, 
 according to the rate of interest. We may imagine a 
 measure fluctuating, expanding and contracting between 
 certain points; as a yard-stick, made of some elastic 
 material, susceptible of being stretched to twice or thrice 
 its ordinary limits, and still called a yard-stick, and used 
 as such. But no one would deem himself acquainted 
 the actual length of anything measured" by this 
 
TO ACCUMULATE VALUE BY INTEREST. 65 
 
 yard-stick, although, if it were the legalized one, it could, 
 and must be used in business.* 
 
 Measures of quantity are instituted, and their length, 
 bulk, and weight are fixed by law, and not by individuals. 
 The measure of value is instituted and made by law ; and, 
 consequently, it is fraudulently used when the rate of in- 
 terest upon it, which determines its value, is altered by 
 individuals. The fundamental proposition of Jeremy 
 Bentham, in his " Defence of Usury," is as follows : 
 
 " No man of ripe years, and of sound judgment, acting 
 freely and with his eyes open, ought to be hindered, 
 with a view to his advantage, from making such bargain, 
 in the way of obtaining money, as he thinks fit; nor 
 (what is a necessary consequence) anybody hindered 
 from supplying him, upon any terms he thinks proper to 
 accede to." 
 
 According to Mr. Bentham's theory, when money is 
 loaned, the rate of interest to be paid must be a matter 
 of agreement between borrower and lender. This makes 
 the rate of interest belong to the system of free-trade, 
 whereas it no more belongs to this system than the length 
 of the yard-stick or the weight of the pound. By in- 
 creasing the rate of interest, both the principal of the 
 money and the interest upon it have an increased power 
 over property, just as the pound increased in weight 
 would call for an additional quantity of products to 
 balance it. The right to fix the value of money is as 
 much reserved by the government as the right to fix the 
 length of the yard or the weight of the pound ; and the 
 regulation of its value is a thousand times more impor- 
 tant to the people.f The value of money is no more fixed 
 
 * See Appendix, A. 
 
 | Although the value of money is now professedly fixed by the go- 
 vernment, we can form no correct idea of what its value will be at the 
 end of three or six months. But we should think it ridiculous to ask 
 what would be the length of the yard, or the weight of the pound, <M 
 
t>6 THE POWEB OF MONEY 
 
 or regulated by the laws ordering each piece of money 
 to be coined of a certain weight and kind of metal than 
 the length of the yard would be fixed by ordering it to 
 be made of a certain weight and kind of wood, without 
 regard to its length. 
 
 The value of money depends upon its power to accu- 
 mulate value for its owner, by interest, and not upon the 
 worth of its material ; as the value of a paper instrument, 
 which secures a ground-rent, depends upon the produc- 
 tiveness of the land on which it is secured, and not upon 
 the inherent qualities of the paper. If the land were per- 
 manently unproductive, the lien could command no pro- 
 ducts, and would be worthless, except so far as the paper 
 on which it was drawn possessed inherent value. Sup- 
 pose the lien to be engraven on a silver plate, instead of 
 on paper, and to be made in perpetuity for $10,000, at 
 six per cent, interest per annum. Let the annual pro- 
 ducts of the land be sufficient to pay for the labor 
 expended upon it, and to pay the ground-rent, and the 
 silver on which the ground-rent was engraven would be 
 
 the size of the bushel three or six months hence ; or to express great 
 anxiety when the crops were coming in and the fall trade commencing 
 whether enough measures could be procured to measure the grain, or 
 scales and weights to weigh it, or yard-sticks to measure the cloth 
 manufactured. We should think farmers, manufacturers and mer- 
 chants crazed, if they should come to New York to ascertain whether 
 enough measures could probably be had to determine the weight and 
 quantity of their products; and under a just and sound monetary 
 system, it would be equally absurd to ask whether enough money 
 could be obtained to buy or exchange the goods, or to make any in- 
 ternal improvement ; and it would appear as ridiculous to ask what 
 the rate of interest would be at the end of three or six months as to 
 ask how many feet it would then take to make a yard. Money pro- 
 perly instituted would be as definite and uniform as the litter measure, 
 and would no more govern the amount of production than the yard- 
 stick does the quantity of cloth manufactured. It could be about as 
 easily procured to facilitate all desirable production, trade and im- 
 provements as yard-sticks to measure any quantity of cloth. 
 
TO ACCUMULATE VALUE BY INTEREST. 67 
 
 worth ten thousand dollars, whether the plate of silver 
 on which it was drawn were three feet square, and 
 weighed three hundred pounds, or whether it were three 
 inches square, and weighed but three ounces. If the 
 ground-rent on each plate were in perpetuity, and it were 
 necessary to preserve ea^-h in its proper form, to keep 
 the title good, although so great a difference existed in 
 the weight, there would be no difference in the value of 
 the two plates, for both would secure the same annual 
 amount of interest. If, however, the ground-rent should 
 fail because of some defect in the title, of course the 
 larger plate of metal would be worth more than the 
 smaller, for it would make more useful and ornamental 
 articles. A ground-rent made in perpetuity for $10,000, 
 secured on good property by paper instruments, would 
 be as valuable to any owner as the larger silver plate. 
 For this and for similar purposes, the paper is as much 
 superior to the silver as, in manufacturing, the power- 
 loom is superior to hand-weaving. The value of these 
 liens on specific pieces of land, does not more depend on 
 the productiveness of the land than the value of money 
 depends upon its power to accumulate an income from 
 the labor or property of borrowers. The value of the 
 papers which secure the National Debt of England would 
 cease if the government should pass a law to pay no 
 more interest upon the debt. A more legislative enact- 
 ment could annul the value of the papers. Laws, then, 
 give them their worth, and their worth consists in their 
 power to collect a yearly income, which may be exchanged 
 for the products of labor. 
 
 Money could not answer the purposes of a medium of 
 exchange unless it were necessary to part with it to make 
 it valuable. For this reason it is made to accumulate no 
 interest in the possession of its owner; for if it would 
 accumulate interest in his hands, it would be legally 
 equivalent to a bond and mortgage bearing interest, or 
 
68 THE POWER OF MONEY 
 
 to productive property, and the owner would not need 
 to part with it to make it productive. 
 
 SECTION V. 
 
 THE POWER OF MONEY TO EXCHANGE VALUE. 
 
 Another power of money is to exchange property. 
 When it is made the public representative of value, and 
 the interest is fixed at a just rate, it is fitted to perform 
 the duty of money, which is the equitable exchange of 
 property. All goods, wares, and merchandise, although 
 they may be exchanged for money a number of times, 
 soon find a place where they are consumed ; but money 
 never reaches a point where it can be used except as a 
 tender in exchange for property. Making a silver dollar 
 an equivalent or tender in payment for a debt contracted 
 by the purchase of a bushel of wheat, does not make the 
 dollar possess the nutritious qualities of the wheat, more 
 than giving a note upon the purchase of a hundred 
 bushels of corn makes the note of as great actual value 
 as the corn. The value of the note depends upon its 
 power to exchange itself for the property of the drawer, 
 and not on the worth of the paper upon which the note 
 is drawn. But the value of the corn depends upon its 
 nutritious qualities, and not upon any power to exchange 
 itself for the property of the person who raised or sold it. 
 The note must be exchanged for property before it can 
 be useful to its owner ; money must also be exchanged 
 for property to become useful. 
 
 This, then, is the distinction between articles of actual 
 value and the medium of exchange. The former are 
 designed to be actually used or consumed ; the latter is 
 designed to be continually exchanged for articles for 
 actual use and consumption. Hence money is not mer 
 
TO EXCHANGE VALUE. 69 
 
 chandise, for if its material be used as a commodity if 
 coins be converted into watch-cases and ornaments, the 
 owner must keep them to make them useful. 
 
 The object of the institution of money is to facilitate 
 the exchange of commodities ; and this it could never do 
 unless it were possessed of as much legal value as the 
 thing for which it is to be exchanged possesses actual 
 value. If a farmer has five hundred bushels of wheat, 
 with which he wishes to buy sugar, coffee, tea, molasses, 
 clothing and so forth for his family, he will not sell the 
 wheat for five hundred dollars, unless the money will be 
 a legal equivalent for ah 1 the articles for which he wishes 
 to exchange his wheat. He does not want the money to 
 keep ; he wants it to exchange for other articles that he 
 .needs to use or consume, and he sells his wheat for 
 money because the money is a legal equivalent for every 
 species of property. It would be very difficult for him 
 to divide up the wheat and barter it for various articled 
 in different places ; and the wheat is not a tender. But 
 he can divide up his money in amounts to suit all his 
 purchases, and the money is a legal tender in payment. 
 A man may carry a piece of paper money in his pocket 
 that is a legal equivalent for a valuable farm in any part 
 of the country, when if he had the same amount of actual 
 value, it might be impossible for him to move it ; but he 
 can sell it for money, and the money he can carry in his 
 pocket and buy with it where he pleases. 
 
 Some writers, instead of considering money as a 
 medium of exchange, call it capital seeking investment. 
 If money be capital, it is already invested ; because the 
 capital would consist in the inherent value of the mate- 
 rial of the money, and not in the thing the money seeks 
 to obtain. But, when money has found one investment, it 
 is as much a seeker for a second and a third investment, 
 as if it had not been invested at all. It is always seeking 
 
70 THE LEGAL POWERS OF MONET. 
 
 investment, without being invested.* It is no more real 
 capital than a very poor horse, of which the appearance is 
 such that he will do very well to exchange off. But if he 
 should finally fall into the hands of a person who had not 
 the good fortune to exchange him again for something 
 else, the owner would have to depencVupon his few useful 
 qualities. And if a currency were formed in the various 
 nations independently of gold and silver, and coins should 
 cease to be a tender in payment of debts, the value of 
 coins would depend upon their inherent qualities, as 
 metals, as much as the value of the horse when he could 
 be no longer exchanged for more than his actual worth, 
 would depend upon the little labor that he could perform, 
 or upon his hide and bones. The price of the gold and 
 of the horse would then depend upon their actual useful- 1 
 ness, and not upon any capabilities for exchange. 
 
 Money is, then, a combination of legal powers, ex- 
 pressed upon metal, paper, or some other substance ; its 
 value is the standard or determiner of the value of all 
 other things, and it serves as a public medium of ex- 
 change for land, labor, and all commodities. 
 
 * We are accustomed to say that money is invested in property, 
 but tin's is not true. Money ia no more invented in property than the 
 yard-stick is invested in the cloth that it measures. When money 
 has passed from one person to another either as a loan or in payment 
 for property, it is ready to be lent again or to be paid for another 
 piece of property. The money is no more used up by passing from 
 one person to another than the yard-stick is used up by measuring a 
 single piece of cloth. We are often told in the money articles of the 
 daily newspapers, that the money of the country haa been used up in 
 railroads ; but upon travelling over these roads we see evidences that 
 & great deal of labor has been expended in grading them, furnishing 
 the iron and timber and so forth, but we do not see any money. If 
 the money has been invested in these roads, it has now gone some- 
 where else ; and it is still going to and fro in the earth, and up and 
 ,lo\rn in i J. 
 
THE MATERIAL OF MONET. 71 
 
 SECTION Vi. 
 
 THE MATERIAL OP MONET, AND THE DISTINCTIONS BE- 
 TWEEN MONEY AND THE MATERIAL OF WHICH IT IS 
 MADE. 
 
 The material of money gold, silver, paper, or any 
 other substance is a legalized agent, made to express 
 the four properties, or powers of money, and render 
 them available in business transactions. 
 
 Common usage has applied the term measure to the 
 material, by means of which, length, weight, etc., are 
 a-scertained ; as, for instance, the yard, pound, and bushel, 
 instantly suggest the stick, iron, and wood, the means 
 employed, rather than the abstract length, weight, and 
 size, which are, in reality, the things signified by the 
 terms. It matters not whether the yard-stick and pound 
 weight be of wood, iron, or gold length and weight 
 are the only properties necessary to be expressed by 
 them, and possessing the standard limits, their material 
 is a matter of indifference. Of course, some materisu is 
 indispensable ; but the only thing that makes one sub- 
 stance preferable to another, is its superior convenience. 
 So of money ; it is a matter of indifference by what 
 material the powers or properties of money are ex- 
 pressed, for the material is merely a substance fixed upon 
 by law. 
 
 The natural powers of any material do not make it 
 money. Its powers and agency as money are delegated 
 to it by law, in addition to its natural capabilities 
 When gold is used, the powers conferred upon it make 
 it an equivalent for every species of property. If gold 
 had not been selected for the material of money, and a 
 legal power given to it to exchange property, and to 
 
THE MATERIAL OF MONEY 
 
 accumulate interest for its use, a man would have as little 
 occasion for more gold than he needs for utensils and or- 
 naments, as for more clothes than he can wear, or more 
 tools than he can use. It would have been subjected to 
 the same laws of trade as other merchandise, and must 
 have waited a demand for consumption before it could 
 have been sold. It is clear that gold possesses no pe- 
 culiar or inherent excellence to endow it with power to 
 determine the value and control the use of all other 
 things. But when it is made the agent of these legal 
 powers, it becomes necessary to acquire the gold in 
 order to discharge debts ; and the quantity of the metal 
 being limited, its owners are enabled to extort from the 
 necessitous a very high price for its use. If gold were 
 not used as the material of the currency, its abundance 
 would cause no inflation of business, nor would its 
 scarcity produce distress, because, compared with other 
 metals, its use is very limited. 
 
 The following statement will show the different effects 
 upon our own people of the use of the precious metals as 
 utensils, and their use as the material of money. All will 
 probably admit that there were, in 1846, twelve thousand 
 families in the city of New York, owning, on an average, 
 $800 worth of gold and silver ware, such as tea, coffee, 
 and dinner services, vases, ornaments, etc. Including 
 jewelry, the amount of the metals probably far exceeded 
 the sum named. But calculating the twelve thousand 
 families to have owned $800 worth each, they owned, 
 in the aggregate, $9,600,000 ; while, according to the 
 Bank Reports, the specie in all the banks in the State 
 of New York on the 1st day of November, 1846, 
 amounted to but $8,048,348. Suppose the twelve thou- 
 sand families owning these silver and gold utensils and 
 ornaments, had in one week collected them together, and 
 shipped them to England. The shipping of these wares 
 would have had no more effect upon the monetary affairs 
 
A LEGALIZED AGENT. 7# 
 
 of the State or nation, nor upon business, than the ship- 
 ping of the same amount in cotton and tobacco. But had 
 the people drained the $8,048,348 of coins from the banks, 
 and shipped them abroad, the banks throughout the 
 State, and throughout the United States, would have 
 been compelled to suspend specie payments, and hun- 
 dreds of thousands of our people would have been 
 bankrupted or thrown out of employment. Yet, by 
 shipping the gold and silver wares, more than one 
 million and a half more of the precious metals would 
 have left the country, than by shipping the coins. The 
 shipment of the smaller amount would have shaken 
 the country to its centre, while the shipment of the 
 larger amount, could not have unfavorably affected busi- 
 ness. And yet our gold and silver utensils and orna- 
 ments are more in use than our coins ; for the coins are 
 mostly in kegs and" boxes in the vaults of banks, and 
 if they are moved at all, it is usually from one bank 
 vault to another, without even emptying them from 
 the kegs. If money is merchandise, why would not 
 the shipment of our gold and silver utensils affect the 
 business of the nation, as much as the shipment of 
 our coins? The same twelve thousand families were 
 doubtless the owners of a much larger amount of the 
 capital stocks of the banks than the $9,600,000 ; and 
 could at any time have sold stock enough to draw all the 
 specie from the banks, and thus have caused a suspen- 
 sion of payments, and distressed producers, even with- 
 out shipping the specie. 
 
 If the value of money inhere in the precious metals, 
 so that a certain weight naturally possesses a certain 
 amount of power to exchange property, and still is itself a 
 commodity, the value of which is fixed by law, other com- 
 modities made of the same naturally precious metals, watch- 
 cases, spoons, etc., should likewise be subject to the scru- 
 tiny and restriction of government, that the public may not 
 
74: THE MATERIAL OF MONEY 
 
 be imposed upon in the receipt of them by any mixture 
 of alloy. If money be a commodity, why do governments 
 pretend to fix a value upon coins, and not upon any other 
 commodity, although it be made of gold or silver ? If a 
 definite value be assigned to one commodity by legal en- 
 actment, a definite value should also be legally assigned 
 to every other commodity, that each may sustain a just 
 relation according to the amount of labor necessary to 
 manufacture or produce it. If money be a commodity, 
 goods sold might as well be made payable in other com- 
 modities, sugar, beef, etc., as in money. Why not as 
 well sell money on time payable in goods, as goods on 
 time payable in money ? If money be a commodity, 
 why should the government force the public to convert 
 every other commodity into this one to pay debts ? If 
 the sale and purchase of all other commodities will 
 cause debts to exist, why should, one commodity only 
 be competent to pay them ? And why should the 
 value of every other commodity be determined by this 
 one commodity ? If money be a commodity, why does 
 the government reserve the right to coin it, making its 
 private coinage a criminal offence ? Why not let any 
 one make it, and dispose of it in market as of any other 
 commodity ? If money be merchandise, why is it, that 
 it can be at all times exchanged for property and products, 
 in any part of the country, and that all other more 
 necessary commodities are at certain times esteemed 
 almost worthless, compared with it ? It is answered, 
 that it is because it is made by law a legal tender in 
 payment for debts that it has this superiority over 
 every other commodity. But the very answer proves 
 that it is not a commodity ; for a legal tender is a 
 creation by law of certain properties which do not 
 naturally belong to any substance, but which are made 
 to represent all substances, and to control their exchange. 
 Governments have enacted their monetary laws upoi. the 
 
A LEGALIZED AGENT. 75 
 
 false principle that the gold and silver metals had an 
 intrinsic value, and consequently a power in their 
 material, before they were instituted as money, equal to 
 their legal power and value after being so instituted. 
 
 It is sometimes said, that commodities are a sort of 
 currency, because they can be and are exchanged for 
 money. Bait though a bushel of wheat may be exchanged 
 for money, it does not possess any of the legal and distinc- 
 tive properties of money. The wheat does not become 
 money more than a watch would become land by being 
 given in exchange for land. 
 
 Some argue that the dollar derives its value from the 
 labor required to mine and coin the silver for it. They 
 say that if a day's labor be required to mine the silver 
 for a dollar, and a day's labor be required to raise a 
 bushel of wheat, the silver and the wheat are of equal 
 worth, and that the legal acts of the government cannot 
 alter the value of either. But if the equal amount of 
 labor expended make the dollar and the wheat of equal 
 value, why will the dollar at certain periods buy two 
 or three times more wheat, or more labor, than it 
 will at other periods ? Why does not the value of la- 
 bor and of wheat increase equally with the value of the 
 dollar ? 
 
 When the products of labor command a high price, 
 labor also commands a high price. A given quantity of 
 wheat or of other products will pay for nearly the same 
 amount of labor every year. But if the price of products 
 be low, the employer cannot pay to labor a high price in 
 money. In seasons of depressed prices, a dollar will 
 purchase double, treble, or quadruple the amount of 
 labor that it ordinarily will, and this difference occurs 
 when no more labor is required to mine and coin the 
 silver. Let those who maintain the theory, that the 
 labor required to procure money constitutes its value, 
 account, if they can, for these facts, so as to satisfy 
 8 
 
16 THE MATERIAL OF MONEY 
 
 laborers and producers, the reward of whose labor, and 
 the price and sale of whose products it so nearly affects. 
 
 Because money is held in lieu of labor performed, and 
 in lieu of everything valuable, the public have been 
 accustomed to consider money an actual equivalent in 
 value to the commodity or labor it will pay for ; whereas 
 in fact, it is only a legal equivalent or balancing power. 
 Air, water, food, clothing and a vast variety of other 
 things are essential to the existence and comfort of man, 
 and no one thing can be an actual equivalent for them. 
 It is as impossible that ten pounds' weight of gold should 
 possess equal actual value with the four thousand bushels 
 of corn, or four thousand days' labor which the gold will 
 purchase, as that a small quantity of poison, frequently 
 necessary as a medicine to restore man to soundness and 
 health, should be of equal value with the corn or labor. 
 As many elements for the support of man exist in the 
 poison, as in the money. Both are useful in their spheres, 
 the former to remove obstructions to health, the latter to 
 facilitate the exchange of products. Poison is of little 
 value compared with food ; and money is as little valuable 
 compared with property. It would be as reasonable to 
 esteem the comet which appears once in a century, more 
 valuable to us than the sun that daily sheds its fertilizing 
 beams upon the earth, as to esteem the actual value of 
 gold and silver equivalent to that of all the necessaries of 
 life. If the quantity of gold were unlimited, not a thou- 
 sandth part as much of it would be used as of iron. 
 The notion that gold and silver are endowed by the 
 Creator with some mysterious value and capabilities, 
 which render them of greater importance than the 
 ordinary products of labor, is an erroneous and pernicious 
 one. Legal enactments cannot alter the inherent proper 
 ties of metals. 
 
 The common opinion that the material of a currency 
 must be something scarce and difficult to procure, that 
 
A LEGALIZED AGENT. 77 
 
 the limited amount may render it permanently valuable, 
 arises from a misconception of the nature of money, 
 the properties of which are entirely independent of the 
 material. Money consists in the legal powers to repre- 
 sent, measure, accumulate, and exchange property and 
 products. It receives its powers from law. If gold and 
 silver should become as abundant as iron and lead, the 
 only difficulty in maintaining them the materials of a 
 currency, would be the difficulty of protecting them from 
 counterfeit. Could they be protected, it would be as 
 unnecessary to abandon them for a currency on account 
 of their abundance, as to abandon the use of paper in 
 making obligations, because more exists than can be 
 used for that purpose. If the quantity of gold and silver 
 were unlimited, and that part of it which was needed for 
 a currency were made a lien upon and representative of 
 property, there would be nearly as great a difference 
 between the value of the metals so used and bullion, as 
 there now is between a paper obligation that is a lien 
 upon valuable property and a piece of blank paper. 
 
 For ages gold and silver have been esteemed precious 
 metals, containing a large amount of intrinsic value, al- 
 though their inadequacy to supply natural wants is mani- 
 fest, when we imagine a man, with a bag of coins, 011 a 
 desert island, and without the power to exchange them 
 for other articles. These metals have intrinsic, or actual 
 value, and this value consists in their utility for utensils 
 and ornaments ; their malleability, ductility and beauty 
 rendering them, for some purposes, superior to all other 
 metals. But it will be confessed, that we could far 
 better dispense with them than with any of the abundant 
 metals, which are in more general and constant use, 
 and the loss of which would seriously impair our com- 
 fort. 
 
 In early ages, gold and silver were, doubtless, selected 
 for the material of money on account of their scarcity. 
 
78 THE MATERIAL OF MONET. 
 
 
 
 and the amount of labor necessary to procure them ; the 
 same reason that led the American Indians to seiect the 
 beaver-skin for a standard of value, by which the value of 
 all other skins and commodities was estimated. It has 
 been already explained, that gold and silver, when used 
 as money, cease to have any other use. These metals 
 have, however, received the sanction of governments as the 
 material of money. The laws require that coins used as 
 a public tender shall contain a certain weight of the au- 
 thorized metal without which they are illegal, and can- 
 not be enforced as a tender. But the only reason that 
 they are not received is, that they are unsanctioned by 
 law. If coins of base metal were endowed by law with the 
 properties of money that is, were made representatives 
 of actual value, capable of accumulating by interest, and a 
 public tender for debts, they would answer every purpose 
 of money, equally well with coins of pure metal. They 
 could represent, measure, accumulate and exchange pro- 
 perty, and these are the sole properties and uses of money. 
 Therefore they would be money, for anything that pos- 
 sesses the properties of money, without division, subtrac- 
 tion, or increase, 'is money. But if the metal were used 
 for purposes of dentistry, the difference between the pure 
 and the base would at once appear ; for the metal would 
 then be used otherwise than as the material of money, 
 and its utility would not depend upon its legal powers, 
 but upon its natural capabilities as a metal. 
 
 The value of money, then, depends upon its powers 
 to represent, measure, accumulate, and exchange value. 
 These powers, given to nny convenient material by Con- 
 gressional enactment, will qualify it for a medium of ex- 
 change, and in every particular constitute it money. 
 
CHAPTER III. 
 
 THE RATES OF INTEREST THE GOVERNING POWliIi 
 OF DISTRIBUTION TO LABOR AND CAPITAL. 
 
 SECTION I. 
 
 THE POWER OP CAPITAL TO ACCUMULATE PROPERTY AND 
 LABOR ACCORDING TO THE BATE OF INTEREST. 
 
 IN the introduction, labor was said to be the chief 
 producer of wealth, and the preceding chapter has been 
 devoted to the consideration of the nature and powers 
 of money. The present chapter will exhibit the laws 
 which govern the distribution of the wealth, and will 
 show the practical effects of certain rates of interest upon 
 producers. 
 
 The Constitution of the JJnited States, Art. I., Sec. 
 VIII. 5, declares, u The Congress shall have power to 
 coin money, regulate the value thereof, and of foreign 
 coin, and fix the standard of weights and measures." 
 Money is the legal standard of value, by which the value 
 of all articles for sale must be determined. The rate of 
 interest fixes the value of money; Its value is no more 
 fixed by the quantity or the quality of its material, than 
 the size of the bushel is fixed by the quantity and quality 
 of its wood. The rate of interest maintained upon loans 
 of money, determines what proportion of the earnings of 
 laoor shall be paid for the use of capital, and what pro- 
 id 
 
80 THE BATES OF INTEREST GOVERN 
 
 portion shall be paid to the laborers for their productions. 
 If interest on money be maintained at a high rate, rents 
 on property will also be high. 
 
 There are but two purposes to which the yearly pro- 
 ducts of labor can be applied. One is the payment of the 
 yearly rent or interest on the capital employed, and the 
 other is the payment of labor. If laborers pay to capital, 
 as use or interest for the year, their whole surplus pro- 
 ducts, the laborers, as a body, work for a mere subsist- 
 ence, and the capital takes their whole surplus earnings. 
 The laborer receives for his year's toil, food, clothing and 
 shelter only, and these perhaps of the poorest kind ; while, 
 the capitalist lives in luxury, increases the number of his 
 bonds and mortgages, or with his income buys land or 
 builds houses to let, which will, in succeeding years, take 
 a still greater sum from the laborer. The law of interest, 
 or per centage on money, as much governs the rent or 
 use of all property, and consequently the reward of labor, 
 as the law of gravitation governs the descent of water. 
 If the interest on money be too high, a few owners of 
 capital will inevitably accumulate the wealth or products 
 of the many. With the present accumulative power of 
 interest, there is no more chance of the laboring classes 
 gaining their rights by combining their labor to increase 
 production, than there would be hope of success that by 
 combining their labor they could reverse the course of 
 the rivers, and make them run to the tops of the moun- 
 tains, and pile up the waters on their summits. The law 
 of gravitation, in the latter case, would not be more sure 
 to overpower all their labor, and frustrate all their plans, 
 than the present governing power of the interest on 
 money is sure to gather up the increased production and 
 add it to the wealth of capitalists. The fault is in the law 
 which governs the distribution of property ; and combi- 
 nations to increase production would no more effect any 
 general change in the distribution, than combinations 
 
THE DISTRIBUTION OF WEALTH. 81 
 
 against the law of gravitation would effect a change in 
 its general governing powers. The evil is legislative, and 
 the remedy must be legislative. 
 
 Money loaned on interest or invested in property, is 
 doubled in a certain length of time, determined by the 
 rate of interest. When this rate is too high, it requires 
 the principal to be doubled in so short a time, that the 
 borrower is compelled to give all his surplus products as 
 interest or rent ; whereas, justice requires that he should 
 pay only a moderate per centage for the use of capital, 
 and himself retain the chief surplus of his labor. 
 The following illustrations, calculating property to 
 accumulate or double at certain rates of yearly per cent- 
 age, in the same manner as money, will clearly exhibit 
 the various results to laborers from various rates of inte- 
 rest. A., B., and C. are young men, who have just come 
 of age. C. is heir to $10,000, while A. and B. are mecha- 
 nics, without capital. C. contracts with A. and B. to 
 build a house which shall cost $5,000, on a lot for which 
 he paid $5,000. The house and lot together are worth 
 $10,000. C. leases this property to A. and B., and 
 charges them seven per cent, upon its cost, clear of insu- 
 rance, taxes and repairs. The interest is payable once 
 a quarter. A rate of interest of seven per cent, per 
 annum, paid quarterly, will accumulate a sum equal to 
 the principal loaned or invested in property in ten years. 
 At this rate, in ten years A. and B. are compelled to buy 
 another lot, build upon it another as good a house, and 
 pay the lot and house to C. for the use of the house they 
 occupy. In twenty years, if A. and B. retain the use of 
 the house and its accruing rents, they must pay C. three 
 houses ; in thirty years they must pay him seven houses ; 
 in forty years, fifteen houses ; in fifty years, thirty-one 
 houses ; in sixty^ears, sixty-three houses ; and in seventy 
 years, one hundred and twenty-seven houses. In seventy 
 years all these must be built by A. and B., and paid to 
 
42 THE BATES OF INTEREST GOVERN 
 
 C. as the accumulation on the one that he leased to them. 
 The one hundred and twenty-seven lots which A. and B. 
 earn the money to buy, cost $635,000, and the buildings 
 cost an equal amount, making together, $1,270,000; 
 which sum is paid to C. for seventy years' rent of one 
 house and lot worth -$10,000. At the expiration of the 
 lease, the original house must be returned to its owner, 
 as well as the rent. If, instead of being invested in the 
 house and lot, the $10,000 were loaned on interest at 
 seven per cent., and the interest were collected and 
 reloaned quarterly, the money would accumulate in a 
 given period precisely the same amount as the pro- 
 perty. 
 
 Now,, suppose interest to be at three per cent, per 
 annum, and A. and B. to build the house, and pay C. 
 three per cent, annually on its cost of $10,000. This is 
 $300, instead of $700 a year ; and, at this rate, the in- 
 terest on money, collected and reloaned quarterly, re- 
 quires nearly twenty-four years to accumulate a sum 
 equal to the principal. Therefore, in twenty-four years 
 A. and B. would give C. another house ; and, in seventy- 
 two years, seven houses, instead of one hundred and 
 twenty-seven, which they are compelled to do at seven 
 per cent, interest. The labor of building the houses is 
 neither increased by a high rate, nor diminished by a 
 low rate of interest. 
 
 If C. let his house to A. and B. at six per cent., in 
 about twelve years the income or rent will equal the 
 principal ; therefore, at the expiration of that period, A. 
 and B. must pay C. another house, and in twenty-four 
 years, they must pay him three houses. But if C. lease 
 the house to them for twenty-four years at three per 
 cent., A. and B. return him his house, adding one to it as 
 its. rent, and retain two houses as their own surplus. 
 With interest at three per cent., in twenty-four years A. 
 and B. would each own a house and lot worth $10,000 ; 
 
THE DISTRIBUTION OF WEALTH. 83 
 
 while, with the interest on money loaned or invested in 
 property at six per cent, both would still be tenants, al- 
 though they would have performed, in both cases, the 
 same amount of labor. With interest at three per cent., 
 in forty-eight years they would give C. three houses, 
 instead of fifteen, as at six per cent., and they would own 
 twelve as the surplus product of their labor. But at six 
 per cent., C.'s capital would compel A. and B. to con- 
 tinue his tenants, and to build for him sixteen houses 
 more during the next twelve years. 
 
 Take another example of the accumulation of property 
 at seven per cent, interest. At the age of twenty-one, 
 D, owns a well improved farm of one hundred acres. He 
 leases it to E. at an interest of seven per cent., payable 
 in land, as the interest on money is payable in money. 
 At the close of the year, E. pays D. seven acres of as 
 good quality as the one hundred rented, and with a pro 
 ratd proportion of buildings upon them. D. continues 
 to let the farm to E. requiring him to pay the rent in 
 land half-yearly, as interest on money is paid half-yearly 
 in money ; and to pay rent on the land so paid, as the 
 borrower of money pays interest on the interest which 
 he adds half yearly to the principal. In ten years, E. 
 must pay one farm ; in twenty years, three farms ; in 
 thirty years, seven farms ; in forty years, fifteen farms ; 
 in fifty years, thirty-one farms ; in sixty years, sixty- 
 three farms ; and in seventy years, one hundred and 
 twenty-seven fkrms ; all in as good a state of cultiva- 
 tion as the one originally leased. At the age of ninety- 
 one, D. can bequeath to his posterity one hundred and 
 twenty-seven farms, from the mere rent on one. These 
 farms E. must earn by the labor of seventy years, and 
 pay to D. for the use of one farm. If it were possible 
 for him to earn the one hundred and twenty-seven farms 
 to pay to D., and the rate of interest were reduced, to 
 one per cent., he need pay to D. only about one farm as 
 
84 THE KATES OF INTEREST GOVERN 
 
 rent for the seventy years, and could retain one hundred 
 and twenty-six as the surplus of his labor. 
 
 Again, suppose John and Richard to be poor boys, 
 each ten years old, who expect to be bound out at the 
 proper age to learn the carpenter's trade. But a rich 
 uncle bequeaths to John a house worth ten thousand 
 dollars. It is worth so much, because it will rent for 
 seven hundred dollars a year over and above taxes, in- 
 surance and repairs. John's guardian is a lawyer, and 
 will collect the rent, and loan it out for him at seven per 
 cent, per annum, getting his fees from those who borrow 
 the money. John likes Richard, and learns his trade 
 with him, and earns his living by his labor as Richard 
 does. John instructs his lawyer to purchase another 
 house, whenever the rent of the one accumulates to 
 enough to buy a second equal to the first. If the in- 
 terest be regularly collected and loaned at seven per 
 cent., and the interest be collected half yearly, it will 
 equal the principal in ten years and one mouth ; when 
 his lawyer can buy for John a second house, so that 
 when he is twenty years and one month old, he will 
 be the owner of two houses. These two houses, rented 
 for ten years and one month more, will buy for John two 
 houses more ; so that at the age of thirty years and two 
 months, he will own four houses : at forty years and 
 three months, he will own eight houses : at fifty years 
 and four months, sixteen houses ; at sixty years and five 
 months, thirty-two houses; at seventy years and six 
 months, sixty-four houses ; and at eighty years and seven 
 months of age, he will own one hundred and twenty- 
 eight houses, each of which is rented at seven hundred 
 dollars a year ; and all of them together are bringing in a 
 clear yearly income of eighty-nine thousand six hundred 
 dollars. Now what has John, or his uncle, or his 
 guardian, done, that the public should be obliged to give 
 John one hundred and twenty-seven houses for seventy 
 
THE DISTRIBUTION OF WEALTB. 85 
 
 years' use of one house ? These one hundred and 
 twenty-seven houses are all legally his; and our laws 
 maintain that John has as equitable a right to them as if 
 he had bought the lots and built the houses by his own 
 labor. Yet, if we allow labor to be worth a dollar a day, 
 it would take the entire earnings of sixty men for over 
 seventy years to pay for the one hundred and twenty- 
 seven houses, which the use of the one house has in 
 seventy years legally acquired for John, without the per- 
 formance of any labor on his part. 
 
 Let us see how different would be the results in this 
 case if the interest on money, and consequently the rents 
 on property, were at one per cent, per annum, instead of 
 at seven per cent. John's uncle bequeaths to him the 
 house worth ten thousand dollars ; but, instead of renting 
 it at seven per cent, on its value, John can rent it at but 
 one per cent, over and above taxes, insurance and re- 
 pairs, and regularly collects and loans out the rent as in 
 the former case. It would be about seventy years before 
 the rent and the accruing interest on the rent would 
 equal the principal, and buy for John a second house as 
 valuable as the first. With interest legally fixed at one 
 per cent, the use of one house for seventy years would 
 accumulate for John, out of the earnings of others, one 
 additional house of equal value, whereas, at seven per 
 cent, it would accumulate for him one hundred and 
 twenty-seven houses. Whether the government fix 
 the rate of interest at seven or at one percent, the public 
 must provide the same quantity of material and perform 
 precisely the same amount of labor to build the one him- 
 dred and twenty-seven houses ; but with the interest at 
 seven per cent. John would lawfully own them all, whereas 
 with interest fixed at one per cent, he would lawfully 
 own but one house out of the one hundred and twenty- 
 seven houses, and otherswould lawfully own the remain- 
 ing one hundred and twenty-six houses. To furnish the 
 
86 THE RATES OF INTEREST GOVERN 
 
 materials and build these houses, requires not only skill in 
 the mechanical arts, but also the performance of an 
 immense amount of manual labor. But to give the one 
 hundred and twenty-seven houses to John, who is fairly 
 entitled to but one of them for the use of the one he 
 rented, is the legitimate operation of the law fixing the 
 interest at seven per cent. What chance have the pro- 
 ducing classes by any combination of labor to contend 
 successfully against such an accumulating and centraliz- 
 ing power ? They might as well venture into the sea, 
 with the wind blowing a hurricane, and expect by their 
 bodily strength to turn back the waves. The sea would 
 not be more certain to sweep over them, and pursue its on- 
 ward course, than the accumulative power of money at 
 seven per cent, interest yearly to gather up the surplus 
 earnings of labor despite all combinations of labor against 
 it. If the producers ever gain their rights, it will be by 
 legally controlling the power of money, and not by any 
 combinations of labor. 
 
 If a hundred dollars can be lent at seven per cent, inte- 
 rest, the borrower pays seven parts of the whole for the use 
 for one year. The borrower must invest the money (for 
 it is of no use to keep) in land or other property, and 
 therefore must pay seven parts of the value of the 
 property for the use of one hundred parts for a year. 
 But if money be borrowed at one per cent., of course 
 the borrower pays but one part for the use of one hun- 
 dred parts either of money or property for a year, hence 
 at tliis rate laborers would receive six parts of their net 
 yearly earnings now paid to capital. A man who labors 
 on his own property gains for himself its whole product. 
 The rate per cent, interest determines what proportion 
 others shall pay him for the use of capital, which he does 
 not need for his own use. Suppose seven per cent, to be 
 the fixed rate of interest, and V. to be a farmer, who, at the 
 age of twenty-one, inherits five farms, worth ten thousand 
 
THE DISTRIBUTION OF WEALTH. 87 
 
 dollars each. He wishes to cultivate one himself, and to 
 sell or rent the remaining four. A., B., C. and D. are 
 farmers without property, and are obliged to hire their 
 farms. They cannot expect V. to rent them his for less 
 than the interest on the money for which they would sell. 
 Suppose these men to rent V.'s four farms at seven hun- 
 dred dollars a year each ; and V. to collect his rent 
 yearly, and lend the money toothers at seven per cent., and 
 yearly to collect and reloan this interest. The rent and 
 accruing interest upon the rent, in ten years and three 
 months, would enable V. to buy four additional farms, 
 worth ten thousand dollars apiece, which he could rent 
 to four more tenants. In ten years and three months, 
 the rent and interest upon the rent of these eight farms 
 would furnish V. with money to purchase eight farms 
 more of equal value, which he could rent to eight other 
 tenants ; in a' third period of the same length, the rent and 
 interest upon the rent of the sixteen farms would buy 
 sixteen additional farms ; in a fourth period, the rent and 
 interest upon the rent of the thirty-two farms, would pur- 
 chase thirty-two more farms ; in a fifth period, the rent 
 and interest upon the rent of the sixty-four farms, would 
 buy sixty-four more ; in a sixth period, the rent and 
 interest upon the rent of the one hundred and twenty- 
 eight farms would buy one hundred and twenty-eight 
 more ; and in a seventh ten years and three months, 
 the rent and interest upon the rent of the two hundred 
 and fifty-six farms then owned by V., would buy for him 
 two hundred and fifty-six farms more, of equal value with 
 the first farms which he rented to A., B., C. and D. Thus 
 V., in seventy-one years and nine months, would become 
 the owner of five hundred and twelve farms, worth ten 
 thousand dollars each, and bringing in a yearly income 
 of seven hundred dollars apiece. Five hundred and 
 eight of these farms would be added to Y.'s wealth by the 
 labor of his tenants, not to mention the improvement 
 9 
 
88 THE RATES OF INTEREST GOVERN 
 
 made on their original value by the labor ; and V. would 
 have had besides, the entire produce of the one farm re- 
 served for his own cultivation. 
 
 We will now see what would be the result to V. and 
 his tenants from the simple change of the rate of interest 
 from seven to one per cent. Suppose V., as before, to in- 
 herit five farms, each worth ten thousand dollars, one of 
 which he cultivates himself. If he should sell the remain- 
 ing four for ten thousand dollars each, he could lend the 
 money at one per cent., that is for four hundred dollars ; 
 but he rents the farms to A., B., C. and D., at one per 
 cent, on their value, and thus receives the same income. 
 If V. should loan this yearly rent of one hundred dollars 
 on each farm, yearly collecting and reloaning the interest, 
 nearly seventy years would elapse before the rent paid 
 him by A., B., C. and D., and its accruing interest, would 
 buy four more farms of equal value with those rented ; 
 whereas, in about the same period, at seven per cent, 
 the rent and its accruing interest would buy five hun- 
 dred and eight farms. Whether the interest were at 
 one or at seven per cent., V. would equally receive the 
 products of his labor on the farm that he kept for his own 
 use ; but at seven per cent., he would gain by the labor 
 of his tenants five millions and eighty thousand dollars' 
 worth of land; while at one per cent, he would gain by 
 their labor but forty thousand dollars' worth. The agree- 
 ments between "V. and his tenants appear on the surface 
 as fair where they pay the larger as where they pay the 
 lower rent ; because, in each case, they conform to the 
 groundwork or foundation established by law ; but, in 
 the latter instance, Y.'s tenants would as much pay to 
 him the full yearly market rent of his farms by paying 
 one hundred dollars apiece, as in the former by pay- 
 ing seven hundred dollars apiece. If one acre of land 
 would produce twenty-five bushels of wheat worth 071? 
 dollar per bushel, each of V.'s tenants must yearly sow, 
 
THE DISTRIBUTION OF WEALTH. 89 
 
 gather and sell twenty-eight acres of wheat to pay seven 
 hundred dollars rent. Suppose wheat to continue worth 
 one dollar per bushel, and the rent to be diminished to 
 one per cent. ; with the same industry and economy, each 
 tenant could pay the one hundred dollars rent, and re- 
 tain for himself six hundred bushels of wheat as the sur- 
 plus of his labor. If V.'s tenants, in about seventy years, 
 could earn and pay to him five hundred and eight farms, 
 in the same period, with the interest at one per cent., 
 they could earn for themselves five hundred and four, for 
 the other four farms would pay all their rent to Y. 
 Having the entire produce of one farm for his own sup- 
 port, the low rent of the other four could do him neither 
 injustice nor injury; while compelling A., B., C. and D. 
 to pay the larger rent would deprive them and others 
 of the just reward of their labor ; and V. would not 
 be really benefited by the hardships imposed upon 
 them. 
 
 The interest on money at seven per cent, is as oppres- 
 sive as the same rate per cent, rent on land. Suppose 
 V., instead of renting his four farms, should sell them for 
 $10,000 each, and loan the money at the legal rate of 
 seven per cent., collecting and reloaning the interest 
 yearly. In ten years ftnd three months, the principal 
 and interest together would amount to $80,000; in twenty 
 years and six months, to $160,000: in thirty years and 
 nine months, to $320,000 ; in" forty-one years, to $640,000; 
 in fifty-one years and three months, to $1,280,000; in 
 sixty-one years and six months, to $2,560,000 ; and in 
 seventy-one years and nine months, to $5,120,000. Mul- 
 tiply $10,000 by five hundred and twelve, the number of 
 farms, and it will give the same sum. If V. should sell 
 the four farms for $40,000, and lend the money on bond 
 and mortgage at seven per cent., requiring, as is usual, 
 double the value in land as security, he would have mort- 
 gages covering $10,240,000 worth of landed estate ; and 
 
90 THE KATES OF INTEREST GOVERN 
 
 the people occupying this land would be hard at work to 
 pay him the interest; thus rapidly concentrating wealth in 
 his hands, instead of diffusing it to supply their own wants. 
 But with interest at one per cent., $40,000 loaned for 
 seventy years, would accumulate but $40,000 more ; 
 whereas, at seven percent, it would accumulate $5,080,000. 
 This difference in interest of $5,040,000 would be added 
 to V.'s wealth from the earnings of others, while V.'s 
 accumulation of money or increase of lands would not add 
 either a dollar to the quantity of money, or an acre to the 
 quantity of land. It would only have monopolized it for 
 V.'s benefit. It would have caused the people to owe 
 V. $5,080,000, and make them $5,040,000 poorer than if 
 interest had been at one per cent. The contracts be- 
 tween V. and his tenants being made in conformity with 
 She standard at seven per cent., they must pay him the 
 $5,040,000, or defraud him of what is legally his due ; 
 and if he voluntarily take less than this from them, it is 
 an act of charity. Seven per cent, is not the standard for 
 V. only ; it is a public standard that favors other capital- 
 ists equally in the various branches of business, and 
 imposes upon the producing classes generally obligations 
 similar to those it imposes upon V.'s tenants.* 
 
 * We do not question the right of V. to inherit the five farms, and 
 to enjoy all the produce of the one he cultivates : nor do we object to 
 his receiving a just rent for the use of any other farms which he may 
 own ; but the rent of the latter should be only equivalent to a pro- 
 per support of the money by which their value is represented ; and 
 we claim that one, or one and one-tenth per cent, is ample to pay for 
 the necessary material and labor to furnish a representative that shall 
 be and remain perfectly secure and good. ... As labor in all 
 useful departments should be fairly compensated, so also the neces- 
 sary labor to furnish and issue the money of a nation should be justly 
 remunerated; and the per centage interest on the money should be 
 equivalent to pay for the needful material and labor to furnish arid lend 
 it. The interest ought not to exceed the expense of the institution and 
 circulation of the money. (.See Sec. XVII. and Part II., Chap. II.) 
 
THE DISTRIBUTION OF WEALTH. 91 
 
 To give some idea to what extent the power of 
 interest operates, it can only be necessary to say, that 
 all the money lent on bonds and mortgages by indivi- 
 duals, by insurance and trust companies ; all the money 
 lent for United States, State, County, City, Railroad, 
 Canal and other bonds, made to raise money for public 
 improvements, whether these improvements be made by 
 corporations, by the States or by individuals; also all 
 the money lent by banks, brokers and individuals on 
 promissory notes all these loans are operating with a 
 like centralizing power against the producers and in favor 
 of money-lenders. This power also establishes a like 
 rate per cent, rent to be paid for the use of all property, 
 real and personal. The rent of houses and lots in cities, 
 and of farms and houses in the country, must conform 
 to- this standard. All the goods, wares and merchan- 
 dise on hand in the nation, and that are in process of 
 being produced and manufactured, are governed in their 
 value by money, and are under tribute to its centralizing 
 power. It is an unavoidable power, because it is insti- 
 tuted, upheld and enforced by the national laws, and is 
 the basis upon which all market values are founded. 
 
 The following statement shows the effect upon pro- 
 ducers of a rate of interest on capital of six per cent, per 
 annum. The yearly income of our most wealthy citizen 
 from dividends on State, bank, and other stocks, money 
 lent on bonds and mortgages, and rents of property, is 
 said to amount to $2,000,000. Take the farmers of the 
 six New England States, include those of New York and 
 New Jersey, and it is very doubtful whether, after paying 
 necessary expenses, each makes a yearly gain of more 
 than one hundred dollars. According to this calculation 
 it would require the use of twenty thousand farms, and 
 the surplus earnings of twenty thousand farmers and 
 their families, to clear $2,000,000 a year. However 
 difficult it might be to trace the ways and means bj 
 
92 THE BATES OF INTEREST GOVERN 
 
 which this income is gathered, it takes $2,000,000 worth 
 of the surplus products of labor to pay the legal accumu- 
 lation on the capital. Suppose able-bodied men to earn 
 one dollar per day, for an average of two hundred 
 and seventy-five days in each year i. e., $275. Two 
 millions of dollars would annually hire and pay for the 
 labor of seven thousand two hundred and seventy-six 
 men. Allow the receiver of the income to expend 
 yearly for his own support as much as seventy-three 
 laborers earn, and he will still receive a clear gain of 
 $1,980,000 yearly, the entire earnings of seven thousand 
 two hundred and three men. Calculate the interest on 
 $1,980,000 at six per cent., and the next year it will 
 make an addition to his income of $118,800; which sum 
 would pay for the labor of four hundred and thirty-two 
 men, in addition to the number employed in the preced- 
 ing year. What is the probable surplus that each of these 
 laboring men would yearly retain, after deducting from 
 the $275 their own expenses, and those of their families? 
 Can any laboring community be prosperous, and pay so 
 great an amount of interest on capital ? The legal power 
 of money to accumulate an undue rate of interest, com- 
 pels these laborers to give all their surplus products to 
 one man for the use of capital, while they and their 
 families are deprived of a good subsistence, and are 
 obliged continually to increase that capital, which yearly 
 exercises a greater power over their labor. 
 
 In order that the power of the ordinary rates of inter- 
 est to concentrate property in the hands of capitalists may 
 l>e more clearly seen, in the following illustration the con- 
 tracts shall be based upon wheat instead of upon money. 
 Take the yearly income of Mr. A., say $2,000,000. If his 
 money be loaned, or his property be leased at six per cent. 
 on its valuation, he must be worth thirty-three and a 
 third millions of dollars. Suppose Mr. A., instead, to 
 own thirty-three and a third millions of bushels of wheat, 
 
THE DISTRIBUTION Of WEALTH. 
 
 Let him lend the wheat instead of the money at six per 
 cent., and the interest will be precisely two millions of 
 bushels. The farmers who borrow the wheat, and give 
 their bonds and mortgages upon their farms to secure 
 the payment of the principal and interest, must sow, reap, 
 and thrash out two millions of bushels, transport them to 
 New York, and put them into Mr. A.'s storehouses, to pay 
 the interest for one year. What a pile of wheat is this 
 for one man's use, gained too, without his sowing or 
 harvesting a bushel of it. But suppose the interest to be 
 at one per cent, instead of at six per cent, and Mr. A. to 
 lend these same farmers the thirty-three and a third mil- 
 lion s of bushels of wheat at this per centage ; at the end 
 of the year they will have to pay him only three hundred 
 and thirty-three thousand three hundred and thirty- 
 three and a third bushels of wheat, to satisfy the 
 interest. The farmers will then retain one million six 
 hundred and sixty-six thousand six hundred and sixty- 
 six and two-third bushels for their own use, or to sell to 
 others, or to pay toward the principal of the debt. With 
 interest at one per cent, they will as much satisfy Mr. 
 A.'s yearly claims, by paying him the smaller quantity of 
 wheat, as they would at an interest of six per cent, by 
 paying two millions of bushels. If each acre of land 
 produce fifteen bushels, and the farmers cultivate on an 
 average ten acres each, it will take the labor of thirteen 
 thousand three hundred and thirty-three farmers, and the 
 use of one hundred and thirty-three thousand three hun- 
 dred and thirty-three and a third acres of land to pay 
 the yearly interest of six per cent, on the thirty-three and 
 a third millions of bushels of wheat borrowed of Mr. A. 
 Bat if interest be at one per cent, and the farmers con. 
 tinue to pay Mr. A. the two millions of bushels yearly, 
 in eighteen years and four months they will pay off both 
 the principal and the interest of the debt. 
 
 Suppose the farmers to pay six per cent, interest, i. e. t 
 
94 THE KATES OF INTEEEST GOVERN 
 
 two millions of bushels of wheat on the loan for twenty 
 years, they will pay forty millions of bushels to satisfy 
 the interest, and will still owe the thirty-three and a third 
 millions principal. If Mr. A., as he yearly receives the 
 interest from the farmers, say two millions of bushels of 
 wheat or $2,000,000, should lend it out to mechanics at 
 six per cent, interest, and continue to do this for twenty 
 years, adding yearly to the loan the interest so accrued, 
 it would accumulate, in the twenty years, to 873,571,180. 
 The interest on this interest for a year amounts to 
 84,414,270, which would yearly be due from the mechanics. 
 If the mechanics, instead of paying the interest in wheat, 
 should pay it in manufactured articles, they would pile 
 up an enormous quantity of goods in Mr. A.'s storehouses 
 for his yearly use. With interest at six per cent., at the 
 end of twenty years, the farmers would owe Mr. A. 
 $33,333,333, or the same number of bushels of wheat, and 
 the mechanics would owe him $73,571,180; together, 
 $106,904,513 ; which would annually require from the 
 farmers and mechanics $6,414,270 worth of their products 
 merely to pay the interest. 
 
 Now let interest be at one per cent, per annum, and let 
 Mr. A. lend $33,333,333 at this rate, and in twenty years 
 the interest compounded yearly would amount to but 
 $7,339,666, instead of $73,571,180 ; making by this sim- 
 ple alteration of the rate of interest for twenty years, a 
 saving to the farmers and mechanics of $66,231,514. 
 
 These calculations of the centralizing power of money 
 are not based upon any usurious rates of interest, but 
 upon six and seven per cent., and the latter rate is estab- 
 lished by the State of New York as just and equitable ; 
 and judgments in the courts of law are rendered and 
 entered upon the records accordingly. These rates 
 of interest are certain to take the wealth from the pro- 
 ducers and give it to the financiers. It will be hereafter 
 shown that the rate of interest may be easily reduced to 
 
THE DISTRIBUTION OF WEALTH. 95 
 
 one per cent., or to any other per cent, that shall be 
 deemed most conducive to the general welfare ; and ii 
 the people think it more just that the interest should 
 cease to accumulate wealth so rapidly in a few hands, 
 they will enact laws to prevent it. If they will stop such 
 accumulation by interest, they will live upon the pro- 
 ducts of their own labor, instead of living upon the 
 charity of capitalists. If in twenty years Mr. A. should 
 bestow on the needy $66,231,514, or the same number of 
 bushels of wheat, it would be an unheard-of liberality. 
 But if the law of interest were such that he could not 
 legally take this amount from the people, they would retain 
 it in their own possession, as the natural product of their 
 labor, instead of being compelled to receive it as a charity. 
 
 Mr. A. now uses the most of his capital by investing 
 it in State and other stocks, buying business notes at 
 large discounts, lending money on bond and mortgage, 
 buying up mortgages bearing seven per cent, interest be- 
 low their par value, purchasing property under foreclosure, 
 etc. Doubtless his object is to obtain the best possible 
 per centage income. for the use of his money or property. 
 All that he gams by these means above six per cent, 
 interest, takes a still greater sum from the earnings of 
 producers. 
 
 Now suppose from this time forward Mr. A. should 
 determine to pursue a different course, and to lay out 
 his capital in such a manner as to conduce in the highest 
 degree to the welfare of the people around him. To 
 support them in idleness would be a disadvantage ; but to 
 employ them, and pay for their work such a price as 
 would give them a good subsistence, and furnish them 
 with the means of educating their children, and to pro- 
 vide for the aged and needy, would be a very benevolent 
 disposition of his wealth. To do this he invests ah 1 his 
 property in the manufacture of cotton goods. With 
 thirty-three and a third millions of dollars he could carry 
 
06 INTEREST GOVERNS DISTRIBUTION. 
 
 on an extensive business. He builds his manufactories, 
 and purchases machinery. He contracts with a number 
 of planters to supply him for a certain number of years 
 with a given quantity of cotton. He also contracts with 
 workmen to perform the labor in his mills, and. agrees to 
 give to all such prices as will afford them and their 
 families a comfortable subsistence, make suitable pro- 
 vision for the education of their children, and support 
 those who are unable to work and dependent upon them. 
 The cotton will, of course, be always furnished at a uni- 
 form price, and the price of labor will be about the same 
 each year. Mr. A. now fix^s the prices of his goods so 
 as to sustain the various people in his employment. Let 
 Mr. A. invest all his mearls in mills, in stock, and labor, 
 on these terms, while the planters hire their plantations, 
 and the mechanics, manufacturers and laborers employed 
 by Mr. A. hire houses to live in, etc., from others at a 
 rent of seven or eight per cent, per annum, and it will be 
 impossible for him, with all his capital, to sustain himself. 
 In a very few years he will become bankrupt, for he 
 must enable his workmen to pay their rents, and give 
 them, besides, a comfortable support. This obliges him 
 to use his own property at a low rate of interest, while, 
 through his workmen, he is compelled to pay a high rate 
 of rent or interest for the use of the property of others. 
 The operation is, virtually, that the owner of thirty-three 
 and a third millions of dollars borrows an equal or large 
 amount at six, seven, or eight per cent, interest, and reloans 
 the borrowed money, together with his own, at an interest 
 of one, or one and a quarter per cent. By so doing, his 
 fortune will soon pass into the hands of other capitalists. 
 The present monetary laws of all nations are opposed to 
 the reward of labor; and no individual or national at- 
 tempts justly to reward it, except by changing thesa 
 laws, can secure any permanent success. 
 
THE WEALTH OF CITIES. $7 
 
 SECTION II. 
 
 THE WEALTH OP CITIES, AND THE MEANS OF ITS ACCU- 
 MULATION. 
 
 The following illustration shows the capability of 
 money, at an interest of six per cent, per annum, to cen- 
 tralize the wealth of nations in large cities. 
 
 Suppose an uncultiv 7 ated island, ten miles square, and 
 a few miles distant from the coast of the United States. 
 Ten thousand wealthy citizens of the States intend to 
 build a city upon it. These citizens are worth $150,000 
 each; in the aggregate, $1,500,000,000. The legal 
 interest on money is fixed at six per cent, per annum. 
 For two years previous to their removal to the island, the 
 people prepare upon it houses for themselves, and suitable 
 accommodations for merchants and mechanics. Each of 
 these families expends $3,000 yearly for its support. 
 Each family being worth $150,000, the interesjjr on which, 
 at six per cent, would be 19,000, each has an income of 
 $6,000 a year, over and above expenses. They expend 
 their surplus income for two years, i. 0., $12,000 for each 
 family, in the aggregate $120,000,000, in making improve- 
 ments on the island. They dispose of their property on 
 the main land on credit, securing it by bonds and 
 mortgages, State stocks, or otherwise, so that they insure 
 an interest payable half yearly of six per cent, per annum, 
 on the whole amount of their property. These obliga- 
 tions merely represent the value of the property they 
 leave upon the main land, and must yield an income from 
 the products of the land and labor of the purchasers. The 
 annual interest on $1,500,000,000, amounts to $90,000,000. 
 The paper obligations held by the creditors legally 
 empower them to demand an interest of $90,000,000, in 
 specie. The mere giving of obligations is all that is re 
 
98 THE WEALTH OF CITIES. 
 
 quired in ,the transfer of property. The conversion of 
 their property into bonds and mortgages and other secu- 
 rities, may not have required the use of a million of dol- 
 lars of money. But the payment of both principal and 
 interest must be made in money. 
 
 The ten thousand families contain, on an average, five 
 persons each, making, in the aggregate, a population of 
 fifty thousand. They employ, on an average, three 
 domestics in each family, increasing the population to 
 eighty thousand. The yearly expenses of each family 
 amount to $3,000; or, for the whole, to $30,000,000. 
 Hatters, tailors, shoemakers, cabinet-makers, mechanics 
 of every sort collect about them to supply their wants, 
 and receive the sums which they expend in living. More 
 than fifty thousand laborers and artisans are needed to 
 supply their wants. In a few years the centralization of 
 capital collects a city of three or four hundred thousand 
 inhabitants. The ten thousand families expend $30,000, 
 000 yearly, and draw besides, from the people of the main 
 land, a cle^r income of $60,000,000 a year, which they can 
 reloan. The debtors cannot send the $60,000,000 in 
 money, and are therefore obliged to send the products 
 of the soil, manufactured articles, etc., to this city for 
 sale, to procure money to meet their payments of interest. 
 The city soon becomes the market-place of the nation, 
 and engrosses the principal business. The people are 
 astonished at its wealth and prosperity, and congratu- 
 late themselves on having so fine a market for their 
 products. 
 
 In the course of a century or two, the ten thousand 
 families and their descendants can, if they choose, with- 
 out labor on their part, build a wall around their city as 
 high and as broad as the walls of ancient Babylon. 
 Meanwhile, the people upon the main land are obliged to 
 supply all the wants, the food, clothing, etc., not only of 
 the ten thousand families and their descendants who do 
 
THE WEALTH OF CITIES. 99 
 
 no work, but also of the laborers employed in the erection 
 of the wall, in the building of houses, and in all other im- 
 provements. Producers and manufacturers from differ- 
 ent parts of the country carry their goods to the city, 
 and the citizens, after selecting the choicest for their own 
 use, resell the remainder to laborers, who are only able 
 to purchase the poorer kinds. If an account were kept 
 of those sold to the country, it would be found that they 
 were minus nearly the whole support of the people of the 
 city. Now what compensation is received by the people 
 of the main land for the supplies which they furnish ? 
 The citizens, indeed, pay money for the supplies, but this 
 money is the interest on capital loaned to the people, 
 without whose labor it would have been useless. In a 
 similar manner, under the present monetary laws of 
 the United States, a few rich men in cities engross the 
 wealth of the country. It is as natural under these laws 
 for the wealth to fall into a few hands as for water to 
 find its level by its own gravitation ; and while our 
 present rates of interest prevail, no combination or suc- 
 cess in production, either by machinery or the muscular 
 power of labor, will ever effect any important change for 
 the better. But when the laboring classes combine to 
 have good national monetary laws in lieu of the present 
 evil ones, their united efforts will effect a change in these 
 laws, and thus accomplish the object they have so long 
 and so anxiously sought after. If the interest in the 
 case supposed were limited to one per cent., the income 
 for each family would be only $1,500, or one-half of what 
 they each year expend ; consequently, they must either 
 labor for the other half, or take a portion of their princi- 
 pal each year for their support. It would, therefore, be 
 impossible for them to build or sustain such a city. 
 
 The ten thousand most wealthy men in the United 
 States are probably worth, on an average, at least 
 
 $300,000 in the aggregate $3,000,000,000. The annual 
 10 
 
100 THE WEALTH OF CITIES. 
 
 interest on this sum at six per cent, would be $180,000,000. 
 If these men should sell their property, and invest the 
 proceeds in bonds and mortgages bearing six per cent, 
 interest per annum, and remove from the country, they 
 would impose a tribute on the productive industry of the 
 nation which would impoverish it for ages. It is doubt- 
 ful whether the people would ever be able to pay and 
 satisfy the interest and principal of the debt. They 
 would pay $180,000,000 of their products yearly, without 
 receiving any equivalent. And yet, without the labor 
 of the buyers or borrowers, the property would be use- 
 less ; and if the owners received any benefit from it, they 
 would be obliged to remain and cultivate it themselves. 
 Ought the laws to be such, that ten thousand wealthy 
 men, on leaving their country, could impose such a bur- 
 den upon the millions left behind? If interest were 
 reduced to one per cent., and the ten thousand men 
 should sell their property, leaving the proceeds on in- 
 terest at one per cent., this nation would pay them 
 $30/000,000 interest annually. And this would be quite 
 enough for producers to pay for the mere use of capital. 
 To show conclusively that the present rates of interest 
 are the cause of the accumulation of the wealth in our 
 cities, we will enter at length into a calculation which 
 each can test and examine for himself. ISTo one will dis- 
 pute that in the city of itfew York there are several hun- 
 dred families whose collective wealth is equal to $250,000 
 for each family. For our illustration, however, we will 
 take but one hundred families, and supppose each of them 
 to be worth equal to $250,000 in total, $25,000,000 
 As five or six of our citizens might be pointed out who 
 are, in the aggregate, worth at least double the sum 
 total, this calculation is a moderate one. Suppose these 
 one hundred families to emigrate to some desirable sec- 
 tion of the country, and settle upon two hundred acres 
 of land, so that each family owns two acres. They con- 
 
THE WEALTH OF CITIES. 101 
 
 vert all their property into money, or into bonds and 
 mortgages bearing six per cent, interest, the lowest legal 
 rate of interest in any State of the Union. Each family 
 expends yearly for its support $3,000, or the interest at 
 six per cent, on $50,000. This sum would supply each 
 family with the necessaries and luxuries of life without 
 the performance of labor by any of its members. Be- 
 sides the $50,000 of which they expend the income, each 
 family has $200,000 in the aggregate, $20,000,000 
 loaned at six per cent, interest, the annual income of 
 which would be $1,200,000. The yearly expenditure of 
 $300,000 (the interest on $50,000 for each family) soon 
 collects near them merchants, mechanics, laborers, and 
 others, to supply their wants ; and farmers find here a 
 market for their produce. 
 
 These families and their posterity live without labor, 
 being determined to incur no hazard of business. They 
 intermarry for five generations, thirty years being the 
 average duration of each. Upon marriage, each couple 
 receives $50,000, the income on which, at six per cent., 
 amounting to $3,000 a year, is appropriated to their sup- 
 port. They also receive their average proportion of the 
 principal. They are forbidden to exact a higher rate of 
 interest than six per cent, per annum, payable half-yearly, 
 and are not at liberty to call in the principal so long as 
 the interest upon it is regularly paid. The families con- 
 sist of five persons each, exclusive of servants, amount- 
 ing, in the aggregate, to five hundred individuals. Sup- 
 pose them to increase twenty-five per cent, every twelve 
 and a half years. Each family at the emigration had 
 $200,000 loaned at six per cent, interest, amounting to 
 $12,000 per annum; and, in the aggregate, on the 
 $20,000,000 owned by all, to $1,200,000 per annum. 
 This interest, collected and reloaned half-yearly, will 
 double the principal, $20,000,000, in about eleven and 
 
102 THE WEALTH OF CITIES. 
 
 three-quarter years ; but, to leave time for the collection 
 and reinvestment of the interest, allow it twelve aad a 
 half years to double. The following calculations exhibit 
 the sum which would be owned by the families at the end 
 of five generations of thirty years each, or at the end of 
 one hundred and fifty years. This calculation of the 
 centralization of wealth by interest is no idle theory, but 
 a mathematical demonstration of facts, based upon the 
 lowest rate of interest established by law in any State 
 a much lower rate, too, than the average one at which 
 money is actually loaned. 
 
 The following table exhibits the accumulation at the 
 rate, and under the circumstances, as above : 
 
 TABLE 
 
 OF THE INCREASE AT SIX PER CENT. OF THE WEALTH OF A HUNDRED 
 FAMILIES WORTH $250,000 EACH, DURING A PERIOD OF ONE HUNDRED 
 AND FIFTY TEARS, WITH A DEDUCTION OF THEIR ANNUAL EXPENSES. 
 
 100 families worth $250,000 each $25,000,000 
 
 Yearly expenses of each family, $3,000, or the income 
 
 on $50,000 at six per cent. total for 100 families. . 5,000,000 
 
 Deduct $5,000,000 for expenses, and there are left to 
 
 accumulate 20,000,000 
 
 The interest at six per cent, paid half yearly, and re- 
 loaned, will equal the principal in llf- years ; but allow 
 12 years, and then add 20,000,000 
 
 4 0.000, X>0 
 
 Add 25 per cent, increase to 100 families in 12 year= 
 i. e., 25 families, and deduct $50,000 for the sup- 
 port of each of the 25 1,250,000 
 
 Left to accumulate 38,750,000 
 
 Add 12 years interest, at 6 per cent 38,750,000 
 
 77,500,000 
 
 Add 25 per cent, increase to 125 families i. e., 31 fami- 
 lies, and deduct $50,000 for each of the 31 1,550,000 
 
 heft to accumulate , 75,950,000 
 
THE WEALTH OF CITIES 103 
 
 Left to accumulate (brought forward) $75,950,000 
 
 -Add 12 years' interest at six per cent. ...... 75,950,000 
 
 151,900,000 
 Add 25 per cent, to 156 families i. ., 39 families, and 
 
 deduct |50,000 for each of the 39 $1,950,000 
 
 Left to accumulate 149,950,000 
 
 Add 12 years' interest at 6 per cent 149,960,000 
 
 299,900,000 
 Add 25 per cent, to 195 families i. e., 49 families, and 
 
 deduct $50,000 for each of the 49 2,450,000 
 
 Left to accumulate 297,450,000 
 
 Add 12^ years' interest at 6 per cent 297,450,000 
 
 594,900,000 
 Add 25 per cent, to 244 families t. ., 61 families, and 
 
 deduct $50,000 for each of the 61 3,050,000 
 
 Left to accumulate 591,850,000 
 
 Add 12 J years' interest at six per cent 691,850,000 
 
 1,183,700,000 
 
 Add 25 per cent, to 305 families i. ., 76 families, and 
 deduct $50,000 for each of the 76 3,800,000 
 
 Left to accumulate 1,179,900,000 
 
 Add 12 J years' interest at six per cent 1,179,900,000 
 
 2,359,800,000 
 
 Add 25 per cent, to 381 families i. e., 95 families, and 
 deduct $50,000 for each of the 96 4,750,000 
 
 Left to accumulate 2,355,050,000 
 
 Add 1 2 J years' interest at 6 per cent 2,355,050,000 
 
 4,710,100,000 
 
 Add 25 per cent, to 476 families i. ., 119 families, and 
 deduct $50,000 for each of the 119 5,950,000 
 
 Left to accumulate 4,704,150,000 
 
 Add 12J- years' interest at 6 per cent 4,704,150,000 
 
 9,408,300,000 
 Add 25 per cent, to 695 families i. ., 149 families, and 
 
 deduct $50,000 for each of the 149 7,450,000 
 
 Left to accumulate. f , .. . 9,400,850,000 
 
104 THE WEALTH OF CITIES. 
 
 Left to accumulate (brought forward) $9,400,850,000 
 
 Add 12 years' interest at 6 per cent $9,400,850,000 
 
 18,801,700,000 
 Add 25 per cent, to 744 families L e., 186 families, 
 
 and deduct $50,000 for each of the 186 9,300,000 
 
 Left to accumulate 18,792,400,000 
 
 Add 12 years' interest at 6 per cent 18,792,400,000 
 
 37,584,800,000 
 Add 25 per cent, to 930 families i. ., 233 families, 
 
 and deduct $50,000 for each of the 233 11,650,000 
 
 Left to accumulate ; ; ; 37,573,150,000 
 
 Add 12 years' interest at 6 per cent 37,573,150,000 
 
 75,146,300,000 
 
 Add 25 per cent, to 1,163 families L ., 291 families, 
 and deduct $50,000 for each for the 291 14,550,000 
 
 Left to accumulate . ..$75,131,750,000 
 
 Add the two hundred and ninety-one families to the 
 eleven hundred and sixty-three, and their sum is a thou- 
 sand four hundred and fifty-four, which is the increase 
 of the one hundred families, by the addition of twenty- 
 five per cent, every twelve and a half years. The cal- 
 culation is continued for a hundred and fifty years, or 
 for five generations of thirty years each. The sum of 
 $50,000 is assigned to each family, which, loaned at six 
 per cent., secures to each a yearly income of $3,000. 
 Each family has an income of ten dollars per day for 
 three hundred days in the year. If each family average 
 five individuals, each man, woman and child receives an 
 income of two dollars per day. This is twice as much 
 as a laborer can earn in a day, and the single dollar must 
 support both himself and his family. Besides this yearly 
 income, the people of this nation would owe the fourteen 
 nundred and fifty-four families $75,131,750,000. Suppose 
 this sum to be equally divided among the families, each 
 
THE WEALTH OF CITIES. 105 
 
 would have $51,672,455. The interest upon the sum 
 total, at the rate of six per cent., would amount to more 
 than $4,500,000,000 annually. An immense amount of 
 the products of labor must be yearly sold for money to 
 pay this interest. Is the law which thus accumulates 
 interest or products, a power for actual production ? 
 No the law which exacts this interest does not increase 
 the quantity of money, nor of products ; it simply re- 
 quires that the proceeds of $4,500,000,000 worth of 
 products shall be given over to the fourteen hundred and 
 fifty-four families to satisfy the interest. More than half 
 the present valuation of the whole property of the 
 United States, both real and personal, would be required 
 to pay the interest for one year. And yet these families 
 exact less than our laws permit, for they take but six per 
 cent, interest, and in a number of our States, the legal 
 rate is seven or eight per cent. 
 
 Now let one per cent, be the legal rate of interest ; 
 and suppose the families to loan the twenty millions for 
 the same period of a hundred and fifty years at one per 
 cent., instead of at six per cent., and to collect and reloan 
 the interest half yearly. The people have the same 
 amount of money to use ; and at the expiration of the 
 hundred and fifty years, the sum of the principal and 
 interest does not exceed $90,000,000, while at six pei 
 cent, it amounts to $75,131,750,000. At one per cent., 
 the principal and the interest do not amount to one 
 eight-hundredth part as much as at six per cent., nor does 
 the sum require one eight-hundredth part as much labor 
 to pay it. If the people borrow the money at six per' 
 cent., at the end of six months they give back a portion 
 of the borrowed money to pay the interest. The in- 
 terest is reloaned to them, and thus continually increases 
 their indebtedness. With interest at one per cent., the 
 people would have the same quantity of money, and at 
 the end of six months would give back a half per cent. 
 
106 THE WEALTH OF CITIES. 
 
 to pay the interest, and the families would reloan the half 
 per cent, to the people, instead of reloaning the three per 
 cent. A high rate of interest cannot increase the quan- 
 tity of money, but it increases the indebtedness of the 
 people. 
 
 If interest were at one per cent., each of the one hun- 
 dred families would have but $2,500 income on its 
 whole capital ; and if they should continue to expend 
 $3,000 apiece yearly, each family, in order not to encroach 
 on its original capital, would have to produce, by its 
 labor, $500 worth of products yearly, for its own use or 
 for sale, instead of being able to lay up $12,000 yearly, 
 without labor. The producing classes could never be 
 oppressed by the capital of these families. But with 
 interest at six per cent., in less than a century and a half, 
 the whole nation would be subject to their control, be- 
 sides being obliged to support them and their posterity 
 in idleness during the hundred and fifty years.* 
 
 * It is not reasonable to suppose that man's morals will be pure so 
 long as we make laws which deprive him of his physical rights. A 
 standard that will deprive producers of what they justly earn, and 
 bestow on non-producers wh&t does not belong to them, cannot fail 
 to corrupt the morals of both parties. No ingenuity in the invention 
 of machinery, and no physical force or combination of labor, has 
 power to change this wrong ; because the evil is not in the produc- 
 tion, but in the wrong distribution, which proceeds from the invisible 
 power or law that governs it. For all laws are spiritual or mental 
 powers, which operate upon and affect visible things ; and their effects 
 can only be altered by altering the spiritual or mental law. This 
 power of money is not the product of labor, nor even a visible thing, 
 more than the attractive power of the magnet is visible. Money, 
 whether of gold, silver or paper, is visible, but the power of interest 
 is invisible, and yet gathers to itself things visible as metals are 
 attracted to a magnet. 
 
INTEREST RECEIVED IN NEV YORK. 107 
 
 SECTION III. 
 
 INTEREST RECEIVED BY THE CITIZENS OP THE CITY OF 
 NEW YORK ON LOANS TO THE COUNTRY. 
 
 Doubtless the city of New York has at this time more 
 than $50,000,000, and probably more than $100,000,000 
 lent in various ways to the country at six or seven per 
 cent, interest. Some part of it is invested in State bonds, 
 bank and railroad stocks, stocks of manufacturing compa- 
 nies, etc. ; and some lent on bond and mortgage, the divi- 
 dends or interest on all of which must be paid in New 
 York. Estimate this sum at only $25,000,000, and allow 
 it to draw seven per cent, interest. Suppose the citizens 
 to support themselves independently of the income from 
 this loan, and allow it, by collecting and lending the 
 interest half yearly, to accumulate for a century. It 
 matters not in what way the capital may be lent, pro- 
 ducers are compelled to add all the interest from the 
 proceeds of their products. In ten years and one month 
 the $25,000,000, will increase to $50,000,000 ; in twenty 
 years and two months, to $100,000,000 ; in thirty years 
 and three months, to $200,000,000 ; in forty years and 
 four months, to $400,000,000 ; in fifty years and five 
 months, to $800,000,000 ; in sixty years and six months, 
 to $1,600,000,000 ; in seventy years and seven months, to 
 $3,200,000,000 ; in eighty years .and eight months, to 
 $6,400,000,000 ; in ninety years and nine months, to 
 $12,800,000,000; and, in one hundred years and ten 
 months, to $25,600,000,000. This is as certain as any 
 other mathematical calculation, and nothing can prevent 
 the accumulation of enormous sums in the hands of a few 
 capitalists in this city, unless it be the inability of the 
 inhabitants of the country to pay the interest on their 
 loans. This rate of interest compels farmers to give the 
 
1.08 INTEREST* RECEIVED IN NEW YOR& 
 
 value of one farm every ten years for the use of another ; 
 the tenant of each manufactory to give the value of 
 another manufactory, once in the same period, for the 
 use of the one occupied ; and the passengers and trans- 
 porters upon each railroad and canal, to pay a sufficient 
 fare or freight to construct, at the expiration of that 
 period, another railroad or canal. It is manifest that the 
 producing classes are unable to fulfil such requirements. 
 Each additional railroad and canal must be added to the 
 original one by the producing classes, and is given to the 
 capitalist without labor or production on his part. He 
 gains them by the legal power of money to accumulate, 
 which is equally great, whether the money be lent on 
 interest or invested in property. If farmers, mvmfactur- 
 ers, mechanics and merchants, were compelled to pay only 
 a just rate of interest, they could devote the labor now 
 expended in the payment of high rates to non-producers, 
 to the supply of their own wants and of general comforts 
 and conveniences. 
 
 Large cities accumulate the wealth of nations without 
 earning it. According to the State Register, in 1845, 
 the city of New York contained a population of 371,233, 
 and the State of New York contained a population of 
 2,604,495. The population of the city was less than one- 
 seventh part that of the State. And yet the assessed 
 valuation of the real and personal property of the city at 
 that period was $239,995,517, while all the other property 
 in the State was valued at only $365,650,574. This esti- 
 mate does not include Brooklyn and Williamsburgh, 
 which are in fact parts of the city of New York, as they 
 have grown up and are sustained by its business. Tak- 
 ing the city of New York alone, it appears that it owns 
 more than two-fifths of the assessed property in the State, 
 while it contains less than one-seventh of the State popu- 
 lation. But it is doubtless true that its citizens are worth 
 more than all the other inhabitants of the State. They 
 
ON LOANS TO THE COUNTBY. 109 
 
 own large tracts of land in different parts of the State, 
 and these lands are taxed in the counties in which they 
 are located. If these taxes were estimated as being paid 
 in the city, where the property is owned, and were taken 
 from the taxes of the country, the transfer of taxes on 
 the amount of $62,827,530, would make the valuation of. 
 the property of the city equal one-half the property of the 
 whole State. The citizens of the city of New York own 
 large tracts of land in other States, which are taxed in 
 those States. They have also a large amount of money 
 lent to the country on bond and mortgage, and large 
 amounts invested in United States, State, and bank 
 stocks, and in stocks of manufacturing and railroad com- 
 panies, etc., in various States, all of which property, if 
 taxed, is estimated and taxed as belonging to the country. 
 There are doubtless many loans of money and much per- 
 sonal property, which, although lent and used in the city, 
 escape any taxation. The people of other parts of the 
 State own a considerable amount of property, stocks, etc., 
 in the city ; but the amount owned by them in the city 
 is very small compared with the amount owned by the 
 citizens of the city in the country probably not one- 
 twentieth. It is reasonable to conclude that the inhabi- 
 tants of the city and county of New York own as much, 
 or even more property, than all the people in all the othet 
 fifty-eight counties in the State.* Does any one suppose 
 
 * If, to show the relative gain in wealth of the city and the State, 
 from 1845 to 1859, we include with the county of New York the neigh- 
 boring counties of Kings and Westchester which are, in fact, suburbs 
 of the city of New York we have the following result: 
 Assessed value of real and personal property. 
 
 COUNTT. 
 
 New York, 
 
 1845. 
 . $289,995,517 
 
 1859. 
 
 $552,008,742 
 
 Kings, 
 Westchester, . 
 
 Other Counties, 
 
 80,750,472 
 10,036,817 
 
 280,782,306 
 824.863,789 
 
 106,914,629 
 40,487,671 
 
 699,411,042 
 
 716,879,795 
 
 Total State Valuation, 
 
 $605,646,095 
 
 $1,416,290,837 
 
110 INTEREST RECEIVED IN NEW YORK. 
 
 that the citizens of this city earn more by their labor 
 than all the other inhabitants of the State ? Do they do 
 more toward supplying the people of the State with food, 
 clothing, building materials, etc., than the people of the 
 State do toward supplying them with these things ? If 
 they do not, why should they possess and continue to 
 accumulate so great a proportion of the wealth? 
 
 The means of arriving at the truth in relation to this, 
 would be to take for a series of years an exact account 
 of all the products which are sent out of the city, and 
 see if the products that leave the city are increased 
 above, or diminished below the products that are sent 
 from the country into the city. If the money be taken 
 into account, the interest and dividends on both sides 
 should be excluded. Allowance should be made for the 
 labor performed in exchanging goods, in shipments, etc., 
 in the city, equal to the allowance for the same amount of 
 labor on a farm, so that the population of the city should 
 be fairly compensated for their labor. If it be found that 
 tne 371,233 citizens of the city have not performed one-half 
 the labor for the 2,604,495 inhabitants of the State, and 
 yet have obtained more than one-half the whole property, 
 it is evident the distribution has been unjust. Our pro- 
 ducers are continually endeavoring to overcome their 
 poverty by their industry, but while our present rates of 
 interest prevail, capital will continue to take their surplus 
 earnings, and leave them poor. 
 
 It appears that, in 1845, these three counties owned 46$- per cent, of 
 the wealth in the State, and, in 1859, they owned 49^ per cent. But, 
 unquestionably, their actual proportion of the wealth was far greater 
 than is shown in the statistics ; for their citizens own very large 
 amounts of real estate and other property beyond the limits of these 
 counties. The property, too, of many persons whose wealth was 
 acquired in the city, and who have removed their residences beyond 
 the counties named, might properly be included in this calculation as 
 belonging to the city. [M. K. P.] 
 
INCREASE OF STATE VALUATIONS. 
 
 Ill 
 
 SECTION IV. 
 
 THE PER CENTAGE ACTUAL INCREASE OP THE VALUE OP 
 THE PROPERTY OF THE STATES OP NEW YORK AND 
 MASSACHUSETTS, COMPARED WITH THE PER CENTAGE 
 LEGAL INCREASE ON THE PROPERTY OF THESE STATES 
 FOR THE SAME PERIODSS. 
 
 The State of New York is deemed very prosperous, 
 and thought to be rapidly increasing in wealth by its in- 
 dustry and enterprise. The following table, taken from 
 the New York State Register for 1846, will exhibit the 
 actual gain of the people of the State for ten years, viz, 
 from 1835 to 1845, according to the assessed value of the 
 property : 
 
 TABLE 
 
 OF REAL AND PERSONAL ESTATE IN THE STATE OP NEW YORK, AS 
 TAKEN FROM THE STATE REGISTER FOR 1846. 
 
 Real estate. Personal estate. 
 
 1835 $402166,094 $128,526,103 
 
 1836 539,756,874 132,615,613 
 
 1837.... 498,430,054 122,021,033 
 
 1838 502,864,006 124,680,778 
 
 1839 519,058,782 131,602,988 
 
 1840 517,723,170 121,447,830 
 
 1841 531,987,886 123,311,644 
 
 1842 504,254,029 116,595,233 
 
 1848 476,999,430 118,602,064 
 
 1844 480,027,609 119,612,343 
 
 1845 486,490,121 115,988,895 
 
 Corrected aggregate 
 valuation. 
 
 $530,653,524 
 
 605,646,095 
 $74,992,571 
 
 11 
 
INCREASE OF STATE VALUATIONS 
 
 The table shows that in 1835, the whole valuation of 
 the taxed real and personal estate in the State of New 
 York, was $530,653,524 ; and that in 1845, it had increased 
 to $605,646,095. In the ten years, the people of the 
 State added to their wealth $74,992,571 equal to 
 $7,499,257 a year, or a fraction over one and four-tenths 
 per cent, a year on the capital employed. This calcula- 
 tion is made without any payment of interest until the 
 expiration of the ten years. 
 
 Taking the above as a fair valuation of the property, 
 the people of the State added only about one and four- 
 tenths per cent, per annum to their capital, and the legal 
 interest of the State is seven per cent., and is usually paid 
 oftener than yearly. If we had rented the State of a 
 foreign nation, and at the end of every six months had 
 taken up our obligations and added in the six months' 
 interest, at the end of the ten years we should have 
 added to the principal over $524,000,000. We should 
 have owed the foreign nation, in interest or rent, a sum 
 seven times greater than all that we earned above our own 
 support. If we earned only $74,992,571 more than our 
 own maintenance, how could we return the property to its 
 owners, and pay them $524,000,000 of rent, or seven 
 times more than our labor would have produced ? Yet 
 the laws of the State, fixing the interest at seven per 
 cent., make a requisition equal to this upon laborers in 
 favor of capital. 
 
COMPAKED WITH LEGAL INTEREST. 113 
 
 The average of the yearly loans of the banks in the State 
 of New York, according to their own reports, amounts 
 
 to $70,000,000 
 
 According to the annual report, the debt of the State on 
 
 the 30th September, 1846, was 24,734,080 
 
 Debts of the principal cities in the State in 1845, as taken 
 from the State Register : 
 
 City of New York $14,476,986 
 
 " Brooklyn 645,000 
 
 Albany 500,000 
 
 " Troy 772,000 
 
 " Rochester 108,000 
 
 " Buffalo 57,131 
 
 16,459,117 
 
 $111,193,197 
 
 The interest on this sum at 7 per cent, per annum 7,783,523 
 
 Yearly average of the surplus earnings of the people of 
 the State, according to the assessed valuation of the 
 property, from 1835 to 1845 7,499,257 
 
 $284,266 
 
 It appears that the interest on these debts alone, at 
 seven per cent, would amount to $284,266 more than the 
 surplus earnings of all the people in the State, and this 
 too without compounding the interest. It must be borne 
 in mind, that this debt of $111,193,197 is contracted for 
 money borrowed by the people, or by the State, and the 
 interest paid upon it goes into the hands of a few capital- 
 ists, who furnish the capital for banking, and lend the 
 money to the State and its incorporated cities. All the 
 debts contracted by the sale of lands, agricultural pro- 
 ducts, and merchandise all the money lent by individ- 
 uals on bond and mortgage, and all business debts, bear- 
 ing interest, are additional to the reported debts. The 
 debts yearly contracted in the State by sales of land 
 merchandise etc., amount to several hundred millions of 
 dollars, and two, three, or four hundred millions bear 
 interest. Must not the payment of so great an amount 
 of interest, by the producers, concentrate the wealth of 
 
114 INCREASE OF STATE VALUATIONS 
 
 the State in the hands of a few capitalists, and continue 
 more and more to oppress the producers ? We might 
 as well expect by labor to dam up the mouths of our 
 rivers, so that they could not empty into the ocean, as to 
 expect by labor, to contend successfully against the 
 power of capital, even at two and a half per cent, interest, 
 and much less against six or seven per cent. An inter- 
 est on capital of even two and a half per cent, per annum 
 would as certainly break down productive industry, and 
 accumulate the wealth in favor of capital, as the rivers 
 would certainly break down the dams, and force their 
 waters and the obstructing dams into the ocean. 
 
 According to the assessed valuation of the property of 
 the State of New York, the increase of its wealth from 
 1835 to 1845 was about one and four-tenths per cent, per 
 annum, without compounding the interest. This was a 
 period of only ten years. It is probable that, in 1835, 
 property was estimated higher in proportion to its actual 
 worth than in 1845. This statement, then, would not be 
 an exactly fair criterion of the actual increase of wealth 
 in the State. During that period, according to it, we 
 gained, beside our own support, only a fraction over one 
 per cent, a year by all our labor. If this was a correct 
 estimate, the per centage we gained in wealth was only 
 three-fourths as great as our per centage increase in pop- 
 ulation, for, during the ten years, our population increased 
 from 2,174,517 to 2,604,495, or a fraction less than two 
 per cent, a year. This calculation would make the aggre- 
 gate wealth of the State in proportion to its population 
 less in 1845 than it was in 1&35 ; and this, we presume, 
 was not the fact. Still there is little doubt that at least 
 one-half the people of the State were poorer in 1845, and 
 are now poorer, than they were in 1835. The increased 
 wealth is accumulated in fewer hands. More and more 
 of the earnings of the producing classes are required to 
 pay the yearly rent, or interest, on the yearly increasing 
 capital. If the men who are now rich had in 1835 an in 
 
COMPARED WITH LEGAL INTEREST. 115 
 
 some that abundantly supplied their wants, an increase of 
 wealth has not added to their happiness ; and the increase 
 has been taken from those who toil, and yet are suffering 
 for the necessaries of life. Without improving the con- 
 dition of the rich, we are continually doing a wrong to a 
 arge class of industrious and worthy citizens.* 
 
 * In 1859, the valuation of the real and personal property in the 
 State of New York had increased to $1,416,290,837, showing an 
 increase in fourteen years of $810,644,742, or less^ than seven per 
 cent, added annually. But property was probably estimated lower in 
 proportion to its value in 1845 than it was in 1835 or 1859, and a 
 calculation embracing the twenty-four years, would give a truer 
 criterion of the actual increase of wealth. The property of the 
 State in 1835 was valued at $530,653,524, and the increase in twenty- 
 four years was $885,637,313, or for the whole period an average of 
 not quite seven per cent- per annum ; and, added yearly, of about 
 four per cent, per annum. At seven per cent., with the interest com- 
 pounded yearly, the State would have added to its wealth during the 
 twenty-four years, over $2,100,000,000, that is, over $1,200,000,000 
 more than was actually added to the wealth of the State by the labor 
 of all its inhabitants. The legal rate of interest demanded from 
 laborers over $1,200,000,000 more than they actually earned. Of 
 course, as a body, they could have had only a bare subsistence, and 
 large numbers of them must have been reduced to the condition of 
 paupers. The following extracts are taken from the Report of the 
 New York Association for improving the Condition of the Poor, for 
 the year 1859. James Brown, President; James Boorman, James 
 Lenox, Horatio Allen, A. R. Wetmore, John C. Green, Vice Presi- 
 dents. 
 
 " It was shown in the Thirteenth Annual Report of this Association, 
 that, according to the ratios of population in the two countries 
 there were about two paupers in the wealthy and prosperous State of 
 New York, to one in Ireland, whose very name has long been a syn- 
 onym for poverty and wretchedness. The statement appeared so 
 improbable, that it was received with a general expression of 
 incredulity. Since that period, pauperism appears to liave augmented 
 more rapidly in our own State than it has decreased in Ireland. If 
 any reliance, therefore, is to be placed in Governmental Reports, that 
 unwelcome fact, so humiliating to our pride, having been confirmed 
 by the statistics of each succeeding year, can, with no show of rea- 
 
116 INCREASE OF STATE VALUATIONS 
 
 An estimate of the increase of wealth in the State oi 
 Massachusetts, for fifty years, is contained in an article in 
 the May number, for 1847, of that deservedly celebrated 
 
 eon, be longer denied or evaded. The Annual Report of the 
 Secretary of the State of New York, to the Legislature, of the 
 paupers relieved in the several counties, at the public expense, during 
 the past year, affords a basis for a comparison of our own pauperism 
 with that in Great Britain and Ireland, for the same period, of whicl: 
 the following is the result : 
 
 Population. Paupers. 
 
 England and Wales 19,046,000 885,000 
 
 Scotland .8,035,000 115,218 
 
 Ireland 6,500,000 56,910 
 
 New York State 8,500,000 261,155 
 
 " In other words, the pauperism of England and Wales was in th<> 
 ratio of four and six-tenths per cent, of the whole population; in 
 Scotland, three and nine-tenths per cent. ; in Ireland, about nine-tenths 
 of one per cent.; while in the great State of New York, which is fore- 
 most in population, enterprise and resources, the ratio is seven and 
 four-tenths per cent. Making, therefore, every reasonable allowance 
 for hypothetical inaccuracies in our State Statistics for the figures 
 assumed are less than the returns would justify and we are con- 
 fronted with the appalling fact, that the pauperism in this State is 
 some five per cent, in advance of that in Ireland ; that is to say, 
 there are, according to the ratios of population, five paupers in this 
 State to one in that country. It is unnecessary to extend the con- 
 trast, or it might be farther shown, that the legal provision for the 
 relief of the New York paupers is greater per capita, than the govern- 
 mental allowance in Ireland, but proportionately less than the poor 
 rates both of England arid Scotland. 
 
 " Let it not be supposed that this dread phenomenon of pauperism 
 has come suddenly upon us. Statistics, on the contrary, show that it 
 has reached its alarming prevalence by a steady, gradual growth. 
 The census of the State from 1831 to 1851, and the pauper statistics 
 for the same period, exhibit the following results : 
 
 Increase of population in 20 years 61 per cent. 
 
 Increase of pauperism from annual tables during the 
 
 same period 706 per cent. 
 
 ** ' In 1831, there was one pauper to every 193 persons : in 1841, 
 
COMPARED WITH LEGAL INTEREST. 117 
 
 * 
 
 periodical, Hunt's Merchants' Magazine. A few extracts 
 are made to show the difference between the amount of 
 property produced by the labor of Massachusetts during 
 
 there was one to every 39 persons; in 1861, there was one to every 
 24 persons; and this year (1856), there is one to every 17 persons. 
 Let the same ratio continue 16 years longer, and there will be one 
 pauper to every five persons ; that is, every five persons in the State 
 must support one pauper. Twenty years, reaching from January, 
 1831, to 1851, furnish as just a scale as can be obtained, by which to 
 gauge the succeeding 20 years. Indeed, the five years since 1851 
 show a still larger increase in the ratio of pauperism, so that at the 
 end of 15 years more, the 20 years from 1851 to 1871 would exhibit 
 even a sadder result than the number of years between 1831 and 
 1851. It is submitted, whether we should act from a blind confidence 
 in the perpetuity of our institutions, or from statistics gathered from 
 the steady action of. a quarter of a century, on our history.' 
 
 "Since 1856, when the above statement in substance was first pub- 
 lished, pauperism has increased in the State above the ratio then an- 
 ticipated, so that the present proportion to the population is one 
 pauper to about 13i persons. Is it not astonishing that such facts 
 are unheeded ? It is idle to reason against facts, for if there is any 
 reliability in statistics, the facts themselves stand boldly in evidence. 
 
 "Ireland and other foreign countries have doubtless been benefited 
 at our expense, by the deportation of their poor, and to them we 
 owe the bulk of our pauperism 
 
 "But, in conceding this, let not the momentous fact be overlooked, 
 that pauperism, so long regarded as an exotic, is actually germinating 
 in our own soil, with baneful luxuriance. The humilating proof of 
 this is placed beyond dispute by official statistics. Of the 130,150 
 paupers relieved in this city, in 1858, 50,251, or 38 per cent., were 
 natives ; and that this result was not attributable to the demoralizing 
 influencies of city life, is shown by the fact that, of the 261,155 
 State paupers, 104,744, or 41 per cent., of the whole number, were 
 natives of the United States. It is evident, therefore, that exclusive 
 of emigration, the ratio of our native-born paupers to the population 
 of our city and State is far beyond that of England and more than 
 double that of Ireland 
 
 " It is the certain tendency of every financial revulsion, to throw 
 multitudes of the self-supporting, industrious classes down to a lower 
 level than they before occupied. Nay, in the ordinary animal opera- 
 
1* 5 INCREASE OF STATE VALUATIONS 
 
 
 
 fifty years, and the amount which would have accumu- 
 lated upon the capital employed during that period at six 
 per cent, interest. 
 
 " It is the object of this article to exhibit the progress 
 of wealth in Massachusetts during the fifty years, from 
 1790 to 1840, as deduced from the six State valuations, 
 taken at intervals of ten years each. These valuations 
 have the legislative sanction of the General Court, and 
 are the bases of apportionment of all State taxation for 
 the ten years following. They are prepared from the 
 returns furnished by the assessors of the several towns 
 and districts, and are intended to embrace all the taxa- 
 ble property of the Commonwealth. They may be re- 
 lied upon as sufficiently correct for the purposes of 
 comparison, or of showing the progress of wealth during 
 these fifty years ; at least they furnish the nearest approx- 
 imation we have to the true amount of wealth in the 
 State." 
 
 The assessors' valuation of the property in the State of 
 
 tions of labor, as affected by the seasons, aiid by the fluctuations of 
 supply and demand common in the most prosperous times, every 
 winter is full of perils to thousands of the respectable poor. Such 
 being the laws of labor, what schemes of economical science will 
 prevent their operation ? 
 
 *'But the subject presents itself in another aspect. The times are 
 always hard with large families, whose miserably insufficient wages 
 just keep them above starvation. By wonderful energy and manage- 
 ment, they contrive to live on, unaided, the greater part of the year. 
 But let them be overtaken with sickness, or by the usual contractions 
 of labor during the winter, which takes away their slender pittance, 
 and what is there between them and starvation ? They have no 
 work, no savings to fall back upon, and their children and themselves 
 are perishing with cold, and hunger, and nakedness. It is not in 
 human nature to endure such an ordeal, unharmed, especially when 
 driven by stern necessity to consort with the outcast, and to be de- 
 graded by public relief. Yet such, alas ! is often the condition of 
 many of the deserving poor." [M. K. P.] 
 
COMPARED WITH LKOAL INTEREST. 119 
 
 Massachusetts in 1790, was $44,024,349, and in 1840, it 
 had increased to $299,880,388. The increase of wealth 
 in the State during fifty years was $255,855,989. In 
 Massachusetts the legal rate of interest is six per cent 
 per annum, and the value of property is commonly esti- 
 mated by the per cuitage income for which it can be 
 rented. If a house and lot, or a store and lot, will rent 
 for $000 per annum, besides the taxes and insurance, the 
 property is valued at $10,000, for the income from it is 
 equal to interest at six per cent, per annum on $10,000. 
 
 In Massachusetts, the banks are allowed to discount 
 paper at six per cent. In making loans, they take the 
 interest or discount from the notes for the time they have 
 to run. Take the value of the property in 1790, say 
 $44,024,349, and suppose it to have been loaned at six 
 per cent, per annum, on notes having six months to run. 
 In fifty years the interest on this sum would have 
 amounted to $885,524,246. Add the principal i. e., 
 $44,024,349, and we have a sum of $929,548,595, The 
 actual increase of wealth in the State during the fifty 
 years, was but $255,855,989. Add to this the principal 
 or property of the State in 1790 i. e., $44,024,349, and 
 the entire wealth of the State amounts to $299,880,338 ; 
 or not one-third as much as the accumulation on the same 
 capital would have been in fifty years at six per cent, in- 
 terest per annum. If, in 1790, the people of Massachu- 
 setts had rented their property of a foreign nation, and 
 agreed to pay interest on it half yearly at the rate of six 
 per cent, per annum, they would have been bound to pay 
 in the fifty years, about three and a half times more than 
 they earned during that period over and above their 
 living. The results of the establishment of this rate of 
 interest in the State, are manifest in the accumulation of 
 wealth in the hands of the few, and in the proportionate 
 destitution of the many. 
 
 According to a pamphlet containing a list of the 
 
120 INCREASE OF STATK VALUATIONS. 
 
 wealthy men of Boston, and an estimate of the value oi 
 their property, there are 224 individuals who are worth. 
 in the aggregate, $71,855,000, and upon an average, 
 $321,781 each. In this pamphlet no estimate is made of 
 any individual's property that is supposed to amount to 
 less than $100,000. If we take the wealthy men in all 
 the other towns and counties in the State, and suppose 
 that there are 3,000 other individuals who are worth 
 only $30,000 each, their aggregate wealth would amount 
 to $90,000,000. Add this sum to the $71,855,000 owned 
 by the 224 men, and we have $161,855,000, or consider- 
 ably more than half the value of all the property of the 
 State. Such estimates are liable to be more or less in- 
 correct; but any one who will make an estimate of the 
 wealth of the town or village in which he resides, will 
 find that a very small proportion of the inhabitants are 
 worth more than all the rest. This is still more true of 
 large cities than it is of towns and villages. 
 
 If the estimate of the wealth of the 3,224 wealthy men 
 in the State of Massachusetts be correct, these men are 
 worth more than all the other inhabitants of the State. 
 Allowing the families of the 3,224 men to average five 
 persons each, they would constitute a population of 
 16,120 individuals. In 1840, the State contained a popu- 
 lation of 737,700. The 16,120 individuals -would not be 
 two and one-fifth per cent, of the population, and yet 
 they would own more than half the wealth of the State. 
 If this estimate even approach the truth, it shows an 
 immense disproportion of wealth for the labor performed 
 by its owners ; for it is impossible that they, or their 
 ancestors, whatever may have been their skill or industry, 
 can have performed the labor and made the improve- 
 ments which constitute this wealth. The interest on 
 money loaned, and the rent on property leased, are the 
 only means by which they could have accumulated it. 
 $44,024,349 loaned on six months' paper at six per cent. 
 
NATIONAL AND STATIC DEBTS. 121 
 
 interest per annum, as interest is taken by banks, would 
 increase in fifty years to twenty-one times its original 
 amount. This increase would accrue to the lenders of 
 the money, by merely exchanging their money, or bank- 
 notes for the notes of individuals, and collecting the 
 interest. 
 
 If the rate of interest on money in Massachusetts 
 were at one per cent, per annum, instead of at six per 
 cent., and the $44,024,349 were loaned on six months* 
 paper at one per cent, interest in advance, in fifty years 
 the money would accumulate $28,879,973. Add the 
 principal i. e., $44,024,349 and the sum would be 
 $72,904,322, instead of $929,548,595, the accumulation at 
 six per cent. 
 
 SECTION Y. 
 
 INTEREST ON NATIONAL AND STATE DEBTS. 
 
 Interest on money at six per cent, per annum, payable 
 half-yearly, will double the principal in eleven years, 
 eight months, and twenty days; but, for convenience, 
 we will call it twelve years. One thousand dollars lent 
 at six per cent., in twelve years, will accumulate to 
 $2,000 ; in twenty-four years, to $4,000 ; in thirty-six 
 years, to $8,000 ; in forty-eight years, to $16,000 ; in 
 sixty years, to $32,000 ; in seventy-two years, to $64,000 ; 
 in eighty-four years, to $128,000 ; in ninety-six years, to 
 $256,000 ; in a hundred and eight years, to $512,000 ; in 
 one hundred and twenty years, to $1,024,000. Multiply 
 this sum by 1,024, and it will give the accumulation for 
 one hundred and twenty years more; $1,024,000X1,024 
 =$1,048,576,000. Multiply this product by 1,024, and 
 we shall have the accumulation during the next one hun- 
 dred and twenty years, or for a period of three hundred 
 
122 INTEREST ON NATIONAL 
 
 and sixty years $1,048,576,000X1,024 =-$1,073,741, 
 824,000. 
 
 A rate of interest on money at one per cent., payable 
 half-yearly, will double the principal in about sixty-nine 
 and a half years ; but, for convenience, we will call it 
 seventy years. One thousand dollars lent at one per 
 cent., in seventy years will accumulate to $2,000 ; in a 
 hundred and forty years, to $4,000 ; in two hundred and 
 ten years, to $8,000 ; in two hundred .and eighty years, 
 to $16,000 ; in three hundred and fifty years, to $32,000": 
 or in three hundred and sixty years to, say, $37,574. 
 
 Deduct $37,574 from the accumulation on $1,000 at 
 six per cent., during the three hundred and sixty years 
 i. e., $37,574 from $1,073,741,824,000, and the remain- 
 der is $1,073,741,786,426 ; which sum, a rate of interest 
 at six per cent, on $1,000 will accumulate over and above 
 the sum accumulated by a rate of interest of one per cent. 
 on $1000 during a period of three hundred and sixty 
 years. One dollar loaned at six per cent, per annum, the 
 interest collected and reloaned half-yearly for a period of 
 three hundred and sixty years, will accumulate the sura 
 of $1,073,741,824 ; while the same dollar loaned at one 
 per cent.,' and the interest collected and reloaned in the 
 same manner for the same period, will accumulate little 
 more than $37. One dollar loaned at six per cent, inter- 
 est per annum for a period of three hundred and sixty 
 years, would accumulate more than the assessed value of 
 the whole State ofNe\v York. The legal interest in the 
 State of New York is seven per cent., and one dollar 
 loaned at this rate for three hundred and sixty years, 
 would accumulate a greater sum than the valuation of 
 the whole United States. 
 
 Suppose a foreign nation should lend to the government, 
 of the United States $100,000 at seven per cent., on con- 
 dition that our government should give her bonds halt 
 yearly for the payment of the interest, and the sum should 
 
AND STATIC DKBT8. 123 
 
 accumulate for a term of three hundred and sixty years. 
 However prosperous our people might be, at the expira 
 tion of the period the whole property of the nation would 
 not pay the debt. At seven per cent, interest, the debt 
 would double in about ten years. In three hundred and 
 sixty years, $100,000 loaned at seven per cent, interest 
 per annum would amount to $6,97 1,947,6 73,600,000 ; a 
 much larger sum than the valuation of the property of the 
 whole world. These calculations make it evident that six 
 and seven per cent, interest cannot and ought not to be 
 paid by any nation. 
 
 We will make a calculation of interest at three pei 
 cent, per annum, paid and reloaned half-yearly, as in the 
 former calculations. If the United States shomd borrow 
 from England $100,000 at three percent, interest, take 
 up her bonds every six months, and give new bonds, 
 adding in. the interest, the debt would be doubled in 
 about twenty-three and a half years. But allow it to 
 double in twenty-four years, and the $100,000 would accu- 
 mulate in three hundred and sixty years, to $3,276,800,000. 
 The annual interest on this sum at 'three per cent, would 
 be $98,304,000. ^The yearly payment of this sum of in- 
 terest would be caused by merely borrowing $100,000 
 for a period of three hundred and sixty years at three 
 per cent, per annum, adding the interest every six 
 months. This enormous debt would be occasioned by 
 the accumulative power of interest, which it requires the 
 products of labor to satisfy and pay. 
 
 Suppose, when Virginia was settled in 1607, England 
 had sold to the first settlers the whole of the United 
 States for $1,000, and had taken a mortgage for this sum 
 covering the whole property, but instead of paying the 
 interest yearly at seven per cent, the settlers had agreed 
 to take up their bonds at the end of every six months, 
 and add in the interest. Allow the $1,000 and the 
 accruing interest to remain outstanding until 1860, and 
 2 
 
124: INTEREST ON NATIONAL 
 
 then become due. Although our prosperity has far 
 surpassed that of any other nation, yet our property of 
 every description would not pay the debt. Interest at 
 seven pei 1 cent, doubles the principal in ten years and one 
 month. In one hundred years and ten months the debt 
 would have amounted to $1,024, 000 ; and in two hundred 
 and one years and eight months, to $1,048,576,000. Add 
 fifty years and five months to 1859, and the sum would 
 amount to $33,554,432,000. All the interest which would 
 have accumulated upon the $1,000 would not have in 
 creased the quantity of money or the property of the nation. 
 All the increase of the value of the property would have 
 been ad'ded by the labor of the people : but all their sur- 
 plus earnings have not equalled the legal accumulation at 
 seven per cent, interest on $1,000 during this period. 
 
 The southern and western States depend upon the 
 yearly products of their labor for their wealth ; they are 
 greatly impoverished by the amount of interest that they 
 are compelled to pay to our eastern and northern cities 
 for the use of money. A very large amount of the capi- 
 tal stocks of western and southern banks, and a large 
 amount of western and southern State%bonds, are owned 
 by capitalists in the northern cities and by foreigners. 
 The interest on these is constantly transferring the earn- 
 ings of the people of these States to a few capitalists in the 
 large cities and in foreign nations. All this would be 
 avoided by the establishment of proper monetary laws by 
 our own government. The government ought to furnish 
 money, by making a representative of the property of 
 applicants in their own States, and no State should be 
 compelled to pay to other States or nations millions of 
 dollars' worth of products yearly for the use of money to 
 represent the value of its own property. For if there be 
 property in any State or country, there is a founda- 
 tion on which to establish a plenty of good money to 
 repiesent its value ; but if there be no property there 
 
AND STATE DKBTS. 125 
 
 will be no inhabitants ; and, of course, no use for 
 money. 
 
 Money lias been instituted with such overwhelming 
 power, that it is almost universally understood to be the 
 actual capital, and the property and labor of a nation 
 only representatives of the value of money. The news- 
 papers and periodicals of the day consider capital abun- 
 dant when money is plenty, and lament the want of capi- 
 tal when money is scarce. New States legalize high 
 rates of interest to induce capital, that is, money, to come 
 into them for investment. But the money is not capital, 
 for if the real capital did not first exist in these States in 
 sufficient amount to secure the money it would never go 
 into them. There could be no use for money in any part 
 of the world unless the capital first existed ; for there 
 would be nothing to buy, and the money itself could 
 afford no means of support, and would therefore be 
 entirely useless. But although a new State may have a 
 large amount of capital and improvements, the inhabitants 
 cannot exchange their property without money : it is iin 
 possible for the people to make their exchanges by barter, 
 and no States take the products of labor for taxes : all 
 debts are payable in money. The people of every State 
 must have money for the transaction of business, yet 
 money is not their capital, it only represents the value of 
 their capital. Landed property in any new State that is 
 competent to secure permanently a loan of $1,000, made 
 by a citizen of another State, and to secure the payment 
 of the interest yearly, is just as competent to secure per- 
 manently a like sum of paper money, if it were created 
 by the Government on purpose to make this loan. Where 
 actual capital exists, it would be as easy, under true 
 monetary laws, to make all the money necessary justly 
 to represent and exchange its value, as it is to furnish 
 measures to determine the quantity of products ; and 
 there would be no more necessity for this nation to 
 depend upon England, or upon any other foreign couii- 
 
126 INCREASE OF PROPERTY BY LABOR 
 
 try, to furnish us with money to represent the value of 
 our own capital, than there is for sending to the Czar of 
 Russia for some of his nobles to govern us. 
 
 SECTION VI. 
 
 NO ACCUMULATION OF PROPERTY BY LABOR EQUAL TO THE 
 ACCUMULATION BY THE LOAN OF MONEY AT SEVEN 
 PER CENT. INTEREST. 
 
 Although the business of a nation be conducted in 
 good faith, and all contracts be fulfilled according to law, 
 and no scarcity of money be induced, yet a legal rate of 
 interest of seven per cent, per annum, will inevitably con- 
 centrate the wealth in a few hands. 
 
 To show that interest at seven per cent, will accumu- 
 late property far more rapidly than it can be earned by 
 labor, suppose a nation of one thousand individuals. We 
 will use this miniature nation in illustration, because the 
 operation of the laws will be more readily seen upon so 
 small a community ; but the effects would be similar upon 
 a great nation. The thousand persons settle in a new 
 country, and engage in various occupations, agricultural, 
 manufacturing, mercantile, etc. At the settlement 
 of the colony, we will suppose the colonists to be worth 
 an equal amount of property, so that one shall possess no 
 superiority over another. Each pursues some lawful and 
 useful business, without entering into any speculation 
 whereby a fortune may be gained without labor. No 
 one has any means of support besides actual production, 
 except the legal interest of seven per cent, on money 
 loaned, or rent at the same rate on money invested in 
 property. All are diligent in their several occupations, 
 and thus each contributes to the general well-being. 
 
 Two mechanics, just come of age, are desirous of accu- 
 mulating large fortunes.- They are good workmen, and 
 each is able to earn a dollar a day over and abovr 
 
COMPARED WITH LEGAL 
 
 pcnses. Every six months they loan the money thus 
 earned at seven per cent, interest, the interest payable 
 half yearly. They set their affections upon being rich, 
 and therefore do not burden themselves with a house and 
 family. These men earn an average of a dollar a day, 
 beside their expenses, three hundred days in each year, 
 during forty years and four months. Their age is then, 
 sixty-one years and four months. Each earns by labor $300 
 per year for forty years, or, for tlie whole period, $12,100 
 together, $24,200. The interest on their earnings, 
 loaned half yearly, for a period of forty years and four 
 months, accumulates an amount which will be seen by 
 reference to the following table. Interest at seven per 
 cent, per annum, paid and reloaned half yearly, accumu- 
 lates a sum equal to the principal in ten years and one 
 month. 
 
 TABLE. 
 
 INTEREST AT SEVEN PER CENT. OU $300. 
 
 1st half year they earn 
 
 by their labor $300 00 
 
 6 months' interest at 7 
 
 per cent 10 60 
 
 310 50 
 2d h Alf year's labor .... 300 00 
 
 610 50 
 6 .months' interest. . . 2137 
 
 631 87 
 3d half year's labor. . 300 00 
 
 931 87 
 6 months' interest 32 61 
 
 964 48 
 4th half year's labor. . . 800 00 
 
 1,264 48 
 6 months' interest 44 26 
 
 1,808 74 
 
 Amount brought up $1,308 74 
 5th half year's labor . . 300 00 
 
 iths' 
 
 6 months' interest 
 
 6th half year's labor. . 
 
 6 months' interest. . 
 
 7th half year's labor . . 
 
 6 months' interest 
 
 8th half year's labor. . 
 
 1,608 74 
 56 30 
 
 1,665 04 
 
 300 00 
 
 1,965 ()4 
 68 78 
 
 2,033 82 
 300 00 
 
 2,333 82 
 81 68 
 
 2,415 50 
 300 00 
 
 2,715 60 
 
128 
 
 INCREASE OF PKOPEETY BY LABOR 
 
 Amount brought up $2,715 50 
 
 6 months' interest . . . 
 
 95 04 
 
 2,810 54 
 9th half year's labor. . . 300 00 
 
 3,110 54 
 months' interest. . 108 87 
 
 3,219 41 
 10th half year's labor. . 300 00 
 
 3,519 41 
 6 months' interest 123 18 
 
 3,642 59 
 llth half year's labor. . 300 00 
 
 3,942 59 
 6 months' interest. . 137 99 
 
 4,080 68 
 12th half year's labor. . 300 00 
 
 4,380 58 
 
 6 months' interest, ... 153 32 
 
 4,533 90 
 
 13th half year's labor. . 300 00 
 
 6 months' interest. . 
 
 4,833 90 
 , 169 18 
 
 5,003 08 
 14th half year's labor. . 300 00 
 
 6,303 08 
 6 months' interest ..... 185 61 
 
 6,488 69 
 
 Amount brought up $5,488 69 
 15th half year's labor. . 300 00 
 
 6,788 69 
 6 months' interest 202 60 
 
 5,991 29 
 16th half year's labor. . 300 00 
 
 6,291 29 
 6 months interest 220 20 
 
 6,511 49 
 17th half year's labor. . 300 00 
 
 6 months' interest . . . 
 
 6,811 49 
 238 40 
 
 7,049 89 
 18th half year's labor. . 300 00 
 
 7,349 89 
 6 months' interest 257 25 
 
 7,607 14 
 19th half year's labor. . 300 00 
 
 7,907 14 
 6 months' interest. ... 276 75 
 
 8,183 89 
 20th half year's labor. 30000 
 
 6 months' interest . 
 
 8,483 89 
 49 49 
 
 8,533 38 
 Add one month's labor. 50 00 
 
 $8,583 38 
 
 In the first ten years and one month, the two men earn 
 
 by their labor $6,050 00 
 
 Interest thereon during this period 2,533 38 
 
 8,588 38 
 
 In the 2d ten years and one month, the interest on this 
 sum equals the principal , 8,583 38 
 
 17,166 7G 
 
COMPARED WITH LEGAL INTEREST. 129 
 
 Amount brought over $17,166 76 
 
 2d 10 years and 1 month's labor, and interest thereon. . 8,683 38 
 
 25,750 14 
 8d " interest 25,750 14 
 
 51,500 28 
 8d " labor and interest thereon. .. 8,583,38 
 
 60,083 66 
 4th " interest 60,083 66 
 
 120,167 32 
 4th ** labor, and interest thereon . ,583 38 
 
 128,760 70 
 In 40 years and 4 months the men earn by their labor. . 24,200 00 
 
 Remainder accumulated by interest $104,550 70 
 
 The interest on the sum, 824,200, earned by their 
 labor is $104,550 70 over four and a quarter times more 
 than they have earned by their labor. Suppose the two 
 men to live twenty years and two months longer that 
 is, to the age of eighty-one years and six months and 
 continue to loan their money. During this period it 
 would double twice. 
 
 Thus $128,760 70 
 
 10 years and one month's interest 128,750 70 
 
 257,501 40 
 2d 10 years and one month's interest 257,501 40 
 
 Total accumulation in 60 years and 6 months $515,002 80 
 
 The two men do not labor during the last 20 years and 
 2 months, and expend for their living during that 
 period 15,002 80 
 
 600,000 00 
 In 40 years and 4 months, they earn by their labor 
 
 $24,000, and live twenty years and 2 months on their 
 
 money without labor 
 Subtract money earned by labor 24,200 00 
 
 Remainder accumulated by interest on $24,200 $475,800 OQ 
 
130 INCREASE OF PROPERTY BY LABOR 
 
 Every dollar of the $475,800 is earned by the labor of 
 others and given to the two men, as the legal interest 
 upon $24,200. These men live laboriously, and work for 
 a very moderate compensation. They take only the 
 legal rate of interest, and do not demand the principal 
 of the money as long as the interest is paid. Neither 
 do they enter into any speculations. It is, therefore, 
 said, that labor earns their large fortunes. Cases similar 
 to this are often brought to prove that an industrious 
 man may, by his labor, accumulate a large property. 
 That this conclusion is erroneous, is manifest from the 
 foregoing table, by which it appears, that more than 
 nineteen out of twenty parts of the large fortunes of 
 these men are earned by others, and paid to them to 
 satisfy the legal interest on their loans of money. 
 
 Now let us suppose the intereston money to be one per 
 cent., and, with this difference only, these two men to be 
 placed in the same circumstances in which they have 
 been already described. They earn over and above their 
 expenses a dollar a day, three hundred days in each year, 
 during a period of forty years and four months. They 
 loan their earnings at the legal rate of interest, (eue per 
 cent.,) and collect and reloan the interest half-yearly. 
 
 TABLE. 
 
 INTEREST AT ONE PER CENT. ON $300. 
 
 1st half year's labor. . . . $300 00 
 6 month's interest at 1 per 
 
 cent.,. ... 1 50 
 
 2d half year's labor ... 300 00 
 
 6 months' interest 8 01 
 
 604 51 
 
 Amount brought up* 604 61 
 3d half year's labor. . . 300 00 
 
 904 61 
 11 50 6 months' interest. . 4 5? 
 
 601 50 909 3 
 
 4th half year's labor. . . 300 00 
 1,209 03 
 
CO MT A RED WITH LEGAL INTERES'i. 
 
 131 
 
 Amount brought up $1,209 03 
 fi months' interest. . 6 06 
 
 1,215 08 
 6th half year's labor. . . 300 00 
 
 1,615 08 
 6 months' interest . 7 68 
 
 1,622 66 
 6th half year's labor. . . 300 00 
 
 1,822 66 
 months' interest 911 
 
 1,831 77 
 7th half year's labor. . 300 00 
 
 2,131 77 
 6 months' interest .... 10 66 
 
 2,142 48 
 8th half year's labor. . . 300 00 
 
 2,442 43 
 6 months' interest 12 21 
 
 2,454 64 
 yth half year's labor. . . 300 00 
 
 2,754 64 
 
 6 months 1 interest 13 77 
 
 2,768 41 
 
 10th hau ?ar's labor. . 300 00 
 
 3,068 41 
 6 months' interest. . 15 34 
 
 3,083 75 
 llth half year's labor. . 300,00 
 
 3,383 75 
 6 months' interest 16 92 
 
 3,400 67 
 12th half year's labor. . 300 00 
 
 3,700 67 
 
 Amount brought up $3,700 67 
 6 months' interest 18 60 
 
 3,719 17 
 13th half year's labor. . 300 00 
 
 4,019 17 
 6 months' interest. . 20 10 
 
 4,039 27 
 14th half year's labor. . 300 00 
 
 4,339 27 
 
 6 months' interest .... 
 
 4,360 96 
 15th half year's labor. 300 00 
 
 4,660 96 
 6 months' interest. ... 23 80 
 
 4,684 26 
 16th half year's labor. 300 00 
 
 4,984 26 
 6 months' interest 24 92 
 
 5,009 18 
 17th half year's labor. . 300 00 
 
 5,309 18 
 6 months' interest 26 65 
 
 5,335 73 
 18th half year's iabor. . 300 00 
 
 6,635 73 
 6 months' interest 28 18 
 
 5,663 91 
 19th half year's labor. . 300 00 
 
 5,963 91 
 6 months' interest 99 82 
 
 5,993 73 
 20th half year's labor. . 300 00 
 
 6,293 73 
 
132 INCREASE OF PROPERTY BY LABOK 
 
 Amount brought up $6,293 73 
 1 month's interest. . 5 27 
 
 Amount brought up $6,299 Ofi 
 1 month's labor , 50 00 
 
 6,299 001 6,349 OC 
 
 In the first ten years and one month, the two men would 
 earn by their labor the same sum as in the former case, 
 viz: 6,050 00 
 
 Interest during that period at 1 per cent, on the money 
 earned . 299 00 
 
 6,349 00 
 
 2d ten years and one month's interest at 1 per cent., re- 
 loaned half yearly 671 7 
 
 7,020 73 
 
 2d ten years and one month's labor, with interest thereon 
 at 1 per cent 6,349 00 
 
 13,369 73 
 8d ten years and one month's interest at 1 per cent 1,414 53 
 
 14,784 26 
 
 3d ten years and one month's labor, with interest thereon 6,349 00 
 
 21,133 26 
 
 4th ten years and one month's interest at 1 per cent 2,235 87 
 
 23,369 13 
 4th ten years and one month's labor, with interest thereon 6,349 OC 
 
 $29,718 13 
 
 In the above forty years and four months, the two men 
 earn by their labor the same sum as when interest was 
 at 7 per cent., viz $24,200 00 
 
 Interest at 1 per cent, upon this sum during a period of 
 forty-four years and four months 6,518 13 
 
 $29,718 13 
 
COMPAKKI) WITH LEGAL INTERKST. 133 
 
 Brought over $29,718 13 
 
 Interest on this sum at 1 per cent, for twenty years and 
 two months, or until the men arrive at the age of eighty- 
 one years and six months first ten years and one 
 month's interest 3,144 17 
 
 82,862 30 
 
 2d ten years and one month's interest 3,475 80 
 
 Total amount of earnings, and interest thereon at 1 per 
 
 cent, for sixty years and six months 36,338 10 
 
 As ir the former case, suppose the men to live the last 
 twenty years and two months- of their lives upon their 
 money, and deduct for their expenses 14,995 00 
 
 $21,343 10 
 
 With interest at seven per cent., at the age of eighty- 
 one years and six months they have a fortune of $500,000, 
 while with interest at one per cent, they have but $21,343, 
 making a difference of $478,656. If in the former case 
 they decease at the age of eighty-one years and six 
 months, their fellow-citizens are indebted to their estates 
 or heirs, $500,000, with an annual interest of $35,000 ; 
 and in the latter, the citizens are indebted to them $21,343 
 with an annual interest of $213 44. Even at one per 
 cent., the interest legally accumulates for them more than 
 one-half as much as they earn by labor. 
 
 Let us now suppose another case, of two men who be- 
 come of age at the same time as the former two, and who 
 are equally good workmen. They likewise earn a dollar 
 per day over and above their own support; but they 
 marry, and have the expense of supporting their families. 
 Each rents a house at $100 per annum ; and thus one- 
 third of their surplus earnings is paid for tenements. 
 Their earnings must also supply their families with food, 
 clothing, fuel, etc. Although these two men work as 
 diligently and as skillfully, and earn as much as the 
 former two, yet, instead of being able to lend money 
 
134: INCREASE OF PROPERTY BY LABOR. 
 
 upon interest, they are obliged to pay interest on the 
 houses they occupy. Strict economy is requisite to make 
 one dollar a day, over and above their personal expenses, 
 school their children, pay rent, and furnish neces- 
 sary supplies. These two men labor as much as the 
 former two, and contribute at least an equal share to the 
 public good. All their earnings are devoted to the pay- 
 ment of artisans, teachers, and others, whose services 
 they require. The former two, without performing more 
 labor than the latter two, live twenty years and two 
 months without labor, and leave fortunes to the amount 
 of $250,000 each. The latter work as long as they are 
 able, but in old age are, perhaps, compelled to seek an 
 asylum in the poor-house. 
 
 If the former two men as they earned their money had 
 invested it in farming land, or in houses and stores, and 
 had rented the property at seven per cent, on its cost, 
 they certainly could not have oppressed the producing 
 classes more than they would by lending them money at 
 seven per cent. In either case they would compel others 
 to earn for them more than nineteen out of twenty parts 
 of their fortunes.* 
 
 The amount to which nations and individuals are in- 
 debted, is a subject of general complaint. The above 
 illustration exhibits the cause. The difference in the 
 amounts due to the estates of these men, under the sup- 
 posed circumstances, can be traced directly to the differ- 
 ence in the rates of interest. At the rate of seven per 
 
 * We do not dispute the right of the bachelors to use all the 
 money that they can earn by their labor, and to lend their money on 
 interest to others ; but the interest which they have a right to receive 
 from others, should be restricted to the necessary expenses of furnish- 
 ing and supporting a money representative of value. If a just rate ot 
 interest be maintained, landlords and tenants, in voluntary agree- 
 ments, will naturally fix upon a just rate of rent ; because the foun- 
 dation upon which agreements will then rest will be just 
 
tWO PKB CICNT. INTEREST. 
 
 135 
 
 cent., a sura of $500,000 is due to their estates. I 4 
 would take the labor of a single man for more than 
 1,666 years to pay this principal; and it would require, at 
 one dollar per day, the constant toil of more than 116 
 men to pay the yearly interest of $35,000. From gene- 
 ration to generation, they might continue to pay the 
 interest, and still the burden be undiminished. In the 
 short space of sixty years and six months, two men 
 entail this debt upon this small nation. Not the laboi 
 of these two men entails this evil, but the law which 
 fixes the unjust rate of interest. It is the natural result 
 of the law, and must be alike disastrous to large and 
 small communities. 
 
 SECTION VII. 
 
 TWO PER CENT. PER ANNUM TOO HIGH A ^ATE OF 
 INTEREST. 
 
 However fertile a country may be, interest even at 
 two per cent, per annum will inevitably oppress the pro- 
 ducers. In the following table interest is calculated at 
 two per cent., under the same circumstances and for the 
 same period as in the former cases. The interest will be 
 found far to exceed the principal. 
 
 TABLE. 
 
 INTEREST AT TWO PKR CENT. OH $800. 
 
 1st half year's labor.. $30000 
 6 months' interest at 2 
 
 per cent. 3 00 
 
 303 00 
 2d half year's labor 800 00 
 
 G months' interest 
 
 lii 
 
 603 00 
 603 
 
 60908 
 
 Amount brought up. $609 03 
 3d half year's labor 300 00 
 
 6 months' interest . . 
 
 918 12 
 4th half year's labor. . . 300 00 
 
 1.218 19 
 
136 
 
 A RATK OF INTEREST 
 
 Amount brought up 
 6 months' interest 
 
 $1,218 12 
 12 18 
 
 Amount brought up 
 6 months' interest. , . . 
 
 $3,804 76 
 38 05 
 
 5th half year's labor. . . 
 
 1,230 30 
 30000 
 
 13th half year's labor.. 
 
 3,842 81 
 30000 
 
 
 
 
 
 6 months' interest 
 
 ,ooU oO 
 15 30 
 
 
 4,142 81 
 
 
 1,545 60 
 
 6 months' interest . . . 
 
 41 43 
 
 6th half year's labor. 
 
 30000 
 1,845 60 
 
 14th half year's labor. . 
 
 4,184 24 
 300 00 
 
 6 months' interest. . . . 
 
 1846 
 
 1,86406 
 
 QfiA (\(\ 
 
 6 months' interest. . . . 
 
 4,484 24 
 44 84 
 
 
 
 
 
 6 months' interest. . . . 
 
 2,164 06 
 21 64 
 
 15th half year's labor. 
 
 4,529 08 
 80000 
 
 8th half year's labor. . 
 
 2,185 70 
 300 00 
 
 6 months'" interest, . . . 
 
 4,829 08 
 48 22 
 
 6 months' interest. . . 
 
 2,485 70 
 24 86 
 
 16th half year's labor. 
 
 4,877 87 
 300 00 
 
 9th half year's labor.. 
 
 2,510 56 
 30000 
 
 6 months' interest. . . 
 
 5,177 37 
 51 77 
 
 6 months' interest .... 
 
 2,810 56 
 28 11 
 
 17th half year's labor. 
 
 5,229 14 
 300 00 
 
 10th half year's labor. . 
 6 months' interest. . . . 
 
 2,838 67 
 30000 
 
 3,138 67 
 31 39 
 
 6 months' interest. . . . 
 18th half year's 'labor.. 
 
 5,529 14 
 55 29 
 
 5,584 43 
 300 00 
 
 llth half year's labor. , 
 
 3,170 06 
 30000 
 
 6 months' interest 
 
 5,884 43 
 
 58 84 
 
 6 months' interest 
 
 3,470 06 
 3470 
 
 19th half year's labor. . 
 
 5,943 27 
 300 Of 
 
 12th half year's labor.. 
 
 3,504 76 
 800 00 
 
 8,804 76 
 
 6 months' interest . . . 
 
 6,243 27 
 62 43 
 
 6,so:. 70 
 
OF TWO PER CENT. PER ANNUM. 
 
 137 
 
 Amount brought up $6,305 70 
 20th half year's labor . . 800 00 
 
 Add one month's inte- 
 rest. . 
 
 6,605 70 
 
 Add 1 month's labor. . 60 00 
 
 6,666 76 
 
 Add 10 years and 1 
 month's interest at 2 
 per cent 
 
 2d 10 years and 1 
 mouth's labor and 
 
 1,481 65 
 
 8,148 31 
 
 interest. 6,666 76 
 
 14,816 07 
 
 Amount brought up $14,815 07 
 10 years and 1 month's 
 
 interest. 
 
 3d 10 years and 1 
 month's labor and 
 interest 6,666,76 
 
 24,774 18 
 10 years and 1 month's 
 
 interest 6,50588 
 
 30,280 06 
 
 4th 10 years and 1 
 month's labor and 
 interest 6,666 76 
 
 $36,946 82 
 
 Add the interest at two per cent, for twenty years and 
 two months longer, until the men reach the age of 
 eighty-one years and six months. 
 
 1st 10 years and one month's interest 8,210 69 
 
 2d 10 years and 1 month's interest. 
 
 45,157 61 
 10,035 36 
 
 56,192 86 
 
 In forty years and four months the two men earn by their 
 
 labor 24,200 00 
 
 The interest upon this sum for a period of sixty years and 
 
 six months, even at two per cent., amounts to 30,992 00 
 
 This is $6,790 more than they earn by their labor. 
 
 $55,192 00 
 
 When it is considered that this interest or rent is paid 
 for the mere use of money or of capital, every reflecting, 
 honest mind must be convinced that two per cent, is a 
 higher rate of interest than a people can afford to pay. 
 It is surely most unreasonable for the laws to compel 
 
138 TWO PJBK CKNT. INTMiKST. 
 
 producers to pay for the use of the property which a 
 man may acquire by forty or fifty years' labor, twice or 
 thrice the sum of the property so earned. The thing 
 produced is more highly estimated than the power that, 
 produces it. If an interest of two per cent, upon a well 
 regulated currency would accumulate the property of .a 
 nation in the possession of a few, can it be considered 
 strange that the rates of three, four, five, six, and seven 
 per cent, and even higher rates, which are exacted in 
 different countries, should have concentrated property 
 into so few hands ? The only wonder is, that producers 
 have continued to live under this oppression. 
 
 A rate of interest of even two per cent, per annum, 
 would put it out of the power of the people to fulfil their 
 contracts. The establishment of this rate of interest 
 would be equivalent to the passing of a law, compelling 
 the laboring classes to double the capital of a nation, in 
 favor of capitalists once in thirty-four and a half years, 
 besides producing their own support. Suppose a foreign 
 nation owned all the real and personal estate in this 
 nation, and a fair estimate were made of the value of all ; 
 and then our people were legally obliged to pay two per 
 cent, yearly upon this valuation, besides maintaining 
 themselves, would not a tribute or tax like this keep us 
 forever in poverty? Our laws enforce much higher 
 rates of interest on capital, which are little less oppressive 
 to the great body of our producers, because they are 
 paid to a few capitalists in our own land instead of to 
 foreigners. 
 
 It may be objected that some of the illustrations of 
 the accumulative power of interest are based on so long 
 periods as to present exaggerated results ; but it must 
 be borne in mind that interest, and rents, at too high rate;- 
 are continually accruing to the capital of nations, and 
 are producing their evil effects upon the people whether 
 the loans be for longer or for shorter periods. 
 
BKDUOED INTEREST A L5KNKFIT, 
 
 SECTION VIII. 
 
 TUB REDUCTION OP INTEREST WOULD BE AN EQUAL BENE- 
 FIT TO THE PRODUCING CLASSES, WHETHER PROPERTY 
 SHOULD RISE OR FALL IN PRICE, IN CONSEQUENCE OF 
 SUCH REDUCTION. 
 
 It may be supposed that if interest were diminished to 
 one per cent., property and labor Avould rise in the same 
 proportion, and therefore, the producing classes would 
 receive no benefit from the reduction. But whether 
 property should rise, or fall, or maintain its present price, 
 producers would have the same relative advantage ; their 
 gain would be from the lessened per centage on capital. 
 If a man borrowed a hundred dollars for a year, he 
 would pay but one dollar for the use of one hundred, 
 instead of paying seven dollars. If he hired a hundred 
 acres of land, he would have to earn only one acre to 
 pay for the use of one hundred, instead of being obliged 
 to earn seven to pay for their use ; for the per centage 
 on money governs the rent of land. This principle of 
 the adequate reward of labor, by the decrease of the 
 interest on money, although property and labor in con- 
 sequence should rise in price, will be illustrated in the 
 following table. The price of labor is calculated at six 
 dollars per day, and the interest on money at one per 
 cent, per annum. The men earn their money, and loan 
 it as in the former cases. 
 
 TABLE. 
 
 3 
 
 INTEREST AT ONE PER CENT. LABOR AT $6 PER DAT. 
 
 1st 6 months' labor. . $1,800 00 
 6 months* interest at 1 
 
 per cent .......... 9 00 
 
 3,609 00 
 1,809 00 
 
 Amount brought up $1,809 00 
 2d half year's labor. . . 1,800 00 
 
140 
 
 REDUCED INTKBEST A BENEFIT 
 
 Amount brought up. . . 
 6 months' interest. . . . 
 
 $3,609 00 
 18 04 
 
 Amount brought up . . 
 6 months' interest. . . . 
 
 $18,410 44 
 92 05 
 
 
 
 
 
 3d half year's labor. . 
 
 3,627 04 
 1,800 00 
 
 llth half year's labor. 
 
 18,502 59 
 . 1,800 00 
 
 6 months' interest. . . . 
 
 6,427 04 
 27.14 
 
 6 months' interest.... 
 
 20,302 69 
 101 51 
 
 4th half year's labor.. 
 
 5,454 18 
 1,800 00 
 
 12th half year's labor. 
 
 20,404 10 
 1,800 00 
 
 C months' interest. . . . 
 
 7,254 18 
 86 27 
 
 6 months' interent. . . . 
 
 22,204 10 
 111 02 
 
 5th half year's labor.. 
 
 7,290 45 
 1,800 00 
 
 13th half year's labor. 
 
 22,315 12 
 . 1,800 00 
 
 6 months' interest. . . . 
 
 9,090 45 
 45 45 
 
 6 months' interest . . . 
 
 24,116 12 
 . 120 68 
 
 6th half year's labor. . 
 
 9,135 90 
 
 1,800 00 
 
 14th half year's labor . 
 
 24,235 70 
 . 1,800 00 
 
 6 months' interest. . . . 
 
 10,935 90 
 54 68 
 
 6 months' interest . 
 
 26,035 70 
 130 18 
 
 7th half year's labor. , 
 
 10,990 68 
 1,800 00 
 
 16th half year's labor. 
 
 26,165 88 
 . 1,800 00 
 
 6 months' interest . . . 
 
 12,790 68 
 63 95 
 
 6 months' interest. . . . 
 
 27,965 88 
 139 88 
 
 8th half year's labor . . 
 
 12,864 53 
 1,800 00 
 
 16th half year's labor. 
 
 28,105 76 
 . 1,800 00 
 
 6 months' interest. . . . 
 
 14,654 53 
 
 73 27 
 
 6 months' interest 
 
 29,906 76 
 149 68 
 
 9th half year's labor. . 
 
 14,727 80 
 1,800 00 
 
 17th half year's labor. 
 
 30,055 29 
 . 1,800 00 
 
 6 months' interest. . . . 
 
 16,527 80 
 82 64 
 
 6 months' interest .... 
 
 81,855 29 
 169 28 
 
 10th half year's labor.. 
 
 16,610 44 
 1,800 00 
 
 18th half year's labor. 
 
 32,014 57 
 . 1,800 00 
 
 
 18,410 44 
 
 
 38,814 67 
 
WHETHER PRICES RISE OK FALL. 
 
 Amount brought up. . $33,814 57 
 6 mouths' interest 169 07 
 
 38,983 64 
 19th half year's labor. . 1,800 00 
 
 35,783 64 
 months' interest. . 178 92 
 
 35,962 56 
 
 Amount brought up. . $35,962 5(5 
 20th half year's lacor . 1,800 00 
 
 37,762 5t> 
 1 months' interest. . .\ 31 47 
 
 37,794 03 
 1 months' labor 300 00 
 
 $38,094 03 
 
 10 years and 1 month's labor and interest $38,094 03 
 
 2d 10 years and 1 month's interest 4,030 44 
 
 42,124 47 
 10 years and 1 mouth's labor and interest 38,094 03 
 
 80,218 50 
 8d 10 years and 1 month's interest 8,487 24 
 
 88,705 74 
 10 years and 1 month's labor and interest 38,094 03 
 
 126,799 7T 
 4th 10 years and 1 month's interest 13,415 34 
 
 140,215 11 
 10 years and 1 month's labor and interest 88,094 03 
 
 $178,309 14 
 
 In 40 years and 4 months, the two men earn at $6 per 
 
 day $145,200 00 
 
 Interest thereon for 40 years and 4 months at 1 per cent. 33,109 14 
 
 178, 309 14 
 
 Let the interest on $178, 309 14 accumulate 20 years and 
 2 months, until the men arrive at the age of 81 years 
 and 6 months. Interest on $178,309 14 for 10 years at 
 1 per cent 18,865 02 
 
 17,174 16 
 2d 10 years* interest 20,854 80 
 
 218,028 9>> 
 
EFFECTS UPON- PRODUCERS 
 
 Amount bought up $218,028 9d 
 
 The men cease to labor at the age of 61 years and 4 
 months, and expend during 20 years and 2 months, six 
 times more than when labor was at $1 per day. They 
 expend six times $14,995. Deduct 89,970 00 
 
 $128,058 9( 
 
 With interest at seven per cent., and labor at $1 per 
 day, (see Sec. VI.,) the two men leave to their heirs 
 $500,000 ; while with interest at one per cent., and labor 
 at $6 per day, they leave to their heirs $128,058, only a 
 fraction over one-fourth as much as in the former case. 
 The interest on $500,000 at seven per cent., would be 
 $35,000 annually. It would take the labor of one man at 
 $1 per day, one hundred and sixteen years to pay the in- 
 terest for a year. The interest on $128,058 atone per 
 cent., would be $1,280. The labor of one man for two 
 hundred and thirteen days, at $6 per day, would pay the 
 interest for a year. 
 
 SECTION IX. 
 
 EFFECTS UPON PRODUCERS OF HIGH AND FLUCTUATING 
 BATES OF INTEREST. 
 
 The following illustration, based upon land, will show 
 the effect of high and varying rates of interest upon 
 producers, and the safety with which money could be 
 loaned, if interest were reduced to a just and uniform 
 rate. 
 
 Suppose W. owns a thousand acres of land, which he 
 has bought from the Government, and upon which he is 
 paying the taxes. The land will produce no income, un- 
 less he cultivates it himself, or sells or rents it to others, 
 who will cultivate it. He sells the land in five tracts, of 
 two hundred acres each, at five dollars per acre. A., B., 
 
OF VARYING KA.TKS <>F INTEREST. 143 
 
 C., D., and E., are the purchasers,- and jnove upon and 
 cultivate the land, and pay the taxes. No other payment 
 is to be made for five years, at the expiration of which 
 period, A., B., C., D. and E., are to pay up the interest 
 on their respective tracts of land, and after that to pay 
 the interest annually. All the land sold is of nearly the 
 same quality. Each purchaser agrees to pay a thousand 
 dollars, and gives a bond and mortgage upon his land to 
 secure the payment. W. takes A.'s bond and mortgage, 
 hearing two per cent, interest; B.'s bearing four per 
 cent. ; C.'s bearing eight per cent..; D.'s bearing sixteen 
 per cent. ; and E.'s bearing thirty-two per cent, interest. 
 At the end of five years, A.'s bond arid mortgage will 
 have drawn $100 ; B.'s $200 ; C.'s $400 ; D.'s $800 ; mid 
 E.'s $1,600 interest. Yet W. sells the land to all at the 
 same price, and all the difference in the indebtedness of 
 A. and E. is caused by the difference in the rates of interest 
 that W. charges them. This difference makes E. In- 
 debted to W. $1,500 more than A. All the debtors must 
 pay the interest with the products of their respective 
 farms, and W. does none of the labor toward making the 
 production. 
 
 Now let X. sell the same land to the parties on a 
 credit of one year, and charge them six per cent, in- 
 terest. Suppose money to be so scarce, that at the end 
 of the year they clear only the interest, and are com- 
 pelled to lose their farms by foreclosure, or else to borrow 
 the money and pay off their mortgages. A., B., C., D. and 
 E. borrow on the best terms possible, on mortgage of 
 their farms and stock. A. procures the money at two 
 per cent, interest ; B. at four per cent. ; C. at eight per 
 cent. ; D. at sixteen per cent. ; and E. is compelled to pay 
 thirty-two per cent, per annum, or two and two-thirds 
 per cent, a month. This amounts to the same thing as if 
 they had bought their farms of W., agreeing to pay 
 him these rates of interest. The money enables them to 
 
EFFECTS UPON PRODUCERS 
 
 keep possession of their farms. From the sales of their 
 products they must pay the different debts and interest. 
 The rate of interest in each case decides what propor- 
 tion of the products shall go to pay for the use of the 
 farm. When the farmers borrow the money to pay off 
 their mortgages, they do not keep the money. It con- 
 tinues to circulate, and to decide what rents others shall 
 pay for the privilege of keeping the use of property for 
 a given period. 
 
 But suppose the rate of interest to be fixed at one per 
 cent., and that money could always be obtained on the 
 offer of good security. Those who had money to 
 lend would ascertain whether the property offered as 
 security would make the interest safe. If so, the security 
 would be deemed good. When interest is liable to rise 
 from six to twelve per cent., the lenders of money require 
 securities that will make their loans safe if the interest 
 should rise to the latter point. But if the supply of 
 money were such that the interest could not rise, a less 
 security would always keep loans safe. Suppose, then, 
 i,he rate of interest to be at one per cent., and W. to sell 
 ohe land to A., B., C., D and E., as before. They purchase 
 two hundred acres apiece at $5 per acre, and pay only 
 the taxes until the end of five years, when they pay the 
 interest for the whole period. The interest at one per 
 cent, on $1,000, for five years, amounts to $50 ; and on the 
 whole $5,000, to but $250, instead of $4,100, the amount in 
 the fojmer case, when the money was loaned at the various 
 and higher .rates of interest. The tenants have as much 
 the use of the farms to enable them to pay the $250 as to 
 pay the $4,100. If they make any reasonable improve- 
 ment on them, W. can incur no hazard of losing his 
 money, for each farm would certainly rent for $10 a year. 
 Even if at the close of the five years the farmers should not 
 have paid the interest, and each farm would rent for 
 $10 50 a year, over and above the taxes, each farm 
 
OF VARYING RATES OF INTEREST. 145 
 
 would still be as good as $1,050, at interest, at one pei 
 cent. ; therefore, in either case, the tenants would keep 
 the sale of the land good, or the loan safe for W., with- 
 out his personal labor. But if W. sell the farms, when 
 interest is at six per cent., at the end of the five years 
 each of the farmers would owe him $300 interest, which, 
 added to the principal, would make $1,300. The interest 
 on this sum, at six per cent., would be $78 annually, and 
 unless each farm would rent for this sum, W.'s debts 
 would not be safe. The per centage rent on the valua- 
 tion of property must be equal to the rate per cent, 
 interest on money, or the property cannot be good 
 security for the payment of the money. 
 
 It is* commonly said and supposed that borrowers pay 
 a certain rate of interest for the use of money. But they 
 do not use the money ; they part with it in some way for 
 property, and the rate of interest determines what rent 
 they shall pay for the use of the property. A few illus- 
 trations will show the effect of increased rates of interest 
 upon the welfare of producers and distributers whose 
 property is in their products. Suppose a planter raises 
 a hundred bags of cotton, in doing which he becomes 
 indebted for bagging, rope, clothing for his workmen, 
 etc. Let him be compelled to realize the money for his 
 crop as soon as he can get it to market, and at a time 
 when money is very scarce, and the price of cotton 
 extremely low. He is obliged either to sell for cash, or 
 to offer a commission to some one to accept his draft on 
 the pledge of the c'ottori ; and is forced to pay for his 
 acceptance, say two and a half per cent. This will take 
 the proceeds of two and a half bales of cotton. If the 
 draft be drawn on three months' time, and the scarcity 
 of money compel the planter to sell the draft at two per 
 cent, a month, six bales more will be taken from his one 
 hundred bales. He must lose eight and a half bales for 
 the privilege of keeping the remainder three months in 
 
14:6 EFFECTS OF VARIOUS RATES. 
 
 Ktore, besides the storage, cartage, and the commission 
 on sales. The proceeds of the eight and a half bales of 
 cotton are gained by the capitalist by means of the high 
 rate of interest, and without any adequate labor on his 
 part. Under a true monetary system, the planter would 
 be able to hold his cotton a year without losing even two 
 bales of it for the advance of money. 
 
 Again, a manufacturer makes a package of a hundred 
 pieces of cloths, and sends them to market. Six months 
 pass before the goods can be sold, and, with interest at 
 six per cent, per annum, he loses three pieces as the inter- 
 est on the ninety-seven which he has left. If, at the end 
 of six months, the commission merchant sell them on a 
 credit of eight months, at the above rate of interest the 
 manufacturer must lose four pieces more, in all seven 
 pieces of cloth. But suppose the manufacturer is greatly 
 in need of money, and must have the eight months' note 
 cashed. Let the commission merchant, in consequence of 
 a rise of interest, sell the note in market at two per cent. 
 a month discount, and the manufacturer must lose sixteen 
 pieces of cloth on the note, instead of four pieces, the loss 
 at six per cent. Add these to the first three, and it will 
 make nineteen pieces, paid to others out of the one hun- 
 dred pieces, to enable him to keep eighty-one pieces, or 
 their proceeds, for fourteen months. These are a total 
 loss to the manufacturer. Besides, he has to pay cartage, 
 storage, commission and transportation. The proceeds 
 of the nineteen pieces of goods go into the hands of the 
 money-lender. 
 
 Now let us see the result in the same transaction, with 
 interest on money diminished to one per cent, and main- 
 tained at that rate. The manufacturer sends the hundred 
 pieces of cloths to market, and they lie six months unsold. 
 He loses only half a piece of cloth for the six months' 
 interest on his goods. The commission merchant sells 
 them on eight months' credit, as before, and gets the 
 
HIGH RATES OF INTEREST. 147 
 
 note discounted at the rate of one per cent, per annum, 
 This amounts to two-thirds of a piece of cloth, and added 
 to the half piece, is a loss to the manufacturer of one 
 piece and one-sixth of a piece during the fourteen months, 
 instead of being a loss, as in the former case, of nineteen 
 pieces. This difference is caused solely by the difference 
 in the rate of interest. Although the bales of cotton or 
 the pieces of goods lie unused and uninjured in the store- 
 house, yet a number of bales of cotton or pieces of goods 
 are taken from their owners by the legal growth of the 
 money, or by the growth or accumulation on the paper 
 obligation given to obtain the money. The rate of inter- 
 est decides how many bales of cotton shall be owned by 
 the planter how many pieces of goods shall be owned 
 by the manufacturer ; and the proportion of them that 
 shall be given to those who lend the money to represent 
 their value. 
 
 SECTION X. 
 
 THE OPPRESSION OF LABOR BY A MONOPOLY OF LAND 
 NOT AS GREAT AS THE OPPRESSION BY HIGH RATES OF 
 INTEREST ON MONEY. 
 
 It is supposed by many that the monopoly of land is 
 the cause of the centralization of wealth, and that land- 
 owners are the greatest oppressors of the laboring classes. 
 They think that if all had access to a certain portion of 
 land, the means of support would be within reach of 
 all. But if the land were equally divided, many persons 
 are not qualified to improve it to good advantage, nor are 
 all, or nearly all, capable of manufacturing the imple- 
 ments which must be used in its cultivation. The mecha- 
 nical arts are absolutely necessary to the improvement of 
 the land ; and men who are engaged in these arts require 
 
 very little, if any land, to cultivate, because their time is 
 14 
 
14-8 HIGH BA.TKS OF INTEREST 
 
 occupied with the various trades by which agriculturists 
 and others are supplied with houses, implements of indus- 
 try, clothing, and so forth. A monopoly of manufac- 
 tured articles would be as likely to cause the evil as a 
 monopoly of land; for if all implements of agriculture 
 were held by a few, it would be nearly impossible to culti- 
 vate the land ; and should all owners of houses refuse to 
 receive tenants, more than three-quarters of the people 
 in our large cities would be turned into the streets. 
 Doubtless it is for the interest of landlords to rent their 
 houses, but it is equally for the interest of landowners to 
 lease or rent out their lands : for, if they keep them in 
 their own possession, neither the houses nor lands can be 
 useful to their owners, except so far as they can cultivate 
 the one, and live in the other. The same is true of all 
 kinds of implements and merchandise. Neither lands 
 nor products have any natural monopolizing power. The 
 monopolizing power is an artificial one, instituted by our 
 national laws, and is in the money which represents the 
 property and products. The monopoly is one of the effects, 
 it is not the cause of the evil. If the land and wealth 
 were now to be equally distributed, the same cause which 
 lias thus far centralized them would accumulate them 
 again in the hands of a few. In the illustration of the one 
 hundred families and their descendants, (see Chap. III., 
 Sec. II.,) no land is bought except the two hundred acres 
 for their personal residences ; yet they take from the 
 people as large a quantity of their products, by the inter- 
 est on money, or on their obligations, as if they had invested 
 the twenty millions in farming land, and let the* land out 
 to tenants at six per cent, interest on its cost, reinvesting 
 the interest half-yearly in land during the hundred and 
 fifty years. The tenant of leased land pays the rent by 
 the sale of its yearly products. If he cannot support 
 himself well besides paying the rent, it is evident to all 
 that the rent is too In'o-h. The landlord and the tenant 
 
WORSE THAN LAND MONOPOLY. 14:9 
 
 some in direct contact, and the wrong done by the former 
 to the latter is manifest. But nothing grows upon mo- 
 ney with which the borrower can pay the interest. He 
 exchanges it for merchandise or lands, and expects to 
 make a profit on them which will pay the interest on the 
 money. If, however, he be not able to pay the interest, 
 it is set down as bad management on his part, instead of 
 being attributed to the too high rate of interest on the mo- 
 ney. The owner of money, by the legal interest, imposes 
 as great hardships upon the borrower, as if he hd lent 
 him land or merchandise at the same per centage on its 
 valuation. 
 
 The following'illnstration will show the different esti- 
 mates put upon the leasing of land at a certain per centage 
 on its value, and the lending of money at the same rate. 
 K. is the owner of $100,000. He expends this* sum for 
 well-improved farms, which he leases in perpetuity at six 
 per cent, per annum on their cost. His tenants lire, 
 therefore, obliged to pay $6,000 a year for the use of the 
 farms. They would find it very difficult to pay so high a 
 rent ; and it would be deemed very oppressive to them 
 and to their heirs who must work the land. If the owner 
 of the land should require from each tenant security for 
 the rent, so that one must become responsible for the 
 payment of another's rent, he would be thought a hard 
 landlord. And if in time of drought or disease, which 
 rendered the tenants unable to pay their rent, the land- 
 lord, should sell the stock from their farms, he would be 
 deemed very oppressive, although his tenants had volun 
 tnrily entered into the engagement. 
 
 Now, suppose M. to own $100,000, which he lends on 
 interest at six per cent, per annum payable half-yearly. 
 To secure the loan, he requires double its value in land, 
 so that he is twice as well secured as the landowner. 
 He allows the principal to remain outstanding as long as 
 the interest is regularly paid. Ho annually recoives 
 
150 HIGH RATES OF INTEREST 
 
 $6,000 interest on his money, the same sum that the land- 
 owner receives for the rent of his land, and he is much 
 better secured, for in some years the crops may fail ; but 
 the mortgage on land of twice the value of the loan, 
 is a double security, and will force the sale of the farm 
 
 the interest be not paid. It takes as many of the 
 products of labor to pay the interest to the money-lender, 
 as to pay the rent to the land-owner ; yet the money- 
 lender is deemed a just and honorable man, because he 
 takes only six per cent, interest for his money. If at 
 any time the scarcity of money and the low price of pro- 
 ducts prevent the payment of the interest, and the 
 money-lender foreclose some of his mortgages, buying 
 in the property, worth double the amount lent, at half 
 price, no stigma rests upon his character, especially if the 
 legal rate of interest be seven per cent., and he charge 
 but six per cent.* Although these cases are so differently 
 regarded, the oppression by lending money at six pet- 
 cent, interest greatly exceeds that by leasing property. 
 
 The following illustration shows how tenants of land 
 are affected by high rates of interest on money. N. 
 owns a farm which he cultivates. He is, therefore, the 
 rightful owner of the products. If, however, N". lets the 
 farm to O., and O. cultivates it, then N. and O. are 
 joint owners of the products. This principle, that labor 
 and capital are together entitled to the products, is in 
 accordance with the laws of nations, and must continue 
 to be so as long as the rights of property are recognized 
 by civil authority. The question which arises for settle- 
 ment is, what proportion rightfully belongs to the capita!, 
 and what to the labor what proportion of products N, 
 should receive for the use of the farm, and what propor- 
 tion O. should receive for his labor in cultivating it. It 
 will be said at once that the proportion which O. is to 
 
 * People seem to look upon niouey as a sort of sasred thing, and 
 on iaoor as a mere tool that is subservient to it. 
 
\VOIiiSE THAN LAND MONOPOLY. 151 
 
 give to N. is a matter of agreement between them ; and, 
 therefore, whatever N. agrees to take, and O. agrees to 
 pay for the rent of the farm, is the right proportion ; and 
 that no laws should interfere in such contracts except 
 to compel their fulfilment. This would be right, and 
 just to both the contracting parties, if the public stand- 
 ard of value on which they are compelled to found the 
 contract were equitable. But if the standard or rate of 
 interest be such that O. is obliged by its legal operation 
 to pay nearly the whole surplus products of the farm to 
 N. as rent, the contract is a manifest wrong to O. ; 
 because, although he work diligently all his life, the 
 legal standard will keep him forever poor, while N., by 
 the action of the same standard, without labor, will 
 constantly increase in wealth. 
 
 We declare that all men are born free and equal ; but 
 N. may be born heir to a dozen farms, while O. may be 
 born without property ; and, under present laws, by his 
 labor alone he cannot acquire it. Therefore, N. is 
 actually born to live in luxury without labor, and O. is 
 born to be a servant to N. O.'s children are born 
 servants to N., and to his posterity, and live in perpetual 
 toil and hardship, that N.'s children may be supplieddth 
 all the luxuries of life without labor. N. and his children 
 receive these luxuries from the rent that O. and his 
 children pay for the use of the land owned by N. If all 
 men are by nature free and equal, why has legislation 
 reversed the order of nature so as to secure the greatest 
 possible inequality '? It is not in the power of man to 
 continue a more effectual method of concentrating pro- 
 perty in a few hands, than by high rates of interest. 
 This method works rapidly and securely, because it 
 extorts consent as it operates. If civilization require 
 that property should descend from father to son, it 
 certainly does not require that legislation should do its 
 utmost to magnify the inequalities arising from this right 
 
152 HIGH RATES OF INTEREST. 
 
 of inheritance. These inequalities only exist because the 
 whole body of producers are obliged to pay an exorbitant 
 price for the yearly rent of every description of property ; 
 and why are they obliged to pay this price ? Because 
 the rent is determined by the legal interest on money, 
 he standard of value, to which no individual, nor class 
 of individuals, can offer successful resistance. If N., 
 instead of leasing the farm to O., lend him money witli 
 which to purchase a farm, O. rents the money from N. 
 instead of renting the farm. But he is as much compelled 
 to pay the interest on the money with the products of 
 the farm, as he is to pay the rent of the farm with the 
 products. If the interest on money .were at one per 
 cent., N. could not let his farm to O. at such a rate as to 
 compel O. to give him in rent a sum equal to the princi- 
 pal of the farm in less than about seventy years. But if 
 interest on money be fixed at seven per cent., N. can 
 compel O. to give a rent for the farm which will equal 
 the principal of the farm in about ten years. At this rate, 
 in seventy years O. must give N". the value of one 
 hundred and twenty-seven farms as the legal rent of 
 one. High rates of interest under any form of govern- 
 ment will centralize the wealth of the nation, and 
 degrade and impoverish its producers. In fixing the rate 
 of interest, governments determine what proportion of 
 their earnings the producing classes shall pay for the use 
 of capital. Laborers have no means of resisting the 
 )verwhelming power of accumulation thus given to 
 capital, except by a change in the monetary system, and 
 the establishment of a just rate of interest. Then the 
 inequalities of birth and condition will be greatly dimin- 
 ished, and no class of laborers can be kept, for any length 
 of time, subservient to capital. 
 
RATE OF INTEREST DETERMINES PRICES. 153 
 
 SECTION XI. 
 
 THE RATE OF INTEREST DETERMINES THE PRICE OF PRO- 
 PERTY, AND A RISE OF INTEREST INCREASES THE 
 POWER OF MONEY TO COMMAND PROPERTY. 
 
 The value of money is determined by the interest that 
 it will accumulate ; and the value of all property is deter- 
 mined by the rent that can be obtained for it. The 
 market value, or price of property must conform to the 
 legal standard. 
 
 If the rent of any property be not sufficient to accumu- 
 late a sum equal to the estimated value of the property 
 itself, in as short a period as money loaned, the property 
 will fall in price until the rent bears the same proportion 
 to the value of the property that the rate of interest bears 
 to the principal. 
 
 It is perfectly right that the interest on money should 
 govern by its own per centage the rent of all property, 
 because money is the legal representative of all property, 
 and the standard by which its value is estimated. This 
 interest is of the same quality as the principal loaned, 
 and each fractional part is of proportional value ; and the 
 rents of property must conform to this rule. For ex- 
 ample, if the per centage be in the proportion of one to 
 one hundred, the tenant of a hundred acres of poorly cul- 
 tivated land must pay as rent a sum in money equal to 
 the value of one acre of land of the same quality. If 
 he improve the farm and make it produce double, he 
 must pay the value of one acre of improved laud for the 
 use of the improved one hundred. He pays more value, 
 but no greater per centage on the value of the land. 
 Money is the standard ; if the per centage interest on it 
 be fixed at a just rate, it will equitably regulate the rent 
 of all property, and also secure to labor its earnings. 
 
154 THE RT8E OF INTEREST 
 
 f 
 
 The value of property depreciates in proportion to the 
 increase of the value of the dollar that measures it. 
 Whenever the value of money increases by a rise of in- 
 terest, there is a corresponding decrease in the value of 
 property. . The diminution of the market value of pro- 
 perty, by a rise of interest, may be compared to the 
 moving of a fulcrum on the beam of a scale. As one end 
 of the beam is lengthened, the other end is shortened, so 
 that a pound weight, on the long end, may balance as 
 many products as three, four, or five pounds would 
 before the fulcrum was moved. So, with the rise of in- 
 terest on money, property falls in price, and one dollar, 
 in money, balances two, three, four, or five times more 
 property than it did before the rise. Enough property 
 must be added to make the rent equal to the interest on 
 money; for no man will invest his money in property 
 unless he suppose? that the property will yield as good 
 an income as the money he pays for it. Therefore, the 
 price of property must fall whenever the interest on 
 money increases, that 'the incomes from property and 
 from money may be equal. When the power of the dol- 
 lar to accumulate is increased, no alteration is made in its 
 form, weight, or external appearance, as when the ful- 
 crum is moved no alteration is made in the weight, but 
 the power of the weight is increased.* 
 
 SECTION XII. 
 
 THE RISE OP THE BATE OF INTEREST INCREASES THE 
 LIABILITIES OF ALL DEBTORS. 
 
 All obligations for the payment of money are based 
 upon money, and hold the same position, with respect to 
 labor and property, that money does. They are private 
 
 See Appendix, B. 
 
INCREASES DEBTS. 155 
 
 representatives of their amount of money, and, being 
 secured on property, call for the payment of a definite 
 sum of money as principal, and a definite rate of interest. 
 When the interest on money rises, property falls in price, 
 BO that the value of the bonds, notes, mortgages, etc., 
 payable in money, is increased with respect to property, 
 tor they will purchase more ; but their value is diminished, 
 compared with money, for the interest on money is 
 greater than the interest on the obligations. Hence the 
 obligations fall below, and will not sell for their par value, 
 although they continue to bear the same rate of interest, 
 and to call for the same amount of money as at the for- 
 mer period. The value of money has increased above its 
 former value, instead of the value of the obligations being 
 diminished, except relatively. The obligations still de- 
 mand the same amount of money, which will now draw 
 a higher rate of interest, and command a greater amount 
 of property. But the amount of interest which the obli 
 gallons at present draw, is not increased, and is less than 
 that on money. 
 
 For example, if interest rise from six to twelve per 
 cent., a State bond, bearing the former rate, will fall 
 below its par value, but will continue to bear the same 
 rate of interest that it did previously to the rise of interest 
 on money ; yet the bond can be exchanged for more pro- 
 perty than before the rise of interest. Hence the liabili- 
 ties of all debtors whose means of payment are in their 
 property, or in their ability to labor, are increased in pro- 
 portion to the increase of interest upon money, because 
 the full amount of all debts must be paid in money, of 
 which the power to purchase property has thus much in- 
 creased or, in other words, the rise of interest has 
 decreased the market value of property and labor, so that 
 two, three, four, or five times the quantity formerly re- 
 quired, must be sold to procure money to cancel debts. 
 Labor, howover low it* price, is no tender for debta } and 
 
156 THE RISE OF INTEREST 
 
 must be disposed of for money before it can be a legai 
 equivalent in payment for anything. When goods are 
 sold on tune, the property of the purchaser, both real and 
 personal, is legally bound for the payment of the debt ; 
 and although the purchase of the goods caused the debt 
 to exist, no kind of property is legally competent to pay 
 it. The debtor must convert his property into money 
 for this purpose, or the creditor can legally enforce the 
 sale of a sufficient amount of the debtor's property to 
 satisfy his claim and pay the costs of suit. The debtor's 
 property is collateral security to the money, and is made 
 subject to its power, but the property has no legal 
 authority over the money. 
 
 The injustice done to debtors by increasing the value 
 of the measure by which their debts were contracted, is 
 evident. It has already been shown that the dollar is 
 the measure of more or less property, according to the 
 rate of interest. Therefore, debts contracted when in- 
 terest was low, and falling due when interest is high, will 
 require a much larger quantity of property to pay them 
 than was understood in the contract. The following is a 
 familiar illustration of this principle. A man agrees to 
 make and deliver to another nine yards of cloth. He 
 brings the usual amount of cloth to fulfil the contract, 
 but in the meantime, the length of the yard-stick is in- 
 creased to four and a half feet, and the cloth falls a third 
 short of the required length. The debtor weaves a third 
 more on the end of the piece, and presents it. The length 
 of the yard-stick is again increased to six feet, and the 
 cloth again falls short. The construction of the yard- 
 stick may allow its length to be increased without addi- 
 tional labor, but the debtor is obliged to add both labor 
 and material to produce the required length of cloth. 
 The additional cloth is fraudulently taken from him by 
 the increase of the length of the measure. 
 
 To exemplify the principle with respect to money, the 
 
INCREASES DEBTS. 157 
 
 measure of value. The rise of interest on money increases 
 the liabilities of all debtors. A man lends on mortgage 
 of a house and three vacant lots, $1,000 at six per cent, 
 interest. The interest on the money for a year is $60, 
 and the house of the borrower rents for $60 a year. 
 The rate of interest increases to nine per cent., conse 
 quently the interest on the $1,000 increases to $90. To 
 make the loan safe at the advanced interest, the bor- 
 rower is required to erect another house on one of the 
 lots covered by the mortgage. He builds one costing 
 $500, and lets it for $30. The two houses now bring $90 
 a year, just the interest on $1,000. Interest rises to 
 twelve per cent., and the holder of the mortgage requires 
 the borrower to erect a second house, costing $500, on 
 another vacant lot covered by the mortgage. This house 
 is likewise let for $30. The three houses rent for $120, 
 and the mortgage for $1,000 draws twelve per cent. 
 The mortgage now brings in as much income as the three 
 houses. The $1,000 as much balance the value of the 
 three houses now, as they did that of the one house when 
 the money was loaned ; for it now takes the rent of three 
 houses, as it then did that of one house, to pay the in- 
 terest on the mortgage. Two houses are added by 
 material and labor, and no material or labor is added to 
 the mortgage or money ; yet the mortgage or money 
 at twelve per cent, interest, is worth as much to the 
 holder as the whole property. 
 
 As the value of money increases, the market value of 
 the things to be measured by it decreases, so that it 
 works in a double ratio against producers, for rents of 
 property diminish as interest on money increases. But 
 in the foregoing example, this feature has not been ex- 
 hibited, no diminution of rent being supposed to take 
 place in consequence of the rise of interest, although ex- 
 perience proves that this is the invariable result. 
 
158 INTEREST INCREASES 
 
 SECTION XIII. 
 
 RENTS, WHETHER HIGH OR LOW, BEAR THE SAME RELA 
 TIVE VALUE TO THEIR PRINCIPAL; BUT, WHEN THE 
 PER CENTAGE INTEREST ON MONEY IS INCREASED, NOT 
 ONLY IS ITS RELATIVE PROPORTION TO THE PRINCIPAL 
 INCREASED, BUT EACH FRACTIONAL PART HAS IN- 
 CREASED VALUE. 
 
 It is proposed to show that there is a wide difference 
 between renting property and lending money, and that 
 the rent and market value of property decrease in pro- 
 portion to the rise of interest, whereas the market value 
 of money, and of the interest upon it, increases in direct 
 proportion to the rise of interest. 
 
 If the rent of a farm, store, or house rise to double, 
 the price of the farm, store or house is doubled. If 
 the rent of the farm before the rise be $300 over repairs, 
 etc., and money be at six per cent, interest, the farm is 
 worth $5,000. But if the rent rise to $600, the price of 
 the farm will be increased to $10,000. Therefore, if the 
 owner invest the income or rent in other land before the 
 rise of rent, he can buy as much land with the $300, as 
 he can buy after the rise with $600. If the rent fall 
 again to $300, the price of the farm will fall again t 
 $5,000 ; but the $300 will buy twice as much land as 
 it would if the rent had been maintained at $600. 
 Neither the rise nor the fall of the rent alters the actual 
 value of the farm, for its productiveness is neither in- 
 creased nor diminished by either. The nutritive proper- 
 ties of its wheat and corn cannot be altered by the rise 
 or fall of its rent. But the dollar received when the rent 
 is $600, is worth only one-half as much as the dollar 
 when the rent is but $300 ; for when routs are low, one 
 dollar will buy as much land as two will when rents 
 
IN GEOMETRICAL PROGRESSION. 159 
 
 are double. The intrinsic value of the property under- 
 goes no material change, but the. standard changes by 
 which its market value is estimated. Now note the differ- 
 ent effects of the rise of the rent on property, and the rise 
 of the interest on money. Let the rate of interest on 
 money rise from six to twelve per cent., and the rent on 
 property will inevitably fall in about the same ratio. 
 The price of property will of course fall in proportion to 
 the fall of its rent. When the interest on money is 
 doubled, the value of every dollar received as interest is 
 doubled ; for each dollar of interest will buy double the 
 property that it would before the rise. But when the 
 rent on property is doubled the dollar is worth but half 
 as much as it was before, for it will not purchase more than 
 half as much property as it would before the rise of rent. 
 
 If the rent on land rise to double, the land itself will 
 sell for double its former price ; therefore, the rent will 
 not double its principal of land in any shorter time in 
 consequence of the rise. But when interest on money 
 rises to double, the interest will double the principal in 
 half the time that it would before the rise of interest. 
 When the rent on land rises, the rent continues to hold 
 the same relative value to its principal of land that it did 
 previous to the rise. But when the interest on money 
 rises to double, the relative proportion of the interest to 
 the principal is doubled. 
 
 For example : P. lends to Q. for a year $20,000 at six 
 per cent, interest. The interest amounts to $1,200. P. 
 invests this income in a farm at the then market price of 
 land. At the commencement of the following year, there 
 is a scarcity of money, and P. reloans to Q. the same 
 $20,000 at twelve per cent, interest. At the end of the 
 year, Q. must pay to P. as the interest on the $20,000, 
 $2,400, twice the sum that he paid the previous year. 
 Scarcity of money and high rates of interest invariably 
 depreciate the price of property. Its price falls one-half" 
 
160 GEOMETRICAL INCREASE OF INTEREST. 
 
 so that each dollar of the $2,400 received as the interest 
 on the money when interest is high, will purchase twice 
 as much property as it would before the rise of interest. 
 Hence, if the interest at six per cent, on $20,000 will buy 
 a farm worth $1,200, when the interest on the $20,000 
 rises to twelve per cent. i. e.^ to $2,400, and the price 
 of the farm falls one-half, the $2,400 will buy four farms, 
 all as good as the first bought at $1,200. The income 
 from the $20,000 will be worth four times as much as it 
 was before the rise of interest. 
 
 Making the calculation in dollars and cents, we shall 
 arrive at the same result. The interest on $20,000 at six 
 per cent, is $1,200. Loan the $1,200 at six per cent, and 
 it will accumulate in the ensuing year $72. Now loan 
 the $20,000 at twelve per cent, and we have $2,400 as its 
 interest for the year. Loan the $2,400 at twelve per 
 cent, and it will accumulate in the ensuing year $288, just 
 four times $72. Thus the value of the income at twelve 
 per cent, is four times greater than at six per cent, 
 whether it be invested in land, or whether it be reloaned 
 on interest. With interest at twelve per cent, per annum 
 the capitalist possesses power to monopolize property 
 four times greater than with interest at six per cent, per 
 annum. The centralizing power of money increases in 
 geometrical proportion to the rate of interest. This is a 
 practical as well as a mathematical truth or law ; which 
 is constantly operating to centralize wealth in the handa 
 of a few at the expense rf tho producers. 
 
HIGH INTEREST LOWERS PRICES. 161 
 
 SECTION XIV. 
 
 TO CHEAPEN PRICES BY AN UNJUST BATE OF INTEREST 
 AND A SCARCITY OP MONEY, IS BUT TO CHEAPEN THE 
 LABOR OF ALL PRODUCERS, AND GIVE THEIR EARN- 
 INGS TO CAPITALISTS WITHOUT AN EQUITABLE EQUI- 
 VALENT. 
 
 When low prices are paid for labor, the prices of pro- 
 ducts are proportionally low. It is, therefore, generally 
 supposed that the laborer can as readily procure all need- 
 ful supplies when labor is at a low price, as when it is at 
 a high one. But the articles whose price is diminished 
 by the lowering of labor, are the productions of labor; 
 and the producing classes suffer great injury from this 
 depression of both their labor and products. 
 
 The folio whig illustration will exhibit the advantage of 
 high prices for labor. A man raises a hundred bales of 
 cotton, sends them to market, and receives three and a 
 half cents per pound. A laborer in New York receives 
 fifty cents a day for his labor ; with a day's work he can 
 purchase fourteen pounds of cotton. If labor be at a dol- 
 lar per day, and cotton at seven cents per pound, with a 
 day's labor he can purchase the same quantity. If labor 
 rise to a dollar and fifty cents a day, and cotton to ten 
 and a half cents per pound, a day's labor will still pur- 
 chase fourteen pounds of cotton. Thus far we do not 
 observe the difference of price to have any influence upon 
 the ability of the laborer to purchase ; but we have yet 
 to notice the condition of that class of producers who 
 raise the cotton at the first price, three and a half cents 
 per pound. After paying for the use or rent of the plan- 
 tation one-half the price at which a loan of money can be 
 obtained, say three or four per cent, interest on the cost 
 of the plantation, they do riot earn fifty cents a day, but, 
 
162 HIGH INTEREST LOWEKS PRICES 
 
 in fact, receive little or no compensation for their laboi 
 The same labor and land are required to produce cotton 
 when it brings three and a half cents, as when it brings 
 fourteen cents per pound. Suppose a workman in New 
 York to buy cotton at fourteen cents per pound ; a barrel 
 of flour at $8 ; wheat at $1 50 per bushel ; potatoes at 
 40 cents ; corn and rye at 80 cents ; brown sugar at 10 
 cents; coffee at 12 cents; boots at $3 a pair; shoes at 
 $1 ; a fur hat at $3 ; brown sheeting at 10 cents per 
 yard ; and good calico at 1 2 cents per yard. If labor 
 fall to 50 cents per day, and he have full employment, to 
 be as well oif as when labor was at $2 per day, he must 
 buy flour at $2 per barrel ; wheat at 37-*- cents per bushel ; 
 potatoes at 10 cents; corn and rye at 20 cents; brown 
 sugar at 2^ cents per pound ; coffee at 3 cents ; boots 
 at 75 cents per pair ; shoes at 25 cents ; a hat at 75 cents ; 
 brown sheeting at 2^ cents per yard; good calico at 3 
 cents ; and everything else in proportion. Travelling 
 expenses, rents and taxes, must be diminished three-quar- 
 ters. All the necessaries of life must be reduced in price 
 three-quarters, or the laborer who is out of debt will not 
 be as well off when labor is at fifty cents per day, as 
 when it is at two dollars per day. 
 
 But suppose one class of the laborers to buy at these 
 low prices, what will the producers of wheat, rye, corn, 
 etc., receive for their labor ? The reason that the laborer 
 can buy as much cotton when labor is at fifty cents per 
 day, as when it is at two dollars, is, that he buys a fellow- 
 laborer's products at a price which will not pay a cent a 
 day for the toil of producing them. So when the prices 
 of labor are reduced in this ratio, laborers, as a body, are 
 unable to provide themselves with the necessaries of life. 
 The reduction of the prices of labor and products, 
 consequent upon a scarcity of money and a rise of inte- 
 rest, forces producers and merchants to suffer great losses, 
 because the diminution of the prices of products does not 
 
TO THE LOSS OF PliODUOERS. 163 
 
 diminish the amount of their debts, nor their legal obliga- 
 tions to pay them; while the capitalists who own these debts 
 will compel laborers and owners of land and products to 
 sell double, treble, and quadruple the quantity of these, 
 to obtain money to satisfy the debts. Thus wealth passes 
 with great rapidity into the hands of a few capitalists. 
 If the merchant has bought goods at as low a price as 
 they can be afforded by the manufacturer, it is no safe- 
 guard against loss by the fall of goods in the market, be- 
 cause the market price of the goods does not depend 
 upon the labor necessary to their production, but upon 
 the ever-varying value of the dollar. Our laws make th<> 
 dollar the ral value, and producers and all kinds of pro 
 perty are controlled by its power. 
 
 The objection is often urged, that to make money 
 plenty would destroy the value of products. But how 
 would or could it destroy their value, to allow the needy 
 to earn the means to purchase them? Will not a starv- 
 ing people buy products ? Does any one suppose that 
 the people of Ireland would live upon their present scanty 
 food, if their labor would afford them the means of pur- 
 chasing more and better ? Was there ever a bad market 
 for products when labor was receiving what are called 
 high prices, or a good market when labor was at a low 
 price? The market is made poor by the inability of the 
 laboring community to earn enough to make purchases. 
 If labor were well paid, the market would always be 
 good, and the laborer, assured of a just reward, would 
 work cheerfully. 
 
 Large production, at a fair price, gives a better com- 
 pensation to producers, than half production at double 
 price. The families of producers require as many pro- 
 ducts for their own consumption when the crops are 
 diminished one-half, and their price is doubled, as when 
 products are abundant. The producers cannot then spare 
 a sufficient quantity to sell for their usual profits, even at 
 
164: VOLUNTARY AGREEMENT 
 
 the increased price, and capital makes the same requisi- 
 tion upon their labor for rent or interest as if their crops 
 were abundant. 
 
 SECTION XV. 
 
 VOLUNTARY AGREEMENT NO TEST OF A JUST RATE OP 
 INTEREST. 
 
 The laws do and ought to restrict some contracts 
 and give freedom in others. Restrictions should apply 
 to transactions upon a wrong basis, and those made upon 
 a right one should be entirely free. Agreements founded 
 upon a just basis would naturaDy be mutually beneficial 
 to the parties contracting them, but no agreements 
 founded upon a wrong one can ever do equal justice. 
 
 Lotteries and various kinds of gambling are rightly 
 prohibited by law, although the buying and selling of 
 lottery tickets, and betting on games of cards, are volun- 
 tary transactions. If mere voluntary agreement makes 
 contracts just, why do the laws annul those made in 
 gambling, while they enforce the fulfilment of other less 
 voluntary agreements ? A man without property must 
 become a pauper unless he agree to work for others, or 
 have the property of others to work upon. He is not as 
 free in his contracts as the gambler, in whose case there 
 is no such necessity ; for the latter must have money or 
 property to stake, or others will not bet with him. The 
 only reason for making gambling contracts void in law, 
 is, that no equivalent is rendered to losers for what is 
 gained by winners. If, then, wealth is the product of 
 labor, and it passes into the hands of a few capitalists by 
 agreements less voluntary than betting and buying 
 lottery tickets, is not the former even more contrary to 
 justice than the latter ? Wrongs of this kind to the 
 laboring classes are surely as greatly to be deprecated as 
 
NO TEST OF A JUST RATE. 165 
 
 those to gamblers ; and as no mutual agreements will 
 ever make gambling just, so no mutual agreements 
 founded on a wrong money standard can ever be fair and 
 equal. 
 
 If R. be a hatter, and T. a shoemaker, the products 
 of their labor must be exchanged, in order to supply 
 both their families with hats and shoes. If X. hold the 
 medium by which this exchange must be effected, and by 
 its power and use can obtain without labor more hats and 
 shoes from R. and T. than they can together retain as 
 the reward of their labor, X. evidently holds an unjust 
 power over them and their products. R. and T. are not 
 only obliged to exchange their hats and shoes with each 
 other, but are also obliged to exchange them for every 
 necessary of life, and even for the materials out of which 
 the hats and shoes are manufactured. They cannot make 
 these exchanges without an agreement with X. for the 
 use of the legal medium. Neither the shoemaker nor 
 the hatter can refrain from the use of money as a man 
 can from gambling ; and, under the operation of the pre- 
 sent monetary system, by using it they are certain to 
 lose the greater share of their surplus hats and shoes. 
 They do not even stand the same chance for winning by 
 their labor that the gambler does by gambling, for the 
 dice may turn in his favor, but a rapidly accumulating 
 power will never turn in favor of producers. When 
 money shall be rightly instituted, and a just rate per cent, 
 interest maintained, agreements among R., T. and X. 
 will naturally award to each his equitable share of pro- 
 ducts ; but until this medium of exchange is rectified, the 
 legal rights of property must continue at variance with 
 actual justice. The income power will absorb what the 
 producing power earns, and no voluntary agreements 
 according to demand and supply, can prevent this result; 
 for the suffering is caused by injustice in the laws, and 
 not by faults in the agreements. 
 
166 VOLUNTARY AGREEMEN1 
 
 Public opinion appeai-s to lean toward less legal restraint 
 upon trade. This would be well., if the foundation of trade 
 were made just. But first to fix upon an unjust money 
 basis, and then to make laws enforcing the fulfilment of 
 voluntary agreements made upon it, is first to establish an 
 evil, and then trust to a competition in doing the evil to 
 produce a good. It makes the grossest corruption legal 
 and gives it the greatest freedom. But financiers assert 
 that laws cannot be enacted which will regulate the rate 
 per cent, interest, and thus keep money at a uniform 
 value ; and that the rate per cent., like the market value 
 of commodities, can only be regulated* by supply and 
 demand. Under this law of supply and demand, agree- 
 ments according to the necessity of the borrower and 
 the avarice of the leMer, are considered tests of a just 
 rate of interest, and must regulate the standard by which 
 all values are determined. Under this system, directors 
 and the favored few borrow money from banks at five, 
 six, or seven per cent, per annum, and lend it at three, 
 four or five per cent, a month ; and if mutual agreement 
 makes justice, all these rates are equally just ; although 
 one class pays from six to ten times more than the other, 
 and the favored class gams the difference by a mere ex- 
 change of paper, without in any way benefiting the suf 
 ferers. A broker borrows money from a bank at the 
 .rate of six per cent, per annum, and lends it on the same 
 day to. a merchant who is " cornered " at one per cent, a 
 day just sixty times as much and according to this 
 great law of supply and demand, as it is often called, 
 each party pays exactly the right and just rate per cent, in- 
 terest. The broker demands the money from the bank, and 
 the bank supplies him at the rate of six per cent, per an- 
 num : but the merchant demands the money from the 
 broker, and the broker supplies him at the rate of 365 per 
 cent, per annum. If a man fall into the water and de- 
 mand holp to get out, the person who supplies assistance 
 
NO TEST OF A JUST KATE. 167 
 
 has a perfect right, according to this law of supply and 
 demand, to take all the property a man may own; for 
 who but a miser would not give all his wealth to save his 
 life ? In Europe, laborers, by voluntary agreement, work 
 for ten or fifteen cents a day, and are often thankful to 
 get work at these rates to save themselves and their chil- 
 dren from starvation. If mere freedom of agre ement, or 
 supply and demand, constitute the justice of contracts-, 
 independently of their basis, these prices must be a stand- 
 ard whereby to estimate the true value of labor, which, 
 therefore, would depend on the price the capitalist would 
 pay for it, and not on its utility. 
 
 This wrong basis of contracts also causes a competition 
 among laborers themselves according to their necessities ; 
 the tendency of which, under present systems, is to re- 
 duce the price of labor to the mere subsistence of the 
 laborer. But the reverse of this is true of competition in 
 lending money. Whenever a strife occurs in the money 
 market, and one bank begins to run upon another, and 
 capitalists strive for the highest rate per cent, for the 
 use of their money, the tendency is at once to increase 
 the rates of interest. The greater the strife the higher 
 the interest rises, until the whole business of the country 
 is paralyzed ; for the rise of interest increases indebted- 
 ness, destroys credit, diminishes the wages of labor, and 
 throws it out of employment. 
 
 It is probable that every man, woman, and even every 
 child over five years old, in this nation, has seen and 
 handled more or less gold, silver or copper money. If we 
 tell the public that the legal power of money is the great- 
 est, the most controlling and influential of all earthly 
 powers ; that it determines the rate per cent, that shall 
 be paid for the use of all property ; that it decides who 
 shall be born in the lap of wealth, and live in luxury, and 
 who shall be born in povovty and want, and be subjected 
 
168 VOLUNTARY AGREEMENT* 
 
 to a life of the severest toil and servitude in order to sub- 
 sist ; that it also rules governments and the destinies of 
 nations, and that its present power is directly opposed to 
 virtue and in favor of vice ; if we tell the people all this, 
 we shall only tell them the truth. But will they believe 
 us ? Will they not say, " We, and our children, and our 
 fathers before us, have seen. and handled more or less 
 money all our lives, and we have never seen in it any such 
 power." It is true they have no more seen this power 
 than they have seen the law of gravitation, because it is 
 just as invisible ; yet they have as sensibly felt the eifects 
 of the centralizing power of money as they ever have 
 the effects of the law of gravitation. People work hard 
 all their lives, without considering by what laws the pro- 
 ducts of their labor are governed, and they are taught to 
 believe that as the mining and coining of the gold and 
 silver are the products of labor, that this labor performed 
 is what constitutes the value of the money. These coins 
 are only the material of money, they are not its power. 
 The power of money is to collect a per centage income, 
 and this is a legal power, and not a material thing. This 
 power is the product of law, and not the product of labor. 
 Yet this invisible, legal power of money as much controls 
 and centralizes the productions of labor, as the mind 
 directs what the physical man shah 1 perform. By its 
 unjust power the wealthy few govern the destinies of 
 man. When they lend money liberally to the public, at 
 what is called a low rate of interest, it sets the multitude 
 at active production, so that they are as busy as bees in 
 a warm summer morning. But when the few call in 
 their loans, and raise the rate of interest, the producing 
 classes are paralyzed, like the bees when the thermome- 
 ter is at zero. The financial skill of a few Rothschilds, 
 wielding the power of money, as much determines where 
 the wealth of a nation shall be centralized, as the captain 
 %nd pilot of a steamship direct at what point or wharf 
 
THE LAW OF INTEREST. 16t? 
 
 the passengers shall be landed. Not only the producing 
 public, but the government itself, is about as much 
 directed by a few money-lenders as the crew of the ship 
 by the captain and pilot. If the commanders of the ship 
 run her upon the breakers, they endanger their own pro- 
 perty and lives as well as those of the passengers ; but 
 the managers of this financial power, by calling in their 
 money and reloaning it at higher rates of interest, not 
 only cripple the government, and compel it to sell its 
 own credit at usurious rates of interest, but they also 
 paralyze the business of the producing classes, deprive 
 them of the means of subsistence, drive multitudes of 
 them into distressing poverty, despondency and suicide, 
 and by thus wrecking the public they gather large gains 
 out of the spoils. Money, as now instituted, is the most 
 deceitful power that ever has been or can be established. 
 The groundwork for its first institution is false, and sub- 
 sequent laws for the regulation of such money can no 
 more remedy its evil power, than a good house can be 
 built on a foundation previously laid upon a quicksand, 
 where every tide of the ocean would cause some part of 
 the foundation to change its position. 
 
 SECTION XVI. 
 
 THE LAW OF INTEREST ON MONEY AN ACCUMULATIVE, 
 NOT A PRODUCING POWER. 
 
 Money loaned is universally spoken of as bearing in- 
 terest ; but this is a mistaken idea. It is the borrower's 
 obligation, and not the lender's money, that bears in 
 terest. It is generally believed that borrowers have the 
 use of money for the time that they hire it, just as a 
 tenant has the use of a farm for the time that he rents it 
 This also is a mistaken idea, for the farm is usable in the 
 
170 THJfi LAW OF INTEREST 
 
 tenant's hands, but money is not usable in the borrower's 
 hands. If a man borrow $10,000, and give to the lender 
 his note payable in one year, with seven per cent, in- 
 terest, at the end of the year he will owe to the lender 
 the principal and $700 interest. Now what does he 
 have to use during the year out of which he is to gain 
 the interest? It certainly cannot be the $10,000 ; for if 
 he keep the money in his own pocket, there can be no 
 increase in quantity, and at the end of the year, he will 
 not have enough by $700 to pay the debt. But the 
 borrower's obligation in the lender's pocket has increased 
 the debt $700. The $10,000 must enable the borrower 
 to have something else to use for the year, or certainly 
 he would not borrow the money, and agree to pay the 
 interest. As soon as he has the money in his possession, 
 he either pays a debt previously contracted, or buys 
 land, or some kind of goods, wares or merchandise with 
 it. If he buys land, he has the use of it for the year by 
 paying $700 rent. If he is a manufacturer, and has been 
 disappointed in the sale of his goods, and owes $10,000 
 that has become due, he pays the debt, and this enables 
 him to keep $10,000 worth of his goods for the year. It 
 gives him a year's tune to sell these goods, and turn 
 them into money to pay the debt. Thus the so-called 
 interest on money is the rent that he pays for the use of 
 the goods for a year : it is not paid for the use of the 
 money. The money and the interest are both re- 
 presentatives of value. The value is in the goods, or 
 land, and the labor that makes the property productive. 
 The money is always dead, and strictly speaking, people 
 never pay a fraction of interest for its use. The practi- 
 cal effect of the per centage called interest, is simply to 
 determine the per centage rent of property. 
 
 A tree bears fruit, because the fruit grows out from 
 the vitality of the tree. But money is authorized and 
 organized by human laws, and human laws do not or- 
 
NOT A PRODUCING POWER. 171 
 
 ganize or create vitality, therefore money is of necessity 
 a dead power, and has no vital energy to produce other 
 money. Money loaned accumulates by interest, but the 
 money produces no interest. All the money in this 
 nation will be kept over from to-day until to-morrow, and 
 will bear no interest to those who keep it ; it will gain 
 nothing by interest for him who may keep it a week, 
 month, year, or any other longer or shorter time. All 
 the money in the country is barren of interest in the 
 hands of somebody to-day, and will be barren of interest 
 in the hands of somebody to-morrow. It may change 
 owners a hundred times, but it is always a dead power 
 in the hands' of somebody. Borrowers, whether for a 
 longer or shorter period, always pay out the money as 
 soon as possible ; they do not keep it. The money is 
 not usable as property, it is not susceptible of being im- 
 . proved by labor, nor is it competent in itself to supply 
 any want of man, or to make any improvement. It is 
 dead in their 'hands, and they at once part with it for 
 something which is usable, such as materials that can be 
 improved, or houses that will shelter themselves and 
 their families, or lands upon which they cfvn raise crops, 
 or goods, wares and merchandise which they can use, or 
 can exchange for a profit. 
 
 As we have said, the per centage interest that borrowers 
 agree to pay for the use of money, simply determines 
 what per centage rent they shall pay for the actual use of 
 a certain amount of property for a given period. Bor- 
 rowers use the property, not the money ; and from the 
 property they must produce or gain the means to pay the 
 interest. If F. be a farmer, and borrow from A. $1,000 at 
 seven per cent., F. must raise one hundred and forty 
 bushels of corn, and sell it at fifty cents a bushel to pay 
 the yearly interest of seventy dollars. It is then the pro- 
 ductiveness of F.'s farm coupled with F.'s labor, that pro- 
 duces the money to pay the interest. The thousand dol- 
 
172 THE LAW OF INTEREST 
 
 lars lent by A. to F. do not produce anything : but the 
 money, by a legal, arbitrary power, takes one hundred 
 and forty bushels of corn from F., and appropriates 
 them to A.'s use. If A.'s thousand dollars possessed 
 vital instead of legal power, and could hire land, buy the 
 seed, plant, cultivate, gather, shell and sell the corn, it 
 would then actually produce for A. what the money now 
 legally compels F. to produce for him. But as no 
 human law can make the dollar a naturally productive 
 thing, it is impossible to gain wealth by finance, unless 
 the labor of others produces what is gained by the 
 financiers. 
 
 Money, then, earns for its owner by an accumulative 
 power ; by a power to gather things already produced, 
 and not by a natural power of growth, like that contained 
 in the germ of wheat or grain. Where this power to 
 accumulate by interest is made greater and more rapid 
 than the natural power of production by labor, this law 
 of interest becomes a most powerful engine of evil. It 
 gathers into the hands of a few capitalists the productions 
 of labor, and often deprives the producers of the neces- 
 saries of life. 
 
 All nations have considered money to be wealth, be- 
 cause it possesses this power to accumulate ; but whether 
 made of gold or of paper, it reaUy contains a very small 
 amount of actual wealth. The laws make money a legal 
 equivalent for all property, and give it the power 
 to accumulate by interest. They make $100,000, loaned 
 at six per cent, interest, earn for the owner $6,000 a year, 
 without labor on his part, while the labor of twenty 
 men, for three hundred days in the year, at a dollar a 
 day, will earn no greater sum. The labor of twenty men, 
 for a year, would make a visible improvement on a 
 farm ; but the interest makes no visible improvement or 
 the money loaned. 
 
 Nothing has prevented, nor now prevents, the full em 
 
NOT A PRODUCING POWER. 173 
 
 ployment, and adequate compensation of labor, but 
 the monopoly of money, and unjust rates of in- 
 terest. All nations and all political parties profess to 
 legislate for the protection of industry, but in reality, 
 they have from time immemorial legislated to support 
 exorbitant interest on money. And since the interest on 
 money governs the rent or use of all property, legisla- 
 tion, by fixing high rates of interest, has always sup. 
 ported and increased capital, and depressed labor. This 
 enormous per centage interest on money has reversed the 
 true order of nature ; for the increase of the earth is tht 
 natural reward of labor, but the too great income power 
 gives the reward to those who neither plant nor water, 
 and often starves the laborers on the soil which their own 
 hands have cultivated. By this exorbitant interest, the 
 bounties of God are made a sacrifice on the altar of Mam- 
 mon, and the poor are oppressed because they are poor, 
 and in their toil there is little salvation from want and 
 misery. This income power, established by the laws of 
 nations, has not in the least altered the laws of pro- 
 duction. Production has always been made by labor 
 upon the soil, and by mechanics and artisans ; but the unjust 
 income power is a mere human contrivance, by which 
 actual producers are made slaves to non-producing capi- 
 tal, and by which the few monopolize what the many 
 produce by their labor. 
 
 It is impossible for the producers of a nation to pay 
 three, four, or five per cent., or more, for the yearly 
 use of property, and also furnish themselves with the com- 
 forts and conveniences of life. All the per centage col- 
 lected for the rent on property, or as the interest on 
 money, must be paid by sales of the yearly productions 
 of labor, which remain over and above the support of 
 the producers. If a very few rich men, in any civilized 
 nation, should live frugally, and their posterity should do 
 the same, in th course of a few generations they would 
 
174 THE LAW OF INTEREST. 
 
 reduce to poverty nearly every other individual in the 
 country. Consequently, under present monetary laws, 
 extravagance in the rich, and the frequent inefficiency 
 and imbecility of their children, are great advantages to 
 producers. The second evil is necessary to modify the 
 overwhelming power of the first. 
 
 The income or interest, legally fixed and maintained 
 upon money, governs not only the rent of property, and 
 the dividends on stocks, but also the entire general in- 
 come on all other things, because the interest on money 
 is the standard. This income is a yearly tax levied upon 
 producers, which at the present rates is enormous and 
 oppressive. Laws may be made to prevent the entail- 
 ment of property, to compel banks to divide yearly or 
 half-yearly their earnings, and various other laws may be 
 made to prevent the unjust accumulation of property in 
 the hands of the few, and to give the laborer what he 
 really earns ; but all these will be of little avail to amelio- 
 rate the wrong. But as the per centage interest is dimi- 
 nished, producers will be benefited ; and when it is re- 
 duced and maintained at the just rate, the laboring classes 
 will receive the chief part of their own products. The 
 currency is the national standard by which the value of 
 the labor and products of all citizens is estimated, and 
 all are obliged to use it and found their contracts upon 
 it. If a fundamental law, like that of the rate of interest 
 on money, be made just, it will be easily supported by 
 other just laws ; but if it be made unjust, it will be dilli- 
 cult to support it, for all the laws which sustain it mustf 
 necessarily be unjust. A man who utters a falsehood 
 must support it by other false assertions. A hundred 
 lies may be required to give the first the semblance of 
 truth. So if a nation fix an unjust standard of value, 
 every law which sustains that standard must be unjust. 
 An unjust standard has been used from the earliest ages 
 of which we have a record; but the long use of it wiU 
 
A JUST KATE OF INTEREST. 
 
 175 
 
 never make it just, more than the long use of a fal^bppd 
 with a hundred lies to support it, will make the false 
 hood truth ; or the long use of evil make the evil good. 
 When governments make money unlimited in quantity, 
 at a just rate of interest, laws will be simple, debts paid, 
 labor rewarded, and peace and happiness will pervade 
 the country. Money will be easily obtained in exchange 
 for labor, instead of labor being superabundant, and 
 money scarce. Non-producing capital i. e., anything 
 which requires the expenditure of labor to make it pro- 
 duce should bear a low interest. Actual production 
 will then receive a suitable reward. 
 
 SECTION" XVII. 
 
 ESTIMATE OF A JUST BATE OF INTEREST. 
 
 From what has been said of unjust and fluctuating 
 rates of interest, it must not be inferred that money 
 loaned should bear no interest; for the accumulative 
 power of money is as essential to its existence as food to 
 the support of life. Without this power money would 
 not represent production, and, consequently, could not 
 be made an equivalent in payment either for labor or pro- 
 ductive property, and therefore could not be maintained 
 as a medium of exchange. We are, then, seeking no 
 extreme measures, but that just rate of interest which 
 shall secure to the whole people the greatest good. We 
 do not advocate the annihilation of interest, but we urge 
 that the amount should not be so great as to oppress the 
 laborer whose toil produces every necessary of life, and 
 even the material for the medium of exchange. 
 
 The rate of interest fixed upon money determines 
 what proportion of the value produced by labor shall be 
 awarded to the capitalist for the use of his capital, and 
 what proportion the laborer shall receive for his toil in 
 
176 ESTIMATE OF A 
 
 making the production. It is, therefore, important to 
 ascertain what per centage the people of a nation can pay 
 to capital, and still receive a due reward for their labor. 
 To arrive at a just conclusion, we must form an estimate 
 on a large scale, and for a term of years. Take the fol- 
 owing as such an estimate : Suppose a country lay off 
 our coast equal in every respect to that of the United 
 States, but in its primitive wildness. Allow those classes 
 of people whose labor makes all improvements to have 
 the use of the United States in their present condition, 
 with their cities, railroads, canals, farms, goods, wares 
 and merchandise, bank, State, and other stocks, money, 
 etc., for the term of seventy years. At the close of this 
 period, they are to return the property uninjured by use, 
 perishable articles replaced by new ones, and decayed 
 buildings and machinery repaired and renewed. And 
 for the use or rent of all these, they are meanwhile to 
 make in the adjoining new country every improvement 
 already in this , cities, railroads, canals, shipping, improve 
 farms, make money, stocks, etc., etc., and render the 
 country in every respect equal to the United States. At 
 the end of seventy years they must give up the United 
 States, together with the new country and all its improve- 
 ments, and this would only be paying for the use of the 
 property an interest half-yearly, at the rate of one per 
 cent per annum. We will repeat the length of time in 
 which money doubles at certain different rates of interest } 
 the interest being paid and reloaned half-yearly. At two 
 per cent, per annum, it will double in about thirty-fiv 
 years ; at three per cent., in less than twenty-four years 
 at six per cent., in a little less than twelve years ; and at 
 seven per cent., in a little more than ten years. If the 
 laboring classes can make as many improvements in a 
 new country as now exist in this, and can afford to give 
 the whole improvement for the use or rent of this country 
 for ten years, seven per cent, would be a just rate or 
 
JUST RATE OF INTEREST 177 
 
 interest. If the people require twenty-three and a half 
 years to perform this labor, beside making a comfortable 
 provision for themselves, three per cent, would be the 
 just rate; if thirty-five years, two per cent. ; and if sixty- 
 nine and a half years, one per cent, should be the rate. 
 
 Take the same estimate under a different form. Sup- 
 pose all species of property in the country to receive a 
 fair valuation, and its owners sell it on a credit of one 
 hundred years, the interest or rent to be paid half-yearly, 
 at the rate of seven per cent, on the amount of valuation. 
 At this rate, the purchasers must pay every ten years to 
 the sellers a value in interest equal in amount to the value 
 of the whole property of the nation. If, however, the 
 property were sold upon the same credit, bearing an in- 
 terest of one per cent., nearly seventy years would 
 elapse before the purchasers must pay to the sellers an 
 amount in interest equal to the value of the principal. 
 
 If the distinctions between the value of gold and of 
 paper disappear when both are used as money, it follows 
 that the value of gold and silver money cannot be regu- 
 lated by the quantity of metal in each piece, any more 
 than the value of paper money could be regulated by the 
 quantity of paper in each bank-note. The power of 
 money over property and labor is increased or diminished 
 just in proportion to its accumulative power, hence the 
 only possible way to affix a true value to money, is to 
 regulate a right rate per cent, interest for its use. A 
 nation should not allow any money to circulate that is 
 not perfectly good, and at par, and also a legal tender in 
 payment for debts in every part of the country. Good 
 money is a representative of value, and must be Derma- 
 nently secured by property that possesses intrinsic value ; 
 for if the property which formed the basis for the issue 
 of the money, should cease to be valuable, the money oi 
 course would cease to represent value, and would be 
 worthless, except for the actual value of the material out 
 
ITS BENEFICIAL RESULTS OF 
 
 of which it was made. Money to be good must also re- 
 present production, hence it must always be susceptible 
 of being loaned for a rate per cent, interest. Now, as 
 labor in any useful occupation should be justly compen- 
 sated, so also the necessary labor to furnish and issue the 
 money of a nation should be fairly remunerated ; and the 
 per centage interest on the money furnished and loaned 
 by an Institution established by the Government for that 
 purpose, should be equivalent to pay for the material 
 and labor employed in producing and loaning it. Thus 
 the borrowers of the money would pay the cost of the 
 production and issue (see Part IT., A True Monetary 
 System)^ and this would form the rate per cent, inte- 
 rest to be charged by any subsequent owners of the 
 money when they should reloan it. Money thus organ- 
 ized would always pay for its own support, without aid 
 from the Government.* 
 
 SECTION XVIII. 
 
 BENEFICIAL RESULTS TO LABORERS AND MERCHANTS FROM 
 THE REDUCTION OF THE RATE OF INTEREST. 
 
 It may be said that the reduction of the interest on 
 money would cause property to rise in price in proportion 
 fco the decrease of interest, and, therefore, the condition 
 of the laborer would not be improved. It will be sup- 
 posed that if the market value of property should rise 
 in proportion to the decrease of interest, speculators and 
 owners of property would be the gainers by the reduc- 
 
 * The two modes of estimating the just rate of interest, set forth 
 In this chapter, do not differ in their result; but the author considered 
 the latter (which is taken from his more recent writings) the final 
 criterion; and spoke of it repeatedly, during the last winter of liis 
 Ufe, as a point to which ie attached crreat importance. [M. K. P.] 
 
A REDUCED BATE OF INTEREST. 179 
 
 tion ; that interest being reduced from seven to one per 
 cent., V.'s four farms (see Section I.) would rise in their 
 market value from $10,000 to $70,000, and a rent of one 
 per cent, on the $70,000 would be $700 precisely the 
 same sum as seven per cent, on $10,000 and thus the 
 tenants would gain nothing by the lessening of the inte- 
 rest, but V. would gain by the rise in the market value of 
 his farms. By looking a little deeper into this matter, 
 we shall see that such would not be the fact. For, if V.'s 
 farms rise to $70,000 each, and A., B., C. and D., hire 
 them at one per cent, on this valuation, that is, at $700 
 a year for each, which V. on its receipt, loans out at one 
 per cent., yearly collecting and reloaning the interest, it 
 would be seventy years before the rent and its accruing 
 interest would buy four other farms. Hence the relative 
 gain of the laborers by lowering the rate per cent, inte- 
 rest, would not be altered by any rise in the market value 
 of the farms. To show this yet more clearly, suppose 
 the market value of each farm increase from $10,000 to 
 $70,000, and let V. instead of renting sell them, and loan 
 out their proceeds on bond and mortgage at one per 
 cent, per annum, yearly collecting and reloaning the in- 
 terest, it would still be seventy years before the interest 
 would equal the principal, and amount to $280,000 ; and 
 the $280,000 gained by interest, would buy for V. only 
 four farms worth $70,000 each ; whereas, with interest at 
 seven per cent., if V. should sell the same four farms at 
 $10,000 each, loaning out the $40,000 proceeds at seven 
 per cent., and yearly collecting and reloaning the interest 
 at the same rate, in seventy-one years and nine months 
 he would gain $5,080,000, which would buy five hundred 
 and eight farms. 
 
 Whether property rise or fall, or maintain its present 
 price, the reward of labor would be equally increased by 
 the diminution of interest. Suppose H. has a lot that 
 
180 BENEFICIAL RESULTS OF 
 
 cost him in cash $1,000, and builds a house upon it cost 
 ing $1,000 together worth $2,000. Interest on money 
 is at six per cent, per annum; therefore to make the pro 
 perty worth the money it cost, H. must let the house for 
 $120 a year, clear of insurance, repairs, and taxes. Labor 
 is then at one dollar per day. Reduce the interest on 
 money to one per cent., and, in consequence of this re- 
 duction, let the lot and house rise to six times their 
 former price that is, from $2,000 to $12,000. The in- 
 terest on $12,000 at one per cent, would be $120, the 
 same as when the property would sell for but $2,000, 
 The house could not rise from $2,000 to $12,000, unless 
 labor should rise proportionally that is from one dollar 
 a day to six dollars a day. The same amount of labor 
 would as readily build the house at one time as another. 
 With labor at six dollars per day, the tenant could pay 
 the $120 rent with twenty days' work; whereas, with 
 interest at six per cent., and labor at one dollar per day, 
 it would take one hundred and twenty days' labor to pay 
 the rent, six times more than when the interest on money 
 was at one per cent. Now suppose the change in inte- 
 rest to produce no effect upon property, and the house and 
 lot to continue worth only $2,000. The interest on the 
 $2,000 at one per cent, would be $20. If property did 
 not rise, labor would not rise, because it would require 
 the same number of days' labor to build the house, and 
 it would take twenty days' labor to pay the rent the 
 same number of days that it would if the property should 
 rise to $12,000. 
 
 A just per centage on money being established, the rise 
 or the fall of property would not affect the relative posi- 
 tions of. labor and capital. If property should rise in 
 price, the tenant would not be obliged to build another 
 house for the use of one, any sooner than if property 
 should fall in price. He could pay the rent in the one 
 
A REDUCED RATE OF INTEREST. 181 
 
 case as easily as in the other, and with the same amount 
 of labor ; but a change in the rate of interest would im- 
 mediately affect him. 
 
 The amount of products required as the rent of land 
 would be diminished by reducing the rate of interest. 
 Suppose G. owns a farm of one hundred acres of well 
 improved land worth $100 per acre. H. rents this farm 
 at seven per cent, interest on its cost, and consequently 
 must pay to G. $700 a year. If the land produce twenty- 
 five bushels of wheat to the acre, and wheat be worth $1 
 per bushel, H. must sow, reap, and sell the products of 
 twenty-eight acres, and pay the whole proceeds to G. as the 
 rent of one hundred acres for the year. If interest were 
 at one per cent, instead of at seven, the rent of the farm, or 
 of the $10,000 for the year would be $100, instead of 
 $700 ; and H. would be obliged to cultivate and sell the 
 products of four acres only to procure one hundred bushels 
 of wheat, or $100 to pay the rent. If he performed the 
 same labor when interest was at one as when it was at 
 seven per cent., he would retain the products of twenty- 
 four acres i. 0., six hundred bushels of wheat as the 
 surplus earnings of his labor, instead of paying them to 
 G. for the use of capital. The reduction of the rate of 
 interest would not lessen the quantity of products, nor 
 decrease their value ; it would only give a larger propor- 
 tion to producers. If G. should cultivate his own farm, 
 he would receive the whole of its products as the earn- 
 ings of his labor, whether interest were at one or at 
 seven per cent. But if interest were at one per cent., 
 and H. should rent the second farm, G. could exact but 
 a small proportion of the products of the farm as rent. 
 G. would receive a more just sum for the use of the farm, 
 and H. would likewise receive a more just reward for 
 his labor upon it. 
 
 A low and uniform rate of interest would have a most 
 beneficial effect on trade ; and of this the following is a 
 
182 BENEFICIAL RESULTS OF 
 
 practical illustration. Suppose a merchant in the city 
 now pays $2,000 rent for his store, and $800 for his 
 house. His rents must be paid from the profits on his 
 goods before he can gain anything for his own support. 
 Reduce the rate of interest to one per cent., and his rents 
 would be reduced to $400. The interest on his stock of 
 goods would also be but one-seventh its present amount. 
 Estimate his stock at $40,000 and the interest upon it at 
 seven per cent, would be $2,800 a year. But reduced to 
 one per cent., the interest would amount to but $400. 
 The saving of interest on the goods, and of rents on the 
 house and store, would amount to $4,800. Suppose the 
 merchant to sell $250,000 worth of goods in a year, he 
 must calculate at least two and a half per cent, for guar- 
 antee of bad debts. This per centage would be $6,250. 
 Reduce interest to one per cent., and probably it would not 
 be worth a tenth of one per cent., to guarantee the debts. 
 In this item, there would be a clear saving of $6,150. 
 Add the $4,800; there would be saved $10,950. The 
 cost of the transportation of products from one part of 
 the country to another would be greatly reduced; 
 because the per centage to be paid for the use of capital 
 to make internal improvements would be reduced to one 
 per cent. Ah 1 this difference of interest would be gained 
 and saved by producers and distributers. 
 
 That a low rate of interest would drive specie from 
 the country, is a false supposition. Do the lower rates 
 of interest in England drain that country of its specie ? 
 Does six per cent, interest in the New England States 
 drive their specie into the southern and western States, 
 in which the legal interest is eight per cent, per annum ? 
 Such is not the fact. Where interest is the lowest, money 
 and specie are the most abundant. If products pay a 
 profit by shipment to England, they go forward rapidly 
 to meet the demand. Not so with money. In England, 
 money is often lent for months together at from two tc 
 
A ftEDUCED KATE OF INTEREST. 183 
 
 three per cent, per annum, while the New York banks 
 lend at six and seven per cent, per annum. For years 
 past, the people of the United States have paid, nearly 
 or quite,. double the per centage for the use of money 
 that has been paid in England. Why does not money 
 from England flow in and supply the market, so as to 
 equalize the rates of interest of the two nations? Why 
 do the States which pay the highest rates of interest go 
 abroad most frequently to borrow money, and still have 
 not enough ? It is because the rates are so high that the 
 people of these States cannot produce a sufficient surplus 
 to pay the interest to capitalists among themselves, and 
 to other States where the interest, though lower, is still 
 oppressive, to procure the money required to carry on 
 their business. Money is a legal representative, and 
 serves to fix an income, but not to produce wealth. 
 Loan it twenty or thirty times where the interest is high, 
 and every time it is lent it makes an income for the 
 lenders for a longer or shorter period, which impoverishes 
 the borrowers, because they must sell their products to 
 pay the interest. The principal borrowed must soon be re- 
 turned to the lenders in interest, and the interest i& 
 r cleaned to the people. These high rates of interest 
 serve to make the people paying them tributary to a few 
 money-lenders among themselves, and in other States. 
 For a few years previous to 1851, the State of Wisconsin 
 made all rates of interest legal; that is, the rate of 
 interest was a matter of agreement between borrower 
 and lender. The consequence was, that the rate of 
 interest varied from 12 up to 100 per cent, per annum. 
 We are credibly informed that the highest rate was, in 
 many instances, exacted, and good landed security obtained 
 for its payment. Let us see what effect certain rates of 
 interest on money borrowed abroad must have upon the 
 circulating medium of the State. If the rate of interest 
 were at one per cent., and T., living in New York, should 
 17 
 
184- A REDUCED RATE ol INTEREST. 
 
 lend $10,000 in Wisconsin at that rate, the borrower, al 
 the close of the year, must send T. $100. The people of 
 Wisconsin would have $9,900 of the money borrowed 
 remaining among them as a circulating medium. But if 
 T. lend his money at twelve per cent., the borrower 
 must send T. at the close of the year $1,200, and but 
 $8,800 would be left circulating in Wisconsin. If he 
 lend at fifty per cent., the borrower must duly send T.. 
 $5,000 to pay the interest, so that one-half of the 
 borrowed money is returned to T. in New York, and 
 only $5,000 are left in Wisconsin. But if T. lends the 
 $10,000 at a hundred per cent, per annum, the borrower 
 must send T. at the end of the year $10,000, and not 
 one dollar of it is left in Wisconsin. Still the borrower 
 would be indebted to T. for the principal of $10,000 and 
 in another year would owe T. $10,000 more in interest. 
 It would not take a very large amount of money lent at 
 this and approximate rates by the citizens of New York 
 to those of Wisconsin, to throw the balance of trade 
 against Wisconsin and in favor of New York : nor, in 
 such a case, would it be strange that money should be 
 scarce in Wisconsin while it Avas plenty in New 
 York. 
 
 In the United States, if interest were reduced to one, 
 or to one and one-tenth per cent., useful productions 
 would probably increase from twenty-five to fifty per 
 cent. The wealth, instead of being accumulated in a few 
 hands, would be distributed among producers. A large 
 proportion of the labor employed in building up cities 
 would be expended in cultivating and beautifying the 
 country. Internal improvements would be made to an 
 extent, and in a perfection unexampled in the history of 
 nations. Agriculture, manufactures, and the arts would 
 nourish in every part of the country. Those who ar 
 now non-producers would naturally become producers. 
 The production would be owned by those who per 
 
LOW PRICES OF LABOR IN KUBOPE. 185 
 
 formed the labor, because the standard of distribution 
 would nearly conform to the natural rights of man. 
 
 SECTION XIX. 
 
 THE LOW PRICES OP LABOR IN EUROPEAN COUNTRIES 
 NOT CAUSED BY THEIR LOW RATES OF INTEREST. 
 
 In^nswer to the principle advanced, that the establish- 
 ment of a low rate of interest will secure a better com- 
 pensation to labor, it will be said that money is plenty in 
 ah 1 old countries, at a low rate of interest, and that labor 
 is very poorly paid; whereas, in new countries, in 
 which interest is always high, high prices are paid for 
 labor. In England, France, and Germany, money is 
 loaned at two, three, four, and five per cent, per annum, 
 and in all these countries the prices of labor are very 
 low ; while in the United States, of America, in which the 
 lowest legal rate of interest is six per cent., and the 
 average rate double that of European nations, the prices of 
 labor are also double. In former ages, the rates of intenggft; 
 in these now old countries were very high, and by this 
 means the property was early accumulated in the posses- 
 sion of a few. These few owning the property, and 
 letting it to those who were destitute of the means of pay- 
 ing the rent or interest except by the products of their 
 labor on the property, the lenders could no longer collect 
 the high rates ; and a reduction of interest necessarily fol- 
 lowed, because the laws could not enforce the collection of 
 the higher rates, where the ability to pay them did not exist, 
 
 As a general thing, emigrants to new countries are in- 
 dustrious and enterprising persons, who have little pro 
 perty, and seek a new home because they have not the 
 means of purchasing farms, etc., in old settlements. li 
 these pioneers hire laborers to assist them in clearing 
 and preparing their lands for use, they must pay higher 
 
186 LOW PRICES OF LABOR IN EUROPE 
 
 wages than are usual in older countries, for the laborers 
 have many hardships to encounter. The first settlers im- 
 port their provisions until they can raise a crop. The 
 new soil produces largely. All fresh emigrants being 
 compelled to buy provisions until they can raise their own, 
 constant market is afforded for the surplus products of 
 earlier settlers, and they are, consequently, able to pay 
 good prices for labor. Emigrants to new countries raise 
 the principal part of their provisions, but depend, in a 
 great measure, on older countries for clothing, imple- 
 ments of husbandry, etc. Their products are consumed 
 among themselves ; and they have few, if any, to send to 
 cities or manufacturing towns, to exchange for neces- 
 sary articles. They must send money to buy them ; or, 
 if they purchase on credit, the money must be had at the 
 maturity of the debts. This drains off their money. Al- 
 though they make great improvements, add immensely 
 to the value of their laud, and the wealth of the country 
 rapidly increases, yet money is very scarce, and the peo- 
 ple are compelled to contract debts for clothing, imple- 
 ^mOits of husbandry, etc. Any one who has money to lend 
 can obtain exorbitant interest, and those who are in debt 
 will offer high rates to their friends in older countries, to 
 induce them to lend their money in the settlement. The 
 scarcity of money is so great, that capitalists require the 
 best security that can be offered, to quadruple the 
 amount of their loans. Interest is maintained at ten 
 twenty, or a higher rate per cent, per annum, and this 
 rapidly draws property into the possession of capitalists. 
 Every money-lender thinks himself justified in demand- 
 ing as high a rate of interest as his neighbor. When 
 mortgages become due, property, in many cases, is sold 
 for less than half the cost of the labor to make the im- 
 provements upon it. The holder o'f money can buy pro- 
 perty at one-fourth of its actual value, and another who 
 has not the money to pay, will perhaps repurchase it at 
 
NOT CAUSED BY LOW BATES OF INTEREST. 187 
 
 a large advance, paying a small portion down, and 
 agreeing to give a high rate of interest on the remainder. 
 He makes what is termed, a good bargain in the pur- 
 chase. In this way interest is maintained at enormous 
 rates, and lands and improvements pass rapidly into 
 he hands of capitalists. 
 
 In new and thinly settled countries, where fertile lands 
 are at low prices, the people do not starve, even when 
 they are charged ten, twenty, or even thirty per cent, 
 per annum on borrowed money and property ; but these 
 rates of interest concentrate the property rapidly into 
 the hands of a few, and break up and keep hundreds of 
 thousands of laborers poor. They can, however, gene- 
 rally find employment by which they may obtain their 
 food. But as countries grow older, the population more 
 dense, lands higher in price, and concentrated in fewer 
 hands, the mechanical arts begin to flourish, and manu- 
 factories are established, in which hundreds of workmen 
 labor for their daily support. The manufactories are 
 carried on by individuals, by firms, or by incorporated 
 companies. If money become scarce, and interest increase 
 to double, treble, or quadruple the ordinary rate, the 
 prices of goods inevitably fall, the wages of the workmen 
 are reduced, and great numbers are thrown out of employ- 
 ment. The demand for goods rapidly decreases, for pro- 
 ducers generally have become impoverished, and are 
 unable to purchase their usual supplies, and many of them 
 must subsist on charity. If the scarcity of money and 
 the high rates of intei^st continue, the manufacturers too 
 must break ; for to pay the same amount of debt, they 
 must sell twenty-five or fifty per cent, more of their 
 goods than when interest was at the lower rate. 
 
 Although the rates of interest in all old countries are 
 much lower than in newer countries, yet they are suffi- 
 ciently high continually to centralize the wealth, and to 
 'ncrease more and more the number of the poor. In all 
 
188 LOW PRICES OF LABOR IN EUROPE 
 
 the old countries the established rates of interest are high 
 enough to concentrate the wealth in a few hands, even 
 in a new country ; not, however, so rapidly as the higher 
 rates of interest which are usually paid in newer coun- 
 tries. In consequence of our higher rates of interest the 
 property of the United States is accumulating in the 
 hands of a few men much more rapidly than in the older 
 countries. This accumulation will continue until the 
 rates of interest are reduced below the rates obtained in 
 the older countries. 
 
 The fluctuations of the rates of interest, in all countries, 
 render it difficult to offer any very clear illustrations of 
 their bearing upon labor, except upon general principles. 
 In England, the rates of interest vary according to the 
 necessity of the borrower, from one, two, or three per- 
 cent, per annum, to four, five, six, seven, eight, nine, ten, 
 eleven, and twelve per cent.; and similar variations of 
 interest, though at much higher rates, occur in our own 
 large cities, and to a considerable extent in our towns 
 and villages. But let twelve nations fix twelve different 
 rates of interest, maintaining the rates uniform, the first 
 at one per cent., the second at two per cent., and so on 
 to twelve per cent., and the concentration of wealth in 
 few hands, in the different nations, would increase in 
 nearly the same ratio with the rates of interest. The 
 ratio would be almost exact, except for the profligacy 
 and extravagance of many of the rich, and the benevo- 
 lence of others. This general principle will hold good, 
 whether the country be new, rich 4iid fertile, or whether 
 it be old, or poor, because the accumulation is according 
 to the rate- per cent. A copper cent, loaned at six per 
 cent, interest per annum, will double its principal in pre- 
 cisely the same time that a gold eagle, at the same rate 
 of interest, would double its principal. It is a mistaken 
 idea, that it is right to pay a higher rate of interest in 
 d new and fertile country, because production is more 
 
NOT CAUSKD BY LOW RATES OF INTEREST. 189 
 
 easily made. If labor will produce a greater quantity of 
 products, capital has no right, through an unjust stand- 
 ard of accumulation, to take them without rendering a 
 fair equivalent ; but if the rate of interest be too high, it 
 will inevitably do so. There is no more justice in increas- 
 ing the rate of interest, on account of facility in produc- 
 tion, than there would be in increasing the size of the 
 bushel, because labor would produce more bushels of 
 grain. 
 
 'In all ages and nations, the rates of interest maintained 
 have been so high as continually to concentrate the 
 wealth in a few hands. When the wealth of a nation 
 becomes thus centralized, the producers and distributers 
 who are destitute of property, are compelled to borrow 
 money, and rent property from its holders. Suppose the 
 whole property .of a nalon to be accumulated in the 
 possession of one man (for this shows the principle more 
 strongly), then all other individuals would be compelled 
 either to buy the property on credit, or to rent it. If he^ 
 should charge three per cent, per annum on the money 
 or property, it could hardly fail to keep nineteen-twen- 
 tieths of the people in perpetual poverty. For a few years 
 they might appear to be prosperous, but their prosperity 
 could not possibly be permanent, because the rent, or 
 interest, would certainly absorb more than the people 
 could earn. A rate of interest of even two per cent. 
 would produce the same results, but in a less degree, 
 because there would be many more owners of property, 
 and the general indebtedness of the people would not be 
 nearly so great, as it is at the higher rates of interest. 
 .It cannot then be true, that the low rates of interest 
 maintained in the old countries, are the cause of the low 
 prices of labor, and the poverty of the producers, but on 
 the contrary, the former high rates of interest accumu- 
 lated the property in a few hands, and the present 
 rates of interest are sufficiently high to continue th? 
 
190 LOW PRICES OF LABOR IN EURurK. 
 
 accumulation and prevent the reward of labor. High 
 rates of interest have been, and are, the cause of the 
 poverty of producers in all nations. 
 
 In England, where the average rate of interest is three 
 per cent, per annum, the labor is compelled to double the 
 entire capital of the nation, in the hands of its holders, 
 in twenty-three and a half years, besides which, the labor- 
 ers must furnish their own support* But this is not the 
 only cause of the depression of labor in Britain. An 
 enormous sum of money was borrowed by the govern- 
 ment of its wealthy citizens, and expended in wars. 
 This National Debt amounts to about $4,000,000,000, the 
 annual interest on which, at an average of three per 
 cent., is $120,000,000, which the people must pay by an 
 annual taxation of their products. Labor receives no 
 benefit from it. The money is fiot invested in land, nor 
 in anything else of which the labor has the use by the 
 annual payment of the interest. This interest on the 
 National Debt is additional to the too high rate of inter- 
 est already charged on all the capital actually em- 
 ployed. 
 
 It is commonly supposed that the land owners of Eng- 
 land are the oppressors of the toiling multitude. The 
 power to lease land, at the present rates, is given by the 
 law, fixing the rate of interest on money. The op- 
 pression by lending money, however, is greater than that 
 by leasing land, because the rates of interest on money 
 are continually fluctuating, and the oppression of the 
 producing classes by its power, being indirect, can be 
 made greater. The income of the holder of English 
 government securities is earned by the operatives in the 
 mines and factories, and by the seamstresses and various 
 workwomen in the cities. But the bondholder comes in 
 direct contact with none of these. His income is paid 
 by the government, which gathers it from every branch 
 of industry in the country by grievous taxations. Dc-e.s 
 
NOT CAUSED BY LOW RATES OF INTEREST. 191 
 
 it not beggar the producing classes to pay the interest 
 to the money-owner, as much as to pay the rent to the 
 land owner ? Are the operatives in the manufactories 
 and mines any better provided for than the laborers on 
 the soil ? Overgrown landed estates have generally been 
 acquired through exorbitant interest on money. The only 
 way to eradicate the oppression caused by holding them 
 at high rents, is to reduce the interest upon money to such 
 a rate that the products of labor will legally go to those 
 who perform the labor, instead of going to the owners 
 of capital. Every dollar that passes into the hands of 
 the receiver of interest, is representative of products, 
 and all the excess, above a just rate of interest, is taken 
 from the rightful earnings of the laborer. Without the 
 intervention of the government, which collects the inter- 
 est by various taxations, so that the means -of oppres- 
 sion are somewhat concealed, the people would refuse to 
 submit to the injustice, and revolution in this system 
 would naturally follow. 
 
 If the national rate of interest, in Great Britain, on all 
 bank and private loans, and on the National Debt, were 
 reduced to' one per cent., and the interest were regularly 
 paid, the bonds of the government would always be at 
 par. A hundred pounds of the National Debt would be 
 worth as much as a hundred pounds in coin, or a hundred 
 pound note of the Bank of England. Now this Bank 
 and private bankers continually vary the rates of interest. 
 At some periods they charge two, three, or four times 
 more than others, while the bonds of the government 
 bear a regular rate of< interest. Therefore, when the 
 Bank and its Branches lend at a low rate, the govern- 
 ment securities rise in price ; and! when they lend at very 
 high rates, the government bonds depreciate. 
 
 Suppose the interest on the National Debt were re- 
 duced from three to one per cent, per annum. This 
 simple procedure would save to the laboring classes 
 
192 LOW PRICES OF LABOR itf EUROPE. 
 
 eighty millions of dollars' worth of their products. It 
 the interest on loans of money by the Bank of England, 
 and by capitalists, and brokers, were also reduced to one 
 per cent., it would increase the saving to the laboring 
 classes to some two or three hundred millions annually. 
 The per centage income upon capital can only be paid 
 with the proceeds of labor ; therefore this reduction of 
 the per centage income would be equivalent to the dis- 
 tribution of several hundred millions of dollars among 
 the producing classes, according to the labor per- 
 formed. The effect of so large an annual distribution 
 among this class would be to diffuse, in a few years, com- 
 petence and happiness where now exist only poverty and 
 misery. 
 
 The maintenance of the interest on money at one, or 
 at some other rate per cent, lower than this, would soon 
 and forever end the periodical depressions of trade, labor, 
 and the prices of products, and the general oppression of 
 the laboring classes. 
 
CHAPTER IV. 
 THE BANKING SYSTEM. 
 
 SECTION I. 
 
 THE NATURE OF BANKS, THEIE INSTITUTION, AND THE 
 PRINCIPLES BY WHICH THEY ARE GOVERNED. 
 
 BANKS, like other incorporated companies, receive their 
 chartered powers by legislative enactments. These 
 charters make it incumbent upon the banks to divide 
 their gains in dividends to their stockholders, and to re- 
 port to the legislature yearly, or oftener, their situation 
 and standing. It is presumed that the publishing of these 
 dividends and reports will keep the people informed of 
 the doings and utility of the banks. Yet the practical 
 operations of banking, and their special and general influ- 
 ences for good or for evil, are hidden from the public 
 view. Causes are felt to be in operation which the peo- 
 ple cannot comprehend the changes in the market value 
 of property, and in the prices of labor, are accounted for 
 by the abundance and scarcity of money ; but why money 
 is scarce at one time, and abundant at another, is to the 
 great body of the people utterly unknown. 
 
 It is the intention of the author to place the institution 
 and operation of our banking system fairly before the 
 producers of the nation, that they may clearly understand 
 
 198 
 
194 THE NATTTKE OF BANKS. 
 
 its effects upon their interests. The producers them- 
 selves will then determine whether they will change the 
 system for one to be established on right principles, and 
 that will act for the good of all, or continue the present 
 one, the effect of which, for ages, in this and other 
 countries, has been to accumulate wealth in the hands of 
 a few, to the constant injury and hopeless poverty of the 
 many. 
 
 The Constitution of the United States declares, Art. I. 
 Sec. X., " JSTo State shall emit bills of credit, make any- 
 thing but gold and silver coin a tender in payment of 
 debts." A bill of credit is a representative of property. 
 A bank bill is a bill of credit ; it is taken for the amount 
 of value, or property, set forth upon its face, and if it 
 does not actually represent that value, the owner must 
 suffer loss. 
 
 The General Government has reserved to itself the 
 right to coin money and emit bills of credit. It has, at 
 least impliedly. assumed the obligation to provide a 
 representative of property to the extent required. It 
 has, however, neglected to supply the necessary kind and 
 quantity of money to effect the exchanges essential to the 
 interest and welfare of all civilized communities. The 
 consequence has been an attempt of the State governments 
 to supply the deficiency by the establishment of banks. 
 The mode of instituting banks has been various, but 
 however instituted, experience has shown their unfitness 
 to fulfil the public purposes of their institution, and also 
 their unequalled power as instruments for gathering the 
 earnings of labor tocapital, without any adequate return. 
 
 The nature of banks is sometimes said to be similar to 
 that of manufacturing companies. The chief point of 
 resemblance in their constitutions is, that the stockhold- 
 ers, both in manufacturing companies and in banks, are 
 bound only for the amount paid in as capital stock, and 
 are not liable for any further debts of the institutions. 
 
THU NATURE OF BANKS. 195 
 
 In this particular they are on the same footing. But in 
 other respects they differ widely. Banks are chartered 
 in order to furnish the people with a public representative 
 of value, that is, with a currency by which their soil and 
 products may be exchanged. Manufacturing companies 
 are chartered in order to facilitate the production of use- 
 ful articles for the support and comfort of man. Banks 
 deal in representatives of property, and the interest on 
 these representatives is the source of their gains Manu- 
 facturers gain by increasing the amount of actual produc- 
 tion, for combinations of machinery diminish the expense 
 of producing useful articles. Still, although manufactur- 
 ing companies may have an equal amount of capital with 
 banks, say from $100,000 to $2,000,000, yet any man may 
 manufacture articles made by companies, or any number 
 of men may combine for the same purpose, without a 
 charter or any other legislative authority ; and they have 
 as much right to sell their articles in market as chartered 
 companies. If banking institutions and manufacturing 
 companies be of the same nature, why do not legislatures 
 allow individuals, however small their capital, to manu- 
 facture and circulate their notes as money, as well as to 
 manufacture goods and sell them to any one who will 
 purchase them ? Why, too, do they limit the amount of 
 business that banks may transact, and leave manufactur- 
 ing companies to be governed by the discretion of their 
 directors ? If bank-notes be merchandise, why not allow 
 banks to sell their notes for other merchandise, instead 
 of lending them for an interest in money? Why do 
 legislatures limit the interest that banks may charge for 
 the use of their bank notes, more than they limit the 
 price of goods manufactured by chartered companies ? It 
 is because the notes issued by the banks are made a 
 public medium of exchange for all property, even for the 
 goods of chartered manufacturing companies, that their 
 
 quantity, and the interest upon them, are legally re 
 
 18 * 
 
196 CHARTERED BANKS. 
 
 stricted. It is true that legislative action has thus far 
 accomplished very little toward the regulation of a cur- 
 rency; but these restrictions upon it, and the necessity 
 for legal authority to create it, prove that it is not regarded 
 as merchandise. 
 
 The business of the public generally is made greatly 
 dependent on that of a comparatively few individuals and 
 corporations, who are empowered to issue bank-notes ; 
 for all the debts of the people must be founded upon and 
 paid in money, most of which these individuals and cor- 
 porations are alone authorized to furnish. It is generally 
 understood that the banks provide a very large amount 
 of capital for public use, and it is therefore thought just 
 that they should receive large amounts of interest. But 
 if it be found that the public furnish all the security to 
 make the bank-notes a safe currency, and that the banks 
 gain immense sums in interest merely for their labor in 
 manufacturing the bank-notes, and exchanging them for 
 indorsed notes of the people, it will be evident that the 
 public is suffering a great and unnecessary loss, and 
 could have this labor performed, and the same results ac- 
 complished, or rather a far more equitable currency main- 
 tained, at a comparatively small expense. 
 
 Formerly, all our banks were conducted under special 
 charters, granted to each ; and their capital was profess- 
 edly all specie. More recently, several of the States have 
 passed General Banking La\vs, under which United 
 States and State stocks, and bonds and mortgages are 
 substituted as part of capital stocks. To establish a bank 
 under the first system the persons desirous of banking 
 petition their State government for a charter granting 
 them the privilege. The petition states that the bank is 
 needed by the public, yet we shall see presently that it is 
 not only for private purposes, but that it is to be con- 
 ducted solely for the benefit of the stockholders. The 
 rharter, according to law, requires the parties, or the 
 
OHAKTERED BANKS. 197 
 
 lockholders, to furnish a certain amount of money, which 
 constitutes the capital stock. When this is paid in, the 
 oank becomes an oftice of discount and deposit, and is 
 authorized by its charter to issue and lend bank-notes to 
 circulate as money. The chartered banks in the State of 
 'New York are authorized to discount two and a half 
 times the amount of their capital : that is, a bank that has, 
 say one million of dollars paid in as capital stock, is at 
 liberty to discount or lend to the people two and a half 
 millions of dollars. Without a bank charter, the men 
 who own the million of money which constitutes this 
 capital, could lend only one million of dollars. In granting 
 the charter, the legislature grants to these few individ- 
 uals the privilege of charging the people seven per cent. 
 interest on one and a half millions of dollars never owned 
 by the stockholders. The bank issues bank-notes bear- 
 ing no interest, and exchanges them for the indorsed 
 notes of the people, bearing interest.* 
 
 The bank pays no interest upon deposits, and charges 
 interest on all the indorsed notes given in exchange for its 
 bank-notes. The interest upon one and a half millions of 
 dollars' worth of indorsed notes, at seven per cent., 
 amounts to one hundred and five thousand dollars a year. 
 This interest is paid on a capital which is entirely ficti- 
 tious, so far as the bank is concerned. If there be any 
 capital underlying this one and a half millions of dollars, 
 it is furnished in the indorsed notes given by the people 
 in exchange for the bank-notes. The solvency of the 
 bank for one and a half millions, depends upon the good- 
 ness of the indorsed notes received from the people, and 
 not upon its own capital ; for however safely its one mill- 
 
 * Money is popularly said to bear such a rate of interest, as if the 
 money itseli bore the interest. But, in fact, money bears no in- 
 terest ; the obligations given for the use of money bear the interest ; for 
 when money circulates in making cash purchases of commodities and 
 property, in which no obligations are given, no interest is paid. 
 
198 CHARTERED BANKS. 
 
 ion of capital may bemoaned, it can redeem but one .mill 
 ion of liabilities. If the bank should lose a million of 
 dollars, by bad debts, or otherwise, the entire loss would 
 fall upon the stockholders, for 'this amount is comprised 
 in the capital of the bank ; and, by the charter, is made 
 first liable for the losses which may be sustained. But 
 the remaining $1,500,000 of bank-notes loaned could not 
 be redeemed unless the indorsed notes received in ex- 
 change for the bank-notes were against responsible per- 
 sons. If the drawers and indorsers were able to pay 
 only a part of these notes, then only a part or a certain per 
 centage of the bank-notes could be paid ; and, if no part 
 of the indorsed notes could be collected, the million and 
 a half of bank-notes would be a total loss to the holders. 
 The original $1,000,000 of capital has little basis of 
 specie, and the surplus 81,500,000, issued over and above 
 the capital, has none. The latter is based upon a priv- 
 ilege granted by the government to a company of men 
 to make bank-notes bearing no interest, and exchange 
 them for the indorsed notes of the people bearing 
 interest. True, all bank-notes are made payable on 
 demand in specie, and if banks refuse to pay specie they 
 are liable to forfeit their charters. But all obligations 
 between individuals, even to book-accounts, are also 
 legally payable in specie ; and all debtors are liable to 
 prosecution if they refuse to pay their debts 'in specie. 
 The law which requires the banks to redeem their notes 
 on demand in specie, no more furnishes them with specie 
 for that purpose than it furnishes individuals with specie 
 to redeem their notes and pay their debts. Nearly 
 three times the whole amount of specie in the banks in 
 the State of New York, from 1835 to 1845, would have 
 been required to pay their deposits, at any one time 
 during that period, and this without redeeming in specie 
 a dollar of their circulation. If specie should be gener- 
 ally demanded, the laws could not enable the banks to 
 
CHARTERED BANKS. 199 
 
 pay their notes and deposits in coins, nor individuals to 
 pay their notes and debts in coins. 
 
 The principle upon which the contracts between the 
 banks and the people are made, may be illustrated by 
 supposing the government to fix a value upon ten silver 
 spoons belonging to John Doe, and make them a tender 
 in payment of debts. As they are not sufficient in amount 
 to form a currency, John Doe is empowered to make 
 twelve paper spoons on the credit of each silver one, 
 all of which paper spoons he is to redeem on demand 
 with silver spoons. He retains the ten silver spoons, and 
 .oans at seven per cent, interest the one hundred and 
 twenty paper spoons, charging interest on them at seven 
 per cent., and receiving in exchange for them good 
 indorsed notes payable in two, three, or four months 
 in silver spoons. All the paper spoons loaned to the 
 people are payable in silver spoons on demand at John 
 Doe's office, who has but ten silver spoons to pay the 
 one hundred and twenty -paper ones. If the holder of 
 ten paper spoons, should demand and take the ten silver 
 spoons, John Doe would be obliged to make the indorsed 
 notes which he had received from his customers for paper 
 spoons redeem the remaining one hundred and ten paper 
 spoons which he had issued. All these were based upon 
 paper, and must be paid again in paper if they are paid 
 at all. Still, he would receive from the people interest 
 upon a hundred and ten silver spoons which he never 
 owned, and this by means of a legislative charter granted 
 to him because he was the owner of ten silver spoons. 
 If the legislature would not sanction the balancing of these 
 debts with paper, the people could never pay Doe in 
 silver spoons the indorsed notes they owed him ; nor 
 would Doe be able to redeem his paper spoons with silver 
 spoons. The drawer of the ten silver spoons would have 
 engrossed the whole tender upon which all the contract;- 
 were founded. 
 
200 GKNERAL BANKING LAW. 
 
 In general, debts are contracted for land, labor, and 
 products ; but none of these is a tender in payment of 
 debts. Debts are payable in a tender established by law, 
 but are generally paid in bank-notes which are used as a 
 substitute for the tender. Admitting, then a silver dollar 
 to possess intrinsic value equal to its nominal amount, 
 how is it possible for it to make twelve representatives 
 of itself, and make each one of the twelve as valuable as 
 itself, when at the same time any one of the twelve has 
 power to demand and take the silver dollar, and thus to 
 leave eleven destitute of any basis of silver, and incapa- 
 ble of being paid in it? If paper money be allowed to 
 pass as representative of specie, there should be a silver 
 dollar for every paper dollar. Otherwise, the paper 
 money cannot represent specie. A silver dollar cannot be 
 represented by two paper dollars, each of which would be 
 as valuable as itself, more than the owner of one acre 
 of land can give t\vo deeds, each for the one acre, to 
 different individuals, and make both deeds good. The 
 first deed must take the entire acre. If the second be of 
 any value, it must be made so by offsetting the consider- 
 ation given in payment for the deed, and not the land 
 which the deed purports to secure. If paper money be 
 allowed to circulate, it should not be under the pretence 
 that it represents what it does not and cannot repre- 
 sent. 
 
 In April, 1838, the State of New York passed a Gene- 
 ral Banking Law, allowing any number of individuals to 
 associate together and establish a bank, provided they 
 furnish a capital of not less than $100,000. To secure the 
 public from loss by the issue of bank-bills under this law, 
 the* banks deposit with the Comptroller an amount in 
 bonds and mortgages, or State stocks, equal to the 
 amount of bank-bills which they are authorized to issue. 
 The bills are then countersigned by the Comptroller. If 
 any bank fail to redeem its bills, the Comptroller -is em 
 
GENERAL BANKING LAW. 201 
 
 powered to sell the bonds, and redeem the bills with the 
 proceeds. 
 
 This mode of supplying the public with mone)> is 
 leemed by many a very safe one. Still, during the first 
 six or seven years in which this new system was in ope- 
 ration, thirty-four banks failed, and did not redeem their 
 notes at par. Some paid only twenty-five or thirty cents 
 on the dollar. Others paid a per centage varying from 
 thirty to ninety-four cents. Of forty banks closed by 
 the Comptroller, only six redeemed their circulation at 
 par. At the time of the Comptroller's sale of the secur- 
 ities given for the redemption of their bank-notes, the 
 forty banks had a circulation of $1,233, 374. The circu 
 lation of the six banks of which the notes were finally 
 redeemed at par by the Comptroller amounted to 
 $120,729, leaving a balance of circulation of $1,112,645, 
 which was compromised at rates varying from twenty-five 
 to ninety-four cents on the dollar. Doubtless a large 
 amount of these notes was bought up by brokers at a 
 much greater discount than that at which they were 
 eventually redeemed by the Comptroller, so that the 
 public lost probably from $700,000 to $800,000, besides 
 the losses of depositors which do not appear. 
 
 It may be said that the securities placed with the 
 Comptroller were not the bonds of the State of New 
 York, but those of other States ; that these States failed 
 to pay their interest, and consequently their bonds depre- 
 ciated greatly below their par value, and were not good 
 security. True ; but at the time they were taken by the 
 Comptroller they were deemed good security for the 
 redemption of the bank-notes. It must be remembered, 
 too, that in 1837 the bonds of the State of New York, 
 bearing an interest of six per cent., sold at about thirty 
 per cent, below their par value. The securities pledged 
 .with the Comptroller at the present time are of the same 
 nature as those then pledged. If the interest on money 
 
202 GENERAL BANKING LAW. 
 
 should now n&e as high as then obtained on loans of bank- 
 notes, the bonds of the State would again depreciate as 
 much as ia 1837. The same loss of confidence in the 
 ability of the State to pay its debts would exist, because 
 rates of interest at two, three, and four per cent, a month 
 so rapidly increase the indebtedness of the people, that 
 their wealth is soon transferred to a few capitalists, who 
 are enabled to control the rate of interest, and conse- 
 quently the market value of State bonds and property. 
 As ?Jng as money can be obtained on good securities at 
 eix or seven per cent, interest per annum, the bonds of 
 the State, bearing six per cent, interest, will command at 
 least their par value. But only so long as banks and 
 capitalists choose to keep the rate of interest as low as 
 six or seven per cent., will these State bonds continue 
 safe for the redemption of the bank-bills. 
 
 We will now see by whom the security of this banking 
 capital is furnished, and by whom the interest upon it is 
 paid. In order to provide capital for a bank, the indi- 
 vidual who desires to establish the institution must buy 
 State bonds to secure the bank-notes which he intends to 
 issue. He invests $100,000 in bonds, on which the peo- 
 ple pay him six per cent, interest. Although his money 
 is invested, yet he receives $100,000 in bank-notes, 
 countersigned by the Comptroller, upon which he is 
 authorized to bank. Adding a few thousand dollars in 
 specie to his bank-notes, he opens an office of discount 
 and deposit, loans out the $100,000 in bank-notes, which 
 he received from the Comptroller, and perhaps $100,000, 
 or $150,000 more received from the people in deposit, on 
 which he pays no interest. He charges interest on all 
 the money he lends. If the people should call upon him 
 to redeem his bank-notes, and pay their deposits in specie, 
 he would probably not have more than $10,000, $20,000, 
 or $30,000 in specie ; and if there should be a run upon 
 the bank, this would not meet the demand for a single 
 
SPECIE OWNED BY THE BANKS. 20& 
 
 day. The banker would be compelled to suspend specie 
 payments. What would then secure the remaining in- 
 debtedness of the bank except the indorsed notes of the 
 people, and the State bonds, for which the people are 
 responsible ? The banker is not liable beyond the capital 
 invested. He lends his money on securities furnished by 
 the property of others. The object of this Banking 
 Law was the security of the bank-notes. This object, as 
 we have shown, has not been realized. The people have 
 not only lost $700,000 or $800,000 by the failure of the 
 banks to redeem their notes, but the depositors also have 
 lost large amounts. Deposits in a public banking insti- 
 tution, ought to be as secure as the bank-notes circulated ; 
 but for this no provision is made by the law. Bankers, 
 under the sanction of the General Banking Law, obtain 
 interest from the people on two or three times more pro- 
 perty than they actually own. This law, as also all 
 other laws granting banking privileges, creates a fictitious 
 capital for which the people are compelled to pay inter- 
 est five or six times greater than they can afford to pay 
 for real capital and at the same time justly reward labor. 
 It has operated to enrich bankers and capitalists, instead 
 of operating for the benefit of the people. ' 
 
 SECTION II. 
 
 THE AMOUNT OF SPECIE OWNED BY THE BANKS, AND 
 THE INTEREST PAID BY THE PEOPLE ON BANK LOANS. 
 
 The chartered banks profess to transact their busi- 
 ness entirely on a specie basis. If, to show the actual 
 amount of their specie, we take that of the banks 
 of Connecticut, which have been conducted with as much 
 safety to the public, and credit to themselves, as those of 
 any other State in the Union, and far more than the 
 
204 
 
 SPECIE OWNKD BY THE BANKS. 
 
 average, it will be not only a fair but a favorable criterion 
 of the specie capital of the banks in the other States. 
 The following table, extracted from the "Merchant's 
 Magazine," vol. xvii., page 209, is an abstract of the 
 Commissioners' Report for eleven years, from 1837 to 
 1847 inclusive; to which is added from the same work, 
 vol. xxii., page 320, the Commissioners' Report for the 
 year 1849. Thus we have the following statement of the 
 condition of the banks during twelve years. 
 
 Year. 
 
 11837 
 IbSS 
 11839 
 M840 
 11841 
 !1842 
 11843 
 1844 
 1845 
 1846 
 11847 
 
 1849 
 
 Capital. 
 
 Circulation. 
 
 Total Liabilities. 
 
 Specie. 
 
 Loans and Dis- 
 counts. 
 
 $8,744,697 50 
 8,754,467 50 
 8,882,223 00 
 8,878,245 00 
 8,873,927 50 
 8,876,317 57 
 8.580,393 50 
 8,292,288 00 
 . 8,359,748 00 
 8,475,630 00 
 8,6 5,742 00 
 
 95,273,629 57 
 8,985,917 00 
 
 $3,998 325 30 
 1,920,552 45 
 3,987,815 45 
 2,32.i,589 95 
 2,784,721 45 
 2,555,638 33 
 5,379,947 02 
 3,490,963 06 
 4,102,444 00 
 3,565,947 06 
 4,437,631 06 
 
 $15,715,964 59 
 12,302,631 11 
 14,942,779 31 
 12,950,572 40 
 13,866,373 45 
 13.465,052 32 
 12,914,124 66 
 14,472,681 32 
 15,243,235 79 
 15,892,685 25 
 15,784,772 04 
 
 $415,386 10 
 539,447 86 
 502,180 15 
 499,032 52 
 454,298 61 
 471,238 08 
 438,752 92 
 455,430 30 
 453,658 79 
 481,36709 
 462,165 53 
 
 $13,246,49508 
 9,769,286 80 
 12,286,946 97 
 10,428,630 87 
 10,944,673 35 
 10,683,413 37 
 9,798,392 27 
 10,^42,95535 
 12,477,196 06 
 13,032,600 78 
 12,781,857 43 
 
 38,549,575 13 
 4,511,571 00 
 
 $157,550,872 44 
 
 5,16S,957 95 
 575,676 00 
 
 126,292,898 38 
 13,740,591 00 ! 
 
 $104,259,546 57 
 
 $5,744,633 95 
 
 $140,033,489 S3 ' 
 
 . | 
 
 Average Capital 
 
 Average Liabilities . . 
 
 Average Specie . 
 
 Average Loans and Discounts . 
 
 .$8,688,295 55 
 ..13,129,239 37 
 
 478,719 50 
 
 . .11,669,457 44 
 
 By the foregoing table it will be seen that the average 
 amount of the specie held by the banks in the State of 
 Connecticut, for the twelve years, was $478,719, while 
 die average amount of their loans to the public, during 
 the same period, was $11,669,457 more than twenty- 
 four and one third times as much money as the banks 
 had specie. The annual interest on $11,669,457 was 
 $700,167. If they could have loaned only their specie, the 
 interest would have amounted to but $28,723. The banks 
 gained from the public annually, $671,444 above the in- 
 terest on their specie; and, in the twelve years, 
 
SECURITY FOR BANK LOANS. 205 
 
 &6,057,32S. They collected this interest in advance, and 
 made their dividends half yearly to their stockholders ; 
 therefore, it is proper to compound this interest half 
 yearly, which would swell their gains to nearly 
 $12,000,000, that is to say, $1,000,000 interest annually. 
 These were actual gains, as much realized by these banks 
 as if they had produced and sold annually $700,167 
 worth of agricultural products. 
 
 These banks were chartered with a professed specie 
 capital, averaging for the twelve years, $8,679,962 ; 
 while the average of the specie actually held by them 
 was less than one-eighteenth part of this sum. How 
 was this excess of capital above the average $478,719 ID 
 specie made up, and was it furnished by the stockholders 
 or by the public ? The specie held by these banks, as 
 we have said, did not constitute one-eighteenth part 
 of their professed capital; hence there must have been 
 other capital to make up the seventeen parts we find 
 wanting, otherwise their bank-notes could not have been 
 safe ; for, one thousand dollars' worth of land is as good 
 security for the payment of eighteen thousand dollars in 
 money, as one thousand dollars in specie for the payment 
 of eighteen thousand dollars in bank-notes. But the 
 banks, instead of eighteen lent over twenty-four dollars 
 for each dollar in specie, so that the specie held by the 
 banks was but a fraction over four per cent, of their 
 loans. The specie was, then, a very small item in the 
 security of the bank-notes, and was not essential to their 
 safety. If the banks in other States have, in proportion 
 to their loans, double the amount of specie owned by the 
 Connecticut banks, it is no evidence that they are more 
 safe, because their safety cannot depend upon four or 
 eight per cent, of specie. No bank-notes can be safe 
 money unless secured for their full amount. 
 
 Let us see how the specie capital of banks is generally 
 made up. Suppose one bank to be chartered with a 
 
206 SPECIE OWNED BY THE BANK8. 
 
 specie capital of $500,000, all paid in, and to lend 
 $750,000 for approved indorsed notes. A second bank 
 is likewise chartered with a capital of $500,000 ; to make 
 up which, $400,000 of the notes of the first bank and 
 $100,000 in specie, also drawn from it, are paid in. The 
 notes of the first and second banks, together with a small 
 sum in specie, form the capital of a third ; and thus bank 
 after bank is formed, say to the number of eighteen, each 
 with a professed specie capital ; while, in reality, all of 
 them together own only $500,000 in specie. How is 
 this excess over the $500,000 secured ? The loans 
 of the first bank for $500,000 were secured by the same 
 sum in specie ; but when it had lent $250,000 more, the 
 excess was secured by the indorsed notes offered by the 
 people for discount. When the second bank had discounted 
 $750,000, the two banks had under discount a million 
 and a half of dollars, one million of which was secured by 
 indorsed notes, and but half a million by specie. A 
 third, fourth, and finally eighteen banks having dis- 
 counted $750,000 each of indorsed notes, the aggregate 
 amount would be $13,500,000, of. which $500,000 only 
 would be secured by specie, and the sole security for 
 $13,000,000 would be the indorsed notes held by the 
 banks against the public. Some of these discounted in- 
 dorsed notes might be against stockholders in the banks ; 
 bu1 all of them, whether against stockholders or others, 
 are secured by the property of their drawers and in- 
 dorsers, and not by the capital of the banks. If thirteen, 
 out of thirteen and a half millions of dollars, are made 
 safe for the public use by these indorsed notes, evidently 
 the remaining half million could be made safe in the 
 same manner ; and we could thus dispense with specie 
 altogether. If ninety-six per cent, of the money is now 
 secured by indorsed promissory notes, certainly the 
 other four per cent, can be secured by similar means. 
 The people furnish the security for the bank-no* es, and 
 
SECURITY FOli HANK LOANS. 207 
 
 pay the interest, wliieh is the source of all the gains of 
 the banks. R. and S. are men of property. R. draws his 
 note at six months for $10,000, gets S. to indorse it, and 
 then has it discounted at bank. If interest be at seven 
 per cent., R. will receive only $9,650 in bank-notes, and 
 at the maturity of the note must pay $10,000 to take it 
 up : the bank thus gains $350 as the interest or rent of 
 the bank-notes for six months. Under no circumstances 
 would the bank discount the note unless it were deemed 
 perfect security for the return of the money and the pay- 
 ment of the interest. R.'s note, indorsed by S., and 
 held by the bank, is secured by the property of these 
 men ; and the bank-notes secured by the indorsed notes 
 are also secured by the same property of R. and S. If 
 the bank-notes circulate for six months, R.'s indorsed 
 note also secures to the bank the return of $350 more 
 than it gave for the note. 
 
 A similar illustration may be made on a more ex- 
 tended scale, say on $5,000,000 ; about the sum kept 
 under discount by some of the larger banks in New 
 York. Suppose a bank to discount notes, drawn and 
 indorsed by various individuals in good credit, for 
 $5,000,000, having (to simplify the process, and bring the 
 gains under one item) twelve months to run. It would 
 pay to these individuals $4,650,000 in bank-notes : and the 
 $350,000 deducted as discount wduld be clear gain, less 
 the labor to make and exchange the bank-notes. If the 
 public need the $4,650,000 to meet their business obliga- 
 tions for the year, the money will continue to circulate, 
 and the bank will not be called upon to redeem it, during 
 that period. At the close of the year, when the indorsed 
 notes become due, if the drawers should collect every 
 dollar of the bank-notes issued, $350,000 would still be 
 wanting to pay the bank the indorsed notes for 
 $5,000,000 ; arid the people would be dependent on the 
 bink for a further discount of notes to obtain the money 
 
208 SPECIE OWNHD BY THE BANKS. 
 
 due as the year's interest. If one bank furnished all tne 
 money of the nation, the people would be dependent on 
 that one for money to fulfil all their obligations. In- 
 crease the number of banks to a thousand, and the in- 
 dorsed notes in proportion, and the transactions will be 
 more numerous and appear more complicated, as they ac- 
 tually are ; but it will not alter in the least the principles 
 upon which the banks gain the interest out of the earn 
 ings of the public, while the public furnishes all the secur- 
 ity necessary to make the bank-notes safe to circulate as 
 money. 
 
 The people furnish double the security to make the 
 bank-notes safe that they give to each other in the 
 ordinary purchase and sale of products. The farmer 
 sells his produce to the miller or merchant on credit ; 
 the miller sells his flour, the wool-grower his wool, and 
 the manufacturer his goods mostly on two, four, six, 
 eight, ten and twelve months' credits to city merchants, 
 who resell them on like credits to other city or country 
 merchants, and these dispose of them chiefly on credit, to 
 farmers, mechanics and other consumers. Farmers, 
 mechanics and merchants, in ordinarily good credit, can 
 buy goods on their own responsibility ; and their pur 
 chases are generally limited only by their own discretion. 
 But they cannot take book accounts to the banks, and 
 get bank-notes in exchange on the responsibility of 
 the man who owes the money. Notes offered 
 for discount must have only a certain time to run, 
 must be drawn by men known to the directors to be 
 responsible, and indorsed by one or two others in 
 equally good credit. Thus the people do give at least 
 double the security to make the bank-notes safe to circu- 
 late as money that they do to secure themselves against 
 loss in the sale of the products of their own labor. Yet 
 they pay to the banks five or six times more than a fair 
 equivalent for the material and labor to make and ey> 
 
SECURITY FOR BANK LOAN'S. 
 
 shange the bank-notes for the indorsed notes ; and thi 
 is a total loss to the producing classes, and a clear gain to 
 the banks. 
 
 We will now estimate the proportion of capital stock 
 furnished in specie by the stockholders of the banks in 
 the State of New York, and the proportion furnished by 
 the balancing power of paper against paper. The follow- 
 ing table, taken from the State Register, shows how 
 much of the State currency, in 1844 and 1845, was based 
 upon specie, and how much was based upon paper notes : 
 
 BANK REPORTS FOR 1844-45. 
 
 COMPARISON OF THE PRINCIPAL ITEMS, AT QUARTERLY PERIODS, FROM 
 FEBRUARY, 1844, TO FEBRUARY, 1 845, INCLUSIVE. 
 
 Capital 
 
 February 1, 
 1844. 
 
 $48,649,887 
 16,335,401 
 1,483,848 
 29,026,415 
 15,610,554 
 
 Mayl, 
 1841. 
 $48,462,311 
 18,365,031 
 1,506,167 
 30,742,289 
 15,467,494 
 
 August 1, 
 1844. 
 
 $43,443,005 
 18,091,324 
 1,210,794 
 
 28,757,112 
 16,102,922 
 
 Nov. 1, 
 1844. 
 
 $43,618,607 
 20,152,219 
 1,534,553 
 30,391,622 
 14,431,103 
 
 February 1, 
 1845. 
 
 $43,674,146 
 18,513,402 
 1,607,572 
 25,976,246 
 11,501,102 
 
 Circulation 
 Canal Fund 
 
 Deposits 
 
 Due Banks 
 
 Loans and Discourse 
 Stocks and promis- 
 sory notes 
 Specie 
 Cash items 
 
 $70,025,734 
 
 11,062,458 
 
 10,086,542 
 4,502.479 
 2,275,172 
 10,267,207 
 
 $74,527,858 
 
 10,362,330 
 9,455,161 
 5,999,952 
 3,148,421 
 8,817,179 
 
 $75,546,592 
 
 10,648,211 
 10,191,974 
 4,916,862 
 2,511,326 
 8,359,328 
 
 $77,347,718 
 
 10,773,678 
 8,968,092 
 6,047,52$ 
 2,368,467 
 8,767,513 
 
 $70,888,578 
 
 10,244,043 
 6,893,286 
 4,839,886 
 2,887,i -OS 
 7,684,308 
 
 Bank-notes 
 
 Due from Banks 
 
 From the foregoing table, it will be perceived that the 
 banks were indebted at the above period to the amount 
 of from $101,272,468, up to $110,128,104. Their average 
 indebtedness, including the refunding of the capital stock 
 to the stockholders, was $106,931,004. The average 
 amount of their specie at the different periods as above, 
 was $9,119,001. Deduct the specie from the indebted- 
 ness i. e., $9,119,001 from $106,931,004 and we have 
 left $97,812,003, which sum must have been cancelled by 
 paper. Our banks have specie enough to redeem only 
 about one-fifth part of their capital stock. The balance 
 of their capital stock, the redemption of the bank-note* 
 
SPECIE OWNED BY THE BANKS. 
 
 
 
 in circulation, and the payment of the deposits, are 
 secured by the indorsed notes of the people, binding the 
 property of the drawers and indorsers. Their property 
 as much secures the bank-notes, as it does their own 
 notes. The bank-notes are representatives of the pro- 
 perty of the people, and not representatives of the pro- 
 perty of the banks. Not a single dollar of the paper 
 issued over and above the actual amount of specie, is 
 secured by their capital stock, because, if none of these 
 indorsed notes and bonds of the State were ever paid, 
 not a single dollar of the indebtedness of the banks, either 
 for bank-notes or deposits, above their actual specie, 
 would ever be paid. The $97,812,003 would be a total 
 loss to the holders of the bank-notes, to the depositors, 
 and to the stockholders. 
 
 The interest collected on the indorsed notes and State 
 bonds supports the banks, and pays all their extravagant 
 expenditures in granite buildings, salaries of officers, etc. 
 They can pay their presidents and cashiers from $3,000 
 to $5,000 each, and other expenses, house-rent, etc., in 
 proportion, to the amount of $40,000 or $50,000 yearly. 
 They can also pay to the stockholders from three to five, 
 six, or seven per cent, in dividends every six months. 
 The banks under legislative authority make the public 
 furnish the capital, and then pay interest on this capital. 
 But although the industry of the people supports the 
 whole, they have no voice in the management. The 
 directors in the banks can at any time call upon them to 
 pay off their notes and cancel the bank-notes ; and if they 
 fail, they are blamed for over-production and over-trad- 
 ing. When the banks contract their loans rapidly, and 
 distress the people, the directors are said to be prudent 
 and judicious managers. Yet if the people should 
 demand specie, the banks could not pay it, unless they 
 could collect it out of the indorsed notes of the people. 
 But these indorsed notes were never founded upon 
 
SlfiOUKITY FOE BANK. LOANS. 211 
 
 specie, and could not be paid in it, because the drawing 
 and indorsing of the notes by the people, and the en- 
 graving of the bank-notes by the banks, and the exchange 
 of the bank-notes for the indorsed notes, do not create 
 gold and silver coins to pay either the bank-notes or the 
 indorsed notes. There has never been a time when the 
 banks could have paid specie for a week, for their aver- 
 age deposits are more than three times their whole 
 amount of specie. 
 
 The table shows that the average amount of the capital 
 of the banks in the State of New York, during the 
 period mentioned, was $43,569,591, and their average 
 indebtedness was $106,931,004. The difference of these 
 two sums is $63,361,413. The annual interest upon 
 $63,361,413, at seven per cent., was $4,435,333, which 
 the people of the State paid to the stockholders and 
 officers of the banks for furnishing bank-notes above the 
 amount of their professed specie capital. The people 
 wrote their own notes, had them indorsed, and took 
 them to the banks to be discounted. The banks engraved 
 their bank-notes, and gave them in exchange for the 
 indorsed notes. For engraving these notes, and making 
 these exchanges, the people of the State paid to the 
 banks annually $4,435,333, or as much as the farmers of 
 the State receive for four millions four hundred and 
 thirty-five thousand three hundred and thirty-three 
 bushels of wheat, at $1 per bushel. The labor of pro- 
 ducing such an amount of wheat was great ; the labor 
 of producing the bank-notes was very small, yet the interest 
 paid on these bank-notes would have bought this quantity 
 of wheat. At the end of the year the people of the 
 State returned ah 1 the bank-notes to the banks, together 
 with the value of this large amount of wheat to pay the 
 year's interest. The same amount of interest accrued 
 every year, and called for the same amount of their pro- 
 ducts. They solv? their products in market, and paid the 
 
212 SPECIE OWNKD BY THE HANKS. 
 
 interest to tho banks with the proceeds of the sales, the 
 same to them as if they had carried their wheat and 
 products directly to the banks to pay the interest. If 
 the entire capital of the banks had been specie, the 
 people would have paid the same amount for the use of 
 the bank-notes which would have been issued over and 
 above the specie. 
 
 The interest yearly paid for the use of 863,361,413, in 
 bank-notes, was a legal equivalent for the four millions 
 four hundred and thirty-five thousand three hundred 
 and thirty-three bushels of wheat yearly raised upon 
 a certain quantity of land ; and the legal value of the 
 $63,361,413, in bank-notes, was equal to the actual value 
 of the land and labor necessary to produce the wheat. 
 The power of the bank-notes was an exact balance 
 against these products and the land upon which they were 
 produced. If the quantity of money was at any time 
 diminished, and the rate of interest increased, a larger 
 amount of products was required to balance the smaller 
 amount of money, and a larger amount of products to 
 balance the interest on the smaller amount of money. 
 Still this money must have been used to balance products, 
 for it was the only public representative of value, and 
 must have been employed as a tender, or as a substitute 
 for a tender, in payment of debts. The promise of the 
 banks to pay specie for their bank-notes on demand, does 
 not enable them to pay the specie, nor does it alter the 
 monopolizing power of the interest on the money over 
 products. 
 
 If our bank-notes are good for the purchase of pro- 
 perty by the people, certainly they should be equally good 
 for the purchase of property by the banks. Let us reverse 
 the relative positions of the banks and the people. Sup- 
 pose instead of lending their money to the people to buy 
 property, the banks should buy property with their bank- 
 notes, and let it out to the people. This would put the 
 
SEC UK' IT Y FOR BANK LOANS. 
 
 bank notes into circulation, and the banks would be the 
 landlords of the property, instead of being the owners 
 and lenders of the money. Let the people then call 
 upon the banks for the redemption of the bank-notes in 
 specie, and in default of payment sue them ; and if they 
 wish to borrow bank-notes to save their property from 
 sheriff's *8alej charge them one, two, or three per cent, a 
 month for the use of the bank-notes. Let the banks try 
 to rent their property so as to make the rents pay these 
 rates of interest. This would only place the stockholders 
 in a position similar to that in which they now often, 
 though indirectly, place the people. It is evident that 
 it would be impossible for them to redeem their bank- 
 notes in specie, or to redeem them in any way except by 
 selling their property and taking these bank-notes in 
 payment, as the people now give their notes to the banks 
 and pay the discount, and when their notes become due, 
 collect these bank-notes together, and take them to the 
 banks to redeem their indorsed notes. If the banks 
 should buy the property with their bank-notes, and their 
 friends should guarantee the property worth the price 
 paid, the property and the guarantee would secure the 
 bank-notes. It would only place the banks under the 
 necessity of cultivating their property, and selling the 
 products to pay the interest. It would be as possible to 
 redeem the bank-notes with specie, under the supposed 
 circumstances, as it now is. If the banks were called 
 upon to redeem them now, they would crowd the people, 
 and sell their property, and in the supposed circumstances, 
 rhe people would crowd the banks, and sell their property. 
 In both cases the debts must be cancelled by offsetting 
 the property against them, for they could not be re- 
 deemed with specie. 
 
 It is perfectly obvious that our legislative bodies have 
 founded our banking system on false pretences upon 
 the banks do not even expect to fulfil. The 
 
214: SPECIE OWNED BY THE BANKS. 
 
 only reason why the banks can exist upon such a basis is, 
 that the people do not. demand the specie for their notes 
 and deposits. The government enacts a law binding all 
 debtors to make their payments in specie, when it is per- 
 fectly well known that specie does not exist in sufficient 
 quantities to enable them to fulfil the requirement. More 
 than eleven-twelfths of the debts between the bfinks and 
 the people are contracted with a paper balance, and have 
 no reference to specie. Of course, the only means of 
 paying them is by balancing one paper note with another. 
 If the banks, or the people, or the government should in 
 every case exact what the laws require, it would be 
 impossible to meet the demand. If the three should ex- 
 act specie in payment for then* obligations, it would 
 inevitably bankrupt them all, and almost certainly cause 
 starvation in the midst of abundance, if not civil war. If 
 the governments of the States as well as the General 
 Government should refuse to take bank-notes in collect- 
 ing and disbursing their revenues, probably the people 
 could not pay their duties and taxes. The necessary 
 withdrawal of specie to meet these engagements would 
 at once cause the banks throughout the Union to suspend 
 specie payments. The need of money would then compel 
 the people to petition the legislatures of their respective 
 States to sanction this suspension, and allow the banks to 
 continue to discount without paying specie on demand. 
 They would, however, still be allowed to charge interest 
 upon all the indorsed notes of the people received in ex- 
 change for the bank-notes, which would then be avow- 
 ydiy destitute of any basis of specie. 
 
 Can anything be more directly opposed to every prin- 
 ciple of justice, than laws requiring the performance of 
 impossibilities ? Laws which, if the people should 
 attempt to execute them, instead of promoting peace and 
 happiness, would cause the greatest calamities that could 
 possibly befall a nation. It is essential to good govern- 
 
THE BANK OF ENGLAND. 216 
 
 ment that the interest and welfare of the people should 
 require the execution of its laws, and whenever their vio- 
 lation becomes necessary to the public good, it is self- 
 evident that there is something radically wrong in the 
 government itself. A government should never allow 
 anything to pass as a substitute for money ; the tender 
 itself should be equal in amount to the wants of business. 
 The law making gold and silver the only tender in pay- 
 ment of debts is well adapted to build up and sustain 
 monarchical governments, because it must infallibly accu- 
 mulate property in the hands of a few, constituting aris- 
 tocracies, which are essential to this form of government ; 
 but the same reason that qualifies it so admirably for this 
 purpose, renders it incompatible with a government hav- 
 ing for its sole object the welfare and happiness of the 
 people. 
 
 SECTION III. 
 
 BASIS OF THE BANK OF ENGLAND. 
 
 The Bank of England is established upon a basis similar 
 to that of the banks of the United States. Indorsed 
 notes secure the bank-notes, and not specie. The bank- 
 notes are not representatives of specie. The bullion in 
 the bank seldom much exceeds the amount of the depo- 
 sits. Should the depositors draw the specie, the only 
 way in which the bank could redeem its bank-notes 
 would be to take them in payment for the indorsed notes 
 it holds against individuals. If these indorsed notes were 
 not good, the bank-notes would be worthless. These 
 indorsed notes are secured by the property of then- 
 drawers and indorsers ; their property, and not the pro- 
 perty of the bank, secures the bank-notes. 
 
 The Bank of England first issues 14,000,000, on gov- 
 ernment securities. This is making paper balance paper. 
 It gives to the bank no ability to pay the 14,000,000 in 
 
216 THE BANK OF ENGLAND. 
 
 bullion. If two individuals should exchange obligations 
 for 14,000,000, this exchange would not produce bullion 
 to pay either obligation. The bank-notes for 14,000,000 
 have not a fraction of value, except in so far as they are 
 secured by the government bonds, and these bonds are 
 secured not by the bank, but by the property and produc- 
 tive industry of the people of England. 
 
 All the gains of the bank by the recent * rise of interest, 
 were unfairly taken from the industry of the people, and 
 appropriated to the stockholders of the bank. The idea 
 was given out that the bank was compelled to raise the 
 rate of interest in order to be able to pay specie for 
 its obligations. If the bank had been established upon 
 a proper basis, and had loaned its money to aid the 
 productive industry of the nation, at a low and uniform 
 rate of interest, instead of making its loans to stock- 
 jobbers and brokers to reloan at high rates, the recent 
 crisis, or any former crisis in the monetary affairs of the 
 country could not have happened. But the bank is 
 established upon a false basis, promising to pay specie 
 which it has not and cannot have. Therefore, in the 
 recent crisis, it was compelled to lend its money to 
 brokers and stock-jobbers, ptherwise they would proba- 
 bly have drawn its specie, and compelled it to suspend 
 specie payments. The bank and this class of citizens 
 -vork for one another's interest, and extort the last 
 penny from the producers of the wealth, under the pre- 
 tence that the money, or the bullion, is the real wealth of 
 the nation, and they keep the people constantly toiling 
 for the bullion without ever possessing it, while the 
 owners of the bullion contrive to live in luxury upon 
 what the labor of the people produces. 
 
 To show that the bank is sustained in its specie pay 
 xnents by its reciprocal operations with capitalists, and 
 
 * This was written previous to 1849. [M. K. P.] 
 
BALANCING POWER OF BANK-NOTES. 217 
 
 that the bank-notes are secured by the indorsed notes 
 of the people, and not by the bullion in the vaults, it will 
 only be necessary to refer to the weekly reports of the 
 bank. October 23, 1847, bullion, 8,312,691. Deposits, 
 8,588,509. Net circulation, 20,318,175. The bullion 
 amounted to 275,818 less than the deposits: and if the 
 deposits had been called for in specie, there would not 
 have been a shilling in bullion toward paying the 
 20,318,175 of bank-notes. These, if paid at all, must 
 have been paid by balancing them off against the 
 indorsed notes of the people, held by the bank. Again, 
 January 22, 1848, the bullion had increased to 
 13,176,812, the deposits had increased to 10,774,870, 
 and the circulation had diminished to 19,111,880. De- 
 duct the deposits from the bullion, and there remained 
 2,401,942 in bullion to pay 19,111,880. Deducting 
 the bullion there remained 16,709,938, which, if it had 
 been paid at all, must have been paid by balancing off 
 the bank-notes against the indorsed notes held by the 
 bank ; as if two individuals should exchange notes, and 
 agree to pay them in specie, but as neither has the specie 
 to pay, agree to exchange notes again, and thus close the 
 transaction. The exchange of the bank-notes, for the 
 indorsed notes of the people, is different in this respect; 
 the bank pays no interest to the people, but, it makes the 
 people pay interest on the bank-notes, and this interest 
 absorbs the productions of labor. 
 
 SECTION IY. 
 
 THE BALANCING POWER OF BANK-XOTES AND DEPOSITS. 
 
 It has been already stated that if the banks become 
 indebted for a larger sum than the amount of specie in 
 their vaults, the surplus above the specie must be paid 
 by balancing paper notes with paper notes, until the 
 
218 BALANCING POWER OF BANK-NOTES. x 
 
 amount of specie in their vaults is exactly equal to the 
 amount of paper for which they are liable. This state- 
 ment was made taking into consideration only the in- 
 dorsed notes discounted by the banks, and the bank- 
 notes issued by them as their proceeds. The bank-notes 
 are, however, not only the balancing power for the 
 indorsed notes discounted, but are also the balancing 
 power for all individual notes given in payment for sales 
 of merchandise. Although these business notes be not 
 discounted at bank, nor put into bank for collection, the 
 bank-notes are the balancing power with which all these 
 debts must be paid, as well as all State bonds issued, all 
 bonds and mortgages given by individuals, and ah 1 debts 
 contracted for lands, goods, wares and merchandise sold 
 on credit or for cash. All these debts must be paid 
 either with bank-notes, or with specie. Taking an 
 average of the whole amount of contracts, it is probable 
 that not one dollar in a hundred is paid in specie. 
 
 A small amount of money is always capable of balan- 
 cing or paying a large amount of notes, bonds and 
 mortgages, and also of purchasing many times its own 
 amount of property. The money which pays for one 
 farm may also pay for a second, third, and fourth, the 
 same day. 
 
 The banks gain as much by the deposits left with 
 them, as they would by the circulation of an equal amount 
 of bank-notes. They pay no interest on deposits, and 
 they lend their deposits to depositors and others, and 
 charge interest on them. In cities, every man who has a 
 large business, keeps an account, and deposits his ready 
 money in some bank. Suppose a thousand merchants and 
 mechanics keep deposit accounts of a thousand dollars 
 each in the same bank, the sum will amount to a million 
 of dollars. The bank can lend this sum to the depositors 
 themselves, and make them pay interest on it. The 
 money may be paid out many times during the day ; 
 
MANAGEMENT OF THE BANKS. 219 
 
 but before three o'clock, when the banks close, it will re- 
 fcurn in deposit, and be ready for use the next day. 
 Some of the deposit accounts may be drawn down to a 
 hundred, and some even to five dollars, while others may 
 be increased to five, ten, or twenty thousand dollars, yet 
 the average balance in bank will vary but little. It ap- 
 pears from the Report of the Bank Commissioners, that 
 the deposit accounts in cities are always very large, 
 whereas in country banks they are generally small. 
 When farmers have money, they usually keep it in their 
 own possession until they have occasion to pay it out. 
 The inhabitants of large cities deposit their ready money 
 in banks, and pay it out by giving checks on the banks. 
 Most of the contracts in large cities are paid in this way. 
 The money is kept on deposit for convenience and 
 safety ; and the owners can draw checks for larger or 
 smaller amounts, and thus avoid counting the money. 
 The holder of a check has as good a right to draw specie 
 as the holder of bank-notes. He can draw the money 
 or he can deposit the check as if it were money. 
 
 SECTION V. 
 
 THE MANAGEMENT OF THE BANKS AND THE EFFECTS OP 
 THEIR OPERATIONS UPON THE PROSPERITY OF TRADE 
 AND PRODUCTIVE INDUSTRY. 
 
 Our present banking system, and the present legal rates 
 of interest, even with the fairest and best management, 
 are a powerful means for the unjust accumulation of 
 wealth. But looking a little deeper into the subject, and 
 observing how the business of the banks is conducted, 
 we shall find that their unavoidable evil tendencies are 
 greatly augmented by the manner in which they are con- 
 trolled and directed. 
 20 
 
220 MANAGEMENT OF THE BANKS. 
 
 The banks are empowered to lend two and a half times 
 their capital. They have no legal right to exceed this 
 sum, but they may expand and contract their loans as 
 much as they please within this limit. They can discount 
 notes at longer or at shorter dates. They sometimes 
 discount notes having six, eight, ten and twelve months 
 to run, and then suddenly stop discounting any having 
 over ninety days to run. They can make money very 
 abundant, or very scarce. The banks can make good 
 indorsed notes sell in Wall street at a discount of one, 
 two, or three per cent, a month ; or they can make money 
 so plenty, that the same quality of paper will sell at less 
 than a half per cent, a month. They can make the business 
 of the nation prosperous, and make labor command good 
 prices, or they can so greatly curtail business that the 
 industrious laborer will be compelled to beg his living. 
 
 "When a bank is extending its discounts, it will hold 
 out inducements to merchants and mechanics to open 
 accounts with it, being glad to discount for them to any 
 reasonable amount. The merchant and the mechanic 
 open accounts, and perhaps for a considerable time the 
 paper which they offer is discounted at the legal interest 
 of seven per cent. They are well satisfied, although the 
 bank discounts for brokers and large capitalists at four, 
 five, and six per cent, per annum, while it charges them 
 seven per cent. But suddenly there is an apparent scar- 
 city of money, and the bank declines discounting the 
 paper of merchants and mechanics at long dates. The 
 applicants inquire of the officers the reason of this refusal. 
 They are answered, that money is becoming scarce, and 
 that the bank discounts but one-half the paper offered. 
 In reality the amount of money is not in the least dimin- 
 ished, nor the amount of discounts required increased 
 but the banks and the capitalists keep it in their own 
 possession to make the money-market tighter, that they 
 may reloan to the business community at higher rates. 
 
MANAGEMENT OF THE BANKS. 221 
 
 If for two days they discount only one-half their usual 
 amount of paper, it is felt in the money-market. Those 
 who are disappointed in obtaining discounts, must pro- 
 cure money elsewhere. They are driven to brokers and 
 large capitalists, and are obliged to pay perhaps twelve 
 per cent, per annum for money which has been borrowed 
 by favored brokers and capitalists at seven per cent, per 
 annum. 
 
 The merchant and the mechanic again offer at bank 
 for discounts, and are a second time disappointed. Upon 
 inquiry they are again informed that money is becoming 
 very scarce, and that, besides, in looking over their depo- 
 sit accounts, the officers find theirs small, and that others 
 who keep much larger accounts are now asking for dis- 
 counts. The merchant and the mechanic reply that they 
 have heretofore kept good balances, and should be glad 
 to continue them, if the bank would discount for them. 
 But they are told that their balances were never as large 
 as those kept by certain capitalists and brokers, who, 
 although they kept large balances, seldom asked for dis- 
 counts. Now, as money is scarce in the market, and 
 they need discounts, the bank must favor them, for it is 
 bound to attend to its own interest, and merchants and 
 mechanics must attend to theirs. In these hard times 
 the banks must discount for those who keep the largest 
 deposits, and offer the best secured paper, as merchants 
 and mechanics will sell their wares, or goods, to those 
 customers who serve their interests best. It is as much 
 the duty of the banks to consult their interest, and the 
 interest of the stockholders, as it is that of merchants and 
 mechanics to consult their interests, and the interests of 
 their families. This reasoning sounds plausible enough, 
 and seems to satisfy the people If the articles dealt in 
 by both parties were the actual productions of labor, and 
 neither of them was created by law, these arguments 
 would have some force. Or if any man who had a pack 
 
222 MANAGEMENT OF THE BANKS. 
 
 age of calicoes could issue paper-money bearing no inter- 
 est, and pay his debts with it, and the mechanic could 
 make a paper representative of his steam engine pass as 
 money as easily as a bank can engrave and sign bank- 
 notes, and make them pass as money, this reasoning 
 might be sound. But when the article traded in by 
 banks is a legal tender for debts, or is of necessity used 
 as such, and the articles dealt in by others are the pro- 
 ducts of labor, and not a tender, nor used as a tender in 
 payment of debts, then such arguments are false and 
 ought to be powerless. They do not bear upon the facts ; 
 for the holders of the products of labor, or of their avails, 
 are dependent upon the banks who make and possess the 
 money which is a product of law. It requires little labor 
 to create millions of dollars. The labor to make a five 
 thousand dollar bank-note is the same as to make a one 
 dollar note. But the difference of labor between raising 
 five thousand bushels of wheat, and one bushel, is very 
 great. Yet the bank-note for five thousand dollars is as 
 much legally worth five thousand times more than the 
 one dollar bill, either to lend upon interest, or to pur- 
 chase products, as the five thousand bushels of wheat 
 are actually worth five thousand times more than one 
 bushel. 
 
 But to return. The applications of the merchant and 
 the mechanic, at bank, for discounts are refused. The 
 paper they had discounted when money was plenty is 
 maturing, and must be paid. Meanwhile, in Wall street 
 interest rises from one to two per cent, a month. Capi- 
 tn lists and brokers find it very profitable to get the notes 
 which they buy at two per cent, a month discounted at 
 seven per cent, per annum. The bank considers this 
 paper far preferable to that of the mechanic and the mer- 
 chant, because the capitalist or the broker, who bought 
 the paper, was careful to have it secured by good indor- 
 sers before the purchase, and offers, besides, to leave a cer 
 
MANAGEMENT OF THE BANKS. 223 
 
 tain portion of the proceeds on deposit, which the bank 
 can lend to others. The refused applicants at bank have 
 no alternative but to pay the two per cent, a month to 
 the broker or to the capitalist. Capitalists generally buy 
 notes through a broker, and the broker receives a quar- 
 ter per cent, on the amount, for brokerage. This, too, 
 must be paid by the borrowers, in addition to the two 
 per cent, a month. 
 
 As money becomes more and more scarce, and the 
 offerings increase, the paper of large capitalists, and of 
 the richest merchants and brokers, is often thrown out, 
 and not discounted. If the more humble applicant, the 
 merchant or the mechanic, should again inquire why his 
 paper could not be discounted, the officers of the bank 
 would mention the names of some of the most wealthy 
 men, whose paper they were obliged to throw out for 
 want of means to discount it. In Wall street money is 
 loaned for from two to four per cent, a month, and even 
 at these rates, the best paper can be obtained, with bonds 
 and mortgages, or bank and State stocks as security for 
 thd prompt payment of notes. Directors in banks who 
 are allowed by law to borrow an amount equal to one- 
 third of the bank capital, have an opportunity to borrow 
 money at the usual rates, and purchase State bonds an< 
 other securities, at a great discount from their par value. 
 Capitalists who lent out money when it was abundant, 
 at six or seven per cent, per annum, call it in, and invest 
 it in State stocks, or in bonds and mortgages, which can 
 be purchased at ten, fifteen, or twenty per cent, dis- 
 count.* 
 
 * All who become rich by speculations in bank, State and other stock?, 
 gain their wealth at the expense of the producing classes ; for no in- 
 creased production is made by the changing market value of these 
 stocks. It is clear, that when the rate of interest is increased, the 
 gains of money-lenders are augmented, and the money gained will 
 Duy a greater quantity of property and labor. The increased gains 
 
224: MANAGEMENT OF THE BANKS. 
 
 The apparent scarcity of money soon spreads in every 
 direction throughout the country. The banks in all the 
 cities and towns shorten their discounts, and prepare t^r 
 the approaching crisis. Their officers look over their 
 paper, and collect that of the men whom they think least 
 able to pay their notes. Not that the ability of these men 
 to meet their engagements would be doubtful if money 
 were plenty, and at the ordinary rates of interest ; but 
 it is not certain they could maintain their payments dur- 
 ing a long pressure. The officers, therefore, if possible, 
 collect all paper of this description, and from, time to 
 time obtain more security upon such as cannot be realized 
 in money. They now lend money upon such paper only 
 as they consider very strong and well secured, and which 
 they think will be paid in full at maturity. The mechan- 
 
 of the lenders must be paid by the borrowers by the productions of 
 their own or of others' labor. The increased transfer of money as 
 interest from borrowers to lenders produces no increase of property, 
 nor does the rise or depression of stocks by speculation, add a frac- 
 tion to the wealth of the nation ; yet a few may become rich by their 
 rise, while many will be made poor by their fdM. The market value 
 of stocks is governed by the market value of money : if money can 
 be loaned for a higher per cent, interest than the stocks are paying 
 dividends, they will fall below their par value ; but if money be 
 loaned at a lower rate than the dividends on well secured stocks, the 
 stocks will rise above their par value. If money could be supplied at 
 all times, and safely loaned at a uniform rate per cent, interest, all 
 well secured stocks paying like per centage dividends would be uni 
 formly at par, because they would bring in precisely the same income 
 as loans of money. The value of money is the standard by which 
 the market value of stocks is governed ; hence if the National 
 Government would provide a means of supplying the public with the 
 necessary amount of money at a uniform rate of interest, the State 
 Bonds and all other securities would be of uniform value ; conse- 
 quently there would be no inducement to make a sacrifice of one 
 class of securities to invest in another, because no advantage could 
 be gained ; and all these speculations in borrowing money at banks 
 at lower, and reloaning it at higher rates of interest, and in the rise 
 and fall of stocks, would at once and forever cease. 
 
MANAGEMENT OF THE BANKS. 225 
 
 ics and the merchants who have sold their wares 01 goods 
 to the country, are compelled to pay. not only one, two, 
 three or four per cent, a month upon the money they 
 have to borrow, but the scarcity prevents the collection 
 of the debts due by their country customers ; and if they 
 have had any of their notes discounted before the pres- 
 sure, they come back upon them to pay in addition to 
 their other payments. The payment of these exorbi- 
 tant rates of interest for the use of money, is sufficient 
 to account for all our commercial revulsions. 
 
 When a scarcity of money commences in Wall street, 
 the offerings of paper to be discounted at the banks are 
 greatly increased, sometimes fifty, sometimes a hundred 
 per cent. The reason is this : when banks stop discount- 
 ing long paper, and confine their loans to paper having 
 thirty, sixty, or ninety days to run, in order to maintain 
 their circulations, the discounts must be increased just in 
 proportion to the shortening of the paper. If the "banks 
 discount paper having only sixty days to run, then in the 
 sixty days they will collect in the whole amount under 
 discount. If their loans have on an average only ten 
 days, then in ten days they will collect all their loans, 
 and will not have a dollar under discount unless they lend 
 out as well as collect in daily. If they should discount 
 no paper having more than one day to run, they would 
 collect in all their loans every day, and must reloan the 
 same amount daily to maintain their circulations. There- 
 fore, it is evident that if the banks maintain their lines ot 
 discount they must be increased exactly in proportion to 
 the shortness of the paper that is discounted. Suppose 
 a merchant has $1,000 to pay, and holds a business note 
 for $1,000, payable in six months. To obtain a discount 
 he is compelled to procure another note, having nob 
 more than sixty days to run. At the end of sixty days 
 he must procure a second discount for a thousand dollars? 
 to pay the first, and in sixty days more a third to pay the 
 
226 MANAGEMENT OF THE BANKS. 
 
 second. In six months he is obliged to procure three 
 loans of a thousand dollars each, and pay three thousand 
 dollars, whereas, if the bank had discounted the six 
 months' note he would have procured but one discount 
 for a thousand dollars. Consequently, during the six 
 months he would have offered but one-third as much 
 paper at bank, and but one-third as much money would 
 have been required to make his payments. 
 
 The interest on money will sometimes rise in a few 
 months from six or seven per cent, per annum, to two or 
 three per cent, a month. In 1837, a broker in Wall 
 street sold the post-notes of the Delaware and Hudson 
 Canal Bank, having four months to run, at a discount of 
 five per cent, a month; and sold more notes the next 
 day, for the. same person, at six and a quarter per cent. 
 a month. Six and a quarter per cent, a month, for four 
 months, would take one-fourth from the principal of the 
 note* This is equivalent to compelling a tenant to pay 
 in advance one-fourth of the value of a house, or farm, 
 for the use or rent of three-fourths during a period of 
 four months, at the end of which he is responsible for 
 the return of the whole ; for the return of the fourth of 
 which he had not the use, as well as of the three-fourths 
 which were in his possession. The borrower of the 
 money received but three-fourths of the par value of the 
 notes. If at the end of the four months, when the post- 
 notes became due, the bank had not paid them, the 
 borrower would have been bound to pay their par value. 
 As well might the tenant pay as exorbitant a rent for a 
 house or a farm, as the borrower of money so high a rate 
 of interest. These high rates of interest are not paid by 
 all. Doubtless, favorites at bank could and did borrow 
 money the same day in Wall street at seven per cent, 
 per annum. The Delaware and Hudson Bank was 
 solvent and good at the period named, and has so con- 
 tinued. At their maturity, if not before, the post-notes 
 
MANAGEMENT OF THE BANKS. 227 
 
 were paid. The money lent at six and a quarter per 
 cent, a month was no better than that lent at seven per 
 cent, per annum. Take from a $1,000 post-note $250, 
 and there remains $750, of which the borrower had the 
 use for four months, by paying the lender $250. The 
 favored one who borrowed at bank $750 at seven per cent, 
 interest per annum, paid for its use for four months 
 $18 40. The first borrower paid thirteen times more 
 than the second for the use of the same article, in the 
 same street, and on the same day. Neither bought any- 
 thing but the use of the principal, for at the end of the 
 period the principal was returned to its owner. A man 
 who was obliged to borrow money was charged thirteen 
 times more than one who had no use for it except to 
 gain the difference in interest. This procedure was as 
 unjust as it would have been to charge men suffering for 
 food $6 50 a bushel for potatoes, and to charge those 
 who possessed an abundance only fifty cents. Such 
 exactions do not occur in sales of products, but it is no 
 uncommon thing in Wall street for money to be lent to 
 the needy at a quarter per cent, a day, or ninety per cent, 
 a year, which is fourteen times more than the banks are 
 allowed to charge for discounting short paper. If a 
 government agent should be directed to sell a quantity 
 of flour to a needy people at six dollars per barrel, but 
 for certain considerations, should sell it all to a capitalist, 
 knowing that he would compel the people to pay $90 a 
 barrel or starve, it would be similar to the abuse of the 
 power conferred on the banks, and wielded by them in 
 favor of capital. 
 
 Some of the large capitalists in the city of New York, 
 during the years included between 1836 and 1840, 
 bought up bonds and mortgages perfectly well secured, 
 and bearing six and seven per cent, interest, at from ten 
 to thirty-three and a third per cent, discount from their 
 par value. They also bought millions of dollars' worth 
 
228 MANAGEMENT OF THE BANKS. 
 
 of well indorsed notes at from one and a half to five per 
 cent, a month from the face of the notes. Some Avill say 
 that the paper sold at these rates was of doubtful 
 character, but such was not generally the fact. Indi- 
 viduals of known wealth, extensively engaged in business, 
 and in want of money, sold large amounts of their paper 
 indorsed by men in equally good standing, at three per 
 cent, a month discount. These notes were, to say the 
 least, quite as safe as the bank-notes for which they were 
 exchanged. 
 
 The following illustration will show the bearings of 
 these speculations in money upon the welfare of the pro- 
 ducing classes. H. is a wealthy broker, and a bank 
 director. His income, as also the income of the bank, 
 depends upon the interest on money. He is worth 
 $100,000, $20,000 of which are in bank stock. He uses 
 $80,000 as a broker in buying mercantile paper. Sup- 
 pose him to be able to effect a change in the rate of 
 interest, from six per cent, per annum, to two per cent, 
 a month, and the interest on his $80,000 will be increased 
 from $4,800, to $19,200, making a clear gain of $14,400. 
 At the bank in which he is a director, and at other banks 
 he obtains discount for $80,000, at six per cent, interest 
 per annum, on short paper, and pledge of his bank stock. 
 Loaning th.':s at two per cent, a month, he makes a clear 
 gain of $14,400 more, making with the former, in one 
 year, a clear gain of $28,800 over the six per cent, inter- 
 est. By the rise of interest from six per cent, per 
 annum to two per cent, a month, H. increases his income 
 from $6,000 to $34,800. This increase is paid to him by 
 merchants for money to meet their engagements, and, 
 consequently, their debts are increased this sum. If 
 interest had remained at six per cent., the broker would 
 not have borrowed of the banks, for there would have 
 been no inducement to borrow money which he could 
 not reloan at a higher rate of interest. The money 
 
MANAGENENT OF THE BANKS. 
 
 would, therefore, have been loaned by the banks directly to 
 the merchants at six per cent, per annum, and the merchants 
 would have saved $28,800, which they paid to the broker. 
 
 When the banks curtail their discounts, numerous con- 
 tracts depending on their loans must lie over unpaid. 
 Those who are desirous of meeting their engagements 
 will suffer themselves to be defrauded in the rate of in- 
 terest, rather than have their paper protested ; for in a 
 large city, if their paper lies over, their credit is gone, 
 and their business ruined. They are compelled to pay 
 these exorbitant rates of interest, however sensible they 
 may be of the injustice. Good and evil are not set before 
 them to choose between ; but two evils are placed before 
 them, and they must choose one or the other. If they 
 wish to do right, they will choose the one which they 
 think will do the least injury to themselves and their 
 neighbors ; but to one or the other of the evils, to usurious 
 interest or to bankruptcy, they are compelled to submit. 
 
 Such are, however, by no means all the evil conse. 
 quences of speculations in money. Money is the standard 
 of value, by which the products of the soil, all merchan- 
 dise, and the labor/ of the people are estimated. The in- 
 comes from labor and products diminish in proportion to 
 the increase of the income from money. The change of 
 the rate of interest compels the producers to labor four 
 times more to clear $100, than before the rise of interest. 
 Each sum of $100 contained in the $28,800 gained by the 
 broker," will purchase as many products of labor, as the 
 $100 gained by the four-fold toil of the producers ; and. 
 yet the broker has done nothing to aid production or dis- 
 tribution, but has retarded both. City merchants sell 
 goods to countiy merchants, and country merchants sell 
 them to farmers and mechanics, from whom they must 
 collect the money. But the diminished price of products 
 puts it out of the power of the mechanics and farmers to 
 pay, and thus the merchants are bankrupted. Meanwhile 
 
230 MANAGEMENT OF THE BANKS. 
 
 brokers and capitalists, who are neither engaged in pro- 
 ductive labor, nor in the distribution of products, grow 
 rich on the spoils. They are reverenced for their wealth, 
 while mechanics, farmers and merchants, who have be- 
 come correspondingly poor, are despised for their poverty, 
 and blamed for being unable to fulfil their engagements. 
 
 The nature of money is not understood by the public, 
 nor by the farmers, mechanics, and the great masses of 
 the laboring classes ; for if they did un derstand it, they 
 certainly never would submit to its overwhelming and 
 oppressive power. The newspapers in the City of New 
 York devote several columns daily to giving the state of 
 the money market, the prices of various stocks, and their 
 fluctuations from day to day, according to the state of 
 the money market. Now if money were properly insti- 
 tuted and regulated, there would never be such a thing 
 as a money market. There would be a market for the 
 productions of labor ; and these would doubtless vary 
 more 'or less in their market value or price, but there 
 would be no variation in the market value of money. It 
 is as unreasonable for people to gain great wealth by 
 fluctuations in the market value \of money as it 
 would be for them to gain great wealth by fluctua- 
 tions in the length of the yard. Money is as much 
 a standard of value as the yard is of length ; and devia- 
 tions in the market value of money are as much a 
 fraud upon the public as deviations in the length, weight 
 and size of other measures. No matter how long this 
 . gross wrong has been practised upon all nations, it is no 
 less an evil ; and it has shown itself to be such by the 
 centralization of wealth in every nation, and the poverty 
 of the people whose labor has produced the wealth. 
 
 It is now quite generally admitted that money is only 
 a representative of value ; and we presume many of tho 
 writers of the money articles in our daily papers woul d 
 acknowledge that its value is only representative. Yet 
 
MANAGEMENT OF THE BANK3. 231 
 
 in the next breath they wiU tell you, that the country is 
 rich in all the productions of labor, but what the people 
 need is capital to get their products to market : that the 
 manufacturers have plenty of goods, but there is a great 
 want of capital to buy them, and therefore there is no 
 market for the goods just as if the money was the 
 actual capital, and the labor and the productions of labor, 
 merely represented the valuer of the money. The reason 
 why money thus appears to be the real capital is, that all 
 agreements for the sale or the exchange of property are 
 founded upon it, and it must be had to meet the payment 
 of these debts, for nothing else is legally .competent to 
 pay them. When money has been made by law a 
 standard of value and a tender inpayment of debts, it has 
 the entire control over the value of the labor and property 
 of the nation. The money has legal value, but pro- 
 perty and labor have no legal value, and are solely de- 
 pendent upon the value and power of the money. Hence 
 we often see a nation in great prosperity, the labor busily 
 employed, and all branches of business remunerative. 
 But suddenly there comes up a crisis in the money 
 market, and the business of the nation is prostrated. 
 The power of money has brought a blight upon trade and 
 industry. Money has suddenly become worth every- 
 thing, and the laborers have suddenly become beggars in 
 the streets of our cities, and the products of labor almost 
 worthless in the market. 
 
 The following illustration shows the effect of differing 
 rates of interest in different sections of the country. A 
 merchant in New York for goods sold, holds a $1,000 
 note against a merchant in Alabama, which note he 
 in dorses and has discounted at bank. The southern 
 merchant is not able to take it up when due, and it is 
 returned to the New York merchant, who, to preserve 
 his credit as indorser, must raise the money and pay it. 
 Money is so scarce that he is obliged to sell a note hav- 
 21 
 
MANAGEMENT OF THE BANKS. 
 
 ing six months to run, at a discount of three per cent, a 
 mouth. The Alabama customer had abundant means to 
 pay his debts ; but the scarcity of money made it impos- 
 sible for him to pay the note when it was due. Some 
 time elapses, and the New York merchant sends out the 
 note for $1,000 to Alabama for collection. Meanwhile, 
 until the note is collected, he must borrow the money at 
 three per cent, a month. He raises the money, and pays 
 the returned notes by selling other notes having six 
 months to run at a discount of three per cent, a month. 
 Discounts thus : 
 
 Note at six months $1,219 61 
 
 Three per cent, a month off for six months is eighteen per 
 
 cent 219 51 
 
 $1,000 00 
 
 The note for $1,219 51 falls due, and he sells another 
 note having six months to run at three per cent., and 
 with the proceeds takes up the first note. 
 
 Note $1,487 20 
 
 Three per cent, a month for six months=eighteen per 
 
 cent 267 69 
 
 $1,219 51 
 
 This note falls due, and he sells another six months' 
 note at three per cent., and with the proceeds takes v 
 the second note for $1,487 20. 
 
 Note $1,81 55 
 
 Three per cent, a month for six months=eighteen per 
 
 cent 826 35 
 
 $1,487 20 
 
 This note falls due, and he sells another six months' 
 note at three per cent., and with the proceeds takes up the 
 third note for $1,813 55. 
 
MANAGEMENT OF THE BANKS. 
 
 Note $ 2 > 21104 
 
 Three per cent, a month for six months=eighteen per 
 
 cent - _! 9 i!! 
 
 $1,813 55 
 
 This note falls due, and he sells another six months' 
 note at thuee per cent., and with the proceeds takes up 
 the fourth note for $2,211 64. 
 
 Note $2,697 li 
 
 Three per cent, a month for six months=reighteen per 
 
 cent 48547 
 
 $2,211 64 
 
 Two and a half years have elapsed since the note in 
 Alabama fell due. Being disappointed in its collection, 
 the New York merchant, to save his credit, has raised 
 and paid the money for two and a half years. From this 
 has grown the note now due for $2,697 11. The Ala- 
 bama merchant pays every dollar of this note with inter- 
 est and costs in New York current funds. Thus : 
 
 Note $1,000 00 
 
 Two and a half years' interest at seven per cent 175 00 
 
 $1,175 00 
 
 From the increased note of the New York merchant. . . . $2,697 11 
 Deduct the note and interest received from the Alabama 
 
 merchant 1,175 00 
 
 Balance due by New York merchant. $1,522 11 
 
 The difference of interest on $1,000 for two and a half 
 years, causes a loss to the New York merchant of 
 $1,522 11. The interest amounts to more than one and 
 a half times the principal. The dollar is said to be the 
 product of labor ; but is this difference of interest the 
 product of labor, or is it a change in the measure of 
 value ? Certainly, if the Alabama measure and the New 
 York measure were the same, the debts would balance 
 
834 MANAGEMENT OF THE BANKS. 
 
 each other. They balanced each other two and a half 
 years before, but in this period the thousand dollars in 
 New York have increased $1,697 11, while $1,000 in Ala- 
 bama, during the same time, have increased but $175. 
 One has accumulated nine and a half times more than the 
 other. The Alabama merchant pays all he owes the New 
 York merchant, and the latter appropriates it to the pay- 
 ment of the $1,000 which he raised to take up the note 
 of the southern merchant ; but he still owes on this 
 transaction $1,522. The third person who gets the 
 $1,522, gains it without producing or distributing any 
 products. 
 
 The following table exhibits the discounts on six 
 months' notes for a term of sixty years. A thousand dol- 
 lars in money are taken, and with this sum a note payable 
 at six months is discounted. When the first note is paid, 
 a second note having six months to run is discounted 
 with its proceeds, and a third note with the proceeds of 
 the second. This calculation is continued on six months' 
 notes for sixty years. The table shows the accumulation 
 on $1,000 for sixty years, at the various rates of 1, 2, 3, 
 4, 5, 6, 7, 8, 12, 18, 24, and 30 per cent, per annum, tak- 
 ing off the discount, as is always done by banks and bro- 
 kers. The highest rate calculated is thirty per cent, per 
 annum, or two and a half per cent, a month, a rate not 
 nearly so high as is often paid in Wall street. 
 
MANAGEMENT OF THE BANKS. 
 
 235 
 
 TABLE OF DISCOUNTS. 
 
 SHOWING THE ACCUMULATION ON $1,000 FOR A PERIOD OF SIXTT 
 TEARS BY DISCOUNTING NOTES HAVING SIX MONTHS TO RUN, AT 
 
 1, 2, 3, 4, 6, 6, 7, 8, 12, 18, 24, AND 30 PER CENT. PER ANNUM. 
 
 1 
 
 PER CENT. 
 
 5 PER CENT. 
 
 12 PER CENT. 
 
 10 years 
 20 " 
 SO " 
 40 " 
 50 " 
 SO " 
 
 . . . $1,105 45 
 
 1,22202 
 1,350 87 
 1,493 33 
 1,650 78 
 1,82487 
 
 10 years... . $1,659 24 
 20 " ..... 2,75306 
 80 " 4,567 97 
 40 7,57983 
 50 " ..... 12,57587 
 60 " 20,866 85 
 
 10 years $3,447 13 
 20 " 11,881 90 
 30 " 40,957 07 
 40 " 141,177 95 
 50 486,644 91 
 60 " 1,677,481 45 
 
 2 PER CENT. 
 
 6 PER CENT, 
 
 18 PER CENT. 
 
 10 years 
 20 " 
 80 " 
 40 " 
 60 " 
 60 " 
 
 $1 ,222 64 
 .. . 1,49483 
 .... 1,827 63 
 .... 2,234 52 
 .... 2,732 00 
 .... 8,340 23 
 
 10 years... . $1,838 93 
 20 " 3,381 66 
 80 " 6,218 65 
 40 " 11,43567 
 50 " 21,029 39 
 60 " 88,67168 
 
 10 years $6,594 35 
 20 " 43,485 48 
 30 " 286,758 62 
 40 " 1,890,988 71 
 50 " 12,469,831 63 
 60 " 82,230,496 79 
 
 3 PKR CENT. 
 
 7 PER CENT. 
 
 24 PBR CENT. 
 
 10 years 
 20 " 
 80 " 
 40 " 
 50 " 
 60 " 
 
 . . . $1,852 93 
 . . . 1,830 46 
 . . . 2,476 48 
 . . . 8,350 44 
 . . . 4,532 91 
 .... 6,18273 
 
 10 years $2,039 17 
 20 " 4,15822 
 30 " 8,479 32 
 40 " 17,29079 
 50 " 85,258 90 
 60 u 71,898 92 
 
 10 years $12,892 78 
 20 " 166,223 76 
 30 " 2,143,086 39 
 40 " 27,630,338 24 
 50 " 856,231,914 13 
 60 " 4,592,819,317 86 
 
 4 PER CENT. 
 
 8 PER CENT. 
 
 80 PER CENT. 
 
 10 years 
 20 " 
 80 " 
 40 " 
 50 " 
 60 
 
 . .. $1,497 89 
 . . . 2,243 66 
 . . . 3,360 75 
 . . . 6,034 01 
 . . . 7,540 36 
 . .. 11,29460 
 
 10 years $2,262 43 
 20 " 5,11859 
 80 " ..... 11,580 46 
 40 " 26,19997 
 50 " 59,275 70 
 60 " 134,107 05 
 
 10 years $25,800 11 
 20 " 665,645 68 
 30 " 17,173,731 66 
 40 " 443,084,165 99 
 50 " 11,481,620,222 06 
 60 " 294,936,059,207 87 
 
 In the foregoing table it appears that interest at one 
 per cent, would transfer $824 worth of the products of 
 labor to the capitalists to pay for the use of $1,000 for 
 sixty years ; at six per cent., $37,671 58 ; at seven 
 per cent., $70,898 92 ; and at thirty per cent., $294,- 
 936,058,207 37. In any community the rise of the rate 
 of interest on all the money used, whether for a longer 
 or a snorter period, transfers from producers to capitalists 
 a sum proportioned to the increase of the rate per cent., 
 as demonstrated in this table. 
 
236 MANAGEMENT OF THE BANKS. 
 
 When money becomes scarce, and interest rises to ex- 
 orbitant rates, the rates of exchange between one city 
 and another, and between one State and another, always 
 increase. These exchanges are merely a cover under 
 which the banks obtain a higher rate of interest than the 
 one allowed by law, and a means to enable them greatly 
 to increase their dividends. In 1836, the banks in New 
 York began to do a business of considerable amount, by 
 collecting notes on the South and West, and charging 
 various rates of exchange, from one to three or four per 
 cent. The discount at seven per cent, on a note having 
 three months to run, would be one and three-quarters 
 per cent. ; and by charging three per cent, exchange on 
 Georgia or other southern States, it would amount in 
 the three months, to four and three-quarters per cent. 
 If their money was returned free of expense, these ex- 
 changes were much" more profitable to the banks than 
 lending money at seven per cent, interest per annum. To 
 secure the return of the money without loss or trouble, 
 when another person applied for a discount of a note 
 payable in New York, it was very easy to tell him that 
 the bank could not discount, that its funds were locked 
 up in Georgia or elsewhere, and that if he were willing to 
 take a draft on a Georgia bank, it would discount his note. 
 Being compelled to have the money or break, the appli- 
 cant would take the draft on Georgia, and through a 
 broker sell it in market. If the bank did not then buy 
 the draft back at a discount of three or four per cent., at 
 all events by the two transactions it would have made its 
 funds payable in New York. It would have saved the 
 exchange of three per cent, on the first note discounted 
 and this would have amounted to about double the legal 
 rate of interest. The banks sometimes made seven or 
 eicht times more in this way than by interest. This 
 mode of exchanging spread through the Union ; and in 
 the spring of 1837, when the New York banks and the 
 
MANAGEMENT OF THE BANKS. 237 
 
 banks generally suspended specie payments, the rates oi 
 exchange still increased.* 
 
 To show that the banks profited largely by the em- 
 barrassments and fluctuations in 1836 and 1837, we have 
 only to notice the per centage profit gained by them in 
 the State of New York at different periods. The 
 published statements in the New York Assembly docu- 
 ments show that the average dividends of the Bank of 
 America, for ten years, from 1818 to 1828, were 5.30 
 per cent annually. But in the years 1836 and 1837, 
 money was veiy scarce, and the difficulties of the com- 
 munity proportion ably great. During these years the 
 profits of the bank averaged more than 16.14 per cent, 
 annually. More in one year of embarrassment than 
 in. three years of general prosperity. The same pub- 
 lished statements of the following six banks, viz., Bank 
 of America, City Bank, Mechanics' Bank, Merchants' 
 Bank, Bank of New York, and Union Bank, show a re- 
 sult as follows. During the same ten years, from 1818 
 to 1828, their average dividends were 5.70 per cent, 
 per annum. But in the two years 1836 and 1837, their 
 profits were 13.35 per cent, annually. The same 
 statements rendered by fifty-nine country banks in this 
 State, show that in the same two years, their average 
 profits were 11.36 per cent, per annum. 
 
 To effect a rise of interest, it is not necessary for the 
 banks to allow their money to lie dormant any length of 
 time. Let the New York banks for one week refuse to 
 
 * I know of other instances where paper has been discounted foi 
 ninety days and drafts given on Philadelphia at par, -when the ex- 
 change on that city was over thirteen per cent, discount. The parties 
 borrowing had to sell the Philadelphia funds and lose this exchange, be- 
 sides the interest ; and banks have discounted paper, paying in Phila- 
 delphia funds when at as large discount as the above mentioned ; if 
 .they have not done this in New York, it has been done in a neighbor 
 ing State. Currency, the Evil and the Remedy. 
 
238 MANAGEMENT OF THE BANKS. 
 
 discount a single note, and the want of money would 
 probably be as great, and as severely felt, as during the 
 most difficult periods in 1837. By this refusal the banks 
 would only lose the interest on the amount collected for 
 half the week. But by the end of the week those who 
 needed money would be obliged to sell paper having 
 three, six, nine, and twelve months to run, at a discount 
 of two or three per cent, a month, and would be sub- 
 jected to a great loss. The banks in the city of New 
 York keep an average of about $50,000,000 loaned. If 
 the notes thus discounted have an average of fifty-six days 
 to run, the citizens pay into the banks six and a quarter 
 millions of dollars every week. If for one week the 
 banks should refuse to discount, and draw in the six and 
 a quarter millions, they would lose the interest on this 
 sum for an average of three and a half days. This interest 
 at six per cent, would amount to $3,557 69. If this cur- 
 tailment of the circulation for one week should compel 
 merchants and mechanics to sell their business paper, 
 having but sixty days to run, at two per cent, a month 
 discount, they would lose four per cent, on the 
 $6,250,000, *. ., $250,000. The merchants and the 
 mechanics would sustain a total loss of $187,500 over and 
 above interest for sixty days, at the rate of six per cent, 
 per annum on $6,250,000. Let us extend this calculation, 
 and suppose the banks to stop their discounts for two 
 weeks, and collect in their dues. In the course of two 
 weeks, they would collect in $12,500,000. They would 
 lose the interest upon this sum for an average of one week, 
 in which time the interest would amount to $14,230 77. 
 These curtailments would produce an extreme scarcity 
 of money. Suppose the merchants and the mechanics to 
 be compelled to sell their business paper having six 
 months to run at a discount of two per cent, a month for 
 that period. They would lose twelve per cent, on 
 $12,500,000, i. e., $1,500,000. Their actual loss 
 
MANAGEMENT OF THE BANKS. 239 
 
 above the interest, at the rate of six per cent, per annum, 
 for six months, would be $1,125,000, while the banks 
 would lose only $14,230 77. If, instead of curtailing their 
 discounts, the banks should refuse to loan to merchants 
 and mechanics, and lend their money to brokers and 
 capitalists, who should reloan it at the above rates to the 
 people, the same results would be produced without any 
 loss of interest by the banks, or any curtailment of their 
 discounts. The $1,125,000 would be lost to business men 
 and gained by brokers and capitalists. 
 
 The banks can curtail their discounts as much and as 
 rapidly as they please without violating the laws. In 
 1837 and 1838, there were not only twelve and a half mil- 
 lions of dollars loaned at two per cent, a month, but 
 probably some hundreds of millions were loaned at much 
 higher rates. One or two per cent, a day w^as often ex- 
 torted from the needy. Many merchants and mechanics 
 in New York might be mentioned, who paid from 
 $10,000 to $50,000 in extra interest, that is, interest over 
 seven per cent, before they were compelled to suspend 
 payment. Besides, when collections were made for 
 them in the various States by banks and otherwise, they 
 were subjected to great losses in exchanges on their 
 drafts. Millions of dollars' worth of the best paper was 
 sold at a discount of three per cent, a month. Take the 
 discount off in advance, at this rate, from six months' 
 paper, and $1,000 will buy a note for $1,219 50. At the 
 maturity of this note, its proceeds, i. e., $1,219 50 will buy 
 a second note having six months to run for $1,487 18. Thus 
 it is seen that the indebtedness of those paying this rate of 
 interest was increased, in one year, almost fifty per cent, 
 on all the money they borrowed to meet their engagements. 
 
 Curtailments of bank discounts, made under pre- 
 tence" of getting the people out of debt, serve only to 
 increase their indebtedness. They inevitably retard 
 the sale of products, and destroy the regularity of 
 
24:0 MANAGEMENT OF THE BANKS. 
 
 business. If the inhabitants of the State of New York 
 ordinarily pay interest on four hundred millions of dol- 
 lars, and one-half this sum, i. e., two hundred millions, 
 were loaned at two per cent, a month, their indebtedness 
 would be increased on this one item thirty-six millions 
 of dollars above the interest at six per cent, per annum ; 
 and this, too, without taking the interest in advance, 
 which is usually done in cases of this nature. In all 
 these transactions, by which thirty-six millions of dollar? 
 would be taken from producers and distributers, and 
 transferred to capitalists, there would be no exchange of 
 products, and the people would receive no consideration 
 for their money. Besides the suffering caused by the in- 
 crease of indebtedness upon loans of money, the prices 
 of products would be greatly diminished. Those sold 
 would not, perhaps, cancel more than one-half the debts 
 that they would if the rate of interest had not increased. 
 Therefore, the money engrossed by the capitalist would 
 be worth to him double the same sum at the usual in- 
 terest, for he could purchase with it nearly double the 
 quantity of products that he could under ordinary rates. 
 A man who owns a farm cannot rent it for thirty or 
 sixty days, and force its return, and keep constantly re- 
 letting it, so as to inconvenience his tenants ; because, in 
 these short periods the farm would not produce a crop ; 
 but money will gather an income when it is loaned for 
 thirty or sixty days, or for one, two or three days. Many 
 men now devote their time to the loaning of money for 
 one-eighth, one-quarter, one-half, and one per cent, a day, 
 fixing a higher or a lower rate, according to the necessity 
 of the borrower. In this way they extort the largest 
 possible interest. This they say they do " to keep peo- 
 ple from breaking." * Doubtless many of those engaged 
 
 * We feel confident in saying that no intelligent business man in 
 the city of New York will doubt, that there have been many millions 
 of dollars loaned the past week (Sept. 9th, 1854) by the banks in this 
 
MANAGEMENT OF THE BANKS. 241 
 
 in brokerage are ignorant of the effects of their stock- 
 jobbing and loaning operations upon the welfare of their 
 fellow-men, and not any of them fully appreciate the evil? 
 they occasion, or, it is to be hoped, they would cease to 
 pursue an employment so blighting to their own moral 
 characters, and so pernicious to the welfare of others.* 
 
 In 1837, rents on stores feh 1 to one-half or one-quarter 
 of their former prices, and many stood untenanted. At 
 the same time, bank-notes which a year or two before 
 could be rented at but six or seven per cent, per annum, 
 were rented at from three to ten times more than before, 
 although at the former time the bank-notes were profess- 
 edly based on specie, and at the latter, no pretension of 
 this sort was made. Was the rise of interest on the 
 bank-notes, or money, caused by an increase of labor to 
 
 city, at the rates of six and seven per cent, per annum. Nor will any 
 intelligent business man doubt, that several millions of this same 
 'money have been reloaned during the week by brokers and other 
 financiers at one, two and three per cent, a month, and from this rate 
 to a quarter per cent, a day. A quarter per cent, a day is seven and 
 a half per cent, a month, while six per cent, per annum, is but a half 
 per cent, a month. It makes a very wide difference in the rent of 
 property, if one pay seven and a half times more than another. 
 Whether money be loaned at a high rate per cent, interest for one 
 day, one month or for ten years, the loans are all governed by the 
 same principle ; it is a certain rate per cent, to be paid just 
 in proportion to the time for which the money is borrowed. There- 
 fore if it be just at any time to loan for a quarter per cent, a day, it 
 would be equally just to loan at the same rate per cent., for a month or 
 for ten years. It is such a notorious fact that money is loaned at 
 usurious rates of interest, that these impositions are daily published 
 in the newspapers as a constant practice, and the man who can obtain 
 the highest rate is looked up to as a first rate man of business. 
 Financiers talk of the borrowing and lending of money at usurious 
 rates of interest, as if they were buying and selling commodities at a 
 profit or loss. Yet the borrowing and lending money is not buying 
 and selling money, any more than renting and hiring a house ie 
 buying and selling the house. 
 * See Appendix, C. 
 
24:2 MANAGEMENT OF THE BANKS. 
 
 engrave and secure the notes, or was the fall of rent on 
 stores caused by a diminution of the number of bricks, 
 or the amount of labor necessary to build them ? No ! 
 it was an arbitrary rise of interest to increase the gains 
 of banks, brokers, and capitalists. Our producers were 
 not idle : we had a superabundance of products for our 
 market : yet, strange as it may seem, thousands in our 
 midst were suffering for the very things of which the 
 abundance was the subject of lamentation. One had raised 
 a surplus of some products, and was in need of surplus 
 products owned by others. But it was nearly impossible 
 to effect any exchange of these products, on account of the 
 scarcity of money. At this juncture, the situation of the 
 producers in Europe was similar to that of the producers 
 in the United States. The Bank of England was openly 
 authorized to increase the rate of interest on its loans in 
 order to check over-production and over-trading. * 
 
 * Financial power is instituted by governments; and when a 
 money crisis occurs and prostrates business, governments, to be 
 consistent, must sustain the power they have established, and, con- 
 sequently the financiers who wield it. But the revulsion must be 
 attributed to some cause in order to satisfy the public mind, and 
 financiers are always ready with hosts of reasons for it. They will 
 tell you that the people one year produced too many agricultural 
 products, and next year too few ; that another year they manufactured 
 too many goods, and another year too few : that another year they 
 built too many railroads; another year they imported too many 
 goods ; etc., etc., etc. There is no end to the subterfuges resorted 
 to in the endeavor to show that these crises in the money market are 
 caused by the laboring classes, either by not producing enough, or 
 else by over-production, over-trading, etc. Yet all these have never 
 really satisfied the public on this subject ; for their common sense 
 tells them, that labor is the producer of wealth, and that there can 
 be no great surplus of products unless this surplus remains after sup- 
 plying every man, woman and child with all the necessaries of life. 
 It is no proof of a surplus, that the merchants have their stores filled 
 with unsold goods when thousands of the laboring community around 
 them are suffering for the want of these very goods, but cannot seii 
 
MANAGEMENT OF THE BANKS. 
 
 How different would have been tlie condition of the 
 producing classes if the banks had pursued an opposito 
 course. If, instead of raising the interest on their loans, 
 and increasing their dividends to double their amount in 
 previous years, they had lowered the rate of interest so 
 as to dimmish their dividends to one-half their previous 
 amount, the prosperity of the producing classes would 
 have as greatly exceeded their prosperity in former years, 
 as it was by the rise of interest diminished below their 
 former prosperity. The amount of bank loans would 
 have been less. Probably money would have circulated 
 with more than double its former rapidity. One million 
 of dollars circulating rapidly will accomplish as much in 
 a given time as two millions will if the latter circulate but 
 half as fast. If in January, 1836, the banks throughout 
 the Union had reduced their rate of interest to four per 
 cent., and had lent their money to business men for good 
 indorsed notes, if they had made no loans on pledge of 
 stocks as security, or to any one who they knew desired 
 to lend the money again at an advanced rate of interest, 
 business would have been attended with increased pros- 
 perity ; country products would have maintained good 
 prices; the State bonds of every State in the Union, 
 bearing an interest of five per cent, per annum, would 
 have been above par ; every State would have paid the 
 interest on its bonds promptly, and in January, 1/837, the 
 people would not have owed as much by a very large 
 amount as they were compelled to owe under the actual 
 circumstances. The producing classes would have been 
 comparatively well off, and large capitalists would not 
 
 their labor to pay for them. So long as labor commands a fair price 
 in money, there is a ready market for the products of labor ; and it 
 is only high rates of interest and a scarcity of money that make labor 
 and the products of labor unsalable. Revulsions in trade are 
 caused by the money power, by financiers, and not by the producing 
 classes. ^aBSWSSSSasai^^,^ 
 
 22 . 
 
244 MANAGEMENT OF THE BANKS. 
 
 have become so immensely rich. State stocks would not 
 have been crowded upon the market, nor would capital- 
 ists have become competitors with the business community 
 for loans at banks. The producing classes cannot afford 
 to pay even four per cent, per annum, but there would 
 be less distress among them at this rate, than at six per 
 cent., or a higher rate. Their subsistence will always 
 become scanty in proportion to the increase of the rates 
 of interest.* 
 
 If the English government should raise the interest on 
 its debt to four per cent, the taxes of the producers would 
 be increased in the same proportion. But if it should 
 lower the interest on its debt to one per cent., and com- 
 pel the Bank of England and all bankers to take only one 
 per cent, on the indorsed notes of individuals, and to 
 make no loans on pledges of stocks as security, the pro- 
 ducing classes of England would be elevated, and their 
 share of their own surplus products would be increased 
 in proportion to the diminution of the rate of interest. 
 
 The curtailments of bank discounts seem to be made 
 that producers may know and consider the great value 
 of money, and the comparative worthlessncss of the pro- 
 ductions of labor. It would seem that the principal wealth 
 of a nation may be dug out of some obscure place in the 
 earth, collected into a very small compass, and placed in 
 the vaults of banks. It there remains as inactive as it 
 was in the mines before it was excavated. ' This gold and 
 silver money gives power to the banks, the Board of 
 Brokers and a few large capitalists, to compel the people 
 to cultivate the earth, and to gather and market its pro- 
 ductions mainly for their use, reserving for themselves of 
 the poorer kinds a bare subsistence. 
 
 Do the farmers, mechanics, and the laboring classes in 
 general, believe that the majority of the surplus wealth 
 
 * See Appendix, D. 
 
MANAGEMENT OF THE BANKS. 245 
 
 which their labor yearly produces, ought in justice to 
 be owned at the end of the year by a few financiers ? 
 Does their common sense teach them that a few, for the 
 use of the money necessary to exchange the commodities 
 produced, ought to gain double, treble or quadruple as 
 much of the surplus production as those who furnish 
 the skill and perform the labor to make the produc- 
 tion ? Does it accord with their sense of justice, that 
 the bankers, brokers, and financial stockjobbers in the 
 city of New York, should realize each year more clear 
 gain in wealth than all the agriculturists and mechanics 
 in the State can gain by their year's toil ? Do our pro- 
 ducers and the public generally really believe that the 
 principal wealth of the nation is stowed away in the vaults 
 of the banks in our large cities, and that the prosperity 
 of this great nation ought to depend on the quantity of 
 specie in the vaults of these banks ? If the people from 
 the highest to the lowest do really believe this, who can 
 wonder that the Babylonians believed that the golden 
 image set up by Nebuchadnezzar was the true God, and 
 that Daniel deserved to be cast into the lions' den for his 
 unbelief ; for there was in that golden image as much of 
 the life-giving spirit of God, and ability to provide for 
 the temporal and spiritual necessities of its worshippers, 
 as there is now in our gold arid silver money images to 
 provide for our temporal and spiritual support. The law 
 of Babylon which attributed to this image the power of 
 God,, and commanded the people to bow down in adora- 
 tion before it, was hardly a greater imposition upon their 
 credulity and rights than is now practised upon nations 
 by legally authorizing certain gold and silver images to 
 be set up, and attributing to them an innate value equiva- 
 lent to that of all other things.* 
 
 Every man's common sense must tell him, that tho 
 
 * See Appendix, E. 
 
246 MANAGEMENT OF THE BANKS. 
 
 present distribution of wealth is radically unjust. Bat 
 as similar wrongs have existed in every civilized nation, 
 from the earliest ages, it seems to be taken for granted 
 that they are necessary evils in other words, that there 
 can be no remedy for them. Yet their continued exist- 
 ence only proves that an evil cause continuing to act will 
 continually produce its evil effects, and that this cause 
 must be removed before the evils will cease. Although 
 the effects produced are exceedingly complicated, these 
 enormous evils of unjust distribution originate in every 
 civilized nation from one and the same fundamental cause, 
 namely, the unjust and uncontrolled power of money. 
 If it be possible to institute money with only a just 
 power, and that power such as can be controlled and 
 regulated by national laws, the fundamental cause of 
 these evils can be easily removed. But if it be impossi- 
 ble thus to institute and govern money, the fundamental 
 cause cannot be removed, and the consequent evils are 
 entailed upon us. 
 
 Nations have assumed that the value of gold and 
 silver money is innate, and have established their mone- 
 tary laws upon this false assumption. Thus, according 
 to law, all innate value is in gold and silver money, and 
 there is no innate value in anything else ; for the laws 
 have made this money a legal balance in payment for 
 everything that is bought and sold, while no other thing 
 is any tender or legal balance in payment for money. 
 Neither is any other thing a tender in payment for any- 
 thing that is bought or sold ; hence if a value be at- 
 tached to anything besides money, it is this innate value 
 of money which must determine what that market value 
 shall be ; for other things have no legal value except by the 
 permission and determination of this innate value of 
 money. This innate value, assumed by law for gold and 
 silver money, is not like that of any created thing in the 
 mineral, vegetable, or animal kingdom, for it over- 
 
MANAGEMENT OF THE BANKS. 247 
 
 rules and controls the value of all these things. Accord- 
 ing to our laws, it is an independent, uncreated power, 
 having an inherent right to govern and settle the value 
 of all things.* 
 
 This money power is not only the most governing and 
 influential, but it is also the most unjust and deceitful of 
 all earthly powers. It entails upon millions excessive 
 toil, poverty and want, while it keeps them ignorant of the 
 cause of their sufierings ; for, with their tacit consent, 
 it silently transfers a large share of their earnings into 
 the hands of others, who have never lifted a finger to 
 perform any productive labor. The same power has 
 grossly deceived our public teachers ; for not being able 
 rationally to account for the great inequalities of wealth 
 and condition existing in society, and being expected to 
 furnish a satisfactory explanation in some way, they tell 
 the people that these great wrongs are providential, that 
 they are the mysterious workings of the providence of 
 God : that all these evils are governed and controlled by 
 His power and goodness. This method of accounting 
 for the gross political wrongs in society has covered up 
 and hidden from view a multitude of heinous sins. Not- 
 withstanding the number of those who now live in luxu- 
 rious idleness, performing little, if any useful labor, and 
 the great number of those who remain idle because the 
 scarcity of money renders it impossible for them to 
 obtain work, yet with all these impediments, there is 
 generally enough produced each year in each nation to 
 give to every man, woman and child a comfortable liv- 
 ing. | Every person of common sense must see, that 
 
 * See Appendix, F. 
 
 | A nation in which each individual should devote four or five 
 hours daily to labor in useful production, would probably be 
 better supplied with the comforts and luxuries of life than any 
 people now on the globe. Not only is a moderate amount of manual 
 labor necessary to the full development and health of the body, but 
 
24:8 MANAGEMENT OF THE BANKS. 
 
 God in his providence has bountifully provided for man 
 and that there is some other power working against him, 
 and diametrically opposed to the righteous distribution 
 of his bounties. It is the providence of the national 
 laws, establishing this unjust power of money, which 
 obs the producing classes of their rights. As the boun- 
 ties of God are abundant, so must the money for their 
 distribution be abundant, or they can never be justly 
 distributed. If the scarcity of money or its centralizing 
 power retard the production and the distribution of the 
 products of labor, the power of the money is unjust 
 and oppressive, and instead of being in unison with 
 the providence of God, it is the most powerful opponent 
 of his righteous laws, as well as the most powerful and 
 bitter opponent of justice and beneficence among men. 
 It would be as reasonable to expect sweet waters to flow 
 from a bitter fountain, as to expect just distributions of 
 property if the standard by which it is valued is unjust. 
 We are not depicting an unknown evil. Legislators, 
 financiers and the producing classes all know that money 
 is possessed of some mysterious evil power, which has 
 never been clearly explained and defined. We have in- 
 tended to remove this mystery concerning the nature and 
 operations of money, and to show what laws must be an- 
 nulled, and we shall proceed to show what other laws 
 must be enacted, in order to establish money that will be 
 endowed with an equitable power. The evil power of 
 money has been politically established, and it must be 
 politically annulled. It is a public wrong, and the public 
 must administer the remedy. 
 
 it contributes in no slight degree, to the most ennobling exercise of 
 the moral and mental capabilities. 
 
THE USURY LAWS. 249 
 
 SECTION VI. 
 
 REMARKS ON THE REPEAL OF THE USURY LAWS. 
 
 In the course of the few past years, numerous petitions 
 have been presented to the legislature of the State of 
 New York, praying for the repeal of the Usury Laws. 
 It is proposed that in loaning money the rate of interest 
 should be agreed upon between borrowers and lenders, 
 as the prices of merchandise are agreed upon between 
 buyers and sellers. The position assumed by those in 
 favor of abolishing the Usury Laws is, that the competi- 
 tion between the lenders of money would be so great as 
 to reduce the rate of interest below seven per cent. But 
 such would not be the result. There is now no law 
 against competition at, or below, seven per cent. ; there- 
 fore the competition at seven per cent, and under this 
 rate, could not be increased by annulling the restriction. 
 
 Another argument for the abolition of a legal rate of 
 interest is, that the laws against usury are continually 
 violated. In large cities, money is often loaned at from 
 one to three per cent, a month, at a quarter and a half 
 per cent, a day, and sometimes even at one or two per 
 cent, a day, and the legal rate of seven per cent, per 
 annum does not govern the money-market ; it is, there- 
 fore argued that the law must be wrong ; and that if the 
 price to be paid for the use of money were left open to 
 competition, the demand and supply would equitably 
 regulate the rate of interest. 
 
 The idea commonly held out is, that the rates of in- 
 terest would be lower if the Usury Laws were abolished ; 
 and anticipating this result, many are induced to sign the 
 petitions. There is reason to believe that the principal 
 originators of these petitions are those who are now in 
 
250 THE USURY LAWS. 
 
 fringing the laws by exacting extra rates of interest, and 
 who would like to have their extortions legalized. They 
 do not advocate the chartering of banks without restric- 
 tions upon their rates of interest. Banks should lend 
 money at the legal rates. Then a few capitalists would 
 borrow large sums from them, and discounts would be 
 refused to business men, who would be compelled to 
 borrow money from these capitalists at the rates of inter, 
 est for which they would agree to lend it. The necessity 
 of the borrower, and the avarice of the lender, would 
 fix the rate of interest. If a capitalist could borrow 
 from a bank Si 0,000 for ninety days, at six per cent, 
 per annum, and reloan it at three per cent, a month to a 
 man who must have the money or break, he would make 
 by the operation a clear gain of $750. Annul the laws 
 against usury, and this kind of business would be far more 
 extensive than it now is ; but under the existing laws, 
 more of it is done than is for the benefit of the public. 
 
 Other arguments advanced in favor of abolishing the 
 Usury Laws, are such as these. It is said when goods 
 are sold on a credit, a greater difference is made in their 
 price than the interest at seven per cent, per annum for 
 the time of the credit, and it is therefore right that 
 lenders should receive higher rates of interest for their 
 money. People are not aware that the high and fluctu- 
 ating rates of interest on money are the cause of the 
 extra prices charged for credits on sales of goods. Sup- 
 pose a merchant is obliged to turn his goods into money 
 to pay a debt. He sells them on six months' credit, 
 taking the purchaser's note, on which he pays two and a 
 half per cent, a month discount to obtain the cash. He 
 could as well afford to take fifteen per cent, from the 
 goods as fifteen per cent from the note. The purchaser 
 of the goods who cannot pay the money even when 
 offered this large discount off his note, is not as safe for 
 the payment of his note as he would be if others could 
 
THE USURY LAWS. 251 
 
 not get so large a discount by paying cash. It gives a 
 man who can pay the money great advantage over one 
 who cannot, for if the latter pay fifteen per cent, on the 
 cost of his goods for six months' possession, the buyer 
 for cash can undersell him. If money could be always 
 easily borrowed at a uniform and low rate of interest, 
 the difference between sales for cash and credit would 
 vary but little from the rate of interest ; for if interest 
 were at a just rate, there would be few bad debts, and a 
 very small per centage on goods would guard against all 
 losses from this cause. 
 
 Another proposition is, that the Usury Laws should be 
 taken off from all four months' paper, and the rates of in- 
 terest on longer loans restricted, as if four months' paper 
 were governed by different principles from that having 
 six or eight months to run. It would be hard to show 
 how selling four months' notes at exorbitant rates of in- 
 terest would save the credit and property of business 
 men. If, at the end of the first four months, the mer- 
 chant be obliged to sell a second four months' note at 
 the same rate, is he any better off than if he had at first 
 sold one of eight months, instead of the two four months' 
 notes ? If it were legal to demand as high rates of in- 
 terest as could be obtained on paper not having more 
 than four months to run, paper for longer dates would be 
 unsalable whenever interest on the short paper was high. 
 Usurers now say that they take a higher rate of interest 
 on account of the risk they incur by lending at a rate not 
 allowed by law. Hence, if they could legally demand 
 two, three, or four per cent, a month discount on four 
 months' paper, they would ask still higher rates for dis- 
 counting six months' paper, to pay for the hazard of the 
 illegal act. Besides, if any rate of interest which people 
 would agree to pay for money for four months were made 
 legal, whenever the rate of interest was high those who 
 owed money on bond and mortgage would .probably be 
 
252 THE USURY LAWS. 
 
 called upon for payment. If they could not pay, the 
 ^holders of the mortgages would give them four months' 
 time, and take a new bond, very likely at two or three 
 per cent, interest a month. In the city of New York 
 there is probably a larger amount loaned on bond and 
 mortgage, that is now duej than the amount of all the 
 capitals of banks in the city. Nearly all our Insurance 
 Companies loan their money thus on one year's time, but 
 do not expect to call for it so long as the interest is re- 
 gularly paid, unless they meet with great losses. A large 
 proportion of these mortgages is due. Many millions are 
 loaned by individuals and executors of estates, and per- 
 haps a very large proportion of these would be called for, 
 in order to obtain the higher rates of interest. The 
 people would be obliged to pay almost any rates that 
 the owners of the mortgages chose to exact ; otherwise 
 their property would be sold to satisfy the debts. Either 
 course would break up a large proportion of the debtors, 
 and their property would pass over to their creditors for 
 half, or less than half, its value. 
 
 Another proposed modification of the law is, that if 
 the money-lender obtain from the borrower an agree- 
 ment to pay more than seven per cent, interest per 
 annum, and prosecute his claim for the recovery of the 
 debt, he shall be allowed to collect no more than the sum 
 loaned and seven per cent, interest. Could any honest 
 man propose a law for the prevention of theft, the only 
 penalty of which, in case of detection, should be the 
 restoration of the goods ? 
 
 If the people desire a more rapid centralization of 
 wealth and power, and to increase the depression and 
 poverty of the producers, let them annul all Usury Laws, 
 and they will be sure of success. But if they wish to 
 perpetuate a democratic government, and elevate the 
 producing classes, they must reduce the present power 
 of money, or it will surely make this nation a practical 
 
THE USURY LAWS. 253 
 
 aristocracy, even though we professedly continue to be a 
 democracy. A righteous government must rule over 
 money, instead of allowing the money to over-rule the 
 government. To do this, it must furnish a sufficient 
 supply of money, and regulate a right rate per cent* 
 interest.* 
 
 Seclppendix, G, 
 
CHAPTER V. 
 
 THE AMOUNT OF A CURRENCY SHOULD BE LIMITED 
 ONLY BY THE WANTS OF BUSINESS. 
 
 IT is indispensable to the regulation of the currency 
 that the amount of money should be limited only by the 
 wants of business. It has been already shown that the 
 value of money is determined by its income, or rate of 
 interest. This proposition being established, it follows, 
 that if the interest be regularly maintained, the amount 
 of money may be unrestricted without decreasing its 
 value. 
 
 The following illustration will show, that no laws 
 against usury can prevent the oppression and evil conse- 
 quent upon a limited amount of money. 
 
 Suppose one hundred thousand persons forming a 
 nation to frame their own government and laws. They 
 make gold and silver coins the legal currency, and fix 
 the rate of interest at six per cent. Severe penalties are 
 affixed to the exaction of a higher rate, and to the 
 exportation of money from the country. This nation 
 has in coin $12 to each inhabitant; probably as much as 
 any people, however wealthy, can keep in active circula- 
 lation. The specie in the nation amounts to $1,200,000. 
 Twenty men become worth $100,000 each, together 
 $2,000,000. One million is loaned on bond and mort- 
 gage and business notes at the legal rate. When all 
 the money of the nation is in active use, the twenty men 
 determine to call in thirty per cent, of their loans, and 
 hold the money for a week or a month in order to make 
 
THE AMOUNT OF A CURRENCY. 255 
 
 a more profitable reinvestment. This takes out of 
 circulation $300,000, one-fourth of the whole circulating 
 medium, and causes a great scarcity of money. One- 
 fourth of the debts in the nation He over unpaid, for all 
 the money was before required to meet contracts. The 
 twenty men hold only their own money, and no law 
 can, or should compel them to use it. Th'ey do not take 
 more than the legal rate of interest. Let these men 
 hold their money for six months, until the unpaid debts 
 are mostly collected by suits at law, and the twenty men 
 and other owners of money can buy the property of 
 debtors at less than half its value. All securities depre- 
 ciate, and confidence is lost in the value of property, and 
 in the ability of debtors to discharge their obligations. 
 Yet no money leaves the country, nor is any change 
 made in the rate of interest. 
 
 Twelve hundred thousand dollars is an abundance of 
 money for a population of a hundred thousand persons. 
 If we allow it to pass from one individual to another 
 three times a week, (and money passes much oftener in 
 cities,) the $1,200,000 would pay $3,600,000 of debts 
 every week, and in a year $187,200,000. Notwithstand- 
 ing this abundance, these few individuals can easily affect 
 the money market, and greatly increase their wealth by 
 purchasing property at reduced rates, and selling it when 
 the depression ceases. If the amount of money for each 
 inhabitant were increased to $20, the aggregate amount 
 would be but $2,000,000, and the twenty men would be 
 worth as much as the whole currency of the nation, and 
 could easily keep enough in their own possession to effect 
 the same results. The government is powerless to pre- 
 vent these evils, for the amount of money is limited, and 
 a few individuals have the control of it. 
 
 In the United States within a few years, in times of 
 scarcity of money, cows were sold at sheriffs sale at 
 from $2 to $5 ; good horses at from $3 to $10 ; and cui 
 
256 THE AMOUNT OF A CURRENCY 
 
 tivated lands for a few cents an acre, when they cost 
 their owners nearly as many dollars. When money be- 
 came plenty ag % ain, these cows, horses, and lands rose to 
 perhaps quite their former price. No nation should fix 
 upon a standard of value of limited amount. For a 
 limited amount of money, even at a uniform interest, will 
 enable the owners of money to monopolize the property 
 of the nation. 
 
 The State of New York has a population of 3,500,000. 
 Multiply this by 12, and we have $42,000,000, a much 
 larger sum, doubtless, than is kept in active circulation in 
 our State. Still, there are probably two men ^in the 
 State who are worth more than this sum ; and who can, 
 whenever they choose, affect not only the money market 
 of this State, but also that of every State in the Union. 
 Neither the State government, nor the General Govern- 
 ment has power to prevent it, nor to relieve the people. 
 
 A comparatively small sum of money must pay all the 
 debts now existing in the country. It must also pay for 
 the year's crops. When the crops arrive in market they 
 are no more money than while they were in the hands of 
 the farmers, and if they will not sell for money the debts 
 cannot be paid with them. Neither labor nor the products 
 of labor are any salvation from a money crisis. A power 
 is given to money that is totally different from all other 
 powers, and this does not seeni to be at all understood. 
 There is not a particle more natural power in the gold, 
 silver and paper out of which money is made, than there 
 is in iron, tin and wood. Consequently the power of 
 money is not in its material substance, but in its imma- 
 terial legal authority, which constitutes both its power 
 and market value. The material part of the money 
 only represents the immaterial, and this immaterial 
 power is exerted to an enormous extent where there 
 is nothing in the shape of money to represent it. 
 Hence this power is wofully oppressive j it calls for a 
 
THE AMOUNT OF A CURRENCY. 257 
 
 material substance, and there is no material 'substance 
 in existence to meet its demands ; and the labor and 
 property must be diminished in their market value so as 
 to conform to the material quantity of the money. 
 Money has legal authority to crush the value of labor and 
 property, but property and labor have not a particle of 
 legal authority over money. 
 
 When a national government has established money 
 as a standard of value, so far as the jurisdiction of the 
 laws extend, the money is clothed with an omnipresent 
 power, such as no other earthly thing possesses. This om- 
 nipresent power of money is used a hundred times more in 
 the entire absence, of its material sal: stance than it is 
 when and where the material substance is present. 
 Manufacturing companies, in this country, mostly send 
 their goods to commission merchants in the city. These 
 goods are credited to the manufacturers, who draw upon 
 the merchants at such dates and times, and for such 
 amounts as are agreed upon between the parties. These 
 goods are sold on four, six, eight and ten months' 
 credit to jobbers in the city, who sell them again to 
 merchants in the country, upon perhaps equally long 
 credits. All these sales are founded upon money, and 
 yet all these agreements are made without any use 
 of the material substance of the money. The material 
 substance is not necessary in making these sales. In 
 running accounts at stores, the goods are extended, 
 summed up, and the amount is a balance against the 
 debtor of so much money : Jbut not the labor of the 
 debtor nor any product of labor has legal authority 
 to pay this balance. There is a certain amount of money 
 due, which the creditor can force the debtor to pay, no 
 matter how much the latter may have to sacrifice, of his 
 labor or products in market in order to exchange them 
 for money. Yet in incurring the indebtedness, not a 
 penny of the material substance of money may have been 
 
258 THE AMOUNT OF A CURRENCY 
 
 used. It -is simply the legal authority and power of 
 money which are used in making all these obligations 
 and agreements ; but in order to pay these debts money 
 must be had in its material form. 
 
 It is obvious that all agreements for the sale of pro- 
 perty and labor are founded upon money, and that no 
 price could be fixed upon any property or labor without 
 first having a standard of value. When this standard is 
 established, it is not a matter of choice but of necessity 
 that the people use it in all business transactions. If 
 individuals barter one kind of property for another, they 
 fix a price for each kind of property, and they must use 
 the power of money in order to estimate the value, so 
 that even in a barter, where not a dollar of the material 
 substance of money is present, its power is used ; and the 
 balance may be adjusted by the addition of more pro- 
 perty on one side or the substitution of less on the other ; 
 but if a balance be left unsettled, the creditor can compel 
 the debtor to pay it in money. 
 
 Again, the banks in the city of New York publish 
 weekly statements of the amount under discount, the 
 amount of specie on hand, of money on deposit, and of 
 bank-notes in circulation. These weekly statements are 
 given under oath of the officers of the banks, and 
 the people suppose there is actually so much money 
 deposited in the banks belonging to depositors. Now, 
 are these deposits all money ? If they are, the power of 
 money is not in its material substance, for all the specie 
 and all the bank-notes held by the banks would not, in 
 ordinary times, pay even one-half ^of these deposits as 
 reported. Then in what does the other half consist ? 
 It consists in a mere balance of accounts ; and if these 
 balances are money, it follows that the power of money is 
 not in its material substance. But this power has the 
 ability to call for the material substance to satisfy its re- 
 quirements. Let the banks in the city of New York 
 
THE AMOUNT OF A CURRENCY. 259 
 
 curtail their discounts, so that they shall not exceed the 
 actual amount of their specie and the bank-notes which 
 they have received from the Comptroller, and it would 
 paralyze the business of the nation, and make a far more 
 ruinous crisis than that of 1837, or the one of 1857. The 
 property and labor of the country would sink into insig- 
 nificance before this overwhelming power of money. The 
 usurers would get almost any price they chose to charge 
 for the use of money, and thus monopolize the great 
 wealth of the nation without even lifting their hands 
 in any productive labor. Under our present mone- 
 tary laws the people would be compelled to submit to 
 these extortions ; for the money has the legal power, but 
 property and labor have no legal authority over the 
 money. The holder of a mortgage for $1,000 on pro- 
 perty worth $50,000, if the mortgagor could not pay the 
 money, might buy in the property worth $50,000 for 
 even $100, and enter up a judgment against his debtor 
 for $900. A debtor placed in these circumstances would 
 doubtless try his best to borrow the $1,000, even if he 
 had to pay one or two per cent, a day, in order to pre- 
 vent this great sacrifice of his property, and in the hope 
 that there would be more ease in the money market. 
 This endowment of money with an immaterial, omnipre- 
 sent power, which can be, and is, used to any extent 
 without the presence of the material substance, and this 
 immaterial power having the legal right to call for money 
 in its material form to fulfil its requirements and satisfy 
 its demands, when the government has neglected to pro- 
 vide the necessary material substance, is a gross outrage 
 upon the rights of the people. 
 
 A certain amount of money is required to fulfil the 
 business engagements of a nation. If one-fourth of that 
 amount be withheld from circulation, one-fourfeh of the 
 contracts must remain unpaid. A high price charged 
 for the remaining three-fourths, will not enable them to 
 
260 THE AMOUNT OF A CURRENCY. 
 
 supply the place of the absent one-fourth, which is indis- 
 pensable to the prosperity of business. No country can 
 be prosperous, while capitalists can cause a scarcity of 
 money. Their legal right to withdraw their money from 
 circulation cannot be denied ; but the exercise of this 
 right should not operate to the injury of others. Some 
 public means must be devised whereby the requisite 
 amount of money for the people may always be supplied, 
 at the legal rate of interest. No government should make 
 a currency of a material of which it cannot supply a 
 quantity adequate to the wants of the people, for it can- 
 not be necessary to have a representative of value scarce 
 so long as there is an abundance of actual value suscepti- 
 ble of representation. It will be hereafter shown, that 
 in all sections of the country, a certain part of the actual 
 value of the property may be so represented by money 
 as to supply an abundant, uniform and good currency, 
 and that a rate of interest may be adopted and main- 
 tained, which will reward labor, and promote the public 
 welfare. 
 
CHAPTER VI. 
 
 THE NECESSITY OF CREDIT. 
 
 To credit is to trust our property, or the reward for 
 our labor, in the hands of others for a limited time. 
 Governments could not exist, nor legislative bodies meet, 
 without credit. The members of Congress trust the 
 Government to pay their travelling expenses, and the 
 nation trusts the Government with funds for that pur- 
 pose. We continually trust our fellow-men. The 
 laborer who works by the day trusts his employer until 
 evening for his wages. If the employer pay in advance, 
 he trusts the laborer. Daily laborers are supposed to 
 incur little risk by trusting their employers, but in the 
 city of New York they have lost large amounts in this 
 way. The clergyman trusts his parish for his salary ; 
 the teacher the parents of the children ; colleges their 
 students, etc., etc. Houses could not je rented without 
 credit ; the owner credits the tenant with the use of his 
 property ; the tenant may injure or destroy it. If it be 
 insured, he trusts the insurance company to indemnity 
 him for loss by fire. If the tenant pay rent in advance, 
 the house may be burned, and he may lose his money. 
 Banks could not exist without credit. The people credit 
 the banks on their bank-notes, and the banks credit the 
 people on their indorsed notes. The people, too, trust 
 the banks with deposits. A very large proportion, at 
 least ninety or ninety-five per cent, of the exchanges of 
 productions, is made on a longer or shorter credit. All 
 merchandise sent by manufacturers to commission mer- 
 
262 THE NECESSITY OF CREDIT. 
 
 chants in our cities, is trusted in the hands of the latter. 
 A very large proportion of this merchandise is sold on a 
 credit of six or eight months to jobbers, and is then 
 resold by them to retailers on credit, who again sell to 
 consumers mostly on credit. Nearly all our internal im- 
 provements are contracted for on a certain time of credit. 
 A considerable proportion of these contracts is paid 
 for by borrowing money on mortgage of the improve- 
 ments. Even goods sold for cash are usually delivered 
 before payment. Except on an exceedingly limited scale, 
 exchanges of productions could not be made without 
 credit. Neither the General Government nor the State 
 governments could raise money at home or abroad with- 
 out it. Our country could never have achieved its inde- 
 pendence without the money it obtained upon credit. 
 
CHAPTER VII. 
 
 A WELL-REGULATED CURRENCY IMPOSSIBLE 
 UNDER PRESENT LAWS. 
 
 OUR whole banking system is based upon a credit 
 given by law to bank-notes, for which the people furnish 
 the security in their indorsed notes and State bonds. For 
 the legal representative has no value in itself; it rests 
 upon actual capital, the earth and its productions, and 
 not upon the inherent value of its material. It may then 
 be asked, why the State governments cannot bank on the 
 same security, and appropriate the gains to the public 
 benefit, instead of allowing a few individuals to acquire 
 large fortunes by private banking. But bank-notes issued 
 by a State would soon depreciate. The currency must 
 be national, and pass equally well in all sections of the 
 Country. If a State should make paper money a tender 
 (and this is forbidden by the Constitution), the money, 
 like the money of the banks chartered by the States, must 
 necessarily be redeemed with specie to secure public 
 confidence. But this local redemption would make the 
 money of unequal value in different sections of the Union. 
 Another difficulty would be incurred by a State bank, 
 that unless a few of the largest capitalists were included 
 as stockholders, and the interest of the wealthiest men 
 identified with the bank, it would soon be compelled to 
 suspend payments. 
 
 A United States Bank could not regulate the currency. 
 Before the General Government could establish the insti- 
 tution, it would be obliged to consult a few large capi- 
 
264: A GOOD CURRENCY IMPOSSIBLE 
 
 talists to ascertain whether they would take the stock. 
 If the charter were not one which would probably secure 
 an income quite as good as any other investment, they 
 would refuse the stock, and the Government could not 
 establish the bank. If the Government should deem 
 three per cent, a just rate of interest, and should limit 
 the dividends at this rate, the stock would not be taken. 
 But should it allow six per cent, interest, and leave 
 the dividends unlimited, both native and European capi- 
 talists would call it a good investment for money, if they 
 could retain sufficient control of the institution. 
 
 If under our present laws making all notes redeemable 
 in specie, the General Government should establish a 
 bank, and issue enough paper-money for all business 
 transactions, at a low rate of interest, our large capitalists 
 would array themselves against it by collecting their 
 debts in bank-notes, and demanding specie from the bank. 
 Such a bank, established on a specie basis, could not be 
 sustained a month. The Government and all the produ- 
 cers could not prevent its total failure. 
 
 Monetary laws are the most important subjects for 
 legislation. It is the duty of every national government 
 to institute and regulate the medium of exchange ; but 
 that this duty has been imperfectly discharged, appears 
 from the fact that where specie is made the only tender 
 in payment of debts, neither the government nor the 
 mass of the people have had or can have, any adequate 
 control over it. Capitalists control the money, and 
 through the money control the Government. The defect 
 of the present monetary laws, further appears from the 
 variations in the rates of interest on Government stocks, 
 perfectly secured at all times, but constantly fluctuating 
 in value. If the Government does not secure a uniform 
 value to money for its own use, how can it be said to 
 regulate the currency of the country. 
 
 It is impossible to secure to labor its earnings, under 
 
UNDER PRESENT LAWS. 265 
 
 systems by which the Government and the people depend 
 upon a few capitalists to furnish the medium and stand- 
 ard for the distribution of the productions of labor. In 
 the plan about to be developed, the whole people, through 
 Congress, would hold the power, and fix the rate of 
 interest. They can by a vote put the system in suc- 
 cessful operation without consulting capitalists, banks or 
 brokers. 
 
RECAPITULATION. 
 
 RECAPITULATION. 
 
 IN the foregoing -chapters the following propositions 
 have been considered, and, it is believed, fully sustained. 
 
 1. That there is an essential difference between intrin- 
 sic value and the value of money. 
 
 2. That any material may be made money, by endow- 
 ing it with the following legal powers, namely, the 
 powers to represent value, to measure value, to accumu- 
 late value by interest, and to exchange value. 
 
 3. That money which does not represent its full 
 amount of actual value, carries upon its face a false pre- 
 tence ; nothing can in fact be money, that does not 
 represent property. 
 
 4. That money, as a measure of value, is controlled by 
 the rate per cent, interest that it bears. 
 
 5. That the necessary effects of the present rates of 
 interest, are to accumulate property in large cities, and 
 in the hands of a few capitalists. 
 
 6. That the present rates of interest greatly exceed 
 the increase of wealth by natural production, and conse- 
 quently, call for production beyond the ability of produ- 
 cers to supply. 
 
 7. That the rate per cent, interest determines what 
 proportion of products shall be awarded to capital, and 
 what to labor. 
 
 8. That in proportion as the rate *per cent, on money 
 is increased, the value of property and labor is decreased. 
 
 9. That a currency constantly fluctuating in value, by 
 varying rates of interest, is no more suitable as a medium 
 of Exchange than an elastic yard-stick is fit for a measure 
 of cloth ; that justice requires uniformity of value, and 
 that our present currency is devoid of this quality. 
 
 10. That our present banking system rests upon a fic"- 
 litious basis, is unsafe, and is productive of many and 
 
RECAPITULATION. 267 
 
 great injuries ; and while it calls upon producers for a 
 large sum of money to pay for the use of its bank-notes, 
 at the legal rate of interest, it assists capitalists, brokers, 
 etc., in monopolizing money, and enables them to extort 
 large sums from merchants, mechanics and other, beyond 
 the legal rate. 
 
 1 1 . That the currency, to be of uniform value, must 
 be limited only by the wants of business. 
 
 12. That credit is indispensable. 
 
 24 
 
PART II. 
 A TRUE MONETARY SYSTEM. 
 
 CHAPTER I. 
 
 THE SECURITY OF A PAPER CURRENCY. 
 
 WE now enter upon the most important and yet the 
 simplest part of this subject ; namely, the institution of 
 a true monetary system, by which the distribution of 
 wealth can be properly regulated. 
 
 It has been proved in our foregoing arguments, that 
 the amount of a currency should be equal to the wants 
 of the people, and that gold and silver, of which the 
 quantity is necessarily limited, are not the proper mate- 
 rials. It remains to be proved that a paper currency can 
 be established, which shall be always adequate in amount, 
 and which can be maintained at a uniform value. The 
 present chapter will offer some considerations of the 
 security and competence of a paper currency, as a medium 
 of exchange. 
 
 First, we may notice some of the ways in which paper 
 is now used, and in which a legal .power expressed upon 
 it is deemed sufficient security. All titles to land, all 
 loans of money on bond and mortgage or otherwise, the 
 payments for all lands, and for every other species of 
 
 269 
 
270 A TRITE MONETARY SYSTEM." 
 
 property on a credit, are secured by paper. These papers 
 must, of course, be made legal liens upon property or 
 they would be worthless, for their value must consist in 
 their control of real property, and not in any worth in- 
 herent in their substance. Money., of every description, 
 gold, silver and paper, is created by the laws, and its 
 value consists in its being made by law a public Hen upon 
 all property for sale. 
 
 The difference between a private obligation, such as a 
 mortgage, or note of an individual, and money, is, that 
 the two former are private liens, one on a specific piece 
 of property, the other on any or all the property of an in- 
 dividual ; while money is a public Hen on ah 1 property for 
 sale, whether that property be owned by individuals or 
 by the Government. Between individuals and the Gov- 
 ernment, the law secures the fulfilment of contracts by 
 mortgages and other paper instruments. If paper in- 
 struments can be made safe representatives of property 
 between two individuals, no good reason appears why 
 paper instruments cannot be made safe representatives of 
 property for any number of individuals. If paper 
 instruments can be made representatives of property for 
 limited periods of time, no good reason is perceived why 
 they cannot be made safe representatives of property 
 when made payable on demand. And if made payable 
 on demand in something capable of producing an imme- 
 diate income, they are then made competent to fulfil all 
 the uses of money; for money can have no other use than 
 to exchange for property, or to loan for an income. 
 
 Governments have falsely assumed that the value of 
 money consists in the inherent worth of the gold, silver 
 and copper materials out of which it has been coined. 
 This is not only palpably a false assumption, but the laws 
 of nations prove it to be so ; for in nearly every civilized 
 nation, the governments have authorized paper money 
 (when secured by State and National stocks, bonds and 
 
SECURITY OF A PAPER CURRENCY. 271 
 
 mortgages, and so forth,) to be issued in the form of bank- 
 notes and to circulate as money. England has made 
 paper money a tender in payment of debts ; and in other 
 countries, where paper in the form of bank-notes is 
 authorized to be used as money, although it is not a 
 tender, it is generally received as such. Bank-notes are 
 called money, although the laws do not make them a ten- 
 der for debts. Banks are, however, chartered by law, and, 
 therefore, the bank-notes issued by them are generally 
 considered as money, and answer all its purposes. They 
 are founded, or based on a promise to pay specie on de- 
 mand. Let us see, however, if they are not practically 
 money, instead of being merely representatives of gold 
 and silver coins. A man exchanges at a bank in New 
 York a hundred dollars in specie for a one hundred 
 dollar bank-note, and takes it to the western country 
 to buy land. The note is thus put in circulation 
 there, is loaned and reloaned on interest, and is used in 
 the purchase of property and products. It is continually 
 active, while the silver for which the bank-note was taken 
 in lieu, lies dead in the vault of the bank, and is neither used 
 to purchase property or products, nor to fulfil contracts, 
 nor to produce an income. The bank-note has performed 
 all, while the specie has performed none of the functions 
 of money. If the former should circulate for any num- 
 ber of years, and should be loaned for an income, and 
 used to purchase property thousands of times, and when 
 it was returned to New York, there should be no 
 specie in the vault of the bank to redeem it, still, every 
 purchase made by the bank-note would be valid, and 
 every mortgage for which it had been received would be 
 a binding lien upon the property of its drawer for the 
 payment of specie both for the principal and the interest. 
 Coins and bank-notes have a legal power to accumulate, 
 not natural to either of them. Both are generally re- 
 ceivecl in tender for debts, so that one is practically as 
 
272 A TRUE MONETARY SYSTEM. 
 
 much money as the other. In fact, if either is to be de- 
 spoiled of its character as money, it must be the specie, 
 for this is mostly deposited in the vaults of the banks, and 
 while so deposited is not practically money ; but the bank- 
 notes which perform more than ninety-five hundredths 
 of the exchanges, are really the money of the countiy, 
 and fulfil alt its uses with greater convenience and celerity 
 than could gold and silver. Paper made to represent 
 landed property instead of specie, and endowed with 
 legal power to accumulate, measure, and exchange pro- 
 perty would answer every purpose of money, and would 
 be money. 
 
 The abundance of paper is not an objection to its use 
 as the material of money, more than to its use for deeds, 
 notes, bonds and mortgages. It would be a better mate- 
 rial for money than gold and silver, for these metals are 
 limited in amount, and are troublesome, expensive, and 
 hazardous to remit. If a sufficient gold and silver cur- 
 rency were presented to this nation free of cost, the 
 inconvenience and expense attending the circulation, and 
 transmission of the coins, would far overbalance the 
 whole labor and expense to provide and circulate a 
 paper currency. 
 
 The question to be settled then, is this ; can a currency 
 be formed entirely of paper, which will buy the produc- 
 tions of labor as readily as gold and silver coins not 
 whether a silver spoon can be made out of a paper dollar, 
 or whether a gold watch-case can be made out of a ten 
 dollar bank bill as well as it could be out of an eagle 
 We do not want money to make utensils and ornaments. 
 We want money for a medium of exchange, to buy such 
 articles as are useful to us, and if it cannot be made of 
 paper so that it will be as good to the man who seUs his 
 labor or his products as gold and silver coins, we must 
 not have a paper currency. 
 
CHAPTER IL 
 
 THE SAFETY FUND. 
 
 SECTION L 
 
 THE FORMATION OP MONET, AND THE MODE OP ISSU1L 
 
 THE Cpnstitution declares, Art. I., Sec. VIII., 5, " That 
 the Congress shall have the power to coin money, regu- 
 late the value thereof, and of foreign coin, and fix the 
 standard of weights and measures." Sec. X., I., " No 
 State shall coin money, emit bills of credit, make any. 
 thing but gold and silver a tender in payment of debts." 
 It is clear that Congress has the Constitutional right to 
 coin money, and regulate its value ; to emit bills of credit, 
 and to make anything it chooses a tender in payment of 
 debts. This reserved right makes it the duty of the 
 General Government to provide the money of the 
 nation ; and it is, accordingly, bound to make money in 
 quantities adequate to the wants of business, and to 
 institute it in a way which will secure the effectual reg- 
 ulation of its value. The Constitution as plainly calls 
 for the exercise of the Federal power for this purpose, as 
 for the fixing of the standards of weights and measures. 
 Sec. X., I., declares that the States have no right to coin 
 money, emit bills of credit, or make anything but gold 
 and silver a tender in payment of debts. Bank bills 
 are bills of credit, and very hazardous ones too ; for mill- 
 
 278 
 
274: A TRUE MONETARY SYSTEM. 
 
 ions of them are issued without being representatives of 
 property, and many holders have sustained great losses 
 by their failure. According to the Constitution, the 
 State governments have no right to establish banks, and 
 impose this hazard and loss upon the people ; they have 
 infringed the province of the General Government. 
 Having themselves no Constitutional right to issue bills 
 of credit, they can certainly have no power to delegate 
 such right to others. 
 
 In the plan we are about to propose for the formation 
 of a National Currency by the General Government, all 
 the money circulated in the United States will be issued 
 by a national institution, and will be a representative of 
 actual property, therefore it can never fail to be a good 
 and safe tender in payment of debts. It will be loaned 
 to individuals in every State, county, and town, at a 
 uniform rate of interest, and hence will be of invariable 
 value throughout the Union. All persons who offer good 
 and permanent security will be at all times supplied with 
 money, and for any term of years during which they will 
 regularly pay the interest. Therefore, no town, county, or 
 State, need be dependent upon any other for money, be- 
 cause each has real property enough to secure many 
 times the amount which it will require. If more than the 
 necessary amount of money be issued, the surplus will be 
 immediately funded, and go out of use without injury. 
 It will be impossible for foreign nations, or any number 
 of banks, or capitalists, to derange the monetary system, 
 either by changing the rate of interest, or by inducing a 
 scarcity or a surplus of money. It will be the duty of 
 the Government to ascertain as nearly as possible what 
 rate of interest will secure to labor and capital their 
 respective rights, and to fix the interest at that rate. 
 
 The plan requires the General Government to establish 
 an institution, with one or more branches in each State. 
 This institution may appropriately be called the NATIONAL 
 
FORMATION OF THE MONEY. 275 
 
 SAFETY FUND : first, because the money of this institu- 
 tion will constitute a legal tender of uniform value for the 
 whole people, and will always be safe ; second, because 
 the interest being fixed at a just rate it will secure the 
 respective rights of labor and capital ; and third, the 
 supply of money being always commensurate with the 
 wants of business, it will effectually protect the nation 
 from financial revulsions. 
 
 To make this currency a true representative of prop- 
 erty, the Safety Fund must issue its money only in ex- 
 change for mortgages secured by double the amount of 
 productive landed estate. The money ought not to be 
 issued on perishable property, nor on the credit of indi- 
 viduals, because such property might be destroyed, or 
 the individuals become bankrupt, when the money would 
 cease to be a representative and become worthless, 
 except for the guarantee of the Government, and the loss 
 would fall upon the nation. The money, then, when put 
 in circulation, will represent and be secured by the first 
 half of productive property, and the interest upon the mort- 
 gages will be secured by a portion of the yearly products 
 or income of the property. The Safety Fund will issue 
 its money, bearing no interest, for the mortgages bearing 
 interest. We have shown that money to maintain its 
 value must not only represent property, but must always 
 be capable of being loaned for a uniform income. It is 
 therefore necessary to provide not only for the issue, but 
 also for the funding of the money. No government can 
 regulate the value of money unless it provide means for 
 funding it ; this being the only way in which the 
 interest upon it can be kept uniform. 
 
 The first of the following obligations will be the money 
 of the institution ; the second will be a note bearing in 
 terest for the funding of the money : 
 
276 A TKUB MONETARY SYSTEM. 
 
 No. MONEY. Dated 
 
 $500. $500. 
 
 The United States will pay to the bearer Jive hundred 
 dollars in a Safety Fund Note, on demand, at the Safety 
 Fund Office in the city of 
 
 No. . SAFETY FUND NOTE. Dated 
 
 $500 $500 
 
 One year from the first day of May next, or at any 
 time thereafter, the United States will pay to A. JB., or 
 
 order, in the city of five hundred dollars; 
 
 and, until such payment is made, will pay interest thereon 
 on the first day of May in each year, at the rate of one 
 per cent, per annum. 
 
 The money will bear no interest, but may always be 
 exchanged for the Safety Fund Notes, which will bear 
 interest. Those who may not wish to purchase property 
 or pay debts with their money, can always loan it to the 
 Institution for a Safety Fund Note, bearing an interest 
 of one per cent, per annum. Therefore the money will 
 always be. good ; for it will be the legal tender for debts 
 and property, and can always be invested to produce an 
 income. 
 
 The money being loaned at one and one-tenth per cent., 
 and the Safety Fund Notes bearing but one per cent., the 
 difference of one-tenth per cent, in the interest will induce 
 owners of money to lend to individuals, and thus prevent 
 continual issuing and funding of money by the Institu- 
 tion. 
 
 The Safety Fund Notes are made payable a year after 
 date, to prevent the unnecessary trouble of funding money 
 for short periods. It is not probable that the Institution 
 
FORMATION OF THE MONEY. 277 
 
 will issue Notes for a less amount than $500. People 
 having small amounts will seldom wish to fund them. 
 They will loan to individuals or purchase property. If, 
 however, it be deemed desirable to fund small amounts, 
 they may be received, and credited in a small book, as 
 in savings banks, and the interest paid upon these credits 
 as upon Safety Fund Notes. 
 
 Having given an outline and brief explanation of the 
 proposed system of currency, we will proceed to show 
 that the money issued by the Safety Fund will possess 
 all the properties, and be capable of performing all the 
 functions of money. We have said in our description of 
 money that it must be a representative of property. The 
 Safety Fund money being based on productive landed 
 estate to double its amount, will be an undoubted repre- 
 sentative of property. Second, money must have power 
 to accumulate. The provision made by the Safety Fund 
 for funding the money will secure an income beyond all 
 contingency. Third, it must have power to measure 
 value. The Safety Fund money will not only possess 
 this power equally with coins, but it will possess the 
 additional quality of being a uniform and perfect measure. 
 By establishing a uniform rate of interest, the dollar will 
 be of invariable value, and cannot be made to fluctuate 
 more in the measure of property than the yard-stick in 
 the measure of cloth. Fourth, it must have power to 
 exchange value. Being instituted by the General Govern- 
 ment as the legal tender, and its income power estab- 
 lished, all persons will be compelled to receive it in 
 exchange for property and labor. We have elsewhere 
 shown that any portable substance possessing these prop- 
 erties will be money. The Safety Fund money will 
 possess all the properties adapted to its use as money 
 that belong to coins, and can be counted and carried with 
 greater convenience, and can be more easily transmitted 
 from one section of the country to another. The effect of 
 
278 A TRUE MONETARY SYSTEM. 
 
 its adoption will be to annihilate all difference of exchange 
 between different commercial points, or to reduce it to 
 the merely nominal expense of letter postage. 
 
 SECTION H. 
 
 THE SECURITY OF THE SAFETY FUND MONEY. 
 
 It will be perceived that since the rate of interest on 
 the money will always be uniform, and loans can always 
 be obtained from the Safety Fund on productive prop- 
 erty, it will be impossible to induce a financial crisis, 
 and depreciate the value of the property on which the 
 money is issued, so that it would not be good for the 
 interest. Therefore the mortgages will always be ample 
 security for the loans of the Safety Fund; and the 
 money will always be a fair equivalent for property 
 and labor, because it will always truly represent their 
 value. For, if the money can be loaned for a per centage 
 interest which will buy a certain portion of the yearly 
 products of laud and labor, the legal value of the princi- 
 pal of the money will be equal to the actual value of so 
 much land as will produce what the interest will purchase. 
 When Branches are established in all the States, every 
 individual can borrow money, at the usual rate of inter- 
 est, to the amount of half the value of his productive 
 land. Every dollar thus borrowed will be added to the 
 amount in circulation, as much as if it had been imported 
 from a foreign country or corned. The Safety Fund will 
 actually create all its money. 
 
 It will require a very small proportion of the property 
 of the country to secure a sufficient currency. The prop 
 erty in Massachusetts, according to the assessed valua- 
 tion in 1840, averaged $406 50 to each individual. The 
 average wealth in property of our whole population is 
 
SECURITY OF THE MONEY. 279 
 
 from three to five hundred dollars. The amount of money 
 needed will not, probably, exceed ten or fifteen dollars 
 for each inhabitant. Therefore, only three or four per 
 cent* of the property of the country will be necessary to 
 secure an ample supply of money. The Government can 
 111 this way provide a portable legal value to any extent 
 that may be required. The people can borrow money 
 from the Safety Fund in larger or smaller sums at pre- 
 cisely the same rate of interest. 
 
 The mortgages may be drawn payable one year after 
 date, with one and one-tenth per cent, interest ; and so 
 long as this interest shall be regularly paid, the principal 
 may remain, in whole or in part, at the option of the 
 mortgagor. So, whenever a mortgagor shall have the 
 means, he can pay off any part of the mortgage, and 
 stop the interest. But he will never be compelled to 
 pay the principal so long as the interest shall be regular 
 ly paid. 
 
 No aid from large capitalists will be required to 
 establish the Safety Fund, for the money will be made a 
 balance against the lauded estate of the people, without 
 a specie basis. It is no more necessary to make money 
 of gold and silver to render it a just balance against 
 property, than to make a mortgage of gold or silver to 
 render it of equal value with a piece of land. The value 
 of the mortgage depends upon its legal power over the 
 laud and its products. The Safety Fund money will have 
 a legal representative value which will be capable of 
 purchasing the mortgage, or the land, or the products 
 of the land. The mortgage, or the money as such, can 
 be no more valuable made of gold than of paper. As 
 paper mortgages amply secure individual loans of money, 
 so paper mortgages will secure the money issued by the 
 Safety Fund. If people will readily loan gold and silver 
 coins for paper mortgages on property, they must esteem 
 the paper mortgages as valuable as the coins. A mort- 
 25 
 
280 A TRUE MONETARY SYSTEM. 
 
 gage is a lien upon a specific piece of property. The 
 Safety Fund money will be a general lien upon all pro- 
 perty for sale, and a legal tender in payment for all debts. 
 The mortgages given to the Safety Fund will be indivi- 
 dual obligations for the payment of money, and will be 
 necessarily local. But the money issued for them will be 
 neither individual nor local. It will be equally good in 
 Maine, New York, Ohio, and Florida. If its owner does 
 not wish to lend it to individuals, he can lend it to any 
 Branch of the Safety Fund at an interest of one per 
 cent. 
 
 It has already been stated that it is no more necessary 
 to make money of gold and silver in order to make it 
 good, than to make a bond or note on a silver or gold 
 plate in order to make it good. Still, if the people shall 
 insist upon a mixture of specie in the currency, it can be 
 easily provided. It will only be necessary that the 
 interest to be received and paid by the Safety Fund shall 
 be paid in specie. By loaning money at one and one- 
 tenth per cent., the Fund will always be in receipt of 
 many times the interest in specie that it can be called 
 upon to pay. This will preserve the use of coins as 
 money. It appears evident, however, that the money 
 of the Safety Fund will fulfil all the functions of a public 
 medium of exchange without any admixture of coins. 
 
 The Safety Fund money will probably be compared by 
 some to the assignats of France, or to the Continental 
 money issued by the United States during the Revolution. 
 But they are no more alike than a good productive soil 
 and a desert. There is as much difference between the 
 paper assignats issued by France and the paper money 
 to be issued by the Safety Fund, as between two 
 perpetual mortgages, one bearing interest, and the other 
 bearing no interest ; the first would be good, the second 
 worthless. If, as heretofore stated, the French Govern- 
 ment had secured the payment of the assignats issued tc> 
 
SECURITY OF THE MONET. 281 
 
 her citizens by mortgages on productive landed estate, 
 not exceeding half its value, and when payment was 
 demanded had funded them with government bonds bear- 
 ing a yearly interest, they must have continued good. 
 Both the mortgages and the assign ats would have been 
 representatives of property, and the yearly productions 
 of the land would have secured the annual interest, and 
 made them safe. The assignats became worthless 
 because they were not representatives of property. If 
 the Government of the United States, instead of issuing 
 the Continental money, had established a Safety Fund, 
 and had lent money for mortgages on productive land 
 worth double the amount of the loan, and had provided 
 notes bearing interest to fund the money, such paper 
 money would have been a representative of property, 
 and invariably good. The Continental money not being 
 a representative of property, of course proved worthless. 
 Had our Government instituted a Safety Fund, it would 
 have had an abundance of money for the transa ction of 
 all business ; we should have saved the many millions we 
 paid to France for a representative of our own property, 
 and besides, should have prevented the great injury 
 suffered by the country from the scarcity of money and 
 high rates of interest, which then so much retarded 
 business and production. 
 
 The objection may arise that if the loans of the Safety 
 Fund be confined to the owners of land, it will place in 
 their hands a great monopolizing power, and instead of 
 diffusing wealth in accordance with the labor performed, 
 will give it to the landholders. But a little reflection 
 will make it evident that the abundant supply of money 
 and the reduction of the rate of interest will be of equal 
 benefit* to those who are without property, and depend 
 on their daily labor for their support. The owners of 
 land will obtain loans from the Fund, either to purchase 
 property, or to discharge debts, or to pay for labor; and 
 
282 A TRUE MONETARY SYSTEM. 
 
 all the money borrowed for these purposes will go into 
 circulation, and be used by others. The owners of land 
 will not borrow money to keep, for they would lose the 
 interest on it, and be paying interest on their mortgages 
 to the Safety Fund. Every farmer owing money o& 
 mortgage of his farm, and paying seven per cent, inter- 
 est, will probably borrow money from the Safety Fund 
 and pay the debt. The difference between seven and 
 one and one-tenth per cent, on his mortgage will be in 
 favor of the earnings of his own, or others' labor on his 
 farm ; the interest will absorb but a comparatively small 
 proportion of the products. The receiver of the pay- 
 ment for the mortgage cannot obtain a higher rate of 
 interest than that charged by the Fund : he must either 
 purchase property with the money, or lend it to individ- 
 uals at one and one-tenth per cent., or to the Safety 
 Fund at one per cent, interest. If he finds that he can 
 rent out land to others^ for a term of years so as to 
 secure one and one-tenth, or one and one-quarter per 
 cent, interest, of course he will purchase the land in 
 preference to funding the money ; and the laborers who 
 can have the use of land at these low rents, will soon lay 
 up the means to buy farms for themselves.* 
 
 SECTION III. 
 
 THE RATE OF INTEREST ON THE SAFETY FUND MONEY. 
 
 The law granting to all the privilege of lending money 
 at the same rate, has an apparent fairness which is de- 
 
 * If a laborer who had no property to be represented except his 
 power to labor, could borrow money from the Safety Fund t and his 
 power to labor should fail by sickness or death, the Safety Fund 
 would still be bound to redeem this money with a Safety Fund Note 
 bearing interest, and this loss would fall upon the people. (See 
 Appendix, H.) 
 
RATE OF INTEREST ON THE MONET. 283 
 
 ceptive. The fairness depends upon the justice of the 
 rate of interest, and not -upon the universality of the 
 grant. 
 
 The illustration of the one hundred families clearly 
 shows the accumulative power of money at six per cent, 
 interest, (see Part L, Chap. III., Sec. II.) The same chap- 
 ter shows this power at various rates, from seven down to 
 one per cent. The Safety Fund can maintain any rate 
 of interest which shall be deemed for the public good 
 If it lend money at six per cent., and fund at the same 
 rate, there will be an abundant supply at a uniform in- 
 terest in all parts of the country; this currency will 
 therefore -be greatly superior to any that has ever been in 
 use. If $300,000,000 be required, and the interest be at 
 six per cent., the Government will gain a revenue of 
 $18,000,000 annually, less the expenses of the Institution. 
 If the Branches be made offices of discount and deposit, 
 and the deposits be reloaned, the gains will probably 
 be doubled, and amount to say $36,000,000. There is 
 hardly a doubt that this latter or a larger sum is annually 
 paid by the producers to the banks for the use of bank- 
 notes. It will certainly be more just for the Govern- 
 ment to gain this for the general benefit, than to have the 
 banks gain it for their private purposes. 
 
 But a rate of interest that will rapidly concentrate 
 the wealth of the nation into the hands of the Govern- 
 ment or of individuals, cannot be just. The Government 
 cannot institute money and lend it at six per cent., with- 
 out giving power to individuals to lend at the same rate, 
 and the loans of the latter will be much greater in 
 amount than those of the Fund, even if its Branches 
 should be made offices of discount and deposit. Besides, 
 as has been already shown, money is a standard, and 
 the rate of interest governs the per centage rent on all 
 oroperty. No way can be devised of establishing a high 
 rate of interest, and doing justice to producers. The evi- 
 
284: A TRUE MONETARY SYSTEM. 
 
 dence adduced in this volume upon the different rates of 
 interest, appears sufficient to prove that one and one- 
 tenth per cent, is as high a rate of interest as money can 
 bear, and secure the rights of producers. Money at this 
 rate will have power to buy property ; for in England it 
 has often been lent even at lower rates, after business 
 had been paralyzed by maintaining interest at exorbi- 
 tantly high rates. 
 
 Money is national in its character, and ought therefore 
 to be authorized only by the General Government. The 
 Government should never allow any money to circulate that 
 is not permanently safe and good, and a legal tender in pay- 
 ment of debts. The money should be a just legal equiva- 
 lent in exchange for labor and property, and at par 
 value in every section of the country. To be thus a i'air 
 equivalent of uniform value throughout the country, the 
 rate of interest must be made just and uniform ; and it is, 
 therefore, of the first importance to arrive, as nearly as 
 possible, at what would be a just rate per cent, interest. 
 As money is designed for public use, and is not in itself 
 a producing power, we think the interest on the money 
 should not only be sufficient to pay for the necessary 
 material and labor to manufacture the money, but also 
 for the necessary labor of loaning it, as well as for the 
 safe keeping of any money that might remain on hand un- 
 used. Whatever rate per cent, interest would be re- 
 quired to defray the necessary expenses of furnishing and 
 issuing a full supply of money for the use of the public, 
 should be the established legal rate of interest, at which 
 all subsequent owners of the money might lend it. The 
 first borrowers of the money would directly pay it over 
 to others to cancel debts, or to pay for property and pro- 
 ducts. Hence they would seldom be subsequent owners 
 and lenders of the money, because if money should after- 
 ward come into their hands, they would be more likely 
 to pay off their own debts, and stop the interest, than to 
 
KATE OF INTEKKST OK THE MONEY. 285 
 
 lend the money on interest, and still continue to pay in- 
 terest on their obligations. 
 
 If it should take $500,000,000 of the new currency to 
 supply this nation with money, and the rate of interest 
 should be fixed at one and one-tenth per cent., the 
 income from the Safety Fund would be $5,500,000. If it 
 should take $600,000,000, it would make an income of 
 $6,600,000. At all events, we think this rate of interest 
 would be sufficient to supply the material for making the 
 money, and pay for the labor ; as well as to pay the officer? 
 and clerks employed in the principal Institution and in 
 the various Branches of the Safety Fund. A just rate of 
 interest would be one that would supply the money and 
 keep the Safety Fund in operation. Thus the Safety 
 Fund would be a self-supporting institution. No good 
 reason can be shown why the interest should be greater 
 than is necessary to furnish the money and keep in 
 operation the means of supplying it. 
 
 There is as great a difference in their effects between 
 a well regulated currency with a low rate of interest that 
 will justly distribute productions, and a currency with 
 high and fluctuating rates, as between the fire limited to 
 the domestic hearth, subserving the wants of the house- 
 hold, and the same element exceeding its useful limits, 
 and destroying the house. Steam kept within proper 
 bounds is usefully employed in facilitating production^ 
 but increased beyond these, it becomes a powerful agent, 
 in destroying life and property. Money with the in- 
 terest kept within proper limits, will distribute the pro- 
 duction rightfully to the producers; but increased in- 
 terest will deprive them of their rights, and entail upon 
 them poverty and misery 
 
286 A TflUE MONETARY SYSTEM. 
 
 SECTION IV. 
 
 ORGANIZATION AND MANAGEMENT OF THE SAFETY FUND. 
 
 The Safety Fund may consist of a Principal Institution 
 with Branches. The first may be located at Washington, 
 or some other central town, and the latter wherever con- 
 venience may require. The Principal Institution should 
 issue money only to the Branches, and they should be 
 required to make weekly reports to the Principal of their 
 loans, and also of the money returned to be funded. The 
 Principal, at certain times, should report the money in 
 circulation. 
 
 For the management of the Principal, one director 
 may be appointed by each State, and one or more by the 
 General Government. 
 
 The States may elect the directors of the Branches by 
 Congressional Districts, or otherwise. 
 
 The directors should receive salaries for their services, 
 and should not be allowed to borrow money from the In- 
 stitution, nor be interested in any of its loans. They may 
 hold their offices during good behavior, or until a certain 
 age. All officers and clerks may be required to give 
 bonds, with such securities as may be deemed necessary 
 to secure fidelity and safety. 
 
 All money loaned may be paid, in whole or in part, at 
 the option of the borrower after one year, but the in- 
 terest should be punctually paid. 
 
 In case of failure for a certain time to pay the interest, 
 the directors might advertise the property covered by 
 the mortgage, and sell it at auction, giving the debtor 
 timely notice of such advertisement and sale. 
 
 Twenty-one different denominations of money will 
 form an ample currency: viz., Three Cents ; Four Cents; 
 Five Cents; Ten Cents; Twenty-five Cents; Fifty 
 
OBGANIZATTON AND MANAGEMENT. 287 
 
 Cents ; One Dollar ; Two Dollars ; Three Dollars ; Five 
 Dollars ; Ten Dollars ; Twenty Dollars ; Fifty Dollars ; 
 One Hundred Dollars ; Two Hundred Dollars ; Three 
 Hundred Dollars ; Five Hundred Dollars ; One Thousand 
 Dollars ; Two Thousand Dollars ; Three Thousand Dol- 
 lars ; Five Thousand Dollars. With these denominations 
 of money any change can be made to a cent. 
 
 Our present bank-notes are frequently altered from 
 one denomination to another ; as, for instance, by ex- 
 tracting " Two " and inserting " Ten." Against this 
 fraud the money of the Safety Fund may be effectually 
 guarded, by making the size of the paper conform to the 
 denominations. The value of each piece will then be 
 known at a glance by its size, as well as by the engrav- 
 ing. The three cent pieces may be made an inch and a 
 half long and an inch wide ; and the size may be increased 
 for each successive higher denomination by adding a 
 quarter of an inch to the width and half an inch to the 
 length. The different denominations may also be of 
 different plates as well as of different sizes. 
 
 The people throughout the country will soon become 
 familiar with the money, and there will be little danger 
 of deception by counterfeits. 
 
 The paper for the money and Notes may be manufac- 
 tured by the principal Safety Fund, and farther guarded 
 from counterfeit by water marks, and by the kind and 
 quality of the paper, which should be of the best material 
 for durability. 
 
 In preparing the money for circulation no necessity 
 will exist for the signatures of the president and cashier, 
 more than for such signatures on coins. Proper care in 
 regard to the material and making of the paper, and 
 the engraving of the plates, etc., will guard the 
 money against counterfeits more effectually than the 
 quality and coinage of the precious metals can protect 
 coins. 
 
288 A TRUE MONETARY SYSTEM. 
 
 A simple and short form of a mortgage may be pro- 
 vided, so drawn as to save the necessity of a bond, and 
 prevent a multiplicity of papers. With ordinary care iu 
 the institution and direction of the Safety Fund, there 
 will be incomparably less danger of frauds than now exists 
 in banks. 
 
 The money for the amounts under a dollar will prob- 
 ably be called by the opposers of the Safety Fund, shin- 
 plasters, rag-money, a very unsafe currency for laborers, 
 etc., but every one of these small notes will be a repre- 
 sentative of its nominal amount of property. They will 
 maintain their relative value to every other piece of 
 money in eveiy section of the country, and will soon be 
 esteemed far preferable to the small silver and copper 
 coins now in use. 
 
 SECTION" V. 
 
 THE PROBABLE AMOUNT OP THE SAFETY FUND MONEY. 
 
 The quantity of money used in business is very small 
 compared with the amount of business transacted, for it is 
 only the average balance kept on hand. If a man receive 
 $10,000, keep it one hour, and then pay it out, he uses 
 the money only one hour. A man may be worth half a 
 million of dollars and transact a business of a million a 
 year, and yet his average balance may not exceed five 
 thousand dollars. If he deposits his money in bank, the 
 bank makes an estimate of his balance and lends it to 
 others ; so that even this balance is constantly in use. 
 
 The amount of money used compared with the con- 
 tracts fulfilled by it, is not much greater than the number 
 of bushels used compared with the bushels of grain mea- 
 sured by them. The amount which can be kept in active 
 circulation is comparatively small. If the Safety Fund be 
 established, and loan at an interest of one and one-tenth 
 
PKOBABLE AMOUNT OF THE MONEY. 289 
 
 per cent, on all good security, money will circulate 
 rapidly ; and if all other money be swept from the coun- 
 try, it is doubtful whether the Safety Fund can keep out 
 a sum exceeding from twelve to fifteen dollars for each 
 inhabitant. Estimate the population of the United 
 States at thirty millions, and $15 to each inhabitant will 
 amount to $450,000,000. Allow this sum to change 
 hands four times a week, and it will cancel $1,800,000,000 
 of debts each week, and in one year $93 a , 600,000,000. 
 The assessed value of all real and personal property in 
 the United States in 1860, was $16,000,000,000. The 
 $450,000,000 passing four times a week, will in one year 
 pay for nearly six times the assessed value of the whole 
 property of the nation. It is not intended that the 
 Safety Fund and its Branches shall be made offices, of 
 discount and deposit. If they should be made such, 
 they would more than double the amount of their loans ; 
 but the increase of loans would not augment the amount 
 of money. They would lend the money left on deposit, 
 and thus increase their income, as banks now lend their 
 deposits and gain the interest.* 
 
 * With the Safety Fund money, if fifty millions were hoarded and 
 withdrawn from circulation, the amount could be at once supplied ; 
 and it would not in the least disturb the regular interest or the value 
 of the money. The Fund would still receive the interest on the fifty 
 millions ; and those who hoarded it would lose the interest, and could 
 gain no advantage over others by again laying out the money, because 
 their hoarding would not have made money any less plenty, and when 
 they put it again in use, it would not in the least alter the rate of 
 interest, but would find its way to the Safety Fund, and pay a debt 
 due to the institution, or it would be loaned to the Fund for a Safety 
 Fund Note bearing interest. When money is hoarded it is taken out 
 of use, and it is, therefore, as necessary to supply the amount thu? 
 withdrawn as if it did not exist, for it is of no use to the public so long 
 as it is hoarded. The Safety Fund would be as independent of capi- 
 talists as of laborers ; nor could the Rothschilds with the aid of the 
 Bnnk of England affect our money or disturb the business of 'ho 
 nation. (See Appendix I.) 
 
CHAPTER III. 
 
 THE ADVANTAGES OF THE SAFETY FUND MONEI 
 OVER SPECIE. 
 
 THE following illustrations will show the different 
 effects of a specie and a paper currency upon the pros- 
 perity of countries having materials for the formation 
 of either. Suppose two fertile islands to exist, each con- 
 taining a silver mine as productive as the average of 
 those now worked. Two parties, of a hundred thousand 
 settlers each, emigrate to these islands, taking with them 
 implements of husbandry, a stock of cattle, merchandise, 
 tools, etc., and provisions for a year, in procuring which 
 they nearly exhaust their money. Arrived at their 
 respective destinations, they locate their lands, etc., and 
 each party begins to make exchanges among its mem- 
 bers. The want of money is soon severely felt. The 
 inhabitants of one island determine to have a metal cur- 
 rency, and accordingly prepare to work their silver mine. 
 One-fifth of the whole population, i. 6., twenty thousand, 
 are men capable of labor. Three thousand engage in 
 working the mine, and with their families constitute a 
 population of fifteen thousand, who consume the pro- 
 ducts of others. Suppose each man to earn or make 
 half a dollar a day ; total in a year four hundred and 
 fifty thousand dollars. This sum being exchanged by 
 the miners for food, clothing, etc., goes into immediate 
 circulation. It will require nearly three years to supply 
 the money necessary for their internal exchanges, say 
 $12 for each inhabitant, i. e., $1,200,000 ; and during this 
 
THE MONEY SUPERIOR TO SPECIE. 291 
 
 period money must be very scarce. The shipment of any 
 specie abroad to pay for goods, will increase the want of 
 incney at home. Suppose the population to increase 
 thvee per cent., that is, three thousand a year, they must 
 continue to mine $36,000 yearly, to maintain the propor- 
 tion of $12 to each individual. 
 
 The inhabitants of the other island determine not to 
 work their silver mine, but to establish a Safety Fund, 
 and lend the paper money as heretofore stated. All 
 have the opportunity to borrow to one-half the value of 
 their productive land. This money costs nothing but the 
 comparatively trifling labor of the paper and engraving. 
 If a surplus be in circulation*, its owner can at any time 
 pay off a mortgage to the Fund and stop the interest, 
 or fund the money and receive interest. The exact 
 amount required will always be in circulation, and the 
 interest being regular, the value of the money will be 
 invariable. 
 
 The difference between the labor to mine and coin the 
 silver money, and the labor to make and engrave the 
 paper money, will be a clear saving to the island using 
 the paper money ; and all this difference of labor can be 
 applied to the production of articles for export. The 
 island using the paper money can export about as great 
 an amount of products as the other island will coin in 
 money. If the latter island require the products of the 
 former, and exchange coins for them, the former island 
 will use the silver money for manufactures, or for export ; 
 it cannot need them for money. If the Fund lend at one 
 and one-tenth per cent, interest, the island will always 
 have an abundance of money at a low and uniform rate, 
 so that every branch of industry can be carried on to the 
 best advantage, and the property will be distributed to 
 those whose labor shall earn it. But the business and 
 productive industry of the island using coins will be con- 
 stantly retarded for want of money, and the high and 
 26 
 
A TRUE MONETARY SYSTEM. 
 
 fluctuating rates of interest will inevitably concentrate 
 the wealth in the hands of a few capitalists, and leave 
 the producers in poverty. The people of the island 
 using the paper currency will be rich, virtuous, and 
 happy, while those using the silver money will be poor, 
 wicked, and miserable, because poverty and avarice will 
 lead to crime. If the two islands, instead of trading 
 with each other, maintain trade with other nations, it 
 must be obvious that the one using the paper money 
 will have a great advantage over the one using the silver 
 money. 
 
 Suppose the same number of emigrants to settle on a 
 third island, and borrow their whole currency of a for- 
 eign nation, say $1,000,000 in gold, silver, or paper 
 money, at an interest of eight per cent, per annum, pay- 
 able half yearly. If their imports equal their exports, 
 and they be obliged to issue bonds every six months at 
 eight per cent, to pay the interest, in fifty-three years 
 the island will become indebted to foreign nations 
 $64,000,000 ; $63,000,000 of which will be interest on 
 the $1,000,000 originally borrowed. The people must 
 lose this amount in consequence of defective legisla- 
 tion. If the emigrants through their government estab- 
 lish a Safety Fund, and provide their own currency, 
 instead of importing it, they will save the whole interest, 
 besides having great advantages by the abundance of 
 money. 
 
 Paper money can be as easily made to exceed coins in 
 value, as coins to exceed paper money, because the value 
 of all money is governed by the . per centage interest. 
 Let the Safety Fund lend paper money, and fund it with 
 Safety Fund Notes bearing six per cent. ; let it lend coins. 
 and fund them with Safety Fund Notes bearing but four 
 per cent., and the paper money will always be the more 
 valuable, and command a premium in exchange for the 
 coins. The paper money will as certainly command a 
 
THE MONEY SUPERIOR TO SPECIE. 293 
 
 premium above the coins, as a ground rent at six per 
 cent, will command more than one at four per cent. If 
 this nation had a sufficient quantity of specie for a cur- 
 rency, it would still be necessary to have an institution 
 similar to the Safety Fund ; for the interest upon it could 
 only be kept regular by the establishment of an institu- 
 tion to make loans at a uniform rate of interest whenever 
 good security was offered, and to fund the specie when- 
 ever it was redundant. 
 
 A government may obtain an immense power over 
 the property of the people by furnishing a paper currency 
 at six per cent, interest. Suppose our Government to 
 establish a Safety Fund, and make its paper money the 
 only tender in payment of debts. Let the Safety Fund 
 lend an amount equal to say $15 to each inhabitant for a 
 population of 20,000,000, that is, $300,000,000, and money 
 would become plenty. This sum lent on double its 
 amount of landed estate, would cover $600,000,000 worth 
 of property. If the Government should leave the prin- 
 cipal outstanding during the regular payment of the 
 interest, it would receive from the interest, after deduct- 
 ing say $1,000,000 for the expenses of the Safety Fund, 
 an annual revenue of $17,000,000. After a year or two 
 let the Fund refuse to make further loans, and yearly 
 collect its net gam of $17,000,000 for ten years, i. e., 
 $170,000,000, and the whole business of the nation must 
 be transacted with the remaining $130,000,000. This 
 would cause a great sacrifice of the mortgaged property 
 and greatly depress the price of other lands and products. 
 In six years more, the Government would collect in 
 $102,000,000 additional interest, thereby reducing the 
 currency to $28,000,000. The interest for two years 
 more would amount to $34,000,000, but only $28,000,000 
 could be paid, because the whole amount of money 
 would be exhausted. By foreclosing its mortgages, 
 the Government could buy the $600,000,000 worth of 
 
294: A TRUE MONETARY SYSTEM. 
 
 property for the $6,000,000 which would still be due. 
 Hence it is evident that the law has power to make 
 paper money control property as effectually as gold and 
 silver corns. 
 
CHAPTER IV. 
 OBJECTIONS TO THE SAFETY FUND CONSIDERED. 
 
 SECTION I. 
 
 OBJECTIONS TO A PAPER CURRENCY ON ACCOUNT OP 
 FOREIGN TRADE CONSIDERED. 
 
 WHEN the adoption of a paper currency within our 
 own limits is advocated, questions arise concerning the 
 adjustment of our debts with foreign nations, among 
 whom gold and silver are the only legal tender. Great 
 embarrassments are apprehended because our paper 
 money would not be received in payment of debts con- 
 tracted and payable abroad. 
 
 The exports and imports of the United States are 
 nearly equal ; probably our whole exports . do not 
 amount to more than a twentieth part, or five per cent, 
 of the yearl} productions of our labor. Certainly the 
 disposal of five per cent, of our productions is not a suffi- 
 cient reason for maintaining a metal basis for our cur- 
 rency, which must inevitably affect the market value, and 
 disturb the regular and just distribution among ourselves 
 of ninety-five per cent, of our productions. The chief 
 object of a currency is to effect the internal exchanges 
 of products with facility and justice. Such a one could 
 
 896 
 
296 A TRUE MONETARY SYSTEM. 
 
 not impair foreign trade, nor do injustice to other nations. 
 The following illustrations will make it evident that the 
 use of a paper currency at home, instead of disturbing 
 foreign trade would greatly facilitate it. Trade between 
 nations is carried on by individuals, and not by govern- 
 ments. The governments simply make the laws, and fix 
 the standards by which the value, weight and quantity 
 of articles of trade are to be determined, as also the 
 tariffs of duties on imports and exports. Individuals, 
 then, export or import goods as their interests dictate, 
 and receive for them the money in use where the goods 
 are sold. For instance, importers of goods for the New 
 York market, take in payment for their sales the money 
 current in the city. They do this when the banks pay - 
 specie. They did the same in 1837, when the banks had 
 suspended specie payments. If they must remit the 
 proceeds of the goods, they buy cotton, or other produce 
 for shipment and sale abroad, or bills of exchange, or 
 specie, as may best subserve their interest. English ex- 
 porters to "New York receive in payment for their goods 
 our current money, and invest the money as they deem 
 most profitable. If we had none but paper money, 
 English exporters to New York would sell their goods 
 for our paper money, buying with the proceeds our pro- 
 ducts, cotton, flour, or tobacco, or bills of exchange on 
 England, or bullion. Or, they could lend the money 
 here as they now do and purchase products for shipment 
 to England with the interest, or reloan the interest. If 
 our paper money would buy our own calicoes and broad- 
 cloths, it certainly would buy English calicoes and 
 broadcloths in our own market. There is no reason why 
 we should provide a currency to pay for the products of 
 foreign labor different from that which pays for home- 
 labor. 
 
 If we import fifteen millions more than we export, this 
 balance will draw interest against us until we can pay it 
 
OBJECTIONS CONSIDERED. 297 
 
 in specie or products. If State or United States stocks 
 be sent abroad and sold to pay the debt, it is still a 
 form of credit for which we must pay the interest. 
 There is certainly no greater necessity for our Govern- 
 ment to provide means for our merchants to pay their 
 debts to foreign merchants, in such cases, than to provide 
 means for southern merchants to pay their debts to 
 eastern merchants, in cases of a partial failure of the 
 cotton crop. When in any year southern merchants buy 
 of eastern merchants more goods than their crops will 
 pay for, the latter must wait for the next crop, mean- 
 while receiving interest on the amount due. If our Gov- 
 ernment maintains a currency which a balance of imports 
 over exports demanding a shipment of specie must neces- 
 sarily derange, and subject debtors to extravagant rates 
 of interest, this legal act must cause greater loss to the 
 people than the failure of the crops- which would turn the 
 balance of trade against them. The only embarrassment 
 which could occur in our foreign trade, from the use of 
 paper money, would be delays in payments when the ex- 
 ports should exceed the imports; and the occurrence 
 even of this would be rendered much less probable by 
 the use of paper money, at a low rate of interest, than it 
 is with our banking system, and high rates of interest. 
 The greater facilities afforded to production would yearly 
 save an immense amount of imports ; and the difference 
 in the interest account between the United States and 
 England, would save our people many millions of dol- 
 lars every year. 
 
 If we had a sound paper currency, and did not depend 
 on gold and silver, to make our internal exchanges, we 
 could send all our gold and silver coins out of the coun- 
 try to adjust our foreign balances, without deranging our 
 monetary affairs, or enabling foreign or native capitalists 
 to embarrass the exchanges of our products among our- 
 
A TRUE MONETARY SYSTEM. 
 
 selves. If we now have $50,000,000 * of coins, we could 
 ship them, and cancel this amount of our debt to Eng- 
 land, by paying our Government and State bonds, and 
 thus save $3,000,000 interest, annually paid to the foreign 
 holders of our bonds, for the use of a representative of 
 our own property. The money, too, on which we pay 
 this interest, goes mostly into the vaults of our banks, and 
 lies there dead, while our bank-notes make the exchanges. 
 It previously lay idle in the vault of the Bank of England, 
 while the notes of that Bank performed the exchanges in 
 England. 
 
 But suppose, upon its arrival here, every dollar of the 
 specie should go into active circulation, what service 
 would it render us ? It would only assist us to effect our 
 internal exchanges ; we should still be obliged to make 
 all our products by our labor, as much as if we had used 
 our own paper money to make our exchanges. If 
 the Bank of England should send $50,000,000 of her 
 bank-notes to the United States, and our laws should 
 make them a tender for debts, they would be no more 
 useful to us than $50,000,000 of our own currency ; and 
 we should be compelled to pay to England $3,000,000 
 worth of our products yearly, in interest. If we sent the 
 bonds of our Government to procure the notes of the 
 Bank of England, or to procure the coins, the property 
 of the United States would secure the money while it re- 
 mained here. The money would become a representa- 
 tive of our property. Before it could again become a 
 representative of the property of England, we should 
 have to send back the $50,000,000 to England and take up 
 our bonds. As long as the money remained here we should 
 pay to England $3,000,000 yearly, in interest, because 
 the bonds of our Government bear the interest, and not 
 the money. Money is always a dead capital in the bands 
 
 Written before the introduction of gold from California [M. K. P.] 
 
OBJECTIONS CONSIDERED. 299 
 
 of the holder. Even after its arrival here, every person 
 who kept it a day, would keep it at the loss of the in- 
 terest for that day, because money has no power of 
 growth beyond that given by law, which is as impotent 
 for actual production as the picture of a horse is to per- 
 form the labor of the horse. We might as well pay 
 to England $3,000,000 yearly for a man to represent us 
 in Congress, as to pay this sum for a representative of 
 our property. 
 
 With a just monetary system, we should no more de- 
 pend upon a foreign nation for money to represent our 
 own property in our own country, than for the air we 
 breathe. When we make our own property the basis of 
 our currency, and furnish all the money we need for the 
 exchange of our own products among ourselves, no for- 
 eign nation will have power to affect our money market, 
 and derange the internal exchanges of our products, more 
 than it could induce a scarcity of air, and thus disturb our 
 breathing. No scarcity or abundance of money in foreign 
 nations would affect our monetary system. Gold and 
 silver coins would be imported only to convert into 
 utensils and ornaments, or for. re-exportation these 
 metals could never be needed for money. If a paper 
 currency in this nation were properly instituted, it would 
 become known in England, and it would be a thousand 
 times more likely to be received there than our bank 
 paper. But if it would not pass there at all, many advan- 
 tages are to be anticipated from its adoption. Bills of ex- 
 change, on foreign nations, could be much more easily 
 obtained than at present, because balances, under this 
 system, would probably be in our favor. If our mone- 
 tary system were such as always to supply the necessary 
 quantity of money at a just and uniform rate of interest, 
 so that production should never be impeded by a scarcity 
 of money or high rates of interest, no one acquainted 
 with the trade and resources of our country can doubt 
 
300 A TRUE MONETARY SYSTEM. 
 
 that the amount of our yearly productions would be 
 increased several hundred millions of dollars. The 
 greater the amount of our productions, the greater the 
 amount that we should have to export, and the less we 
 should need to import, and the balance of trade would 
 necessarily be in our favor ; and this balance we should 
 be compelled to take in gold and silver, or leave on in- 
 terest in foreign nations. The foregoing considerations 
 make it evident that no unfavorable results are to be ap- 
 prehended to our foreign trade from the adoption of a 
 paper currency at home. 
 
 SECTION II. 
 
 SUNDRY OBJECTIONS THE EFFECTS OP THE SAFETY FUND 
 ON OUR BANKING INSTITUTIONS, ETC., CONSIDERED. 
 
 It may be well to examine a few more of the prominent 
 objections which will be urged against the adoption of 
 the Safety Fund. Our banking institutions will probably 
 complain that its establishment will infringe the chartered 
 rights granted to them by the States. But in instituting 
 the Safety Fund, the General Government will not with- 
 draw their charters, nor pass any law preventing them 
 from banking. Doubtless it has the right to prohibit the 
 issue of such bills of credit as bank-notes ; but this will 
 not be necessary. The Government will simply provide 
 a means whereby the people in every section of the 
 country 'can obtain a fair representative of their produc- 
 tive landed estate, at one and one-tenth per cent, interest, 
 instead of being compelled to procure from banks and 
 individuals an imperfect and unsafe representative of 
 their property, and at six, seven, or eight per cent, inter- 
 est ; as much for the use of a representative as the 
 jrops of their land are worth. 
 
OBJECTIONS CONSIDERED. 301 
 
 It is a frequent remark that legal enactments have no 
 more effect upon the value of money than upon the price 
 of wheat, and that competition in lending money will 
 equitably regulate the rate of interest. By establishing 
 the Safety Fund to lend money at one and one-tenth per 
 cent, to all who offer the required security, and not 
 interfering with the chartered privileges of the banks$ we 
 shall ascertain whether legal enactments have any power, 
 and the advocates of regulating the rate of interest by 
 competition among the lenders of money, will also 
 have an opportunity to test the correctness of their 
 opinions. 
 
 Banks will object that they do business on a specie 
 basis, and the Safety Fund on a land basis. It may be 
 difficult to show that the former is better than the latter ; 
 for all kinds of money must be as useless without land 
 and products to be exchanged, as yard-sticks with 
 nothing to be measured. It will be fair towards the 
 farmers, mechanics, and merchants, for the Government 
 to institute a paper currency, and equally fair towards 
 the banks ; for their bank-notes are no more legally pay- 
 able in specie than the indorsed and other notes, and 
 even the book accounts of private citizens. If the Safe- 
 ty Fund money will be a safe medium of exchange for 
 products, it will be a just equivalent to pay debts to 
 banks, because the stockholders can buy products or land 
 with it ; therefore the issue of a tender based on landed 
 estate cannot do injustice to our banking institutions. 
 
 The Safety Fund money being made the legal tender, 
 the banks cannot refuse to receive it in payment of debts. 
 They can easily and safely collect in their dues, with- 
 draw their circulation, and wind up their business 
 without causing a scarcity of money, or any panic in the 
 money market. We shall then have nothing circulating 
 as money which is not a legal tender. If the banks shall 
 still deem their specie more valuable than the paper 
 
302 A TRUE MONETARY SYSTEM. 
 
 money of the Safety Fund, and in closing up their busi- 
 ness shall not have as much specie to divide among the 
 stockholders as they originally paid in, or if they shall 
 have to pay the whole capital stock in Safety Fund 
 money, still no injustice will be done to them, for the law 
 making paper money a tender in payment of debts, 
 gives to it a value equal to that possessed by gold and 
 silver money regulated at the same rate of interest. 
 Whils the establishment of the Safety Fund can do no 
 wrong to the banks, it will greatly benefit those en- 
 gaged in production and distribution. 
 
 Believers in the great intrinsic value of gold and 
 silver coins, have nothing to apprehend from the adoption 
 of paper money as a tender in payment of debts, and 
 the reduction of interest. The institution of paper 
 money, and the rejection of coins as a tender, can have 
 no more effect on the intrinsic value of the precious 
 metals, or upon the desire to possess them on account of 
 this, value, than the enactment of a law that wheat shall 
 be transported only on horseback will alter the nutritious 
 properties of the wheat, and the desire to use it for 
 food. One would suppose that those who so highly prize 
 gold and silver coins for their intrinsic value, would be 
 strong advocates of paper money; the coins being 
 released from their use as money, the gold and silver 
 would easily and naturally fall into their hands. * 
 
 It may be objected that if money be made so plenty, 
 the people will run into extravagant speculations ; but a 
 little thought will make it evident that the system will 
 prevent great fluctuations in the price of property, and 
 of course remove the inducements for speculations, f 
 
 * For thousands who are now compelled to have them to pay debts 
 would not use them ; and those who love them for their inherent 
 value, could easily obtain them, and could keep them to look at for 
 a lifetime without injury to others. 
 
 f See Appendix, J. 
 
OBJECTIONS CONSIDERED. 303 
 
 It may be objected that so great an alteration in the 
 medium of exchange and measure of value, will derange 
 and unsettle the value of property, introduce confusion 
 into the various branches of business, and break down 
 all existing relations between money and property. But 
 in substituting a better for a worse, the means to effect 
 the change must be improvements ; and every stage, 
 from the commencement to the entire exclusion of the 
 present currency, will be a succession of benefits to the 
 mass of the people. The change will only lessen the 
 power of capital over the future productions of labor. 
 It will deprive no man of the use of his property or 
 money; both will be at his disposal as much as under 
 the present monetary system. 
 
 Another objection will be the risk incurred by unfaitb 
 fulness in the officers appointed to manage the Institution 
 Every institution must have officers, and a certain amount 
 of power must necessarily be confided to them ; conse- 
 quently a risk of unfaithfulness must be incurred. But 
 other circumstances being equal, the risk is greater or 
 less, in proportion to the action of self-interest ; and ac- 
 cording to the plan of the Safety Fund, no officer will be 
 allowed to borrow money from the Fund, nor to be inte- 
 rested in any of its loans. Bonds will also be required for 
 the faithful discharge of duty. But, granting there may 
 be risk, yet it will be almost nothing compared with that 
 now incurred under the banking system, where the 
 officers have their own interests to serve in various 
 ways, and especially by increasing the rates of interest 
 and using the funds of the banks for their private ad- 
 vantage. 
 
 It may also be objected to the Safety Fund, that it 
 will lessen the incomes of widows and orphans ; but there 
 are very few of this class who have incomes. Objectors 
 on this ground will therefore do well to extend their sym- 
 pathy so as to embrace the nine-tenths whose only means 
 
304 A TKDE MONETARY SYSTEM. 
 
 of support is the scanty compensation for their daily and 
 excessive toil, and whose condition, and the reward of 
 whose labor, as well as the earnings of those who have 
 incomes, will be greatly improved by the reduction of 
 the interest on capital. Their sympathies will then lead 
 them to advocate the Safety Fund, unless they are actuated 
 by some other motive than commiseration for the needy. 
 The greatest difficulty, however, to be apprehended in 
 the introduction of the new currency, will be found in 
 the attachment of the people to ancient laws and customs, 
 sanctioned by the greatest statesmen of the past, and 
 ages of experience ;* but this feeling operates with the 
 
 * Is the fact that these unjust monetary laws have been in force from 
 the earliest ages, and produced in every civilized nation their natural evil 
 effects, any good reason for the continuance of such laws ? Are evils 
 any less evils because they are sanctioned by the laws of ages ? On 
 the contrary, do not the evils increase as countries grow older; and 
 do not the wealth and power become more and more centralized, and 
 the laboring classes more and more impoverished until oppression in- 
 duces civil wars and the overthrow of governments ? This has been 
 the experience of nations for ages. There is now in every civilized 
 nation a continual strife between capital and labor. Has there ever 
 been a nation in which the wealth has centralized with more rapidity 
 than during the last ten years in this free Republic ? How can we ex- 
 pect to continue this centralizing power and yet ward off its evil effects? 
 Common sense teaches, and experience proves, that like causes pro- 
 duce like effects; and if we persist iu giving to money this unjust 
 centralizing power, it will eventually seal the fate of this nation as it 
 has that of other nations in past ages. People do not seem to con- 
 sider that the laws of right existed before human laws were instituted, 
 but seem to take it for granted that the institution of these monetary 
 laws gives existence to justice and truth ; and therefore all men are 
 bound to look upon them with the same awe and submission as if they 
 were founded upon the eternal principles of justice. But justice and 
 truth are prior to all human laws ; and these monetary laws are in 
 direct opposition to every act of God's providence, and every just 
 right of man ; and are the most egregious national sin that was ever 
 organized, or instituted, because the evi extends as far as these mone- 
 tary laws extend, corrupting all contracts between man and man. and 
 
OBJECTIONS CONSIDERED. 805 
 
 name force in other things, and has been found to yield 
 in favor of improvements introduced by the progress of 
 discoveries in the arts and sciences. There needs only 
 undoubted proof that an evil exists, and that a remedy 
 can be applied for its removal, in order to secure the re- 
 formation. We have already shown that great evils have 
 arisen from the unjust monetary laws of the past, and to 
 our mind, conclusive proof has been offered to sustain 
 this point. It is now incumbent on objectors to show, 
 for instance, that the inhabitants of cities produce more 
 for the people of the country than the latter produce for 
 the former ; that a man by standing on the corner of a 
 street a few hours in a day to lend the legal representa- 
 tive of value to the necessitous at exorbitant rates of in- 
 terest, produces more of the necessaries of life than a 
 hundred industrious farmers and mechanics ; that the 
 yearly use of the present bank-notes in the State of New 
 York is really worth as much to the people as the 
 $4,435,333 worth of products which they are compelled 
 to sell annually to pay the interest ; or that one and one- 
 tenth per cent, interest would secure to producers a 
 greater proportion of the products of their labor than 
 they are entitled to receive. If they can prove that the 
 productiveness of land and labor is in proportion to the 
 rate of interest, or that the public good requires that the 
 wealth should be concentrated in a few hands, they will 
 then have shown the superiority of our present monetary 
 system. These are things of which farmers and mechan- 
 ics and other producers can judge as well as any states- 
 man or lawyer in the country. If scarcity of money and 
 high rates of interest do not affect the market value of 
 
 between nation and nation, making the individuals who earn the 
 wealth tributary to those who possess this monetary power ; and even 
 making one nation tributary to another that merely furnishes a repre 
 scntative of the wealth. 
 
306 A TRUE MONETARY SYSTEM. 
 
 labor and products, let it be clearly shown to the pro- 
 ducing classes. If such questions be evaded, it is but 
 fair to infer that the advocates of existing monetary laws 
 are willing or desirous that the oppression of the pro- 
 ducers should be continued, and the people be kept igno- 
 rant of the causes of their poverty, instead of having 
 the reward of their labor and their business transactions 
 regulated by a standard which they will perceive to be 
 just, and of which they can understand the oJDeration. 
 
 It may be admitted that the theory of the Safety Fund 
 is good, but impracticable at present ; it is calculated for 
 some future generation, when men shall have become 
 more intelligent and virtuous. If the same faith shall 
 be held by the generations which are to follow us, it will 
 be difficult to point out at what period this desirable re- 
 formation wiT occur, because the evil of our present sys- 
 tem will always be in the present, and the good of the 
 plan proposed in the future. We are, however, per- 
 suaded that a large majority of the people are aware 
 that their present depressed condition may and should 
 be exchanged for something better, and the Safety Fund 
 will be regarded by them as neither too Utopian nor 
 visionary to be made immediately operative for their bene- 
 fit. All the objections to the proposed currency, upon 
 the ground that it will lessen the incomes of capitalists 
 who are supported by the labor of others, only serve to 
 show the true working of the Safety Fund system ; for 
 its object is to furnish a standard of distribution which 
 will cause men to sustain such mutually just relations as 
 to render it generally necessary for all to render an 
 equivalent in useful labor for the labor received from 
 others. 
 
CHAPTER V. 
 
 ADVANTAGES OF THE SAFETY FUND. 
 
 THE Safety Fund will lend money at a low rate of 
 interest to all applicants furnishing the requisite landed 
 security ; hence every town, county, and State, which has 
 the power to perform the necessary labor, can make inter- 
 nal improvements without pledging its property to large 
 cities or to foreign nations to borrow money. A few 
 years since, the high and fluctuating rates of interest so 
 depressed the prices of products, that a number of the 
 States were unable to pay the half-yearly interest due on 
 their bonds ; consequently, they fell to a very low price, 
 .and many of the holders suffered great losses, while large 
 capitalists were enabled to take advantage of the fall, ancf 
 to buy the bonds, in some instances, at less than one-fifth 
 of their real value. The canal bonds of the State of Illi- 
 nois were bought at from sixteen to thirty cents on the 
 dollar. A short time after this, in 1845, the purchasers 
 of these bonds made a negotiation with the State to fur- 
 nish it with a further sum of money to complete the 
 canal, on condition that a mortgage should be given to 
 them on the canal and adjacent lands, securing the money 
 so advanced, and also securing the par value of the bonds 
 bought at these reduced rates, and the interest. It 
 seemed as if the people thought this money would actu- 
 ally excavate the canal, quarry the stone, and build the 
 locks. But when they had received the money, they 
 were obliged to build the canal by their own labor, and 
 
 QOW that it is completed, to collect the tolls for the trans- 
 
 SOT 
 
308 A TRUE MONETARY SYSTEM. 
 
 portation of their own products, and from all the mer- 
 chandise passing on the canal, and give this income to 
 the foreign and other holders of the bonds for merely 
 furnishing a representative of Illinois property. 
 
 If the Safety Fund had been established, and money 
 had been issued representing the property of the people 
 of Illinois at an interest of six per cent., their property 
 would not have been more encumbered than by being 
 pledged to foreigners at the same rate of interest. The 
 property that secured the loan to foreigners would have 
 been good security to the Fund. The interest on the 
 loan would have been gained by the people of the State, 
 instead of being paid to foreigners. All the interest that 
 Illinois pays to other States or nations, is paid for the use 
 of money, and not for the use of actual capital. If the 
 people of Illinois had had no capital, they could not have 
 borrowed the money ; if they had ample capital, they 
 certainly ought to have had the power to obtain a proper 
 representative of it at home, instead of being compelled 
 to go abroad for it. How much greater would have been 
 the prosperity of this State had the Safety Fund been 
 established before she began to make her internal 
 improvements. The necessary money to carry them 
 through without delay could have been obtained from 
 the Fund at one and one-tenth per cent, interest, and no 
 embarrassment from a scarcity of money would have 
 been felt in any department of industry. The improve- 
 ments would have remained in her own hands, and she 
 would long since have been receiving the advantages of 
 them in tolls and increased facilities of transportation. 
 But under the present monetary system, she has suffered 
 the loss of credit, and to complete her improvements has 
 been compelled to mortgage her canal and canal lauds. 
 and the labor of coming generations. 
 
 Millions of money are now paid in interest to foreign 
 nations on our Government and State debts. BesideSj 
 
ADVANTAGES OF THK SAFETY FUND. 309 
 
 in all our large seaport towns, many foreign capitalists 
 have agencies or banking houses for drawing bills of ex- 
 change, dealing in stocks, discounting notes at enormous 
 rates, etc., and in this way immense fortunes are accumu- 
 lated from our labor. These capitalists exercise a great 
 influence upon our money market. When our people 
 shall have an ample national currency, at a low and uni- 
 form rate of interest, these capitalists and agents will dis- 
 appear. Money-brokers and stock-jobbers, who now live 
 by fluctuations in the money market, will abandon an 
 occupation no longer profitable. 
 
 The value of money being made uniform, all kinds of 
 stocks will maintain a uniform value, determined by the 
 per centage interest which they will yield, and the time 
 they have to run before the payment of the^ principal. 
 If they bear a higher rate of interest than the legal one, 
 of course they will be above par. All the State stocks 
 which the States have reserved the right to pay before 
 maturity, will be paid with money borrowed at one and 
 one-tenth per cent. Even if the bonds of some of the 
 States have a number of years to run, these States can 
 much more easily pay five, six, or seven per cent, inter- 
 est per annum upon them during the period, than they 
 can under the present monetary system, because the 
 value of their labor and products will be increased. The 
 same will be true of all private bonds and mortgages 
 having a number of years to run. A few years will ex- 
 tinguish all these old loans, and then there will be a 
 nearly uniform rate of interest on all obligations through 
 out the nation. 
 
 From what was said in the Introduction, it appears that 
 the farmer or planter is very dependent upon the mecha- 
 nic for his implements of husbandry, for his house, furni- 
 ture, books, etc., etc. The mechanic is certainly not less 
 dependent on the farmer for the materials of his food and 
 clothing, and these are indispensable to his existence. 
 
310 A TRUE MONETARY SYSTEM. 
 
 There is no such thing as independence among men; they 
 are and must be helps to each other. Although all useful 
 trades and occupations are mutually beneficial and neces- 
 sary, yet in most nations a jealousy exists between the 
 agricultural and manufacturing interests. But in reality 
 the natural tendency of the prosperity of one is to increase 
 the prosperity of the other. The object of both is to 
 supply themselves and each other with food, clothing, 
 and the other comforts of life. If an ample supply 
 of money were at all times in circulation, at a uniform 
 and sufficiently low rate of interest, both the farmers 
 and the mechanics would find a ready market for 
 their products ; and the prices of their products would 
 naturally adjust themselves so that both parties would 
 receive an equitable share of the proceeds of their 
 labor. Each would be justly contributing to the welfare 
 of the other, and each would be benefited by the Jabor 
 of the other, and would receive an equitable proportion 
 of the products, because the representative power by 
 which the distribution was made, would not be capable 
 by its income of engrossing the products of either party. 
 But so long as the income power is the all-absorbing 
 power which takes the larger portion of what both 
 these parties earn by their labor, a third party that holds 
 this legal power of income, will take without labor the 
 larger share" of what both the others produce. While 
 the poverty of producers is supposed to be caused by 
 over production, and the sale of too many products, the 
 evil will be attributed to laws favoring one class of pro- 
 ducers to the disadvantage of others. But when the real 
 cause of the oppression, that is, the monopolizing power 
 of money over all the productions of labor is perceived 
 and rectified, the various branches of productive industry 
 will harmonize, and promote one another's welfare. 
 
 Some may not understand how the rate of interest on 
 money affects the compensation of labor. Suppose the 
 
ADVANTAGES OF THE SAFETY FUND. 311 
 
 owner of a small farm is now obliged to work early and 
 late for a mere subsistence. He lias little or no means 
 to spare for the education of his children, and in fact 
 cannot give them time to attend school. If this man 
 should be told >that the high rate of interest at which 
 money is loaned deprives him and his famiiy of the com- 
 forts of life and the means of education, he would very 
 naturally ask: '^How can that be? I never borrow 
 money and pay interest, nor do I lend money and re- 
 ceive interest. The payment of a high rate of interest 
 by others does not affect me ; it does not diminish my 
 crops. I raise food for my family, and the produce that 
 
 can spare I sell, and buy such other articles as we 
 need, and the storekeeper does not charge me any inter- 
 est. I have enough to do to live, without troubling 
 myself about the interest on money." He is indeed 
 aware that many people live with far less labor than he 
 does, and have many more comforts, and this he attri- 
 butes to their good fortune. He does not grasp the sub- 
 ject sufficiently to perceive that the interest on monej 
 is a standard or governing power, which compels him to 
 contribute bis proportion of* the products required tc 
 support all the non-producers in this country, and pro- 
 bably some of the capitalists of Europe. He does not 
 see that a large per cent, is taken from the price of his 
 products by the purchaser, in order to enable the latter 
 to pay his interest and live by the purchase and sale ; 
 and that, for the same reason, when he purchases, a 
 large per cent, is added to the price of every article pro- 
 duced by the labor of others. This "difference in price 
 must be sufficient to support all who live upon income 
 without labor. 
 
 Let the, Safety Fund be established, and interest be 
 reduced to one and one-tenth per cent., and after a year 
 or two let inquiry be made of the same farmer about his 
 welfare. He would probably say, ""1 am doing very 
 
312 A TKUE MONETARY SYSTKM. 
 
 well ; I am much better off than I was two or three 
 years ago. I send iny children to school, and have a 
 good living." Should he be told that his prosperity was 
 owing to a sound currency and low rate of interest, he 
 might say : " I do not borrow any monev from the Safety 
 Fund, and I have no money to lend upon interest. I 
 raise corn and potatoes as formerly, and sell them to the 
 came merchants. I do not see how the* reduction of the 
 interest on money that other people borrow is any bene- 
 fit to me." Although he do not perceive the causes of 
 his past privations or of his present comforts, he will be 
 as sensible as any one of the improvements in his condi- 
 tion. If a man suffering intense pain were informed 
 that it was caused by the disorder of a nerve, he might 
 not understand this, nor think so small a cause could 
 occasion such acute suffering. Apply the proper remedy, 
 let the nerve recover its tone, and the pain cease, and 
 he would be conscious of health, although he might not 
 understand how the pain was removed. Whether a man 
 understand the laws relating to his physical system or 
 not, he will suffer if any organ do not perform its duty ; 
 and whether laborers understand the constitution of 
 money or not, they must suffer all the consequences of 
 its imperfect or deranged organization. 
 
 There will doubtless be a class of objectors to the 
 Safety Fund who will contend that it is by the use of 
 ::Tealcjr talents, and not by the unjust power of money, 
 that a few gain the majority of the wealth in a nation. 
 But it is evident, that if the greater talents of the few 
 are not dependent upon the unjust power of money and 
 the love of gain by its exorbitant rate per cent, interest, 
 that diminishing the power of money and greatly lower 
 ing the rate per cent, interest, cannot in the least infrm;.>v 
 upon the full and freest use of their greater talents, 
 either for the production or the acquisition of wealth, 01 
 tor any other ju<t riml lawful purpose. 
 
ADVANTAGES OF THE SAFETY FUND. 313 
 
 When the natural reward of labor is secured to the 
 laborer, poverty cannot exist in any family whose mem- 
 bers are able and willing to work. And those who can 
 so easily provide for their own wants, \vill cheerfully con- 
 tribute to the support of the sick and needy. They will 
 be able to supply themselves amply with the comforts of 
 life, and have an abundance of time for intellectual find 
 moral culture. The incentives to vice will be compara- 
 tively few. .Avarice first arises from the fear of want ; 
 to remove want will therefore in a great measure re- 
 move this vice, and the unnumbered evils which are its 
 attendants.* It is frequently said that the people must 
 reform, and that not until then may we hope for good 
 laws. Not so : we might as well expect families to grow 
 up virtuous where the parents are cruel, profligate, and 
 vicious, as to expect nations to be virtuous under op- 
 pressive laws. Make the laws a standard of right, and 
 their benefits must secure an improvement in the morals 
 of the people. 
 
 It is often said that men are naturally lazy, and will 
 not labor unless compelled by an urgent necessity ; and 
 it may be objected to the Safety Fund that if laborers 
 are supplied with all the necessaries and comforts of life 
 with far less labor than at present, the effect will be to 
 induce indolence. This opinion is held mainly by men 
 who have accumulated large properties, and by those 
 who have been placed in easy circumstances by theii 
 ancestors, and who, under the present system have the 
 power to impose the necessity to labor. This class seem 
 to think it their right, if not their duty, to take all the 
 surplus earnings from laborers, that the latter may be 
 kept at work. If it be true that man is naturally indo- 
 lent, it will be difficult to show any good reason for com- 
 pelling the larger part of the race to labor excessively to 
 
 * See Appendix, K. 
 
314 A TRUE MONETARY SYSTEM. 
 
 keep from starvation, while the greater and better por 
 tion of their productions is applied to support a smaller 
 class without labor. There are those, however, who be- 
 lieve that man is naturally industrious. They know that 
 healthy children are continually active, and that when 
 motives of comfort or pleasure are offered, they are ever 
 ready to make great exertions to possess themselves of 
 the desired objects. Hence they believe that if the pro- 
 ductions of labor were fairly awarded to the producers, 
 the prospect of the comfort and elevation in 'store for the 
 industrious, would present sufficient motives to secure 
 ah 1 necessary and desirable exertion. This certainly is 
 true unless the natures of the child and the man are radi- 
 cally different. But if, when a child had made great 
 exertions to obtain some desired object, others should 
 by a secret or visible power prevent his receiving three- 
 fourths of his well-earned reward, and the same exertions 
 should be repeatedly followed by the same results, 
 doubtless he would be discouraged from further at- 
 tempts. If under these circumstances he should become 
 idle, or seek to acquire without labor, it ought not to, be 
 attributed to natural indolence, but to the want of a 
 reasonable assurance that his "labor would be successful. 
 The situation in which the producing classes of all 
 nations are placed, seems analogous to that of the disap- 
 pointed child. It has hence become a very common 
 remark that man is naturally indolent. If discourage- 
 ments were perceived by the minds of children equal to 
 those familiar to the laboring classes, they would be so 
 disheartened in their efforts as apparently to change 
 their natures, and we should then have laz;y children. 
 Their efforts also would depend on necessity ; rind men 
 and children would be found to have the same natures, 
 and to be governed by similar motives.* 
 
 * See Appendix, L. 
 
ADVANTAGES OF THE SAFETY FUND. 315 
 
 As a further illustration of the foregoing principle, we 
 may notice briefly the policy which our Government 
 should pursue in the sale of the public lands. If a country 
 is to become wealthy, facilities must be afforded to those 
 who perform the labor necessary to make it rich. It is 
 generally admitted that a free people will perform more 
 labor, and make greater production than an equal num- 
 ber of slaves. This seems to prove that' those who expect 
 to own and enjoy the proceeds of their labor will pro- 
 duce more than those who are stinted in the necessaries of 
 life by having their products appropriated to the use of 
 others. When large estates are rented, and the land- 
 lords take a great share of the earnings of their tenants, 
 the farms are not generally as well cultivated, and the 
 buildings and other improvements are seldom if ever as 
 good as where the farmers are the owners of the soil 
 which they cultivate. The difference is doubtless owing 
 to the hopelessness in one case that even by severe toil 
 they shah 1 materially improve their condition, and to 
 the prospect in the other of enjoying the fruits of their 
 labor. To the former labor is a burden, while the latter 
 cheerfully perform a greater amount. If then our Gov 
 eminent desires the improvement of the public lands, 
 encouragement must be offered to those who will pur- 
 chase arid cultivate them. Speculators who buy and sell 
 them at a tenfold profit, and make no improvements on 
 the lands, add nothing to the wealth of the country ; but 
 purchasers who go upon the land and improve it by their 
 labor, increase the'public wealth. Let then the Government 
 soil the lands to actual settlers only, in parcels not exceed- 
 ing half a section to any individual. Let a small part of 
 the purchase money be paid down, and let the balance 
 remain on mortgage at One and one-tenth per cent, inter- 
 est until the occupant is disposed to pay it. In this way 
 the land will at once bring an income to the Government 
 
 as good as if the whole purchase money were paid and 
 
 18 
 
316 A TRUE MONETARY SYSTEM. 
 
 relouned at tlie legal rate of interest. The Government 
 will be perfectly safe, and the people will pay for and 
 improve the lands. This will at the same time build up 
 a prosperous and happy people, who will soon add im- 
 mensely to the wealth of the nation, and who, in improv- 
 ing their own condition, will contribute to the comfort 
 and happiness of others by supplying them with food, 
 and receiving their surplus products in return. 
 
 If the laws be such that the people can secure a good 
 living and a handsome surplus without labor, and can earn 
 only a scanty subsistence and no surplus by it, they will 
 seek to exempt themselves from labor. But if the laws 
 be made such that labor will secure to them a good living 
 and a handsome yearly surplus, while without it they can 
 obtain only a poor living and no surplus, people will 
 incline to labor. If interest be reduced to a just rate, 
 almost the entire population of the country will be en- 
 gaged in some species of productive industry, and the 
 laboring classes will be relieved from the support of 
 a numerous body who now live by their wits that is, 
 by contriving to obtain the products of others without 
 toil. When money is made a just standard, the injustice 
 of contracts founded upon it will cease,' and many laws 
 necessary to support the present unjust standard will dis- 
 appear. 
 
 So long as monetary laws continue a standard that 
 will wrest products from producers, and place and pro- 
 tect them in the hands of non-producers, they will require 
 for their support the aid of the sword and bayonet, be- 
 cause man's natural sense of right revolts against the 
 usurpation and the injustice of such protection. But 
 when monetary laws shall sustain a just standard of value., 
 which will place and protect products in the hands of 
 their producers, they will of course conform to the natu- 
 ral laws of production, which were ordained by a higher 
 than human power. The distribution then being accord 
 
ADVANTAGES OF THE SAFKTY FUND. 317 
 
 ing to justice strife will cease, because a man having Ids 
 own rights respected and protected, will naturally respect 
 and protect the rights of others. The time is not far dis- 
 tant when this truth will be known and appreciated by 
 all civilized nations, and the mistaken power of legal 
 Might which has such dominion over man, will wither 
 before the meek and peaceable power of Right that exists 
 in the natural laws of a wise and beneficent Creator. 
 
CONCLUSION. , 
 
 IN the previous pages we have discussed the rights oi 
 labor and capital for the sole purpose of convincing the 
 public that the rapid increase of capital by per centage, 
 now favored by monetary laws, while it stimulates the 
 enterprise of the few, and naturally and inevitably 
 secures to them great wealth, represses and cripples the 
 enterprise of the great mass of the people, tending to pau- 
 perism, crime, and indirectly, but certainly, to the over- 
 throw of the Government, which, disregarding the ratio 
 of the actual increase of property by labor, has given the 
 preference to capital : that justice to labor, while it will 
 secure individual comfort and happiness to all who are 
 able and willing to work, will rapidly develop the highest 
 qualities of our nature, and all the resources of our coun- 
 try, and greatly increase the national wealth ; that it will 
 give to civilization an impetus such as the world has 
 never seen, and relieve it from one of its hardest condi- 
 tions, that of creating desires and necessities which it pro- 
 vides no means to gratify ; that it will silence at once 
 and forever the doubt so often felt and spoken, whether 
 the happiness of the mass of men has been promoted by 
 the change from the savage to the civilized state. 
 
 It has been shown that labor constitutes the real trea- 
 sure of a nation, and without claiming for it anything 
 more than its natural rights, we insist that these should 
 be guarded by the most jealous care of government. It 
 has also been shown that under existing monetary laws, 
 labor is not and cannot be properly rewarded. Change 
 is indispensable, and fortunately it can be effected with- 
 out altering the Constitution of the United States, with 
 
 318 
 
CONCLUSION. 319 
 
 tmi th* slightest disturbance to the present institutions 
 of soc'Xy, or real injury to any one. 
 
 It is MOW for the American people, who have founded 
 their government upon the principles of equality and free- 
 dom, to establish the rights of labor, which have been 
 nearly disregarded in all previous time, and only cared for 
 as they have served to minister to the ambition and luxury 
 of courts and nobles. Let the social position of the 
 laborer, to which he is entitled by the ordination of God 
 in the laws of nature, be ascertained and recognized, 
 and poverty, crime, and most other political and social 
 evils, will give place to competency, virtue and happi- 
 ness. 
 
 The facts contained in this volume show plainly that 
 our monetary system favors the rapid concentration of 
 capital in opposition to the rights of labor, and we deem 
 it warrantable to assume, that nearly all who shall care- 
 fully examine the subject, will be convinced that our 
 present laws of distribution are continually doing a great 
 wrong to the people. 
 
 Nothing more simple than the Safety Fund need be 
 desired, and the more it is considered, the more adequate 
 it will appear to distribute the wealth to those whose 
 labor earns it. This system will as certainly reward 
 labor, as the one now in force has oppressed it. It will 
 infringe no rights of property. The owners of wealth 
 will continue in undisturbed possession. They will be 
 able to lend their money and rent their property as 
 readily at one and one-tenth per cent, as now at six or 
 seven per cent. The dollar received by the rich man in 
 interest or rent will purchase as much as the dollar 
 earned by the laborer ; precisely as at the present rates 
 of interest. Landowners will be at liberty to rent their 
 land to tenants, work it themselves, or leave it untilled, 
 according to their own pleasure : the low rate of interest 
 will not prevent it from yielding crops. Capitalists will 
 
CONCLUSION. 
 
 no!. l>c required to favor laborers, nor to give them em- 
 ployment, nor to diminish the hours of toil. Capitalists 
 mid laborers will be free to make their own agreements 
 <>n these points. The Safety Fund contemplates no 
 agrarian distribution. It asks for no distribution of lands 
 ml property, and for no contributions of money by 
 cither the Government or individuals to the support of 
 laborers. Laborers will need no favors. They only re- 
 quire that the Government establish a just standard of 
 value, which will allow them to possess an equitable 
 share of the fruits of their labor.* 
 
 Who are those directly interested in the adoption of 
 the Safety Fund ? All agriculturists, manufacturers, 
 mechanics, planters, in short, all who wish to earn a 
 support by honest industry. Merchants will do a safe 
 business in exchanging products, and their profits will be 
 moderate and sure. Nine-tenths of our whole population 
 will receive the pecuniary benefit which is justly their 
 due, and the remaining one-tenth will be left in undis- 
 turbed possession of their present wealth, and like their 
 fellow-citizens, at liberty to increase it by any useful 
 employment. The desire of capitalists to accumulate is 
 often owing to the wish to leave large fortunes to their 
 children. But if they lightly consider the instability of 
 wealth, they cannot expect all, or even one-fourth of their 
 posterity to remain rich. Will it not be, to reasonable 
 men, a thousand times more consoling to leave such laws 
 as with a moderate amount of labor will secure to their 
 whole posterity the comforts of life and the means of 
 education, than to leave to their children the money and 
 the present monetary laws, which must in a few years 
 compel the larger part to toil incessantly for a scanty 
 subsistence, and deprive them of mental and social culture? 
 Are not just laws a far greater blessing to transmit than 
 nn y amount of wealth? We believe that many among 
 * See Appendix, M. 
 
CONCLUSION. 321 
 
 the rich, perceiving the justice and beneficence of this 
 system, will be found among its most ardent supporters. 
 Tn all civilized nations much attention is now directed 
 to the enormous evils of society ; and thousands, yes, we 
 may say, millions of good and benevolent inen are en- 
 deavoring to do something for their removal. But 
 there is a great variety of evils, and a corresponding 
 variety of opinions as to the means to be used to accom- 
 plish the desired objects; hence reformers split into 
 numerous societies ; and one society combats drunkenness, 
 another slavery, another land monopoly and the oppres- 
 sion of labor, another war. These are admitted to be 
 great evils, and all who are truly desirous of their 
 removal are the good men of the age; because they are 
 striving to alleviate the sufferings of mankind, and to 
 improve the moral character and condition of society. 
 Yet their work will only serve partially to modify these 
 evils, and will never eradicate them, because they are 
 working not at the cause but at the effects. To remedy 
 the wrongs they must begin at the foundation which 
 supports them, and make that just and right, and then 
 the evils will be easily removed ; as a good house may 
 be easily erected on a good foundation, but on a bad one, 
 the people might always work at the effects produced by 
 it on the work above, and the most that could be clone 
 would not prevent its being a rickety, poor building ; 
 while the same labor on agood foundation would have built 
 up a splendid edifice. And had the foundation of con- 
 tracts been just, the labor performed during past ages 
 would not only have provided amply for the physicnl 
 wants of the race, but would have supplied the best 
 means for their moral and intellectual culture. The root 
 of a tree produces a trunk ; the trunk naturally divides 
 itself into brandies, which subdivide themselves into 
 thousands of smaller branches and little twi^s. All these. 
 
C?22 CONCLUSION. 
 
 are supported by the root and trunk. If we girdle one 
 of these little twigs, it will die off above ; but will be 
 likely to sprout out below. A large branch cut off will 
 die, and in dying will impart new vigor to the other 
 branches ; but killing the root will destroy the tree. So 
 with the evils of society, most of them spring from one 
 root, and they have become a great tree. The trunk 
 divides itself into many brandies, which subdivide into 
 many other branche's, and little twigs. Girdling this 
 twig, or this or that branch, will never, destroy the evil ; 
 but kill the root, and then these large, and thousands of 
 smaller branches and twigs will wither, decay and drop 
 off, and the trunk will die. We desire to call the 
 attention of philanthropists of every nation, clime, and 
 sect, to the great, hidden evil which lies at the root 
 and below T the surface, that they may combine their 
 strength, and by one joint effort Directed at the root, 
 slay the thousand great sins of a nation, so that they 
 will at once begin to wither and decay, like the 
 branches and twigs of a tree killed at the root. If the 
 philanthropists who are now engaged in their works of 
 kindness, and the producing classes who so wrongfully 
 suffer by the present system, would but use their united 
 efforts to have a just currency substituted for the present 
 unjust one, it would be speedily accomplished ; and the 
 consequent moral and physical improvement would be- 
 without a parallel in the history of man. When any 
 nation shall adopt a just monetary system, the abundant 
 supply of comforts, and the good will, peace and happi- 
 ness which will ensue, will form such a contrast to the 
 present condition of society as to astonish the world ; 
 and all* will wonder that the power of money was 
 adequate to the production of so much evil. By the 
 nnjust power of money tyrannies have been built up and 
 sustained, and by making it a just standard of value, and 
 
CONCLUSION. 828 
 
 .'in equitable balairce against actual production, it will 
 Mgain demolish them, giving to man his rights throughout 
 the civilized world.* 
 
 The means necessary to put in operation and sustain 
 the Safety Fund are not confined to the few capitalist? 
 who now control the currency, and furnish the Govern- 
 ment and the people with money. Our farmers and 
 mechanics alone have sufficient landed estate to secure 
 several times the amount of money necessary for our 
 currency. The only thing required is a law of Congress 
 adopting this system. The passage of this law must be 
 effected by direct petition, and by making the measure a 
 leading question, the people voting only for men who will 
 use their influence in favor of it. Every one, thoroughly 
 convinced of the truth of the positions taken in this book, 
 can do something to diffuse a knowledge of them among 
 his friends and neighbors. The most effectual way to ex- 
 cite interest in the system, and give it prominence, would 
 be to call public meetings and lecture upon the subject. 
 The objects which will be secured by its establishment, are 
 so evidently in accordance with the principles and aims of 
 the Christian religion, that ministers of the Gospel cannot 
 fail to advocate it with the same zeal that they advocate 
 peace, justice, and good-will among men ; nor can states- 
 men who legislate for the well-being of their countrymen., 
 refuse it their support. The public newspapers have 
 
 * If we could put an end to its unjust use there is no dangrr 
 of our Government ever becoming a monarchy, the predictions of 
 Europe to the contrary notwithstanding. But should the interest on 
 money be regulated by our Government, at just and equal rates, 
 there would be a Union in this country stronger than any govern- 
 ment ever yet established,. and, instead of our becoming a monarchy, 
 the governments of Europe would be obliged to adopt our form of 
 government, or very much better their own, for I am persuaded that 
 this oppression of the people who earn the wealth of nations by thei. 
 industry must, from its severity, cease. Currency the Evil and thi 
 Remedy. 
 
CONCLUSION. 
 
 great power to awaken the attention' of the people, and 
 to disseminate a knowledge of this New Monetary Sys- 
 tem, and their aid would greatly hasten 'its adoption. 
 But more than all, let farmers, mechanics, and all men 
 \vho earn their living by labor, determine that Congress 
 e.^ill legislate so as to do them justice. 
 
APPENDIX. 
 
 A. Page 65. 
 
 A RAILROAD stock that brings in an income of six per cent, 
 per annum is certainly worth only one-half as much as one 
 that Brings in twelve per cent. If the income of the one that 
 brings in six per cent, could be let for six per cent, only after it 
 was received, and the one that brings in twelve per cent, could 
 be let at twelve, the stock bringing the latter price would be 
 worth vastly more than double the one that brings but six per 
 cent, per annum. But suppose one of these stocks should bring 
 in one year six per cent., the next eighteen, the next five, the 
 next twenty-four, the next seven, the next four, and the 
 next seventeen per cent., and each year the income uncertain, 
 no one would,. pretend to say there was a fixed value to this 
 stock, or that it would be a just measure of value, although 
 they now say of the dollar, that it is a dollar all the world over 
 and its value is always the same. They might as justly assert 
 of this railroad stock, that stock is stock all the world over, 
 and always of the same value. But, if the income on this 
 stock were precisely the same, not only every year but every 
 day in each year, and would continue so without iluctuation, 
 other things might vary, but the stock would always be of 
 uniform value. And especially if it were made the skiiidard. by 
 which every other species of property were valued, it being the 
 foundation of all value and always producing the same income 
 stock producing stock as money at interest produces 
 money, the thing produced being "precisely like the thing that 
 produced it, the stock could not po<sT in value. Sup- 
 
 pose a man to have one hundred shares of this stock, which 
 was yearly producing six dollars on each share (amounting to 
 
326 APPENDIX. 
 
 $600), the interest or dividend ($300) being paid . every six 
 mouths, should the stock and road cease to exist, but the divi- 
 dend be regularly paid, the non-existence of the road and stock 
 would in no manner affect its value. But let the dividend or 
 interest cease to be paid, and forever cease, and the road con- 
 tinue, the stock would not be worth ono cent. Should a farm 
 cease to produce, it would be worthless for agriculture; so, 
 should the interest on money forever cease, I doubt whether any 
 nation, with all the laws it might make, could ever maintain it 
 as a currency. Therefore, money loaned should bear an interest 
 fixed at such rates as never to be oppressive. We might better 
 vary the length of the yard than the interest on money better 
 allow all the other measures to vary than this, because it mea- 
 sures the value of every species of property, all government 
 expenses, all official salaries, and everything that is sold by the 
 piece, bulk, or quantity. How important is it then that it 
 should be just ! A man might as well be allowed to change his 
 neighbor's landmark as to increase the interest on his debtor : 
 he would as much augment the debt, to the injury of his debtor, 
 as he would enlarge his farm to the loss of his neighbor. If the 
 one is just, the other must be so too. 
 
 Congress has coined money, but has not determined its value 
 because it has left its use or interest unsettled. It might as well 
 have said that yard-sticks should contain thirty' cubic inches and 
 allow them to be made to slide out to any length from two to 
 fifteen feet, and then permit a few people to monopolize them ; 
 when buying, to slide out the stick to any length, and when 
 selling, to reduce it two or three feet and call the length of the 
 stick a yard, however long or short it might be. It would 
 no more vary the yard when its length was increased from 
 three to fifteen feet than the dollar is changed when the interest 
 is altered from six per cent, per annum to thirty per cent, or 
 two and a half per cent, a month. (Currency, the Evil and the 
 Itemedy.} 
 
 'B.Page 154. 
 
 I think none will deny that labor earns the wealth of all 
 nations ; yet the laboring classes often suffer for the necessaries 
 of life, and are in distress for the want of employment. For 
 
APPENDIX. 327 
 
 example: take England, the wealthiest nation in the world, and 
 contemplate the state of the laborer. Instead of receiving an 
 equivalent for Ms labor, he is clothed in rags, lives on scanty, 
 miserable food, and many times tinds great difficulty in keeping 
 himself from starving. The manufacturer who employs 
 hundreds of these laborers finds his goods, when manufactured, 
 soil below their cost, because the interest on money is raised. 
 He naturally endeavors to lessen his expenses, and, cotton 
 having fallen, buys his materials a little cheaper. Though he 
 very much dislikes to reduce the wages of his workmen, and 
 continues for a time to pay the same price, his losses compel 
 him to diminish them one-eighth. The manufacturer, still 
 losing, buys cotton a little lower, and takes another eighth from 
 the wages of his workmen, which distresses them very much. 
 Goods fall again, and he is obliged to give the men employment 
 half the time only at this low price. He would certainly stop 
 his factory, but he knows the workmen would suffer still more 
 should he do so; at last his losses compel him to do it ; the 
 laborers are thrown out of employment and cannot get sufficient 
 food to eat. The manufacturer cannot feed them ; for a long 
 time he has been losing on the goods, his business is stopped, 
 and he is earning nothing. He feels for his workmen, but 
 cannot help them ; the market is glutted with goods, and they 
 will not sell. The fault of this change in the price of goods 
 may not be in the least owing to the manufacturer. It lies be- 
 yond all the useful business of the nation in the money capital. 
 If the interest of money rise from three per cent, per annum 
 to four per cent., it is equal to a change or fall, in the goods of 
 twenty-five per cent. ; the measure is just one quarter more 
 than it was. The income of one hundred dollars in a year is 
 four dollars instead of three, hence a person buying its use has 
 to pay four dollars where before he paid but three. The use is 
 all the person buys ; he rents the money as he would rent any 
 other property the money belongs to the party lending or rent- 
 ing out its use, and, at a given period, is to be returned to its 
 owner, its use only being paid for. But if the interest have 
 risen from three to four dollars, the dollar itself is worth 0116 
 hundred thirty-three and a third cents, and as well worth that 
 as it was before worth one hundred cents. It is the same to the 
 " manufacturer as if he should be compelled when lie sells his 
 29 
 
328 APPKNDIX, 
 
 goods, to increase the length of his yard-stick to four feet And 
 sell liis goods at the same price lie did when his yard-stick was 
 but three feet long. He cannot do this unless his workmen will 
 make four yards of cloth at the same rate that they hefore made 
 three ; he must also buy as much cotton now for three dollars 
 as formerly for four, and curtail every other expense in the same 
 proportion, or his business will not be as good as when niouej 
 was at three per cent, interest. The interest on money con- 
 tinues to rise until it gets to five per cent, per annum ; now his 
 yard-stick must be five feet long and Ins workmen must make 
 five yards of cloth for the same same price they before made 
 three. Where the manufacturer bought a bale of cotton at fifty 
 dollars, he must now pay but thirty and diminish every other 
 expense in proportion. The interest on money still increases to 
 six per cent, per annum, and the use of a dollar having doubled, 
 the dollar itself is just doubled in value. Mow his yard-stick 
 must be six feet long and his workmen make two yards of cloth 
 for the same price they before made one : he must buy a bale 
 of cotton for twenty-five instead of fifty dollars, and lessen all 
 other expenses in proportion. Add to this, he is in debt when 
 the change in the interest takes place, although the debt against 
 him is permanent and bears but three per cent, he is obliged to 
 reduce everything in this ratio, i. e., buy the cotton, reduce the 
 wages of his workmen, have just as ready sales and collections 
 as formerly, or his interest will be burdensome to him, for it 
 takes just double the quantity that it formerly did to pay the 
 three per cent, interest, and he must sell double the quantity of 
 cloth to obtain the same money. But suppose the property on 
 which the debt is a lien is forced on sale, what will it bring ? 
 Certainly if it rented as well as it did before when money was 
 but three per cent, it would. not now be worth more than half 
 its former value. Thus tlie manufacturer is broken up, arid every 
 branch of useful business checked, laborers cannot find employ- 
 ment ; and all this trouble is attributed to the people who have 
 made the goods and every other useful article : the capital takes 
 nearly all the earnings, allowing tjie people who have earned the 
 whole wealth of the nation to starve, and this is called "finan- 
 ciering," getting things down to the specie or real value. 
 When this process is over, and the wealth concentrated in thfl 
 f the few, money is offered to the business people at a- 
 
APPENDIX. 329 
 
 somewhat reasonable interest ; business again goes on for a few 
 years, when the same scene is reacted and the same result pro 
 duced 
 
 All laws are made for the government of man. Each nation 
 enacts them for itself, and ever} r citizen within their jurisdic- 
 tion is bound to obey them. These laws are intended to pro- 
 tect the rights of property, to shield the weak from the strong, 
 allowing no one by oppression or injustice to take property 
 from another without returning an equivalent. Stealing, is ap- 
 propriating property without the consent of its owner. One 
 who steals is not only bound by law to return the thing stolen, 
 but is also obnoxious to imprisonment. 
 
 The laws also protect against gambling. Gambling consists 
 in two or more individuals posting up any sum of money, to 
 which all parties agree, then playing some game, after which, 
 the one who beats takes all the money. This is gambling, be- 
 cause one man takes from others money or property without 
 rendering any equivalent. The others have lost just what the 
 winner has gained, yet it was all done voluntarily, without the 
 slightest necessity for it, so there was no oppression on the part 
 of the winner ; the hope of gain prompted each, yet they knew 
 before they played all but one must lose, still each hoped to be 
 the fortunate one. This is fair gambling, but should those whc 
 had lost their money discover that the winner had prepared the 
 cards by a private mark on the back of each, and thus had 
 won the game, it would be called unfair gambling, and the 
 persons losing would say they had been cheated out of their 
 money. 
 
 The laws prohibit these transactions because they are injurious 
 to the parties concerned, their families and the public ; corrupt- 
 ing the morals of the community by the pernicious practice of 
 taking from one his property and giving it to another without 
 any equivalent. A gambler is not generally considered a busi- 
 ness man. If it were asked in what business such a man is, the 
 answer would be, "None ; he is nothing but a gambler." I wish 
 now to speak of other things in the community called business, 
 and ascertain whether the term be more properly applied to them 
 than it is to the gambler. I mean the stockjobbing business. 
 A person buying stock to hold for a time, expects to sell it for a 
 higher price than he pays for it. If it be State stock bearing 
 
330 APPENDIX. 
 
 interest at six per cent, lie intends to buy it at such rates that 
 he shall not only receive six per cent, interest, but a profit 
 beside. Let us see whether, if he buys the stock below its par 
 value, others will not lose all he gains. Suppose it to be issued 
 by the State and bear six per cent, interest. Some individual 
 who has taken it at par is compelled, by misfortune, to sell it for 
 fifty per cent, discount, thus losing one half the amount for 
 which he has received no equivalent, while the person buying it 
 has gained precisely what the other has lost, and given nothing 
 for it. 
 
 Again, if the State itself be obliged to sell its own bonds bear- 
 ing the legal interest of the State at twenty, twenty-five or any 
 other per cent., below par value, it loses all the difference 
 between the par value and the amount for which they are sold, 
 and the person buying obtains precisely what the State loses, 
 and this loss must be paid by taxing, directly or indirectly, the 
 citizens of tl>e State. These State stocks bear a certain rate of 
 interest, and both principal and interest are as definite as the 
 pound weight or the yard. The interest is daily going on at a 
 certain rate, and the stock varies from day to day exactly the 
 amount of the accruing interest and no more. But in the stock 
 market one day it is up one, two or three per cent. ; the next, 
 down one, two, three, four or five per cent., and then again up. 
 In all these transactions, one party gains precisely what the 
 other loses, as much as if one man should measure the pieces of 
 cloth he bought of another with a yard-stick four feet long, and 
 when he sells measure with one three feet long. He has taken 
 precisely as much cloth from the first man without giving any 
 equivalent, as he has gained from the person to whom he has 
 sold it. The stocks rise and fall daily, because some few indi- 
 viduals combine and run them up by falsely selling to each other 
 without any intention of delivering the stock, or if delivered 
 there is an understanding that it shall be rebought by the person 
 who sold it. This is done to " corner " some other persons who 
 have sold stock on time and have to deliver it within a certain 
 period, which, if they cannot do, they must pay the difference 
 or be disgraced by this very respectable Board of Brokers. In 
 this way, combining to run up and run down the stocks, they 
 try to induce innocent people to partake in the same business. 
 It is often the case that sundry individuals combine on ;-e -tain 
 
APPENDIX. 
 
 Dank ,'uicl railroad stocks, and agree not to sell the stocks which 
 they own or control, knowing they have a large majority of that 
 in which they are operators. TJiese same men then go forward 
 and buy, to be delivered in a certain time, a far greater amount 
 of the same stock than there is outstanding, and run it up to 
 double its former price. When the time arrives for it to be 
 delivered, they know it cannot be done unless it is bought 
 directly or indirectly from themselves, and they charge whatever 
 they please for it, .or else they take the difference, and the 
 stock is not delivered at all. This is done under pretence that 
 there is some real cause for this great advance, and those 
 unskilled in financial operations are often " cornered " in this 
 way, or in some other quite as unsatisfactory. 
 
 Now are these transactions any more fair than a private mark 
 upon the cards before gambling? In all these do not some of 
 the parties lose precisely what the others gain? In all this 
 there has been nothing done to increase the wealth of the nation 
 or the comfort of man; neither has it bettered the morals of 
 any one. No transaction of this kind deserves the name of busi- 
 ness ; and here let me explain what business is. 
 
 Take, for instance, a farmer who has an extensive business in 
 wool, and suppose him to have two thousand sheep. . He must 
 provide hay and grain to keep them during the. winter; lie also 
 raises grain to sell. To cultivate so large a farm, he must 
 employ a number of laborers, whom he boards and pays sufficient 
 wages to furnish themselves with good clothing, and enable thein 
 at the end of the year to have a handsome surplus. "When the 
 wool is ready for market, the farmer sells to the manufacturer 
 for a price which will pay for the labor devoted to the sheep, a 
 reasonable compensation for the use of the part of the farm 
 allotted to them, and a small profit besides. The manufacturer 
 converts the wool into cloth and sends it to a commission mer- 
 chant in New York to sell, limiting him to such prices as will 
 enable him to pay all his workmen well. The manufacturer also 
 demands a price sufficient to pay himself for his own labor, for 
 the use of his machinery and manufactory, and to insure a small 
 profit. The commission merchant sells these cloths to the 
 wholesale merchant or jobber, and receives his commission, 
 which gives him a good living and a handsome surplus. The 
 jobber again sells the cloths to the country merchant, and 
 
332 APPENDIX. 
 
 receives enough to give him a good living and a reasonable 
 profit. The country merchant sells them to the farmers, mecha- 
 nics, and various individuals who need them, and they wear 
 them out. 
 
 Every one of these persons is making a living and saving a 
 surplus ; the people who buy these cloths and wear them out 
 are raising grain, beef, pork, etc., supplying the various manu- 
 facturers and mechanics with food, and they also "make a good 
 living and some profit. No one lias lost what the other has gained, 
 but each and every one of them is gaining. This is business: 
 each one is adding to his own comfort, while at the same time 
 he contributes to that of all the others. The same happy result 
 would attend every branch of useful business in our land, if 
 business were pursued and not gambling. 
 
 If this gambling in stocks and money affected those only who 
 are in that "business," as it is called, the evil would be compa- 
 ratively small, but it does not stop there. This article, money, is 
 the measure of value of all the productions of the country, and no 
 matter where the farmer, mechanic, laborer, merchant, or any 
 producer may be situated, if he be in debt, the rise of interest 
 from six to twelve per cent, per annum, doubles his debt upon 
 him although he may be paying but six per cent, interest upon 
 it. It will take double the produce to pay six per cent, because 
 it will fall in about that proportion, but at the same time it will 
 take the same labor that it always did to raise a pound of cot- 
 ton, a bushel of wheat or to make a yard of cloth, and one hali 
 the money will pay for it, hence it is doubled ii t favor of the 
 money capital. To illustrate this, I will suppose : A., who is 
 clear of debt, owns a farm, but it is not as large as he wishes it. 
 13., another farmer, offers for this $4,000, paying $2,000, and 
 giving a bond and mortgage on the farm purchased for the re- 
 maining $2,000, payable in instalments of $300 a year, interest 
 at six per cent. He expects, with the assistance of his family, 
 to do all the work on the farm, and thinks he can easily clear 
 $300, as produce commands good prices. A. purchases another 
 farm for $6,000, paying $2,000 in cash, and giving his mortgage 
 for $4,000 at six per cent, interest on the farm purchased. He 
 agrees to pay $500 a year and the interest. He expects to re- 
 ceive $300 a year from B., and to make clear at least $200 
 besides the interest. But before the year rolls round, the inter- 
 
APPENDIX. 333 
 
 est on money rises in the Atlantic cities from six to twelve per 
 cent. He sees the newspapers stating the fact, but thinks it has 
 little to do with his farming as he is paying no such interest, his 
 mortgage hearing but six per cent. By the time he gets his 
 crops to market, he finds produce has fallen, and even at lower 
 prices does not sell readily. His neighbor B. does not receive 
 as high a price for his produce as he expected, and is able to 
 pay the interest and $200 only on his mortgage, instead of $300 
 as he agreed. A, with difficulty makes his interest and $300 
 beside. He takes the $200 collected from B. and the $200 he 
 has made from his own farm, reduces his mortgage to $3,600, 
 and pays the interest. Still in the Atlantic cities interest con- 
 tinues high, and money has become scarce in the country, 
 the interest rising to twelve per cent., though the farmers are 
 paying but six per cent, interest on the mortgages. When the 
 crops are ready for market, they have fallen one-third from the 
 last year's price : the cost of transporting to the market is tho 
 same as formerly, and when expenses are deducted they find 
 they have cleared but half as much money as in the year pre- 
 vious. B. is able to pay his interest and $100 only on the prin- 
 cipal. A. can pay the interest on his mortgage and $200. 
 The mortgage is now reduced to $8,400 ; the person holding it 
 insists upon the amount due being paid and forecloses the mort- 
 gage. The farm for which A. paid $6,000 brings but $2,000, and 
 money, by this time, is so scarce that few people have sufficient 
 to purchase it. As A. is pushed, he sues B., and B.'s farm 
 brings but $1,200, leaving B. insolvent and owing $500, which 
 must be paid from his future earnings. When the $1,200 are 
 added to f-e $2,000 A.'s farm brought, it would still leave A. 
 indebted $200 besides interest and costs. Now what evil have 
 these two farmers done ? They and their families have worked 
 hard, and raised from their farms provisions for themselves and 
 a large surplus for the food of others ; and who has reaped the 
 fruit of their toil ? The moneyed capitalist, and without render- 
 ing the slightest equivalent. I appeal to persons in all sections 
 of our country if casos quite as hard as these have not occurred 
 within the limits of their observation. These fanners paid but 
 six per cent, interest, and yet lost, because the measure of 
 value has affected the produce of their farms and tested them bj 
 
334 APPKNDIX. 
 
 a different measure from the one by which they bought, and 
 therefore they fall short in paying their debts. 
 
 For further illustration, suppose the State of New Jersey, 
 during the whole time that the rates of interest were fluctuating 
 in all the other States, had maintained hers at six per cent, and 
 -etained all the money that generally circulates in the State, so 
 that any citizen could as easily obtain the money at this rate, as 
 at any period of her existence. : Under these circumstances there 
 would have been no complaint of a scarcity of money, and if any 
 one unable to pay his debts had attributed it to usury he would 
 have been called a madman. But look at the facts. The sur- 
 plus produce of New Jersey, and most of the goods manufac- 
 tured there find their market in New York and Philadelphia. 
 These productions are tested by the measure of value in these 
 two cities, and they fall off in price from one-third to one-half, 
 while those consumed in the State fall about as much; for the 
 prices at home are governed by the prices in market. This in- 
 creases the amount of labor to be performed by every debtor to 
 pay his debts, for it requires the same labor as at any previous 
 time to produce a bushel of grain, or any other article, the re- 
 sult of labor. 
 
 Farms, manufactured goods, machinery, all fall in price, and 
 this operates against the producers and in favor of -the money 
 capital. The citizens of the State may be great sufferers, and 
 many of them entirely broken up, although not one of them has 
 directly paid more than six per cent, interest for money bor- 
 rowed or previously owed, and not one has been troubled to 
 borrow what he needed for his use. It is as if a planter should 
 agree to deliver, at a given time, a certain number of pounds of 
 cotton, and the man purchasing should put, to balance the cot- 
 ton, double the weight he formerly did. still calling each A 
 pound. He doubles the pound weight, and the cotton falls shoi t 
 one half/ The pound weight tests or measures the weight, but 
 not more than money tests or measures the value. If the value 
 of money be doubled, the debt of every debtor is doubled, and 
 lie falls short in payment for the same reason that the cotton 
 fulls short in weighing. In weighing cotton, doubling tho 
 pound would be considered fraudulent, but doubling the value 
 of money is only "financiering." 
 
APPENDIX. 335 
 
 When grain is sold, the size of the bushel with which it shall 
 be measured is not considered a matter of bargain ; nor when 
 cotton is sold, the kind of weight that shall be used ; but it is 
 taken for granted that these are determined and fixed by law. 
 Were it not thus, there would probably be a street in each of 
 our large cities devoted to the business of changing the weights 
 and measures, especially if a few individuals were allowed by 
 law to engross them, (as the banks, brokers and rich men now 
 engross the money). The one who could increase and shorten 
 the measures most would have the most business. These people 
 would congregate in groups or on the corners of the streets, (as 
 brokers now do,) with their sliding yards, skilfully made, and 
 all sorts of measures with ingenious and false bottoms moved 
 by springs invisible to the common people ; and thus the mea- 
 suring and weighing would be the most difficult thing to accom- 
 plish, in the same manner that "financiering " is now the most 
 difficult business in the exchange of property. But it would be 
 impossible to commit so great a fraud in these measures of 
 quantity as is now and has ever been committed in finance by 
 changing the value of the dollar. Currency, the Evil and the 
 Remedy. 
 
 C.Page 241. 
 
 But again let us look at the money market in the city of Now 
 York, say this 24th day of June, 1843. Money is now said to 
 be very plentiful, and is loaned with much difficulty for good 
 security. A rich man may now borrow at from three to four 
 per cent, on good notes not having more than six or eight 
 months to run; yet another, who has not all these advan- 
 tages, although just as good for all his obligations as the 
 richest, will in the same bank be charged six, or even seven per 
 cent, interest. Even now it is difficult to procure money for a 
 term of years on bond and mortgage at six per cent, interest, 
 and often at seven per cent., because the security is not that on 
 which capitalists wish to loan money. They wish to loan 
 money in such a way that it can at any time be recalled if there 
 is a change in the money market.- They hope business will soon 
 start, for when it again prospers they will get seven per cent, 
 interest ; and when it is quite flourishing they can, by suddenly 
 calling in their money, get the rates of interest up to twelve. 
 
336 APPENDIX. 
 
 eighteen or twenty-four per cent, per annum. If they do loan 
 on bond and mortgage, they require it to be so secured by the 
 property on which it is loaned that it will be sure to bring 
 enough to pay the bond and mortgage, costs, etc. When the 
 time arrives that ^money will bring eighteen or twenty-four 
 per cent, per annum, if they buy the property under foreclosure 
 they get it for one-half or one-third its value ; hence the diffi- 
 culty of borrowing money on b.ond and mortgage; they' are not 
 willing to loan on mortgage more than half the present esti- 
 mated value of property, which is now extremely reduced in 
 value. The man who borrows money at three per cent, and 
 lends it at six makes a hundred per cent, profit, just as much as 
 the man who buys a barrel of flour at three dollars and sells it 
 at six. We might as well make laws which, in their operation, 
 would compel the producing classes that were not rich to pay 
 double price when they bought, and when they sold to the rich 
 to receive but half what they gave : it would not be more certain 
 to operate against the producers and in favor of the capitalists. 
 
 I will give an example of the operation of money at the pre- 
 sent time. A. being a rich broker in Wall street, finds that, by 
 borrowing ten thousand dollars from a bank for ninety days, 
 there is a good opportunity for him to make money on State 
 stock. He borrows of a bank the ten thousand, at the rate of 
 three and a half per cent, interest per annum, pledging stock 
 for security. The interest on the $10,000 for ninety days ia 
 $87 50. B., a Pearl street merchant, needing a discount for 
 $10,000, applies to the same bank the same day, and gets his 
 paper discounted : the bank charges him six per cent, interest ; 
 that is $150. <J., a mechanic who has just finished a steam 
 engine and boiler, and has taken a note in payment for $10,000, 
 applies to the same bank, which discounts the note for 
 him, charging him seven per cent, interest; that is, $175. 
 Each of the three has bought the use of the same sum of money 
 for ninety days: the money all belongs to the bank and at the 
 end of ninety days must be returned to it. One has paid at the 
 same bank, on the same day, for the use of the same article, 
 $87 50 ; the next has paid $150 ; and the third, 175. The bank, 
 we all know, would not have discounted any of these notes 
 unless perfectly satisfied that they were good.. 
 
 Let us apply the same to merchandise. A. buys ...f a me reliant 
 
APPENDIX. 337 
 
 a package of goods ou three months' credit for $87 50 ; B. 
 buys the same day of the same merchant a second package ex- 
 actly like A.'s, and is charged $150 on the same credit; 0. the 
 same day huys the third package, and is charged $175. Or. 
 suppose A. needs a barrel of flour; he pays for it $3 50; B. 
 buys the same day and hour another barrel of the same quality, 
 and pays $6 ; and 0. buying another of the same man, is charged 
 $7. A. is richer than B. and B. is richer than 0. ; and of course 
 the richer the man the cheaper he must buy, and the poorer the 
 man the more he must pay to increase his poverty. 
 
 But suppose these three should come to a ferry which they 
 wished to cross, and the ferry-master should say to the rich bro- 
 ker, " Sir, \vhat is your business ?' "I am a very rich man ; I 
 deal in measures of value, and change these measures as much as 
 it is in my power. I borrow money out of bank for three and 
 sometimes three and a half or four per cent, interest, and I buy 
 good business notes, well indorsed, for six and seven per cent, 
 or even more, as good notes as can be had in New York ; and 
 for several years past, when money has been scarce, I have 
 been borrowing money out ot bank, paying six or seven per cent. 
 interest; and when I have paid these rates at bank, I have 
 usually received from one to two and sometimes three per cent. 
 a month for the same money that I borrowed at six per cent, a 
 year ; and I have made a great deal of money by this, for the 
 merchants have been hard run." "Sir," says the ferry-master, 
 " you may have the use of our boat for twelve and a half cents." 
 Next comes the Pearl street merchant, "And what is your 
 business, sir?" "I am a merchant, but business is very bad, 
 money is scarce with me." u Your fare for the use of the boat 
 to go over the ferry will be twenty-five cents." Next comes the 
 tteam-engine maker. " What is your business ?" " Why, I am 
 a hard-working man." "Your ferriage, sir." "What is it?" 
 u Why, sir, as you are a hard-working man, I shall charge yon 
 thirty-seven and a half cents, sir ; our ferry is a great accommo- 
 dation to the public, and we wish to do all we can to promote 
 industry ; step on board the boat and take that seat where there 
 is no cushion ; the cushioned seat, sir, is reserved for the gen- 
 tleman broker." Why not as well pay the difference for the use 
 of the boot to cross the ferry as to pay the difference to bank 
 for the use of money ? Currency, the Evil a f iid the Remedy, 
 
338 APPENDIX. 
 
 V.Page 244.* 
 
 To the Editor of^the N. Y. Tribune. 
 
 Sir: A few mouths ago this country was enjoying a proti- 
 perity unsurpassed in its history. The crops, more abundant 
 tliriii t.'ver before, were sufficient to supply not only our own 
 wants, but to admit of large exportations. Manufacturing 
 establishments and railroads employed a great number of 
 persons. The merchants were conducting their business with 
 as much prudence as at any former period. Houses were being 
 built in the cities and villages, and in the farming districts, and 
 labor was in good demand. 
 
 Now affairs are in a very different condition. The business 
 of the merchants is broken up ; the manufacturers have suspended 
 their operations; hundreds of thousands of laborers are thrown 
 out of employment and are in danger of starvation ; the farmers 
 cannot get their abundant crops to market, and if they could, 
 they would be obliged to sen them at greatly reduced prices. 
 Business stands still. 
 
 This great change is rightly said to be owing to Liie difficul- 
 ties in finance, to the crisis in the money market. All the 
 money of the nation, bank-notes included, amounts to about 
 five hundred millions of dollars. Probably when the circulation 
 of the banks has been the most expanded the whole currency 
 has never reached six hundred millions. But the productions 
 of labor for the last year are estimated at three billions five 
 hundred millions of dollars about seven times as much as all 
 the currency of the nation, and these productions or a large 
 proportion of them will change hands through the process of 
 manufacture, and otherwise, from three to eight or ten times 
 before they reach the actual consumers. Now, this compara- 
 tively small sum of money must pay for every one of these 
 exchanges, or for every debt contracted in making these 
 exchanges. The same money must also pay all the debts con- 
 tracted by borrowing money from banks or upon bond and 
 mortgage or otherwise. It must pay for all the lands that ar-o 
 sold by the government and by individuals ; for all the bonds 
 issued by railroads, cities, States, and by the United States; for 
 
 * Published in the " New York Daily Tribune,'' Nov. 27, lSf>7 
 
API': NIMX. 389 
 
 all the stocks and securities that are sold at private sale, at 
 auction and by the various boards of brokers, and for all the 
 bills of' exchange sold from one part of the country to another, 
 as well as for all bills of exchange upon foreign nations. It is 
 evident that this comparatively small sum of money must 
 change hands a great 'number of times to effect the needful ex- 
 changes- of this immense amount of property, and that any 
 obstruction to its movement or withdrawal of a portion of it 
 from circulation must seriously 'embarrass the business of the 
 whole country. 'The importance of this free circulation of 
 money may perhaps be more fully appreciated when we state 
 that all the money we possess gold, silver and paper would 
 not suffice to pay the board of this nation for four mouths, at 
 $1 per week for each individual. 
 
 The city of iSTew York is the financial centre of the country. 
 If the banks in this city keep up their lines of discount so as to 
 supply the business community with money, the banks in all 
 other parts of the country will also discount and supply the peo- 
 ple in their neighborhoods. Of course there mast be at 'times, 
 balances greater or less against one part of the country in favor 
 of another, but all these will be easily adjusted, and business 
 will go on prosperously. 
 
 In the latter part of August last, the Ohio Life and Trust 
 Company, with a capital of two millions of dollars, suspended 
 payment, with debts against the Company to the amount of six 
 or seven millions of dollars. This failure was the apparent oc- 
 casion of distrust, and of contraction in btmk issues to the 
 amount of some eight millions of dollars in the course of two 
 weeks ; and to the 24th of October of about twenty-six mill- 
 ions. This contraction of discounts for the first two weeks only 
 was doubtless a much greater loss to the business men of this 
 city than the entire capital and liabilities of the Ohio Life and 
 Trust Company. The news of this curtailment rushed with 
 lightning speed to all parts of the country, and carried conster- 
 nation into every city and town where a bank existed ; and the 
 banks in this city and throughout the country called upon each 
 other to pay up their balances in specie. Many of the banks in 
 this State were obliged not only to stop discounting, but had to 
 send their State stocks to this city, and sell them at from 15 to 
 30 per cent, loss to redeem their bank notes and take them out 
 3 
 
34:0 APPENDIX. 
 
 of circulation in order to save themselves from suspension, 
 But this was not the worst of the evil. Merchants, unable to 
 get their notes discounted at bank, were driven into Wall 
 street, and compelled to borrow at exorbitant rates of interest 
 to meet their payments, thus rapidly increasing their indebted- 
 ness, and rendering it inevitable that in the end a large propor- 
 tion of them should be made bankrupt. Many of them paid to 
 usurers for the use of money, one, two, three, four, five and six 
 per cent, a month, and from these rates to a quarter, a half and 
 sometimes one per cent, or more a day, and were compelled to 
 leave double, treble and quadruple securities to obtain the money 
 at all. The banks by curtailing their discounts so that money 
 is not to be had to meet the mercantile engagements, remove 
 the foundation upon which the contracts were based ; and the 
 merchants can no more stand up under such an event than a 
 house can stand supported by the air if the foundation be re- 
 moved from under it. Money is the only thing recognized by 
 our laws as a tender, and all the property of debtors becomes 
 mere collateral security for the payment of money for their 
 obligations. Hence, in a crisis like this, the great wealth of the 
 nation seems to be concentrated in the money. 
 
 The banks hold on deposit millions of dollars belonging to 
 the public on which they are paying no interest. If the tables 
 were turned and the public should make the banks pay five per 
 cent, a month on these deposits in advance until they could pay 
 them all off in specie, the banks would soon be as insolvent as 
 the merchants ; yet it would be quite as just and more so than 
 for the banks to force this necessity upon the merchants and others. 
 The banks are public institutions, and are authorized by law to 
 furnish the currency. It is a penal offence for individuals to cir- 
 culate their own notes as money. Labor, bills receivable, goods, 
 wares and merchandise are not money: all of these must be ex- 
 changed for money in order to pay debts. The public is entirely 
 dependent upon the banks for this money, and if they do not 
 furnish it, the people must borrow of usurers at rates of interest 
 which are certain to eat up their assets, and in many instances 
 to leave them, after a long life of toil, in absolute poverty. 
 
 Our merchants have sold many millions of dollars' worth of 
 their best paper at from three to six per cent, a month discount. 
 From a six months' note for $1,000 take five per cent, a month, 
 
APPENDIX. 341 
 
 and the borrower will get only $700. The discount on the same 
 note at seven per cent, per annum would be $35. In this one 
 transaction this usury increases the borrower's indebtedness 
 $265. If the merchants, manufacturers and mechanics of the 
 city of ISTew York would come out and frankly state, under their 
 own signatures, what rates per cent, interest they have paid foi 
 the use of money during the last three months, giving the names 
 of the parties from whom they have borrowed it, and the secu- 
 rities they have pledged to secure the payment ,of the monej 
 borrowed, hundreds, yes, thousands of extortions would be 
 revealed which would greatly astonish the public. Could these 
 transactions be further traced, we think it would be found that 
 a very large amount of the loans of the banks are made to bro- 
 kers and other usurers, and even to the officers and directors of 
 banks themselves ; many of whom would not borrow from bank 
 at all when the street rates of interest were not above seven per 
 cent, per annum. Let us look at the gain a usurer could make 
 on but $100,000. Three months' discount at bank would be 
 $1,750, leaving to his credit $98,250. This sum will buy paper 
 at six per cent, a month to the amount of $119,817 07, and the 
 paper would mature in time to meet his note at bank. Should 
 the usurer renew his note for another three months, he would 
 have $19,817,07 more to invest than he had before, amounting 
 with the $98,250 to $118,067 07. This sum, at six per cent, a 
 month, would buy $143,984 23 worth of notes. Thus the 
 usurer would gain $43,984 23, on six months' investment of 
 $100,000 ; and this too, without using a dollar of his own money 
 and without having performed any productive labor. The men 
 who sell this paper are indebted $43,984 23 more than they 
 would have been had the banks discounted their notes at the 
 usual rates, instead of driving them to borrow of the usurer. 
 This is the usurer's harvest, when he is reaping what others 
 have soAved and gathering what others have strewed. 
 
 How can our merchants pay these exorbitant rates of interest 
 when they sell their goods for a profit of from five to fifteen per 
 cent, at most, averaging probably not more than nine per cent., 
 and then trust them out all over the southern and western 
 States. And this is not all they have to encounter. In conse- 
 quence of the usurious rates of interest, the exchanges between 
 New York and the South and West are on the average nearly & 
 
34:2 APPENDIX.. 
 
 much as they made profits on their goods when they .sold them. 
 A merchant holding a note due the 1st of November at hank in 
 a western city, may be compelled to wait twenty or thirty days 
 after the note is paid before a bill of exchange can be bought on 
 New York. Interest on money being at from three to six pej 
 cent, a month, the buyer of the note would take oft* the face of 
 it this per centage, in addition to the rate that must be paid foi 
 the bill of exchange. 
 
 "We think we have not overstated the rates of interest that 
 have been paid during this crisis. Things have now reached 
 such a state that usurers have lost nearly all confidence in the 
 ability of debtors to discharge their obligations ; for they make 
 close calculations, and readily perceive that the above rates of 
 exchange alone would about eat up all the profits made on goods 
 sold during the last year, even if every debt were promptly paid 
 at maturity. Add to this the depreciation of the goods they 
 have on hand, and it is evident that these must rapidly consume 
 all their former earnings. The indebtedness of the people has 
 doubtless been increased several hundred millions of dollars by 
 this crisis. If business could have taken its usual course the 
 merchants in the city of New York would probably have col- 
 lected fifty millions of dollars more from the country than they 
 have now been able to do. Had they made these collections 
 and paid debts to this amount, the indebtedness of the people 
 would have been diminished one hundred millions of dollars ; 
 for these fifty millions are still owing to the city merchants, and 
 the city merchants owe the fifty millions to others. 
 
 Is not the country rapidly sinking, instead of increasing in 
 wealth? We think we shall not overestimate the number, if we 
 say, there will be one million of people thrown out of employ- 
 ment for at least six months by this unnecessary financial crisis. 
 If this million of mechanics and others could be employed at 
 one dollar per day each, their earnings would be six millions y 
 week, and in twenty-six weeks they would enhance the valua- 
 tion of the country one hundred and fifty -six millions of dollars, 
 which would amount to about as much as one half the banking 
 capital of the whole United States. These persons who are 
 thrown out of employment must subsist on previous earnings or 
 on the charity of others, so that, instead of being any longer 
 producers, they are compelled to be simply consumers of wealth 
 
APPENDIX. 343 
 
 All this comes upon us in addition to the diminution of the 
 value of our merchants' assets, railroad assets, and that of all 
 other property in the country. Nor will our grain and cotton 
 crops command the same prices abroad that they would have 
 done if this money crisis had not been brought upon us, hence 
 oar debts to foreign nations will be needlessly increased. 
 
 The remedy proposed for our financial difficulties is the ac- 
 cumulation of specie ; but the people do not want specie ; they 
 have never wanted it when bank-notes would pay their 
 debts and make their purchases. We have not a doubt that- 
 more than nineteen-twentieths of our debts are paid with 
 paper money ; and paper money is, therefore, practically the 
 money of this nation. If the public did not prefer to use 
 it rather than coin, paper money could not be established 
 and made to transact the business. A run for specie has 
 never been made on the banks except when they have b^en so 
 managed as to throw the business community into the hands of 
 usurers and stock-jobbers which is only another name for the 
 same class of individuals. Whenever the banks have maintained 
 their lines of discount so as to furnish the community with money, 
 there has been little demand for specie, and the gold and silver 
 coins have, for the most part, lain idle in the vaults of the banks. 
 
 When the Ohio Life and Trust Company suspended payment, 
 had the banks in the city of New York discounted every note 
 offered that was considered safe, in less than three weeks, and 
 probably in one week, money would have been as plenty in the 
 city of New York and throughout the country as it has been at 
 any time during the past ten years ; and all undoubted securities 
 that were bearing 7 per cent, interest would have commanded 
 money at their par value. The business of the whole nation 
 would doubtless have been as prosperous as it has been at any 
 time during the last ten years. The agricultural productions of 
 the South and West would have been rapidly sent to market, and 
 would have sold at prices that would have remunerated the pro- 
 ducer. Now, if they are freely sent into the market they will 
 be sold at ruinous sacrifices. Men will not pay 4 or 5 per cent. 
 a month for money to buy produce unless they feel sure they 
 shall realize a good profit over the 4 or 5 per cent, by the in- 
 vestment. 
 
 The banks will tell the people that they could not have gone 
 
344 APPENDIX. 
 
 on safely and discounted all the well-secured paper offered ; that 
 the specie in their vaults had been considerably diminished by 
 being drawn for exportation, and was liable to be diminished to 
 a still greater extent. But why, when the sjjecie was called for 
 to subserve its proper uses of paying balances that occurred in 
 trade, should it have been necessary to deprive the people of 
 paper money, for which the security is in State stocks, and not 
 in specie ? Several times within the last ten years the banks 
 have sought for and have been glad to discount paper at the rate 
 of five per cent, per annum, even when it had seven and eight 
 months to run ; and no good reason has appeared why they were 
 not as in good condition to make money plenty and discount 
 freely in August last as they were at any previous time what- 
 ever. 
 
 The banks are professedly established for the good of the pub- 
 lic, but they are often so conducted as to break down the busi- 
 ness of the country and enrich usurers. The capital stock of the 
 banks in all the States of the Union would not exced one-half 
 of that invested in railroads, yet all the railroads are prostrated 
 before the all-absorbing power of the banks. The prostration 
 of business on these railroads, the usurious interest they have 
 paid for money, and the depreciation of their stocks and bonds 
 in market, are doubtless a greater loss to these interested in rail- 
 roads alone than if they had lost one halt of all the banking 
 capital in the Union. Besides this, many of these railroads will 
 doubtless go into the hands of the tirst and second bond-holders ; 
 and thousands of the stock-holders, who have taken the stock 
 hoping to benefit the public, will be turned out of their farms 
 and homesteads, penniless. Is it not strange that these little 
 round pieces of metal and these little pieces of paper in the form 
 of bank-notes, both of which look to be as powerless and harm 
 less as the toys of children, should be clothed with such powei 
 as to baffle the minds of the most sagacious men and paralyze 
 the business of the nation ? 
 
 Now, to show what measures would in reality afford relief 
 to the public, we will state what measures have afforded relief 
 in similar financial crises, both in this country and in. England, 
 and the propriety of the immediate application of the remedy 
 will, we think, be apparent to every business man. 
 
 In 1834, large contractions were made both by the United 
 
APPENDIX. 345 
 
 States and the State banks, and for a few weeks there wa* 
 nearly as great a panic in the money market as there was in 
 August last, and quite a large number of merchants failed. 
 But when the offerings for discount at the banks had become 
 very large, the United States Branch Bank in the City of New 
 York, unexpectedly to the public, discounted every piece of 
 paper offered that was deemed good. The other banks immedi- 
 ately followed this example, and in a very short time the rates 
 of interest went down from two, three and four per cent, a 
 mouth to five, six and seven per cent, per annum, and business 
 at once revived and went on prosperously. 
 
 In 1847 (I quote from memory) there was a great financial 
 crisis in England, the issues of the Bank of England having 
 been limited by the financial bill of Sir Robert Peel, passed in 
 1844. The rates of interest rose from 3, 4 and 5 per cent, per 
 annum to 1, 2, 3 and even higher rates per month, and thou- 
 sands of merchants and manufacturers were bankrupted and had 
 to suspend payment. A meeting was called in London, and a 
 committee was appointed to wait on Lord John Russell and 
 request that the Bank of England should extend her discounts 
 so as to make money plenty. Lord John replied that it was 
 contrary to the laws of England to increase the circulation be- 
 yond the fourteen millions of pounds sterling secured *by 
 government stock; that the issues above this sum must be 
 governed by the amount of bullion in the bank ; that he had no 
 authority to exceed this amount, and that the people must take 
 care of their own financial affairs. The committee retired with- 
 out obtaining any relief. A few days or weeks after, the 
 committee waited again upon Lord John Russell, with a similar 
 request, and met with a similar refusal. But before retiring 
 they remarked that they should break the bank. Lord John 
 Russell asked them if they could do it, and the committee 
 informed him that the gentlemen whom they represented had a 
 much larger amount on deposit than all the bullion in the bank ; 
 that they should draw what there was and take their chances 
 for the balance. This strong argument had its effect on the 
 mind of Lord John Russell, for the bank at once began to dis- 
 count liberally. Money became very plenty at very low rates 
 of interest, and business revived. 
 
 In the present crisis, the same means must be used to relieve 
 
M6 APPENDIX. 
 
 ns from our financial difficulties that ought to have been used to 
 prevent their occurrence. Let the banks in the city of New 
 Jork discount every piece of paper offered which they consider 
 safe and good, and let them adjust their balances among them- 
 se'ives and with other banks throughout the Union as they have 
 hitherto done when money was plenty. Let them discount 
 paper that has four, five and six months to run as well as short 
 paper. They can do this as well now as they ever could at any 
 previous time. Let them discount thus liberally and the 
 business of the nation will revive ; the products of the South 
 and West will find their way to market, and command much 
 better prices both at home and abroad than they possibly can 
 BO long as this contraction of bank issues continues. Many of 
 our railroads may yet go on and prosper. 
 
 But let the banks continue their present course and they will 
 continue to throw the money into the hands of the usurers, and 
 the usurers will stand between the banks and the business 
 public. Many more of our merchants will be broken, and 
 those who have suspended will be obliged to renew their exten- 
 sions. There will be hundreds and thousands of starving 
 laborers in our streets, while this year's abundant crops will be 
 stored away in granaries for want of money to get them to 
 market. The property of debtors will be exhausted and thrown 
 into the hands of creditors, and there will be few securities re- 
 maining to otfer for the loan of money. The usurers will 
 themselves cease to borrow largely at bank, for there will be few 
 left to borrow of them. The banks, then, finding their business 
 falling off, will begin to discount freely, and money will be 
 seeking investment at low rates of interest and the useful 
 business of the nation will gradually revive. Whether business 
 shall revive now, our manufacturers resume their operations, 
 our laborers be employed ; or whether the present condition of 
 the money market shall continue until the country is completely 
 prostrate, and the wealth of the nation, for the greater part, 
 accumulated in the hands of the usurers, is at the option of the 
 
 banks in the city of New York. 
 
 EDWARD KKLioaa. 
 Brooklyn, Nov. 13fA, 1857. 
 
APPENDIX. 347 
 
 E. Page 245. 
 
 When we read of our ancestors in ages long past earring out 
 of wood some strange and grotesque image, and then falling 
 down in adoration before it, as though it had some mysterious 
 power by which the heavens and earth were brought forth and 
 sustained in their orbits; and to which the nations of the earth 
 were bound to offer up not only the choicest fruits of their labor, 
 but also their own lives and those of their children in order to 
 appease this deity, and that even kings and the chief rulers of 
 nations bowed down in worship before the power of a wooden 
 or brazen god, we look back with astonishment at the ignorance 
 and superstition that prevailed, and congratulate ourselves that 
 these have disappeared in the sunshine of an enlightened age. 
 But the time is not distant when people will look back on this 
 gold -ridden age with as much wonder at our ignorance, and at 
 the superstition that now attaches to the power and worth of the 
 gold, as we do at the power and worth which our ancestors 
 gave or attached to the wooden god. Their wooden gods had 
 as much power to create and sustain the world, as the gold has 
 to nourish the human body, or bring ont and sustain the virtues 
 of the human mind. We sacrifice the choicest fruits of our 
 labor upon the altar of this golden god. We sacrifice to it in wars 
 and tumults the property and lives of our own citizens, and 
 those of the men, women, and children of neighboring nations. 
 Even the rulers of nations must bow down before the " almighty 
 dollar." If these golden images are hidden in vaults under the 
 earth, and the rulers want to carry on wars, they must make 
 sacrifices of the fruits of the labor of future generations, that 
 they may he brought forth to sustain the slaughter. If these 
 mighty coins should move off, and cease to be seen in our land, 
 we should have to bow down our heads in the dust, and clothe 
 ourselves in sackcloth and ashes until they were returned to 
 us; the laboring poor would die of hunger in the streets 
 of our cities, and desolation and gloom would spread over the 
 country. But how does it happen that these gold and silver 
 dollars could cause all this ? Is it because the metals have any 
 more sustenance for man than the carved images which ruled 
 over our fathers ? Have we not as much made and formed these 
 
318 APPENDIX. 
 
 gold and silver images with our hands as they did the images 
 that they carved out for themselves with their hands? Has the 
 gold or silver a single more element for human support than 
 their carved images ; and if they have, are the inherent quali- 
 ties of these metals any more used while they form a currency 
 than the inherent qualities of the wood when it was formed into 
 an image and daubed over with pitch and paint ? Or would the 
 earth cease to bring forth her increase because the gold and 
 silver had absented themselves from the land, more than if these 
 carved images should have been removed from the land of our 
 fathers ? No doubt the removal of the images would have been 
 thought a great calamity, but not more so than the removal ot 
 the gold and silver money in our day ; and they would have 
 had as much reason for their distress as we should for ours. 
 The removal now of a few tons of gold and silver coins from 
 our country to a foreign one, or even from one part of our 
 country to another, causes great agitation and consternation; 
 but the time is not far distant when the removal of a few tons 
 of these metals will have no more influence upon the happiness 
 and welfare of the people than the removal of a few hundred 
 tons of iron or lead. M88. 
 
 F.Page 247. 
 
 The most fundamental and important truths in relation to 
 the nature of money, have always been so covered up by the 
 technicalities of law as completely to deceive the people respect- 
 ing its true character, although they have always known and 
 felt that there was something wrong in its power. Writers 
 upon political economy as well as the public in general, have 
 taken it for granted that the laws of nations were right in 
 founding the value of money in the innate value of the gold and 
 silver metals out of which it was coined : hence the conclusions 
 at which they must all arrive, are just as false as the premises 
 upon which they start. And political economists may continue 
 to write and the public may continue to argue upon these 
 premises for centuries to come, and be just as far from the 
 truth as when money was instituted upon this basis. Not- 
 witnstanding this mystification about money, its true cha- 
 racter and power are very simple, and need only to be clearly 
 
APPENDIX. 349 
 
 and fairly stated to meet -the approval of the common mind ; 
 and then the public must know that the present centralizing 
 power of money is as gross an imposition upon the com- 
 mon sense of man, as it is upon the common rights of labor 
 and property. For if the material of neither gold, silver nor 
 paper money can in itself be used as food, clothing or shelter, 
 then certainly the scarcity or abundance of money, or the 
 scarcity or abundance of the materials of money, ought never 
 in the least to interfere with a general and full supply of all the 
 necessaries of life. For these necessaries of life are evidently 
 the product of labor, and not the product of money. Yet the 
 present power of money is such that the people are compelled 
 first to work for money, and then to depend upon the power of 
 money to supply the necessaries of life. Thus the power of 
 money is first, and the power of labor is second. The money 
 commands the labor instead of labor commanding the money. 
 This is exactly reversing the true order of things, for it is 
 making a dead centralizing power to rule and tyrannize over 
 the living, productive pdwer, whereas the productive ought 
 always to command the unproductive power. If any writers 
 upon political economy, or any financiers, have discovered the 
 true nature, power and use of money, they have not made such 
 discovery manifest to the understanding of the public. For 
 the laws of nations as well as the newspapers and other publica- 
 tions of the day, are still carrying forward and enforcing the 
 idea that money is a productive, living power. Yet the power 
 of money is entirely a dead power, and totally unproductive 
 notwithstanding its legal, accumulative powers. M/S/S. 
 
 G. Page 253. 
 
 Let me illustrate the effects of " free trade "" in the use or 
 interest on money loaned a plan which is advocated by many 
 people in our cities, and doubtless by many in the country. 
 They say, Make merchandise of money, let the man who will 
 give the most for its use borrow the money, and -allow no laws 
 to interfere between the parties contracting if A. has money 
 and B. wants it, let B. buy its use as cheap as he can from A., 
 and, if he is not suited with the price A. demands for it, let him 
 borrow of some other person : he is not obliged to take A.'s 
 
350 APPENDIX. 
 
 money any more than he is compelled to buy A.'s potatoes; lias 
 not a man a right to do what he will with his own ? A captain 
 of a ship at sea might see on fire near him another ship, full of 
 people, and say to the passengers and crew of the burning vessel, 
 " If you will give me all your possessions in money, goods and 
 chattels, I will take you on my ship : but, if you do not wish to 
 coir ply with my terms, I shall not take you on board ; this ship 
 is mine, and I have a right to do what I will with my own. I 
 shall not urge you to come on my vessel on the terms I propose ; 
 you had no business to place yourselves in such a situation ; it 
 is your own fault, not mine ; therefore if you do come it is 
 because I like to help people out of difficulties. My humanity 
 prompts me to make this offer." Do you not think the passen- 
 gers and all would accede to the terms, and be glad to get on 
 board of the ship of this humane man ? If this benevolent cap- 
 tain had secretly, by the aid of ship-brokers, set the vessel on fire 
 with a slow match, and then happened to be near and proposed 
 these terms to those in distress, he would be in principle much 
 like our modern usurers, who hoard the public measure of value 
 when they very well know that it is impossible for the public 
 either individuals, States, or the United States to fulfil their 
 contracts without the money, and they can make any terms they 
 please with those in distress. The captain of the ship would 
 have about as much good feeling for the passengers and crew of 
 the burning vessel, as these men have who hold the money to 
 extort the last farthing from the producers. 
 
 Suppose a surveyor owns his chain to measure land, and, wheo 
 appointed by government a public measurer of land, should say 
 to one needing his service, "The chain is mine, and I will stretch 
 it out to double its legal length if you will give me so much for 
 measuring ;" to another, " I will contract so much if you will pay 
 me for it; the chain is mine, and have I not a right to use it as 
 I please ? Who has any right to dictate to me what I shall do 
 with my property ?" Now, the length of the chain being altered 
 one-third, does not more effectually alter the quantity of land 
 measured, than adding one-third to the interest on money alters 
 every contract based on money, and the public measurers would 
 have as good right to use their chains in this way as a man loan- 
 ing money has to alter the interest on the monny. No matter 
 in whose hands money may be, it is a definite thing, and the 
 
APPENDIX. 351 
 
 only public measure and base of value of everything in all 
 nations. 
 
 Free trade in the use in loaning money is as certain to prove 
 destructive to the debtor's property as a free right, because you 
 own your knife, to plunge it into your neighbor's breast would 
 be certain to endanger his life. We are as much in duty bound 
 to protect our citizens bylaw from these depredations upon their 
 property, as we are to protect them by law against the assassin's 
 knife. For many a man who through a long life has been able 
 to support his family comfortably, has not been able to bear up 
 under these sudden and unexpected robberies, generally called 
 misfortunes, and aberration of mind or death has been the con- 
 sequence, and he has left his family to the cold charities of the 
 world. 
 
 H. Page 282. 
 
 If the Safety Fund should lend its money at six per cent, in- 
 terest, and Richard Roe should borrow $1,000 on mortgage of 
 his farm that rents for $120 a year, every year he would have 
 to pay to the Safety Fund $60 interest or one half the rent of 
 his farm. The $1,000 in money would represent the first half 
 of the value of the farm ; and Richard Roe would have to lose 
 all the second half before the Safety Fund could lose any por- 
 tion of the half on which it had lent him the money. The 
 Safety Fund money being always the representative of the first 
 half of the value of productive property the second half of the value 
 must entirely sink before the first half could be at all deteriorated. 
 
 The lower the interest on the Safety Fund money, the greater 
 would be the certainty of its perfect security and goodness. 
 For, if Richard Roe should borrow from the Fund the $1,000 
 at six oer cent, interest yearly, in less than twelve years he 
 would have to pay over to the Safety Fund in interest a sum 
 equal to the principal that he borrowed ; that is, one half the 
 entire value of his form. But suppose the interest should be 
 fixed at one and one tenth -per cent, per annum, and he should 
 borrow the $1,000 at this rate on mortgage of his farm, he 
 would have but $11 a year to pay instead of $60, and it would 
 be above sixty years before he would have to pay back to the 
 Safety Fund in interest a sum equal to the principal borrowed, 
 that is, one half of the value of his farm. 
 31 
 
352 APPENDIX. 
 
 If the per centage interest b.e regular, the producer cannot be 
 made to pay a sum in rent or interest equal to the principal in 
 any shorter time whether you call a given lump of gold or a 
 certain farm worth $100 or $1,000. If John Doe owns this lump 
 of gold or this farm, and rent either to Richard Roe at ten per 
 cent, per annum without compounding the interest, in ten years 
 the latter must pay a sum in interest equal to the principal bor- 
 rowed. If the lump of gold or the farm were called worth 
 only $100, and were rented at the same rate of ten per cent., 
 Richard Roe would still pay back in ten years a sum in interest 
 equal to the principal borrowed. But if he borrowed the same 
 lump of gold or the same farm at one per cent, without com- 
 pounding the interest, it would be a hundred years before he 
 would have to pay to John Doe a sum in interest equal to the 
 principal. 
 
 The interest on money is the standard, and the rents of all 
 property must conform to its governing power. Although this 
 principle has been repeatedly stated, as it is important that it 
 should be clearly understood in connection with the Safety 
 Fund, we will offer another simple illustration. Suppose John 
 Doe's farm, in consequence of the reduction of interest on the 
 establishment of the Safety Fund, to rise in value from $2,000 
 to $10,000, and the Fund to lend him on mortgage of it $5,000 
 at one and one-tenth per cent, interest. The yearly interest on 
 the $5,000 would be but $55, and before John Doe must return to 
 the Safety Fund a sum in interest equal to the principal bor- 
 rowed, the same number of years would elapse as if the farm 
 had not risen in price in consequence of the reduction of the 
 rate of interest. John Doe need not pay to the Fund a sum in 
 interest equal to one-half the value of his farm in less than 
 sixty years, but if the interest were at six per cent., he would 
 have to pay a sum in interest equal to the principal borrowed 
 in less than twelve years. It must be borne in mind that the 
 value is in John Doe's farm and not in the money : the money 
 merely represents the value of the farm. The interest that ac- 
 crues on the money borrowed is a representative of production, 
 but it is not production. The production is made by labor upon 
 the farm ; the interest that accrues upon the money is an arbi- 
 trary, legal, balancing power against a certain part of the pro- 
 ducts of the farm. The money merely helps the people to 
 
APPENDIX. 353 
 
 exchange one commodity for another ; and the rate of interest 
 decides what proportion of the products of labor shall be 
 awarded to those who perform the labor and what proportion 
 shall go to those who receive the income without labor. MSS. 
 
 I. Page 289. 
 
 I will examine a little further the operations of money upon 
 our commerce and foreign trade. In order to explain, I will sup- 
 pose a case : It is known to our government and citizens that 
 very many wealthy houses of Europe have agents or bankers in 
 onr large commercial cities. The Rothschilds, Barings, and 
 many others of this class wield an immense capital, and are able 
 to raise almost any sum of money which can be advantageously 
 invested. The very purpose for which these houses are estab- 
 lished here is to make money by buying stocks, advancing on 
 securities and drawing bills of exchange on foreign nations, etc. 
 The general business of these bankers is dealing in money, not 
 in merchandise ; they may make advances On cotton, but this is 
 not dealing in cotton it is simply holding the pledge of cotton 
 as collateral security for the payment of money loaned. These 
 houses are in the habit of drawing bills of exchange on England, 
 Germany, France and other countries, for large sums, and it is 
 in their power at any time to derange our whole monetary sys- 
 tem and disturb our domestic trade throughout the country. 
 Thus they could make great profit, but it would be by robbing 
 ns of our just rights ; and the consequent fluctuations would put it 
 in the power of creditors throughout the nation to take undue 
 advantage of debtors. I will merely state the case, and I think 
 no business man can fail to see the practicability of such an ope- 
 ration. These bankers in the different Atlantic cities have 
 wealth and credit sufficient to draw bills of exchange on England, 
 France and Germany, dispose of and get the money for them in 
 the course of one or two months to the amount of five, six, seven 
 or more millions of dollars, as our foreign trade amounts to about 
 one hundred millions a year, which are paid by bills of exchange ; 
 thus the drafts to pay this sum would average over eight mil- 
 lions a month, and when the largest amount is required to be 
 remitted, it would be an easy matter for these bankers, through 
 their agents, to sell in two months seven or eight millions of ex- 
 change on the various countries before mentioned. Several 
 
354: APPENDIX. 
 
 houses have agents in a number of our Atlantic cities and 
 whether they sold bills of exchange on England or France at 
 New York, New Orleans, Baltimore, Philadelphia or Boston, 
 cbey could easily concentrate all the funds in New York, and as 
 the money came in for the bills of exchange sold, they could 
 draw the amount from the New York banks in specie, and ship 
 it to England or any other country to meet the drafts. The 
 drafts being drawn as usual, payable sixty days after sight, they 
 would have sixty days to prepare and ship the specie to meet 
 the drafts at maturity. If they have the credit to draw and sell 
 the drafts, all these operations could take place with little or no 
 capital. If even three or four millions in specie in the course of 
 one or two months were drawn from the New York banks, it 
 would curtail their discounts and probably raise the rates of 
 interest in Wall street to one, one and a half or more per cent. 
 a month. Should it be attempted to draw suddenly seven or 
 eight millions, no doubt a suspension of specie payment by the 
 banks throughout the Union would be the result: exchange on 
 England would rise to fifteen or twenty per cent, above par, 
 and a general scarcity of money would ensue ; cotton would fall 
 to half its former price, and as it fell in our market it would also 
 fall in England ; exchange on England being very high, the cot- 
 ton at greatly reduced prices would be hurried forward to pay 
 debts in England, and we should be compelled to send double 
 the quantity of cotton or any other product to pay our debt 
 abroad (or again to import the same amount of specie) that we 
 should if our currency had not been deranged. Thus we should 
 be robbed of nearly one half of our products without receiving 
 for them the slightest equivalent ; and the debtors in our own 
 country, by the rise of interest and the scarcity of money, would 
 be obliged to give double the labor or property to meet their 
 engagements at home. The exchanges would be deranged 
 throughout the country, the banks would curtail their discounts, 
 and distress and ruin ensue. Such operations as these, impairing 
 the ability of producers and consumers to buy, by causing a fall 
 in the price of cotton and other products, would in turn destroy 
 the market for goods manufactured, and cause goods and labor 
 to fall in England, and the laboring poor would be impoverished 
 there; the capital or wealth of both nations would be concen- 
 trated in the hands of a few without rendering the least equi- 
 
APPENDIX. 355 
 
 valent to those who earned it. Now, to what would all these 
 troubles be attributed, and to what have like revulsions been 
 always attributed ? Why, to over-production, over-trading, too 
 much credit, etc. These disasters are laid at the door of the 
 honest producer and trader, while the real cause is either con- 
 cealed, or at all events is not understood 
 
 Suppose one hundred of the richest men in the city of Hew 
 York should agree to draw specie from the banks and hold it 
 themselves for a given time say one, two, or three months 
 keeping the engagement to themselves, so that the public would 
 bo unacquainted with their intentions: less than eighty -five 
 thousand dollars for each individual would draw every dollar of 
 specie from every bank in the State, and some of these men 
 could easily furnish several times the sum allotted to each. All 
 who would make these drafts are the actual owners of the money 
 they would draw from the banks ; and as they owe no one, they 
 could keep it as long as they pleased, whether one, two, or three 
 months or longer. I presume no one acquainted in New York 
 would doubt the ability of one hundred of our citizens to com- 
 mand this money without being indebted to any one for a dol- 
 lar ; but should this be questioned, it would only be necessary 
 to add a few to the number to accomplish it. Should this be 
 done, every bank in the city must stop specie payment ; and this 
 would probably cause a run on the banks in all the Atlantic 
 cities, and another suspension throughout the United States 
 would be the consequence. This would at once occasion a great 
 scarcity of money, and would reduce property much below its 
 present price ; then suppose the men who held this specie should 
 denounce banks and State stock, saying all this kind of paper is 
 worth next to nothing, and that all sorts of property ought- to 
 be sold for specie, as there is certainly no dependence to be 
 placed in banks. Let these men still hold the specie, and not 
 buy a dollar's worth of property themselves for six months I 
 ask what would property bring, provided a mortgage, or one 
 hundred mortgages, were foreclosed in New York, and the pro- 
 perty sold for specie? If a bank should be sued, and it held 
 State stock as collateral security, and should sell it for specie, 
 what would the stores, houses, and State stock bring in specie? 
 Who would have the specie to buy them? The property would 
 not sell for more than a quarter of its present estimated value ; 
 
356 APPENDIX. 
 
 yet these men have a right by law to do all this, and the State 
 and the United States Government would he utterly powerless 
 in the matter, and could not help themselves nor the citizens. 
 These hundred men would hold nearly all the legal tender of the 
 State, and the citizens are bound by law to pay their debts in 
 this tender, which it would be impossible for them to procure ; 
 they could no more pay them than the children of Israel could 
 make brick without straw; they could neither get the money 
 from abroad nor at home: credit would be entirely prostrated 
 and the laborer beg from door to door. Yet such are our laws 
 on this all-important subject : our citizens are absolutely legally 
 robbed by their own neighbors and before their own eyes, but 
 have no power to prevent it. 
 
 It will be said that these hundred men would lose the interest 
 on their money, and therefore there would be no inducement to 
 this ; but I answer specie would bring a much greater premium 
 than all the loss of interest, or they could buy good bonds and 
 mortgages at an enormous sacrifice, or property for less than 
 half its value. If they chose, before they made the run on the 
 banks, they could sell State or bank stock, to be delivered at a 
 certain time within three or six months, and calculate with a 
 moral certainty that the stock would fall in price so that they 
 could take the difference without buying the stock at all ; and 
 if they should buy it, they could have it delivered the same 
 day, and draw the money they pay for the stock from the per- 
 sons to whom they sold, without encroaching on one dollar 
 of the specie drawn from the banks. These hundred men by 
 this means would doubtless more than double their money. The 
 public have nothing to guard them against this but the tender 
 consciences of these men, and the people who have within a few 
 years past paid to them from one to four per cent, a month for 
 the interest or the use of money, with every pledge which the 
 parties could possibly give to secure the safe return of the money, 
 can pretty well judge as to the conscientious scruples of our 
 most wealthy moneyed men in the city. 
 
 When hard times begin, the merchants, who are the first to 
 feel the pressure, look about to see what expenses they can 
 avoid. They dismiss some of their clerks and cut down the 
 salaries of others; for their families they procure houses of which 
 the rent is low, or else get their landlords to reduce the rent of 
 
APPENDIX. 357 
 
 those they occupy, and the same with stores. The clerks find a 
 cheaper place to board, or reduce the price at their present 
 places. The manufacturers dismiss some of their hands, and cut 
 down the wages of those whom they continue to employ, and 
 all mechanics do the same. Cotton falls in price, and those pro- 
 ducing it must buy fewer goods arid pay less for the production 
 of the cotton. All articles for food fall in price, and of course 
 the farmers raising them must pay less for the labor they employ, 
 and buy less clothing for their families, and all those who work 
 for them must do .the same ; hence people consume more of 
 articles produced with little labor and less of those which 
 require more. Many without employment are unable to buy 
 even the cheapest food and clothing at these low rates, and all 
 lands, tenements, everything in the country produced by labor, 
 falls in price. "When this occurs, it is said that it makes no dif- 
 ference if you receive low wages, you buy all those things at a 
 proportionably low rate, so one thing balances another. They 
 do not even consider that all these tilings are in the same end 
 of the scale, and bear the same way ; they do not perceive that 
 little devil money in the other end of the scale, and his imps 
 (the usurers) laughing in their sleeves at the folly of the pro- 
 ducers, and saying, "With six cents we can now weigh in this 
 balance as much as we did before with twelve, eighteen, or 
 twenty-five. However divisible this labor may be, whether 
 large or small, from a penny to the sale of the Exchange in New 
 York for over eight hundred thousand dollars, we are so divisible 
 that we can at all times fix an exact balance, and by a sort of 
 magic can expand ten or twenty cents to a dollar, and again 
 contract to ten or fifteen cents. I and my imps never want a 
 balance for all or any of the bounties of Providence : I can by 
 my imps draw myself up into a nut-shell, and I and my posses- 
 sors as much balance all these things when so drawn up as 
 when I by them expand over the world. When I through them 
 expand, the people think less of me ; when I by them contract 
 myself, I draw the nation w-ith me, government and all; they 
 feel my power, and reverence my authority, and they are as 
 much compelled to bow before me as the people of Babylon 
 were to the golden image set up by Nebuchadnezzar." Cur- 
 rency, the Evil and the Remedy. 
 
358 APPENDIX. 
 
 J. Page 302 
 
 Again, in regard to the amount of currency which would be 
 required for the business of the nation, I think it would be less 
 than has generally been in circulation. The currency being at 
 par in every section of the country, no delay in procuring drafts 
 for remittance, or any holding on for higher rates of interest, 
 money would circulate with great rapidity, and consequently 
 for the same amount of business a less quantity would be neces- 
 sary; and, as to wild speculation, there would be less danger 
 from that than there ever has been in any country. The great 
 speculations which make so much noise, in building-lots, houses, 
 lands, etc., would never very materially interfere with the 
 general business of the nation ; the business of a few individuals 
 might be broken up where they bought on credit and agreed 
 to pay for property a larger sum than they could make the 
 property pay interest on ; but this would never interrupt the 
 general prosperity of a people. We never hear of hard times 
 in any country except when the interest on money advances ; 
 the first complaint is always of a scarcity of money, want of 
 what is necessary to do business ; not only a scarcity of money 
 to pay for building-lots, but a scarcity for all business purposes. 
 From great abundance, we are suddenly in great want, and the 
 rates of interest have increased double, treble or quadruple. 
 One now borrows money at six per cent, interest at bank 
 because he is among the favored ; another pays in the same 
 street the same day twelve per cent., another twenty-four, and 
 another, who is " cornered," thirty-six ; the last buys the use 
 of the same article, in the same street, on the same day, and 
 pays six times as much as the first ; he does this from necessity. 
 Why is not one person obliged to pay on the same day in the 
 same market, for a barrel of flour or a bushel of potatoes, six 
 times as much as another individual who may happen to be in 
 better credit or greater favor ? Is there not as great a risk in 
 selling these articles as in lending money? Do people give 
 better security when they buy merchandise than when they bor- 
 row money ? What would be said of a grocer who made as 
 much difference in the price of a pound of sugar or a quart of 
 molasses, charging those who were in the greatest need the 
 
APPENDIX. 359 
 
 most exorbitant prices? Those who can bny almost <m;y 
 quantity of goods at the usual market prices in their own names 
 without giving any security, pay these enormous prices for 
 money. Goods, wares and merchandise, which are the products 
 of labor, we trust out on a single name, without requiring any 
 security for the payment of the debt. We do not expect the 
 persons buying these goods to be impoverished by the purchase : 
 if we anticipated any such result, we should certainly demand 
 security, as we should know we were injuring our customers. 
 But, as a general thing, we should not sell to them at all, for if 
 it were usual for people to lose by the purchase of goods, wares 
 or merchandise, or any property whatever, the product of labor, 
 none of these things would be sold without security, and all 
 confidence between individuals would be lost. Society could 
 scarcely exist in this state ; it would indeed be in a wretched 
 condition. We may discourse about a cash system without 
 credit as much as we please, but it is an impossibility ; it never 
 did and never can exist. 
 
 Why is it necessary that in lending money it should be hedged 
 about with so many securities, .and these securities so often 
 suffer by it ? The only reason which can be assigned for it is 
 that people are compelled to pay more for the use of money 
 than the use of money is worth. If this were not the case, to 
 loan money would not be hazardous. All the debts contracted 
 by the purchase of goods, wares and merchandise, are payable 
 in money as much as debts contracted by borrowing money. 
 Why should not a debt be as sacred where a shoemaker has 
 bought his leather and given his note or paid the money on it, 
 and spent his labor in making the shoes, as a debt for money 
 loaned ? May not a man as well lose his money as his labor and 
 leather, when he depends upon these for his bread, as much as 
 the other does upon his money for his subsistence ? I believe 
 more than nine-tenths, and probably more tiian ninety -nine hun- 
 dredths, of these debts in both cases are lost in consequence of 
 unjust laws in the monetary system. The interest on money in 
 all countries is far higher than the producers can afford to pay, 
 and not only so but interest has never been regulated in any 
 nation. Money being the base of all contracts, the change in 
 the rates of interest, and the monopoly of money change the 
 base of every contract in the nation after the contract is made, 
 
360 APPENDIX. 
 
 and then the producing classes are blamed for over-production and 
 extravagance, while those who have done the evil are esteemed 
 for their wisdom and prudence. 
 
 There are few people who contract debts without intending 
 to pay them, and no one except a thief at heart would do it 
 unless compelled to it by actual want. But thousands, by ex- 
 pecting to obtain work and being disappointed in this, become 
 discouraged and broken down by the hardships they endure. 
 These men are to be pitied instead of being blamed, as they 
 now are by the community they need encouragement instead 
 of condemnation and imprisonment; no man should seek for 
 employment and be unable to get it. 
 
 Until there is a radical change in the monetary system, these 
 evils must and will continue as certainly as cause will produce 
 effect. No remedy which does not strike at the root of the 
 evil can remove it, and the power to do this is in the hands of 
 the nation. 
 
 The sudden scarcity of money does not depend on the showers 
 of the heavens or on an abundant crop, but upon the will of a few 
 moneyed men, Wall street brokers and petty banks, who deter- 
 mine when it shall be scarce and when plenty, and when the 
 rate of interest shall be high or low. When they have, by 
 sudden curtailment, after a prosperous season of business, con- 
 centrated in their hands a large portion of the earnings of the 
 people, it is for their interest again to lend money at -low rates 
 of interest, that the. people may earn more- property to be again 
 taken from them by the same unjust means. Currency, the Eoil 
 and tlie Remedy. 
 
 K. Page 313. 
 
 The avarice that pervades the civilized world has been in- 
 grafted upon society by the too great power of money. In most 
 countries it has made production by labor degrading to the child 
 flrhose necessity conlpels him to perform it. The skill to gain 
 <!>y lending money, and by taking advantage of others in bargain- 
 ing, has been, and is taken as evidence of superior talent, until, 
 by example and precept, avarice has been instilled into the 
 minds of children. It has grown with their growth and 
 strengthened with their strength until it has corrupted the very 
 foundations of society. The per centage incomes on bank, rait 
 
APPENDIX. 3d 
 
 road, State, and other stocks, and the rates at which money can 
 be borrowed and lent, are the great leading topics of a business 
 community. The topics are not, How shall we contrive to pro- 
 duce by our labor the greatest supply of all the necessaries of 
 life for the general good ? but, on the contrary, How shall we 
 contrive to get the largest possible per centage income with the 
 least possible production on our part ? This state of society is 
 directly at variance with such a one as a just monetary system 
 would naturally induce. It is as much opposed to the natural 
 rights of society as falsehood is to truth ; and no continuance of 
 competition in production or distribution, under the present 
 monetary laws, will be any more likely to remedy the evils of 
 this debasing system, than competition in falsehood would be 
 likely to produce and sustain truth. We must begin improve- 
 ment by doing away the great gain by unrighteous per centage 
 interest on money ; and then the wealth will naturally be widely 
 distributed among those who do the most for the. good of man, 
 instead of being gathered by a few, who thus became the great 
 oppressors of the human family. M8/S. 
 
 ~L.Page 314. 
 
 As the present monetary laws have adjusted society, what 
 prospect is there before a young man starting in life? Is there 
 any reasonable encouragement for him to produce the means of 
 subsistence as God has ordained that is, by his daily labor ? If 
 he sells only his own labor, or the articles which his own daily 
 labor will produce, without any other traffic, trade, or specula- 
 tion by which he may gain undue advantage from the labor of 
 others, he is doomed to the severest toil for his whole life, espe- 
 cially if he marries and maintains a family. Should he be dis- 
 abled for a season by sickness or other misfortune, or in a money 
 crisis happen to be thrown out of work, then he and his family 
 are compelled to be solicitors of public or private charity, or else 
 they must suffer for the want of food, clothing, and shelter. 
 Thousands in the cities of New York and Brooklyn are now (on 
 this tifteenth day of February, 1855) in this sad predicament, 
 yet these evils and sufferings are very often attributed to the 
 mysterious workings of the laws of God, while they are evt 
 
362 APPENDIX. 
 
 dently owing to the mysterious magical workings of the monetary 
 laws of man ; and are as much in opposition to the righteous 
 laws of God as the acts of an individual who commits arson or 
 murder, and are as much more aggravated in their character, 
 and effects upon the welfare of the public, as a national trans- 
 gression is greater than an individual one. 
 
 Mr. B. W. Emerson, in one of his lectures, speaks of judges 
 or governments acting in their official capacity as the brains of 
 the nation. If the brains of this nation cannot make laws that 
 will govern the dollar, then the dollar is greater than the govern- 
 ment brains that made it; for if two great powers meet in com- 
 petition with each other, the greater will rule the lesser power ; 
 and in this, as well as in other civilized nations, the dollar is 
 the greater power, and rules the brains. Governments both 
 theoretically and practically admit, that they have not brains 
 enough to govern the use of the dollar, and so they bow down 
 in submission to the gold and silver idols which they have set 
 up ; and by and through the use of these idols the nation is 
 governed in opposition to eYery just law of God and man. The 
 dollar not only governs the brains of the nation, but it also 
 comes into competition with the physical and muscular po \vers 
 of the laboring classes ; and though their brains direct how they 
 shall perform their manual labor in production, yet all the 
 machinery brought into use, and all the labor that man can per- 
 form, have no power at all to stand in competition .with the 
 centralizing power of money. 
 
 What does the Government of the State of New York say in 
 relation to this important matter? It says that borrowed 
 money is worth seven per cent, interest per annum, which 
 means just this : that the producing classes are bound by law 
 first to support themselves, and in addition to this, that they 
 shall by their labor, every ten years and three months, make all 
 the improvements that have been made in this State from its 
 first settlement down to the present day, and also produce all 
 the machinery, goods, wares and merchandise which are now 
 on hand, or which they may use in making these improvements. 
 and give all these improvements to the capitalists who now own 
 the property, for the ten years and three months' rent of this 
 property. If all the inhabitants of the State were now to 
 engage in active production, it is doubtful whether they could 
 
APPENDIX. 363 
 
 support themselves, and make all the improvements that now 
 exist in this State even in fifty years : for the inhabitants of this 
 State have been at work nearly two hundred and fifty years to 
 produce these improvements; yet the monetary laws of this 
 State require those who are engaged in production and distribu- 
 tion to perform all this in ten years and three months. The 
 laws require of the laboring classes that which they cannot 
 possibly perform, and then cast censure upon them for not per- 
 forming impossibilities. These remarks upon the centralizing 
 power of money are no fictions, but are truths susceptible of 
 the clearest mathematical demonstration, and under such 
 impositions upon the producing classes, is it any wonder that 
 people should seek for some profession, or engage in traffic, 
 trade, and speculation, or almost any other calling, rather than 
 that of productive labor ? MSS. 
 
 ^IPae 320. 
 
 The rights of property in a nation cannot be protected except 
 by general laws ; for it would be impossible for the Government 
 to see that every individual in making his bargains with others 
 got the exact value of what he sold, and that the purchaser got 
 the exact worth of his money. The Government could not fix 
 a price for the daily labor of each individual, and compel others 
 to employ him at this price, unless it should also compel others 
 to buy the products of labor at remunerating prices. It is utterly 
 impracticable for the Government to have 'a supervision over the 
 individual agreements in the nation, and superintend the busi- 
 ness transactions of the public. All that it can or ought to do 
 in this important matter, is to make such general laws for the 
 government of th property as will naturally tend to effect its 
 equitable distribution. Money holds a legal position in regard 
 to other things which gives to it a controlling power. It is the 
 legal standard by which all values are determined, and the 
 medium by and through which the exchange of all valuable 
 things is effected. It is by and through the power of money 
 that the individual rights of property in every nation are awarded 
 and protected. The laws sustain the money in its position and 
 protect its power while it is performing its functions in making 
 the distribution of wealth. The laws protect the rights of pro- 
 32 
 
364: APPENDIX. 
 
 perty by enforcing the fulfilment of agreements, so that each 
 shall receive what the power of the money has distributed to 
 him as his share of the wealth. Hence the protection of the 
 rights of property must depend entirely upon the just power of 
 the money; if the power of the money be unjust, it will be 
 certain to make an unjust distribution of the property, and 
 the laws will protect the unjust distribution, for they must sup- 
 port the power of. the money and enforce the fulfilment of 
 individual agreements made in conformity with its legal standard 
 power, otherwise they would be totally inconsistent in them- 
 selves. 
 
 Governments establish and sustain money, and make it the 
 basis upon which individual agreements must be founded, 
 and then leave individuals free to make their own agreements 
 one with another, in exchanging their land, labor and commodi- 
 ties. This is the way in which all civilized nations protect the 
 legal rights of property ; and there is no other practicable way 
 in which they can be protected. There is an exception to this 
 in countries where the laws recognize a privileged class, and 
 landed property held by this class is protected by special laws, 
 and is not liable to be sold to pay their debts. By thus exempt- 
 ing their property from execution, it is not under the controlling 
 power of money, but all the other property in the country is 
 governed by this power. 
 
 Money holds a legal position as totally different from that 
 held by labor and property as the position held by the helm of 
 a ship is different from that held by the ship and its cargo. It 
 is its position that gives to the helm the power to govern and 
 direct the destiny of the ship; and it is the legal position of 
 money that gives to it the power to govern the value of all pro- 
 perty, and control the distribution of wealth.* If the helm were 
 removed from the ship's stern and placed in the hold, it would 
 be as powerless to control the direction of the ship as any other 
 part of the cargo ; and the ship and cargo, helm and all, would 
 be at the mercy of the winds and waves, if all the gold and 
 silver coins in the Sub-Treasury and banks were made into plate 
 for private use ; they would be as powerless to govern the value 
 of property and the distribution of wealth as the helrn of the 
 ship when stowed in the hold to direct the course of the vessel. 
 They would both have lost their position to govern. The 
 
APPENDIX. 365 
 
 money might be recoined, and it would be restored to its former 
 position and power ; and the helm might be again attached to 
 the stern of the ship, and thus be restored to its former posi- 
 tion and power. The helm of a ship made of wood, iron, and 
 copper is better and more convenient for use than it would be 
 if it were made of solid gold ; and money when made of paper 
 is far more convenient for use than when it is made of gold and 
 silver. If the National Government will institute good paper 
 money, and by making it the legal tender, place it in its true 
 position, it will save an immense amount of labor, besides being 
 a far safer currency for public use. When the Government shall 
 institute paper money secured by landed estate, and then found 
 its value upon a just rate per cent, interest instead of upon its 
 material, and shall make it a tender in payment of debts, it will 
 rightly govern the value and distribution of property, for it will 
 *be sure to distribute the wealth according to the earnings 
 o labor; whereas it is now sure to help a few to mono- 
 polize the wealth that the many produce by their labor. If 
 the money be thus instituted, and a rate per cent, interest 
 be established sufficient only to pay the expense of furnishing 
 it, the money will form a just foundation upon which to build 
 contracts. 
 
 We are aware that the financiers of this and other nations 
 will ten tne public, and endeavor to persuade the governments 
 that this is impossible that since it never has been done, it 
 never can be done. They will be just as positive in relation to 
 this all-important matter as kings and despots are that they have 
 a divine right to reign, and that a democratic or republican 
 government is a trespass against Divine authority, and never 
 will be permitted to stand except for a brief period of time. To 
 fix and maintain a right rate per cent, interest for the use of 
 money is striking at the very root of despotic power ; and the 
 producing public must expect to have it called impracticable, 
 and to have a strong opposition to its adoption. Yet we do 
 know that it is as practicable for the Government to supply the 
 necessary quantity of money that shall be permanently safe, and 
 regulate the rate per cent, interest as to fix and regulate the 
 length of the yard. The Government can do this so effectually 
 that any person can as readily tell what the rate of interest will 
 be in every part of this nation for five or ten years to come as 
 
366 APPENDIX. 
 
 ro tell what will be the length of the yard. Money is as much 
 a standard of value as the yard is of length, and it should and 
 ?,an be so instituted and governed that any one may as readily 
 tell *-.he value of money as the length of the yard. MS8. 
 
 | e s|wll not fail twrr bt ftistwttagrir, till \t 
 judgment in t|e 
 
INDEX. 
 
 Agreements. Of capitalists with laborers. 
 28. Freedom of, fails to secure just 
 reward of labor, 28. Foundation of, 
 unsound, 29. Freedom of. limited by 
 standard of value, 29. Unjust, 29. 
 The rate of interest ought not to be a 
 subject of, (35. Fair appearance of, but 
 false foundation, 88, 151. With just 
 rate of interest, just rents fixed upon 
 in voluntary, 134, note. Voluntary, no 
 test of justice, 1G1, 107 1(36. Gambling, 
 void, lc'4, 329. Mutual, cannot make 
 gambling just, 165. With just money, 
 will award just share of produdion, 
 165. Made by use of the power of 
 money without its material substance, 
 257. Money, the basis upon which, 
 must be founded, 364. 
 
 Avarice, how generated, 3GO. 
 
 B. 
 
 Banks. Receive their charters by legal 
 enactments, 19:1. How they resemble 
 and how differ from manufacturing 
 companies, 195. How established, 190. 
 What constitjites capital of, 197, 198. 
 Securities partly furnished by the bor- 
 rowers of money, 197. Principle upon 
 which their contracts with the people 
 are made, 199. Capital ot, under Gen- 
 eral Banking Law of the State of New 
 York, 20(1. Failures of, during six or 
 seven years, 201. Deposits in, ought 
 to be as secure as the bank-notes cir- 
 culated, '203. Chartered with a pro- 
 fessed specie capital, average of specie 
 held by, 205. Specie capital of, how 
 made up, 206. Discounts made by, in 
 New York, 207. Expenditures of, '210. 
 Their contractions of loans said to be 
 judicious, 210. Relative position of, 
 toward the people reversed, 212, 213. 
 Gains of, by deposits, 218, '2! 9. Power 
 of, in regard to discounts, 220. Opera- 
 tions of, illustrated in management of 
 discounts, 220, 221, 222. 223. Profits of, 
 from fluctuations in value of money, 
 
 237. Can easily raise rate of interest, 
 
 238. In instituting new monetary 
 
 system need not interfere with char- 
 ters of, 300. Safety Fund money com- 
 petent to pay debts to, 301. Institu- 
 tion of Safety Fund will do no injus- 
 tice to, 302. Risks greater with pres- 
 ent, than under Safety Fund system, 
 303. 
 
 Bank-notes. As valuable to pm-chaso 
 property as coins, 55, 271. Value of. in 
 legal authority, 55. Not merchan- 
 dise, 195. Security for. furnished by 
 the public, 190, 210. While interest i8 
 kept low, State bonds good security for 
 redemption of, but no longer, 202. 
 Labor of producing them small, 211, 
 222. Amount paid by the people for 
 the use of, 211. Balancing power of, 
 217, 21S. Not a legal tender, 271. 
 Practically money, 271, 272. Bills of 
 credit issued without constitutional 
 right, 194, 274, 300. 
 
 Bank of England. Basis of, 215. In- 
 dorsed notes secure the bank notes of, 
 215. Issues of, 215, 216. Gains of, by 
 rise of interest unfairly token from 
 people, 216. Weekly reports of, show 
 that notes of, arc secured by indorsed 
 notes, and not by bullion, 217. 
 
 Borrowers. States paying high rates 
 are most frequently, 183. Effects in 
 Wisconsin of high interest on, 183, 18 L 
 Only the use of principal bought by, 
 227,' 327. 
 
 Bullion. Why value of, is equal to th;it 
 of coins, iio. Pretence that it is real 
 wealth, 216. Amount of, compared 
 with deposits in Bank of England, 217. 
 Issues of Bank of England above 14,- 
 OO'ViOO, governed by, 345. 
 
 Business. What it is, 331, 332. What 
 exchanges must be made by money to 
 carry on, 338. 
 
 C. 
 
 Capital. Money not, 70, 125. Easy to 
 make money to represent the value of, 
 125. Oppression of labor by, at present 
 rates of interest, SO, 80, 91, 92, 95, 100, 
 106, 112, 114, 138, 151, 152, 174. Why 
 money appears to be, 231. 
 
 Capital of Banks. Furnished partly by 
 stockholders and partly by the bor 
 
 367 
 
368 
 
 INDEX. 
 
 rowers of money, 196, 197. Under 
 General Banking Law of the State of 
 New York, '200. Security of, by whom 
 furnished, 202, 207, 208. So-called 
 specie, 205. How the, is made up, 205, 
 200. Proportion of the, furnished in 
 specie by stockholders of banks in the 
 State of New York, 209. 
 
 Cities. Consumers of wealth, 20, 99. 
 Atlantic cities supposed to be cut oflf 
 from country, 21. Majority of people 
 in, poor, 21. How the wealth of 
 nations accumulates in large cities, 97, 
 98, 99. Present rates of interest gather 
 wealth in cities, 100, 101, 102. Table 
 of accumulation, 102, 103, 104. Dif- 
 ferent result to. at one percent., !().% 
 loij. Loans of the city of New York 
 to the country, 107. Accumulate 
 wealth without earning it, 108. Dis- 
 proportion of wealth of the State owned 
 by the city of New York compared 
 with its population, l<'8, 109. 11. >w to 
 estimate disproportion, 110. Dispro- 
 portion of wealth owned by the city 
 of Boston, as compared with the State, 
 120, 121. 
 
 Coins. Increase in amount no improve- 
 ment in means of distribution, 38. Of 
 base metal could be made pood money 
 by law, 78. Are the material of money, 
 not its power, 168. With good paper 
 money at home could ship, to pay for- 
 eign balances, 298 
 
 Commodities. Exchange of, indispensa- 
 ble, 31. Standard of value needed to 
 exchange, 31. Money not a com- 
 modity, 69, 73, 74. Commodities not 
 currency, 75. 
 
 Constitution of the United States. Powers 
 of Congress in respect of money, 27:5. 
 States debarred from exercising IMJWI-I-S 
 of Congn-s.s respecting money, 273. 
 No change needed in, in order to estab- 
 lish just monetary system, 318. 
 
 Contracts. Could not be made without 
 money, 34. Gambling, void in law, 34, 
 1G4. Varying and unjust on an un- 
 just foundation, 35. Change with rate 
 of interest, 36, 350, 327, 328, :-j:',2, 38Sj 
 359. Public standard or foundation 
 unjust, 151, 174, 304, note. Which 
 ought to be restricted and which loft 
 free, 164. Principle upon which, made 
 between the bunks and the people, 199. 
 In large cities mostly paid by checks 
 on banks, 219. Fulfilment of, between 
 individuals and the government se- 
 cured by paper instruments, 270. 
 Money, how constituted to form a just 
 foundation of, 365. 
 
 Credit. Definition of, 2G1. Extent of, 
 261. Necessity of, 262, 359. Banking 
 system based upon, 263. State and 
 United States stocks, a form of, 297. 
 
 Currency. Amount of, required, 254, 
 260, 285. Effects on a nation of a gold 
 and silver, 254, 255, 290, 291. Must be 
 
 national, 263. United States Bank 
 could not regulate the, 203, 264. 
 Security of a paper, 269. Character of, 
 proposed, 274. How to make paper, a 
 true representative of value, 275. Pro- 
 portion of property required to secure 
 a sufficient paper, 278. Mixture of 
 specie in, 280. Different effects of a 
 good and bad, 285. Borrowed of for- 
 eign nations, 292. Power of a paper, 
 293. Chief object of a, 295. Paper, 
 will facilitate, not hinder foreign trade, 
 29b. An easily deranged, a greater 
 loss to the people than the failure of 
 crops, 297. 
 
 D. 
 
 Debts. Definition of, 45. Money tender 
 for, 45, 200. To absentees at six pet 
 cent, would impoverish the nation, 99, 
 100. Increase' of national and state, 
 shown at various rates of interest, 122. 
 123, 124. Of Southern and Western 
 States, 124. Of nations and individuals, 
 how caused, 134, 135, 292. Increased 
 by a rise of interest, 155, 167, 202. 243. 
 Require mon- labor and property tc 
 pay, 163. National debt of England 
 increases depression of fal.H>r, 190, 244 
 Reduction of interest on English na 
 tional debt would benefit producers, 
 191, 192, 244. Founded upon and paid 
 in money. 196. 359. Legally payable in 
 specie, 19X. Curtailments of bank dis 
 counts increase, 239, 240. Under new 
 monetary system, adjustment of, with 
 foreign nations, 295. 
 
 Dependence, mutual, of all men, 31, 32, 
 33, 309, 310. 
 
 Discounts. Process of extending and 
 contracting bank, 220, 221, 222, 223, 
 225. Of post-notes of Delaware and 
 Hudson Canal Bank, 226, 227. Made 
 by capitalists from 1836 to 1840, 228. 
 Table of, at various rates, 235. Effects 
 of refusal of, by banks, 238. Curtail- 
 ment of, not a violation of law, 239. 
 
 Distribution. No agrarian proposed, 40, 
 320. Just standard will regulate, 40, 
 320. Unjust, owing to one cause, 246. 
 Power of money opiwsed to just, 248. 
 Money must be abundant to make 
 just, 248. New monetary system will 
 furnish just standard of, 306. Of wealth 
 made by money under protection of 
 law, 363, 364, 365. 
 
 Dollar. Most important measure, 58. 
 Measures value every time it passes, 58. 
 Value of, determined by rate of inter- 
 est, 61. Value of, rises and falls with 
 rate of interest, 64, 163, 327. Doubled 
 in value, 64. Value of, not due to 
 labor to mine and coin silver for it, 75. 
 Measures more or less value according 
 to rate of interest, 156. Human law 
 cannot make naturally productive, 172. 
 Greater than the government brains 
 
INDEX. 
 
 369 
 
 (hat made it, 302. Machinery and 
 labor cannot compete with, 302. How 
 it varies in value, 325. 
 
 E. 
 
 Evils. Cannot ulter past, 39. Of money 
 national. 39, 2/8. Legislative. 81, 21-s. 
 Second evil needed to modify first evil 
 of bad monetary laws, 174. Must 
 choose between two, 229. Popular 
 way of accounting for, 247. Not di- 
 minished by their long continuance, 
 304, note. .Many will disappear under 
 just monetary system, 319. Root of 
 most of present, 321, 322. 
 
 Exchange. Of commodities indispensa- 
 ble, 31, 32, 33. Medium of, necessary, 
 33, 125. Of commodities augmented 
 by machinery, 37. Distinction between 
 medium of, and articles of actual value, 
 68. Rates of, increased by a rise of 
 interest, 230, 341, 342. Kate of, on 
 Philadelphia, 13 per cent., 237, note. 
 With good paper currency at home, 
 bills of, could be more easily obtained, 
 290. 
 
 G. 
 
 Gambling. Compared with stock job- 
 bing, 320, 330, 331. In stocks and 
 moiiey, ho ,v it aTects producers, 3.)2, 33 3. 
 
 Gold. Xot used as material of money, 
 must have been like other articles of 
 trade, It. Possesses no peculiar ex- 
 cellence, 72. Difference between uso 
 as utensils and as money, 72, 73. Of 
 little intrinsic value, 77. Images of, 
 innate value attributed to them, 245. 
 With good paper currency would not 
 be needed as money, 299. Institution 
 of good paper money cannot affect in- 
 trinsic: value of, 31)2. Superstition.! 
 worship of, 347, 348. 
 
 Government. Protects rights of prop- 
 erty, 18, 320, 30-5, 304. Of United 
 States supposed to confer all possible 
 benefits, 27. Provides schools, 27. 
 Established to protect interests of gov- 
 erned, 30. Ought to furnish money 
 in the various States to represent value 
 of their own property, 124. Deter- 
 mines what proportion of earnings of 
 labor shall be paid for the use of capi- 
 tal, 152, 79. Directed by money-lend- 
 ers, 109. English, intervenes in col- 
 lection of taxes, concealing came of 
 oppression, 191. General, reserves 
 right to coin money and emit bills of 
 credit, 194. State, has established 
 banks, 194. Financial pow^r instituted 
 by, 242, note. Cannot institute a good 
 currency on a specie basis, 203, 20 1. 
 Present monetary laws tend to over- 
 throw of, 318. lias left the value of 
 money unsettled, 320. Just monetary 
 
 system will sustain and preserve, 328, 
 note. Cannot supervise individual 
 agreements, 303. Must make general 
 laws, 303. Establishes and sustains 
 money to make and govern distribu- 
 tion of wealth, 3C4, 305. 
 
 I. 
 
 Income. Of English securities holder, 
 how collected, 190. Money gathers 
 an, whenever it is lent, and for longer 
 or shorter periods, 240. Value of 
 stocks varies with yearly, 325, 320, 330. 
 
 Innovation. Every improvement an, 38. 
 
 Interest. Valuable because can be ex- 
 changed for actual value, 44. Deter- 
 mines length of time in which bor- 
 rower shall double lump of gold, GO. 
 Does not grow on money or obligations, 
 Gl, 143, 171. Determines value of the 
 dollar, 01. Can be established by fre- 
 quent transfers of money to take the 
 income of many pieces of property, 03, 
 64, 183. Must be kept uniform, that 
 the money may be of uniform value, 
 6i. Benthanrs theory of, 05. Kate 
 of, determines relative proportion of 
 earnings paid to capital and labor, 80, 
 200. Governing power of distribution, 
 80, 200. Results to laborers of various 
 rates of, 81. At seven per cent., 81, 
 83, 84, 87. At three per cent., 82, 83, 
 189, 190. At six per cent., 82, 91, 92, 
 94. At one per cent., 85, 88, 89, 93, 
 94, 144, 145. Results to borrowers of 
 various rates, 86, 89, 90. Extent of opera- 
 tion of, 91. Establishes rent of property, 
 91, 14o, 147, 170. Individuals cannot 
 withdraw from law of, 95, 90, 165. 
 Present rates of, gather the wealth in 
 cities, 100, 206. Power of, invisible, 
 but draws things visible to itself, 106, 
 note, 108. Received by city of New 
 York on loans to country, 107. In- 
 crease of value demanded by present 
 legal rates compared with the increase 
 of assessed valuations of the States of 
 New York and Massachusetts, 111, 
 112, 113, 114, 115, 110, 117, 118, 119. 
 At two and a half per cent, too high, 
 114. Doubling of principal at various 
 rates of, 121, 122, 176. Accumulation 
 of, on State and National debts, 1^2, 
 123, 308, 309. At seven per cent, ac- 
 cumulates property more rapidly than 
 labor can earn it, 120. Table, 127, 128, 
 
 129, 130. Accumulation at one per 
 cent , table, 130, 131, 132, 133. Two 
 per cent, too high a rate, table, 135, 
 
 130, 137, 138, 189. Ke.inced would 
 benefit producers whether prices should 
 rise or fall in consequence, of reduc- 
 tion. 139. Table of, at one per cent, 
 and labor at per day, 139, 140, 14i, 
 142. How high and fluctuating rates 
 of, affect producers, 142, 143, 307, 308. 
 
370 
 
 INDEX. 
 
 When rates increase, property falls in 
 price, 154, 155, 266. As interest in- 
 creases, rents diminish, 157, 158. Value 
 of money rises in direct proportion to 
 increase of, while value of property 
 and rents fall, 158, 159. Relative pro- 
 portion of, to the principal doubled 
 when rate of, rises to double, 151). 
 Value of, at twelve per cent, four times 
 greater than at six per cent , 160. Value 
 of money increases in geometrical pro- 
 portion to rate of, 160. Not the lend- 
 er's money, but the borrower's obliga- 
 tion that bears, 169, 298. Means" to 
 pay, must be gained from property, 
 170, 171. A yearly tax levied on pro- 
 ducers, 174. Reduced, will benefit 
 laborers, 174. An essential power of 
 money, 175. How to estimate the just 
 rate of, 176, 177, 284. Should pay for 
 labor to institute and circulate the 
 money, 178, 284. Lowering of rate of, 
 a benefit to producers whether property 
 rise or fall, or remain at present prices, 
 178, 179, 180. Lowering of rate of, a 
 benefit to trade, 181, 182. Low rate 
 of, would not drive specie from the 
 country, 182, 183. High in new coun- 
 tries, and centralizes property rapidly, 
 
 186, 187. Too high in old countries, 
 
 187, 188. Paid by the people on their 
 indorsed notes given to the banks, 197. 
 High rates increase indebtedness, 202. 
 By whom paid on securities of bank- 
 ing capital under General Banking 
 Law of the State of New York, 202, 
 
 203. Amount of, paid by the public 
 to banks in State of Connecticut, 204, 
 205. Amount of, paid by people of 
 State of New York on bank notes 
 beyond professed specie capital, 211, 
 212. Payment of exorbitant rates of, ac- 
 counts for commercial revulsions, 225. 
 Rate of, paid on post notes of Delaware 
 and Hudson Canal Bank in 1837, 226, 
 227. Differing rates of, in different 
 sections of the country, 231, 232, 233, 
 
 204. Rates of, paid in New York in 
 1,854, note, 240, 241. High rate of, 
 cannot enable a too small sum of 
 money to discharge debts, 259, 260. 
 Under new monetary system money 
 obtained at a low rate of, 307. In- 
 crease in, compared to increase in 
 length of yardstick, 328. 
 
 L. 
 
 Labor. The producer of wealth, 19. 
 Moderate amount produces good sup- 
 ply of comforts for man, 20, 247, note. 
 Present labor indispensable, 24. Efforts 
 to secure it a better reward, 30. Power- 
 less to discharge debts, 48, 156. Present 
 .monetary laws opposed to the reward 
 of, 96, 151, 318, 319, 361, 362, 363. Must 
 produce what is gained by financiers, 
 
 172. Under just monetary system 
 equivalent in useful, must be rendered 
 for labor of others, 306. New monetary 
 system will reward, 319, 320. 
 
 Laboring classes. Their poverty not due 
 to their ignorance or extravagance, 23. 
 Results if those unemployed in finan- 
 cial revulsions could have been set at 
 work, 26. Ought not to need public 
 schools for their children, 27, note. 
 Make their own bargains, 28. No 
 chance of securing their rights by 
 combinations of labor, SO, 86, 99, 106, 
 note, 152. At two per cent, interest they 
 must double the capital of the nation 
 in thirty-four and a half years, 138. 
 Land-owners not their greatest op- 
 pressors, 147. \Vhen prices of products 
 are low, laborers suffer, 163. Impossi- 
 ble for them to pay four or five percent, 
 interest and have comforts of life, 173. 
 High rates of interest cause of their 
 poverty, 190. Pay income of English 
 bondholders, 190, 191. How to eradicate 
 oppression of, 191. Do not cause finan- 
 cial revulsions, 242, 243, note. Pros- 
 perity increased by liberal loans by the 
 bank's, 243. Their condition in Eng- 
 land when interest rises, 3^7. 
 
 Land. Has no natural monopolizing 
 power, 148. Monopoly of, not so injur- 
 ious as high rates of interest, 1-19, 150. 
 How tenants of, are affected by high 
 rates of interest, 150, 151. Land- 
 owners of England not more oppres- 
 sive than money-1 enders, 110, 191. 
 Policy to be pursued in the sale of 
 public, 315, 316. 
 
 Laws. Fundamental, 17. Monetary, 
 most important, 17, 18, 34, 264. Ex- 
 tremes of wealth and poverty in na- 
 tions in proportion to the age of their 
 monetary, ^0. Make producers de- 
 pendent on capitalists, 29. Cannot 
 withdraw labor and products from in- 
 fluence of, "0. Must not interfere with 
 freedom of contracts, 31. If monetary 
 laws are evil, the contracts made in ac- 
 cordance with them must partake of the 
 evil, 34, 165, 167. Prohibit gambling 
 contracts, 34. 164, 329. .Just monetary, 
 more important than inventions, 38. 
 Antiquity does not prove excellence, 
 39. Must institute and fix value of 
 money to make it a tender. 45. Aim 
 in regulating value of money, 45. 
 Give money its properties, 45. Powers 
 created by, 46. Immaterial; princi- 
 ples, not " substances, 52. Profess to 
 establish value of money in its mate- 
 rial, but fail, 53. Monetary, enacted on 
 false principle, 75, 169, 246, 247. Col- 
 lection of property in few hands due 
 to monetary, 86. Subsequent laws can 
 do little to modify evil of false basis 
 of fundamental, 174. Hequire per- 
 formance of impossibilities, 214. Mak- 
 ing gold and silver a tender ad ipted 
 
INDEX. 
 
 371 
 
 to build up monarchies. 215. How to 
 ascertain whether they all'ect the value 
 of money, 301. Benefits of just, 3lt>, 
 31 7, 320. Better leave to children just, 
 than wealth, 320. Rights of property 
 must he protected by general, 363. 
 Money sustained by, while making 
 the distribution of wealth, 3f33. 
 Lien. On property what, 43. Money 
 a public, 43, 50. Money superior to 
 mortgages and judgments, 43. Money 
 a lien on property,' 43, 50, 270. Notes 
 of hand liens on property, 43, 50, 270. 
 Lieu engraven on silver plate not more 
 valuable than paper instrument, 66, 07. 
 
 M. 
 
 Machines, labor-saving, have not relieved 
 producers, 37. 
 
 Material. Of money cannot be equal in 
 value to the property and products 
 which it exchanges, 46. Legal power 
 of. superior to natural value, 50. Value 
 of money not dependent on, 50. Gold 
 or silver material of money used for 
 spoons no longer money, 51. Yardstick 
 of elastic, 64. Of money a legalized 
 agent, 71. Natural powers of, do not 
 make it money, 71. Quantity and 
 
 Duality of, do not fix value of money, 
 9. 
 Measure, of value changeable, its effects, 
 
 333, 334. 
 
 Measures, definition of, 56. Determined 
 by law, 57, 65. Money a measure of 
 value, 57. Not invariable, fraudulent, 
 
 57. Dollar most important of, 58. 
 Money measures property as often as 
 it passes, 58. Distinction between 
 measures of value and articles of value, 
 
 58. Measure of value passes to seller, 
 69. Divisible, 59, G9. Farmers, etc., 
 do not inquire whether enough can be 
 had to weigh and measure quantity of 
 products, 66, note. Material of, in- 
 different, 71. Any other, may better 
 vary than the dollar, 326, 335. 
 
 Money. Gold and silver, not a substitute 
 for other productions, 19. A tender 
 for articles of trade, 34. Value and 
 prices of products estimated by, 34. 
 Variations in value of, illustrated by 
 Government bonds, 35. Nature of, not 
 understood by political economists, 36. 
 Nor by laborers, 2MO. Power of, legal, 
 43,25!-*. National medium of exchange, 
 
 45. A public tender, 4n, 48, 231. Defi- 
 nition of, 46. Properties or powers of, 
 
 46. Material of, 46. Must have legal 
 
 Snver to represent value, 48, 177, 266. 
 eld in lieu of property, 48. Only 
 legal tender, 48. Determines value 
 of labor and property, 48. Negotiable 
 power of, 50. Legal power superior to 
 , natural value of material, 50, 256. Can- 
 not be used as actual value, 50, 51, 63. 
 
 Power of, not material, but legal, 52, 
 53, 55, 168, 256, 259. Worth of, not in 
 material, but in legal representative 
 value, 53. Of paper, can fulfil func- 
 tions of coins because both are repre- 
 sentatives, 54, 55. Measures value, 57. 
 Individuals prohibited from making 
 and issuing, 58. Governments reserve 
 right to coin, 58. Accumulates value 
 by interest, 60. Not a producer of 
 value, 60, 149, 183, 349. Valuable in 
 proportion to its rate of interest, 61, 
 177, 266. Worthless if it lose power to 
 draw good intere-t, 62. Illustrated by 
 Continental money, 62. How Conti- 
 nental, could have been made good, 
 63, 281. Capable of measuring its own 
 value frequently, 63. Value not fixed 
 nor regulated by weight and kind of 
 metal, 66, 177. Must be parted with 
 to make valuable, 67, or useful, 68, 69, 
 
 170. Exchanges property, 68. Legal, 
 not actual equivalent for property, 69, 
 76. Not real capital, 70, 125, 308. Not 
 invested in property, but pa-ses on, 70, 
 note. Value of, does not inhere in 
 precious metals, 73. Not a commod- 
 ity, 74. Labor to procure, does not 
 make value of, 75. Legal standard of 
 value, 79, 230, 231. Power of, un- 
 avoidable, 91, 152, 165. Legal power 
 6f, most influential of all earthly 
 powers, 167, 168. Strictly speaking, 
 always dead, 170, 171, 298, 349. Not 
 susceptible of being improved by labor, 
 
 171. Ought to be a legal tender, 177. 
 Worthless if it docs not represent in- 
 trinsic value, 177. Why scarce in 
 Wisconsin, when plenty in New York, 
 184. Rates at which lent in Wall 
 street, when discounts are contracted, 
 2^3. Speculations in, their effect on 
 producers, 228, 332, 333. Must be 
 abundant to make just distribution, 
 248. Power of, unjust and oppressive, 
 248. Amount of, should be limited 
 only by wants of trade, 254. Bad re- 
 sults of limited amount of, shown in 
 miniature nation, 254, 255. Power of, 
 omnipresent: used in the absence of 
 the material substance, 257, 25S, 259. 
 Certain amount of, required to fulfil 
 business engagements, 259, 338, 339. 
 Amount of, required in business small 
 compared with transactions, 288. Power 
 of, commands labor, 349. People buy 
 or rent only the use of, 327. Opera- 
 tions in, their effect on commerce and 
 foreign trade, 353, 354. A little devil, 
 357. With unjust power, will make 
 an unjust distribution of wealth, 364. 
 Legal position of, 364. Description of, 
 which will rightly govern distribu- 
 tion, 365. 
 
 Money-mai-ket. Would be none if 
 money were rightly instituted and 
 regulated, 230. Can be affected by 
 two or three wealthy individuals, 256. 
 
372 
 
 INDEX. 
 
 Condition of, in Juno, 1S41, and various 
 operations in, 335, 336, 337. 
 Mortgage. Eights given by a, 43. 
 Holder of a. must cancel if money is 
 tendered, 43. On what, value of a, 
 depends, 43. Increased -value as to 
 property when interest rises, but les- 
 sened as to money, 155. 
 
 National Safety Fund. Why new insti- 
 tution for issuing money so named, 27o. 
 How the money of, should he issued, 
 275. Security of money of, 275, 278, 
 279, Sol. Means of funding money of, 
 must he provided, 275. Form of M(i\ r.v 
 of, 27(3. Form of SAFETY FUND NOTI: 
 of, 276. Money of, will hear no inter- 
 est, hut can he exchanged for interest- 
 heal ing Safety Fund notes, 27(5. Rate of 
 interest on money an 1 notes of, 276, 
 351, 352. Money of, will perform all 
 thefuncti ris of money, 277. Money of, 
 more convenient than coins, 277, 27!S. 
 Small proportion of property required 
 to secure sufficient currency, 278. 
 Amount probably needed, 279, 288, 289, 
 358. Rate of interest uniform on all 
 loans, ::79. Mortgage securities of, may 
 remain outstanding so long as interest 
 is regularly paid'!, 279. Purchasing 
 power of money of, 279. Money of, not 
 local nor individual, 280. Mixture of 
 specie with money of, can be easily 
 provided, 280. Mixture of specie with 
 money of, not needed, 280. Money of, 
 OM-ntially different from Continental 
 money or asngnats of France, 280. 
 How the Continental money and the 
 u-ssignats of France could have been 
 made good, 3, 281. Money of, will 
 have no monopolizing power, 281, 2S2. 
 Why money of, should he founded on 
 permanent property, 2S2, note. Rate 
 of interest at six per cent, on loans of, 
 too high, 2-3, 293. Just rate of inter- 
 est on loans of, 284. Income from 
 loans of, 285. Principal institution 
 and branches of, 286. Directors ami 
 officers of, 286. L'ayment of loans of 
 money of. and interest on mortgages 
 given to, to he enforced, 286. Denom- 
 inations of money of, 286, 2S7. Pro- 
 tection from counterfeits of 'money 
 and notes of, 2b7. Fractional money 
 of, will maintain its relative value. 
 2s8. Hoarding of money of could 
 liot disturb circulation, 2>9, note. 
 Advantages of, over silver money il- 
 lustrated in small nation, 280, 291, 292. 
 Money of, can he made to exceed coins 
 in value, 292, 293. With money of, 
 should not depend on other nations 
 for loans, 299. .No injustice done to 
 banks or individuals by institution of, 
 300, 301, 302. What risk of unfaith- 
 
 fulness in management of, 303. What 
 objection to. on account .of decrease of 
 incomes, 303, 304. What objection to, 
 on account of custom, 304, 3U5. What 
 advantage from, to fstates in making 
 internal improvements, 308. What 
 advantage from uniform value of 
 money of, 309. With money of, har- 
 mony of industries, 310. Establish- 
 ment of, will benefit laborer who 
 neither borrows nor lends, 311, 312. 
 Will not prevent the use of talents, 312. 
 Will promote benevolence, 313. Will 
 not make men indolent, 313, 314. 
 Will not infringe rights of properly, 
 319. Means to put in operation and 
 sustain. 323. 
 
 New Jersey, State of, how affected by 
 high rates of interest in New York 
 and Philadelphia, 334. 
 
 Note. Dependence of legal value of, on 
 actual value of property of drawer, 49, 
 69. Trifling labor to provide note, 49, 
 69. Not payable in products, but in 
 money, 49, 69. Value increased as to 
 property when interest rises, hut les- 
 sened as to money, 155. Offerings of 
 notes for discount greatly increased 
 when there is a scarcity of money, 225. 
 Discounts off well-indorsed notes, from 
 1836 to 1840, 228. 
 
 P. 
 
 Paper. Power delegated to, 49. Be- 
 comes a representative of value, 49. 
 Value added to its inherent qualities, 
 49. Legal value of. depends on actual 
 value, 49. Power of attorney does not 
 increase inherent power of. 49. Worth- 
 less without property, 50. Papers se- 
 curing English national debt, laws 
 could annul value of, 67. Paper need 
 not he abandoned for making obliga- 
 tions, because more exists than is 
 needed, 77, 272. Money of, represent- 
 ing specie should have a specie dollar 
 
 ' for every dollar of, 200. Currency of, 
 can be established of adequate amount 
 and uniform value, 269. Titles to 
 land, loans of money, and other credits 
 secured by legal instruments on, 269, 
 270. Endowed with requisite legal 
 powers can fulfil uses of money, 27<>, 
 272. In form of bank-notes now cir- 
 culates ;us money, 271. Abundance of, 
 not an objection to its use as the ma- 
 terial of money, 27-'. 
 
 Prices. Fall when interest rises, 154. 
 Low, injurious to producers, 161. Il- 
 lustration of, 161, 162 Why low for 
 labor in England, France, and Ger- 
 many, where interest is low, and high 
 in United States where interest is 
 high, 1 85, 1 86, 187. Low, where money 
 is scarce, 25ft, 256. Fluctuations in, 
 lessened by institution of new mone- ( 
 tary system, 30 J. 
 
INDEX, 
 
 373 
 
 Production. Ac'ivo when the wealthy 
 few ]e>id money liberally, 108. Large, 
 gives bettor reward to labor than half- 
 production at double pri'-r. It'.:',. Laws 
 of, not alteied by laws establishing in- 
 come power, 173. Will have just re- 
 ward with low interest on non-pro- 
 ducing capital, 175. Would increases 
 if interest wore reduced, 184. Facility 
 in, no reason for maintaining high rate 
 of interest, 189. No increased, made 
 by changing market value of stocks, 
 223, note. Facilities to, afforded by 
 good paper currency, 297, 300. 
 
 Products. Accumulate in hands of non- 
 producers, 20. Injustice of present 
 distribution, 24. Apparent overstock 
 of, during financial revulsions, 25. 
 Best sent to cities, 28, 99. Yearly, 
 applied to two purposes, paying inter- 
 est and rent on capital, and paying for 
 labor, 80. Accumulation of, at six 
 per cent, interest, illustrated, 93, 94. 
 Accumulation of, at one per cent., il- 
 lustrated, 94. How increased rates of 
 interest affect producers and distribu- 
 ters of, 145. Planter, 145. Manufac- 
 turer, 14(5 Merchant, 146. ITave no 
 natural monopolizing power, 148. Mar- 
 ket value of, decreases with rise of in- 
 terest, 155. Good market for, when 
 labor is at a high price, 1(53. Plenty 
 of money would not destroy their value, 
 163. Of hatter and shoemaker must be 
 exchanged, 105. Required for rent of 
 land lessened by lowering rate, of in- 
 terest, 181. Have no legal value, nor 
 power over money, 231. Low prices 
 of, from scarcity of money, 250. 
 
 Property. The product of labor, 19. 
 Must 'have use of, to preserve life, 25. 
 No change in ownership from regula- 
 tion of money, 40. Cannot discharge 
 debts except with creditor's consent, 
 45. Heal value in, 46. Powerless to 
 discharge debts, 48. Power of attorney 
 conveys control of, 49. Difference be- 
 tween money and, 63. Money of 
 little real value, compared with, 76. 
 Money invested in, accumulates as 
 if lent on interest, 108. Erroneous 
 idea that a large property can be ac- 
 cumulated by one man's labor, 130. 
 Monopoli/.ing power of, artificial, 14S. 
 Means of concentration of, 151. Price 
 of, falls when interest rises, 154, 155. 
 Legal rights of, at variance with actual 
 justice, 1(55. Accumulates rapidly in 
 few hands in United States, 188. 'Has 
 no power over money, 257. 
 
 E. 
 
 Rent. How soori, paid in property at 
 seven per cent., doubles property in 
 hands of owner, 81, 83, 87. At three 
 per cent., 82. At six per cent., 82. At 
 
 one per cent., 85, 88. Accumulations 
 by, result of law of interest, 8(5. Must 
 conform to standard. 88, 15;;. Deter- 
 mined by rate of interest, 145, 170, 171. 
 Rising to double the land will sell for 
 double, 15<). 
 
 Representative. Of value necessary in 
 division and distribution of products, 
 33. Money and obligations represent 
 actual value, 44. Powers of a, 46, 47. 
 Power of a, specific, 47. Power of attor- 
 ney makes a man representative of 
 property, 49. Silver dollar and paper 
 dollar both, 54. Representative of 
 property ought to be furnished to ap- 
 plicants in their own States, 124. An 
 obligation for the payment of money a 
 private, 155. Of value, can be made 
 where there is actual value, 260. With 
 true monetary system the people not 
 compelled to have unsafe and imper- 
 fect, :>>;!(>. 
 
 Revulsions. In trade every few years, 
 25. Over-production and over-trading 
 supposed Cause of, 26, 242, note. Real 
 cause in power governing distribution, 
 27. Progress of, illustrated, 222, 223, 
 224, 225. Neither 'labor nor products 
 can prevent, 256. Safety Fund money 
 will protect from, 275. Due not to 
 employer or employed, but to false in- 
 stituti 'ii of money, 327. How one can 
 be easily brought about, 355, 356. 
 
 Revulsion of 1857. Discounts made by 
 banks in city of New York control 
 supply of money throughout the coun- 
 try, 3o9. Contraction, following on 
 suspension of Ohio Life and Trust Com- 
 pany, 339. Consequent payment of 
 usury by debtors, 340. Banks force 
 payment of usury on the people, 340. 
 Rates of usury paid, 341. (rains of 
 usurers, 341. Profits of merchants com- 
 pared with rates of interest and ex- 
 change, 341 ,312. Increase of indebted- 
 ness, 342. Unemployed laborers, :;12. 
 Loss of production, 342. Depreciation 
 in price of property, 343. Accumula- 
 tion of specie proposed as a remedy, 
 343. Specie not wanted, 343. How 
 the crisis could have been avoided, 343. 
 Professions of the banks, 343, S44. 
 Their power to prostrate business, 314. 
 Why have these bits of metal and paper 
 such power? 344. Measures that af- 
 forded relief in the United States in 
 1834,344,345; and in England in 1847, 
 245. Same means must be used to re- 
 lieve that ought to have been used to 
 prevent, 346 The power lies with the 
 banks in the city of New York, 316. 
 
 S. 
 
 Silver. Made into spoon does not make 
 a money spoon, 52. Mere metal not a 
 tender, 52. Silver dollar fulfils the 
 
374 
 
 INDEX. 
 
 uses of money no better than paper 
 dollar, illustrated, 54. Dollar of, can- 
 not make twelve or two valuable rep- 
 resentatives of itself, 200. 
 
 Specie. Capital of banks has little basis 
 of, 198. Bank-notes payable on .de- 
 mand in, 198. Law does not furnish 
 them with, to pay their debts, and re- 
 deem their bank-notes, 198. Paper 
 money cannot represent, unless there 
 be a dollar in, for every paper dollar, 
 200. Banks could not pay liabilities 
 in, 202. Amount of, held by the banks 
 in the State of Connecticut, table, 201, 
 205. Amount of, held by Connecticut 
 banks a fraction more than four per 
 cent, of their loans, 205. Bank capital 
 of, how made up, 205, 206. Banks 
 have enough to redeem only one-fifth 
 of their capital stock, 209. Could 
 never have paid, in, for a week, 211. 
 Not enough of, in existence to fulfil 
 requirements made by law, 214. With 
 basis of, impossible to establish a good 
 currency, 2G3, 2G4. Lying in vault, 
 performs no function of money, 271, 
 298. Borrowed of other nations, assists 
 only in making our own exchanges, 
 298. Basis of, not better than land, 
 301. 
 
 Stocks. Cause of rise and fall of, 330, 
 331. 
 
 Supply and demand. Agreements ac- 
 cording to, 28. Do not regulate value 
 of money, 61. Do not make rate of in- 
 terest uniform nor just, 160 
 
 T. 
 
 Tender. Law making money a tender 
 imparts life to metals, 60. No money 
 should circulate which is not a, 177. 
 The tender for debts traded in by 
 banks, 222. Nothing but money a, 246. 
 
 Trade. Not carried on by governments, 
 296. Foreign, greatly facilitated by 
 use of paper currency at home, 296. 
 Under just monetary system balance 
 of, in favor of United* States, 300. 
 
 True monetary system. Its proposed 
 operation and objects, 274. 
 
 U. 
 
 Usury. Rates of, published in news- 
 papers, 241. Laws against, petitions 
 to abolish, 249. .Reasons given for 
 abolishing laws against, '249, 250. Rea- 
 sons for retaining laws against, 249, 
 25>t, 251, 252. Power of, to monopolize 
 wealth, 259. 
 
 V. 
 
 Value. Definition of, 41. Of property, 
 how estimated, 41. Kinds of value, 
 42. Definition of actual value, -J2. 
 Definition of legal value, 42. Distinc- 
 tion between the? two kinds of, illus- 
 trated, 42. Of labor and property con- 
 trolled by money, 48. Actual and 
 legal, of note compared, 49. Of estate 
 represented by owner, 49. Of lands, 
 goods, etc., not dependent on legisla- 
 tion, 51. Of money, not in material, 59. 
 Of money, depends on its legal powers, 
 50, 53, 5o, 61, 64, 66, 78, 266. Money, 
 legal standard of, 79, 258. How to affix 
 true value to money, 177. Of money, 
 standard governing market value of 
 stocks, 224, note. Of stocks made uni- 
 form by uniform value of money, 309. 
 .lust standard of, will conform to nat- 
 ural laws of production, 184, 310. 
 
 w. 
 
 Wealth. Not distributed according to 
 usefulness of owner, 20, 245. Ac- 
 cumulates in cities, 20. Respective 
 amounts flowing to city and country 
 opposed to just reciprocity, 21. Dis- 
 proportion of, owned by few in city of 
 New York, 21. In United States, 22. 
 How to estimate disproportion of, 22. 
 Unfair distribution of, how caused, 31. 
 Present possessors of, not worse than 
 others, 39. How accumulated in 
 cities, 97. Where it shall be cen- 
 tralized, determined by money-lenders, 
 168. Money supposed to be, but not 
 really wealth, 172. Centralizes, ac- 
 cording to rate of interest, IBS. Of 
 nations, not in the vaults of banks, 245. 
 
PROGRESS AND POVERTY, 
 
 By HENRY GEORGE. 
 
 1 Vol. 12mo., large type, neat paper covers, - - .20 
 
 OPINIONS OF THE PRESS: 
 
 '.Not merely the most orljinr.l, the most striking and important contributicm 
 which, political economy has yet received from America, but it is not too much to 
 <*ay that in these respects it has had no equal since the publication of "The Wealth* 
 of Nations," by Adam Smith, a century ago. New York Herald. 
 
 F^w books have in recent years proceed.*! from any American, pen that have 
 more plainly borne the marks of wide learning and strenuous thought. New York 
 Sun. 
 
 A masterly book. Mr. George is the only man who has not merely put down 
 clearly, in black and white, what are the causes ot social disease, but oil'cre 1 a cure. . 
 N. -Y. Times. 
 
 A courageous thinker, who, though familiar with the learning of the books, 
 follows the conclusions of his own reasoning. New York Tribune. 
 
 If we were asked to name the most important work of the Nineteenth Century, 
 we would name- "Progress and Poverty." New York Era. 
 
 The first great economic work in the English language, written from the stand- 
 point and in the interests of the laboring classes.' Irish World. 
 
 Progress and Poverty beyond any book of our time deserves careful study. 
 Brooklyn, Times. 
 
 It has been subjected to the criticisms of the candid .and thoughtful, the exact- 
 ing and the captious, but all aj;ree that it is an earnest, powerful, courageous and far- 
 reaching work. The anther I.:;3 s,i ;:;;! l.'s theories with a clearness of expression, a 
 boldness of thought, and sr.i eloquence of style which have attracted the attention 
 cf t'.ie most profound philosophers, and the most learned of political economists. 
 J3oston Post. 
 
 A book which no public man eaa afford to omit reading. Washington Critic. 
 
 The most remarkable book cf the century in its possible effects upon the course- 
 of human events. Charleston News and Courier. 
 
 Every sentence is as clear as a sunbeam; every proposition is as legitimately 
 traced to its logical result as one of Euclid's. Galveston, News. 
 
 A trumpet c:;!l to a struggle which cannot long be Avoided. Philadelphia Star. 
 
 A bold and frank exposition, of theories now forcing themselves on public 
 notice. Chicago Tribune. ' 
 
 Earnest, honest and forcible; radical to the root; bold, sweeping and dogmatic. 
 Louisville Courier- Journal. , 
 
 JOHN AY. LOVELL COMPANY, Publishers, 
 
 14 & 10 VMS FA- STKEET, XKW YORK. 
 
THIS BOOK IS DUE ON THE LAST DATE 
 STAMPED BELOW 
 
 RETURN CIRCULATION DEPARTMENT 
 
 TO -* 202 Main Library 
 
 LOAN PERIOD 1 
 HOME USE 
 
 2 
 
 3 
 
 4 
 
 5 
 
 6 
 
 LOAN PEmODS AHE 1-MONTH. 3-M 
 RENEWALS: CALL (415) 642-3405 
 
 DUE AS STAMPED BELOW 
 
 2^ 1993 
 
 Ig? 
 
 /I 
 
 /w /" / v 
 
 
 -F5 
 
 APR 16 1992 
 
 UNIVERSITY OF CALIFORNIA, BERKELEY 
 
 FORM NO. DD6, 60m, 1/83 BERKELEY, CA 94720 
 
 $ 
 
92140 
 
 U.C. BERKELEY LIBRARIES