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 THE GIFT OF 
 
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 IN MEMORY OF 
 
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 RENT, INTEREST AND WAGES.
 
 RENT, INTEREST AND WAGES: 
 
 OR, 
 
 THE REAL BEARINGS OF THE 
 LAND QUESTION-. 
 
 PRIVATE RENT THE MOTHER OF INTEREST, THE CAUSE 
 OF COMMERCIAL DEPRESSIONS &' SOCIAL MISERY. 
 
 BY 
 
 MICHAEL FLURSCHEIM. 
 
 ►I 
 
 WILLIAM REEVES, 185, FLEET STREET, E.G.
 
 m^ JFrienbs, 
 
 HENRY GEORGE, 
 
 ALFRED RUSSEL WALLACE, 
 
 WILLIAM SAUNDERS, 
 
 THE INDEFATIGABLE CHAMPIONS OF 
 
 LAND RESTORATION, 
 
 I Bfbtcate this IBooh.
 
 4-6 1 
 
 TABLE OF CONTENTS. 
 
 Chapter I. 
 
 PAGE 
 
 The Problem i 
 
 ' Chapter II. 
 
 The Problem Solved 28 
 
 5 Chapter III. 
 
 
 
 5 The Remedy 8g 
 
 Chapter IV. 
 The Effects of the Remedy. . . . . 139 
 
 ■ Chapter V. 
 
 Carrying through the Reform. ... 194 
 
 Appendix. ....... 233 
 
 431G99
 
 PREFACE. 
 
 -f* 
 
 They say that in 1848 some communists came to the 
 Francfort Rothschild, and wanted him to divide his fortune 
 with them. "All right ; " said the great financier, " How high 
 do you estimate my fortune ? " " Forty million florins," was 
 the answer. " Good, that is just the number of inhabitants 
 of Germany, and will give a florin to each. Here is your 
 florin ; send along the others ! " 
 
 How often do we hear this anecdote in Germany to show 
 how small the share of the poor would be, even if all the 
 wealth of the rich were evenly divided among them ! So 
 Neumann Spallart, one of the first German statisticians, 
 calculates that, if the wealth of the higher incomes of Saxony 
 was distributed among the total of inhabitants, there would 
 be not more than 54 mark increase of income for each tax- 
 payer. Such calculations mixed with a few extracts from 
 the drugshops of Malthus and Darwin make a soothing 
 syrup with which the rich admirably succeed in calming 
 those unpleasant twinges with which the misery around 
 them occasionally torments even the most hardened of their 
 class. 
 
 Eight years ago I, too, was a member of the happy family, 
 who thus succeeded in making life pleasant. If conscience 
 would rebel after all, there was no difficulty in deriving 
 excellent consolation from a whole crowd of white- washing 
 economists of the Atkinson, Leroy-Beaulieu, Giffen, etc. 
 type, v/ho proved, in the most wonderful way, how everything 
 was going on so remarkably well in this best of all possible 
 worlds, and how the progress of science was hastening on 
 the millenium with rapid strides. If all this would not do,
 
 PREFACE. VU. 
 
 there were the churches which preached to the well-dressed 
 people in the pews, that there was no help for it, for it was 
 the will of Providence that we shouM always have the poor 
 with us, — -a provision intended for the benefit of our souls, as 
 it gave us the chance of being charitable. Furthermore the 
 blessings in another world were going to be in proportion to 
 the misery endured in this. 
 
 Of course I did my best to make amends for being well-to- 
 do, and though there were some unpleasant predictions in 
 regard to my future expectations, illustrated by certain 
 difficulties experienced by camels, I thought that I might 
 just as well try, and I therefore did the best I could for the 
 poor fellow beings who were working in my factory, by 
 organising certain beneficial institutions, of which it is not 
 necessary to speak. Men like Owen and Godwm were my 
 models and I thought that the millenium would come on 
 much quicker, if all my fellow manufacturers worked in the 
 same channel. It was about that time I got hold of 
 " Progress and Poverty." It was a new revelation. I saw 
 how deluded I had been, and that the road I was walking in 
 such confidence was sure to end in the worst quagmire the 
 world ever saw. I had never read anything so wonderful in 
 my life, the course of which was to be changed from the 
 day this book got into my hands. I began to spread the 
 new gospel , but the further I got into the subject, the more 
 insurmountable the difficulties I found in my way. 
 
 The social question and its relation to land ownership 
 appeared so completely different in Germany from what it 
 was in the United States, or even in England, that I did not 
 see how I could make any headway with George's doctrines. 
 The domination of capital was such a prominent one and 
 its connection with the land question appeared so unsatis- 
 factory when looked at with Henry George's eyes, that I 
 began to investigate, whether, after all there was not a hitch 
 somewhere in his reasonings. The result, which I finally 
 reached after the work of years, is given in the following 
 pages. 
 
 The reader will find, that I present the great truth of 
 Land Nationalisation from a side essentially different from
 
 the aspect set forth by Henry George. The success my 
 views have obtained, (best demonstrated by the fact that the 
 thousands of disciples whom the great reform has been 
 gaining among the German-speaking nations, and even 
 among the Dutch, almost without exception, are won over 
 by my writings and lectures), encourages me to try their 
 effect upon a public, which up to the present has viewed 
 our great cause only from the side presented by the great 
 " Prophet of San Francisco." 
 
 I do not use this name, by which the Duke of Argyle first 
 designated our great leader, in the satirical and mocking 
 sense attached to it by its inventor. I use it in all reverence, 
 full of a feeling of the truest admiration, looking up to 
 Henry George, as I have looked up to no man before. Yes, 
 he is a prophet, he is one of those God-inspired men, whom 
 a great truth lifts above the level of daily life to the sublime 
 height whence they view the future of Humanity. That he 
 could not see the question in all its bearings, that he left 
 something to others who, through the experience of different 
 surroundings and different callings, saw sides of the question 
 which escaped his observation, is not surprising. It is 
 astonishing that he saw so much considering the limited 
 experience he had. 
 
 If in the course of this book I have to criticise what I 
 regard as the errors of Henry George, I wish it to be under- 
 stood, that this in no way diminishes the unbounded admira- 
 tion I have for his genius. The wonderful poetry with 
 which he succeeded in popularising what before him was with 
 truth called " the dismal science," will win men's hearts 
 before their reasoning is even touched, and it is through the 
 heart that the people is conquered. Its gates once opened 
 by such appeals, cool reasoners may hope to find admission 
 to complete the work of the master. It is only as a com- 
 pletion, an appendix to " Progress and Poverty," that I 
 should wish to have my readers see in these pages. In dedi- 
 cating them in the first place to the great leader of our cause 
 I clearly indicate in what friendly and even loving spirit they 
 are written. 
 
 Michael P'llrscheim.
 
 RENT, INTEREST, AND WAGES, 
 
 OR 
 
 REAL BEARINGS OF THE LAND fiUESTION, 
 
 CHAPTER I. 
 
 The Problem. 
 
 Let us open the subject interrogatively and ask first, Is 
 there a social problem ? 
 
 This question will be understood only by those readers 
 who are acquainted with the writings of a certain class of 
 poHtical economists, once very influential, but now fortunately 
 rapidly declining, though still giving the tone to important 
 organs of public opinion. A man must be blind and un- 
 impressionable indeed, if he can see all around him the 
 evidences of the most abject and harrowing misery jostling 
 side by side with exhibitions of wealth and luxury such as 
 the age of LucuUus and Crassus dreamt not of. It seems im- 
 possible indeed to shut one's eyes either to the lessons or moral 
 afforded by such sights ; but there is no blindness like that 
 of the man who does not want to see, and no spectacles so 
 opaque as those ground on the stone of preconceived and 
 rooted prejudices, especially if these prejudices are based on 
 great prmciplcs wrongly applied. 
 
 In a comic German paper, many years ago, a gardener was 
 represented as leaning thoughtfully upon his spade, when his 
 master approached, and, asked him what he was thinking about. 
 " I was thinking about those beans I planted," replied the 
 gardener. "I know I planted them all right, and what do you 
 think came up ? " " Why, beans, of course." " No, the pigs 
 came and ate them," replied the gardener musingly.
 
 2 RENT, INTEREST, AND WAGES. 
 
 Now,, let US suppose the gardener had been ignorant of the 
 pig's trespass, and his, master h^d told him that if he had 
 planted beans there was no doubt that beans had come up, 
 as natural law determines that beans will produce beans, 
 and if he did not see them his blindness was the only cause, 
 should we have thought him wiser than the gardener, who 
 denied the existence of the natural law, because he felt per- 
 fectly sure that no beans had made their appearance ? 
 
 The reader, however, may smile at both for flying off into 
 such preposterous reasoning, without first investigating 
 whether some important fact had not perhaps been over- 
 looked by one or other of them, the knowledge of which 
 might have changed all their conclusions. He might 
 naturally think that a case like this supposes a degree 
 of stupidity too dense to have been likely or even possible to 
 occur ; but all he will have to do to be convinced of 
 the contrary is to look around and he will find that similar 
 feats of logical reasoning are performed on every hand, 
 perhaps by his best friends, and however unconsciously, even 
 by himself. 
 
 Industrialism and Socialism. 
 
 Look at the fact of the two extreme parties engaged on the 
 battle field of social discussion, represented by the orthodox 
 school of political economy, founded by the physiocrats and 
 Adam Smith, and, baptised at Manchester on the one side, and 
 the partizans of extreme socialism (forinsome sense are we not 
 all socialists ?) on the other, and then ask yourself the question : 
 does not their battling give us a fair counterpart of the dis- 
 cussion between our gardener and his master in another 
 phase ? Does not one of them deny the very existence of 
 any social problem because the working out of natural social 
 laws is bound, whatever happens, to produce universal pros- 
 perity, and does not the other equally deny the validity of the 
 said laws, because of the unmistakable absence of anything 
 like the promised result ? Do not both commit the same 
 fault of forgetting or disregarding the search after the missing 
 link represented by the pigs in the anecdote ? 
 
 I propose to show presently where the missing link is to 
 be found. But my first task must be to expose the 
 errors committed on both sides, and I begin with the
 
 THE PROBLEM. 3 
 
 greater sinner of the two, viz., the economist of the orth-^'dox 
 schooh I say the greater sinner, because in having eyes he 
 sees not, allowing pride and self-interest to step in and often 
 warp his better judgment. 
 
 I do not for a moment mean to impute that such 
 objectionable motives are always present. There can be no 
 question that elevated and noble minds actuated by the 
 highest motives may be found in their ranks. There is some- 
 thing so seductive in a principle which is true in the abstract, 
 that to many it will prove a sorcerer, who, with meshes of deduc- 
 tive reasoning, will gradually so fetter their observing power 
 that the most dangerous sort of colour blindness will ensue. 
 
 And, truly, it is a great principle that of free, unfettered 
 individualism fighting for a higher civilisation by pitching 
 against each other the full powers of the workers in the great 
 battle of competition, without any interference by the State, 
 whose only office is to keep order, and to prevent foul play. 
 It is a principle appealing most powerfully to the minds of 
 strong, energetic natures, in the individual or national sphere. 
 Here we have the reason why those who owe their success 
 in life to their own hard exertions, whose energy and strong 
 will have procured them a cabin berth in the ship of life, are 
 mostly to be found in the ranks of this school, upholding the 
 banner of free and unfettered individualism .Here we have 
 the reason why nations having an unusual supply of such in- 
 dividuals, as those founded by the sturdy Anglo-Saxon race, 
 are the strongholds of individualism. If there is nothing 
 more powerful in its effect for good than the carrying 
 out of a great principle, on the other hand, nothing can 
 be more dangerous than to rest content with half measures 
 on so important a field. Proclaiming the principle that 
 everybody should find his food himself may be a good thing, 
 but if applied to a poor fettered prisoner it would only do 
 harm. As long as the law of free and unfettered individual 
 action is thus only partially carried out, the false principle Oi 
 feeding men who ought to feed themselves is certainly pre- 
 ferable to the working of the correct one of " laissez faire 
 laissez passer." The full right to find his own food in the 
 case of the prisoner would be nothing more than the right to 
 starve, because the right to work presupposes freedom from 
 fetters and jail walls.
 
 4 RENT, INTEREST, AND WAGES. 
 
 Are there no such fetters and jail walls in our actual world 
 of to-day ? Can a man work without having fvcc access to 
 mother earth and the natural forces connected with it ? 
 
 As long as we keep him fettered in the chains of land 
 monopoly, as long as the ivalls of landlordism imprison him, the 
 laws of free individualism are "more honoured in the breach 
 than the observance." State help would in such a case be 
 certainly preferable to laissez f aire. It is no mere chance that 
 the Elizabethan Poor Law, that most gigantic measure of 
 State help and socialism which ever was passed in modern 
 times, had to followclosely on the strengthening of landlordism 
 under Henry the Eighth. 
 
 If landlordism like the pig in our story devours the seed, 
 natural laws assuredly cannot produce the beans. The great 
 error made by the old school in standing up for all liberties 
 except for the one which might claim to be most fundamental, 
 that of free access to natural opportunities, is the cause of 
 its decline and downfall, of which there can be very little 
 doubt on its present lines. There is only one way of salva- 
 tion for it : and that is the full carrying out of its principles 
 by freeing the land from the fetters of monopoly. But instead 
 of doing this its knights and defenders either adopt the plan 
 of trying to prove the presence of beans quite imperceptible 
 to the ordinary eye, and to show that all is for the best 
 in the best of all possible worlds, or they take refuge 
 under the shades cf Malthus, and Darwin, talking of laws 
 of population and the inevitable battle of life with the 
 "survival of the fittest." 
 
 Statistical Proofs of Comparative Prosperity. 
 
 Let us first investigate how they manage to prove that 
 these figurative beans of general prosperity arc growing all 
 around us, though the eyes of unbiassed observers can see 
 nothing but misery. 
 
 If any body wants to prove something which common 
 sense cannot admit, he generally has recourse to that maid 
 of all work called " statistics." With statistics you can 
 prove anvthing, if you know how to manipulate them cleverly. 
 Look at the statistics of vaccination, how its friends as well 
 as its enemies use the long rows of figures to prove their 
 opposite doctrines. The sudden decrease of small pox at
 
 THE PROBLEM. 5 
 
 the beginning of this century in Sweden is given as a proof by 
 vaccinationists in their favour, because it coincides with the 
 introduction of vaccination, whereas their opponents regard 
 this sudden decHne of small pox as a strong point against 
 vaccination, it being impossible that more than a very small 
 part of the population could have been vaccinated at that 
 time. If, say they, there was such a sudden diminution of 
 cases, this did not come from vaccination, but was caused by 
 one of those natural agencies, which at a certain period 
 cause the disappearance of plagues. The Black Death and 
 other visitations of this kind have disappeared from Europe 
 without vaccination, and small pox, they reason in the same 
 way, would have disappeared long ago, if the practice of 
 vaccination had not preserved its poisonous germs. 
 
 Let us see now, how economists use statistics to suit their 
 purposes. 
 
 One of their favourite subjects is the comparison of ivages at 
 the present time with those of previous periods. Mr. Giffen is 
 especiall}^ great in such comparisons. It makes such a cheer- 
 ful impression, when the great statistician shows that wages 
 have increased fifty per cent in fifty years, that few people 
 care to enquire why the comparison is made with one of the 
 worst periods, the time of the Anti-Corn Law League, when 
 one of the main arguments of Cobden and his friends was 
 that the misery reigning among the working classes was the 
 result of protection. 
 
 Why not go further back into former centuries ? If their 
 theories about the increasing well-being of the working 
 classes were correct, the magnitude of the difference between 
 our time, with its enormous increase of facilities for produc- 
 tion, and those old days of primitive modes of manufacture 
 and agriculture would certainly be more apt to force con- 
 viction upon doubting minds than a poor fifty per cent., 
 diminished a good deal by increased cost of living. These 
 gentlemen know perfectly well why they do not extend their 
 comparisons to such longer periods, because the results would 
 be the very opposite of those they wish to adduce. 
 
 Statistics show that, unless destructive wars devastated 
 the country, the purchasing power of wages was higher 
 400 or 500 years ago than it is now. According to Janssen's 
 history of the German people a common workman gained
 
 6 RENT, INTEREST, AND WAGES. 
 
 eighteen Pfennige a day in 1464 at Bayreuth. For these he 
 could buy nine pounds of beef, whereas his present wages 
 would only buy two pounds. 
 
 In the beginning of the same century a week's wages 
 Dought a sheep and a pair of shoes. A month's wages 
 bought a bushel of rye, twenty-live dried cod, a cord of wood 
 and two yards of the best woollen cloth. 
 
 The accounts of the cathedral at Xanten (an old Prussian 
 town on the Rhine), edited very carefully by Beissel, show 
 that in the year 1400, a sawyer earned a lamb in one-and- 
 a-half day's work ; six pounds of ham, or five young 
 chickens in a day; 100 eggs in two-thirds of a day; a 
 pair of boots in two days. Half-a-day's work paid a week's 
 lodging of an unmarried man, a whole day that of a whole 
 family in the town with better lodgings than are now obtained 
 at much higher prices. 
 
 In the days of Adam Smith, a millwright at Zandern 
 (Holland) was paid two shillings a day in the summer and one 
 shilling and sixpence in winter ; a stonecutter over three 
 shillings and free beer in summer. Other prices were as 
 follow : meat threepence, butter threepence half-penny, 
 cheese twopence half-penny a pound. Relatively rent was 
 not half of what it is to-day. 
 
 I only refer to a few foreign instances unknown in England, 
 but the best proofs that workingmen were better off in old times 
 aregiven by an Englishwriter,ProfessorThorold Rogers, whose 
 works on this subject are most highly esteemed in my native 
 country, but are too well known and accessible to English 
 readers to render it necessary to give quotations from them. 
 I only want to mention a single fact not contained in them, 
 mentioned by him to Henry George on the occasion of his 
 late visit, viz., that in the days of Henry VII., a labourer 
 gained ^145 of our money, whereas to-day he only earns 
 
 The following clipping fromGeorge's 5i'rt?/^rt;'^,New York, may 
 be of interest in connection with this question of comparative 
 wages. " One thing that is hardly realized by those who 
 complacently write on labour questions is the increasing 
 intensity of work in many branches of industry. It is not 
 merely that the machine has been increasingly speeded, and 
 that the man, woman or child has had to keep up with it,
 
 THE PROBLEM. J 
 
 but that the system of piece work which has been so 
 generally adopted tends to set the pace at the highest 
 possible. For instance, in the machine shops of the 
 Pennsylvania railroad at Altoona a man gets the same price 
 for making eight axles in i8go that he got for making four 
 in 1872. The machinery has not been improved. On the 
 contrary, where in 1872 he had two lathes to work with, he 
 now has but one, and more dexterity is required. The 
 difference is in the increased skill of the workman and 
 in the increased intensity which he throws into his 
 work. Thoroughly experienced workmen make as much 
 now as they did in 1872, but they put more of their life into 
 a day's work, are more exhausted when the day's work is 
 done, and will have fewer days to work before breaking 
 down." 
 
 To show the real value of statistics like those of Mr. Gitfen 
 even when correct, 1 will translate part of a letter written 
 to me by my friend Jan Stoffel of Deventer, Holland, one of 
 the most conscientious men I ever knew. 
 
 '* You ask me how it is that my workmen can no more 
 afford to kill a pig or a cow now, in spite of a rise of wages, 
 amounting to seventy per cent, in twenty-five years ? 
 Twenty-five years ago the workman rented a piece of land 
 cheaply. He never bought vegetables, potatoes, or milk, and 
 rarely bread. He had a garden next to his house and rented 
 agricultural land from the parish. The time of labour was 
 shorter. He had a shed for a goat and a pig. To-day the 
 rent of his house, without a shed and without a garden, costs 
 more than it did then with the same included. He has 
 no time now to work in the fields, and rents are so high that 
 he can no longer rent land at paying prices. He now buys 
 his vegetables, his potatoes, his milk and his meat, as well as 
 his rye bread that he used to prepare himself, getting the 
 baker to bake it for him at the cost of a few pence. The 
 increased rent has taken all the increase of his wages and 
 more. The danger of being without work in winter is be- 
 coming really alarming in Holland. The situation of our 
 workers is so miserable that if I were to tell my " hands " to- 
 morrow that I should have to lower their wages next week 
 at the rate of two florins, nobody would leave me as they 
 could not find another place."
 
 8 RENT, INTEREST, AND WAGES. 
 
 StofTel here touches one of the main points left out of con- 
 sideration altogether by our friends of the Giffen type, the 
 question of full employment. 
 
 It is evident, that if an increase of fifty per cent, m wages 
 is accompanied by a diminution of say only forty per cent, in 
 the time during which wages can be obtained we really have 
 a decrease in earnings often per cent, instead of an increase. 
 Fifty per cent, increase makes one shilling come up to one 
 shilling and sixpence, and sixty per cent, of actual working 
 time at this rate of wages only leaves a little less than eleven- 
 pence. 
 
 According to the testimony of Mr. Ben Tillet before the 
 House of Lords committee on the Sweating System, 1888, a 
 docker sixteen or eighteen years ago could average through- 
 out the yearabout twenty-four to twenty-five shillings a week, 
 but, before the strike the same man did not average more than 
 seven shillings, his average time of occupation throughout the 
 year having been about three hours a day. I do not need to give 
 statistics to prove that employment is now more difficult to 
 obtain and that the average of full working time is steadily 
 declining in most trades. Those least conversant with the 
 facts of every day life, know this. Statisticians may get up 
 any array of figures to prove that a man ought to be filled 
 when he is hungry, but people have a tendency to trust the 
 teachings of their stomachs rather than the finest set of figures 
 in the world. 
 
 A German boy was once asked by his teacher how many 
 glasses of beer were left if he, his mother, and his father, 
 took one glass each out of five. None, he answered. You 
 do not know your arithmetic said the teacher. " May be," 
 replied the boy, " but I know my father." Theory did not 
 go down with that boy ; experience had taught him the fact, 
 that the old man never left a drop of beer on the table, if he 
 could help it. All statistics of national consumption with their 
 professedly higher averages in every articleofconsumptionare 
 not worth the paper they are written on. To begin with they 
 entirely leave out of consideration the food formerly produced 
 for their own consumption by people who now have to buy 
 everything. The pound of meat they now buy from the 
 butcher is counted on the national consumption list; but 
 who deducts the pig they raised themselves, before the
 
 THE PROBLEM. 9 
 
 common was inclosed which also gave them feed for a cow, 
 enabling them to keep up their little country home in a 
 manner which Mr. Giffen completely ignores ? 
 
 But independent of this, is there anything more deceptive 
 than calculations based upon averages ? Has it ever 
 saved the life of a man who has been drowned by getting 
 into a deep place, his knowing for certain that the average 
 depth of the river did not exceed four feet ? The average 
 consumption of meat in Spain is seventy-six pounds a head. 
 In the province of Almeria it is only 5'8j. It is certain that 
 in all countries the higher and the upper portion of the middle 
 classes have considerably increased their meat consumption. 
 Let us suppose that in a certain country they have increased 
 it from loo to 200 pounds a head. Let us further suppose 
 that their number is equal to twenty per cent, of the popula- 
 tion and that the average consumption of meat has increased 
 from sixty to seventy pounds a head ; in this case eighty per 
 cent, of the population would only get 37*50 a head where they 
 got fifty before. Their consumption would have decreased 
 one-fourth, though the average consumption has mcreased 
 one-sixth. 
 
 The enormous increase in the consumption of alcoholic liquors 
 can just as little furnish a proof of the increase of the people's 
 well-being. Thus the poorest provinces of Prussia are those 
 where the consumption of gin is the greatest. Misery leads 
 to drink in a great many more cases than drink leads to misery, 
 and there never will be such a powerful help to the temper- 
 ance movement as the social reform which makes people 
 wealthier, wiser and healthier.* 
 
 *It is intentionally that I change the order of the three enjoyable 
 blessings promised to early risers. Our social state has com- 
 pletely changed such old fashioned ways of looking at things. It 
 is not early rising to begin with, which leads to success at a time 
 when an eight hour working day is looked to as a means of reform. 
 The boy who, upon being admonished that the early bird catches 
 the worm, replied : " Serves the worm right, why did it get up so 
 early?" had an inkling of the change in social matters. It is no 
 longer health which brings wealth and wisdom ; but wealth which 
 brings health and makes wise. The poor, though they be ever so 
 healthy, have little chance of ever becoming wealthy and wise. 
 Wealth is obtained by othermeans than hard work made possible by 
 good health, and only those who have the means can obtain the
 
 to RENT, INTEREST, AND WAGES. 
 
 Another hobby of the statisticians in question is furnished 
 by the figures of saving banks. There is a great increase, they 
 tell us, not only in the sum total of the savings but also in 
 the number of the savers. 
 
 No doubt the figures are correct ; but let us see who the 
 savers are and to whom the increase of savings is to be 
 credited. The best instance is furnished by the statistics 
 of the Austrian postal saving bank in 1886. 
 
 Of 1,000 depositors only twenty-six belonged to the work- 
 ing class (servant maids not being counted.) Of 2,117 
 workingmen, who during the year had made deposits, only 
 fifty-two had balances at the end of the year. The immense 
 majority of depositors and a greater part of the deposits had 
 been made by small capitalists, who preferred this mode of in- 
 vestment, because interest on government bonds was very low 
 and business investments were too risky. The latter predomin- 
 ating cause thus makes the increase of deposits form rather a 
 sign of bad times than one of any increase of prosperity. 
 
 Further on we shall see that the enormous increase of national 
 wealth, a favourite point with Mr. Giffen, in our days only 
 denotes a descent of the barometer indicating the condition 
 of the masses, just as it did in the days of Rome. 
 
 We shall, moreover, see that the question whether the share 
 of wealth falling to the masses has increased or not, is per- 
 fectly immaterial, so long as its increase does not extend far 
 enough to raise their consuming power to the height of pro- 
 duction. Meanwhile I cannot help recommending to such 
 economists the tale about the mule, which was not satisfied 
 
 wisdom of universities. (Not that I esteem it so very much and that 
 I do not think more of the wisdom obtained in the school of life ; 
 but this is a private opinion, which does not go very far with those 
 official estimators and assessors of wisdom called " boards of 
 exammers.") The poor may be very lucky, if they only conserve 
 their health, which is getting more and more difficult in these times 
 of overcrowded tenements, and unhealthy callings. It is only 
 the rich, who can attend to their health. It is for them that all 
 the inventions of medical science are made, only to them that 
 health resorts are ofTering their blessings, only by them that every 
 comfort for making life pleasanter is obtainable. It is to them that 
 the best schools open their doors, that the wisdom of ages is 
 accessible. This is the reason why I have reversed the time- 
 honored order of thmgsin the old proverb.
 
 THE PROBLEM. XI 
 
 with its food and which its owner wanted to tranquihse with 
 the consolation that its ancestor used to be happy with a feed 
 of thistles. " Alas, this is true," the mule replied, " but you 
 know, my ancestor was an ass." 
 
 Or, to such as are in the habit of saying that the workman 
 is so much better off than the poor employer, who is exposed 
 to such great risks all the time, while the workman gets his 
 settled wages and need not care for the morrow, we recom- 
 mend the story of the runaway slave. When asked by the 
 Kentucky judge why he ran away, the slave had to acknow- 
 ledge that he had all he wanted and was well treated, but 
 when the judge further wanted to know what he ran away 
 for under such circumstances, Sambo replied : " Well, massa, 
 the situation is open yet, if you want to have it 1 " 
 
 Danger of Falsifying Statistics. 
 
 Economists of the Giffen stamp do not know the great 
 harm they are doing, or they might perhaps make use of 
 their capacities in another direction. Even as it is, our well- 
 to-do people have generally a natural inclination to disbelieve 
 the prevalence of widely-spread misery. It is such a com- 
 mon feeling to believe that everybody must be satisfied, 
 when we have eaten a good meal, that everybody must be 
 warm, when we are sitting near our own cosy fireside. The 
 misery of our fellow beings is such a painful sight and 
 thought, that more or less a kind of Podsnap feeling takes 
 hold of men and the}^ are always pleased when philosophers 
 of the Giffen type strengthen the muscles of their arms for 
 the well-known motion with which they try to put things 
 out of their mental sight. 
 
 But my friends, a time is coming when a hundred horse- 
 power of Podsnap muscles will no longer succeed in accom- 
 plishing the reform of the abuses around us by waving or 
 shuffling them out of sight in so comfortable a way. The 
 Supreme Judge before whom we are going to appear will not 
 take kindly to such a way of doing our duty. Podsnapism 
 will find no mercy before God. He will not even defer His 
 punishment until we appear before His judgment seat ; it 
 will reach us here below yet, unless we are destined to be 
 called away very soon. On all sides signs are appearing to 
 those who are able or willing to read them ; Mene Tekels of a
 
 12 RENT, INTEREST, AND WAGES. 
 
 vivid hue, warning us of the storm brewing in all directions. 
 There is no excuse for you my Podsnapian friends, to say 
 that you did not know, that it was not your fault, that men 
 you trusted in grossly neglected their duty by using that 
 important instrument "statistics" in such a nefarious 
 way. It is certainly not the fault of the instrument. Statis- 
 tics are not responsible for the use made of them. It is not 
 the fault of the alarm bell if it is inverted and used as a 
 vessel to mix a sleeping draught in. Real statistics are a 
 powerful alarm bell, potent enough to reach the ear of all if 
 rightly used and listened to. Its warning notes, now wailing 
 and now shrill, are pealing forth from country to country, and 
 while we listen let us not forget that those whose suffering 
 they speak of are human beings like ourselves ; that they 
 feel pain, cold and hunger as we do ; that they are 
 thinking as we are ; that knowledge spreading its light 
 into the darkest corners is getting more and more acces- 
 sible to them ; that the restraining power of religion, or 
 what goes by that name, is losing its hold on them more and 
 more ; that they cease to believe in a future world, which is 
 so sure to repay them a thousand fold for the sufferings they 
 are undergoing in this. Rather are they asserting their 
 inalienable right to the full enjoyment of their earthly life, 
 to which they have as good a claim as any other of their 
 mortal fellow beings. They know that there is no more 
 excuse for their sufferings : that the old curse has been lifted 
 by a Divine Father, whose manifestation to the human mind 
 has brought forth those wonderful discoveries and inventions 
 in all departments of production which have changed the 
 whole face of the world. They know that a thousand 
 millions of iron slaves are working day and night to bring 
 forth bread, raiment, and all the luxuries of life. They know 
 that these untold blessings ought not to be a curse to them, 
 depriving them of their means of existence instead of increas- 
 ing them. They know, that if ever there had been a 
 necessity for their suffering, because the total of wealth in 
 this world was such a small one that the fullest exertion of 
 every worker would barely be sufficient to procure a decent 
 living for all, such a necessity has passed away long ago, and 
 that, if full liberty were given, enough could be produced to 
 give not only the needful but even the superfluous to every
 
 THE PROBLEM. 13 
 
 human being. And in such a world what is the real state of 
 well-being among the millions ? 
 
 Misery of the People. 
 
 There is no need for me to enter into English statistics. 
 The tale of misery has been told so often and bj' so many- 
 more competent men, that to repeat it here is unnecessary. If 
 the reader has not already done so let him read " Land 
 Nationalisation," by A. Russel Wallace, or "Poverty and 
 the State," by Herbert V. Mills, and he will get an idea how 
 much greater than the official figures represent, the number 
 of paupers — i.e., persons assisted by public and private 
 charity — really is. Let me only add a few figures from the 
 report of the Commission investigating the state of the work- 
 ing classes in the East-end of London during the year 1887 • 
 Of 30,000 families, to which the investigation extented, 
 6,000 inhabited a single room, 1,572 only a part of a room. 
 There are many cases where as many as ten persons of all 
 ages and sexes, related or not, sleep and live in the same 
 room. In Glasgow 125,000 inhabitants have only got one 
 room for each family. 
 
 As, however, my readers have better sources of informa- 
 tion regarding the state of things in their own country, I 
 shall refer more to foreign countries, the information respect- 
 ing them being perhaps less accessible to English readers. 
 Let us cross over to France, the country noted for the well- 
 being of the lower classes. In this paradise of the workers 
 219,270 houses have only one opening, viz., a door and 
 no window. We shall see later on how delusive the reigning 
 idea of the well-being of the French peasant proprietor 
 proves to be. Meanwhile let us cross over to Germany, and 
 see what mountains of misery the external glory of my native 
 country is really hiding. 
 
 According to the latest Prussian statistics of 1887, 77'6 per 
 cent, of the population pay no income tax, though incomes 
 of less than ^20 are not taxed. Of the taxed incomes the 
 bulk is taken up by the lowest. The average of these is 
 estimated at ^25 for each family. In 1885, ninty-three per cent, 
 of the nation had an income of less than ^75. Now for a few 
 figures from the income statistics of Saxony for 1886. One 
 third of the inhabitants do not even possess an income o
 
 14 RENT, INTEREST, AND WAGES. 
 
 £15. Another third has less than £25 income, another fifth 
 less than £^0. This gives an average income of ;^2o for 
 each tax payer, or as there are two inhabitants to each tax 
 payer, it means that eighty-two per cent, of the population 
 have an average income of £10 a head. 
 
 Thirteen per cent, of Berlin, and thirty per cent, of Ham- 
 burgh dwellings are in cellars. 75,000 Berlin lodgings con- 
 sist of a single room and are inhabited by 270,000 souls. 
 Passing into Austria we first come to Bohemia. Whoever 
 wants to read harrowing tales of human misery ought to read 
 the book of my friend Dr. Singer about the state of things in 
 North Eastern Bohemia (" Untersuchungen iiberdie sozialen 
 Zustande in den Fabrikbezirken des nord-ostlichen Bohmens," 
 Leipzig, Dunker und Humblot). His description of a house 
 of four rooms, a garret and cellar, containing altogether only 
 2,100 cubic feet (160 is the minimum quantity required by a 
 grown person), in which fifty-one adults and twelve children 
 lived together, is exciting disgust, pity and holy anger 
 against a state of society rendering such things possible. In 
 the capital of Vienna, 1856, each family averaged 3-5 rooms ; 
 1864, only 2-5; 1873, only i-8,. In the other capital Buda- 
 pest the number of cellar lodgings increases from year to 
 year. Within the last five years 8,000 inhabitants have 
 been added to the number of the miserable beings forced to live 
 in such holes. One tenth of the whole population or 43,600 
 souls is the present total of these cellar dwellers. In 1880 it 
 was only 32,600. In 1870 51,664 inhabitants lived in single 
 rooms with more than five; 12,307, with above nine, and 
 1,068 with twenty and over occupants in each. We had 
 better, perhaps, stop here, for it we continue our journey 
 into Italy, and thence into Spain we should have to tell tales 
 of such unheard of misery that even those already told would 
 pale at the sight of them. Pelagra, that terrible hunger 
 disease, is the spectre haunting the fruitful plains of Northern 
 Italy in this civilised igth century. 
 
 But, enough. I have done with showing up the real facts 
 about the beans of prosperity, which no human eye can see any- 
 where. Let us now have a look at the other plan, tried by the 
 same philosophers, that of proving the misery of the masses as 
 a result of natural laws. The idea of combining both kinds of 
 proof reminds one of the woman accused of having taken a pot
 
 THE PROBLEM. 
 
 15 
 
 and giving it back in a broken state. " May it please your 
 honour," was her defence, " I never took the pot, to begin with, 
 and it is a lie that I broke it. I gave it back in the same state it 
 was in before." Our Giflfens tell us that the masses are much 
 better off than they ever were before and in the same breath they 
 tell us that natural laws are the cause of their misery, which, 
 according to these laws, cannot improve. " In point of fact — I 
 never took the pot and it was broken when I took it."
 
 CHAPTER II. 
 OVER-POPULATION. 
 
 It is unnecessary for me to deal seriously with Malthusian 
 theories, so popular with those who want an excuse for doing 
 nothing in the way of reform. I could never make out a 
 clearer refutation than that of Henry George, in " Progress 
 and Poverty," nor could I ever understand how anyone 
 could be found to contend that overpopulation was the 
 principal cause of misery, while, at the same time contending 
 that overproduction was at the root of the evil. 
 
 The theory of Malthus is, as we all know, that population 
 has a natural tendency to overstep the boundary line drawn 
 by the means of subsistence. The overpopulation we now 
 complain of is an increase in the number of people without 
 subsistence, because there is too great an abundance in every 
 department of production, from the fundamental food supply 
 up to houses, clothing and luxuries of every description. It 
 is this overstocking of the market with all the necessaries and 
 superfluities of life, which prevents millions of willing workers 
 from finding employment by which they could earn the wages 
 enabling them to buy their share of the good things which 
 are waiting in vain for purchasers. This strange, but well- 
 known fact is of itself sufficient to silence most of the non- 
 sense talked about overpopulation. The wealth of Great 
 Britain increases at the rate of ^200,000,000 a year, that is 
 two percent. ; while on the other hand population has grown 
 only one per cent. How does this agree with the theories that 
 population outgrows the means of subsistence ? Schippel 
 (Das moderne Elend und die moderne Ubervolkerung, Leip- 
 zig, 1883), gives a list of 25 important branches of work in 
 England, which occupied half a million less workers than 
 they did 20 years before — 2,562,000 instead of 3,030,000 — in
 
 THE PROBLEM, 'I-7 
 
 spite of the increase of population, because improved tools 
 and modes of production enabled the smaller number to pro- 
 duce a much greater amount of goods than before. 
 
 It is not only in industrial productions, however, that this 
 law holds good, viz., of a smaller number of workers produc- 
 ing more goods than the larger number did before ; even in 
 agriculture we find the same result. In iSoi England and 
 Wales, according to Schippel, had an agricultural popula- 
 tion of 1,713,289 but in 1871, in spite of the largely 
 increased population, this number had fallen to 1,657,138, 
 while Caird gives the cultivated area as 20 per cent, larger 
 than in 1821, with an increase of the quantity of wheat raised 
 per acre. The best illustration of what "overpopulation" 
 now-a-days really means is given by the case of Ireland, which 
 Schippel presents in a very convincing way. I shall give it 
 in his own words : 
 
 " In Ireland modern overpopulation has been developing 
 for more than a generation in classic simplicity without any 
 confusing accompanying circumstances. As is well-known 
 the population of Ireland is not increasing, but has been 
 rapidly decreasing for a long time since. 
 
 " It was 8-2 millions in 1842 ; 6-6 in '51 ; 5*8 in '61 ; 5'^ in 
 '66 ; it is 5, 175,000 now. But (Dudley) Baxter has been already 
 enabled to show in 1867, that the total income in the tax 
 lists was continually increasing; 1855, for instance, 16 per 
 cent. The cultivated area had equally increased on the 
 green Island from 1841-76 ; according to Mulhall from 13*5 
 to 15-3 million acres, or 13*3 percent. The value of harvests 
 rose from 23-8 to 36*5 millions, or more than half. The produc- 
 tive power of labour has had a remarkable increase ; 1876, 
 60 per cent, more acres to each head of the population 
 were cultivated and each acre produced 40 per cent. more. 
 What was wanting to make the Irish people happier than it 
 was before ? It was just the increased productive power of 
 labour that proved a curse to labourers and tenants ! The 
 more they brought forth, the less they were needed, and with 
 the steady progress in cultivation they are wanted less and less 
 from day to day and from year to year. In this way Ireland dur- 
 ing the last decades always was overpopulated, in spite of the 
 rapid decline of its population. It was overpopulated, when 
 after 25 years it had lost not only the whole of the excess of
 
 l8 RENT, INTEREST, AND WAGES. 
 
 births over deaths, but 2-7 millions more; when through 
 emigration and terrible famines it had been brought down to 
 the level of 180 1. It has been more overpopulated than 
 ever within the last few years, though from 1871-80, according 
 to the register, the general population had yearly decreased 
 about 19,000. During 1880, 42,605 persons had been swept 
 away from the ranks of Irishmen ; in 1881, certainly more 
 than 50,000. In spite of these terrible blood-lettings thousands 
 find no subsistence to-day, further thousands are rendered 
 superfluous every year through new advances in agriculture, 
 and if ever technical science should develop so far that for 
 the production of the same wealth only one man is needed, 
 sitting in the middle and turning a crank to move the whole 
 apparatus of national production. Irishmen will have to 
 arrange to disappear to the last man from Ireland and 
 perhaps from the globe, if our present system should then 
 take hold of the whole world ever needing less work for the 
 production of all wealth. 
 
 ** Modern over-population does not originate from a drying 
 of productive force, but on the contrary from its overflowing. 
 It is caused by our consumption not increasing in proportion 
 to the productivity of labour, by our not consuming more as 
 we produce more. The nature of the demand governs 
 employers in their employment of labour ; in consequence of 
 unchanged sales and increased productiveness of labour less 
 workers are employed. Some of the unemployed are 
 superfluous; if they found regular occupation before, they now 
 find themselves all at once forming part of the surplus- 
 population." 
 
 I complete the words of Schippel, by adding a few lines I 
 wrote in reply to an article in the April number, 1890, of the 
 Nineteenth Century from the pen of the conservative politician 
 T. W. Russell : 
 
 " An old hobby is ridden by Mr. T. W. Russell in the April 
 number of the Nineteenth Century : The misery of Ireland 50 
 years ago came from over-population. 
 
 It was real over-population according to Mr, Russell, for " even 
 if land had been rent free, the labourers for whom it was in- 
 capable of providing labour could not have profited." 
 
 Are you so sure of this, Mr. Russell ? Let us investigate a 
 few figures. The area of Ireland is 20,826,209 acres, of which,
 
 THE PROBLEM. 
 
 19 
 
 according to J. R. McCuUoch's description and statistics of the 
 British empire of 1S47, 13,000,880 were cultivated at that time 
 Let us leave aside the fact that a great portion of the remaining 
 7,800 000 acres could have been cultivated, if landlordism, with 
 its habit of increasing rent as soon as the tenant had improved 
 the land without paying for the improvement, had not been in 
 the way. In spite of this obstacle, two million more acres have 
 been put into cultivation since then, and millions more could be 
 added. Let us leave this aside, though it is of great importance ; 
 let us simply divide the 13 millions among a population of 
 1,600,000 families of five persons each, and we obtain eight acres for 
 each family, that is, twice as much as is needed to feed them, so 
 that Ireland could maintain at least double the population of 1840, 
 without counting the food which might be imported for industrial 
 products. As, according to Arthur Young, this land is superior to 
 that of England in point of fertility, and, as three acres are 
 sufficient to furnish all the food a family needs, we could easily add 
 eight millions more, if we include the land capable of cultivation, 
 but not counted in the above estimate. The rental, acre for acre, 
 amounted to 13s. sJd. This amounted to £^ Ss. for each family, 
 and as, according to Mr. Russell, the average earnings of a labourer 
 amounted to from 2S. to 2s. 6d. a week, the part taken by the drone 
 was as much as the workers got, and from this source alone the 
 income of the latter could have been doubled. The indirect effect 
 would have been much greater, if that greatest of all hindrances to 
 the free development of the country, idle landlords confiscating 
 improvements and thereby preventing them, had been taken oft'. 
 Look at the exports of that same poor and starving Ireland at the 
 same period, exports mostly made to pay for the rent of the land 
 due to absentee landlords. The exports of 1845, according to 
 McCuUoch, amounted to 3,251,000 quarters of grain and meal. A 
 quarter of eight bushels forms the estimated consumption of an 
 adult during a year, and we thus sec that the grain exported, by 
 itself would have been sufficient to feed half the population. Idle 
 landlords took it away : the people starved, and politicians like 
 Mr. Russell call it "Over-population." Why, on the same plan 
 one single family might be considered as over-population if some- 
 body took away from them the foodstuffs they produced to feed on. 
 The exportations of Ireland in other articles besides grain and 
 flour, amounted to about seven million pounds. The total pro- 
 duce of Ireland in grains, potatoes, garden produce, and flax 
 amounted to ;^28,20o,ooo. This did not include meat, bacon, 
 butter, eggs, etc., and industrial products ; but it would, even as it 
 is, have yielded three times as much to each family as they earned, 
 according to Mr. Russell, if we take into account the wages he 
 mentions. Page 682, he gives the average income of a family at 
 that time to be under £^0, which would be about eight times as
 
 20 RENT, INTEREST, AND WAGES. 
 
 much as the average wages paid to labourers, and therefore, would 
 by itself indicate that it was not over-population and a deficiency 
 of goods which cai\jsed the need of the people, but a wrong distri- 
 bution ; for /"50 a \'ear for each family would be enough to feed 
 and clothe them, would be a good deal more than what French 
 and German populli'.tions possessed at that period, or what 90 per 
 cent, of them posse-is even now. 
 
 If the annual drink bill, according to Mr. Russell, exceeds the 
 annual rent paid for land to-day, it certainly must have done so in 
 1840, if, as the same writer states, people drink a good deal less 
 now than they did then. He says that men drank to forget their 
 misery. As the land system caused this misery, we here have 
 another item which has to be taken into account when we investi- 
 gate the real cause of the state of things described by Mr. Russell. 
 The absence of landlordism would have turned into food a great 
 part of the wealth which flowed into this channel. Where, after 
 all this, can we find a justification of that unpardonable levity 
 which sees in over-population the source of Ireland's misery, when 
 the real cause lies so evidently before the eyes of all who do not 
 intentionally blind themselves to the truth ?" 
 
 If anybody, who does not shut his eyes willingly, who 
 does not make use of the overpopulation craze to lull his 
 conscience to prove to himself satisfactorily, that there is 
 not the least use in doing anything for his fellow men, as 
 any improvement in their lot would only tend to make 
 them increase so much faster, and thus tend to bring back 
 the old misery ; if, I say, any man who looks things 
 honestly in the face continues to talk of overpopulation 
 as the cause of existing misery, there is no alternative, but 
 doubting the soundness of his mind. No man who has 
 the full possession of his senses can continue to talk in the 
 same breath of overpopulation and overpvoduction, after 
 having for one single moment thought over the real mean- 
 ing ot both words. Both cannot exist at the same time. 
 We might have overpopulation with starvation, or a sparse 
 population with a plethora, but they must of necessity be 
 incompatible together. As however it is the existing con- 
 ditions that we have to grapple with, and not hypothetical 
 cases, it can be considered that we have banished the 
 spectre of "overpopulation " from the field of discussion in 
 regard to the social problem of the day. The question 
 whether in the distant future this spectre might not take 
 bodily form and become a terrible reality, is another matter ;
 
 THE PROBLEM. 21 
 
 but certainly it is no question of our day. It should have 
 just as little to do with present efforts for reform as the 
 fear, that the cooling of our earth might at some future 
 period make it uninhabitable and therefore restrain us 
 from working for the progress of humanity. Judging how- 
 ever by past increase and considering the immense area 
 of the earth's surface not yet brought into cultivation, as 
 well as the continual progress we are making in agriculture, 
 such a period could not be reached under the most un- 
 favourable circumstances for probably thousands of years. 
 I do not incline to the belief that it ever will be reached at 
 all, for those philosophers, who busy themselves with such 
 prophesies always base them upon precedents and analogies 
 from the vegetable and animal kingdom, forgetting that man 
 is something more than an animal and that the laws govern- 
 ing the other creatures do not invariably apply to him as 
 well. Man is the only creature on the earth capable of 
 increasing his food supply beyond the limits of natural 
 growth by means of artificial stimulation. How far we 
 have advanced in the attainment of this end has been 
 admirably shown by Prince Krapotkin in an article of the 
 June number 1888 of the Nineteenth Century, en\.\t\e6. "The 
 Reign of Plenty," which gives an example of small 
 culture according to which, as much asparagus had been 
 raised on half an acre, by artificial cultivation, as would 
 grow on 60 acres in the ordinary way, besides numerous 
 other examples of a similar kind. Furthermore, we are the 
 only animals capable of controlling our increase rationally. 
 Our reason develops with well-being, and as a consequence 
 we find individuals and nations showing a decrease in the 
 number of their families in proportion to their well-being. 
 (France and the New-England states may be cited.) 
 
 For these reasons there probably never will be a time when 
 man will multiply to such an extent that the law of the 
 survival of the fittest will apply to him as it does to the 
 lower creation. And so fall those ramparts which the rich 
 have been erecting around their consciences from the scientific 
 material furnished by Malthus and Darwin. No more can 
 the lack of desire to reform social evils shield itself behind 
 the plea of uselessness because a corresponding increase of 
 population brings with it the old misery ; nor can selfish-
 
 22 RENT, INTEREST, AND WAGES. 
 
 ness find an excuse in babbling about the battle of life 
 with its inexorable necessities. 
 
 We have done now with the master, who tries to prove 
 to us the existence of invisible beans and in the same 
 breath the uselessness of the crop, even if we clearly saw 
 it. Let us see next v/hat our socialist gardener has to say 
 for himself.
 
 CHAPTKR III. 
 THE ARGUMENTS OF SOCIALISM. 
 
 " It is all nonsense," he says, " about those natural laws 
 of free competition with self-regulating powers of supply 
 and demand. Their final effect is and always has been the 
 oppression of the many by the few, of the masses by the classes, 
 Co-operation, not competition is the watchword of the future." 
 
 Our friend then continues to show us the anarchy, as he 
 calls it, of our present system of production and exchange of 
 wealth, which, according to him can only be remedied by 
 turning over all tools and means of production to the state, 
 and having all production and exchange going on under her 
 management. 
 
 Before condemning free competition, however, our friend 
 ought first to have ascertained whether we really have it 
 under our present system. Because if we have not, it would 
 certainly not be quite fair to accuse it without having given 
 it a fair chance, to show what it can do. The question now 
 arises : is there really free competition when the land and all the 
 forces of nature connected with it are possessed by a few, 
 who, together with others also possess the capital, i.e., those 
 means of production which are the work of man, and when 
 those who are asked to compete with this fortunate minority, 
 have nothing but their hands, connected with certain hungry 
 stomachs that urgently require filling. It is certainly an im- 
 possible task, as long as the access to nature's store-house is 
 denied them. Free competition between such unequally 
 matched forces! Why, you might just as well call a fight 
 between a knight in full armour, and a naked man, without any 
 weapon, a fairone,with nothingbut equal chanceson bothsides!
 
 24 RENT, INTEREST, AND WAGES. 
 
 I do not blame the working, and often starving masses, 
 that they get disgusted with competition of this kind in which 
 the opponent, they have to fight against, leaves them the only 
 choice of " I win and you loose," or " you loose and I win.' 
 The arrangement is very much like that between a friend of 
 mine and his wife, which according to his view tends to 
 insure perfect agreement between them on all questions ; " for 
 you see," said he, " we have settled the thing between us, 
 that in all points on which we agree, her will is law, but in 
 all others mine." 
 
 If a fire breaks out in a crowded hall, with only one small 
 door, free competition in the effort to get out leaves a 
 very poor chance for the weaker ones, or those in an unfavour- 
 able position with reference to the exit. The strong hand of 
 a good police force compelling a quiet and orderly exit would 
 certainly produce much better results. But does this 
 prove that the principle of free competition is wrong ? Cer- 
 tainly not ; it only proves that, in certain unnatural conditions, 
 unnatural interference might be preferable to the natural 
 principle of laissez faire, just as in a fearful struggle to escape 
 from a crowded hall, only a favoured minority would have a 
 chance of escaping alive without the assistance of the police. 
 
 y^It does not at all prove that interference must always be the 
 
 Hcorrect principle, and liberty the faulty one. 
 
 If our hall had had plenty of wide doors allowing everybody 
 to get out without the least difficulty, full liberty without any 
 interference would certainly have produced the happier 
 results. Let us first break down the walls created by monopoly, 
 open the doors and give free excess to the means of getting a 
 livelihood to every one who is willing to exert himself, and if 
 then the frightful scramble for such a chance does not cease, 
 it will be time enough to talk about state management. 
 
 We shall see presently that competition under conditions 
 of liberty will govern the laws of production and distribution 
 in a much more economical way than state management ever 
 could do, at least so long as men have not advanced towards 
 a state of intellectual and moral perfection far beyond that at 
 which we have arrived at present. True competition will 
 furnish an incentive and spur to effort that we shall certainly 
 never obtain in an equal degree under socialism.
 
 THE PROBLEM. 25 
 
 Even to-day under the reign of monopoly, we have not 
 anarchy, in production and exchange, in the sense used by 
 sociaHsts, for the most perfect management of either by 
 itself, would not only not improve, but infinitely intensify the 
 social misery of to-day. 
 
 Let us for a moment suppose that state management would 
 do away with that enormous waste going on all round us in 
 production and exchange of goods. Let us suppose an im- 
 proved and more economical organisation in all branches of 
 work and large central bazaars taking the place of the 
 multitude of little shops now effecting a similar purpose. 
 What would be the consequence ? Surely a vast increase of 
 over-production unless the state forced a considerable part of 
 the population to remain idle, feeding it out of the national 
 stock as paupers. But I shall give the proof of this assertion 
 in the next chapter, when the real cause of overproduction, 
 as we call it, will be explained. I do not want it to be 
 understood that production and exchange managed by 
 the socialised state would be followed by such results. 
 On the contrary, I fully agree with John Stuart Mill that 
 things would go on much better in that than under the 
 present system, without reform. I only say, that the sub- 
 stitution of state management for free competition would by / 
 itself, without a corresponding change in the laws whicb 
 govern property (such as socialism equally demands), not 
 only not improve, but intensify prevailing evils. 
 
 Assuming, however, first, that if an improvement of these 
 laws, as well as the destruction of monopolies erected by them, 
 were carried out, free competition would direct the offices of 
 production and exchange infinitely better than state manage- 
 ment could ; and secondly, that without such a change in them 
 the most perfect management of production and exchange 
 would only make the muddle worse — it will be clear, that 
 it is not a deficiency in our system of production and ex- 
 change, which can be made responsible for the evils we 
 suffer under. If therefore I succeed in establishing these two 
 points the palaver about capitalist or anarchical production 
 would seem to come to an end. 
 
 Anarchical production, indeed ! Can socialists show me a 
 single article of human production of which we have ever 
 produced enough, if the real wants of the people are con-
 
 26 RENT, INTEREST, AND WAGES. 
 
 sidered, or again a single one, of which we have not produced 
 too much, if the demand of only solvent purchasers comes 
 into play? But if there is not a single article to be found 
 which is not at the same time both over and under produced, 
 what could the best management do to improve it ? Ought 
 there to be increase or decrease of production in such and 
 such an article, and in which ? Do we produce too much 
 cotton? Why, taking the whole of England's yearly pro- 
 duction in all kinds of cotton goods, estimated at one 
 hundred million pounds, by Neumann Spallart, and dis- 
 tributing it among the two hundred millions of Europe's 
 poorest, whose income does not exceed £2,0 for each 
 family, it would only give them 10 shillings worth a head 
 of cotton goods, which certainly would not be an extravagant 
 luxury.* 
 
 Supply and demand are so sensitive to the fluctuations of 
 the market, that no government clerk could ever approach 
 their perfection. As to the anarchy really, or apparently 
 existing, exhibited by the waste of power in all departments 
 of work, but especially in that of exchange, we shall see in the 
 next chapter that this will quickly disappear with the causes 
 which produced it, and that without the necessity of having 
 recourse to socialism. Without a change in the laws of pro- 
 perty, however, socialism would only make things worse 
 even if it effected a saving in this direction, but with such a 
 change laissez fairc will accomplish the same object infinitely 
 better. The proofs of this will be fully discussed in the fol- 
 owing chapters. 
 
 To specify clearly the task reserved for these, let us now 
 get at a clear understanding of the nature of the great problem, 
 called the social question, the solution of which is here 
 attempted. 
 
 Few people realise how completely this problem has 
 changed in the course of centuries. If they did, we should 
 not hear so much about the necessity of poverty, and the im- 
 
 * The yearly production of boots and shoes in Great Britain is 
 stated to be about £'16,000,000, after exports are deducted. 
 Taking 6 shillings as an average price, whicli is certainly below tlie 
 reality, above 23 million pairs more would be needed to supply 
 every inhabitant with two pairs a year, and thousands of sboe- 
 makers are without work to-day.
 
 THE PROBLEM. 27 
 
 possibility of obviating it with all the useless talk about 
 Malthusianism and misapplied Darwinism, which usually 
 accompanies it. Statistics showing the low average of 
 individual income, if all the national wealth were evenly dis- 
 tributed ; the Bible, with its misconstrued contribution 
 " The poor ye have always with you," are also given 
 as proofs of such assertions. Even anecdotes likethat of old 
 Rothschild given in the preface must lend their help. 
 
 There is not the least doubt that, if we take the actual 
 stock of wealth and of production, such views are not without 
 foundation. Even in Great Britain, the richest country 
 in the world, ;^i 00-150 would be all that an equal dis- 
 tribution of incomes would give for each family. Though 
 this would be wealth to most Englishmen, it is not enough to 
 give full enjoyment of all the advantages our civilization 
 could afford us. A decent living might be attained, but all 
 the enjoyments of travel, of art, of refinements of which the 
 rich partake must be renounced. One instance will shew us 
 the futility of such reasoning. Want of work, the curse of our 
 time, what does it really mean ? It means some unnatural 
 obstacle, preventing people from going to work and producing 
 wealth. It means an enormous waste of available power in 
 all departments of production. It means a greater waste still 
 in the department of exchange. As far back as 1851 Stuart 
 Mill calculated that nine-tenths of English merchants could be 
 spared, and that the remainder could very well do all the work. 
 Since then things have gone from bad to worse and to-day we 
 may very well assume that one-twentieth of all merchants 
 and shopkeepers could under a perfect organisation do the 
 work required of them better and cheaper than the whole 
 number at present employed. If anybody doubts this 
 let him go into any town in England and let him count 
 the number of shops, in each of which one or more workers, 
 or would-be workers, are all day long anxiously waiting for 
 customers, like spiders sitting in their webs waiting for a fly 
 to be dispatched to them by Providence. What waste of 
 valuable time, of rent, gas, coals, advertisements, 
 furniture, stock, &c ! Just calculate how many salesmen, a few 
 bazaars properly organised to do the same amount of work, 
 would require, and what savings in rent &c., could be ac- 
 complished by them !
 
 28 RENT, INTEREST, AND WAGES. 
 
 Look at the number of wholesale houses, acting as go- 
 betweens with all their travellers and clerks, which might be 
 saved, if each manufacturer had his fixed customers taking 
 all his production direct. Add to this again the saving of 
 travellers and advertisements sent out by these manufacturers 
 themselves, the enormous saving of working power expended 
 by them on the commercial part of their business, that is on the 
 work of selling their goods, which could mostly be saved, if 
 sufficient outlets existed. Need I point out the enormous waste 
 going on in the professions, in the liquor trade, in armies, in 
 navies, or in the provision for paupers ? Need I point out to 
 the citizens of the greatest manufacturing country in the world 
 what saving could be effected in production, if a greater 
 demand so increased their sales that each manufacturer could 
 conJine himself to some speciality ? If, by a better division of 
 work, by improved organisation, not to speak of improved 
 tools, by full employment of workers, the full productive 
 power of the nation could be developed, does anybody 
 doubt that at least three times as much wealth could be pro- 
 duced, even if our inventive power made no further progress ? 
 ;^30o for each family of the United Kingdom would certainly 
 not be such a poor average to begin with, nor would it permit 
 of such talk as may be heard from those who never give the 
 subject real attention. If they had done so, it must have struck 
 them how ridiculous it sounds to talk of the necessity of poverty, 
 in the same breath in which they attribute to over-produc- 
 tion (that is a superabundance of wealth) the cause of our 
 misery. 
 
 Certainly we shall always have the poor with us, for there 
 will always be poor human creatures deprived of the possibi- 
 lity of earning their bread, not by unnatural hindrances forcing 
 them to idleness in the midst of a world full of chances for 
 remunerative work, but from natural causes, such as lameness, 
 blindness, insanity, &c. These will constitute the poor that 
 we shall always have with us and for them there should be an 
 adequate provision, without having to call for charity. 
 
 The time when poverty caused want, that is by a deficiency 
 of wealth, has passed for ever. It is over-production, 
 our advance in productive power far exceeding our actual 
 production and our production always keeping ahead of the 
 demands of the market, and thus keeping people out of work,
 
 THE PKOBLEM. 
 
 29 
 
 which isthe real cause of our poverty. We must bear this im- 
 portant difference well in mind. Formerly the masses suffered, 
 because there was hardly enough for all in any case, and if the 
 minority took more than their share it was no wonder that the 
 masses suffered. An increase of productive power was a sure 
 remedy for an evil of such simple diagnosis. 
 
 At a time, in which misery comes from the increase of pro- 
 ductive power, by means of which we can get along with fewer 
 workers, and further, as we shall yet see, from the fact, that the 
 favoured minority does not purchase enough of the articles pro- 
 duced, the solution of the great problem, the bearing of which 
 has completely changed, has become much more complex and 
 difficult. 
 
 The problem is no more, as it used to be : how are we to 
 get wealth enough to feed everybody ? It is now : 
 
 How is it that ivith increasing ivealth and better facilities for work 
 of every kind, poverty increases because work is harder to get ? 
 
 And the final and fundamental question, the really great 
 problem of the igth century is : 
 
 What is it that prevents willing and able workers, tlirough- 
 out the world, from going to work and exchanpng the labour froducts 
 for which they have a mutual need ? 
 
 It is no more a question of product. on, but one of distri- 
 bution.
 
 CHAPTER IV. 
 
 The Problem Solve.!. 
 
 In answer to the question with which I closed the last 
 chapter, I shall now try to present a solution of the greatest 
 problem that poor humanity has perhaps ever had to deal 
 with. 
 
 The question was : " What is it that prevents willing and 
 able workers, all throughout the world, from going to work and 
 exchanging the labour products for which they have a mutual 
 need? " 
 
 Answers have not been wanting, but their insufficiency is 
 apparent from the fact of their having a merely local appli- 
 cation, even if it were not easy to show the threadbareness 
 of the logical fabric upon which they are based. The answer 
 can never be a satisfactory one, so long as it does not admit 
 of universal application. As Henry George says in the five 
 opening chapters of " Progress and Poverty'' : — 
 
 " This state of things, common to communities differing so 
 widely in situation, in political institutions, in fiscal and financial 
 systems, in density of population and in social organization, can 
 hardly be accounted for by local causes. There is distress where 
 large standing armies are maintained ; but there is also distress 
 where the standing armies are nominal; there is distress where 
 protective tariffs stupidly and wastefuUy hamper trade, but there 
 is also distress where trade is nearly free ; there is distress where 
 autocratic government yet prevails, but there is also distress 
 where political power is wholly in the hands of the people ; in 
 countries where paper is money and in countries where gold and 
 silver are the only currency. Evidently beneath all such things as 
 these, we must infer a common cause."
 
 THE PROBLEM SOLVED. 3I 
 
 Under-consumption, the Cause of Over-production. 
 
 What is the common cause ? What is the obstacle now 
 standing in the way of the free exchange of products between 
 workers and, consequently of their complete liberty to produce ? 
 " Why, you acknowledge it is a question of free trade," says 
 the free trader, quite forgetting that the free exchange can 
 just as little take place in countries governed by the principles 
 of Cobden. The prime condition of liberty of exchange is the 
 right of exchange. Is this not the same thing under another 
 name ? Not quite. Liberty of exchange means the absence 
 of laws trammelling free exchange. The right of exchange 
 presupposes the ownership of the product which we want to 
 exchange with the product of another. If producers do 
 not own their products, it is perfectly clear that they cannot 
 exchange them. If they only possess part of them, it is 
 equally clear that they can only exchange part of them. Now 
 we know that in civilised communities workers do not and 
 cannot own their products fully. Even where neither rent, 
 nor interest, nor profits of enterprise, nor wages of supervision 
 claim their share, government requires to be maintained and 
 part of the product of labour has to be given up for this 
 purpose. 
 
 In many cases, the number of which increases with the pro- 
 gress of our industrial system and with better division of work, 
 workers do not own their product at all, but only a part of 
 its value, which they mostly receive in the shape of wages. 
 This is immaterial ; the question of importance can only be 
 whether the share they receive is a full remuneration for that 
 part of work contributed towards the joint product of all the 
 workers who had a share in producing and realising the 
 market value of the product. The state which provides the 
 security necessary for the peaceful progress of the work ; the 
 professions looking after the health of the workers, attending 
 to their education, to the adjustment of their differences or to 
 religious worship ; the manager who takes his share as wages 
 of superintendence ; the merchant engaged in the work of 
 exchange — all are co-workers, contributing their part to the 
 market value of the product, and their share, if fairly valued, 
 can not be really considered a deduction from the just wages 
 of labour. On the contrary, we may safely assume that, in 
 spite of these deductions, labour is getting more than when it
 
 32 RENT, INTEi^EST, AND WAGES. 
 
 owned the product in its original shape. The progress in 
 the methods of production, exchange, and protection, which 
 involves such deductions, added much more than it took away, 
 even though a greater waste takes place in the different depart- 
 ments mentioned than would be strictly necessary. If govern- 
 ment is too expensive, if too great a share is paid to 
 merchants and carriers, there can be no doubt that the 
 relative expenses under both heads are considerably less than 
 they ever were before. 
 
 Anyhow this is a question we have not to treat here, 
 where we want to find out the obstacles to the right of 
 exchange. The share, appropriated from wealth produced 
 by the labour of such partners as those above named, can 
 not interfere with the free right of exchange, for their share 
 must be consumed by them sooner or later and thus cannot 
 interfere with free excliange of products all round. Let us 
 suppose a group of one hundred workmen and one employer. 
 
 The one hundred workers are producing all necessaries 
 and luxuries, each one having his speciality ; the employer 
 gets one tenth of all they produce. Each worker will thus 
 have only nine-tenths of what he produces, the employer will 
 get the production often workers. The question whether the 
 work of supervision and organisation, and, perhaps, of in 
 vention, accomplished by him is worth as much as he gets for 
 it, and whether through the smployer's work every worker, in 
 spite of his giving up one tenth, gets more wealth than he would 
 without the employer's interference, is one of no importance 
 in regard to the question before us. All we want to know at 
 present is whether the employer's confiscation of one tenth of 
 all the wealth produced will in any way interfere with free 
 exchange, with the full right of exchange. It evidently will 
 not, if he consumes his share of wealth, or even if he puts 
 it aside for future consumption. 
 
 The workers, instead of exchanging the product of a full 
 day's work only exchanged that of nine-tenths ; the em- 
 ployer takes the balance and every body has full work all the 
 time. 
 
 Let us suppose now, that the productiveness of labour by 
 means of inventions increases tenfold, as actually has been 
 the case, if we compare to-day's results with those of the 
 middle ages ; let us further suppose that wages, that is, that
 
 THE PROBLEM SOLVED. 33 
 
 part of the product left to the worker, have quadrupled in that 
 time, which, as we have seen in the last chapter, is far from 
 being certain. In what ratio will the share of the employer 
 have risen, if he gets the balance ? P is the product, of 
 which formerly W, the workers, enjoyed nine tenths, and E, the 
 employer, one tenth. W had together go P, E lo P. Now W 
 enjoy 4 x go P = 360 P and the total of production 
 being 1,000 P, E will get the balance of 640 P. 
 
 Let us suppose that his needs have only increased tenfold, 
 whereas his income has increased sixty-four fold ; this would 
 enable him to invest a great part of his revenues in luxuries or in 
 new tools by which he could still further increase the produc- 
 tivity of work and consequently his income. 
 
 We might considerit unjust that one man should get so much, 
 and others so little. We might reply to statisticians like Giffen, 
 who exultingly point to the quadrupling of the workers' incomes 
 as a proof of their increased prosperity, that their relative in- 
 come instead of having quadrupled, has gone down to two-fifths 
 if we take into account the increase of productive power ; but all 
 this would have nothing to do with the right of free exchange. 
 Every worker would be able freely to exchange his products 
 with every other worker, and there would be no want of work 
 for any. Whether E takes his lion's share in articles of con- 
 sumption, or whether he prefers taking it in new tools and 
 machines by which he further increases the productiveness of 
 labour, is immaterial. The latter form of investment might 
 be of greater advantage to the workers, because it is not 
 impossible that a small part of the increase of wealth due to 
 new machines would fall to their share. But even supposing 
 that it only increases the income of E, it could not do them 
 any harm, so long as E continues to invest his surplus in the 
 old way. But let us suppose now that E is the owner of the 
 land and by that means of all forces of nature, all its accumu- 
 lated treasures, without which work is impossible — and we 
 have to make such a supposition, as otherwise there would be 
 no earthly reason why the workers should not have left their 
 employer, as soon as his share exceeded the value of his ser- 
 vices. They would very soon have made for themselves as good 
 machines as they had made for him. Let us further suppose 
 that E made up his mind that he had machines enough and 
 did not want any increase of luxuries for the time being. A
 
 34 RENT, INTEREST, AND WAGES. 
 
 new feature of the problem would in this case present itself 
 which had not been observed before. There would no longer be 
 work enough for all the workers. They would like to con- 
 tinue as before, working full time and exchanging with each 
 other the products of their work, givmg the lion's share to E, 
 but E will not let them have the use of natural opportunities 
 any more and any longer than he needs their services which 
 they furnish in payment. One half of the tribute they are in 
 the habit of paying is all he needs, and the natural conse- 
 quence is, that half the work will be all he requires, and all 
 he allows to be done on his land. He now uses the rest of 
 the land as a deer park. There being no other way of 
 going to work than by using E's land, our workers will 
 have to work half time, though they would be happy if they 
 were allowed to make use of their leisure to produce for them- 
 selves the goods they are so much in need of, because natur- 
 ally E only pays them half wages for half work. Very soon 
 fifty of the workers will come to E and propose to him to 
 work cheaper than the others, or to give him a larger part of 
 their products, if he will allow them to work full time. E 
 accepts, and from now there is no more work for fifty of the 
 workers, for the remaining fifty do all the work and leave a 
 larger share to E than the hundred left him before. Let us 
 suppose that E increases his consumption fast enough to use up 
 the new savings he makes in this way as otherwise there would 
 not be full work even for the iifty cheaper workers. Things do 
 not rest here. The fifty unemployed ones, pushed by hunger, 
 finally underbid their former co-workers, and get the work 
 themselves, or rather forty of them get it, for they work so hard, 
 long, and cheap now, that E gets as many goods out of them 
 as before out of the fifty, and since he does not need any more 
 goods for the present, there is only work left for forty. 
 These forty, reduced to starvation wages by their underbidding 
 their former friends, call in the help of their wives and 
 children. By these means they begin to get along a little 
 better, until the increased production becomes too much for 
 E, who consequently dismisses ten of the party. The un- 
 occupied reserve army of workers amounts now to the number 
 of seventy and their families. Want drives them to underbid 
 the thirty, who with their families are working overtime to 
 make a decent living. Finally a man working Vt^ith his whole
 
 THE PROBLEM SOLVED. 35 
 
 family gets no more for fifteen hours work than he formerly got 
 alone in ten hours. " There is no help for it," say the law- 
 givers they appeal to, " work is slack. Emigrate (to other 
 countries, where the same state of things takes place) or go to 
 the poorhouse ! We cannot fight against the laws of supply 
 and demand." Some of the law-givers belonging to another 
 party propose protection, or as that name has become hate- 
 ful in their country by past bad experiences, they call it " fair 
 trade." The workers cannot see what good it can do 
 them, if goods are not imported which they cannot produce as 
 cheaply as the workers of other nations, especially if these, to be 
 even with them, stop taking those goods which they (the native 
 producers) used to export, having attained the knack of making 
 them better and cheaper. Said producers not knowing how to 
 strike at the bottom of the evil propose certain measures, which 
 in any case would do more good than those offered by the 
 fair trade party. They ask for a maximum working day of 
 eight hours, and for a prohibition of the employment of 
 married women and children, and others even want the state 
 to fix a minimum of wages. When the law-givers of both 
 parties hear this, a terrible noise is raised against these 
 socialist and anarchist agitators, who want to sap the founda- 
 tions of our prosperity, the liberty of each man to work as 
 long as he pleases, and to sell his work and that of his wife 
 and children to whomsoever and as cheaply as he pleases. 
 They ask the workers how they can afford to lose the wages 
 of overtime and the earnings of their wives and children when 
 even as it is they hardly know how to make both ends meet. 
 In this way things get worse every day. If a certain part 
 of the unemployed did not open liquor-shops ; if others did not 
 artificially add to the cost of goods by waste in the work of 
 exchange, thus forcing E to spend a little more and to occupy 
 more workers ; if others by becoming criminals and paupers 
 did not make more work, especially by forcing E to employ 
 some of them as policemen and soldiers, thus reducing 
 the army of the unemployed ; if the E's of the different 
 countries did not from time to time quarrel amongst them- 
 selves and lead the unemployed workers mutually to kill each 
 other, thus reducing their numbers ; if these and similar 
 means of decreasing overpopulation were not adopted, there 
 would have been a terrible catastrophe long ago.
 
 36 RENT, INTEREST, AND WAGES. 
 
 We have seen now that the direct cause of the evil is not 
 that E gets a certain share from the workers, but that he does 
 not take this share as fast as they are ready to deUver it, 
 preventing them at the same time from working further until 
 he feels ready to accept the part due to him. We have 
 further seen that the power of thus impeding production is 
 given to him by the ownership of natural opportunities. 
 
 The problem is so important, that I may perhaps adduce 
 another parable for its illustration. 
 
 Robinson Crusoe, on his island had to work all day to 
 satisfy his needs. When he got Friday to work for him, things 
 began to improve. He got a little leisure once in a while and 
 could think of producing articles of luxury. More slaves were 
 procured. The result was complete exemption from work and 
 a greater amount of luxury for Robinson, while the slaves had 
 to work all day long with their primitive tools to provide these 
 and the necessary means of subsistence for themselves. A ship 
 arrived bringing them all the tools and machines which 
 technical science has brought to civilised humanity. Very 
 soon the slaves learnt how to use them. Their productive 
 power increased tenfold. Where formerly the work of six 
 slaves and that of their whole families was necessary to 
 provide the entire colony with clothing, a single producer was 
 sufficient now, and, in spite of this, every body was clothed 
 better than before ; for the cotton gin, the spinning jenny, the 
 improved weaving machine, the sewing machine and other 
 inventions of the same kind, facilitated so much the work for 
 the one worker, that he was enabled to achieve more than 
 thirty could before. It was about the same with agriculture, 
 with breadmaking, house building, and in fact with all industries 
 which before had been carried on by hand. Everywhere 
 hands could be spared, and yet there was a larger production 
 than before, so that all could live in abundance. The un- 
 employed workers had to produce articles of luxury, which 
 before could not be obtained. Good beer, wine, furniture, 
 carpets, table services, and jewellery, or works of art of all 
 kinds were made ; in fact all these settlers could wish for. In 
 time machines and tools, as well as methods of production 
 improved more and more, so that workers in all branches 
 could be spared. What did it matter ? A great many more 
 articles of luxury were invented and provided. One of the
 
 THE PROBLEM SOLVED. 37 
 
 slaves, who was very talented, entertained the company with 
 musical and theatrical performances, another wrote books, 
 others built pleasure carriages and yachts, etc. The general 
 well-being increased continually with the increasing facility 
 of satisfying every wish. 
 
 All this was very good until one day Robinson got up in bad 
 humour, and gave the order to stop the general good living of 
 the slaves, which did not please him. " He alone had a right 
 to enjoy all those luxuries which everybody had been partaking 
 of, and the slaves ought to be satisfied, if they got enough to eat 
 and to drink, and had protection against wet and cold. All 
 that went beyond this point only made them lazy and vicious." 
 From that day the slaves were forced lo live accordingly. 
 
 A week after this, when Robinson took a walk, he saw a 
 great number of the slaves standing about doing nothing. He 
 angrily called his head man and gave him strict orders, that 
 only those who worked were to eat and have clothes and 
 lodgings. 
 
 He was perfectly astonished, when some time after this the 
 head man came to tell him, that a number of the men were 
 dying of want. " Are you mad," Robinson asked him ; " has 
 not the land got as much and more stock of all the 
 good things man needs, as we could wish for, and can we not 
 produce as much more as we like ? Are there not victuals 
 enough ? Are we short of clothing, or of houses ?" 
 
 " On the contrary," the head man humbly replied, "we are 
 forced to build new storehouses, because the old ones are 
 filled to the top with food and clothing, and a great many of 
 the dwelling houses are empty." 
 
 " Well ? " asked Robinson, whose astonishment continually 
 went on increasing. 
 
 " Yes, sir, that is all right, but you ordered that only those 
 who work are to be fed, to be clothed and housed." " Cer- 
 tainly, and that was only right. Why don't the lazy fellows 
 work ?" 
 
 " Because there is no work for them." 
 
 " No work ?" said R., more and more astounded and feeling 
 his head to see whether he was not dreaming. " No work ? 
 Are you crazy, my man ?'" 
 
 " No, sir," replied the head man, who felt offended, *' I 
 have got all my senses about me and should be very grateful 
 
 431699
 
 38 RENT, INTEREST, AND WAGES. 
 
 to my master, if he would show me what work I am to give 
 the men. In the brewery, to begin with, three men were 
 employed, who had plenty of work in providing the beer for 
 our people. Since your lordship has forbidden this luxury, 
 so that only the beer for your table has to be brewed, I had to 
 take away two of the brewers and the other is only busy one-third 
 of his time, so that he is also doing the work of the cooper, 
 who is out of work, too. It is the same with the people who 
 made the carpets and other articles of luxury. Your lordship 
 is provided for and the others are not to have any, so I had to 
 take all the workmen from their work." 
 
 Robinson learnt a great lesson that day, which our 
 economists and statesmen, as it seems, have yet to be taught, 
 a lesson which in fact we ought to ponder over, if we don't 
 want it driven home to our minds some day in a fashion we 
 shall hardly relish. 
 
 I have tried to give a solution of the great problem by pre- 
 senting two parables. In both the cause of the decrease in 
 the demand for work is explained by the fact that workers 
 have only a claim to a part of the wealth their labour 
 produces, and that the parties to whom the balance has to be 
 given up do not want it as fast as it is produced, and until 
 they want it the workers are forced to remain idle, as 
 they cannot get work without having access to natural 
 opportunities, which are in the possession of the employers. 
 The workers have to go hungry, because the employers have 
 no appetite. 
 
 Da these parables correspond with actual facts as we 
 find them in the real world ? They partly do ; but un- 
 fortunately the real picture does not present such clear and 
 unmistakeable Unas. Colours intermix and superpose in such 
 a bewildering maze, that the unpractised eye cannot get a clear 
 outline of the more important features. In very rare cases 
 only do we find such a simplification of the problem as the 
 two sketches here presented show. 
 
 Proudhon in " Qu'est-ce que c'est la Propriete " draws an- 
 other picture, which, though apparently very plain and clear 
 in its outlines, shows such a maze of labyrinthine intertwin- 
 ings, that without a thread of Ariadne to lead us through, it 
 is impossible to arrive at an opening where the light of day 
 can enter and allow us clearly to see our way.
 
 THE PROBLEM SOLVED. 39 
 
 " If the right to live is common to all, so is the right to 
 work and the right of occupation. Could the inhabitants of 
 an island push back with poles unfortunate shipwrecked 
 people, who try to land on their coast, under pretence of their 
 property rights, without committing a crime ? The mere 
 thought of such a barbarous action is revolting to the imagina- 
 tion. The proprietor, like a Robinson on his isle, pushes back 
 with pike, and gunthrusts, the proletarian whom the wave of 
 civilisation submerges and who tries to grasp at the rock of 
 property. " Give me work," the latter shouts with all his power 
 at the proprietor, " don't push me back, I'll work for the price 
 you are willing to pay." " I do not want your services," answers 
 the proprietor, advancing the end of his pike, or the muzzle 
 ofhisgun. " Lower my rent at least." " I need my revenues to 
 live." " How shall I be able to pay you, if I do not work ? " 
 " That is your business." The unfortunate proletarian now lets 
 the current carry him off, or if he tries to enter into the 
 property, the proprietor covers him with his weapon and kills 
 him."* 
 
 ♦Chivalry in its death throes had poor Don Quixote for its 
 champion. In England Mr. Auberon Herbert vows with an 
 enviable earnestness that that Dulcinea of Tobosa, Individualism, 
 is the most beautiful and virtuous lady in Christendom. While 
 writing this book my attention was drawn to a new sally the 
 noble knight was making on his Rosinante, to which I have already 
 referred in the 3rd chapter. I expressed my hearty appreciation 
 in the following article.which appeared in " Land and Labour," the 
 excellent monthly of the Land Nationalisation Society. 
 "A LIBERTY NEWSPAPER." 
 
 " Under this title Mr. Auberon Herbert intends to start a weekly 
 penny newspaper, ' to resist the continual encroachments of 
 government, either central or local, upon the free judgment and 
 the free action of men and women.' ' In describing the character 
 of the paper, I should say that first and foremost we shall insist 
 upon the fundamental right of each individual to direct his own 
 life in such a fashion as seems right to himself, provided only that 
 he is not an aggressor upon the equal rights cfotliers. . . . We 
 shall be democratic in a true sense as opposed to all forms of 
 privilege.' 
 
 "AH this is very pretty and reads well; but the fox's tail is bound 
 to show : " We shall be conservative in a true sense as defending 
 property against all attacks." What I\Ir. Herbert means by this 
 he has shown before on different occasions, when he stood up as a
 
 40 RENT, INTEREST, AND WAGES. 
 
 Let US try to separate the different lines of the picture here 
 presented to our inspection. We can clearly distinguish 
 herein the main feature presented by the two parables before 
 given. The worker perishes, because access to natural 
 opportunities is denied to him by a monopolist of the same. 
 Why is it denied ? Is it also because the proprietor has 
 more wealth than he can consume and for this reason sees no 
 way of occupying the worker ? No. Proudhon's proprietor 
 needs his income. We may even suppose that it is insufficient 
 to supply all his wants. The rent roll is small and he is in 
 debt to a capitalist, who takes almost the whole of his rent in 
 the shape of interest. Rents are low, because the fruits of the 
 soil are almost unsaleable or only saleable at prices which hardly 
 enable the cultivator to make a living, leaving nothing or 
 very little for rent, because the market is as overstocked with 
 the products of the soil as it is with all other kinds of goods. 
 Why is it overstocked with the necessaries of life, when we 
 see a poor man perishing for the want of them ? It is over- 
 stocked, because he cannot purchase any of these goods. 
 Why can't he purchase them, when he is willing to offer in 
 exchange his work capable of producing wealth as valuable 
 as that which he wants to buy in exchange ? Because the 
 access to natural opportunities is denied to him, without which work 
 is impossible. But we have seen, that the man who owns 
 
 defender of our present system of landownership, which, consider- 
 ing his personal position, is not to be wondered at. We don't 
 envy him the task he has put before himself. If he can shew how 
 an individual can direct his own life in such a fashion as seems 
 right to himself, without having access to the stores of Nature, to 
 land, he creates a new philosophy. If he can further prove 
 that one or more individuals can own, unconditionally, the soil of a 
 country, without aggressing upon the equal rights of others, he 
 accomplishes a yet more difficult task. We do not despair of 
 the possibility of his accomplishing such feats; for belief is a great 
 power, and a man who, without blushing and wavering for a 
 moment, can emit the following article of creed is capable of the 
 greatest deeds : ' Our creed will be, that the workman is destined 
 — should he remain true to himself and refuse to be used as a play- 
 thing of political parties — to become gradually the possessor of the 
 larger part of the capital of the country, as the management of 
 voluntarily associated bodies improves, and as he himself acquires 
 the habit of investment in industrial enterprises.'
 
 THE PROBLEM SOLVED. 4I 
 
 these natural opportunities cannot let him have access to them 
 at a rent which will enable him to live, because he himself 
 is hard pressed by somebody else, to whom he is indebted. 
 Our landowner is perfectly innocent of any share in the 
 wrong. He is no idle spendthrift ; but a man who works for 
 his living as hard as he can. The income his work supplies 
 him is barely sufficient to maintain him and his family, and 
 the rent he gets from his land has to be paid to his creditor 
 to cover the interest on his debt and to pay taxes. It is not 
 his abundance certainly which causes the glut in the market 
 nor his consequent failure to make up for the insufficient con- 
 sumption of others by his nonconsumption ; it is not this 
 which lessens the chances of finding work for would-be 
 workers. He would willingly consume more if he could. 
 
 But if he is so far indebted, that the interest of the debt 
 almost or completely swallows the rent, he is only the 
 nominal owner ; his creditor is the real landlord. His creditor 
 has been furnishing him with goods for his consumption, 
 machines and tools used on the farm, all of them the products 
 of legitimate industry. Our landlord could not pay for them 
 
 " Poor workman ! For a thousand years hast thou not been the 
 plaything of political parties, for thou wast like dumb driven cattle, 
 without a voice in thy nation's councils ; and now thou hast acquired 
 it, thou hadst better leave things alone and to thy betters, who 
 have managed them so splendidly all this time that they are in the 
 worst misery while thou livest a shameful life of luxury. 
 
 " Two more delicious morsels, and we have done with Mr. 
 Herbert. 
 
 " He wants taxes and rates to be abolished gradually, and to 
 become voluntary. What we have to expect from the class he 
 belongs to, when we leave it to them to fix their own taxation, the 
 history of the four shillings in the pound land-tax, which they 
 gradually worked down to two-pence, shows conclusively, as to 
 Ireland, he says, after having conceded it the right of Home Rule, 
 ' But we shall not consent to throw any section of society to the 
 wolves, and we shall insist upon the fair claims of landlords being 
 settled in business-like fashion before the great change is made.' 
 No objection to this, of course, can be found, if the questions who 
 are the wolves ? and what are the fair claims of the landlords ? 
 are settled. Perhaps the result would not be what Mr. Herbert 
 thinks, and for this reason he would rather have English landlords 
 settle this question than the Irish peasantry with the robberies of 
 centuries fresh in their minds.
 
 4-2 RENT, INTEREST, AND WAGES. 
 
 and pays interest on his debt until it is paid for. Is there 
 anything illegitimate in this ? Is the debt to become an ex- 
 tortion, because the interest of it is paid by rent extorted — to 
 use the expression current in land nationalisers' writings — 
 from workers on the land? Furthermore it is not our 
 capitalist either, whose under-consumption causes the glut in 
 the market, that deprives workers of a chance of work. 
 Those who are responsible for this real cause of the crisis are 
 quite invisible in all this. 
 
 Let us pick out the biggest of them, to illustrate our case, 
 viz., the Rothschild family. The different branches of the clan, 
 the London, Paris, Frankfort and Austrian Rothschilds are 
 estimated to possess together between 200 and 400 million 
 pounds sterling, representing an income of from 6 to 1 5 millions. 
 Let us take 10 millions as representing the real figures and 
 let us suppose that i million represents the yearly consump- 
 tion, an amount certainly rather in excess of reality than other- 
 wise. 
 
 No income falls from heaven. Somebody has to pay it to 
 the fortunate owner, and, as a celestial downpour is out of 
 the question, this somebody will have to work for it. 
 Nobody denies this. Economists only pretend thai the 
 capital on which the debtors of the Rothschilds pay them 
 interest produces this interest. They do not mean, of course, 
 that this production takes place automatically, for they know 
 very well, that capital in any shape, if left to itself, will 
 decrease and gradually disappear through the attacks of 
 nature's destructive powers. All they mean is that the use 
 
 "Fortunately poor Individualism has better champions than this 
 scion of nobility, who strongly reminds me of the man who was an 
 ardent follower of Cobden and a strong believer in free trade, until 
 it was proposed to touch the industry he himself was interested in, 
 by abolishing the duty on red herrings. 'Hurrah for Individualism ! ' 
 shouts Mr. Herbert, 'provided you leave me the monopoly which 
 the state has kmdly given me and my friends, or rather, which our 
 forefathers established for us by robbery — the land of Great 
 Britain and Ireland. If you do this, then Hurrah again for free 
 Individualism m balloons, for the earth is ours.' Those who 
 want to make the acquaintance of a real individualist, I recom- 
 mend to read The Outcome of Individualism, by J. H. Levy, the 
 ediiov oiihe Personal Rights Journal. He is an individualist who 
 sees \h3ii free land is the sine qua non oi Individualism."
 
 THE PROBLEM SOLVED. 
 
 43 
 
 o the capital in question by workers enables them to increase 
 the productivity of their work to such a degree, that it not 
 only leaves them higher wages than their work unaided by 
 capital would have obtained for them, but enables them in 
 addition to pay a certain hire for the use of the capital cor- 
 lesponding to the rate of interest established by supply and 
 demand. (Wherever I use the word wages I mean earnings of 
 workers of any description — those of the employer as well as 
 those of the common labourer — of the former, in so far as 
 they are the remuneration of his work of enterprise and 
 superintendence.) 
 
 My opinion is, that never did a falser theory obtain 
 general acceptance than this. This is the more strange as 
 no theory could ever be more easily demolished by the most 
 simple arithmetical proofs. 
 
 We all know that old problem of the penny lent out on 
 compound interest at five per cent., since the time of Christ, 
 which to-day would have reached a value equal to a certain 
 number of globes as large as our earth consisting of solid 
 gold. 
 
 Proudhon says in the book before cited 
 
 " If men, united in equality, gave to one of their number 
 the exclusive right of property, and if this single proprietor 
 placed with humanity a sum of loo francs at compound 
 interest, repayable to his successors of the 24th generation 
 after the lapse of 600 years, this sum of 100 francs, would, if in- 
 vested at 5 per cent., amount to the sum of 107,854,010,777,600 
 francs, a sum 2,696 times as large as the capital of France, 
 estimated at 4,000 millions (50 years ago), or 20 times as large 
 as the value of the whole globe with all moveable and unmove- 
 able wealth. . . . The Fourierists, those irreconcilable enemies 
 of equality, the partisans of which they look at as sharks, 
 promise to satisfy all demands of capital, of work and of 
 talent in quadrupling production. But even if they quad- 
 rupled production, if they increased it tenfold, hundredfold, 
 property (he means land and capital with secured rent and 
 interest claims) by its power of accumulation and capitalisa- 
 tion very soon would swallow products, capital, the earth and 
 even the workers. " 
 
 We know the old tale of the inventor of chess asking as 
 his only reward that the Shah would give him a single grain
 
 44 THE PROBLEM SOLVED. 
 
 of corn, which was to be put on the first square of the chess- 
 board and to be doubled on each successive square, which to 
 the surprise of the king produced an amount larger than the 
 treasures of his whole kingdom could buy. It is this kind of 
 chess-game which capital is continually playing with labour. 
 All exertions, all improvements in the methods and tools ol 
 labour, the strictest economy, the severest self-denial are all 
 powerless to compete with the rapidity of self-increase 
 possessed by capital placed at compound interest, and they 
 cannot keep up with its demands. 
 
 Ages had gone by, since sinful man had been driven from 
 Paradise. The curse, not unmixed with blessings, like all 
 punishment coming from such a source, which forced man to 
 earn his bread by the sweat of his brow, had weighed upon 
 mankind with a heavy pressure. The crime had been 
 severely punished ; mercy began to prevail. A loving angel 
 was sent down by the Great Master, charged with the task of 
 lightening the burden. The angel's name was '* spirit of 
 invention. " He began his work by teaching man to make 
 useful tools out of stone, wood, metal and other formerly use- 
 less raw materials. He taught him to tame animals to work 
 for him and finally he made him master of the elements, press- 
 ing them into his service. The mountain stream rushing down 
 to the ocean was forced to turn wheels and to grind the flour 
 needed for bread, or to saw the logs with which houses were 
 built, or furniture made. The wind, the merry son of the air, 
 had to stoop to the same work, where waterpower was not 
 available. The curse was lightened, but not taken off; man's 
 wants had increased with the facility of satisfying them, 
 and work was as hard as ever. But the hour had come 
 when full mercy was to be granted to the children of sinful 
 Eve. Fire offered its service. The most powerful of the 
 elements, though it had condescended hitherto to furnish 
 some comforts to man, as often had proved his deadly 
 enemy. It would have done him even more harm than 
 it did, if a family feud it had with water had not enabled man 
 to make use of their deadly enemity to fight one with the other. 
 Now the time had come, when the unrelenting antagonism 
 between the two was to be used as a means of taking off the 
 terrible weight of physical labour pressing upon mankind. The 
 deadly enemies were imprisoned together in bonds of iron and
 
 RENT, INTEREST, AND WAGES. 45 
 
 steel. A fearful struggle began. Water maddened by the 
 mighty embrace of its enemy, foaming with rage till it turned 
 into steam, tried all its power to break loose from the iron bonds 
 and to kill the fiery element. The angel taught man how to 
 use the fearful power so engendered to turn wheels and to do 
 all the heaviest work. Millions of iron giants in this way were 
 pressed into his service, working for him night and day. 
 
 Far down in the depth of the earth they moved their 
 powerful arms to free the mine from destructive waters and 
 to lift the treasures of the deep. 
 
 Imprisoned in iron cars they moved these with a speed 
 exceeding that of the fleetest deer, drawing heavier weights 
 than could the strongest elephants, or hundreds of horses. Pent 
 up in ships they drove them forth through the waters faster, 
 though heavily loaded, than the best oarsman ever impelled 
 his light craft. But this was not all. 
 
 The angel " spirit of invention" again waved his magical 
 wand and millions of iron and steel goblins came forth skilled 
 in all kinds of work, spinning, weaving, knitting, sawing, grind- 
 ing, printing, sewint;, shoemaking, etc., etc. They were 
 practised in all trades and their delicate fingers went to work 
 with lightening speed, when the iron steam giants were put 
 behind them to force them on. 
 
 It seemed that at last the golden era had come, of which 
 men had dreamed for ages past without ever hoping to attain 
 it. Without trouble, with almost no exertion except that 
 of supervision, man had it in his power to produce boundless 
 wealth to satisfy wants, wliich in former times the richest 
 even did not know or dream of. All the luxuries art and 
 refinement could invent were at the disposal of the poorest, if 
 free scope was given to the wonderful giants and goblins, the 
 numbers of which daily increased in astonishing varieties. 
 
 It seemed, I say, that the golden time had come ; but it had 
 not come. That envious spirit, that fallen angel, Satan, 
 who once before in the shape of the serpent, had driven man 
 from Paradise by seducing him to sin, from the first moment 
 had watched the work of the beneficent angel with continually 
 increasing disgust and anger. He knew very well, that if the 
 plans of the Holy One succeeded, Satan's empire would be 
 over for ever. Once freed from the cares and troubles of the 
 struggle for existence and the battle of life, man would turn to
 
 46 RENT, INTEREST, AND WAGES. 
 
 higher aims the powers God had given him. Art, science 
 and ethics, would celebrate their highest triumphs; more 
 and more would man break loose from the fetters in 
 which his higher spiritual being was held imprisoned by 
 earthly cares, and, getting into nearer contact with the 
 eternal source, from which all spiritual life is emanating, 
 would accomplish the great purpose for which he was 
 created. 
 
 The state of things looked desperate. All was lost if some 
 stop could not be put to the work of God's angel ; but what was 
 Satan to do ? As he was looking over the dark army of vices, 
 sins and follies which had done him such splendid service in 
 past time, to see whether any one of his great warriors could 
 take up the fight with the angel, he saw nothing but dejected 
 faces. They all knew that they were powerless to battle with 
 the heavenly messenger. 
 
 He despaired as he looked at that once valiant and 
 victorous army he was leading, when among thefolliesof man 
 he observed one little imp, who, instead of the despondent 
 mournful look, all the others were wearing, looked at him in 
 a saucy and self-conscious manner, which attracted his atten- 
 tion. 
 
 " What is the matter with you, Interest ? " he asked the 
 saucy imp. " You don't seem to be so dejected as your com- 
 rades are ? " " Why should I be dejected, master? " replied 
 the spirit, " am I not one of your favourite soldiers ? Haven't 
 I always been victorious under your august guidance? Why 
 should I be less certain of victory now than I ever was 
 before ? " 
 
 "Alas," answered Satan in a sad voice, you do not know 
 the power of the enemy we are fighting now. You are no 
 match for the ' spirit of invention.' " 
 
 ** Well, there is no harm in the attempt," answered the 
 imp. *' Supposing you allow me to try a duel with the 
 fellow ? " *' You little fellow, fight the powerful angel, who 
 is defeating all my army?" laughed Satan, "Yes, 1 alone, 
 provided, of course, you allow my son ' compound interest' 
 to help me.'" 
 
 " Are you crazy ? you, with your weak little arms, want 
 to throttle that immense army of powerful giants, and that 
 more numerous one of wary goblins who have filled the world
 
 THE PROBLEM SOLVED. 47 
 
 by the command of the mighty angel, whose brains conceived 
 them ? " 
 
 " I intend to do more than this, your majesty. I shall 
 make them turn traitors to their duty. Instead of their being 
 a source of blessing to mankind I shall make them the pro- 
 ducers of untold misery, worse than any man ever suffered 
 from thy hands. I shall make man curse them and the 
 angel who sent them. He shall be made to consider them 
 as the source of all this misery, and to use his best powers to 
 fetter them and to keep them from their work by protective, 
 military and other repressive laws. He shall sigh for the 
 good old times, when machines did not yet take away the 
 work from poor men ! " 
 
 " You will do all this ? " asked Satan with an unbeheving 
 smile. *' Yes and a good deal more, if you let me have my 
 way," answered the imp, full of self-confidence. 
 
 And Satan did let him have his way. The battle of giants 
 began. Yes, it was a battle of giants and yet only a game ; 
 a fight of titans and yet only a noiseless, quiet sport, in which 
 the imp was the victor. 
 
 Angel "spirit of invention," at first only laughed quite 
 heartily, when he saw the little imp, who came to fight him. 
 " Do you see those immense armies, obeying my commands? 
 asked he. Well, I have only to open the gates of my skull and 
 just as many more will come forward to fight you, poor little 
 fellow. You had better return to the master who sent you, 
 and tell him that his empire is ended for ever, even if he lets 
 loose all the soldiers of hell he commands." There is no need 
 for his doing that," calmly replied the imp. " I alone, together 
 with my son," compound interest, " whom you see peeping 
 from my pocket, can multiply our number to exceed any 
 amount of iron and steel chaps from your empire. Look 
 here, my friend ; before we begin the fight, let us first muster 
 our forces, and to end this business in a peaceful way, I will 
 make you a proposal. Look at this chessboard. It looks 
 just like any other chessboard with 64 squares ; but it has the 
 peculiar quality of extending the dimensions of the squares, 
 so as to always be large enough to accommodate all the 
 soldiers we shall place upon them. Now, listen well to what 
 I propose. I enter the first square with my son and you 
 aatch one of your warriors against us. We enter the second
 
 48 RENT, INTEREST, AND WAGES. 
 
 square doubled in number, you send two more warriors and so 
 on every succeeding square. We agree, that we shall never 
 more than double, and we further agree, that if, when we 
 arrive at the last square and you have a single soldier left 
 after occupying the same, we shall declare ourselves van- 
 quished and Satan will leave this world for ever with all his 
 troops. If I win, you and your army are to be at the com- 
 mands of my master. Are you agreed ? " 
 
 " Am I agreed ? " replied the angel, laughing, as his eye 
 glided over the untold millions of his soldiers. " Why, 
 certainly, my friend. You had better send word to your master 
 to pack his luggage, as quick as he can." All right, we 
 shall see," said the imp in a calm business-like tone, and so 
 the ominous game began. 
 
 In the beginning, the angel laughed, for though twenty 
 squares were passed, no noticeable diminution of his forces 
 was perceptible. Demon " interest " said nothing but 
 attended to business, quietly doubling his army on every 
 succeeding square. At the 30th square the angel ceased to 
 laugh, and a few squares further he had to open the gate- 
 ways of his fertile brains as wide as he could, urging on the 
 new troops coming forward from it with all his might. Only 
 one field more and he had to stop exhausted. He saw he 
 was lost. " I despised you little fellow," he sighed with a 
 despairing voice, " and I am punished for my vanity. I see 
 there is no use fighting against you. Demon interest is more 
 powerful than the spirit of invention. I am your slave. 
 Command your servant ! " "I am only the servant of my 
 great master,' dryly replied the demon. " Here I see him 
 coming. He will give you his orders." 
 
 And Satan gave his orders. He commanded that the angel 
 was to continue in his work with all his troops, which were 
 to be increased with all possible exertion, so that humanity 
 who did not know the nature of the antagonist it had to fight 
 against, would always keep in fresh hope of final success, 
 when the new troops were forthcoming. But as fast as they 
 appeared, demon interest was to send forth a larger army to 
 capture the new forces, to enslave them and instead of their 
 benefitting man, make them mcrease the slave-chains which 
 weigh him down.
 
 THE PROBLEM SOLVED. 
 
 49 
 
 It was a devilish thought, as could rise only in such a head. 
 Just what gave man new hope had to be the means of 
 deepening his misery. What to every eye appeared an un- 
 mixed blessing proved to be the incomprehensible source of 
 greater need. Satan had been victorious far beyond his ex- 
 pectations ; for those consequences of the battle of life always 
 more intensifying and growing wilder, poverty, ignorance, 
 crime, vice, and hopeless misery, appeared clearer from day 
 to day, and there was no hope of reform, because the wise 
 men of the world proved the impossibility of indubitable facts, 
 reasoning that blessings could not produce misery. 
 
 But all this only proves that compound interest is wrong ; it 
 does not prove anything against iiiterest-t>roper. An objection 
 of this kind can hardly be maintained after one moment's 
 reflection. What is compound mterest ? Is it anything else 
 than the fresh investment of earnings of capital ? In what 
 way does the lending of ;^ioo paid to me as interest upon 
 ^"2000 differ from the lending of the original capital ? If one 
 is legitimate, the other is, if one is wrong, both must be 
 wrong. This objection would not hold for a minute, and 
 therefore the mathematical proof is furnished, that labour does 
 not earn enough to enable it to pay interest at current rates 
 and obtain decent wages, or even to get any wages at all. 
 Therefore it must be clear, judging on mathematical grounds 
 only, that capital does not produce interest even when in the 
 hands of labour. If this is true, then interest must be an 
 unjust tribute extorted from workers by capitalists. 
 
 Eenry George's defence of Interest. 
 
 In Chapter 3, book 3 of " Progress and Poverty," Henry 
 George investigates the reason and justice of interest, and 
 after successfully demolishing the current argument based on 
 the power which exists in tools to increase the productiveness 
 of labour, usually illustrated by the plane-lending example 
 of Bastiat, he finds another ground of justification for interest 
 in the power of increase given to capital by the reproductive 
 forces of nature, and by ihe in effect analogous capacity for 
 exchange. 
 
 The element of time is the important factor through which, 
 acccording to him, these forces produce the values represented 
 by interest.
 
 50 RENT, INTEREST, AND WAGES. 
 
 " It is true," he says, that money will not increase, if put 
 away. It only claims interest, because it can be exchanged 
 with other kinds of wealth which claim interest, as for 
 instance wine, which improves in quality, and bees, sheep, 
 hogs, and cattle which increase in number, &c. But is 
 it true that wine always improves in quality, when put away ? 
 Certain wmes will, if well attended to. If not, and if put 
 away too long, the element of time will develop the destructive 
 forces of nature instead of its reproductive ones, or rather, it 
 will develop a form of this reproductive power, producing 
 changes, which, according to the estimate we put on them, 
 are destructive. The conversion of old wine into vinegar 
 may certainly, in a sense, be considered as an effect of the 
 reproductive powers of nature ; but it is certainly an effect 
 which does anything but increase the value of the said wine. 
 It is a change partaking exactly of the same nature as the 
 fermentation of the grape juice, or the turning of new wine 
 into old. The only difference is, that the prevalent taste 
 which governs market values prefers new wine to grape 
 juice, and old wine to new wine, but either to vinegar. It is 
 the prevalent taste, not the universal one, for the writer, for 
 instance, greatly prefers the unfermented grape juice to any 
 of the later forms which wine acquires. If everybody 
 thought the same, it is quite certain that the element of time 
 would diminish the value of wine as it diminishes that of 
 other products of labor. But even as it is, can we really say 
 that an increase of value has been obtained beyond that 
 which pays for the rent of the cellar, the labour of bottling, of 
 supervising and of guarding against the risk of breakage, 
 fires, robbers ? Certainly we can. Nobody would invest 
 capital in wine, if he could get back his outlay alone, includ- 
 ing the wages of his labour. Why ? Simply because he can 
 get interest if he lends out the said capital, and therefore he 
 will certainly not invest it in the wine business, if he does 
 not expect to make at least as much out of this kind of 
 investment, as he could from anything else. Here we have 
 the simple reason, why a certain percentage will be added to 
 the price of the wine, sufficient to compensate the wine pro- 
 ducer for the interest he otherwise could have obtained for 
 the use of his money. Instead of a cause we only have an 
 effect. It is just the same with all the other examples
 
 THE PROBLEM SOLVED. 5I 
 
 produced by George, or in fact with any examples of this 
 nature. 
 
 The prices of honey, sheep, hogs and cattle, have as their 
 components, rent, wages, insurance against loss, and interest ; 
 but the last element only enters in because other invest- 
 ments will bring interest. If this were not the case the 
 price would be so much less. Competition would bring it 
 down to the level on which the regular market return for the 
 other above-named elements of cost could be obtained. The 
 market value of rent, of labour, of insurance against risk, 
 together would give us the price at which the goods in ques- 
 tion could be purchased. Again, we see interest is a cause, 
 not an effect. But if I find the same fact everywhere, if I 
 say that interest has been added to the price because it is 
 obtainable elsewhere, do I not try to explain one effect by 
 another, without ever finding a cause ; and should I not be 
 forced to admit that there must be a flaw in my reasoning ? 
 Certainly, if 1 could not produce the real cause. What is 
 this cause ? 
 
 Monopoly the cause of Interest. 
 
 The real cause of interest is monopoly, and in the last 
 resort, the greatest of all monopolies and the father of all the 
 others, is that oi private landownevship. 
 
 As much as 350 years ago the great reformer Calvin, 
 answering the arguments of Aristotle, who thought the taking 
 of interest unjustifiable, because money put aside cannot pro- 
 duce money, said : — 
 
 " It is undoubted that money does not produce money ; 
 but with money land is liought, which produces more than 
 the returns for the labour applied to it, and which gives a 
 surplus income to the proprietor, after all expenses for wages 
 and other things have been met. With money a house can 
 be bought bringing a rent income. Objects, with which 
 things can be bought, producing incomes by themselves, can 
 certainly be considered as bringing incomes themselves." 
 
 If I have ;^ioo worth of goods of any description, with 
 which I can purchase a piece of land, bringing £^ worth of 
 rental income, I should certainly be a fool if I lent this 
 ^100 in money or goods of any kind to any body unless he 
 paid me at least £2, a year for the privilege of getting th**use 
 of my capital during that time.
 
 52 RENT, INTEREST, AND WAGES. 
 
 Here we have in a few words the answer to the question 
 where the real origin of interest is to be found. Not because 
 old wine has by natural causes obtained an increase of value 
 beyond that added by labour, storage, rent, etc., do we obtain 
 the higher price, but because the same capital invested in 
 land purchase would have brought a certain rent. When, in- 
 stead of purchasing land with his money, our wine merchant 
 bought new wine with it, he had to add to the cost of his wine 
 the rent he sacrificed. 
 
 Land, though the principal and original source of incomes 
 obtained without work, is not the only one. Every secure 
 monopoly partakes of the same nature. If the state issues 
 certain scripts called government bonds, by the ownership of 
 which can be secured the monopoly of claimmg as private 
 income, a certain part of the taxes collected by the state, or 
 in other words, the privilege of making use of the whole 
 power of the state to force the workers into paying to the 
 owner of the bond a certain portion of their earnings by 
 means of the tax-collector, then every one who has capital in 
 hand, which somebody wants to borrow will demand and 
 obtain as much interest for the same, as can be secured by 
 means of the state bond, with the addition or deduction of 
 the risk premium resulting from a comparison of the 
 securities offered on either side. Railway bonds and shares, 
 canal securities, gas and water-work investments, mortgages, 
 etc., participate more or less of the same character. 
 
 When I said that the land monopoly was the father of all 
 these monopolies, I meant, that if the state had never parted 
 with her rights in the land, there would never have been any 
 government debts. As the sole landowner, the sole pro- 
 prietor of the fountain of all material existence — the posses- 
 sion of which entails the right of levying a tribute from all 
 the inhabitants equivalent to all their earnings beyond their 
 legitimate wages, and even more if found necessary — the 
 state with such a power would always have been the greatest 
 capitalist in the land, so far exceeding all others in the 
 magnitude of her wealth, that instead of ever having to 
 borrow, she would have become the principal lender. She 
 would have been enabled to build the railroads and canals 
 from her own capital, and so gas and waterworks, etc., would 
 have been built by the community.
 
 THE PROBLEM SOLVED. 53 
 
 The proof that, without private ownership of land interest never 
 would have existed, and that, after its abolition interest is bound 
 to disappear, will be given in the next chapter, I should not 
 have entered into this subject so far as I have done in this 
 place, if it had not been absolutely necessary to understand 
 the real origin of the incomes our great capitalists are deriv- 
 ing from interest before proceeding any further. If the 
 millions the Rothschilds are yearly receiving from the 
 workers were nothing but a product of nature, as Henry 
 George thinks, my way through the labyrinth of the great 
 problem would be barred at the outset. It is only after 
 having recognised the truth that interest is in reality a 
 tribute wrung by the capitalists from the legitimate earnings 
 of labour, and not a product of capital collected by the users 
 of capital for its legitimate owners, that we can proceed on 
 our way to the real solution. 
 
 Investments of the great Capitalists. 
 
 I assumed that the Rothschilds have an income of ten 
 millions and that they only spent one of these. This fact 
 means in the first place that the workers of the world have 
 to deliver up ten millions worth of the wealth they produce, 
 and in the second place that the R.s only take one million's 
 worth of that wealth. This looks generous or seems at any 
 rate to be beneficial to the general community ; for either 
 the R.s make a present to the workers of the nine millions 
 they do not need, or they turn them into new capital, which 
 means into new machines, into new railroads, new canals, 
 etc., thus increasing the sources from which all the attain- 
 ments of our wonderful civilisation spring. 
 
 We know that the R.s do not give away the nine millions, 
 for their budget of charity is already included in the million 
 they are supposed to spend. Do they build machines, rail- 
 roads, etc., with the surplus in question ? If they did, the 
 social problem of the nineteenth century would not exist, nor 
 would the social problem of former ages return in exchange. 
 Everybody would be bus}^ ; there would be no want of work. 
 
 Want of work ? Do we realise what that means ? What 
 progress have we made in the course of ages ! Want of work 
 was certainly not a complaint known in the times when the 
 Pharaohs built their pyramids. Want of sufficient subsistence
 
 ^4- RENT, INTEREST, AND WAGES. 
 
 for the workers might have been the cry ; but fortunately we 
 are past the times when the wealth producing power of 
 humanity was so low that a minority could live in luxury 
 only on condition that the majority was deprived of the 
 needful. The millions consumed by the Rothschilds and 
 Co. would not deprive the masses of the necessaries and even 
 of certain luxuries of life. Our thousands of millions of iron 
 and steel slaves would attend to that. Needing only a little 
 coal to feed them, which they help to produce from the 
 bowels of the earth, they could give up the balance of their 
 share to the human workers, leaving them enough to over- 
 feed their drones and yet to have a sufficiency left for them- 
 selves. 
 
 Slavery as a legal institution is a thing of the past in 
 civilised countries, but the modern chains, called " compe- 
 tition for the daily bread," which the civilisation of our 
 nineteenth century has placed around the limbs of our " free " 
 workers, are much heavier than those weighing down the slaves 
 of antiquity or of Louisiana. " Work for all who want to 
 work," would soon change " competition for the daily bread " 
 into " competition for the superfluous," for it is only the army 
 of the unemployed which presses down wages and puts the 
 worker at the mercy of the employer, who himself by the 
 same cause has to disgorge into the coffers of capitalism the 
 wealth wrung from the workers. He only performs the office 
 of a sponge, used by capitalism to surrender under its grip 
 the life blood of the workers it has sucked in. 
 
 If the thousands of millions of unconsumed incomes were 
 really invested in machines, factories, railroads and other 
 productions of work, there would be plenty of work for 
 everybody. Thrown out of one department labour would 
 immediately find work in another. If improved machines 
 lessened the number of workers required to produce a certain 
 article, new hands would at once be required to make 
 these improved machines, and as their number could never 
 equal that of those they displaced or there would be no 
 saving — the spare hands would produce new articles of luxury. 
 Not seeing and understanding the obstacle, and convinced of 
 the truth contained in the theory which demands the self- 
 adjustment of employment in the different departments of 
 work, our economists pretend that such self-regulation
 
 THE PROBLEM SOLVED. 55 
 
 actually takes place. We have seen in the last chapter how 
 they manage to get over the inconvenience of facts which 
 totally differ from their pet theories. 
 
 An exceptional circumstance took place at the time rail- 
 roads were introduced, an unprecedented increase of long 
 compressed travel not only gave full employment to the new 
 vehicles, but also increased the number of horses and coach- 
 men, whose trade short-sighted people expected to die out, 
 whereas in reality more coachmen were required to carry 
 people and merchandise backwards and forwards from the 
 new engines of transportation, under the new system, than 
 were previously wanted to do the entire business of trans- 
 portation. This exceptional fact is, up to this day, made use 
 of to prove that all improvements in the arts of production 
 and transportation are bound to have the same effect, though 
 statistics, as we have seen, show a completely different pic- 
 ture. 
 
 If the unconsumed incomes would find investment in new 
 machines, &c., there could be no want of work. We should 
 really obtain all the good things which our economists pre- 
 tend we are enjoying. The beans would be there, if the pigs 
 had not eaten them ; real beans, not such as exist only in the 
 imagination of our philosophers. Not only would the new 
 machines, &c., continually afford employment for large armies 
 of workers, but the number of hands employed by these 
 machines would not decline in spite of their increased pro- 
 ductivity, because a proportionate reduction of prices would 
 increase the purchasing power of wages and the consumption 
 of the cheaper goods in an equal measure. The absence of 
 the immense reserve army of unemployed workers would 
 render it impossible for employers to press down wages as 
 the cost of living increased. On the contrary, the workers 
 would have it in their power to exact an increase. The rock 
 on which most strikes are bound to founder will be cleared 
 away, when the unemployed are busy. When two emi loyers 
 look out for one workman, wages are high ; as long as two 
 workers apply for one vacant place, wages will have a down- 
 ward tendency, in spite of all the strikes in the world. This 
 tendency will be downward even when wages rise, if they do 
 not rise in proportion to the increased productivity of labour. 
 But even if the new machines could not find plenty of work
 
 56 RENT, INTEREST, AND WAGES. 
 
 through increased consumption, things would soon right 
 themselves. The great capitalists would sustain the losses 
 caused by the new machines lying idle, having to rust in the 
 shop or being sold at a loss. All this could not diminish 
 opportunities for work, as long as the surplus incomes found 
 their employment in products of work. As gold or real 
 money is itself a product of work, even the method of hoard- 
 ing the surplus in the shape of this kind of wealth could not 
 have the effect of creating a scarcity of work. The value, 
 i.e., the purchasing power of money would rise, but this 
 would, in the first place, increase the purchasing power of 
 wages, which, even under present circumstances, are slow to 
 follow changes in the value of the circulating medium, and 
 certainly would do so much less at a time when the absence 
 of the reserve army of the unemployed would make resistance 
 against reductions so much more effectual. The increased 
 purchasing power of wages would again stimulate consump- 
 tion and production, and the hoarded treasures would soon 
 come forth again to change into new machines required by 
 the increase of demand. 
 
 We have now seen that if the Rothschilds — and of course all 
 those for which they here serve as a type — invested their nine 
 millions in machines, or if they hoarded them in cash, there 
 would be no social problem. The earnings of workers would 
 increase to such a degree, that finally they would become the 
 capitalists, and the Rothschilds would disappear. But the 
 Rothschilds do not invest their nine millions in such a way. 
 They neither buy goods for consumption with them, nor new 
 tools of production, nor do they hoard them. What then are 
 they doing with them ? How can they employ them other- 
 wise ? The answer to this question gives us the solu- 
 tion of the great social problem of the nineteenth century. 
 
 That this answer has not been given before has, for the 
 most part, been caused by the want of a clear and generally 
 accepted definition of a little word, the word " Capital." 
 
 Definition of Capital. 
 
 What is Capital ? I think that the definition which describes 
 capital as wealth used for the production of new wealth, will 
 cover most of those given by economists. Unfortunately
 
 THE PROBLEM SOLVED. 57 
 
 Capital, in the sense commonly used, in by far the greatest 
 number of cases means something entirely different. Look 
 over the stock exchange lists, in which a great part of what we 
 call " 7iational capital " is enumerated in its different forms, and 
 let us investigate how much of this capital will stand the 
 definition of economists. A great part of the capital in ques- 
 tion consists of land. Land is no capital, improvements are. 
 Even as it is, these form only a comparatively small part of the 
 total of land values ; but this part gets very materially re- 
 duced, if we deduct what has been taken from the land to 
 make room for present improvements. If we only look at 
 those improvements made by land owners, we shall certainly 
 find a deficit against them, which probably would not dis- 
 appear completely if we were even to add the improvements 
 made by the tenants on their land. Anybody who doubts 
 this has only to imagine that in the middle of England a piece 
 of land had been left in the original state, that it had never 
 been touched by human foot. Let us suppose it covered with 
 immense trees, with a soil enriched to a great depth by the 
 decay of former vegetation. Would such land not be worth 
 a great deal more than the neighbouring farm, including all 
 its improvements ? If land to-day is worth much more than 
 the land in primeval times it is certainly not due to the 
 improvements made by landlords or tenants, but to those 
 made by society, by the community, which built roads, canals, 
 dykes to repel inundation, wliich made river regulations for 
 the sake of drainage and irrigation ; wliich enacted good 
 laws and ensured public security ; in short, it is the increase 
 of population and the advance in science and art which have 
 made the England we all know. 
 
 The claims of landlords to the right of ownership based on 
 improvements made by them always reminds me of a joke 
 which once happened in a grocery store. A man asks for a 
 herring. He obtains it. He changes his mind and asks for 
 a piece of cheese instead. As he is m the act of going off 
 with his cheese, the shopkeeper reminds him that he did not 
 pay for the cheese. " Why, I gave you the herring in 
 exchange." "But you did not pay for the herring." "Cer- 
 tainly not, because I gave it back to you, don't you see ? " 
 The shopkeeper saw the correctness of the remark, but still 
 felt puzzled as to how it was that, though everything seemed
 
 58 RENT, INTEREST, AND WAGES. 
 
 all right, he had given away his cheese without getting any 
 money in return. 
 
 The same conversation takes place between the people and 
 the landlords, who follow the reasoning which philosophers 
 of the Carey stamp teach them. 
 
 *' You did not pay for your land," say the people to the 
 landlords who make off with their booty. " No but you 
 know, I gave the improvements which are worth as much as 
 the original soil.'' " But you did not pay for the original 
 soil." " I know, but I did not keep it, you know." 
 
 After land mortgages take an important place in the 
 stock exchange list. They are no capital, whatever the 
 wealth they originally represented, may have been. They 
 are nothing but privileges empowering their owner to levy a 
 tribute from the landowner. Part or the whole of the rent is 
 handed over by the mortgagor to the mortgagee. As he who 
 owns the rent is the real owner of the land, and as the one 
 who pays it is nothing but a tenant under another name, 
 mortgages may be considered as land property. They are 
 therefore not capital. 
 
 We come next to government bonds. Part of them may 
 be considered as capital, but only a very small part, viz., that 
 alone which is invested in real products of labour, as for 
 instance, in rail-road material, arsenals, ships, buildings, etc. 
 Kow small the fraction thus invested, really is, can best be 
 seen from the fact, that Leroi-Beaulieu on page 484 of his 
 " Essay sur la Repartition des Richesses," wishing to show 
 how large the common property is, and therefore certainly 
 not underestimating it, gives a total of 4,000 million francs as 
 representing the value of state and communal property in 
 France, against a debt of over 30,000 millions, state, communes 
 and departments being added together. If we consider that 
 from these 4,000 millions perhaps half will have to be 
 deducted for land, we retain only 2,000 millions, or one 
 fifteenth of the public debt, as covered by real capital; 
 fourteen-fifteenths are nothing but the market value of the 
 privilege to employ the full power of the state for the purpose 
 of collecting taxes from the citizens for the owners of the 
 state bonds. 
 
 Railroads take an important place in the stock exchange 
 list. A great part of these stocks and bonds represent land.
 
 THE PROBLEM SOLVED. 59 
 
 others represent water, that is an artificial inflation of the 
 capital by the process called " watering of stock.'' * Even 
 where this hydraulic process has not been resorted to, the 
 rate of exchange will do the same thing in a different way. 
 If stocks are above par, this means that the privilege of 
 
 * The American, Guy Hampden, in an article of ''Vox Populi," 
 
 entitled " Mostly Fools," as an illustration of Carlyle's famous say- 
 ing, that the population of England was made up of thirty million 
 souls, mostly fools, gives the following statement, adapted to 
 America; which shows how spurious capital is manufactured : — 
 
 " According to the Manhattan railway company's last annual 
 report, its net earnings for the year were 3,658,486 dollars. The 
 joint capital of the two companies merged to form the Manhattan 
 company was 13,000,000 dollars, but after the merger this was set 
 down by the concern at 26,000,000 dollars. The dividend last year 
 was 8.09 per cent., equivalent to 16. 18 per cent, on the true capital. 
 As the roads were built from the proceeds of bonds, the stock 
 really cost the stockholders nothing. The city might have built 
 the roads for 16,000,000 dollars, which, in three per cent, bonds, 
 would have made an annual interest charge of 480,000 dollars. 
 
 " Let it be borne in mind that, by the report, the net earnings for 
 the past year are 3,658,486 dollars and 480,000 dollars, deducted 
 from that, shows a balance of 3,178,486 dollars which is the sum 
 the people now pay the chief gentleman and his associates for the 
 privilege of riding through their own streets, or a tax of a ij 
 cents on each ride. 
 
 " Every labouring man who rides daily on this road drops into 
 the till at the gate ten cents each day ; and in the three hundred 
 working days of the year deposits there thirty dollars. Out of this 
 thirty dollars, 10.50 dollars, more than one-third, goes as a yearly 
 tribute to — what shall we say ? To the genius which can devise 
 ways of wringing wealth out of beggary ? To the superior sagacity 
 which teaches men how to hold a trust for the benefit of the 
 people, and to convert it into an inexhaustible mine for personal 
 benefit ? 
 
 " That the ordinary workingman pays one-fortieth of his income to 
 enrich the milhonaire railway owner is clear. This the state has given 
 to a few individuals, and with it the power to mass millions through 
 the profit on a service it is her own duty to render at cost of supply. 
 The gentleman who was once the largest stockholder in the elevated 
 railway, said that the franchise alone was worth 50,000,000 dollars. 
 This admission was a happy indiscretion for the community, and 
 the reason why the whole population does not enjoy this valuable 
 franchise by making the roads a municipal enterprise, is that ' we 
 are mostly fools.' "
 
 6o RENT, INTEREST, AND WAGES. 
 
 collecting a tribute from somebody, adds a certain additional 
 value to the paper in question, which to be sure is not repre- 
 sented by real capital. In railroad papers it is the monopoly 
 of transportation given to their holders by the state, and the 
 taxing power it implies, which principally adds to their real 
 capital value. There are other stocks on the list, the value 
 of which is partly composed of such monopolies, for instance 
 those of gas and water works, of wharves, telegraphs, tele- 
 phones, etc. 
 
 A striking example of how great a part of the value of 
 stocks at times consists of nothing but fictitious capital is 
 furnished by the stocks of the New River Water Company 
 in London. A short time ago, the sale of an entire share took 
 place, which brought in the fabulous amount of about 
 ^95,000. Perhaps not more than ^^5,000 or ;^io,ooo repre- 
 sent the real value of the tubes, reservoirs, etc., falling to 
 each share. Let us even say ;^25,ooo, which would still 
 leave ;^7o,ooo of fictitious capital, representing nothing but 
 the market value of the monopoly, which empowers the New 
 River Water Company to collect a certain percentage of 
 water-rates from every house holder in a certain district of 
 London. 
 
 Even with shares of ordinary industrial enterprises, enjoying 
 no special monopoly, only a part of their value, as rated in 
 the stock exchange list, can be considered as real capital. 
 Not only have we to take off the value of the land they own, 
 but also the value of other monopolies, viz., of protective 
 duties which may have found their expression in the rate of 
 exchange. It is certain, that this part of the value cannot be 
 said to consist of real capital. It represents nothing but the 
 capitalised right to levy a certain tribute from the people by 
 means of the protective or other monopoly laws, which 
 permit a certain addition to the cost price, beyond cost and 
 ordinary profits. 
 
 That mining, oil, natural gas, and water power shares 
 represent to a great part nothing but land ownership, does 
 not need any further illustration. 
 
 This little review of the stock exchange list shows us, that 
 the greatest part of that which goes under the name of 
 Capital in this world is nothing but a fiction, when we apply 
 the test of the real definition given by economists. A com-
 
 THE PROBLEM SOLVED. 6l 
 
 pletely different definition will have to be found for this kind 
 of capital. Capitalised tribute rights would perhaps be the best 
 way of describing their real nature, as they are nothing but 
 the market value paid for the right of levying certain tributes 
 from the workers. They approach slave values in their 
 substance, as the value of a slave may be said to consist of 
 the market price for the riglit to appropriate certain parts of 
 the wealth produced by the work of the slave, but even a 
 slave represents much more the type of real capital, being 
 raised by human labour for the sake of producing more 
 wealth. The right to squeeze tributes out of so called free 
 workers, which is sold and bought on the stock-exchange has 
 not even this foundation. Those who own these rights, not 
 only did nothing towards raising the workers who pay them 
 their tributes but on the contrary, by the very exercise of 
 these tribute rights they do everything in their power to lay 
 obstacles m the way of raising a healthy generation of future 
 workers. The greatest part of national capital can therefore 
 justly be considered as slave flesh in its worst form, and the 
 stock-exchange is for the most part nothing but a slave 
 market. 
 
 Before i860, the six million slaves of the United States, 
 at a low average valuation of 350 dollars a head represented 
 a capital value of about 2,000 millions, at which rate they 
 figured in the statistical lists of the national capital. 
 
 After the war these 2,000 millions suddenly disappeared, 
 as we are not in the habit of including the value of free 
 workers in the lists of national wealth. Now it is certain 
 that free workers produce more than slaves and that 
 the real wealtli of the United States not only has not 
 decreased, but has increased by the liberation of the slaves. 
 We thus obtain the remarkable paradox that national wealth 
 sometimes increases in decreasing. Is it different with our 
 slave values ? If all monopolies, including the greatest of 
 all, private landownership, were abolished, enormous values 
 would disappear from the tables on which Mr. Giffen and 
 his colleagues compute the amount of national wealth. At 
 one stroke, more than one half of these enormous figures 
 would be struck out. Would the nation really be any poorer ? 
 Certainly not ; just as free men produce more than slaves, 
 so, freed from the yoke of those heavy tributes, exacted
 
 62 RENT, INTEREST, ^^ND WAGES. 
 
 from them by the holders of tribute rights, called capitalists 
 and landlords, free from those obstacles which prevent the 
 free exchange of wealth and thus diminish the production of 
 wealth, our workers would certainly produce more wealth 
 than now. The nation would be immensely richer, though 
 statistics made it much poorer. 
 
 Investments of Millionaires. 
 We return now to our friends the Rothschilds. I have no 
 statistics showing the way their fortune is invested ; but 
 through the experience, which connections and nearly eight 
 years of practical work in the banking and stock exchange Ime 
 havegivenme, I know, that large capitalists as a rule almost ex- 
 clusively invest their savings in those different forms of capital- 
 ised tribute rights, which henceforth I shall call by the name 
 of spurious, fictitious or false capital. The reason is very 
 simple. Investments in real capital are exposed to all the 
 risks to which the productions of human labour are naturally 
 exposed. From the first moment of their existence their 
 decay begins, the rapidity of which can only be lessened, not 
 annihilated by new additions of labour. Even where the 
 destructive powers of nature have little effect, as upon the 
 precious metals, which owe their high value partly to these 
 qualities, human agencies have a powerful influence in 
 rendering their possession more or less precarious. The best 
 bank vaults have been broken into; wars and revolutions are 
 apt to interfere with the safest methods of keeping this kind 
 of wealth. The more capital fulfils its real task of serving 
 labour as a tool for production, the greater will be the risk of 
 loss. The uncertainties of business life are well-known. 
 According to the statistics of Dunn and Co., the largest of 
 all those commercial agencies giving information about the 
 solvency of business firms, during the fifteen years ending 
 in 1883, one firm in a hundred failed yearly. We can safely 
 admit that for one firm which fails three liquidate with great 
 loss to themselves, without neglecting their obligations to 
 others. Thus one in twenty-five firms has to liquidate with 
 loss every year, or the average life of commercial capital, as 
 far as its owner is concerned, does not exceed twenty-five 
 years. All those who have been in business, know what 
 ummense decreases in value take place, when a commercial
 
 THE PROBLEM SOLVED. 63 
 
 concern is forced to liquidate. Not only the value of long 
 years of hard work spent in building up a trade, is completely 
 lost, but the actual tangible values are sold for a mere fraction 
 of their cost. According to Roscher, three large Manchester 
 spinning establishments were sold in 1 842, for ;^66,ooo, though 
 they were valued at ^212,000. This is even a good result, if 
 we compare it with what we are witnessing everyday, without 
 suffering under an exceptional commercial crisis like that of 
 1842. In 1886 a clock factory of the Black Forest was sold for 
 75,000 Marks, though its cost, according to the books, was 
 600,000 Marks. In the same year the inventory of some 
 chemical works at Berlin, costing 100,000 Marks was sold 
 for 12,000 Marks to one of the creditors. The highest offer 
 made by one of the tradesmen professionally buying such 
 stock was 5,000 Marks. 
 
 Prospectuses of new stock Companies are very seductive 
 as a rule ; so are the calculations of inventors or projectors, 
 who try to induce capitalists into making investments ; but 
 our large capitalists very rarely allow themselves to be 
 caught by such seductions, unless monopoly rights of a 
 secure nature are in question, or unless perhaps they see a 
 prospect of immediately selling out at a profit to smaller 
 capitalists. These are the fish who generally bite at such 
 bait, allured by the expectations of large gains. The large 
 capitalists know by experience, obtained through a better 
 survey of the whole field, that the average chances of such 
 enterprises are smaller than those offered by good securities, 
 paying only small, but certain dividends. It is just as with 
 a lottery. Every one knows that lottery tickets necessarily 
 bring prices of a smaller total than the amounts paid for the 
 tickets amount to. If it were different, it would not pay to 
 start a lottery. Nobody would be crazy enough to buy up 
 all the tickets in a lottery, unless he got them at a price 
 which would leave a loss to the original sellers. The 
 larger the investment the more certain the chances of loss 
 are bound to be. Only small investors take to this special 
 method, because, though they know that on the average they 
 are sure to lose, they hope that they will belong to the for- 
 tunate few who win. 
 
 As the good securities are only to be found among the false 
 capital, the interest of which is guaranteed by the ownership
 
 64 RENT, INTEREST, AND WAGES. 
 
 of natural opportunities, indispensable to workers, or by the 
 whole power of the state, large capitalists almost exclusively 
 choose these investments. 
 
 A good proof of this has been furnished lately by Henry 
 George's Standard, which, in one of the January numbers of 
 i8go, gives the inventory of the fortune ot a typical American 
 millionaire, named J. D. Rockefeller. The greatest part of 
 his fortune, reaching a total of 117 million dollars, consists 
 of 68 million's worth of Standard Oil Company shares, the 
 value of which consists for the greatest part of monopolies in 
 oil wells or railroad transportation, land and transportation 
 monopolies, i.e., false capital. Real estate (ten millions) 
 shares of the lead trust, the base of which is formed by min- 
 ing property (land"^ and protectective laws (monopoly), natural 
 gas shares (land) bankshares, the security of which is formed 
 by land or government bonds, town gas shares (mostly land 
 and monopoly), etc., form the balance of the list. Only one 
 million of the 117 seems to consist exclusively of real capital : 
 shares of the Inman steamship line. Even here we have to 
 take into consideration that the principal risk of the property 
 falls upon the underwriters, mostly men who possess sufficient 
 quantities of land or other good false capital, so that even 
 here the security of the false capital is added. Of the whole 
 117 millions perhaps not twenty are real capital, about 100 
 are nothing but capitalised tribute rights, fictitious, false 
 capital. 
 
 It is in this way that the nine millions ecomised by the 
 Rothschilds are invested. They buy more land (already the 
 French Rothschilds own 800,000 acres in France alone, and 
 in Bohemia the Austrian Rothschild owns more land than 
 the emperor) mortgages, government bonds, railroad bonds, 
 mines and oil wells (land), etc. 
 
 This new investment gives no employment to anybody, for 
 it only consists in the transfer of tribute rights, of slave 
 property, from one owner to another, or in the creation of 
 new rights of this kind, of new slaves. 
 
 The Solution of the Problem. 
 A farmer has not been able to sell his corn at a paying 
 price, for though there is plenty of corn needed in the world, 
 those who want it have to sell the product of their own
 
 THE PROBLEM SOLVED. fee 
 
 labour, before they can buy corn. Our farmer needs those 
 products as much as they need the corn ; he wants new boots, 
 new clothes, a better house, etc. Why do they not exchange; 
 those different producers, who need each others goods ; those 
 farmers, who need boots, clothes, houses ; and those shoe- 
 makers, tailors, clothmakers, builders, bricklayers, carpenters, 
 etc., who want bread ? It seems so simple, and the want of 
 money would in no way interfere with the exchange ; for what 
 are cheques and clearing houses invented for ? If each gives 
 a cheque to the other on the same day all the cheques are 
 good, all the goods are paid for, and all the exchange 
 accounts are settled. 
 
 There is a very simple reason for the dead-lock, quite 
 different from all those usually given, but clear as crystal 
 when you once have got the key to the riddle. It is per- 
 fectly transparent, when you once have seen the cat, as the 
 Georgeites are in the habit of expressing themselves, taking 
 as an illustration one of those pictures representing a lands- 
 cape and a cat at the same time, where you can only see the 
 cat after having your attention drawn to it, and henceforth 
 can hardly understand how everybody does not see it imme- 
 diately. The simple reason of the dead-lock is that the 
 workers of this world owe interset and rent debts to the 
 Rothschilds and their colleagues. To satisfy these debts 
 they have to sell a certain amount of their products in 
 the markets of the world. Now, as we have seen, the 
 l^othschilds do not buy goods to the full amount of their 
 credit on interest and rent account. The total of the deficit, 
 which for the Rothschilds alone, a single family, or let us 
 say four families, is nine millions a year at the present 
 moment, is calculated greatly to exceed 500 millions, if all the 
 non-consumed incomes throughout the world which are not 
 invested in real capital and therefore do not buy goods in the 
 market, are added up. Those who think this amount exces- 
 sive will please bear in mind that, according to GifTen, the 
 annual increase of national wealth in Great Britain alone 
 amounts to an average of 200 millions. We can safely say 
 that not one half of this increase consists of real capital, 
 or finds its equivalent in a proportionate increase of houses, 
 machines, ships, furniture, clothing,or merchandise of any kind. 
 More than half is represented by an increase in the capital
 
 66 RENT, INTEREST, AND WAGES. 
 
 value of land, especially building land in towns, irrespective 
 of improvements, by the increased value of monopolies, water- 
 rights, railroad franchises, &c., by the increase of foreign 
 debts, through the accumulation of uncollected interest — 
 for we must remember that a great many debts, 
 especially those of states, are paid by new loans — and 
 bj- similar fictitious values, consisting in nothing but a crea- 
 tion of new tribute-rights or in a higher valuation of the 
 existing ones. Thus Great Britain alone furnishes loo milliofis 
 of the 500. The United States furnish at least half more, 
 say 150 millions. A single boom of real estate — as they call 
 over there those rapid mcreases of land values caused by 
 speculation running ahead of natural increase of population 
 and wealth — will sometimes largely exceed that amount, and 
 though reactions take place there is not the least doubt that 
 the real increase will reach at least 150 millions yearly, 
 independent of improvements, especially if we include all the 
 different kinds of spurious capital. A low estimate of American 
 real estate, exclusive of improvements, will give for the 
 United States alone 5,000 million pounds. An increase in 
 value of not more than three per cent., certainly below the 
 reality, would already give our 150 millions. This increase 
 is no real increase, but only one of slave values. 
 
 As we see. Great Britian and the United States alone 
 amount to one half of our 500 millions, and the balance of the 
 world will certainly give a good deal more than the other 
 half. Think of the enormous increase of land values in South 
 America, Canada, Australia, and of that in our continental 
 towns ! Think of Russia's mines and oil wells, think of water 
 powers, the value of which increases with the price of coals 
 and the increase or industry ! But before anything we have 
 to bear in mind the enormous increase of state debts through 
 inability to pay interest or to pay for new warpaint, powder, 
 and balls, &c., things which represent no enduring value.* It 
 is only the debt, and the increased taxing power its growing 
 figures give to Rothschild and Co., which endure. Five 
 hundred millions is certainly the lowest figure at which we can 
 
 ■"•According to the Tenth Census of the United States the average 
 annual increase of national debts of leading nations has been 
 4891335.079 dollars.
 
 THE PROBLEM SOLVED. 67 
 
 estimate that part of the yearly tribute exacted from the 
 workers, which is not taken in real wealth, in actual products 
 of labour, but is invested in the purchase of new tribute rights. 
 The workers try to sell 500 millions worth ot goods to satisfy 
 the demands of their creditors, who do not buy one penny's 
 worth of these goods, as they are already oversatiated by 
 exercising the remaining part of their tribute rights, and as 
 they do not want to invest their surplus in real capital, in the 
 products of labour. The workers would very willingly buy 
 or exchange with each other those 500 millions worth of 
 goods ; but they cannot do so, as they have to deliver the 
 market value of these goods to their creditors, who do not 
 take anything in payment, but new tribute rights or the 
 money to buy them with.* Those of the workers who have 
 got tribute rights to sell gradually have to give them up ; 
 others make frantic efforts to sell their labour or its products. 
 Our farmer had to sell his corn under cost, because the dead- 
 lock caused by the millionaires has so narrowed down the 
 market, that one producer tries to underbid the other, so as 
 to be enabled to satisfy his Rothschilds, and not as a result 
 of anarchical production or exchange, as Socialists believe; 
 but because there is not sale enough for all products, a fact 
 which creates a devil-take-the-hindmost competition, instead 
 of a peaceful emulation to do better than others, without 
 hurting them. Instead of a pleasant march, during which 
 each endeavours to help his neighbour, we get the terrible 
 run and fight for life we see around us, because monopoly has 
 been walling up one after another of the doors permitting 
 the passage from want to plenty. 
 
 * Henry George very successfully shows the fallacy of the wage- 
 fund theory, the antiquated economic axiom that wages depend on 
 the ratio between the number of labourers looking for employment 
 and the amount of capital devoted to hiring them. In Germany 
 he would have been forcing an open door, for our German economic 
 writers have long ago demolished this theory. There is never 
 smoke without fire, though, and we have seen now by what pre- 
 ceded, that wages, after all, under the present state of things depend 
 on the amount of fictitious capital, but the relation is not a direct, 
 but an inverted one. We might say with perfect correctness that 
 the demand for labour stands in an inverted relation to the amount 
 •of spurious capital existing in the market.
 
 68 RENT, INTEREST, AND WAGES. 
 
 Our farmer, as a consequence of his being forced to sell 
 under cost, cannot meet his engagements, and has to take a 
 mortgage on his farm. His neighbour, the manufacturer, 
 whose profits have in the same manner gone down, through 
 the low prices and the great and expensive efforts he has to 
 make to find customers, by means of advertisements and 
 travelling agents, tries to improve his chances by the intro- 
 duction of new machinery, which enables him to produce 
 more with fewer hands. Unfortunately for him he is not the 
 only one who has that excellent idea. Thousands of his 
 colleagues all over the world who are in the same position 
 have done the same thing. A general reduction of prices 
 takes place in consequence of the saving effected. 
 
 But consumption does not increase in proportion to the 
 cheaper price of the goods, for the workers who have been 
 employed to make the new machines are only temporarily 
 occupied, whereas, those whom the improvement throws out 
 of work are thrown out for ever and their wages no more help 
 to increase consumption. On the other hand, our manufacturer 
 and thousands of his brothers have had to sell government bonds 
 or land they possessed, or worse still, have had to run into 
 debt to their bankers, who take a mortgage on their property. 
 This has decreased their income and their consumption, as 
 that of our farmer has diminished by the amount of the interest 
 of his mortgage. The Rothschilds, Vanderbilts, *Westminsters 
 and Co. who finally get the government bonds and the land 
 sold, or the mortgage bonds entered into by farmers, 
 manufacturers, merchants, etc., do not increase their consump- 
 tion, which before this had already reached its maximum 
 capacity, or at any rate they do not increase it in proportion 
 
 *According to the tables of Thomas G. Shearman there are in the 
 United States : 
 
 70 men possessing more than 37,500,000 dollars. 
 
 90 
 
 180 
 
 135 
 
 1755 
 
 6000 
 
 11,500,000 
 8,000,000 
 6,800,000 
 2,300,000 
 1,250,000 
 
 55,000 men own more than half of the national wealth, which is 
 estimated at 65,000 million dollars. Fifty years ago there was only 
 one millionaire in the United States ; but beggars and tramps weie 
 equally scarce.
 
 THE PROBLEM SOLVED. 6g 
 
 to the decrease in the consumption of the others. The 
 deficit between consumption and production, or anyhow ; 
 productive power — for we cannot produce very long, when 
 we do not consume — thus becomes worse from year to 
 year. Our farmer finally has to give up the battle and 
 leaves for the town to increase the army of the unem- 
 ployed, either directly or by his competition for work. 
 Our manufacturer becomes a bankrupt, his machines and 
 stock are sold at one fifth of their cost price, his hands are 
 thrown out of work ; but the Rothschilds get their interest all 
 the same, for the land is there, and whoever is going to use 
 it has to pay them an increasing tribute. Perhaps the broken 
 man will open a little shop somewhere where there are already 
 more than can subsist and thus become one of the parasites 
 living on the work of others; for every penny, which has to 
 be added to the cost of goods to support merchants and 
 shopkeepers beyond the amount really necessary to pay in the 
 most economical manner for the work of distribution, is waste 
 and food of parasites. 
 
 Causes Delaying the Catastrophe. 
 
 Parasites, too, have their uses in this world of ours. There 
 are certain insects, which would destroy every leaf on earth, 
 if some other parasite did not find it convenient to lay its 
 eggs into their larvae, and if the young stripling coming forth 
 from the same did not begin life by quietly eating up his 
 lodgings. Parasite against parasite. It seems to be a law of 
 nature holding good even in our social world. The big 
 parasites who by means of their interest and rent proboscis 
 suck the life blood from the social organism would ruin us 
 much faster even than they do, if the smaller parasites did 
 not suck back into it some of the life sustaining liquid. 
 
 There are other parasites in great number, which help to 
 put off the inevitable catastrophe. Foremost among them is 
 the criminal and the military parasite. 
 
 W. S. Gilbert furnished a splendid piece of satire in the 
 Times, in saying that lie never could understand the popular 
 prejudice against burglars, who give so much occupation to 
 innumerable employes of the telegraph, the police and the 
 railroad ; sometimes also to surgeons, coroners and grave- 
 stone makers. All these the burglar keeps busy before he is
 
 70 RENT, INTEREST, AND WAGES. 
 
 caught. As soon as he is in safe keeping, the services of 
 a complete army of lawyers, judges, small and great jurors, 
 reporters, jailers, and prison administrators, are in requisition. 
 He certainly does more good than evil. 
 
 And our armies and fleets! How many hands they keep 
 busy, which otherwise would increase the army of the unem- 
 ployed ! And the enormous sums spent for fortifications, 
 armaments, new rifles, of which a new, more deadly form, is 
 continually superseding that which has but just been brought 
 out ! Do we not owe it to these and similar causes, that we 
 are enjoying, what we call a wave of prosperity at the present 
 moment ? We are modest ; such a prosperity, such an 
 improvement in business would, perhaps, have been called a 
 depression 40 years ago ; but let us not be ungrateful ! * 
 
 Depressions and Improvements in Business. 
 
 I have to explain here, how it is we have these inter- 
 missions between commercial depressions, for which even the 
 causes just mentioned would not wholly account, if they were 
 not reinforced by auxiliaries of great power. 
 
 These auxiliaries are ignorance and hopefulness. Simple 
 though it is, when once understood, the real cause of com- 
 mercial depressions is not known. Even great thinkers like 
 Henry George, only partially realize the real cause. In 
 " Progress and Poverty " he sees it in the forcing up of land- 
 values, by speculation, which in discounting the future, 
 creates an artificial dearth of land, rendering it impossible for 
 labour and capital to get access to land on paying terms. 
 
 * I have just come across the following remark in a letter written 
 by the Rev. Mr. Harold Rylett to George's Standard of Feb. 5, 1890, 
 which coutinns my views of the modesty we have acquired in 
 i^egard to our estimate of business improvement. Mr. Rylett 
 writes : " For my part I take leave to doubt whether this much 
 vaunted improvement in trade is a very serious affair. In the poor- 
 law district in which I reside, and which is regarded generally as 
 one of the most prosperous communities of working people in 
 England, we are confronted with a fact, such as this — that in 
 1888 there was in Hyde one pauper in every no of the population, 
 while in 1889, the year of improved trade, we had one pauper in 
 every 102 of the population. And this district was not singular in 
 this respect. Neighbouring districts were affected in an exactly 
 similar way."
 
 THE PROBLEM SOLVED. yX 
 
 Everybody is more or less influenced by his surroundings, 
 and we generally form our judgment on what we are in the 
 habit of seeing. It is no wonder therefore that an American, 
 who perhaps had never been out of his native country, should 
 be naturally inclined to look at the world in the light of his 
 native surroundings, and to judge general by local conditions. 
 Because the rise of land values in the United States seems 
 to be and partly is a cause of commercial depressions, Henry 
 George sees here the universal cause. Even in the United 
 States, however, what seems to be the cause partakes more 
 of the nature of an effect accompanying the real cause and, 
 as very often is the case, intensifying the influence of the 
 cause through the workings of the effect. 
 
 To begin with, I think it is an error to confound the rise of 
 land prices with the rise of rent. Both are subject to totally 
 different laws. Rent rises, when more rent can be squeezed 
 out of the tenant. Speculation cannot force it any higher, nor 
 can tenants as a general rule reduce it any lower. In the 
 first case tenants would not be able to pay and as landlords 
 rather take something than nothing at all, they will let at 
 what they can get. In the latter case, though by combina- 
 tion or law we may sometimes see an exception to the rule, 
 as a general thing competition is sharp enough to finally 
 overthrow any such artificial means of regulating rent. 
 
 The price of land as a rule corresponds with the sum 
 obtained by multiplying the rent figure by loo and dividing 
 the total by the rate of interest, obtainable for this 
 kind of investments. This rate of mterest differs very 
 much in different countries and periods ; but it is generally 
 below the rate of mortgages — because these do not have 
 the advantage of advancing in value, which land enjoys — 
 unless the difficulties of collection add a risk premium 
 (insurance) to the regular rate. In Germany, where good 
 mortgages pay only four per cent, and where the rise 
 of rents of agricultural land has been a little more than one 
 per cent, for long periods, accompanied by great safety and 
 little trouble of collection, the rate at which such rent is 
 capitalised is about two per cent, below that of good mort- 
 gages. It is about two per cent. The honours and the 
 influence connected with land ownership tend to lower the 
 rate below the natural level. It would be lowered still more,
 
 RENT, INTEREST, AND WAGES. 
 
 it the ease with which mortgages can be sold, specially if 
 converted into the shape of bonds did not operate a little in 
 their favour. In Ireland, where political causes have reduced 
 the certainty of undisturbed rent collection, and the hope 
 of a rental rise, the capitalisation of agricultural rent takes 
 place at six or even seven per cent., as some of the purchases 
 under the Ashbourne act show, where from fourteen to 
 seventeen years purchase was paid. Out of this six to seven 
 per cent, not less than three per cent, consists of risk premium, 
 i.e., insurance, and expenses of collection. Though these 
 facts furnish us a fairly reliable rule for the calculation of land 
 values, we cannot always depend on them, for in speculation 
 we have a disturbing element of great uncertainty. Sound 
 speculation will not disturb the working of our rule, for it is 
 nothing but an estimation of the rate of increase likely to 
 obtain for the land in question. If experience shows that this 
 rate, instead of only reaching the average of one per cent, in 
 Germany, is likely to be three per cent, capitalisation would 
 probably take place at one per cent., or less, or in other words 
 loo years purchase would be paid. But speculation for the 
 most part cannot be sound, because it is impossible to estimate 
 the rate of increase in the majority of such cases, where an 
 exceptionally great increase is expected. In these cases the 
 common way of calculation is entirely abandoned. The 
 selling price of land is no longer based on a capitalisation of 
 present, but on that of future rents. When the price paid 
 for land near towns is calculated, it is very often not based 
 on the small agricultural rent it brings, which may be even 
 eaten up by the taxes, but on the estimate of a future rent 
 obtainable for building sites. It is the same with agricultural 
 land in new countries, where land beyond the margin of 
 cultivation, which at present would not pay any rent, is 
 held at prices based on rents expected at some future day, 
 when such land will be desirable farming land. 
 
 Let us see now, how such speculation affects capital and 
 labour. 
 
 In speaking of capital, of course we here mean real 
 capital, for it is quite certain, that land cannot be too dear 
 for spurious capital, as it is the supply and demand of the 
 latter which creates the prices of land, for these are nothing 
 but the market value resulting from supply and demand at
 
 THE PROBLEM SOLVED. 
 
 which tribute rights, or the privilege of exacting present or 
 future black mail from workers are bought and sold. The 
 larger the amount of spurious capital seeking investment, 
 the greater the demand will be and the higher the prices 
 which have to be paid or the lower the rate of interest, at 
 which rent will be capitalised. On the other hand the 
 quantity of spurious capital seeking investment depends 
 on the unconsumed incomes of spurious capitalists and thus 
 the very unconsumed incomes which are the cause of the 
 depression determine its intensity by their quantity. We 
 now see how high land prices are nothing but the effect of 
 those causes from which depressions spring. 
 
 When we come to investigate the effect which booms have 
 on real capital, we shall see how the effect strengthens and 
 intensifies its cause. 
 
 In the times of booms, the general cause of which lies in 
 the great quantity of spurious capital looking for investment, 
 and the effects of whicii are specially observable wherever 
 the chances of future increase promise a good average 
 investment, the extraordinary competition of spurious capital 
 will create extraordinary prices in all localities of this kind. 
 Capitalists are only men and men mostly act like sheep, 
 jumping where others jump and turning aside where 
 others turned aside. This causes prices to rise suddenly and 
 for some time makes them continue to rise. The law of 
 inertia, by which any motion has a tendency to continue 
 after its cause has ceased, operates in business evolutions as 
 elsewhere. As long as the increase has been rational, viz., 
 not exceeding the real values at which rents will sell in the 
 near future, the large capitalists, i.e., the owners of spurious 
 capital, will buy. When this point, which their larger ex- 
 perience in such matters will show them better than the 
 ordinary business man, is reached, they will stop and if they 
 hope to buy back cheaper at a future period, they even will 
 sell. It is the small fry which for some time yet continues 
 the upward motion. It seems such a splendid thing to 
 them, this easy way of making money, which appears to 
 be without limit. Why invest your money in business, in 
 real capital, when false capital brings such profits ? A, who 
 has shares in an industrial enterprise, sells them to buy land. 
 B, who has some money lent to business men takes it back
 
 74 RENT, INTEREST, AND WAGES. 
 
 to go in for land speculation. C, a manufacturer, who 
 intended to enlarge his factory, thinks he had better put it 
 off and use his money to buy some town lots, which he soon 
 expects to sell at a large profit. D, a farmer, who has saved 
 some capital, which he was going to use for the improvement 
 of his farm, decides to wait and meanwhile to buy some land 
 in his neighbourhood, which he does not need, but expects 
 to sell, when it has risen in price. He even buys three 
 times, as much as his means allow him, taking a mortgage 
 for the balance. It is in this way, that the formation of real 
 capital is prevented in hundreds of cases in which savings, 
 which would have been used to give employment to workers, 
 find investment as false capital, giving work to nobody and 
 finally only increasing the unconsumed tribute rights of a 
 surfeited minority, the only ones in most cases who profit 
 by the boom, as when the inevitable crash forces the dupes 
 to sell their boom lands, they buy back at lower prices, 
 what they sold when prices went beyond their legitimate 
 level. 
 
 This is the way in which speculative risings of land values 
 keep capital from investment in business enterprises and 
 labour from getting employment. 
 
 It is not because rents are too high, for they never can 
 be higher than workers can afford to pay and it is only rent 
 not the price of land, which has to be looked at, when we 
 speak of labour not being able to get at the land. 
 
 It is not because, as George says, capital does not obtain 
 the minimum return below which it cannot be preserved — for 
 even in the best times capital will not offer itself for invest- 
 ment, if it only gets enough to pay for its preservation, as 
 long as land or other monopoly investments will afford a rate 
 of interest beyond the cost of preservation — it is because in 
 the periods of booms capital more than usual shuns real 
 investments in active production, as false investments in the 
 purchase of tribute rights seem to offer so much better 
 chances. It is because the real causes of the depression have 
 been greatly strengthened by the effects of land speculation. 
 
 When wars, by means of wholesale destruction of wealth, 
 temporarily create a large consumption which for the time 
 compensates for the deficit caused by the under consumption 
 of millionaires, we generally find a great activity in business,
 
 THE PROBLEM SOLVED. 
 
 75 
 
 which never can last long, as the new loans made by the 
 states to pay for the expenses and devastations of the war 
 have only increased the volumes of false capital and of its 
 unconsumed revenues. 
 
 Henry George is completely mistaken, when he tries to 
 explain the cause of depressions ascribed by him to specu- 
 lation in land values, by assuming that the high price of land 
 prevents the production of raw materials without which 
 industrial workers, who would willinj^ly spend their labour 
 upon them, or exchange it against them, have to lie idle. 
 Anybody, who ever observed the markets during industrial 
 depressions, knows very well that at no time are raw materials 
 so abundant, so cheap and accessible as at such periods. 
 There is no department of production, in which the suffering 
 is greater in such times and in which the workers try harder 
 to get rid of their products at the lowest prices, than in those 
 of agriculture and mining. How then can anybody say that 
 the depression is caused by the inaccessibility of raw 
 materials ? 
 
 In fact, this is just one of the remarkable features, which 
 distinguish modern depressions from those of ancient times. 
 Formerly, when bad harvests, war or other causes 
 impoverished the husbandman, so that he hardly had enough 
 to eat for himself,and could not bring corn to the towns there to 
 be exchanged against the products of industry and commerce, it 
 was easy to account for depressions. Henry George, then, 
 would have been borne out by the facts, if he had ascribed 
 their origin to the inability of the farmer to produce the raw 
 materials without which industry and even life itself are 
 impossible ; but how is it admissible to come forward with 
 such reasoning at a time in which fields go out of cultivation 
 because the immense stocks of corn have pressed down its 
 prices below the paying limit ? 
 
 When Pharaoh had the well known dream about the seven 
 lean and the seven fat kine, the task of Joseph who had to 
 explain the dream was a comparatively easy one. The fat 
 kine were fat years, the lean kine signified years of scarcity 
 and this interpretation once accepted, it was not difficult to 
 provide a remedy for the impending depression. All the 
 wisdom of Jacob's son would have been at fault however, if 
 anybody had told him, that a time was coming, when people
 
 76 RENT, INTEREST, AND WAGES. 
 
 would suffer hunjjer, because there was too much grain in the 
 market, so that the storehouses could not hold it. Would he 
 have been satisfied with an explanation which told him that 
 the real cause of the evil was that labour and capital could 
 not get at the land ? " Why, how is it, then that there is 
 such an enormous stock of corn ? " he would naturally have 
 asked, " If the calamity comes from too great a stock of corn, 
 which has to be disposed of, before people can find new work, 
 how is this state of things to be remedied, if labour and 
 capital can get at the land to produce a still greater stock of 
 this unsaleable corn ? I can see it, just as little as Joseph. 
 Will Mr. George explain ? I have dwelt at some little length 
 on his theory of depressions, because even though his own 
 explanations do not cover the field, he at least sees and shows 
 the hoUowness of other theories, by which sometimes people try 
 to account for the prevailing business epidemic, and because 
 when a clear head like his fails to pierce the darkness sur- 
 rounding this problem, it need not astonish anybody, that 
 the gr«it body of business men have no idea at all of the 
 real cause underlying commercial depressions. 
 
 General Ignorance of tlie Real Cause. 
 
 Ask any manufacturer,merchant, shopkeeper, what he thinks 
 might be the true cause of the stagnation in business and 
 ten to one he will tell you that there is no confidence in the 
 maintainance of peace, that this absence of confidence 
 prevents capitalists from embarking in new business enter- 
 prises, and makes everybody afraid to take in more stock than 
 he can help. Besides, there are the enormous expenses of 
 governments for armaments, which bye and bye get so heavy 
 that they are bound to crush us in the end. " How can we 
 afford to keep millions of our best workers idle, feeding them, 
 instead of them feeding us?" It is strange, that these 
 people never try to account for the remarkable fact, that it is 
 just when the greatest armaments are made, or even during 
 great wars, when more workers are taken away than ever, that 
 confidence comes back, and business revives. Logic is not 
 the habitual companion of fear or hope. Both once in 
 possession of the field, defy all attacks of sound reasoning and 
 generally succeed in constructing their own groundworks of
 
 THE PROBLEM SOLVED. 
 
 77 
 
 sophistical reasoning. There are mental epidemics as well 
 as physical ones. One of the most curious examples of these, 
 which is very little known, was observed in Wurtemberg 
 during the month of March, 1849. On a certain day of 
 that month, the 25th, all over Wurtemberg people thought 
 the French were entering the kmgdom, though no French 
 army crossed the frontier. There was almost no telegraph ; 
 but all over a country, which required days to get its different 
 parts into communication, people armed on that same day 
 and began marching westward, to meet the enemy or fleeing 
 eastward to avoid him. In towns and villages, none of which 
 knew anything of the other, the same report sprang up at the 
 same time, without anybody knowing who started it. The 
 highly interesting facts were even collected in a little 
 pamphlet " Der Franzosenkrieg," Samstag 25 Marz 1848 
 (Erhard Burg, Reutlingen) as an illustration of one of the 
 most extraordinary cases of mental epidemic spreading, as it 
 were, on the wings of the wind or the waves of ether. 
 
 Extensive armaments, a sudden extraordinary increase of 
 railroad building or any other cause, suddenly throwing 
 money into the market, which otherwise would have been 
 kept back, as the common parlance goes ; in reality turning 
 into real capital what otherwise would have been invested as 
 false capital — cause a revival in a few branches, which through 
 the ramifications of trade extends to others. As the general 
 idea has been all along that the depression was only caused 
 by lack of confidence and that business must get again into 
 its old channels as soon as confidence revives, this slight 
 improvement apparently brings the long expected turning of 
 the tide. Hopefulness spreads contagiously to all quarters. 
 Shopkeepers give larger orders to travellers to be better 
 prepared when orders will flow in, travellers report to head- 
 quarters a general revival of trade ; merchants take in larger 
 stock of goods ; manufacturers engage new hands, put up new 
 machines, build new shops, etc. All this increases consump- 
 tion and further revives trade, thus showing to the business 
 world that their optimistical views were justified. Effect 
 strengthens cause and cause produces new effect. The 
 long expected period of renewed activity and prosperity has at 
 last returned and all is well that ends well.
 
 78 RENT, INTEREST, AND WAGES. 
 
 The Relapse. 
 
 But the real causes of the depression have been at work all 
 the time with ever increasing intensity. The new debts made 
 by governments and private firms, manufacturers, enlarging 
 their factories with capital raised on mortgages, or railroads 
 and canals built with the capital of the millionaires, have im- 
 mensely increased spurious capital and the incomes flowing 
 from it, without materially increasing the expenditures of their 
 fortunate possessors. In spite of the large government ex- 
 penses, or of the immense amounts of false capit<:l suddenly 
 changing into real wealth by the enlargements ot manufactur- 
 ing and transportation facilities, the thousands of millions of 
 capital non-consumed incomes soon make the increase of false 
 to exceed that of the real. 
 
 The natural consequences are inevitable. Shopkeepers 
 begin to see that orders do not come in as fast as they 
 thought they would, that they fall off. in a quite 
 unexpected manner, which is the more disagreeable, as on 
 the strength of the revival, new competitors have established 
 themselves in the place, who take away part of the trade 
 and reduce the small profits still more. As a consequence 
 travellers are sent back without orders. Merchants and 
 manufacturers send away part of their workmen. This 
 further decreases consumption. Debts made on the strength 
 of the expected permanence of the revival become due and 
 are not paid. Notes are protested, banks stop payment. 
 The panic which now begins to spread, takes an epidemical 
 character from the same cause, which intensified the effects 
 of hopefulness. The crash sets in, beginning a new period 
 of depression, exceeding the preceding one in length, as 
 this has exceeded the one before. 
 
 The effects of compound interest by their very nature are 
 bound to continually intensify the real cause of the depres- 
 sion. If it was not for the waste caused by wars, armaments, 
 pauperism, criminality, liquor shops and overcrowded profes- 
 sions, which prevents prices from reaching a lower scale and 
 affords chances of turning part of the newly formed false 
 capital into real wealth, the creation of which gives employ- 
 ment to workers ; if it was not for this waste a catastrophe of 
 the greatest magnitude would have arrived long ago, com-
 
 THE PROBLEM SOLVED. 79 
 
 pared with which all similar calamities the world has seen 
 would dwindle into nothing. It is sure to arrive in spite of 
 all we may do to delay it. There is no fighting against demon 
 "interest," and his son "compound interest." Perhaps, un- 
 less a terrible war, such as the world never before saw, give 
 as another breathing time, the present revival will be the last 
 of its kind, will have no successor, when the inevitable crash 
 will have gathered it to its forefathers. 
 
 Changed Character of Depressions. 
 
 To fully understand this, we must clearly bear in mind, 
 that commercial depressions have completely changed their 
 character within the present century, the era of the Roth- 
 schilds, Vanderbilts, Goulds, etc. Depressions of old times 
 were easily accounted for. When a thirty years war 
 devastated Germany, so that the husbandman was without 
 cattle and seed, and was thus disabled from producing the 
 necessaries of life, he certainly did not get enough of them 
 to exchange the surplus against the industrial products of 
 the town and the difficulty of finding work for the inhabitants 
 of these was easily accounted for. When the swindling 
 operations of a Law plundered great numbers, depriving them 
 of the capital with which they had carried on their work, and 
 wasting it in profligate expenses, the stoppage of business 
 which followed, was not very astonishing in its nature. Our 
 present depressions are the consequence of entirely different 
 causes, causes which formerly were followed by general 
 prosperity. It is the continuance of peace, the great pro- 
 gress made in all the arts and sciences, as well as in the 
 methods of work and of government, which are the causes 
 of our depressions. It is the relapse into barbarism, war 
 and its destructive forces which in our days are the factors 
 of renewed activity. But how is it that all of a sudden we 
 experienced a prolonged depression, setting in for fifteen 
 years, such as never was known before in times of universal 
 peace, hardly interrupted by temporary improvements — 
 improvements which formerly would have been considered 
 as depressions and which only appear as improvements 
 when we compare them with what went before? The ex- 
 planation is not a very difficult one. From 1815 to 1841
 
 80 RENT, INTEREST, AND WAGES. 
 
 the void made by a war of twenty years duration, a war 
 which had raged through all Europe and partly even in 
 America, had to be filled up. Besides, the invention of the 
 steam engine was the beginning of a new era in technical 
 developments, necessitating immense sums for the erection 
 of factories, machines, etc. The effect of the unconsumed 
 incomes upon trade not being felt as yet, investments of this 
 kind offered less risk than to-day, and the unconsumed incomes 
 of the few great capitalists were mostly directly or indirectly 
 invested in channels, where they did not impede the free 
 exchange of labour. 
 
 From 1S41 till i860, the era of railroad building, invest- 
 ments in this department gave a new outlet for the uncon- 
 sumed millions. Though one of the principal foundations 
 of the spurious capital of our time was thus laid — not only 
 because of the capitalisation of transportation monopoly 
 rights, but mainly through the impulse given to agriculture 
 and industry and its effect on land values, the present effect, 
 notwithstanding, was a favourable one, for the unconsumed 
 incomes found their investment in real capital, in the work 
 of human hands. 
 
 iS5o to 1873 is a period distinguished by a series of the 
 m.ost destructive wars known to modern history, and by their 
 immediate effects. The Italian, German-Danish, Prussian- 
 Austrian, German-French wars on the European continent, 
 and the Secession war of North America caused such an 
 immense destruction of wealth, necessitated such unheard of 
 emissions of government loans, that the savings of capitalists 
 found an outlet into the channels of actual wealth production, 
 but only by creating future false capital in such immense 
 quantities as had never been dreamt of before at any period 
 of history. Especially so if we add the great development of 
 the American railroad system with its unprecedented gifts 
 of millions of acres to the capitalists, the foundation of vast 
 accumulations of spurious capital forming the fortunes of 
 thousands of American and European millionaires. 
 
 Here we have got the reason, how it is that since 1873 
 we have entered upon a new era of commercial depressions 
 totally different from its predecessors. We are reaping 
 what the preceding periods have sown. That which had 
 been real wealth then, giving employment to labour — labour
 
 THE PROBLEM SOLVED. 8l 
 
 which ifit had been better organised would have resulted in a 
 material improvement of wages and general well being — has 
 now turned into spurious capital, which with Its quickly 
 narrowing coils threatens to throttle us faster and faster. 
 
 Picturing the State of Things. 
 
 We can compare the course of events to the descent of a 
 mountain stream, which rushes down a continually steepening 
 decline. 
 
 In the period represented by the years 1815-41 we see the 
 stream wending its way slowly through a wide expanse of 
 country of a gentle decline, which for a long series of years 
 has been parched and dried up by the heat of the sun and 
 hollowed by volcanic eruptions (wars and revolutions). 
 
 A dam built across the bed of the stream (building of 
 machines and factories) had helped to prevent the descent of 
 the stream. It could not do so for ever. The stream rose 
 and rose until the edge of the dam was reached, when sud- 
 denly it gushed over the top of the dam and formed a water- 
 fall (crash of 1841). The stream continued its downward 
 course ; but it could not make any headway, as an immense 
 hollow (building of railroads), which presented itself on its 
 way, had to be filled up. When the hollow was filled a new 
 dam was built, resulting in a new waterfall (crash of '56). 
 The force of this crash was greatly increased because of the 
 participation of a great deal of real capital in railroad build- 
 ing, which was withdrawn from other branches of produc- 
 tion. Its owners, as usual, took the risks (the shares) and 
 lost their capital, whereas the spurious capitalists for the 
 most part took the safer mortgages. After this another 
 hollow had to be filled (wars of '60-71) when finally the border 
 of the volcanic territory, where such natural cavities abounded, 
 was reached and the stream approached a steeper part of 
 the mountain. The descent did not take place immediately, 
 however, for from '71 till '73 a high dam was built along the 
 edge of the abyss. (Over-stimulation of production ; limited 
 Companies springing from the soil like mushrooms). At 
 last the edge of the dam was reached and the greatest fall 
 yet known, a perfect Niagara, was the consequence. The 
 turbulent water had destroyed the dam (crash of '73). From 
 5
 
 82 RENT, INTEREST, AND WAGES. 
 
 this moment the stream went down the incline faster and 
 faster with a very steady current, for the lakes served as regu- 
 lators of the water supply. (Accumulations of spurious capital 
 during the preceding periods forming the body of the stream 
 of ever-increasing unconsumed incomes.) At the end of 
 1888 the occurrence of a hollow in the bed of the stream (war 
 armament expenditures) which for a moment stopped the 
 descent of the waters, or rather weakened the current, 
 immediately gave courage again to the dam builders un- 
 daunted by previous failures and the result has been a new 
 lake with comparatively quiet waters which, however, is 
 rapidly approaching the edge of the dam and preparing for 
 a new plunge. Whether we ever shall have another stoppage 
 of the roaring waters, before they reach the sea — the final 
 crisis — nobody can tell. 
 
 A Question Concerning All Classes. 
 
 We can now clearly see, that we are dealing with a ques- 
 tion which is far from concerning the manual labourer alone. 
 There is no occupation, in which men work for their bread, 
 which is not affected. The most difficult question a father 
 has to ponder over nowadays is : " What branch of occupation 
 can I advise my children to take up ? " There is none, in 
 which the ever-deepening chasm between production and con- 
 sumption and the scarcity of paying work accruing therefrom, 
 has not narrowed the doors of entrance to such a degree, that 
 only a limited number of specially favoured applicants can 
 get admission. 
 
 Commerce? I translate an advertisement from Number 
 196 of the " Leipziger Tagblatt " of 1888. 
 
 " After having obtained the privilege of carrying on a 
 bookseller's trade in Leipzig as far back as 1873, I ventured 
 to open a little bookstore, middle of last month. After three 
 advertisements in local papers and some circulars sent out, 
 I already had the good fortune to obtain an order from the 
 500,000 inhabitants of Leipzig and surroundings to the 
 amount of 60 pf. say sixty pfennige (7 pence). I connect 
 the bold hope with this interesting and glorious result, that 
 the good will of my esteemed fellow citizens will in the 
 course of a further month perhaps increase to a total order
 
 THE PROBLEM SOLVED. 83 
 
 of 65 pf. and I herewith humbly offer my services, especially 
 to the gentlemen of the university." 
 
 But why did the man begin business on his own account, 
 if there were booksellers enough in Leipzig ? Why did he 
 not rather take a place as a clerk ? 
 
 Let me answer by the following report taken from the 
 " Leipziger Zeitung," an official paper, during the year 1889 
 and dated from Berlin. 
 
 " About 67 per cent, of commercial employees have a 
 monthly income of 100 mark {£s) at the outside; 18 per cent. 
 100-200. All the time there are 29 per cent, out of work, 
 almost a third of all capable commercial employees." 
 
 The liberal professions? From 1874-84 the number of 
 students in German universities has nearly doubled. In 
 1874, when there certainly was anything but a scarcity of 
 students, the number of all German students was 13,800. In 
 January '84 it reached 27,454. Academies of agriculture, and 
 forest culture, architecture and technical pursuits in general, 
 or of commerce are not included. Medical students increased 
 from 5,000 to 6,500 within 2^ years. Law is overcrowded, etc. 
 In France the number of female teachers waiting for employ- 
 ment m 1887 was 12,000. Their number is continually in- 
 creasing. There are always ten candidates for one place. 
 The Times of loth August, 1882, says : — 
 
 "The truth is, in any instance whatever, a man of only 
 ordinary abilities and under only ordinary circumstances, 
 enters life only to make the discovery that everything is 
 against him ; whichever way he turns, he finds a lion in 
 the path. Competition of course he finds, for there are 
 sure to be many like him, and some a good deal cleverer, 
 perhaps less scrupulous, too. He finds it impossible to 
 make a fortune, or even a competence, or even to pay his 
 way. He finds it impossible to make good friends, impossible 
 to rid himself of burdens, impossible to keep up an appear- 
 ance, or even to be quite honest, he will perhaps come to think. 
 He has generally to discover before long, that the world, to 
 use an old phrase, is made up of flats and sharps, and that 
 he comes under the former head. There is not a trade or 
 profession that does not offer the same iron wall of obstruc- 
 tion that agriculture does now." 
 
 It is the same everywhere. The doors which lead to the
 
 $4 RENT, INTEREST, AND WAGES. 
 
 opportunities of making a decent living become narrower 
 from year to year, as monopoly with increasing rapidity goes 
 on walling them up with the bricks " compound interest," 
 the material of which is formed by " rent " from the quarry 
 '* private land ownership." Wilder and wilder the battle of 
 life is raging between the masses in the hall, all anxious to 
 find an outlet through the ever-narrowing door. There is 
 nobody so high placed, so well to do, that he or his offspring 
 may not be drawn into that terrible vortex. It is not a 
 question of the lower classes — low only, because we have 
 trodden them down — it is one concerning every one among 
 us, even those who are responsible for the walling up of the 
 doors, the monopolists ; for unless they throw open those 
 doors of their own free will, the pressure from within will 
 become so great that the walls will be forced out, crushing 
 them in their fall and with them a great many other better 
 things worth preserving. 
 
 In less than twenty years the fortune of the Rothchilds, 
 Westminsters, Astors, etc., will have doubled again. Though 
 the increase of spurious capital competing for the com- 
 paratively limited amount of safe investments will press 
 down the rate of interest, it will never go down as fast as 
 the capital increases. I shall show this in the next chapter. 
 We cannot stand the pressure of the 500 unconsumed 
 millions of our day, how shall we be able to exist under the 
 immense increase of the weight, which is as sure to crush 
 us, as mathematical laws are based on eternal truth ? If 
 the causes of depressions, here set forth, which at the same 
 time are accountable for the terrible state of misery and 
 confusion, which we designate when we speak of '* the social 
 problem," if these causes have been correctly interpreted 
 by me, then it must appear clear to everybody that none of 
 the remedies our statesmen are applying and proposing even 
 approach the real seat of the evil. The only remedy, the 
 only way of salvation in this case can be found in cutting off 
 the root of the evil, the spurious capital, which can only be 
 done by digging away the soil in which it grows interest 
 and the private ownership of rent, the bed rock of the soil. 
 
 How this is to be done and what the effects will be, is 
 the problem I shall endeavour to answer in the following 
 chapters.
 
 THE PROBLEM SOLVED. 8S 
 
 History of this Theory. 
 
 Is my interpretation a correct one, or am I mistaken just 
 as all my predecessors have been ? I must leave it to the 
 reader to decide. I can only say, that after having first 
 published these theories in 1884, in " Auf friedlichem 
 Wege," (Pierson, Dresden) I have become still more con- 
 firmed in them, only making slight modifications, as in the 
 course of years discussions with economists, business men 
 and socialists, as well as careful reviewings of the lessons 
 taught by thirty years of practical business experience in 
 different parts of the globe, gave me a clearer insight into 
 the workings of social machinery. Not only have I never 
 met with any argument which could m the least shake the 
 foundation of my conclusions, though public discussions in 
 which professors of political economy at universities or of 
 related branches took a part, gave every opportunity of 
 showing my errors, but I have the great satisfaction of 
 finding, since I first took up these ideas, that part of my 
 theories had been put forth by eminent economists, in one 
 case as far back as half a century. 
 
 It was the socialist Proudhon, who fifty years ago found 
 in interest the primary cause of commercial depressions. In 
 " Qu'estce que c'est la Propriete " ? page 152, he says : 
 
 " The primary cause of industrial and commercial depres- 
 sions therefore consists in interest of capital, that interest, 
 which all antiquity united to stigmatise under the name of 
 "usury," if it serves to pay the price of money, but which 
 they never dared to condemn under the name of rent, or 
 profit ; as if the nature of the things lent ever could 
 legitimate the price of the loan." * 
 
 * R. G. Sillar, who wrote a number of papers against interest, 
 without understanding that interest can never be attacked other- 
 wise than by its base : private ownership of land, says in a paper 
 he read on Usury in '82: — 
 
 " Until the reign of Queen Elizabeth the word Usury 
 was always used to describe money paid for the use of money. 
 Money lenders were disreputable, and carried on their trade 
 under the names of scriveners or goldsmiths, and the word ' bank ' 
 was apparently unknown in its present sense. Shakespeare 
 has no such word. The Greek word of the bible of 161 1, in 
 ♦Wiclif's bible,' 1380, it is rendered 'borde.' When, however,
 
 86 RENT, INTEREST, AND WAGES. 
 
 He came to this conclusion, after having shown that 
 interest was the cause that the workers could not con- 
 sume the products of their labour in proportion to their 
 production, as the price of the same was raised by the 
 amount of interest — in the wider sense, of course, which he 
 gives to the word — so that the worker possessed the purchas- 
 ing power of only a part of his products. 
 
 " If 100,000 journeymen printers," he says, page 151, " are 
 able to satisfy the literary wants of 34 million people, and it 
 the price of books is only accessible to a third of the con- 
 sumers, it will be clear that these 100,000 workers will pro- 
 duce three times as much as booksellers can sell. To prevent 
 production from exceeding the demand, it will be necessary 
 either that they stop work two days in three, or that 
 every week, every month, or every three months, a third of 
 them take their turn at the work, which means that they do not 
 live during two-thirds of their life. But industry under the 
 influence of proprietors does not proceed with this regularity; 
 its nature requires it to produce much in little time, because 
 the larger the mass of products the quicker they are finished 
 
 the law was passed, it was necessary to coin a word for 
 legal usury and we find the word ' interest ' first used in a public 
 document in 1623 in an act of James I. It was most likely used 
 privately before this, for Shylock says, * My bargains and my 
 well-won thrift, which he calls interest ' ; and he apparently says 
 this with a sneer. ' Truth has as many enemies as a herring in 
 shoal water,' says a modern writer, 'but her worst and subtlest is 
 equivoque,' and so it has proved in this case. Hume rejoices in 
 this change of name ; he says ' by a lucky accident in language, 
 which has a great effect on man's ideas, the inviduous word 
 Usury, which formerly meant the taking of any interest for money, 
 came now to express only the taking of exorbitant or illegal interest.^ 
 .... This change of name is not new. The latin name Usura 
 avoided the word Neshek, which signified biting, and they substituted 
 the word Tarbeth, which means consideration or usance. It was 
 changed also on the continent of Europe, as is evident from the 
 satyre, 'on ne prete plus a I'usure, mais tant qu' on veut a V 
 interet.' Amongst ourselves even now it is amazing to what an 
 extent the idea that Usury means excessive interest prevails, and 
 there are many people who have their money in loaus, in bonds, 
 and debentures, who would start if tiiey were told they were 
 Usurers.' "
 
 THE PROBLEM SOLVED. 87 
 
 and the lower will be the cost price of each piece. At the 
 sign of a sale of the stock, the workshops fill, everybod}' goes 
 to work ; trade prospers and governor and governed praise 
 each other. But the more activity is developed, the more 
 holidays are created. The more we laugh, the more we 
 shall have to cry. Under the government of property the 
 flowers of industry only serve as funeral wreaths ; the 
 labourer who works hollows his tomb. While industry 
 remains idle, interest goes on ; the employer naturally tries 
 to keep up his production by diminishing his expenses. 
 Reductions of wages are coming now, introduction of 
 machines, the irruption of children and women into the 
 trades of men, the depreciation of manual labour, bad 
 workmanship. 
 
 " Production goes on as yet, because the reduction of costs 
 permits the market to extend, but this does not last long, 
 because cheapness of production being based upon the mass 
 and rapidity of production, production tends more and more 
 to get ahead of consumption. If we now get a stoppage of 
 production kept up by workmen, whose wages hardly exceed 
 their daily wants, the consequences of the property principle 
 become terrible. There are no savings, no accumulated 
 small capital, which permits them to live a day longer. To- 
 day the workshop is closed, to-morrow there is fasting in 
 the street, the day after to-morrow it will be death in the 
 hospital or the meal in prison. New accidents happen, to 
 complicate the terrible situation. Through the accumulation 
 of goods and through the utmost reduction of prices, the 
 employer soon is disabled from paying the interest of the 
 capital he is using. The frightened shareholders hasten to 
 withdraw their funds ; production ceases, work stops. After 
 this people are astonished, that capital leaves trade for the 
 stock-exchange; and one day I heard M. Blanqui complain 
 bitterly of the ignorance and unreasonableness of capitalists." 
 
 Under property Proudlion understands interest or rent 
 bearing values, not private property in general, as very often 
 is believed. It is in this way that his famous " La propriete 
 c'est le vol " is to be understood. 
 
 Von Kirchmann and Rodbertus-Jagetzow have also got at 
 a part of the truth. Rodbertus, however, makes the mistake
 
 88 RENT, INTEREST, AND WAGES. 
 
 of believing that if employers and capitalists, including land- 
 lords, did not get a continually increasing share of produc- 
 tion, if wages increased in proportion to the productive 
 power of work, depressions would be a thing of the past. 
 Production is increasing so fast, that even then capitalists 
 would not consume their share and stoppages of work, 
 depressions, would be the inevitable consequences. At any 
 rate it is not by artificially increasing the share of workers, 
 as Rodbertus proposes, that we shall ever find the right way 
 out of the evil, but by reaching it at its source. Weeds are 
 not effectually destroyed by cutting off their flowers, but by 
 digging out their roots. 
 
 The source and the root of the social evil can only he reached hy 
 getting at " rent ", as I shall try to prove in the next chapter.
 
 89 
 
 CHAPTER III. 
 
 The Remedy. 
 
 In the last chapter, I have tried to demolish the theory 
 which sees in interest a product of natural forces. I showed 
 that interest Is nothing but a tribute paid by one man to an- 
 other. I have further said that the source of this tribute 
 right is to be found in rent. 
 
 Though it does not require any proof that as long as capital 
 can buy land which yields rent, it will be able to claim 
 interest, when lent out, it would not necessarily follow from 
 this that with the power of purchasing rental rights — of course 
 always including rent of monopoly of any kind — capital will 
 also lose that of blackmailing labour in any other shape, 
 or in other words, that with the disappearance of private rent 
 interest will also disappear. 
 
 Interest Seen with the Eyes of Uncivilised Man. 
 
 There is nothing so strange as the force of habit. It makes 
 the most natural things appear unnatural, and the most 
 unnatural perfectly natural. Take any uncivilised man who 
 has two young horses, of which he only needs one, while he 
 lends one to his neighbour with the understanding that the 
 borrower has to see that the horse is well fed and kept, for 
 which he enjoys the privilege of using it until the owner 
 needs it for his own purpose. Let us now suppose that the 
 latter claims his horse only when that which he uses died, 
 say after fifteen years. Supposing the other horse having died, 
 too, by that time, what claim do you think our uncivilised horse 
 owner will think himself entitled to make against his neigh- 
 bour ? Certainly none at all. He will say that the horse 
 would have died just as surely if he had himself kept it, and 
 that he was glad to have saved the feeding all this time. The 
 mosaic laws, given to an uncivilised nation, give expression to 
 the same principles. In Exodus chapter xxiii., verse 14
 
 go RENT, INTEREST, AND WAGES. 
 
 and 15, they command, that if a borrowed animal dies or 
 suffers injury by the neglect or in the absence of the borrower, 
 he shall pay the full value ; but if the accident happened under 
 his eyes and in spite of his vigilance, he was released from any 
 responsibility. If our uncivilized capitalist, instead of getting 
 back an old horse, or none at all for the young one he lent out, 
 got a young one back, he certainly would think he had driven 
 an excellent bargain, and if you should tell him that fifteen years 
 having elapsed, a period during which capital at five per 
 cent, will more than double, he would be injured if he did not 
 get back two young horses for the one he lent, he would 
 think you either crazy, or a swindler. 
 
 If you tell him that the wise men of your nation, who make 
 a special study of such things, are entirely of the same 
 opinion as you, and that one of the wisest of them, one Adam 
 Smith, in a book he had written about the wealth of nations, 
 had taught that without the hope of getting interest nobody 
 would lend, unless it were from motives of charity or friend- 
 ship, he would reply : 
 
 " I do not know your Adam Smith, nor any of your wise 
 men, but if the wisest of men came and told me that white 
 was green, or that the sun shone at night and the moon in 
 daytime, I should say he was a fool. How can you make 
 me believe that I did not drive a splendid bargain when I 
 lent my horse to a perfect stranger, giving me good security 
 and when instead of getting back an old or dead horse, I got 
 a young and healthy one as good as mine was fifteen years 
 ago ? You might say that I could have sold my horse at that 
 time, to buy another, when mine died ; but you forget that I 
 have no secure place in which to put the money, or whatever I 
 got in exchange for my horse,and that I would rather have kept 
 the horse at my own expense and risk, if I was not sure to get an- 
 other immediately, when I wanted it, than chance being without 
 a horse when an accident happened to mine. Anybody who 
 is kind enough to save me all expenses and risk, and who 
 agrees to furnish me with a young horse whenever I need it, 
 is welcome to do so at any time, if there is such a fool ; but 
 that I should not strike the bargain with him because he was 
 no friend or was not deserving of charity, and that I should 
 rather keep the horse myself, feeding it and taking all the risks,
 
 THE REMEDY. gf 
 
 to have an old or a dead horse perhaps by the time I need it, 
 is more than my poor uncultured head is able to understand." 
 
 Stupidity of Political Economists. 
 
 But even then you have not exhausted all the wisdom, 
 which the professors of political economy are teaching. There 
 are plenty of them, who proclaim, that if capital cannot com- 
 mand interest, people will cease to produce wealth. Take, 
 for instance the following passage from page 662, vol. i. 
 of Schoeneberg's handbook of political economy, written by 
 Professor Mithoff, teacher of political economy at the univer- 
 sity of Gottingen : 
 
 " In any case interest cannot fall to zero. This would only 
 be possible, if either capitalists offered the use of capital with- 
 out any remuneration, or if there were no borrowers willing to 
 pay such. The basis of both assumptions is that the value 
 of the use of capital had disappeared (dass der Gebrauchs- 
 werth der Kapitalnutzung verschwunden ware.) But with 
 this the inducement to the creation of capital would disappear." 
 
 Supposing this was so, would it also take away the induce- 
 ment to create wealth ? Certainly not, unless we class thinking 
 and provident man lower than the bee, the squirrel, or other 
 hoarding animals. Man would store wealth as well as they. 
 The only difference would be, that whereas animals store 
 wealth in the exact form in which they expect to use it, 
 thinking man will try to store not those things he expects to 
 put to direct use, — which is more or less impossible, if longer 
 periods are contemplated, for nobody can put aside the bread 
 he wants to eat in old age, and to keep meat fresh for a much 
 shorter period requires enormous outlay — but those which 
 are at once most durable, least expensive to store, and such 
 as at any time can easily be exchanged against the goods 
 we v<^ant to use. Money and jewels are considered as having 
 these qualities in the highest degree and in countries or at 
 periods in which industry is little developed, or where lending 
 is too risky, this fashion of storing wealth was and is often 
 resorted to. Ignorance of better methods often leads to the 
 same process. According to Professor Webb (the rate of 
 interest and the law of distribution) the French peasants
 
 92 RENT, INTEREST, AND WAGES. 
 
 hoarded metallic currency up to 1871 and the Maltese cot- 
 tager up to 1886. 
 
 But even precious metals and jewels are liable to be stolen, 
 or injured by fire. If we can get a form of wealth which will 
 save us this risk as well, we should certainly prefer it. Tools, 
 machines, merchandise employed as a stock in trade, etc., in 
 short any form of wealth, capable of being used for the pro- 
 duction of further wealth, i.e. capital, will afford us this ad- 
 vantage, if we find people, who are willing to use it until we 
 need it ourselves for the purpose of exchange against that 
 kind of wealth which we require for consumption, and who 
 give us sufficient security of repayment in kind or in some 
 other goods of equal value and equal facility of exchange. In 
 most cases money, as giving the greatest facility of exchange, 
 is the intermediate form, into which our savings of wealth are 
 turned before we lend them out and when they are returned 
 to us. 
 
 Interest the Greatest Obstacle of Saving. 
 
 Instead of being a necessary inducement towards saving 
 and lending, interest can with perfect truth be considered 
 the greatest obstacle in their way. 
 
 Anybody who has not crippled his reasoning powers by the 
 study of political economy as taught in schools, universities 
 and handbooks, will see this at first sight. If a man wants 
 to earn a yearly income of ;^i,ooo, for the rest of his life and 
 that of his children, an Insurance Company — which will be 
 at his service just as well as to-day, for interest has nothing 
 to do with the principle of insurance, consisting in the equal- 
 isation or averaging of risks — will, if the rest of the natural life 
 of his family members is calculated to last 50 years, make him 
 pay ;^5o,ooo at once or in instalments. To-day ;^33,333 will 
 accomplish the same purpose if invested in 3 per cent 
 securities, or less if paid to an Insurance Company, which 
 takes into account the interest accruing from his payments. 
 We see immediately that more capital will have to be saved 
 without than with interest. 
 
 But the greatest obstacle to the production of capital is to 
 be found in the destructive social effects of interest described 
 in the last chapter.
 
 THE REMEDY, 93 
 
 The great difference between the man, who buys an income 
 of ;^i,ooo, without getting interest and the one who does the 
 same by paying £33,333 for bonds, is, that the income of the 
 first family will end with the life of the last surviver of the 
 two generations, whereas in the other case the ;^i,ooo — or 
 perhaps something less, if interest decreases — will be paid to 
 all eternity, and with new savings added, increasing in bulk 
 like a rolling snowball, it will form part of those immense 
 avalanches of unconsumed incomes, which, if not stopped in 
 time, will finally crush our whole civilisation under their ever 
 increasing weight. 
 
 I wonder what our uncivilsed man would say, if you were 
 to tell him, that not only are we expecting a young horse from 
 him, even if the one we lent him, has died of old age and 
 another young horse into the bargain, after 15 years have 
 elapsed ; but another every 15 years, hence, as long, as he does 
 not give back our loan and that furthermore if he and his 
 children neglect these obligations, the time will come, when 
 through compound interest his descendants will owe more 
 horses to ours, than the whole world can feed, and as they 
 will not be able to meet their engagements, they will have to 
 slave for our descendants and in spite of all they may do, will 
 be miserable bankrupts. 
 
 If habit had not so completely blinded our eyes, if we for 
 one single moment succeeded in clearing away the mist cover- 
 ing our common sense, we should be forced to see how utterly 
 preposterous it is, that because one man has been industrious 
 and saving, and others have been idle or less favoured by 
 fortune, his descendants shall have a right to force the 
 descendants of those others to work for them to all eternity. 
 To all eternity, I say, because compound interest will so 
 increase the claim, that repayment of the loan will become 
 impossible. We sneer at those barbarians, who permitted 
 one man to enslave another as well as his descendants for an 
 unpaid debt. Are we any better ? If there is any difference 
 at all, it is in favour of the barbarians, for they at any rate 
 had to feed their slaves. We have given up that obligation, 
 which will not suit the devout believers in the saving powers 
 of '* laissez faire, laissez passer."
 
 g^ RENT, INTEREST, AND WAGES. 
 
 Impossibility of Interest. 
 People have not always been as blind as we are in regard 
 to this subject. From the oldest times the attacks on 
 interest, or usury, as it was called before the more euphemistic 
 name was adopted (see page 85) by great men, by laws, civil 
 or religious, show us how deeply the feeling of the injustice 
 and danger inherent to this method of robbing our fellowmen 
 was felt. Nobd y expressed better the real nature of this 
 danger than Lord Bacon, when he said, " Usury bringeth 
 the treasure of a realm into few hands, for the usurer being 
 at certainties, and the other at uncertainties, in the end of 
 the game most of the money will be in the box, and even a 
 state flourisheth when wealth is more equally spread." * 
 
 *Sillar says in one of his lectures: — " I will give you an illustra- 
 tion of the truth set forth by Defoe, that even if a man makes 20 
 per cent., yet the 5 per cent, he pays for interest, shall in the end 
 ruin him, if he takes no account of the hazard. This photograph is 
 taken from nature, it is the resulting crop from one seed of oats. 
 One seed threw up 20 stems, and yielded on rough counting, 7,000 
 seeds; 7,000 from i, is 700,000 per cent. Surely you might argue 
 it would be safe to pay a modest certainty of 5 per cent, out of such 
 a possibility, and j'et you would find you were wrong as the state of 
 Agriculture proves to day. 
 
 Take another case : on the authority of Reaumur, one blow-fly 
 will produce 20,000 eggs, which are hatched as soon as deposited. 
 Maggots issue forth, and almost immediately begin to feed, and in 
 twenty-four hours increase their weight 200 times. In eight or nine 
 days they are full grown ; then they assume the pupa state, and 
 after another period of the same duration, ccme forth perfect flys. 
 A month is, therefore, rather more than enough for a generation. 
 Suppose that of the 20,000 eggs, half produced females, then in the 
 first family there will be 10,000 flies, each capable of producing 
 20,000 eggs. A very simple calculation will show, that at this rate, 
 in less than six months, the sixth generation will number 
 2,000,000,000,000,000.000,000,000, (two triUions). If every fly is 
 •^ an inch long, \ of an inch wide, and the same in depth, that is to 
 say, if 32 of them occupy a cubic inch, there will be enough to cover 
 all England and Wales, to a depth of 3,800 miles." 
 
 We fortunately know through practical experience, that the 
 compound interest game,whichSillar's blow-fly is playing against us, 
 is interrupted by the destructive powers of nature, or there would 
 be no room for us in this world. We know that we ourselves would 
 soon be forced to eat each other, if calculations such as those
 
 THE REMEDY. gj 
 
 A. W. Rayment, says in the Australian Standard of June 
 i88g, that, given equal opportunies, all men could live by 
 honest labour ; but we could not ail live by stealing and 
 neither could we all live by exacting interest, which is but a 
 mode of stealing. There could be no more convincing 
 argument against George's theory that interest is a product 
 of natural forces, for if this were true, there would be no 
 earthly reason, why all men should not be able to live by in- 
 terest, as a minority do now. Why should not the forces of 
 nature in combination with the element of time be able to feed 
 all men without work, as well as some ? We know that this is 
 impossible, because, as Rayment says: "Robbery is only 
 possible on condition that there are some, who honestly 
 labour. Increase the relative number of those who live upon 
 theft, and you decrease in a corresponding ratio the number 
 of those who live by their honest exertions, and whose joint 
 efforts alone make thieving practicable. This is precisely 
 the case with interest, yet while the machinery of the law is 
 employed to suppress the one, it encourages the other." 
 
 Another very good remark he makes is : " when properly 
 looked at, interest is seen to be branded with absurdity on 
 the face of it. It is a law of mechanics that we cannot get 
 anymore out of a machine, than is put into it ; but with this 
 machine called interest, it is assumed that by putting in a 
 definite quantity at one (end we can grind out unlimited 
 returns at the other." 
 
 Bastiat's Theory. 
 The only justification of interest which will bear exnmina- 
 
 which Malthus and others made in regard to our own nuiltiplication 
 were not crossed by similar correcting influences. History also 
 shows, that the effects of compound interest never had full play, as 
 bankruptcy generally at some time or other took care to put a stop 
 to the game by suppressing capital as well as interest. There is no 
 fear of its failing to do so again, for impossibilities are impossibilities ; 
 but, as since the beginning of this century the whole power ot law 
 in orderly and peaceful communities guarantees the proceeds of 
 the game, the bankruptcy of our civilisation will be the destructive 
 factor, we have to depend on, unless reform takes its place in time. 
 It would have to do so very soon, for the game is too far gone to 
 make another doubling tolerable.
 
 §6 RENT, INTEREST, AND WAGES. 
 
 tion is the mutual service theory put forth by Bastiat. 
 Interest, according to him, is a service rendered by the 
 borrower to the lender for a service rendered by the lender 
 to the borrower. This justification of interest could not be 
 objected to, if it could be proved that interest would exist at 
 all, if there was no other foundation for it than the difiference 
 in the value between the service rendered each other by the 
 two parties in question, a difference, which, according to 
 Bastiat, usually must be in favour of the lender, otherwise 
 where would be the origin of interest which he tries to find ? 
 
 Let us consider whether this will stand investigation. 
 
 What is the nature of the two services ? The service 
 rendered to the borrower consists in the advantage which the 
 use of the loan will give him. There must be an ?dvantage, 
 or he would not borrow. The service rendered to the lender 
 consists in the work of keeping up the value of the capital, 
 which without such work would depreciate. 
 
 Which service is the greater ? When we compare the 
 value of two commodities, we cannot base our calculation on 
 individual estimation ; we must consult the market, which 
 means the value formed by supply and demand. A starving 
 wanderer, who at last gets into a town, would willingly pay 
 for the bread he buys by giving its weight in gold, if he 
 could not get it cheaper. However, he only pays one penny 
 like anybody else, because it is not his individual estimation 
 of the service the baker renders him, which fixes its price, 
 but the market value of the bread on one side and of the 
 penny on the other. The service the baker renders in our 
 special case is infinitely greater than the one he receives, if 
 we judge the matter from the individual point of view of 
 both parties, but as supply and demand have determined 
 that the bread and the penny are of the same value, only one 
 penny is asked for and payed. 
 
 Let us now try to find the market value of the services 
 which borrower and lender render each other. We have to 
 consider the problem under two different suppositions : first 
 that of absence of spurious capital, of monopoly rights and 
 secondly, that of our present condition which allows invest- 
 ments in such. 
 
 Under the first supposition we shall at all times find that
 
 THE REMEDY. gy 
 
 the supply of capital exceeds the demand, if security against 
 depreciation and risk can be offered by the borrower. Where- 
 ever such security cannot be given, demand may exceed 
 supply and apparently interest will be paid for the use of 
 capital ; apparently, but not in reality, for when in the long 
 run we analyse this so-called interest, we shall find that 
 it is not interest proper, but premium of risk, insurance, 
 i.e., that amount which on the average will just replace the 
 loss of capital. If twenty debtors pay each 5 per cent., and 
 if the 2ist fails and pays nothing at all, then the 5 per cent, 
 have just covered this loss and on the average no interest 
 but premium of risk has been obtained. 
 
 Wealth and capital generally increase and decrease together 
 for with increasing wealth men naturally try to store more 
 and more of it for future use, which, as we have seen, can be 
 done in no better shape than in the form of capital. On the 
 other hand increase of wealth is a consequence of the increase 
 of capital. Little or no wealth therefore also means little or 
 no capital. The less wealth there is in a community the 
 greater the risk offered by the average borrower must be. 
 
 Interest and Wages. 
 
 Here we have got the natural explanation of the reason 
 why in new countries high rates of interest are paid. Not, 
 as George thinks, because land is not yet appropriated, but 
 because risk is great, insurance high. In book i, Chap, i, he 
 says: 
 
 " Eliminating from interest the element of insurance, and 
 regarding only interest proper, or the return for the use of 
 capital, is it not a general truth that interest is high where 
 and when wages are high and low where and when wages 
 are low ? Both wages and interest have been higher in the 
 United States than in England, in the Pacific than in the 
 Atlantic States. Is it not a notorious fact that wherever 
 there has been a general rise or fall in wages, there has been 
 at the same time a similar rise or fall in interest ? In 
 California, for instance, when wages were higher than any- 
 where else in the world, so also was interest higher. Wages 
 and interest have in California gone down together. When 
 common wages were 5 dols. a day, the ordinary bankrate of
 
 98 RENT, INTEREST, AND WAGES. 
 
 interest was 24 per cent., per annum. Now that common 
 wages are 2 dels, or 2'5o cents a day, the ordinary bankrate 
 is from 10 to 12 per cent. " 
 
 George says " eliminating from interest the element of 
 insurance," but he does not do it. If he did, 12 or 24 per 
 cent, interest in California would have dwindled down to the 
 3 to 4 per cent., which at that period were obtainable in 
 England on best securities. If it was otherwise, if the work of 
 supervision of the investments — a part of the element of risk 
 together with all the other components of that element — was 
 not estimated as high as from 8 to 20 per cent, in this case, 
 would not such a moveable thing as capital, so easily trans- 
 ferred, wherever a better investment is to be found, have 
 quickly flowed from England to California, until the level 
 was re-established just as a liquid flows from a full vessel into 
 a corresponding empty one until both are filled to equal 
 height ? 
 
 The error into which George here falls arises from con- 
 founding profit and interest. He forgets that we only get at 
 interest proper, if we deduct from the net earnings of capital, 
 the average percentage of risk (insurance) and the wages of 
 supervision and enterprise. 
 
 These wages follow the same laws as all others, those of 
 supply and demand. As long as the offer of enterprising 
 men, who took the trouble, risk and expense of going to 
 California by those dangerous and disagreeable methods 
 which at that time had to be resorted to, and who braved the 
 dangers of comparative lawlessness, of knife and revolver, 
 was less than the demand, wages were high, whether they 
 were paid to the worker in the placers, to the shoemaker, or 
 to the banker, charged with the supervision of capital invest- 
 ments. If capitalist and banker were one and the same 
 person, these wages had to be deducted just the same, and 
 after setting aside the risk percentage, what was left was 
 certainly not more than the usual rate of interest obtainable 
 at home, or rather in that country where interest was lowest, 
 for if our capitalist came from the Eastern states, where 
 interest was 6 per cent., he had first to deduct from this rate 
 the local wages of superintendance and the premium of risk 
 which would bring it down to the level of English rates. We
 
 THE REMEDY. 
 
 99 
 
 see now that instead of saying that wherever interest is high 
 wages are high, George ought to have said, that wherever 
 the wages of the labourer are high, those due to the capitalist 
 for the work of superintendance and for his enterprise are 
 high also and vice versa. This is the cause that in times 
 of commercial activity wages are high when interest obtained 
 in commercial enterprises apparently is high and that during 
 depressions both are low. Wages of supervision and enter- 
 prise rise and fall through the same causes which raise or 
 lower wages of common labour. 
 
 There is another cause which helps to raise the rate of 
 interest in times of commercial activity. When business 
 investments offer paying returns we shall find savings 
 invest in real capital to a greater extent and in thus 
 lessening demand in the spurious capital market, they 
 help to force up interest proper for the time being. The 
 opposite action forces interest down in times of depression. 
 Instead of being a cause the rate of interest is nothing but an 
 eflfect. As little as the rising of the thermometer causes heat, 
 as little did a rise of interest ever produce a rise of wages. 
 It would be against all rules if it did, for where one of two 
 partners gets more, the other is bound to get less, though both 
 together may get more than they did at a previous period. 
 The more capital is getting of that share which rent leaves to 
 the two partners, the less labour will get. Now we have seen 
 that ficticious capital in reality under the name of interest is 
 taking not only the increase of rent but a good deal more ; in 
 fact if things go on as they do, sooner or later it will take 
 almost the whole rent. We have further seen that the very fact 
 of this transformation of rent into interest of spurious capital, 
 is the real cause of the lowering of wages. Does it not 
 appear preposterous under such circumstances to talk of the 
 joint interest of capital and labour ? The general mistake of 
 confounding ficticious and real capital fallen into even by 
 those, who like George, make a distinction between them, is 
 the cause of such false logic. The larger the ficticious 
 capital, the smaller the part of labour will have to be. The 
 larger the real capital, the better off labour will find itself, not 
 by paying a high interest for the same, but by enjoying its use 
 cheaper and cheaper in proportion to the quantity offered.
 
 lOO RENT, INTEREST, AND WAGES. 
 
 Before I return from this slight digression, I would add, that 
 another great mistake of George and very many others 
 consists in their confounding the rate of interest and the 
 earnings of capital. 
 
 This dangerous error leads men like Leroy-Beaulieu in his 
 •* Essai sur la Repartition des Richesses " to the consolation, 
 that the decreasing rate of interest is a sign and a cause of a 
 more equal distribution of wealth. If he had read his Bastiat 
 a little more attentively, he would have found the following 
 passage, which I take from the fourth letter of this economist 
 to Proudhon: 
 
 " In the same measure in which capital increases, interest 
 goes down, but in such a way that the total income of 
 capitalists increases. ... So if interest falls from 5 to 4, 
 from 4 to 3, from 3 to 2, this means that capital has increased 
 from 100 to 200, from 200 to 400, from 400 to 800 and that 
 the capitalist has increasing incomes of 5, 8, and 12." 
 
 The only objection which can be made to this calculation 
 is that it rests far behind the real ratio of increase, which is 
 much faster. 
 
 When wages and interest proper are both low,* this is by 
 no means saying that labour and capital both get smaller 
 returns, for capital increases much faster than the number of 
 labourers and in spite of the lower rate, the relative share of 
 capital as a whole continually increases. As the lower rate 
 is caused by the increase of capital it is nothing but an 
 indication of this increase and of the increasing share taken or 
 exacted by capital. When formerly one worker and £5 of 
 capital were needed to produce a certain amount of wealth, 
 ^^y ;^50 worth, and if the worker got /"45, of these 50, 
 capital 5, labour would have 90 per cent, capital 10 per cent 
 of production. If progress in technical science and in the 
 processes of manufacture have brought it about that now one 
 worker with £"500 of capital produces ;^ioo of goods, of which 
 
 * Interest proper being low does not mean that labour gets 
 capital cheaper, or wages could not be lower. On the contrary 
 the interest actually paid by labour generally is high at such times, 
 because those very causes which force down interest proper 
 increase risk and insurance (usury interest and low wages in India 
 and Egypt).
 
 THE REMEDY. lOI 
 
 50 are paid in wages and 50 are profits of capital, labour 
 will only get 50 per cent, of production, capital the other 
 50 per cent. The proportionate part of labour will have 
 decreased from go to 50 per cent, that of capital will have 
 increased from 10 to 50 per cent, and yet statisticians will 
 tell you with perfect truth that wages have increased more 
 than 10 per cent, whereas capital only realises to per cent, 
 where it used to clear 100 per-ct'it. ' The EeauHeus will say 
 that workers are getting richer, whereas capitalists are 
 growing poorer, and that the ftnal resuk is "th lorni.a society, 
 in which positions are more equal', activity irioire general and 
 yet less overflowing, in which it will be nearly impossible, to 
 form large fortunes, difficult to acquire medium ones, and 
 easy to obtain ease." 
 
 The descent of the rate of interest must do all this after the 
 false capital will have disappeared, whereas under actually 
 existing circumstances it would be hard to believe in the 
 good faith of the man who wrote thus, was it not that the 
 whole tribe to which he belongs is as blind as a bat to actual 
 existing facts, spending their lives in arranging these facts 
 to suit their theories, hard as it sometimes may be. I 
 heard of a German professor, who, when told that certain 
 facts did not agree with his theories replied : " So much the 
 worse for the facts." 
 
 Interest in Primitive Society. 
 
 I now come back to the point from which I digressed. 
 
 The smaller the wealth of a community, the greater the 
 risk incurred by loans must be and the larger the wealth the 
 more easily will security be obtained, security for the repay- 
 ment of loans. 
 
 In the former case there will be such danger in storing 
 wealth of any kind, that its possessor will be most happy to 
 find somebody who will take it and furnish full security for its 
 restoration when the owner needs it. He would of course 
 like to get more than he lends ; but the danger all kind of 
 property is subject to, is so great, that it is very improbable 
 he will even find the security he looks for, putting interest 
 out of the question. 
 
 A hunter in primitive society kills a deer whereas his
 
 I02 RENT, INTEREST, AND WAGES. 
 
 friends come home empty handed. He lends them part of 
 his meat, without being able to get more meat in return, 
 when they are in luck and he is not. He is not even sure of 
 obtaining as much as he lends, for how can he know for 
 certain, that the others will be able to repay him ? Never- 
 theless he prefers to lend the meat, for he cannot keep it long 
 himself, becau-sfe it will spoil or at any rate will not remain 
 as good as the' ireshly killed' meat, which he hopes to get in 
 return, will be a-t .the 'time he need^it. Furthermore, if his 
 friends are-verij h'SEgry, fhera will'=be very little security for 
 the preservation of his meat, if he should prefer to store it. 
 They together are stronger than he is, and hunger goading 
 them, they might be capable of taking the meat by force. 
 We cannot make the objection that meat is wealth, but not 
 capital, for if it has to be taken along to serve as provision 
 during the next hunt, it must be considered as capital, just 
 as much as the provisions which a shipowner stocks his 
 ships with, form part of his trading capital.* To leave not a 
 particle of doubt on this point, let us suppose that one of 
 those primitive hunters is such a skilled hand at bowmaking, 
 that he finds it of greater advantage, to remain at home and 
 to make bows, which he exchanges for meat, than to kill 
 deer himself. His bows not only procure him all the meat 
 he wants, but even all the other comforts the community 
 knows of. He gets furs to tapestry his cave or cabin, he 
 has all the clothing after the latest fashion, as the richest of 
 his people are in the habit of wearing ; yet such is his skill, 
 that he gradually gets more bows on hand, than would pro- 
 
 *I may as well say here, that I care very little for the distinc- 
 tions made by economists between "wealth" and "capital." It 
 is not only misleadmg in a hundred cases, but has no practical 
 value. There is no kind of wealth, which may not be used as 
 capital in certain cases. Socialism therefore to be logical might 
 be forced to nationahse all wealth, and this means communism. 
 To nationalise capital alone would bring difficulties at every step. 
 A horse used for a pleasure ride in the morning is wealth ; used 
 for carting manure, or hired out in the afternoon, it is capital. 
 There is only one distinction, which I think of practical value, viz., 
 that between real and fictitious wealth, or real and fictitious 
 capital, whichever of the two names for the same thing may be 
 preferred.
 
 THE REMEDY. IO3 
 
 cure him all he needs. He does not like to sit idle, but could 
 wish to provide against old age, when he perhaps will not be 
 able to work any more. There is no more room in his cave 
 for further stock of bows, or any other kind of wealth that 
 others will buy. Besides this the moisture of the cave affects 
 his stock very unpleasantly. A great part of his time has to 
 be spent in looking after it and cleaning and rubbing his 
 goods one after another. In spite of this they will not be as 
 good as when they were new and when he sells a bow 
 customers will impose the condition of getting new ones, 
 which finally renders the old stock worthless. Then there 
 is the trouble about these rascally fellows of the neighbouring 
 tribe, who have a bad habit of stealing his bows and other 
 goods, when they get a chance, and he cannot sit in his cave 
 day and night to watch his stock ; in that case life would not 
 be worth living. If he engages others to do it for him, it 
 would finally take all his stock to pay them. Under these 
 circumstances he is very glad to find members of his tribe, 
 who propose to him to supply them with bows and to take 
 the meat or other goods he wants for the same, whenever 
 he needs them, be it to-morrow or years hence. There is a 
 certain risk connected with this, forthey may die, before they 
 have repaid him ; but the risk is not half as great as if he had 
 to store his bows, till he needed the goods, they exchange for. 
 " But," says our friend Bastiat, " we know that the lender 
 of the bow renders a service to its borrower, which must be 
 greater than the service rendered to him by the latter. 
 Without the bow the hunter could not kill as many deer in a 
 week as he can kill with it in a day and if he gives one day's 
 booty as interest in addition to returning the bow or its value, 
 he will not be injured, but will benefit by the bargain." 
 There might be something in this argument, if the bowmaker 
 was the only one capable of making bows, or if he had a 
 monopoly of its manufacture by general consent. What he 
 would command in this case would not be interest but royalty, 
 against which no objection can be made, if, as is the case in 
 our patent laws, the right of its perception is a very limited 
 one ; but no such thing takes place in our case. Our bowmaker 
 perhaps makes a better bow than others, but for this he gets 
 a higher price than other makers, though not much higher,
 
 104 RENT, INTEREST, AND WAGES. 
 
 for if the difference becomes too great his competitors will 
 take more trouble and will make as good a bow. 
 
 Any one of the hunters can either make his own bow, or 
 get one from one of the other makers, by hunting for them a 
 couple of days. There certainly is an advantage in having 
 a bow, which, if a monopoly to bowmaking existed, might 
 induce the borrowers to make great exertions to obtain one 
 rather than go without ; but there is no such monoply, as the 
 great advantages inherent to the use of bows are not the 
 property of a single man or set of men, but of the whole 
 community which inherits the property rights of this inven- 
 tion together with other mental achievements from the 
 generations who inhabited this earth before them. 
 
 This is a fortunate thing for us, for nothing would have 
 prevented our ancestors from entailing inventors, and authors' 
 rights upon their successors to an indefinite time — to all 
 eternity, as we little worms of a day's growth are in the habit 
 of saying — as they did with land. There certainly would 
 have been much more justice in the one case than in the 
 other ; for the author and inventor are the creators of the 
 intellectual product they give to the world, whereas the first 
 occupier of a piece of land created nothing, and even if he 
 added improvements by his own work, he only did what 
 others willingly would have done, if he had let them. Yet 
 we think it perfectly natural, that for such services he should 
 have eternal propert}^ rights for himself and his successors, 
 whereas we should think it perfectly ridiculous to entail in 
 this way the rights of authors and inventors. We laugh, 
 when Mr. Graham Wallas of Oxford tells us how fortunate 
 it was that the old whig statesmen did not hit upon the idea 
 of entailing the rights of authors, as they did those of land- 
 lords, or we might have a duke of Shakespeare, to whom 
 every one of us would have had to pay two or three pounds 
 as royalty or bookrent, besides the obligation of giving the 
 book back in an uninjured state. We laugh at this, but we 
 think it quite natural that the rental rights of this earth, 
 which was here befoie man, should belong to the successors 
 of certain favoured individuals. 
 
 However, our forefathers did not think it expedient to en- 
 tail the rights to the enjoyment of advances made in civilisa-
 
 THE REMEDY. 
 
 105 
 
 tion upon certain families and bow making was open to all ; 
 the advantages which bows confered did not belong to bow- 
 makers but to the community. For this reason our bowmaker 
 could not put to his credit these advantages, when he struck 
 his bargain with the hunters. All he could advance on his 
 side was that they could not begin hunting until they had a 
 bow and if they had to sit down and make one first, they 
 might die of hunger before they finished. Even this claim 
 would not have availed with his customers, for such a case 
 might have existed in the theory of a professor of political 
 economy, but hardly ever in the practical life of our barbarians. 
 Setting aside the fact, that the beginning of civilisation did 
 not take place on the supply, demand and free market princi- 
 ple, but on the communistic arrangement of family life, we 
 can certainly assume, that history does not begin with the 
 words. *' In the beginning there was the bow maker," or let 
 us say " the capitalist." No, first there were the hunters, 
 who used stones, cudgels or similar weapons provided by 
 nature and it was only at a later period that the bowmaker 
 appeared. Long before he came out as a specialist and much 
 longer before he appeared as a capitalist, bows were made by 
 the hunters themselves and by the time our capitalistical 
 bowmaker came into existence every body but beginners had 
 their bow and new bows only were needed for the latter or to 
 replace broken ones. There was also meat enough in stock 
 topermit bow making without starving, or if only our capitalist 
 had it, he could not have refused to lend it to the others, unless 
 he wanted to run the risk of unpleasant consequences, for 
 wealth and security, want and insecurity of property always 
 go together. The service rendered by our bowmaker to his 
 customer, who had the privilege of paying him with the 
 future proceeds of his work was not greater than the service 
 a brother hunter rendered to his colleague in lending him 
 meat for a few days to give him time to make a bow, and we 
 have already seen, that such a service was fully compensated 
 by the advantages the lender obtained in getting fresh meat 
 at a period when he had better use for it, as otherwise he 
 would have had to keep his meat and to eat it in a less perfect 
 state. But even independently of this the other bowmakers, 
 who were all more or less in the position of our friend, were
 
 I06 RENT, INTEREST, AND WAGES. 
 
 perfectly willing to lend out their stock, and the quantity of 
 stock being greater than the need of it, they would have bid 
 each other down until bows were lent at terms only just pre- 
 ferable to selfstorage. The demand for bows exceeding the 
 stock might have had an influence in raising their price but 
 not in creating interest. Before any body would have made 
 such a ruinous bargain, as borrowing on interest on the average 
 is always bound to be, he would have made his own bow, 
 and if we assume such poverty that there was no leisure for 
 bow-making, there would have been such an increase of risk 
 in the storage of bows that the higher value of the service 
 rendered to the lender would have compensated the higher 
 value of the service rendered by him to the borrower. 
 
 There is a law of natural compensation, which we may 
 formulate thus : "The wealth of a community — the absence 
 of monopolies being presupposed — bears a direct relation to 
 the security it offers to storage of capital, and an inverse 
 relation to the requirement of capital by workers. Thus, the 
 services rendered to each other by borrowers and lenders will 
 always preserve the same relation." 
 
 Interest in civilised communities. 
 
 This principle remains the same, whether a bow is the 
 highest form capital can take or whether it changes into the 
 gun, the magazine rifle, etc. 
 
 The needle made of a fishbone may change into that made 
 of steel, and the sewing machine may take the place of the 
 common needle. The law remains the same. When bows 
 are needed very soon more bows will be made than the day's 
 want requires, if there is no artificial obstacle to prevent it. 
 The same will be the case when the bow has changed into 
 the gun, the needle into the sewing machine. We might 
 formulate another law expressing these facts. " New tools 
 or machines never come into use except when technical pro- 
 gress has advanced far enough to ensure their production on 
 a scale sufficient to supply the demand." 
 
 If there were no artificial obstacles every worker in our day 
 could save enough wealth within a couple of years to supply 
 that share of capital which he needs if he wants to work with 
 the best tools and machines.
 
 THE REMEDY. lOf 
 
 Of course I do not mean that each worker would be able 
 to buy for himself alone a steam engine and all the machines 
 his special trade requires, when our improved methods require 
 that one engine supplies work for a thousand workers and 
 that each worker only attends to a special machine, but that 
 he can earn enough to pay for his personal share in a co- 
 operative shop fitted up with all the modern machinery and 
 improvements. 
 
 If we do not count the land, which will only be obtained on 
 lease, we can safely assume that ;^25o would suffice to pay 
 for the average capital required for each worker as his part in 
 an average factory fitted up with the best improvements, and 
 ;^25o more for a comfortable little house of his own with 
 furniture and household goods. We shall see in the next 
 chapter that a workman would be able to save this amount 
 in less than five years, if the present obstacles in the way of 
 production were put out of the way. Let us assume five 
 years as the outside figure and twenty-five years as the 
 average time a man would like to work, before he retires, we 
 shall then find each worker in the position of saving capital 
 enough to supply five beginners, whereas only one will have 
 to be supplied. During twenty of the twenty-five years he 
 will accumulate wealth and try to turn it into capital as the 
 best means of preserving it with least loss, but he will look 
 in vain for borrowers urgently needing it. The new be- 
 ginners will after a few years not only repay their debts but 
 will soon look out for chances of investment themselves. 
 Under such circumstances the laws of supply and demand 
 will have their usual eff^ect ; instead of borrowers paying 
 interest, the excess of capital looking for investment will 
 make it possible to obtain capital without paying interest.* 
 The borrower might even be able to get pay for his work of 
 preserving capital from depreciation, if there was not one way 
 to avoid this sacrifice. This way is offered by the state, 
 
 * The power of habit, the influence of surroundings is so strong, 
 that thinkers like Henry George even cannot shake them off. 
 After hearing all the proofs I gave him against the survival of 
 interest to land nationaHzation, he said, that he could not see how 
 it could ever come to pass, that a tailor wonld just as well sell a 
 coat on ten years credit as for cash. It did not avail anj tiling
 
 I08 RENT, INTEREST, AND WAGES. 
 
 which is the only party capable of furnishing chances of 
 secure investment to capitalists without making these pay for 
 them, because she alone has got at her disposal an inex- 
 haustible field of investments paying interest, (if we can call 
 it so) in reality paying rent. 
 
 Capital can make blooming fields out of deserts by paying 
 labour to irrigate and manure them. Capital can pump the 
 sea water from the Zuyder Zee and give its soil back to 
 cultivation, which peopled it in past ages. Capital can lay 
 rails on every road, to enable farmers and manufacturers to 
 do their hauling with less than half the work. Capital can 
 bridge rivers and channels, can tunnel cities 'and connect 
 distant countries by cables. Capital can bring the water 
 from the mountain side into the teeming city, making it supply 
 with water power innumerable mills on the way. Capital 
 can do all this and a great deal more, by enabling labour to 
 devote its strength to such enterprises, which only pay in 
 future times, feeding it with the stored wealth of the present 
 and the past in the meantime. All such enterprises increase 
 the productivity of labour and enable the state to levy a 
 tribute from labour for the new advantages offered, a tribute 
 which hardly deserves such a name, as labour is richly repaid 
 by the increased earnings afforded through the faciUties 
 offered. But why could not private capital embark in such in- 
 vestments ? It can ; nobody hinders it an dit will, but it does 
 not get any more by it, than if it is deposited in the state bank 
 without interest. This does not seem very clear and yet it is 
 very simple. All enterprises of this kind are impossible 
 without making use of land, and the land belongs to the 
 state. 
 
 The state leases no land, no monopoly right of any nature, 
 without getting the full letting value of it, the full rent. 
 When private capital has claimed the bottom of the Zuyder 
 Zee, the state will collect the rent from the reclaimed land 
 just as if it had been there from all eternity. All it will do 
 
 that I explained how the tailor would be very willing to make such 
 a bargain if on the one hand he had saved enough to feel certain 
 that he had no use for the money during the next ten years, and if 
 on the other his customer ofiered perlect security for the payment 
 of the debt.
 
 THE REMEDY. IO9 
 
 will be to deduct improvement expenses, viz., the cost of 
 pumping, including a certain reward for supervision and 
 enterprise. 
 
 Our artificial obstacle, once taken out of the way, capital 
 will increase in a measure of which we can form no idea. 
 Just conceive every worker in the land as saving only ^loo 
 of real capital every year — a saving of 1,000 millions in a single 
 year, and such saving and probably three times as much 
 going on year after yftar, to be consumed only after 25 years, 
 when other workers will step in to do the further savings. All 
 this capital will be trying to find investment, will lookout for 
 great enterprises likely to offer it. The effect will be that the 
 better of these enterprises will be so sought after, that the 
 remuneration of capital finally cheapens down to good wages 
 of enterprise, which means that some of these investments 
 will swallow more capital than will be got out of them, when 
 the rent claims of the state are satisfied, and others will bring 
 a profit. On the average none of them will have paid more 
 than the wages of supervision, as the profits of enterprise will 
 be balanced by the the losses of enterprise. A Panama 
 Canal may be built on a charter, which after paying to the 
 state a certain tonnage as rent, leaves so little for the repay- 
 ment of the capital, that a thousand years will elapse before 
 it is paid back, because the cost of construction greatly ex- 
 ceeded the estimate on which capitalists based their hopes, 
 when they made their offers of rent in the competition with 
 other capitalists, so that actual loss to living capitalists and 
 to generations of their descendants is the consequence. 
 Other enterprises, again, may leave a good profit, because 
 the bidders by some special knowledge of management were 
 enabled to make a great saving in the costs of construction, 
 which after outbidding their competitors allowed them a 
 large surplus. These profits will be wages of enterprise, which 
 are balanced by minus wages of enterprise, by losses like 
 those of the Panama enterprise, or even if they are not, they 
 will not be taken from the pockets of anybody, because they 
 are fairly earned by superior skill, which enabled the lucky 
 parties in question to earn something beyond the point 
 to which the general competition of capital had 
 pressed down profits, — i.e. simple payment of wages
 
 no RENT, INTEREST, AND WAGES. 
 
 Rothschilds, Vanderbilts, etc., are richer than their ancestors 
 were, without any law of entail. This is quite natural. Let 
 us put down the fortune of the English Rothschild at loo 
 millions, his interest income at 3 millions, his expenses at 
 100,000. The fortune will have trebled in one generation, 
 and as rich families mostlyhave very few children the increase 
 generally will overbalance the diminishing effect of division 
 by inheritance. — Thus, especially if we add the effect of fortunes 
 added by marriage, we can safely assume that as a rule the 
 sons of such men will be richer than their fathers, even if 
 they have not got any capacities for business at all. All they 
 have to do, is to adhere to the family tradition telling them 
 to make no investments but in good securities, which means 
 in false capital — and to avoid risky enterprises, which means 
 investments in real capital. This state of things will be 
 completely changed with the disappearance of spurious 
 capital. The founder of a large fortune may be lucky enough 
 in his ventures always to hit the winning side ; but it is very 
 unlikely that his son will be as fortunate and that at the end 
 of his life he will not find that he would have acted much 
 more wisely if he had deposited his capital in the state bank, 
 instead of trying investments in enterprises, in which only 
 great foresight and keen calculation will bring profit and 
 where the lack of these qualities is sure to entail losses. 
 
 There are two parties who are bound to be on the winning 
 side in all such operations : the state and the workers. All 
 such enterprises raise rent and increase the income of the 
 community. They furthermore give greater facilities to labour 
 and thus raise wages. 
 
 Trusts no more Dangerous : 
 
 But could not capital unite in immense trusts and similar combina- 
 tions and by thus levying blackmail on the community obtain interest 
 in the shape of profits ? 
 
 There are two kinds of trusts, those based upon the pos- 
 session of monopolies and those without such a foundation. 
 It is only the first kind which can be considered to be on a 
 firm footing even under the present system. 
 
 If all the owners of leadmines in the world or those in a 
 single country the laws of which exclude competition of foreign
 
 THE REMEDY. Ill 
 
 leadmines, by erecting artificial barriers, called custom houses 
 against them, if all these combine, they can levy a certain 
 amount of blackmail on the consumers by raising the prices 
 of their products. All they will have done in this case is to 
 raise rent of soil containing lead beyond that natural limit 
 which the law of rent is tracing. This law says that the rent 
 of leadmines is the profit obtained in mining lead after paying 
 the usual wages of labour, supervision and enterprise, as well 
 as the current rate of interest, adding of course the premium 
 of risk, i.e., insurance. It is only another way of expressing 
 Riccardo's law, which gives us as rent the profit obtained over 
 that gained in the poorest leadveins worked, for they would not 
 be worked, if labour and capital did not get the same remun- 
 eration they get in other departments of work. I prefer my 
 way of expressing the law, because the expression " poorest " 
 may mislead, as capable of being only applied to the quality 
 of the mine, whereas means of access, security of working 
 and transportation form elements which Riccardo certainly 
 intended to include in his quality definition. 
 
 If so called economists of the Carey type had understood 
 him in this sense, they would have saved themselves and the 
 world the infliction of volumes of verbiage about the mistakes 
 of Riccardo, What is it, if it be true, as Carey and Rodbertus 
 proved, that it is very often the poorest land, which is culti- 
 vated first ? That it is not the rich soil of the lower lands, but 
 the more barren soil of the hills which is first taken up ? It 
 simply proves, that the poorer quality of the hillsoil was com- 
 pensated by other advantages, which made it appear more 
 desirable than the richer bottoms. Supposing that the work 
 of felling trees in the bottoms was so hard, that the denuded 
 hills were preferred, or that the fevers of the valleys drove the 
 settlers to the healthier hills, did not the superior advantages 
 of the higher soil form part of the qualification " good," just 
 as much as its chemical components ? Any doubt, which 
 might possibly remain in Riccardo's way of expressing him- 
 self, disappears in mine. When the first bottomlands were 
 worked, and hill lands began to leave a margin of rent to 
 their owners, it was not because these were richer land in the 
 current sense of the word, but because labour and capital 
 were able to earn a surplus beyond the lowest reward at
 
 112 RENT, INTEREST, AND WAGES. 
 
 which they were willing to go to work, a limit just about 
 attained by those working the bottomlands, or they would 
 not have begun doing so. This definition rids us of all those 
 ambiguities caused by the word " poor." It saves us the 
 trouble of explaining, why a very poor leadmine in England 
 will bring rent, when a very rich one in the Amazon Valley 
 will not be worked at all, though it could be had rent free. 
 Labour and capital in the first place will get their accustomed 
 remuneration and still leave a surplus, whereas in the valley 
 of the Amazon, dangers of all sorts and difficulty of transpor- 
 tation might cause great loss to capital, after labour has been 
 duly — which means more highly than in England — rewarded, 
 and of course would leave the getting of rent completely out 
 of the question. 
 
 Combinations based on monopolies may get a higher price 
 than could be obtained, if capital and labour could have free 
 access to natural opportunities, i.e., if everybody was free to 
 go mining, where he liked. Supply and demand in the latter case 
 would take care that the price of lead always corresponded 
 to the cost of labour and capital necessary to get lead from 
 the poorest mine (poor in the sense indicated) which pays 
 working. 
 
 It is different when rich and poor mines are in the hands of 
 combining monopolists. They may artificially raise prices 
 beyond a point at which a limit is reached, when the decrease 
 of sales through the diminution of consumption caused by the 
 high prices counterbalances the advantage obtained by their 
 means. 
 
 These kind of trusts will be rendered impossible when the 
 state owns the mines. The increased price obtainable for 
 lead would bring higher offers of rent for leadmines from 
 parties outside of the combination. The rent paid by the 
 combining capitalists would be raised in proportion to the 
 higher price they are getting and they would have no benefit 
 from their operations. All the profit would flow into the 
 pockets of the community. The second class of trusts in 
 most, if not in all, cases obtains a temporary success only 
 where protective laws render competition from abroad 
 impossible. In this way they may in a certain sense be 
 included in the first class, as state monopoly partakes of the
 
 THE REMEDY. II3 
 
 nature of rent of natural opportunities ; but we may 
 suppose them internationally organised, as they sometimes 
 are in exceptional cases where protective duties do not offer 
 a sufficient barrier. I have to explain how the reformed state 
 of things would prevent both kinds of combinations or in any 
 case take from them the power of levying blackmail. 
 
 We can raise the level of a river by building dams across its 
 bed and along its shores where the banks are not high enough 
 by nature. We can never raise the level of the sea, even if we 
 built as many dams as we like. The volume of water is too large 
 to be affected by such trifles. The artificial obstacles with 
 which our system of ownership has been drying up the stream 
 of capital, destroying it by ruinous competition with its con- 
 sequences of bankruptcies and destructive liquidations, or 
 worse yet, preventing its formation by enforcing idleness on 
 willing workers, has the effect of reducing the volume of real 
 capital or rather of keeping it far below the limit it might 
 acquire if left alone. The more quickly false capital increases 
 the more slowly will the volume of the real article grow. 
 How different this will be, when land-nationalisation will have 
 put a dam across and along the bed of the stream of false 
 capital. The liberated workers, now enjoying the full benefit 
 of their productive powers, which are rapidly increasing with 
 technical improvements and a better organisation of produc- 
 tion and exchange, as a free result of natural developement, 
 not of unnatural mterference, will have their savings increase 
 from year to year until they form so immense a volume, that 
 it will appear like the sea as compared with a river when 
 looked at by the side of to-day's real capital. Trusts may 
 succeed in temporarily damming the river of present pro- 
 duction, they never can dam the sea of that in reformed times, 
 or if they do they will not be able to effect a perceptible rise 
 of level. 
 
 Free labour and free capital will be eagerly watching any 
 opportunity where higher wages or some extra profit can be 
 obtained. The very moment that a combination will have 
 succeeded in raising ever so slightly the profits of capital in 
 any department of production, competitive enterprises will 
 start up on all sides and by underbidding the combined pro- 
 ducers soon will get all the trade, breaking the trust and
 
 114 RENT, INTEREST, AND WAGES. 
 
 forcing it to sell with loss, until the natural increase of con- 
 sumption will have made work enough for the old, as well as 
 for the new producers. The loss will not affect the latter, 
 for their ranks will mostly consist of workers employing their 
 own capital, either singly or organised in co-operative societies, 
 the latter having gone into this branch because the excep- 
 tional circumstances promised better profit than elsewhere. 
 Their risk was small, for even if in the long run their capital 
 did not bring any profit beyond paying for its deterioration, 
 they work on their own account and could easily compete 
 with labour paid by capitalists, so that if overproduction in 
 that special branch finally forced part of the producers into 
 temporary idleness, it would not be theiv factories which 
 would have to be closed, but those of the combined 
 capitalists, especially as the consuming public would at 
 equal terms rather patronise those who had protected it 
 against the conspiracy, than the conspirators. 
 
 The workers employed by the conspirating capitalists 
 would not be any losers either, for they would easily find 
 employment in other departments. There could be no want 
 of work, such as we are used to to-day, because in the 
 absence of all obstacles the level of the labour market could 
 never be appreciably disturbed. A stowage at one point 
 would immediately cause an outflow to another. The void 
 caused by the workers attracted through the chances created 
 by the combination would afford corresponding vacancies for 
 the workers thrown out by the break-down of the combining 
 factories. The foolish capitalists, who own these would be 
 the only losers by their attempt to blackmail the consumer. 
 
 I have now shown, that in the absence of monopolies, with 
 full freedom of production and consumption interest would 
 be a thing of the past, and that without such artifical props 
 it would have never even existed. I do not mean to say 
 that we should not have had, or continue to have something 
 bearing the same name and apparently the same thing ; but 
 when we look closer we shall find that what we call interest 
 in reality is nothing else but the rate of insurance paid for 
 the preservation of capital, not interest proper. Instead of 
 being like this a tribute exacted from labour, it is nothing 
 but an equalisation of risks, a balancing of losses.
 
 THE REMEDY. II5 
 
 Interest and Rent. 
 
 We shall now have to investigate the interest question 
 from the point of view of the second supposition, under 
 which the relations between lenders and borrowers have to 
 be investigated, that of private ownership of land and other 
 monopolies. I need not go minutely into this aspect of the 
 question. It is that of the world we live in and I have pre- 
 sented it before. I have shown that every thing changes 
 completely, the moment capital can find investments of the 
 nature here indicated, or rather to express the exact case, 
 the moment wealth can buy land or monopolies, which 
 enable their possessor to exact tributes from the workers. 
 As soon as wealth will be able to buy land — the strongest 
 foundation any monopoly could have, as men cannot get 
 along without land — wealth will not change into real capital, 
 unless the borrower is willing not only to give as good a 
 security as the possession of land affords — an excellent security, 
 as land cannot be carried away by any body — and further- 
 more to pay a tribute, at least as high as that to be obtained 
 through the possession of land. The rate of interest of real 
 capital will not be below the rate of rent, adding the average 
 rate at which rent increases, as well as the premium of risk, 
 i.e., insurance. 
 
 All declamations against the injustice of interest will avail 
 nothing, as long as the firm root it possesses in rent con- 
 tinues to feed it. When the canonical laws, which forbade it, 
 were most powerful, in the middle ages, they had a very 
 simple way of getting round it. The borrower transferred 
 some land which he owned to his creditor, who collected the 
 rent from it, until the debt was repaid, when the land was 
 retransferred to its former owner. 
 
 All the objections made against interest apply with much 
 greater force to private rent. R. G. Sillar finds the principal 
 objection against interest in the fact that the receiver of 
 interest gets a certainty while the user of the capital is subject 
 to all the uncertainties of human enterprise. He says : 
 
 " It is not just to make a fixed charge for profits out of gross 
 proceeds, and this you will easily understand by a familiar 
 example. A is the owner of a hen sitting on a dozen eggs, 
 and employs B to feed and attend to her. Justice is satisfied
 
 Il6 RENT, INTEREST, AND WAGES. 
 
 if B should be paid a fixed sum for his services or that in lieu 
 thereof he should receive one half of the resulting brood ; but 
 no one would argue that it is equity for the owner A to 
 bargain that B shall in 3 weeks, deliver to him six chickens, 
 eggs hatched or not hatched. You will observe that in the 
 event of the eggs being addled from any cause, there are no 
 chickens to divide, and the capitalist cannot justly receive any 
 return from his capital." 
 
 Does not the same objection attach to rent ? Are we not 
 familiar with cases where the tenant has been ruined, while 
 the landlord has fattened on the rent extorted from him in 
 spite of its not having been earned ? Rent receivers are at a 
 certainty just like interest receivers ; rentpayers are at an un- 
 certainty just like interest payers. 
 
 Thedangersof compound interest are also presented by rent. 
 What prevents the receiver of rent from investing it in new 
 land purchases? Is it not done every day ? Freehold after 
 freehold gets into the possession of the large landowners and 
 just as we see capital gathering in a few hands with ever 
 increasing volume, like an avalanche in its descent, so we 
 see acre after acre accumulating in the hands of the land- 
 cormorants until whole countries once inhabited by a free race 
 of independant peasants come into the hands of a few thousand 
 men, the number of whom is continually diminishing, as the 
 bigger vultures swallow the smaller ones. The free peasants 
 become dependant tenants or agricultural labourers, if there 
 is labour for them. If, as is always the more usual tendency, 
 their services are not needed, a few shepherds or deerkeepers 
 supplying the place of hundreds of ploughmen, they will crowd 
 the labour market of towns, sharpen the already too sharp 
 competition for working opportunities, crowding other 
 workers out of their employments, becoming blacklegs, 
 defeating strikers for a better living, or finally themselves 
 crowded out of this world in which there was no room for 
 them, because sheep and deer wanted it. 
 
 George's Greatest Error. 
 
 George has come very near the truth in the 4th chapter of 
 book 43 . His definition of the nature of spurious capital could 
 hardly be improved ; but he does not see that the interest of
 
 THE REMEDY. liy 
 
 spurious capital, which he abominates as another form of 
 rent, is the only source from which the interest of real capital 
 springs, without which the latter would be bound to disappear. 
 As a rose will smell sweet by any other name so will interest 
 in any shape and under any name be a deadly enemy of labour 
 and ofhumanity in general, the deadly hell flame destructively 
 darting through the paradise which God gave us back again 
 since the millions of iron slaves took away the curse ot labour. 
 This flame, which if we do not extinguish it in time through 
 land-nationalisation or even Socialism, — if we prefer this un- 
 pleasanter and more dangerous fire engine to the soft and 
 refreshing rain which the other remedy will call down will 
 work such havoc of destruction as the world has never seen 
 before. 
 
 An illustration from everyday life will prove better than 
 anything else how impossible it is to separate the two kinds of 
 interest, as far as their practical effects are concerned and how 
 little we can attack the one as an enemy of labour while at 
 the same time defending the other as its friend. A farmer 
 purchases agricultural implements, cattle and seed to stock 
 his farm with. He owes the money to the merchant, as he 
 has not got the means to pay. Of course he pays interest, 
 real interest, if ever there was any. This interest is perfectly. 
 legitimate according to Henry George. The farmer is 
 benefited, not hurt. It is not he, who has to earn the 
 interest, but the productive forces of nature with the element 
 of time. Granted for argument's sake. Let us now further 
 suppose that our merchant asks the farmer to allow him to 
 make an entry of his debt into the public records, where land- 
 mortgages are entered. Has the nature of the transaction been 
 changed by this entry? Certainly not. The cattle do not lose 
 any flesh by it ; the machines do not work less efficiently. The 
 capital is the same as it was before, the interest, according to 
 George, must be just as much a product of nature as before. 
 Yet in spite of all that the nature of the debt has changed com- 
 pletely. It was a real capital debt before ; It is one of fictitious 
 or spurious capital now, for mortgages are nothing but another 
 form of landownership ; their interest is nothing but disguised 
 rent. George agrees with me in this. The real nature of 
 the transaction now is that for real capital handed to him by
 
 Il8 RENT, INTEREST, AND WAGES. 
 
 the merchant the farmer sells to the merchant a certain 
 amount of false capital: land. Instead of paying him interest 
 he in reality pays him rent. To me this makes no difference, 
 for interest and rent are in my eyes of the same nature; they 
 are tributes paid by labour to a master. It is different with 
 George. Interest is a legitimate earning of capital ; rent, 
 whether so called or disguised under the name of interest due 
 on spurious capital, is an unjustifiable blackmail, if paid to 
 private parties, as they have not a shadow of a right to the 
 land for which it is paid, this land belonging to the community. 
 So this simple precaution of entering the debt in the mortgage- 
 records in order to insure it against the risks of human vicissi- 
 tudes, has changed the whole nature of the transaction? 
 What was a legitimate claim becomes an exaction for which 
 no terms can be found strong enough ? To-morrow the 
 mortgage is cancelled, the debt becoming an ordinary debt as 
 before ; immediately what was blackmail to-day becomes asa- 
 legitimate remuneration to-morrow. What to-day has to 
 be squeezed from the sweat of labour, making a slave of the 
 farmer, who had to pay it, to-morrow becomes a product of 
 natural forces and the element of time, handed over to its 
 legitimate owner by the farmer who collected it for him ? Is 
 not this a sufficient proof of the evident fact that interest in any 
 shape or form grows on the same tree, called slavery, which as 
 long as interest exists has only changed the name of its fruits 
 according to the requirements of civilisation ? Does a 
 foetida smell better if called a rose? If he will well 
 ponder on these facts and act accordingly, the great 
 American teacher will find his fight against existing abuses 
 much easier. A reformer cannot prosper without the full 
 truth. Lies are bound to blunt his sword. 
 
 Mis-leading Power of Deductive Reasoning. 
 
 Henry George presents one of the most striking examples 
 of the defects inherent in many of that class of thinkers who 
 work on the deductive system. They are so strongly convinced 
 of the truth underlying their fundamental theory that 
 contrary facts are either put aside, or so distorted that their 
 own mother would not recognise them, in order to make them 
 fit the pet doctrine. The truer this theory the stronger will
 
 THE REMEDY. Iig 
 
 be the distorting or suppressing propensity. I have shown in 
 the first chapter, how the strength of the great truth under- 
 lying the principle of free individual development without 
 state interference blinded individualists to most patent facts 
 clearly visible and recognisable to any unbiassed eye. I have 
 shown the source of their errors to consist in the circumstance 
 that they entirely lost sight of the fact that we can have no 
 free development of individual powers, as long as natural 
 opportunities, without which the free exercise of these powers 
 is impossible, are monopolised by a minority. 
 
 A most interesting example of the magical power with 
 which deductive reasoning from a great truth leads its adepts 
 into overlooking the most simple and evident facts, when 
 these facts do not agree with the one-sided and incomplete 
 picture which the dominating truth takes in their minds, has 
 just been supplied to me by a circular issued by an English 
 individualist, Mr. Auberon Herbert in connection with of a 
 new weekly he desires to start. 
 
 In one passage of this circular Mr. Herbert says : " We 
 shall insist upon the fundamental right of each individual to 
 direct his own life in such fashion as seems right to himself, 
 provided only that he does not aggress upon the equal rights 
 of others." This does not at all interfere with his saying 
 later on : " We shall be democratic in a true sense as 
 opposed to all forms of privilege ; we shall be conservative in 
 a true sense as defending property against all attacks." 
 This is certainly a most striking proof of the wonderful 
 power possessed by deductive reasoning based on imperfect 
 foundations in waiving aside inconvenient facts which it meets 
 with on the way ! 
 
 A clear-sighted man becomes perfectly blind to the plain 
 and simple fact that private ownership of mother earth is a 
 privilege as undemocratic as any in this world and that such 
 a privilege cannot be exercised without aggressing upon the 
 equal rights of others. How are 38 millions of Englishmen, 
 Scotsmen or Irishmen to direct their own lives in such fashion 
 as seems right to themselves, if a few thousand of their 
 fellow-citizens own the soil of their country with the right 
 to use or misuse it, as they see fit ? Suppose these men 
 take the fancy to change Great Britain into a deer park, as
 
 120 RENT, INTEREST, AND WAGES. 
 
 a foreigner Mr. Winans has been doing with a part of Scot- 
 land running from sea to sea, and suppose a general fashion 
 quite the reverse of that of former times, when Englishmen 
 went to America for a good hunt, growing corn on their 
 English lands, set in, what would ensue ? Nay, what do we 
 now actually find ? Americans using British land as 
 a hunting ground, while Englishmen, Scotsmen and 
 Irishmen grow corn on American soil ! Suppose such use of 
 existing rights, and suppose a general eviction of the 38 
 million inhabitants of the United Kingdom, how are these 
 38 million to direct their own life in such fashion as seems 
 right to themselves ? It seems right to them to stay at home, 
 to remain on the land their forefathers shed their blood for, 
 on that beloved English land of theirs. They want to plough 
 and sow it, to exercise their industry on it, as their fathers 
 had done before them. It seems right to them, just as it once 
 seemed right to 15,000 hard-working Scottish crofters to 
 remain on their native soil and to continue to work it with 
 the sweat of their brows, as untold generations had done 
 before them ; but how can they direct their lives in such a 
 fashion, if the legal owners of the English soil will not let 
 them ; if they treat them as the Duchess of Sutherland treated 
 those poor Scottish peasants, whom she ordered to be driven 
 off Irom her land to die in misery, to emigrate or to do what- 
 ever they saw fit to do in this beautiful world of " laissez 
 faire " and " the devil take the hindmost " ? 
 
 Oh, my individualistic Hon. Mr. Herbert, let me tell you, 
 that such individualism of sons of lords and large landowners 
 who want to be " conservatives in a true sense, as defending 
 property against all attacks," of course including property of 
 land of the Sutherland type, let me tell you that such indi- 
 vidualism is not of the material required for building forts 
 against the attacks of that terrible giant " Socialism " and 
 that conservatives of your stamp are the most dangerous 
 revolutionists or even anarchists. Do you really believe that 
 in this almost twentieth century of ours brave Anglo-Saxons, 
 the descendants of one of the freest tribes of the great 
 Teutonic family, fully impregnated with the cravings for 
 liberty and independence their ancestors once possessed, who 
 at last after centuries of subjection to the domination of a
 
 THE REMEDY. 121 
 
 landowning minority, the descendants of a foreign nation of 
 conquerors, have come to know their rights and their power 
 of enforcing them either by law or by force, do you beheve 
 that such people are to be humbugged any longer with this 
 kind of logic and so-called conservatism ? Start your indi- 
 vidualistic papers; spread them in millions of copies; preach, 
 with the tongues of angels, that the old prison walls of land- 
 lordism, which keep men from the paradise around them, are to 
 be kept protected against all attacks, but that to make up for 
 it in some other way, you will set your individualistic face 
 against any kind of interference with their right to get along 
 as well as they can in their prison, against the interference of 
 all those who want to bring them the food which your walls 
 prevent them from getting by their own free exertions. Tell 
 them all this and be sure that, when Most and his friends have 
 once secured their victory, they will give to such as you the 
 highest medal of the anarchist's State, to show their apprecia- 
 tion of the services you have rendered them. 
 
 Enough of this. May the reader excuse me that I have 
 allowed sarcasm to take possession of me for a moment. I 
 was in need of it to get over the feeling of disgust with which 
 social reformers of this type always inspire me. And yet 
 they are not bad men. I have no doubt they are sincere in 
 their way. They are the living proofs of the magic power 
 inherent in great truths manipulated by deductive reasoners 
 who have not first investigated whether their premises really 
 are correct, whether the base of their logic is built on the full 
 truth and nothing but the truth, a foundation without which no 
 lasting success is possible. It does not matter to me, that 
 the single tax men following Henry George's lead already 
 number hundreds of thousands. If numbers were a proof, 
 socialists would be far ahead in truth and old school 
 economists further still. If the great idea we are fighting for 
 has so many followers, even though it yet be mixed with 
 dangerous heresies, what must be its conquering power if its 
 great leader, by trying the inductive method for once, by 
 reasoning from real facts, totally different from those 
 imaginary ones he deduced from incomplete theories, will 
 find his way to the comprehension of the true relations exist- 
 ing between land and capital, rent and interest, and between
 
 122 RENT, INTEREST, AND WAGES. 
 
 both and iheprohlem of commercial depressions, which are nothing 
 else but another name for the great social problem. 
 
 The Best Remedy. 
 
 I now come to the conclusion of this chapter, in which I 
 have tried to show that the remedy for the evils we are 
 suffering under is to be found in the restoration of mother 
 earth to all its children, in its redemption from the hands of 
 monopolists, who are now basing their rent and interest 
 privileges, which are at the bottom of the great labour pro- 
 blem, upon their unjust monopoly rights. I have shown how 
 I reached this conclusion in a totally different way from the 
 great American leader of land nationalisers, or, as they prefer 
 to call themselves, single tax men. It must greatly strengthen 
 the conviction of its truth if such completely diverging wa3s 
 finally arrive at the same goal. After having shown how 
 social necessity compels us to abolish private land-owner- 
 ship, with what feeling of satisfaction do we find that the 
 remedy does not consist in artificial decoctions, disgusting to 
 the palate and poisonous in their nature, but in the exercise 
 of natural rights, in our strict conformation to perennial laws, 
 to justice and the commands of humanity and religion. Of 
 course there are other remedies as well, but they are more or 
 less in contradiction to natural rights and principles. 
 
 Socialism. 
 
 Socialism is one of these remedies. I agree with Stuart 
 Mill that all the objections against it, or even against com- 
 munism would appear like a hair in the scale, if on the other 
 hand the conservation of the present state of things without 
 reform had to be taken into consideration. Fortunately we 
 are not in this dilemma. We do not need to burn a house to 
 roast a pig ; we can preserve the treasure of free individualism, 
 without keeping the dangersit brought us into, through never 
 carrying it out to the full extent of its principles, through 
 being foolish enough to exempt natural opportunities from the 
 objects of free competition while we gave monopolies ol them 
 to a favoured minority. 
 
 1 may be and I even am convinced of the fact, that social- 
 istic principles will obtain to a much greater extent, than
 
 THE REMEDY. 12} 
 
 they do even now, when in individualistic England socialist 
 principles are reigning to an extent, realized by few observers. 
 I recommend those who doubt this to read ^^ Socialism in 
 England " by Sidney Webb. Among other important facts 
 he adduces to show the advance of English socialism, I only 
 mention that already 31 municipalities own their own tram- 
 way lines, comprising a quarter of the whole mileage of the 
 kingdom. Only eight of these lines are leased. The future 
 may bring us great extensions of these and other kinds of 
 public undertakings. Principles like those, which Herbert V. 
 Mills puts forth in " Poverty and the State or Work for the 
 Unemployed " may be carried into practice. The present 
 English poor-law system presents such a terrible ulcer on the 
 body of the State, that a reform like that which Mills proposes 
 ought to be taken in hand at once, without waiting for 
 the effects of land reform, which cannot be felt immediately 
 to their full effect. There is nothing in Mills' plan which 
 appears to me impracticable. To set paupers to work to 
 produce all they need would, it is true, create a kind of 
 socialist state in the state ; but as long as socialism is not 
 forced on those who want to be free workers, I do not see 
 what harm it can do. There are plenty of people, who, though 
 willing and capable of work, have not got the capacity of ad- 
 ministration even as far as is needed for the disposal of 
 their labour in the market. Mills mentions the example of a 
 good and capable gardener in one of the Beggar colonies of 
 Holland who did excellent work when he was under the 
 goverment of the colony, which provided work for him, at- 
 tended to his personal needs and left nothing to his own free 
 will ; but he became a worthless tramp as soon as he was 
 released. There are plenty of men like him and in fact I find 
 that those who denounce socialism are too apt to judge the 
 masses by themselves. People who give lectures, write 
 books, or influence public opinion in any way, generally 
 possess a certain amount of energetic individualism. To 
 submit to the government and management of others in regard 
 o the disposal of the work they are to do seems to them an 
 unbearable hardship. Even George prefers the present 
 world without reform to the socialist's world without the
 
 124 RENT, INTEREST, AND WAGES. 
 
 stimulating power of competition, in which, as we have seen, 
 he entirely differs from Stuart Mill. 
 
 Though accustomed to abstraction, George in this instance 
 is forsaken by his capacity and when he wrote these words 
 in the Standard, man for him had taken the figure and 
 colouring of that special specimen gifted with such great 
 energy and such wonderful powers, called " Henry George." 
 Let him look around in this world, especially on this older 
 continent of ours and he will find it inhabited by quite a 
 different set of people. Does he really think, that it makes 
 such a wonderful difference to the workman of one of our 
 factories whether the master is called individual enterprise or 
 state ? I think, we may safely say, that to go per cent of our 
 European population free individualism is nothing but a well 
 sounding word and even if they understood its meaning they 
 would not understand its practical value. The daily routine 
 of hard spirit killing work has left little of that higher feeling, 
 which stimulates more elevated natures to accomplish the 
 higher tasks humanity has shown itself capable of. " Stitch, 
 stitch, stitch," goes on from morning till night, as in Hood's 
 wonderful poem, and to make both ends meet, takes up the 
 thoughts of the leisure hours. Free individualism indeed ! 
 Whatever there is of it in such people is soon crushed out by 
 the Juggernaut car of daily drudgery from which they try in 
 vain to save their limbs and souls, happy at last even if there 
 is found room for them under the car. Let all progress stop 
 and only give them a just share of what could be produced 
 by present means of production, employing all the unemployed 
 and doing away with the waste in the trades, in commerce, 
 in militar}^ pageant and drone life, etc., can there be any 
 question but that they would be much better off than to-day, 
 even if the state officials were as hard task-masters as those 
 appointed by the laws of supply and demand ? 
 
 I would go so far as to say, that Herbert Mills' plan might 
 be extended so as to embrace all those who are out of work 
 or who through inclination prefer to work without thought 
 for the morrow, leaving to a paternal government the care of 
 attending to the management of work and to the distribution 
 of wealth. Results would show whether the tendency of 
 future development was in the direction of socialism or in-
 
 THE REMEDY. I25 
 
 dividualism; whether material prosperity and better education 
 would make more independent beings out of drudges and with 
 the growth of independent feeling would make them prefer to 
 shift for themselves; or whether the disappearance of want 
 with its ennobling effects on human character would succeed 
 in so subduing human selfishness, that mankind Avould find 
 it more advantageous to drop all the wasteinherent to the best 
 system of individual production and exchange by living like 
 one great family. Perhaps it would adopt the system even 
 to-day practised in the real family (extended to a greater 
 circle, sometimes even numbering almost a hundred indi- 
 viduals in the Zadruga, the Slavonian family community) 
 a system best described in that formula of one of the socialist 
 schools : Every one according to his capacity and to every 
 one according to his needs. 
 
 Even partial socialism may succeed in doing away with 
 the most pressing of present evils. If the German Imperial 
 vianifesto, which has just appeared, as I am writing this book, 
 could succeed in establishing universal regulations about 
 working hours, prohibition of children's and married women's 
 labour, fixing of minimum wages, etc., it might in this un- 
 natural way arrive at the desirable end of doing away with 
 the army of the unemployed, and thus, with this principal bar 
 removed, the rise of wages might continue until labour was 
 getting the just reward of its exertions, which would only be, 
 when it got the full value of its product. The army of the 
 unemployed, that immense reservoir of blacklegism, which 
 no picketing will be able to close, because hunger is more 
 powerful than all the threats of Unions, offers an unsurmount- 
 able barrier to the lasting success of strikes under present 
 circumstances. This army once disposed of, w^hether it be 
 by Imperial legislation, or by " black death," workers have 
 it in their own power to raise their wages to the utmost limit. 
 The scarcity of labour caused by the black death in the four- 
 teenth century raised wages to such a degree, that laws were 
 made for the purpose of limiting them. 
 
 Do Higher Wages raise the Prices of Commodities? 
 
 In the next chapter we shall see how ridiculous that 
 objection is, which we daily meet with, when this question
 
 126 RENT, INTEREST, AND WAGES. 
 
 of higher wages is treated, that higher prices would so much 
 decrease the purchasing power of wages, that the gain to 
 workers would only be an imaginary one. In this place I 
 only want to point to the fact, that wages do not form the 
 only component of the price of products. According to 
 different estimates they do not exceed one fifth of the retail 
 price of goods. Rent, interest, waste of all kinds take almost 
 the whole balance. The part paid to wages of enterprise 
 and supervision is so small, that we hardly need to take it 
 into consideration. Prices therefore need not necessarily 
 rise with a rise of wages, if the part of labour is increased 
 from that of the other partners in the distribution of the 
 product. It is certain, that the lion's share taken up by 
 waste, mostly in the mercantile department, could be 
 materially reduced and the saving thus obtained could 
 by itself at least double the present share of labour, without 
 increasing the price of goods. Under present circumstances 
 rent and interest of spurious capital would get the saving 
 made in this way. The consumption of merchants and shop- 
 keepers, diminishing with the decrease of their numbers, 
 without being replaced by a corresponding increase of con- 
 sumption of landlords and capitalists would lessen the oppor- 
 tunities for work. The labour displaced from unproductive 
 departments could not only find no occupation in productive 
 ones, but even workers in these would have to be dismissed, 
 because of the decrease of consumption. Waste, as I have 
 shown already, performs the office of a leech drawing off some 
 of the superfluous blood of the social body and thus putting 
 off the danger of a stroke of apoplexy. 
 
 It will be different, if labour is enabled, to take up the share 
 saved by a reduction of waste. The consumption of workers 
 would so increase, that the superfluous hands crowded out of 
 commercial occupations would find plenty of work in pro- 
 ductive enterprises. 
 
 But what would prevent rent and its child interest from 
 monopolising all the savings obtained in other departments 
 even after such laws are passed ? They do so now, why will 
 they not continue to do so ? They will not, because there 
 are two ways of killing a parasite: one by taking away its 
 food, the other by having another parasite feed upon its
 
 THE REMEDY. I27 
 
 body. The first, natural way would be land nationalisation, 
 Avhich by taking rent, and thus stopping interest exaction, 
 starves the parasite monopoly. The other way sets parasite 
 against parasite, monopoly against monopoly. Against the 
 monopoly of rent secured by law, labour gets the monopoly 
 of maximum hours of labour, reduction of competing hands, 
 perhaps also minumum wages, etc. All these monopolies 
 would procure to labour the power to strike for higher wages 
 before it goes to work and the holders of the other monopolies 
 would have to yield and be forced to sacrifice their black- 
 mailing power to a certain extent. Theoretically we might 
 think, that the owners of natural opportunities are the 
 stronger in the fight, as they can get along without labour, 
 i.e., without any other labour than their own, whereas labour 
 can do nothing without natural opportunities. Theoretically 
 this is no doubt true, but not in actual life, where those men 
 whose monopolies are the cause of our misery, the large 
 landlords and capitalists, will not dream of working the 
 natural opportunities they hold, by their own labour. Even 
 if their laziness and want of practice or knowledge would let 
 them, they could never satisfy more than a fraction of all 
 those manifold wants to which they are subject, and if it 
 were a question of starving out, it certainly would not be 
 their effeminate bodies, which could hold out longest. 
 Even if they had laid in a large stock of all the neces- 
 saries of life, they are so much used to the services of their 
 fellowmen, that the absence of these would soon be more 
 painful to them than actual want would be to the workers. 
 They cannot get along without work and if artificial labour- 
 laws created a monopoly enabling labour to hold out for better 
 terms, their own monopoly would have to yield. 
 
 This is in accordance with the so called iron law of wages, 
 which restricts wages to the means of existence necessitated 
 by the standard of life. 
 
 If the law artificially raises the standard of life, rent and 
 interest will have to be satisfield with a smaller share. 
 
 It would not be the employers of labour who would be the 
 sufferers, as far as they work themselves. Wages of super- 
 vision would rise with other wages, as they do now, for 
 higher wages mean increased consumption and production
 
 120 RENT, INTEREST, AND WAGES. 
 
 and, of course, a greater demand for work of organ- 
 isation and supervision. There can be nothing more foolish 
 than for employers as a body to protest against higher wages. 
 Of course a single employer, a set of employers, and, in 
 some cases, even all the employers of a single country might 
 be losers, if they had to raise wages ; but there can be 
 no doubt that a general rise of wages would be advan- 
 tageous to all employers in the world. Even if such a 
 rise were restricted to a single country, it would be of advan- 
 tage, for even supposing it was necessary to shut out the 
 competition of cheap labour by protective laws, what is all 
 international commerce, if compared with the home trade, as 
 it could be, if we only willed it ? If the United Kingdom, great 
 as its international commerce is, would restrict itself to a simple 
 exchange against those products which her own people cannot 
 create by their own labour, viz,, tea, coffee, spices and tropical 
 products in general, and would put a Chinese wall around 
 the country, prohibiting all importation of anything else, 
 foolish as such proceedings would be, by which all those 
 immense advantages of international division of work are 
 given up, her people would be immensely happier and more 
 prosperous than to-day, provided the breaking down of our 
 present artificial obstacles, or, in case the false and roundabout 
 way of such state socialism as the Imperial manifesto points to, 
 should be preferred, if labour laws forced up wages to such 
 a height, that there was nothing left for monopolistic 
 millionaires. In a very short time we would see a rich and 
 happy land filled with happy and contented agriculturalists, 
 producing food of all kinds in abundance for the whole nation, 
 and flourishing manufacturing establishments providing all the 
 necessities and luxuries of life, not for a wasteful minority, 
 but for the whole people. The British Islands could main- 
 tain a much greater population than they possess, without 
 having to import a bushel of corn. 
 
 We see now, that even by the artificial way of socialism or 
 that of a more mitigated state interference an important re- 
 form could be carried through ; but this method of procedure 
 is a thoroughly unnatural one, and here we find the cause of 
 the enormous difficulties all such plans will have to fight 
 against. The teachings of the great economic school
 
 THE REMEDY. I29 
 
 started by the French Physiocrats and by Adam Smith, 
 strengthened by the analogous current of thought in the de- 
 partment of science, which showed natural development and 
 evolution to be the agencies gradually bringing about the 
 great changes in this world, have created a strong objection 
 in the minds of leading spirits against any unnatural inter- 
 ference with economic laws. 
 
 It will be much easier to make them understand, that 
 these economic laws could not operate, as they ought to have 
 done, by showing them that liberty is a goddess, who does not 
 brook any half service, but will only pour out her blessings, 
 when fully obeyed — and this cannot be done, as long as we 
 monopolise natural opportunities — they will easier understand 
 this, than believe in increasing state interference. Though 
 an emperor stands at the head of the movement, and though 
 his bold lead reflects the greatest credit on him, I believe that 
 it will not be carried to success. I believe that the easy and 
 natural way, which land nationalisers are showing, will much 
 sooner find general acceptance. 
 
 A French quack was selling patent medicines to a gaping 
 crowd. He had just succeeded in selling a powder which 
 according to his promises never failed in killing those diminu- 
 tive animals, which to our great digust have at the same time 
 chosen our bodies for their gymnastical exercises and for 
 their dinner table. The peasant, who had bought the powder 
 wanted to know how it was to be applied, after he had paid 
 for it. " You take ze flea with ze left hand between ze 
 thumb and ze middle finger," explained the quack, " and you 
 take one of ze powders with ze right hand. Now you tickle 
 his throat until ze beast laughs, which makes he open ze 
 mouth. Quickly you put in ze powder and he will die im- 
 mediately." " But if I have got the flea, I can smash it with 
 my finger-nails," interposed the customer. " You can do zat, 
 if you prefer it," impertubably replied the quack. 
 
 I think, that the natural way of killing the parasite which 
 infests the social body by simply catching and killing it is 
 greatly preferable to the insertion into his throat of patent 
 medicines, in which some of our best meaning men believe. 
 State interference is a poison and though in certain cases 
 even a poisonous medicine may be preferable to none at all, 
 I
 
 13c RENT, INTEREST, AND WAGES. 
 
 cutting off the fountain of the disease by getting nature to 
 act will always be better. 
 
 Nature will act, if we only let her. She is a bountiful 
 mother, at whose breasts every human being will find plenty 
 of food, if we do not deny him access by unnatural laws. 
 Natural law knows nothing of private landownership. There 
 cannot be any ethical, moral or natural foundation for 
 property rights of this kind.* 
 
 Arguments against Land Nationalisation. 
 
 The Nineteenth Century of February 1890, otfered the sad 
 spectacle of a man, who had done great things for the progress 
 of his kind, prostituting his mental powers by trying to prove 
 that there was no such natural right as that of 
 common landownership. Professor T. H. Huxley with 
 all his brilliant rhetoric about the natural rights of tigers 
 to eat Hindoos and of hunters to kill tigers, could not 
 
 * William A. Phillips in " Labour, Land and Law " a search for 
 the missing wealth of the working poor. (New York, Scribner) gives 
 an excellent illustration of what we call property, by beginning his 
 book with the following tale : — 
 
 " It is related that a certain Eastern potentate fell into the 
 impecunious condition, common to many of his predecessors, and 
 set his wits to work to devise a remedy. A farmer of imposts who. 
 had often aided him, in this dilemma came to his rescue. He 
 oflfered him sixty thousand tomans for all the winds that should 
 ever blow over Cashmere. The monarch at first affected to be 
 staggered at the proposition. He was unable to find anything in 
 precedents to warrant it, but although a believer in the doctrine 
 that whatever is is right, he was forced to admit that a monarch may 
 introduce useful innovations. Of course, it was assumed that he 
 was the supreme owner and disposer of all things in his dominions, 
 not only for his own brief, erratic span of life, but for all time, and 
 so he came to the conclusion that, as everything in the world has 
 been sold which could be sold, there was no good reason why the 
 winds, unstable though they might be, should be exempted, if a 
 purchaser could be found. After a proper amount of preliminary 
 haggling a sale was made and the transaction legalized by all that 
 signatures, seals and parchment could do for it. 
 
 Before the public had fairly got over laughing at the absurdity 
 of this novel bargain, the owner of the wind issued a proclainatioa 
 forbidding all persons in Cashmere from using his wind to turn 
 their windmills, winnow their corn, propel their vessels, or employ
 
 THE REMEDY. I3I 
 
 arrive at a better conclusion than that there existed no 
 natural right but the right of the strongest, an argument, 
 we might safely accept, for after all it is only another way 
 of saying, that the majority of men, whenever they are 
 stronger than the minority, which monopolises the ownership 
 of the earth — which they always are, when they only know 
 their power — have a natural right to dispossess the minority. 
 Never mind in which way we look at it, no amount of 
 sophistry has ever been successful in proving, that some men 
 have got a right to live and others have not, even if both are 
 equally well fitted for the battle of life. Furthermore, no 
 amount of sophistry can prove, that life without access to 
 the earth, and its fruits is possible, from which it logically 
 follows, that those who own the land can prevent those who 
 do not from living on this earth, unless they accept the land- 
 lords' terms unconditionally. 
 
 But this was not the worst argument Professor Huxley 
 brought against land-nationalisation. He says that if the 
 earth belongs to all men, then every Chinaman has just as 
 good a right to the English soil as Englishmen, which he 
 til inks a most conclusive argument against land-nationalisation. 
 
 At its best this argument maintains nothing but the prin- 
 ciple that if we cannot right a wrong altogether we had 
 
 it in any other manner, until they had first entered into agreements 
 with him and obtained leases for the various localities, covenant- 
 ing to pay certain amounts for the privilege. Then the laughing 
 turned to lamentation. The monarch met the torrent of petitions 
 and complaints by affecting to deplore the circumstance. He 
 could not foresee, of course, all that had occurred, but his sacred 
 word was involved. Rulers of that type are usually very particular 
 about their sacred word. Driven to desperation, the inhabitants 
 contributed the amount that had been paid for the wind and 
 tendered it to the sovereign so that this unheard of transaction 
 could be cancelled. 
 
 The matter was not to be so easily arranged. The owner of the 
 winds of Cashmere would not think of such a thing. He had 
 acquired a vested right in them. Since it had become purchaseable 
 the wind had greatly risen, in price at least. Wind stocks were 
 on an upward market. The owner insisted that his title was good. 
 He did not claim it merely by his right of discovery of the com- 
 mercial value of the wind, or that he had been the first to preempt 
 this privilege, but he had fairly bought it from the representative
 
 132 RENT, INTEREST, AND WAGES. 
 
 better continue it rather than to do away with part of it. Im- 
 provement is out of the question because we cannot get per- 
 fection. We get hold of a robber, but our conscience will 
 not allow us to take away his booty, because we cannot get 
 at all those whom he robbed. Surely this is almost as bad 
 as Mr. Auberon Herbert's argument that if the land belonged 
 to all men, only the whole body of humanity without a dis- 
 senting voice has a right to dispose of it. If a single man 
 has no right to own land, the majority has not got any either, 
 which means that landlords are not to be disturbed, because 
 we cannot get them to join their vote with that of the other 
 rightful owners. Mr. Herbert as a shareholder of a limited 
 stock Company no doubt will contest the right of the meeting 
 of stockholders to dismiss unfaithful servants, because not 
 all the stockholders are represented, or because the vote of 
 the accused dissents. 
 
 of government, and declared that his title was begirt, and founded 
 on all that was sacred in law or the theory of emnient domain 
 and supreme authority. It would be altogether unfair to ask hmi 
 to surrender this valuable privilege tor anything less than what it 
 might bring him in case he should be allowed to keep it. The 
 proposition of the people was merely a bald scheme of robbery. 
 It was subversive of all property rights ; was socialistic, agrarian 
 and revolutionary ; and to force him to accept of a price so in- 
 adequate would strike a fatal blow at the best interests of society and 
 undermine the whole fabric on which the rights of property rested. 
 
 This reasoning was, of course, entirely conclusive to the monarch, 
 who was undoubtedly the confederate of the farmer of imposts, but, 
 as human endurance can only be stretched to certain limits, it was 
 agreed between them that a fair price for the wind, at that date, 
 would be ten times what was originally paid for it. This amount 
 was finally raised by a long suffering people, who merely exacted 
 a promise from the commercial monarch that he would never sell 
 the wind again, but permit it in God's providence to blow over 
 them free and unrestricted as of yore." 
 
 How ridiculous this story appears, to all of us and yet there 
 are millions, among them many teachers of political economy, 
 who laugh at us, when we oppose ourselves to private ownership 
 of land, as if land was less a part of creation than the wind and 
 as if men could live be;t6r without it. The fact is, we might get 
 along without the wind, but we could never live a second without 
 the land.
 
 THE REMEDY. I33 
 
 How does l\Ir. Huxley know, that we would strike such a 
 bad bargain if we had a mutual agreement with Chinamen, 
 to own our lands jointly, which means that the ground rents 
 collected by the two states would be divided equally among 
 the inhabitants of the two countries ? It is nothing but a 
 division of ground rents, for the only way to enjoy a common 
 property of this kind is not to divide it into equal parts, 
 which is impossible, but to rent it out to the highest bidders 
 for the common benefit. A hundred stockholders owning a 
 factory do not divide it between themselves, but they rent it 
 out to the highest bidder and divide the proceeds, if they do 
 not prefer the usual plan on a socialist basis of working it 
 jointly. According to the excellent book of my friend Eugene 
 G. Simon — who in his " Cite chinoise " gives an excellent 
 description of China, which he saw, as few Europeans have 
 seen it, when as French consul he lived and travelled there 
 for many years — the land values of China are so high, that if 
 we compared them with those of Great Britain and Ireland 
 acre for acre it is more than questionable if the balance 
 would not be in favour of China, so that a partnership of the 
 kind supposed by Mr. Huxley would benefit us more than 
 the Chinese, who probably would be the losers by it. The 
 I '.me may come when human progress will have abolished 
 boundary lines and when a citizen of the world will be at 
 home -where-ever he goes, enjoying equal rights everywhere. 
 In that day perhaps the great congress of nations may have 
 the task of establishing a world's clearing house for rent of 
 land in the different countries, in v/hich the total of rents 
 collected by each national division will be divided among the 
 different nations according to the number of inhabitants, so 
 that each citizen of the world will get his equal share of the 
 rent realised for the common earth. l-3ut until then we shall 
 have to content ourselves with having got as far as to have 
 accomplished unityona national basis, as immense a progress 
 from the unity of the tribe and tribe ownership as was the 
 tribe from that of the family, and family ownership. We 
 n:ust be content if we accomplish land nationalisation on 
 a national basis, until some day perhaps we may reach 
 world ownership, viundaniiatwn 
 
 In the Slavonic principalities of the lower Danube we have
 
 134 RENT, INTEREST, AND WAGES. 
 
 yet numerous examples of family landownership, (Zadruga) 
 the family consisting of several generations. In Russia we 
 have the (Mir) the ownership of the commune. In different 
 countries we have extended communal property of land as a 
 remnant of a system, which formerly seems to have been 
 universal. Even though their way of administering the 
 common property requires great reforms and has many 
 drawbacks, immense advantages are accruing to the com- 
 miunties concerned — accruing even from this imperfect and 
 antiquated system. If, instead of entirely doing away with 
 the great principle underlying it, our forefathers had contented 
 themselves with the improvement of the system of administer- 
 ing the common property, the world would be a good deal 
 further advanced in civilisation than it is now. 
 
 I have dwelt a little longer than the subject warranted 
 on Mr. Huxley's arguments, for it must be very in- 
 structive to see what kind of defence landlordism is finding, 
 even among a class of men for the most part highly qualified 
 by natural talent and by study of a varied nature to do the best 
 for their client that an advocate could be expected to do. And 
 these are really the best arguments offered by the antagonists 
 of land reform. There is no need to enter into the weaker 
 sophistries, which they advance. There is no excuse for them, 
 but the natural influence of interest, of friendship and other 
 powerful links attaching such people to the present state of 
 things and blinding their otherwise clear reasoning powers. 
 If it was not for this, it would hardly be possible to find 
 among the other arguments of Mr. Huxley one brought 
 against the principal foundation of our theories, the limited 
 quantity of land. He has the courage to reply that the fruits 
 of land are limited as weJl as land itself, in spite of the un- 
 disputable fact that the fruits of land can be multiplied to an 
 almost unlimited extent, whereas land cannot be multiplied 
 at all. 
 
 The fruits can, land cannot be increased. 
 
 Again, take his objections to the theory that man can only 
 have a right to the improvement his labour accomplishes, not 
 to the raw material of the earth. The two, he urges, cannot be 
 separated, for instance, in the case of a watchmaker, as if the 
 royalty paid for the iron, the coal, the gold, and other
 
 THE REMEDY. 135 
 
 raw materials contained in required for the production Oi the 
 watch did not pay for these raw materiasl. If these out- 
 lays are deducted we find that only the property in the 
 improvement remains as the real net creation of labour and 
 nothing more. 
 
 It would be impossible to explain on other suppositions, 
 how honourable men possessed of common sense, like Mr. 
 Scott-Moffat, could write defences of landlordism like those 
 answered by me in a symposium on the land question, which 
 appeared in the *' People's Rights' Journal" of '8g, in answer 
 to a paper by that gentleman. I here quote the passage : 
 
 '* There is something so infinitely enjoyable in his definition 
 of the functions of ownership. It is so correct, too. You can 
 see that immediately, when you take, for instance, Mr. 
 Winans, the American, who owns a part of Scotland from 
 sea to sea. First, ' to guard the land against intrusion ' — of 
 the cultivator ; ' to maintain the right of the owner or his 
 representative to its fruits ' — driving away the original 
 owners of the soil, the people who cultivated it for many 
 centuries, who fought for their country's glory on many 
 battle fields, to Canada, Australia, or the United States ! 
 Secondly, 'to procure and maintain (drive away and starve) 
 tenants capable of cultivating it to advantage !' Thirdly, 
 ' to maintain or improve the condition of the land ' — changing 
 it back into the original desert, to afford a hunting ground 
 for idlers. Formerly, these went to the American West to 
 shoot deer. Now the Scottish cultivator goes there, and his 
 fields are turned into western wilds so that the Americans can 
 hunt here. " Whether directly, or by agreement with the 
 tenants.' — For form of agreement see Sutherland clearances. 
 Instead of ' agreement with ' read also ' with the rent paid 
 by the tenants.' It is equally refreshing to read about the 
 excess of rent being due to the high cost of food, at a time 
 when rents are too high because wheat is cheap." 
 
 When we turn from such trash to the powerful arguments 
 of men like Henry George, Herbert Spencer,* A. Russell 
 
 *The irrefutable logical conclusions presented by Herbert Spencer 
 in his " Social Statics " will not lose anything ot their power, even 
 it" their author in later years has chosen fit to deny them. If
 
 136 RENT, INTEREST, AND WAGES. 
 
 Wallace, Charles Wicksteed and others, we are reminded of 
 the fight men like Stevenson and Morse had to sustain against 
 the scientific and technical authorities of their time, proving 
 with irrefutable arguments why the inventions of these great 
 men were thoroughly impracticable. We laugh at such 
 things now and so will our children when in the full enjoy- 
 ment of land-nationalisation, they read of those arguments 
 once brought forward against the great reform. They will 
 produce the same effect on them as it produces on us, when 
 we read of the impossibility of running trains on rails by 
 steam power, because the axles would melt and the rails be 
 turned into glowing firebands from the heat produced by the 
 trains, i'et this was proved by Dr. Lips, a German scholar 
 in 1833, four years after the first English steamhorse was 
 running its regular course. He equally proved that our 
 breathing organs could not stand the rapid motion. 
 
 Phytaguras had repudiated the mathematical proofs connected with 
 his name, it would never have taken away a particle from their 
 scientific force, unless he could have shown where the error came 
 in. This Mr. Spencer never did ; he only found it inconvenient to 
 stand by the practical conclusions, to separate which from his 
 theoretical premises proved an impossible task even for a man of 
 his powers. 
 
 In the January number of the Nineteenth Century he says : 
 " It remains to add that beyond the deductions which, as we have 
 seen, are verified by vast assemblages of inductions, there may be 
 drawn other deductions not thus verified, deductions drawn from 
 the same data, but which have no relevant experiences to say yes 
 or no to them. Such deductions may be valid or invalid ; and I 
 believe that in my first work, written forty years ago and long since 
 withdrawn from circulation, there are some invalid deductions." 
 
 In a letter written to the Times in November '89, he specifies the 
 points in which his deductions about land-nationalisation, according 
 to his views, are not verified by inductions. Taking the land with- 
 out compensation seems to him out of the question, being downright 
 robbery. On the other hand, he cannot see how the landlords can 
 be bought out without having the interest charge take the place of 
 the rental charge, thus leaving no advantage to the nation, and he 
 cannot see that state management would be better than landlord 
 rule. I have not got the letter before me, but it I remember 
 correctlv these were his ideas. I shall show in the last chapter 
 that coinpeusatiori is possible without a permanent interest charge
 
 THE REMEDY. 
 
 137 
 
 The Bavarian minister, Abel, said at about the same time 
 in reference to railroad building: "If England wants to 
 ruin herself, we must let her do so; for us Germans there is 
 no reason to imitate this folly." The celebrated French 
 scholar Arago, proved that it might perhaps be possible to 
 transport men by rail ; but that certainly steam-cars never 
 would do to carry heavy freight. The extract from the 
 Quavtevly Review of i8ig, which can be seen in the 
 Kensington Musuem, is well known, in which a scientific 
 authority makes fun of railroads as of impracticable dreams. 
 And a great many more of these irrefutable proofs of 
 authorities could be added. I only mention one of the latest, 
 the great scientist Faraday's prediction, that the piercing of 
 the SuezCanal would cause a deluge of all the countries border- 
 ing on the Mediterranian. 
 
 It is not the purpose of this book to produce all the argu- 
 ments in favour of common ownership of land, a task which 
 has been fulfilled better than I could do it. I only want to 
 add a new line of arguments to those already given. I want 
 to show that private land monopoly is at the bottom of all 
 monopoly rights existing under the name of spurious capital 
 and of all the forms of tribute unjustly exacted from labour, 
 whether they are called rent, interest, taxes, or otherwise. I 
 want to show that to private land -ownership we owe the 
 existence of the modern social problemof diminishing working 
 opportunities and deepening commercial depressions, but from 
 completely different causes than those given by other land 
 reformers. They only saw the superficial effects of the 
 present system, speculation driving labour from the land to 
 
 on the nation, and if it can thus be proved, that it is possible to get 
 the land back for the nation without despoiling present owners, and 
 obtain a revenue of over 150 million for the people, which to-day go 
 into private pockets, if we can make rent serve as a means of 
 relieving the people of all other taxes and rates, instead of being 
 the source of all misery, by forming the nucleus of those uncon- 
 sunied interest avalanches, which threaten to destroy our civilisa- 
 tion, if this can be proved, it would be a matter of indifference, if 
 it were true, which it is not, that the state or the municipalities 
 could not manatre the land better than landlords. Herbert 
 Spencer will perhaps live to see inductions verify his irrefutable 
 deductions.
 
 138 RENT, INTEREST, AND WAGES. 
 
 swell the industrial crowds in towns and to add increasing 
 violence to their battle for life. I have tried to strengthen 
 the position of land reformers by showing how much more 
 powerful the effect of our proposals is bound to be, when we 
 prove that the indirect effects of land-nationalisation through 
 its influence on interest of capital will be much more power- 
 ful than the direct ones seen by most land reformers. Most, 
 not all, for though the real cause of depressions has not been 
 understood by any one of them, the relation of rent and 
 interest is to a certain extent seen by some, for instance by 
 Mr. Charles Wicksteed, whose book " The Land for the 
 People," which I have just seen for the first time, is by far 
 the best work of this kind, I have met with. I shall yet 
 have occasion to refer to it in the chapter treating of the 
 practical question how to obtain and to manage the land for 
 the people. Books like these and especially like " Progress 
 and Poverty " have to be read by any one who feels interested 
 in the greatest problem of our time, of all times. Mine can- 
 not pretend to take their place. All I want, is to give a 
 supplement, which I thought was urgently needed to attain 
 a full understanding of the great problem and to facilitate the 
 way to its solution.
 
 139 
 
 CHAPTER IV. 
 
 The Effects of the Remedy. 
 
 The effects of the great reform arc best divided into two 
 kinds. I. Direct and 2. Indirect effects. 
 
 I do not intend to spend much time on the first kind. 
 Henry George and others have done that better than I could. 
 They have shown how labour is driven from the land through 
 landlordism crowding our towns with that immense reserve- 
 army of the unemployed, which presses upon wages and 
 renders almost impossible any efforts of organised labour to 
 better its condition by its own exertion. They have shown 
 how impossible it is for any other system to secure the land to 
 those who want to work it by their own hands, how futile all 
 the efforts of those well meaning philanthropists are bound 
 to be, who believe in that phantom, called peasant-pro- 
 pyietorsJiii>. 
 
 Peasant-Proprietors. 
 
 If any further proofs of this are required we have them in 
 the latest discoveries published by our friend Albert Toubeau. 
 In his excellent book " Le proletariat agricole en France 
 depuis, 1789 " he effectually dispels the deep rooted illusions 
 about the French peasant-proprietor. He shows that it is only 
 one more of many myths of this kind, when we hear of the 
 soil of France as being owned by peasant-proprietors, and 
 another, when we hear of the exceptional well-being of these 
 peasant-proprietors. 
 
 He sets before us an extract from official documents, 
 showing that, setting aside the large farms of 200 hectares 
 on the average, the owners of which do not cultivate the soil 
 with their own hands, and only counting those where the 
 owner guides the plough himself, 7iot move than one tenth, say 
 one tenth cf the soil of France is owned by peasant-proprietors. 
 Leroy-Beaulieu has to confess in the very book by which he
 
 140 RENT, INTEREST, AND WAGES. 
 
 tries to show the gradual equalisation of wealth that 50.9 
 per cent, of the French territory is worked by tenants. If we add 
 to this forests, heath, mountains, lakes and rivers, towns and 
 factories, if we further add the large farms worked by their 
 owner, either through superintendents or even by personal 
 supervision, but without actual manual work, we arrive at 
 Toubeau's figures. R. Meyer and H. Ardent in " La 
 question agraire,"' Paris '87, say that the territory owned by 
 great proprietors has increased since i88g, and landlordism 
 has become harder and more unlimited in its rights than it 
 has ever been since the Roman occupation. Rothschild 
 alone owns 200,000 hectares. In his book, " La reforme 
 agraire, et la misere en France," Fernand Maurice arrives at 
 the same results as Toubeau. He shows that 8-6 million land- 
 owners own not more than 2,574,589 hectares, not more than 
 5*9 per cent, of the whole territory, that in consequence 
 they do not own much more than an acre each on the 
 average. 
 
 Mortgages. 
 
 Karl Preser in " Die Erhaltung des Bauernstands " 
 (Leipzig 84), estimates at 20,000 million francs the total of th& 
 mortgage debt resting upon the French soil in 1S76, of which four- 
 fifths fall upon the small proprietors, every hectare of whose 
 property is indebted for 1,200 francs on the average. As 
 the rate of interest of mortgages can safely be taken as 
 double the rate at which economic rent in its relation to 
 the value of the land will amount to, we arrive at the result 
 that in the country, which is usually given as the paradise of 
 the peasant proprietor, on the average this fortunate peasant 
 proprietor does not own the rental value of his land which 
 really is owned by capitalistic mortgage holders. Instead of 
 improving this state of things is getting worse from year to 
 year. In 1S82 alone the credit foncier increased his 
 mortgage loans by adding 400 millions to his bonds. 
 According to Toubeau the mortgages entered officially, 
 which will by no means give us a correct idea of the real 
 debt, amounted to 8,854 millions in 1820, to 11,232 in 1832, 
 to 12,308 in 1840, and to 16,000 in 1868. More than 200,000 
 of the houses in which these happy French peasant proprietors
 
 THE EFFECTS OF THE REMEDY. I4I 
 
 live have not got a single window, the door being the only 
 opening of the house. 
 
 It is everywhere the same, wherever free trade in land, 
 the ideal of English Liberals, is reigning. In one single year, 
 from 1 886 to '87, mortgage indebtedness increased 624,161,840 
 Mark in Germany on agricultural land alone, not counting 
 the towns, from which only 40,100,101 have to be deducted 
 for mortgages paid back. 
 
 A. H. Heath, entrusted with labour statistics for the State 
 of Michigan, gives the mortgages of his State as being 
 estimated at 1 29,229,553 dollars. An agricultural paper gives 
 theincreaseof mortgage indebtedness as exceeding 50 millions 
 a year in the State of Ohio alone. An article in the New 
 York Times names ten western states, the real estate of which 
 at a low estimate is burdened with mortgages to the amount 
 of 3,422 millions, one quarter of the nominal value. The 
 rate of interest being very high in these States it is easy to 
 estimate how soon the ownership of the rental right will have 
 completely passed from the hands of the nominal proprietor 
 into those of the capitalist owning the mortgage. 
 
 In Austro-Hungary mortgage indebtedness increased 1,500 
 million florins between 1870 and '80 
 
 It is a great pity, that the old Grecian system of erecting 
 stone tablets on each estate showing the indebtedness is no 
 more in use. The greatest part of our civilised countries 
 would present the appearance of immense churchyards, on 
 the tombstones of which could be read, " Here lies in peace- 
 ful deathrest, what once was a free community of independent 
 peasant-proprietors. The coffin has been manufactured in 
 the workshops of Capitalism." 
 
 A good deal of nonsense about free trade in land, peasant - 
 proprietorship, etc., would be done away with. We have 
 only to read history, to find on every page how peasant-pro- 
 prietorship has always been the forerunner of the Latifundia- 
 system. Free trade, free inheritance, and free indebtedness 
 of land, finally always result in the big fish swallowing the 
 small with increasing rapidity. 
 
 Capital at Compound Interest increases faster than Land Values, 
 i do not intend further to enlarge on this subject of direct
 
 142 RENT, INTEREST, AND WAGES 
 
 Sindindlrectlatifundice, direct, as represented by those immense 
 estates with which EngUsh readers are famihar enough, 
 indirect as found in the existence of an immense spurious 
 capital consisting of mortgages, bonds, etc. Neither do I 
 intend to waste time on the question of the unearned incre 
 ment, which George and others have handled so well. I only 
 wish to point out, that even here the direct effects of land- 
 ownership have to give way to the indirect ones. The increase 
 of capital placed at compound interest in secure investments 
 is faster than that of land values, even if the rental incomes 
 are taken into consideration. I can prove it for the United 
 States, and if it is true in a country with such enormous 
 increase of land-values, it certainly cannot be denied in other 
 less fortunate parts of the world. 
 
 The German statistician Neumann-Spallart gives the 
 increase of national wealth of the United States between 
 1810 and 1880 as from 1,500 to 43,642 million dollars. As in 
 1880 half of this wealth consisted of land (in reality it was 
 more than half, as Neumann-Spallart based his calculation 
 on the low estimates of unoccupied land, which do not 
 usually reach more than half their market price), we may 
 suppose that the same proportion held good in 1810. We 
 thus have a twenty-nine fold increase in 70 years. Capital 
 would have obtained about the same increase in this time, if 
 invested at 5 per cent. Would capital have brought 5 per 
 cent, beyond the rental incomes of land during this period ? 
 I think it would have brought more, for the following reasons : 
 I. The greatest part of the land did not bear any rent 
 at all during this time. 2. The rate of interest of rental 
 incomes in the United States is much lower than that of 
 capital secured by mortgages, for the value of land arises from 
 the capitalisation of rent at the market rate of interest of 
 such investments. In the estimate of this rate, the pro- 
 spective increase of value is taken into account, and we thus 
 arrive at a very low rate of rent, if the rate of prospective 
 rise is a very high one. Supposing 10 per cent, to have been 
 the average rate of mortgages (it was even higher), and 5 per 
 cent, the rate of increase, the remaining 5 per cent, or 20 
 years purchase would be the rate of capitalisation 
 of rents ; land would have brought 5 per cent rent
 
 THE EFFECTS OF THE REMEDY. I43 
 
 oa its value, where it could be let at all, whereas capital 
 brought ten. 
 
 When we come to investigate the question more closely, 
 we shall be brought to the conclusion that after all it could 
 not be otherwise. As interest is the offspring of rent, so 
 interest must keep apace with rent ; but not only with rent 
 proper, but with the profits obtained through the unearned 
 increment added, for capital will not invest in any other 
 shape unless it can obtain at least as much as it gets from 
 land investments. I say '* at least as much " for the honour 
 usually connected with land investments, helps to reduce a 
 little the rate of interest obtained through such investments 
 as compared with that reaped in other departments. It is 
 quite natural therefore that capital invested anywhere 
 expects to increase as much as it would if invested in land 
 values and for this reason compound interest must secure 
 at least as large an increase as land investments. It is only 
 as the base of all secure income-bearing investments that 
 land is also responsible for the booty taken by interest. 
 
 The Protean shapes of land and fictitious capital, of rent 
 and interest, two names for the same thing, are the cause of 
 most of the misunderstanding reigning in this field. It is 
 true, that land and real capital are essentially different and 
 so are rent and real interest ; but the vendibility of land has 
 created a new economic factor, called land-values. Land 
 and land-values are so intimately connected in our habits of 
 thinking that most people are not able to separate them. 
 
 Land is the substance of the globe we inhabit ; it is a 
 tangible concrete object continually before our eyes, always in 
 direct or indirect contact with our body. Land-values are the 
 estimates of how much wealth land will exchange for in 
 the market and as in this capacity they are playing exactly 
 tiie same part which any of the real kinds of wealth are per- 
 forming, they cease to be commercially distinguishable 
 much as they may differ in their economic nature. They are 
 only fictitious or spurious wealth, but their exchange value 
 is the same as that of real wealth. The same relation holds 
 good between rent and interest. Economically they are two 
 completely different things. Rent is the hire exacted for 
 and, interest is the hire exacted for wealth, «.«., for goods of
 
 144 RENT, INTEREST ANO WAGES. 
 
 any kind, i.e., tor any joint product of man's and nature's 
 labour But though economically different they become 
 identical in practical life, wherever land has become a sale- 
 able commodity. Whereever land as fictitious wealth is ex- 
 changeable against real wealth, the hire of land is bound to 
 become identical in its effects with the hire of wealth and 
 rent as spurious interest, with real interest, or rather vice 
 versa, as it was the spurious mother which gave birth to the 
 real child. 
 
 This practical identity of the real and che fictitious, as far 
 as economic and social effects are concerned, is the cause, 
 that the unearned increment and the increase of capital 
 through compound interest are very much the same thing 
 described in other words. It is true, that there are cases, in 
 which the unearned increment reaches a point which accu- 
 mulation through compound interest could not have reached 
 m the same period. There are small areas of this globe, 
 where the increase of population has been so much greater 
 than in others, that the hirmg value of the ground has in- 
 creased enormously in certain periods. In New York, 
 Chicago, or other growing western cities, in Berlin, especially 
 since it became the capital of the new German Empire, rent 
 and land values have increased more than a thousand fold in 
 certain localities within the last 30 years. Such exceptional 
 cases can just as little be allowed to influence general rules 
 as exceptional commercial profits of a few lucky speculators 
 can influence the average profits of a nation. It is easy to 
 see that as a rule the results of compound interest accumula- 
 tion must be at least on a level with those due to the un- 
 earned increment. We have only to remember that even at 
 the lowest rate of interest obtainable in the market for secure 
 investments, we get such immense sums through the opera- 
 tion of the interest-law that all the wealth of the world could 
 not keep pace with it. Impossibilities are impossibilities, 
 and therefore those sums cannot be reached either in actual 
 wealth, or in spurious wealth, for even spurious wealth cannot 
 rise beyond certain limits. It is bound to keep some relation 
 to the actual wealth against which it is exchangeable. In 
 the present state of things when land as a saleable com- 
 modity is the base of our economic system and the fertile
 
 THE EFFECTS OF THE REMEDY- 145 
 
 mother of many other kinds of spurious wealth, the propor- 
 tion of the real wealth to the spurious is continually diminish- 
 ing, or rather, to express the relation more in accordance 
 with the actual facts, the proportion of the spurious wealth 
 to the real is continually increasing, with the advance to 
 civilization. 
 
 Mutual Relations of Real and Spurious Wealth. 
 
 When man yet lived in the prhiiitive state, when land was 
 common property, and when each worker owned the full pro- 
 perty of what his labour produced, there was no spurious wealth; 
 all wealth was real, what little there was of it. It would 
 have remained so, if land had remained common property. 
 No monopoly rights of any kind giving a permanent right of 
 levying blackmail from workers would have come into exist- 
 ence. With increasing wealth the rental rights accruing to 
 the community from the lease of the common patrimony 
 would have increased in proportion and would have made the 
 state the greatest capitalist, fully able to undertake all those 
 great enterprises of transportation, irrigation, water-supply, 
 &c., which under different circumstances became such prolific 
 sources of spurious wealth. But land was privately appro- 
 priated and fictitious capital was born. 
 
 As long as the community was poor, as long as workers 
 hardly earned enough to make a living, even if they owned 
 the full prodfact of their labour, there was not much chance ■ 
 for fictitious capital, which can only exist where the worker 
 can afford to give away part of the product, being as we have 
 seen, nothing else but a capitalisation, or market value of 
 tne privilege of confiscating a part of the product of labour. 
 Itwasonly when wealth advanced beyond a certain point that 
 spurious capital made its appearance, at first mostly 
 in the shape of land anr\ slave-values. 
 
 It bore a very small proportion to the real capital ; but as 
 the real capital increased faster and faster, the part which 
 could be squeezed from labour increased in a much more 
 rapid manner, every increase of wealth, as we well know, not 
 increasing the share of the labourer in proportion to the 
 growth in value of his product ; but on the contrary giving a 
 continually increasing share to idlers. Spurious wealth
 
 146 RENT, INTEREST, AND WAGES 
 
 being nothing but a capitalisation of this share, was 
 thus bound to increase in a faster proportion than 
 real wealth. 
 
 In the machine age the advance made by spurious wealth 
 over the real made rapid strides. I estimate the proportion 
 of the two as one against two, i.e., one part of real capital to 
 two of fictitious, so far as progressive countries, like Germany, 
 England, France and the United States are concerned. It 
 is immaterial what are the components of the spurious wealth 
 of a country, whether they be slaves, land and transportation- 
 values, or public-debts, etc., and what proportion they 
 bear to eacli other. When public-debts take the lion's 
 share, as in England and France, land-values are smaller 
 where there are few public-debts, there is more room for 
 other kinds of fictitious wealth. Labour is spoiled just the same 
 as in other countries having large debts ; only instead of levy- 
 ing the blackmail through the taxgatherer in the shape of 
 interest on bonds, it is done in the form of rent through 
 the landlord, or of interest through the mortgagee, as in the 
 United States, for instance, where land values form a pro- 
 portionately greater share of spurious wealth. 
 
 Though spurious wealth forms a continually increasing 
 part of the total of national wealth, it can never rise beyond 
 those limits, which are traced by the " fleeceability " of 
 labour. Successful combinations of labour, or state-laws 
 limiting the number of working hours or the number of 
 workers, or fixing minimum wages, may limit that fleecea- 
 bility, may even reduce it and by thus changing the relation 
 of real and fictitious wealth in favour of the former, may 
 constitute real reforms, though the way be an unnatural one 
 and not half as good as the natural destruction of spurious 
 wealth through the resumption of the land by the state. 
 Unlimited " laissez faire " in every economical department, 
 in the free exploitation of labour as well as in trade in land 
 and natural opportunities — a free trade without which the 
 other unlimited freedom would do no harmi would be a bless- 
 ing — may increase the fleeceability of labour to such a degree, 
 that millions are driven to slow starvation, which would be 
 hastened if a humanitarian age had not provided poor-laws, 
 forcing the owners of fictitious capital to lengthen the starva-
 
 THE EFFECTS OF THE REMEDY. I47 
 
 tion process, thus putting a few weak trammels on the 
 increase of their wealth. 
 
 But even did such laws not exist there is a limit to exploita- 
 tion of labour, the limit of nature. A man must eat, if ever 
 so little, to be able to work, and in spite of machines we can- 
 not quite get along without human workers. There is a 
 limit to the blackmail obtainable and therefore to the market- 
 value of blackmailing rights, in other words of fictitious 
 wealth. Beyond this limit it cannot increase ; the law of 
 compound interest must become inoperative at this point. 
 This is the reason why such mathematical results as the 
 immense wealth obtained by the capitalisation of a penny 
 smce the time of Christ remain only theoretical playthings of 
 no practical value. Bankruptcy of the debtor is the limiting 
 point at which compound interest multiplications will have to 
 stop. The inability to pay more rent is the limit and the 
 only limit to the rise of rent, to the increase of the unearned 
 increment, and as rent forms the greatest part of spurious 
 interest, we here find the limit of compound interest multi- 
 plications. 
 
 The one great difference between spiirious and veal interest^ 
 its child, is that the point, at which the limit of the multipli- 
 cation is reached, is arrived at much sooner by the child 
 than by the mother and that where spurious interest only has 
 to slacken its progress, the real dies altogether with the real 
 wealth from which it is obtained. The bankruptcy of the 
 real-wealth-user generally entails a destruction, or at least a 
 depreciation of wealth, whereas that of the "tributee" of 
 fictitious wealth in most cases leaves the value of the wealth 
 in question untouched and unharmed. 
 
 A machine will soon lose its value after it has gone out of 
 use, whereas land rather improves if let alone for a time and 
 if one tenant is ruined another steps into his shoes, or if one 
 taxpayer becomes a bankrupt and can no more pay his taxes, 
 others will do so in his place and the value of the govern- 
 ment-bond the interest of which is paid by the taxes is not 
 impaired thereby. The natural consequences of this state 
 of things are that real capital very rarely accumulates in the 
 hands of the same family by means of its own power of 
 increase through interest. The ever increasing danger,
 
 148 RENT, INTEREST, AND WAGES. 
 
 caused by the accumulation of fictitious wealth in the hands 
 of a few families, in most cases attaches itself to real wealth 
 and ruins its owners, whereas spurious wealth, being pro- 
 tected by the whole power of the state and based on the in- 
 destructability of land and the impossibility of living without 
 it, not only enables its owners to maintain their position, but 
 to crystallise the flying splinters of destroyed real fortunes 
 around the indestructible nucleus of monopoly and thus to 
 continually intensify the causes of ruin. It is not only the 
 relative increase of spurious wealth, which offers an ever 
 deepening danger to our civilisation, but it is the fact that 
 these increasing fortunes by their very nature must always 
 condense in fewer and fewer hands, which renders the 
 impending danger so imminent. I say "by their very nature" 
 for the working of the compound interest force resembles 
 that which causes larger cosmic bodies to attract and incor- 
 porate smaller ones. 
 
 Smaller fortunes are subject to the disintegrating force of 
 division by inheritance, want of caution, or prodigality of 
 heirs ; fortunes like those of the Rothschilds do not need 
 entail to keep from dissipation. Interest has an accumulating 
 power exceeding that of all these disintegrating forces. 
 
 In one generation such a fortune will increase three or four 
 fold, whereas on the average such rich people only have two 
 or three children, so that in spite of division each successor 
 is bound to become richer than his father. The greatest 
 waste will not prevent it, for what does it matter if a 
 Vanderbilt spends 200,000 dollars for an evening party, a 
 waste, compared with which the lavishness of a Lucullus or 
 a Crassus dwindles into nothing, and of which the whole press 
 spoke in tones of amazement ? It is nothing but the income 
 of half a week. The greatest stupidity will not be in the way, 
 if only the family traditions are observed, of not investing in 
 real wealth, but always sticking to fictitious capital. If the 
 children of real capitalists do that, the whole power of the 
 State will take care of the preservation and multiplication of 
 their fortunes ; the whole activity of the community will be 
 at work to accumulatate for them. Let labourers starve, 
 let the gaunt figures of misery and death stride about and 
 make fearful havoc among the working population, it will not
 
 THE EFFECTS OF THE REMEDY. t^g 
 
 matter, their fortunes are bound to increase. Mathematics 
 will fight for them. Though the self-increase of interest 
 cannot take place indefinitely and though bankruptcy will 
 have to put a stop to it finally, this destructive force will first 
 disintegrate the smaller capitals, especially the real ones, 
 before it finally reaches the larger spurious fortunes in the 
 general crash. They are like a powerful tree, growing on a 
 limited piece of ground large enough when the tree was 
 small but getting more insufficient as it grows in size. Its 
 powerful vitality makes it suck from the soil all the nutriment 
 there is in it, so that all other vegetation round it has to die ; 
 but finally it, too, will be destroyed by the very strength of 
 its assimilating powers and vital growth. 
 
 We have seen now, how the unearned increment is nothing 
 but one of the roots of the capitalistic tree, one of the feeders 
 by which the vital power of compound interest is sucking the 
 lifeblood out of the social body and that it is impossible to 
 get a real perception of the true nature of the economical 
 process going on before our eyes, as long as the real relations 
 between rent and interest, between land and capital are not 
 understood. If George, in spite of his deficiency in this 
 respect has been able to gain such a great number of adherants 
 in the United States, as well as in Great Britain and her 
 colonies, it is to be ascribed to the fact that in these countries 
 the direct effects of land monopoly are so distinct and clear, 
 that his powerful eloquence could easily make his followers 
 tide over the more complicated and seemingly less important 
 and urgent problems of capital and interest. It is 
 different on the European continent, and land-nationalisation 
 would never have made any headway, if it had not been possi- 
 ble to show up the errors of the great American leader and to 
 approach the fort landlordism from another side, from that of 
 capitalism based on landlordism. 
 
 Urgent Political Reforms. 
 Land robbery forms such a prominent feature in American 
 social problems, that it is no wonder that Socialists are 
 few when compared with George's single tax-men. It is 
 different on the continent of Europe. In Germany the 
 Socialist vote at the last elections amounted to 1,420,000,
 
 150 RENT, INTEREST, AND WAGES. 
 
 thus proving socialists the strongest German party, which 
 would have elected 80 members, if a correct system of re- 
 presentation existed, if representation was given in proportion 
 to the total of votes in the country, not according to accidental 
 results in single constituiencies. Under the present electoral 
 system a party could have a two thirds majority in any one of 
 the modern states, if the total of votes were considered and 
 yet only get one third of the representatives. It would be 
 different if the minorities got the right of representation now 
 denied to them, which could be done by summing up the total 
 of votes polled by each party, and awarding a representative 
 to each fraction of votes corresponding to the figure obtained 
 by dividing the total of all votes given with the number ot 
 representatives to be elected. Of course those representatives 
 of each party would be declared elected, who polled the 
 greatest number of votes of the party's candidates, even if in 
 their constituency the antagonist had polled a heavier vote. 
 I have taken occasion to point out the necessity of a reform 
 in this direction, for every political reform, which gives us a 
 better expression of the people's wishes, has a social import- 
 ance. As we cannot hope to obtain reform from the classes, 
 who, though they may be better educated, have always made 
 use of their power to press forward their own claims and to 
 obtain privileges for themselves, we have to do all in our 
 power to avoid falsifying public opinion by artificial 
 hindrances. For this reason I also think, that the referendum 
 is one of the reforms most urgently required in all our constitu- 
 tional governments. It is a reform, which would make it 
 impossible for a parliamentary majority elected in a moment 
 of public delusion and no longer representing the real wishes 
 of the people, to pass measures hostile to the majority of the 
 nation. In Switzerland, the only country possessing the 
 referendum, such a proceeding is impossible, for a certain 
 number of citizens can always demand that a law be sub- 
 mitted to the vote of the whole nation, before it becomes 
 definitive. The referendum may sometimes have vetoed a 
 law, which had better been adopted, but it will not 
 do to make laws in advance of public opinion. It is 
 always best to wait till the people have been educated 
 up to them.
 
 THE EFFECTS OF THE REMEDY. 75! 
 
 Indirect Effects of Land-N <*tionalisation most Important. 
 
 Though SociaHsts are not numerous in England as yet, they 
 are making rapid headway, and no real social reform has any 
 chance, which does not reckon with them. Hence it is of 
 great importance even in England, that land nationalisation 
 should fight its way with weapons forged of the steel of real 
 truth. If false alloys are mixed in, they will break at the first 
 fight with a worthy antagonist. Henry George had the best 
 occasion to find this out in the debate he had with the 
 Socialist, Mr. Hyndman, in the summer of i88g. In the 
 opinion of impartial judges it was certainly our own leader 
 who came off second best. It was no use advancing the 
 theory that when labour could get hold of the land, it would 
 cease to press into the towns, competing for industrial 
 situations and forcing down wages, one of Henry George's 
 favourite arguments. Mr. Hydnman had only to show that 
 naked labour without the help of capita) could not compete with 
 capital even in agriculture, and therefore could not pay as high 
 rents as capital ; that much less could it hold its own against 
 capital in manufactures, where unaided labour becomes 
 more powerless from day to day. It was no wonder 
 the socialist could not see how taxing away rent and 
 relieving labour of other taxes would solve such funda- 
 mental difficulties. Henry George could not answer, 
 in the only way in which a satisfactory answer was 
 possible, by showing how the privileges of capital in 
 one form follow those in another, how the capital to which 
 Mr. Hyndman and his friends attach such importance: 
 real capital would be freely accessible to labour, as soon as 
 its dangerous enemy, spurious capital, fell with private land- 
 ownership. Henry George could not give such an answer; 
 because, though he was very near the truth in the fourth 
 chapter of his third book, which treats of spurious capital, 
 he did not see the whole cat — to use a favourite expression of 
 his friends — and by maintaining the right of capital to claim 
 interest, he undermined the whole of his position in a hope- 
 less manner. 
 
 It is human nature to judge of the whole by its parts. As 
 people very often base their judgments of national character 
 on the personal character of a few individuals with whom
 
 152 RENT INTEREST, AND WAGES. 
 
 they accidentally became acquainted, so if we stumble upon 
 flagrant errors in a book, we are very apt to distrust even the 
 truths it contains, though they appear ever so incontro- 
 vertible. " The author has been mistaken in that other 
 point, so he may be in this, though my knowledge does not 
 go far enough, to prove it. Others, who are more competent 
 will certainly do so," must be the way in which such books 
 are accepted ; and such has been the fate of " Progress and 
 Poverty " with a great many readers, whose assistance would 
 have been of immense benefit to the cause, because they 
 belong to the thinking part of the community, who do not 
 accept a theory, because it is popular, but because they have 
 become convinced of its truth. 
 
 I am confident, therefore, that even in England it will be of 
 a great help to the cause, if it can be proved that the indirect 
 effects of land-nationalisation on capital and interest are the 
 most important ones. The comprehension of these is the 
 more valuable, as it leads us to see, how easily a peaceful 
 purchase of existing rights can be accomplished, without 
 burdening the people, because the sinking of interest on one 
 side and the rising of rent on the other, would soon pay for 
 the land by redeeming the bonds issued for its purchase. 
 
 "Taxing out the landlords" is only another name for 
 confiscation, and as far as I can judge ot the English character, 
 with its veneration for historical rights, I think it highly im- 
 probable that such a rough and ready way of settling the ques- 
 tion will find general favour. I shall return to this part of the 
 subject in the next chapter. For the present I shall have to 
 go into the indirect effects of land-nationalisation. 
 
 Gradually the spurious capital begins to disappear, 
 because land can no longer be purchased in the market, and 
 the bonds paid for it as well as the existing government debts 
 are rapidly being redeemed through the profits made by the 
 state in virtue of the increasing rent she receives and the 
 decreasing interest she pays off. Their gradual liquidation 
 will soon be followed by the purchase of railroads and other 
 monopolies of a valuable nature. When in this way the 
 spurious capital begins to disappear, the savings of real and 
 spurious capitalists have to look to real capital for investments. 
 This will quickly bring down its interest, which is always
 
 THE EFFECTS OF THE REMEDY. I53 
 
 much higher than that of the spurious capital, because of the 
 element of risk. 
 
 Low Interests beneficial to Labour. 
 
 People, who are not in business have no idea how great the 
 difference between the two kinds of interest is. The lower in- 
 terest proper, the higher we find real interest paid in business 
 life, if no security of spurious capital can be furnished, or of such 
 kinds of real capital, as in consequence of their more intimate 
 connection with spurious capital, enjoy some of its monopoly 
 value, as houses in desirable situations, certain raw materials 
 of urgent necessity, viz., wheat, pig iron, timber, etc., which 
 in consequence of their relatively limited production are 
 always saleable. In most cases workers cannot find the 
 capital they need to do business on their own account at any 
 price, even if they should offer 50 per cent, interest. In 
 Germany it is quite usual to get cash discount of two, three 
 and even five per cent, on goods sold on three months credit, 
 which means that sellers are willing to pay interest up to 20 
 per cent, to have tlie use of their money a few months earlier. 
 As low interest proper is a sign of commercial depression, 
 high interest proper one of commercial activity, and 
 as commercial risks are greater in times of depression than in 
 those of activity, as a natural consequence the pvemium ofrisk, 
 and therefore the real interest paid hy borroiusrs of veal capital will 
 vise when interest proper, i.e., the interest of spurious capital is low, 
 and vice versa. I have shown in the preceding chapter that we 
 here find the cause why wages are low, when interest proper 
 is low, and high when it is high, a fact by which Henry 
 George was led into his error of proclaiming the identity of 
 interest between capital and labour. An error of this kind 
 would have been Impossible, if there existed only one kind of 
 capital: the real, so that the rate of interest would indicate 
 the rate at which real capital could be borrowed, instead of 
 only indicating the rate of spurious interest. The fact is, 
 that when once in consequence of land nationalisation 
 spurious capital has disappeared from the market, a low rate 
 of interest will really be the sign of the very opposite state ot 
 things it indicates to-day. Instead of being the expression ot 
 commercial depression it will be a sign of activity ; instead
 
 154 RENT, INTEREST, AND WAGES. 
 
 of being a proof of low wages it will be co-existent with high 
 wages in every department of work, high wages of enterprise 
 and supervision as well as high wages of manual labour. 
 Wherever workmen find it easy to get capital, with which 
 they can start work on their own account at a time of good 
 business prospects, they will not work for employers, unless 
 they earn at least as much as they can make on their own 
 account. The employer will have to pay them as much as 
 they would earn if they were working in a co-operative 
 factory, which they can easily start, as capital will be glad to 
 offer itself to united workers of good credit and joint respon- 
 sibility, even if it got no interest at all beyond a low risk 
 premium (insurance). Employers can only exist in this case, 
 if their superior capacity of organisation and supervision 
 leaves them a special profit. They may make more than the 
 salary they would receive as managers of co-operative works ; 
 but so does the worker at piecework compared with the time- 
 worker. It is no loss to the employer if a pieceworker earns 
 double wages, for his goods do not cost any more for that, 
 and so it is no loss to the workers if managers on piecework, 
 as we may designate those who work on their own account, 
 gain more than those on timework, i.e., the managers engaged 
 at a salary. 
 
 Do High Wages Benefit tlie Worker ? 
 
 There is such a wide-spread ignorance of economic truth, 
 even among those who pretend to know all about it, that it 
 appears necessary to explain facts which ought to seem self- 
 evident to everyone who looks at such things with clear 
 unbiassed eyes. For this reason I shall have to show, that 
 high wages are a beneficial thing for the workers as well as for 
 the whole community. I beg your pardon, my poor ignorant 
 socialist labourer, if I have to appear a little ridiculous in your 
 eyes, by thinking it necessary to prove such a self evident 
 case. I know it is self-evident to you and to anyone who has 
 got an inkling of the natural relation of things ; but it does 
 not appear at all so self-evident to those half educated men, 
 who write in newspapers, magazines and even in books, who, 
 having obtained a little smattering of economic knowledge 
 think they are omniscient, and in their supercilious way show
 
 THE EFFECTS OF THE REMEDY. I55 
 
 US social reformers what asses we are if we think to improve 
 the workers fate by raising their wages ; for do not prices rise in 
 proportion to wages and will not therefore the purchasing 
 power of wages decrease in exact proportion to their money 
 increase ? And supposing even the rise was real, would it 
 not result in more drunkenness ? Does not the liquor bill of 
 the United Kingdom exceed the amount of the whole rental ? 
 Let us first consider the question of earnings, and then the 
 way they are spent or will be spent ; for if there is to be no 
 real increase of incomes we need not worry our heads as to 
 the way of spending them. If wages were the only component 
 of prices, there would be no answer to arguments of this kind. 
 Every rise of wages would certainly carry also a correspondent 
 rise of prices ; but wages only form one of the components of 
 prices and that not even the most important. They only 
 account for one fifth of the retail price of goods. I do not 
 think it worth while to enter into the special calculations of 
 different kinds, by which jointly with others, I arrive at this 
 estimate, for it is immaterial whether we assume only a fifth 
 or as much as 40 per cent., which, if my memory is correct, 
 is the optimistic figure resulting from Mr. Giffen's statistics. 
 Even if this highest of all estimates were right — and it may be 
 right, if Mr. Giffen in his figures of national income takes 
 goods at wholesale prices, whereas I take their retail price 
 as that which we have to take into consideration when we 
 speak of the prices paid by the workers — and even if it was 
 meant in relation to retail prices, wages could be increased 
 without proportionately increasing their purchasing power, 
 if we only do not raise those 60 per cent, which help to make 
 up prices. Supposing that wages treble, it would bring their 
 part of P. (price) to 120 from 40. Adding 60, P would be i 80 
 and wages would have increased to 66 2-3 per cent, of P 
 from 40 per cent, an increase of two thirds. If we take the 
 estimate which I think to be the correct one of the fifth as 
 the real share of wages, we arrive at the figures of 60 for W. 
 (wages) and 140 for P, which means that though wages have 
 not really trebled in purchasing power, when they treble in 
 money value, they have anyhow more tlian doubled. But 
 this by no means gives the full extent of the advantages 
 reaped by labour ; for our assumption that the other partners
 
 I5t> RENT, INTEREST, AND WAGES. 
 
 keep the same amount they now obtain will prove an 
 erroneous one. 
 
 As I have already indicated in the last chapter, the lion's 
 share of this immense amount deducted from the gross of 
 production is dissipated by waste in theexchange of products, 
 or in other words in their sale. 
 
 Waste in Distribution. 
 
 We have here arrived at a most important question. Even 
 the blind, even those who are not in the least familiar with 
 economic questions, see clearly, that there is an immense 
 waste going on in the work of exchange or sale of products. 
 We have only to look round us in any of the streets of our 
 towns to become impressed with this fact. In a single street 
 we find a dozen grocery stores, where one could very well do 
 the trade without more than doubling its expenses and the 
 labour employed. Nine tenths of both are waste. But the 
 waste does not stop here. The grocer does not get his goods 
 from the producer ; a great many middle men come between. 
 
 Most of them are superfluous, most of their work and their 
 expenses are waste. John Stuart Mill calculated as long ago 
 as 1851 that nine tenths of English merchants were superfluous, 
 that one tenth could do the work required. But the waste 
 does not stop even here. The greater the competition, the 
 greater must be the efforts of each competitor to beat the 
 other in the battle of life. Each tries to find a new and 
 better way. A time was when once in a year the greater pro- 
 ducers used to come to a centrally located place where those 
 who undertook to sell their products to the public met them 
 and gave their orders. At a later time another middle class 
 interposed between producer and consumer; merchants met 
 the producers at the marts, and they sold to shopkeepers. 
 These marts or fairs gradually lost their signification and 
 degenerated into insignificant local affairs. Only a few 
 remained and these are rapidly losing their importance. 
 (Leipsic, Francfort. o.) Only one can give us a feeble idea 
 what these ancient fairs have been for trade : the fair of 
 Nishnij — Nowgorod in Russia. A barbarous nation, the 
 greater part of which is yet in the state in which middle 
 Europe was in the middle ages preserves an institution which
 
 THE EFFECTS OF THE REM' DY. I57 
 
 in such a state of civilisation answers its purpose. Only 
 in such a state ? Is it so sure, that our present system 
 is a better one, that it denotes a progress of civilisation ? 
 Can it be a progress, if each producer sends one or more 
 commercial travellers to the merchants of the country and 
 that each merchant sends a still greater number of com- 
 mercial travellers to the shopkeepers of a section or of the 
 whole country, instead of having buyers and sellers meet 
 once or twice a year in certain places ? Instead of having 
 to pay only for one journey and wasting one week's time, 
 each has to pay the travelling expenses of one or more special 
 men, for the most part not half as capable as himself, all the 
 year round. If the shopkeepers do not displace themselves, 
 they have to pay for the travelling expenses of the others in 
 the price of goods and the time wasted. To get rid of all 
 the commercial travellers all the year round, to look at their 
 samples, to listen to their eloquence in the end costs them so 
 much labour, that they would prefer to meet the different 
 producers or merchants together in the same place, where 
 they could talk to the principals and make comparison of 
 samples and prices in a much better way than at present 
 between those of travellers, who visit them at different 
 periods. 
 
 i\u certainly, this is no progress and if I said that the great 
 fair of Nishnij-Nowgorod corresponds to a former state of 
 civilisation, can I really mean that our present system is an 
 advance on this primitive one ? No, I do not mean this ; on 
 the contrary, 1 think, that we have retrograded. There can 
 be no doubt, that the old system was a better one and that 
 an immense saving of labour and expense would result from 
 its re-adoption. But what would be the consequence ? I 
 have indicated it already in the last chapter. All those 
 hundreds of thousands who at present find employment as 
 commercial travellers, would be out of work. Others, who 
 get work through them as railroad employes, hotel keepers, 
 hack drivers, trunk makers, etc., would find a decrease of their 
 work, and would see a certain number among their ranks 
 out of employment. It would be much worse yet, if a 
 thorough reform took place, if central bazaars were organised, 
 ■doing their business with the greatest economy, purchasing
 
 158 RENT, INTEREST, AND WAGES. 
 
 from certain producers, who being fully employed by a certain 
 number of bazaars do not need to trouble themselves about 
 the sale of their goods. Transportation would be saved to a 
 great extent, as the bazaars could buy from those producers 
 nearest to them, and in course of time producers would so 
 group themselves that they would find themselves in the centre 
 of the different bazaars they were providing with their pro- 
 ducts. What an immense saving in shops, in lighting and 
 heating, in people engaged in them, in railroad work, in 
 advertisements, and consequently printers and other workers, 
 such a reform would bring about ! And as a natural conse- 
 quence how many more would be out of work, how much 
 greater would be the army of the unemployed! Why? 
 Because the progress of our civilisation has enabled us to 
 get along without their work in productive occupations, 
 machines having taken their place. In uncivilised countries, 
 like Russia, such reforms might do less harm, as machines 
 have not yet done their work to such an extent, and conse- 
 quently they may, for the time being, continue to enjoy the 
 advantages of great fairs and save travelling and travellers' 
 expenses. A civilised country cannot afford such things. As 
 long as we have not the great fundamental reform, which 
 will make reforms of any kind in the work of production and 
 exchange of goods a real blessing, because it increases the 
 consuming power of the people, in exact proportion to the 
 advance of their productive facilities, by preventing a minority 
 from stepping in between production and consumption — as 
 long as we have not this fundamental reform, all other 
 reforms will only harm instead of benefit us. The more you 
 add to the size and to the contents of a building without 
 foundations, the surer you will hasten its crash. In a world 
 which has been turned topsy turvy by false economic ar- 
 rangements, only what stands on its head can be considered 
 upright, and what stands in its natural position must by the 
 very nature of things find itself standing on its head. It 
 has become a habit with me, which I have almost invariably 
 found to produce good results, always to decide the advisa- 
 bility of a legislative measure by inverting the result of 
 theoretical examination. 
 
 If true economic science teaches that a measure ought to ba
 
 THE EFFECTS OF THE REMEDY. I59 
 
 adopted, I have every reason to feel certain of its working 
 more or less harm, and if on, the other hand, I know that 
 theory condemns it, I am certain that it will do a great deal 
 of good under present circumstances. Let me illustrate my 
 point by a few examples. 
 
 Productive work done by paupers and by convicts. 
 
 Can there be anything more reasonable than to have those 
 whom society has to feed, to house and to clothe repay such 
 outlay by their work? There can be no doubt that in a 
 natural state of affairs society would reap benefit by such an 
 institution. The work done by paupers and criminals would 
 amply repay the losses entailed by them on society. But what 
 would be the result under the existing unnatural condition 
 of things? A decided increase of social misery. Over-pro- 
 duction would be growing to an enormous extent, if those 
 millions who are eating the bread of charity or who are 
 maintained by our prison administrations were to produce 
 goods, without in the least increasing consumption. The 
 complaints of free labour against convict labour are perfectly 
 justified under present circumstances. At a time when 
 millions of workers have to go without regular work, millions 
 more will swell their ranks, if those who are kept from 
 productive work by poor-laws and prison authorities become 
 producers without consuming more than they do under present 
 circumstances. For every pauper and convict turned into a producer 
 a free and honest worker will have to become a pauper or a criminal. 
 The final result would be socialism attained through pauper- 
 isation and criminality. 
 
 Militarism. 
 
 Can there be anything more antagonistic to all common 
 sense than the spectacle offered by our standing armies? 
 Three million of healthy and strong men, the very strongest 
 and healthiest in fact, are kept from productive work all the 
 year round. The taxpayers are forced to feed them in order 
 to enable them to march forward and backward, shouldering 
 and presenting arms, wasting powder and lead by shooting- 
 exercise, or worse yet to enable them to go to work and destroy 
 life and wealth in bloody warfare.
 
 l60 RENT, INTEREST, AND WAGES. 
 
 Granted; but let us suppose our peace societies have 
 become successful in their efforts. Let us suppose that the 
 sword has been turned into the ploughshare, the lazy soldier 
 into the active workman, and that universal peace reigned 
 over this earth at last. Under natural circumstances we 
 should have an immense increase of prosperity. Those 
 millions would produce wealth, and hundreds of thousands 
 who are now busy in manufacturing implements of destruc- 
 tion would go to work and increase the capital stock of the 
 world. What would be the result of such desirable reforms 
 under present circumstances ? A decided increase of social 
 misery. For every one of those three viillion soldiers or those makers 
 of guns, powder, swords, warships, who will get productive work, a ivorker 
 who now attends to it, will have to leave offrvork, as those millions 
 will not consume any more than they do now. The average 
 consumption of a soldier, obtained by dividing the amount spent 
 for the army and navy by the number of soldiers and marines, is 
 not as large as the average expenditure of a civilian of the same 
 class. If the national consumption does not increase through 
 the dismissal of our armies, the demand for goods in the 
 markets of the world cannot increase either, and in conse- 
 quence it will be impossible to employ the millions of new 
 workers without taking away a proportionate amount of work 
 from the old ones. Pauperism and crime will have to fill 
 the gap made by the absence of militarism. On the other 
 hand universal peace, doing away with the waste of war, 
 will stop an important outlet for our superfluous production. 
 Destructive wars form one of the most important palliatives 
 we possess against the terrible social disease we are suffering 
 under, the external symptoms of which are exhibited by over- 
 stocking of markets and want of employment. This is the 
 reason why after great wars we always experience a renewal 
 of commercial activity, even if the depression during the war 
 has not been greater than the depression before it 
 began. Things have come to such a pass that business men 
 all over the world look at wars, if only they do not involve 
 their own country, as blessings, which a poor overstocked 
 merchant ought to be very thankful for. I know they do not 
 say so publicly, and their press organs are duly praising the 
 blessings of peace with a grateful upturning of their eyes,
 
 THE EFFECTS OF THE REMEDY. l6l 
 
 but I know what is said behind the scenes, for during thirty 
 years I have been an initiated member of Mercury's Limited 
 Stock Company, called the commercial community. If this 
 had not been so, if I belonged to that learned clique, which 
 the world over have monopolised economic and social science, 
 I should speak differently. I should praise the beneficial 
 effects of peace ; I should curse the destructive tendencies of 
 war ; I should declaim against the waste of militarism ; I 
 should expect universal prosperity from general disarma- 
 ment ; I should do all this, and I should be as great a liar 
 as they are under the existing state of things. 
 
 Temperance and Economy. 
 
 How many millions could be saved, if that terrible vice intem- 
 perance could be gotten rid of! How many good workmen 
 could be saved from sickness and death, could use their sinews 
 and brains in the beneficial work of wealth production, instead 
 of falling under the ghostly embrace of demon Alcohol ! 
 Let us suppose they kept out of temptation : let us suppose 
 that our temperance societies scored a world-wide victory 
 amidst universal pledge takings, and what is more, pledge 
 keepings ; what would be the consequence under present 
 circumstances ? An immense increase of misery. If a 
 limited number of workers leave off drink and begin to save, it 
 will certainly benefit them, even in thepresent state of things, 
 but if all do so, wages will be pressed down in proportion to the 
 saving effected, because the army of the unemployed 
 will be able to underbid their brethren to the lower margin 
 to which their abstinence will allow them to descend. Under 
 present circumstances the iron law of wages, proclaimed by 
 Ricardo, holds good, whatever some economists may say 
 against it. Nay, we may even go further and say that this 
 terrible law has made room for one much more fearful. If 
 it be no longer true, that wages have the tendency always to 
 reach the lowest margin prescribed by the minimum, which 
 is absolutely necessary for the maintenance of existence 
 according to the standard of life obtaining in the locality at a 
 given period, and for raising offspring, it is false in a sense 
 not meant by those who deny the doctrine. It is true, 
 because wages no more maintain this minimum line ; they 
 
 L
 
 l62 RENT, INTEREST, AND WAGES. 
 
 are rapidly descending below it. As semi-starvation is prefer- 
 able to starvation so the unemployed rather than starve 
 altogether will accept wages which permit them and their 
 children to die a little more slowly than before. The iron 
 law of wages, except in exceptional cases where trade- 
 unions have been successful in raising wages, can only 
 be denied on the ground that it has turned into a Steel 
 law. Temperance and economy under present circum- 
 stances will only help to further reduce consumption, 
 and in consequence, opportunities for work. All those 
 millions who are now employed in the liquor traffic would 
 lose their work without having a chance of obtaining an 
 equivalent in another department of production, because the 
 final result would be a proportionate reduction of wages, which 
 render the replacing of the displaced consumption by another 
 impossible. 
 
 Free Trade. 
 
 What could be more reasonable than to put aside those 
 artificial fetters to international exchange, clasped around the 
 wrists of labour in the shape of custom houses by protective 
 laws ? Is it not ridiculous to dig tunnels, to build new railroad 
 lines and canals for the purpose of a better and cheaper 
 connection between different countries and to erect custom 
 houses at the ends of these tunnels, railroads and canals to 
 outweigh the advantage aff"orded by them through import 
 duties ? 
 
 If it is an acknowledged fact that the different sections of 
 a country profit by the free intercourse it aff"ords, why does 
 not the same law hold good between different countries ? 
 
 Free trade certainly increases production and for this very 
 reason protectionists understand much better the needs of 
 the age, when in a time of overproduction they denounce the 
 heresy of free trade. Anything which hampers trade, which 
 makes more work and produces less at the same time, must, 
 alleviate the evil we are suffering under. George is perfectly 
 correct, when he says, that we might just as well pass a law 
 to protect our manufacturers, by which we order a ship to 
 go twice round the globe before we allow it to land, as levy 
 protective duties. I even go further in saying that such a
 
 THE EFFECTS OF THE REMEDY, X63 
 
 system would be much preferable, because it would create a 
 great deal more waste than custom-houses; and waste is our 
 best friend under present circumstances, without which we 
 should arrive much more rapidly at a catastrophe. 
 
 Treating the problem from a national point of view, the 
 question statesmen have to solve, under the actual state of 
 things, is whether in the general scramble for buyers 
 the trade of a nation will benefit by free trade or by 
 protection, whether the balance of trade will improve 
 more in one way or the other ; for it is self evident, that 
 in a world in which a continually widening gulf between the 
 producing power and the purchasing capacity of the people 
 increases the difficulty of finding work in an accelerating 
 proportion, those individuals and nations must be best off in 
 the battle of life, who succeed in securing the greatest number 
 of purchasers at the expense of less fortunate competitors. 
 
 I knoAv that this balance of trade policy is hooted at by 
 free traders, who proclaim the theory that goods will buy 
 goods and therefore that the more a nation imports the more 
 will it export. There never was a greater fallacy. It is just 
 as little true that goods buy goods, as it is true, that our 
 millionaires spend their incomes in giving employment to 
 workers. There is such a thing as international indebtedness, 
 as well as private indebtedness. A nation may buy goods 
 from another by running into debt to the foreigner, without 
 getting a chance of paying in goods of her own make. The 
 amount of British capital invested all over the world is 
 estimated at £"2,500,000,000. Does this enormous indebted- 
 ness of other nations to England not prove that they did not 
 export as much to England as they imported thence ? Such 
 international indebtedness signifies yet something else. It 
 means that besides the increasing tributes paid to the national 
 millionaires further tributes have to be paid to the foreign 
 ones, tributes which they only partly levy in products or work 
 but which mostly serve to increase their tribute levying and, 
 consequently, work depriving power. 
 
 George in his last book ^ Free Trade and Protectioji' gives us 
 the simile of Crusoe on his island, as being warned by a 
 protectionist against the importation of cheap goods brought 
 by a merchantman. The man tells Robinson that such impor-
 
 164 RENT, INTEREST, AND WAGES. 
 
 tation will deprive him of work, upon which the islander 
 replies that he does not want work, but goods, and if he can 
 get these goods with less work, he certainly prefers to buy 
 them rather than to manufacture them himself. 
 
 There can be no objection to Robinson's reasoning, if the 
 merchant is willing to take hides, furs and other produce of 
 the island in payment, and in case he will not take these, if R. 
 does not buy his goods ; but let us suppose, that he does not 
 want any of Robinson's goods, being provided with, or having 
 no sale for them, or that he is willing to take these goods 
 even if R. does not buy ot him. In the first case the latter 
 would have to run into debt and finally would become a 
 dependent interest or rent slave of the foreigner. He would 
 be forced to work for a continually increasing tribute and yet 
 find an ever growing difficulty of getting work, if the creditor 
 did not need his products. Finally he would have to 
 mortgage and sell the island and there would be no work for 
 him on it, if others did this work cheaper, and in such manner 
 as to give satisfaction. In the second case he would become 
 the creditor of the foreigner, would get interest from him, 
 which, if things continued in the same way, would finally 
 allow him to live without work. His economy and hard 
 work, which allowed him to get along with the g®ods made 
 on the island, though the foreigner could have made 
 them for him with less expense of labour, in the end would 
 enable him to force the foreigner to work for him and his 
 descendants to all eternity, supplying all the goods he and 
 they might need, without having to do a stroke of work or to 
 deliver a piece of goods in return. He would simply live on 
 his income from the interest due to him. 
 
 Is it any difftrentif we substitute a nation for this individual 
 islander? Is it less true, that he who saves by selling as 
 much as possible and buying a little as he can, will be better 
 off, than he who spends what he earns, or, worse yet, runs 
 into debt, by buying more than he can sell ? 
 
 It is all very well to contend that division of labour, whether 
 carried through nationally or internationally, is a blessing and 
 that it is a retrograde movement to go back to the old system 
 of making things ourselves, which others could make much 
 better for us. We pride ourselves on the development of
 
 THE EFFECTS OF THE REMEDY. 165 
 
 technical science, of transportation facilities, which made 
 us give up the old system for the new. This is all very well ; 
 but it presupposes free mutual exchange. The moment this 
 is interrupted, as it is by the effects ot capitalism, the very 
 reverse takes place. We do not want to economise work, 
 we want to make work. The unnatural state of things we 
 live under has turned everything topsy turvy. Thus when 
 we find continental peasants spinning their own flax and 
 weaving their own yarns we cannot blame them, though such 
 workshowsanenormous waste of power, as a spinning machine 
 enables a single girl to do the work of a thousand hand- 
 spinners and a power loom enables one man to do the work 
 of a hundred, and yet, I repeat, we cannot blame these people. 
 To purchase the product of Manchester they have to sell 
 something they can produce to better advantage than these 
 goods ; but if nobody wants to buy, how can they get the 
 means wherewith to pay the dealer in Manchester goods ? 
 Having no paying employment lor their labour, is it not 
 better to make their own linen, even though it cost them a 
 thousand times as much labour as it costs in the steam mill ? 
 As it is between individuals so it is between those aggre- 
 gations of individuals, called nations. We certainly shall 
 think it a foolish thing if the West Indians produce ice with 
 ice-machines instead of buying it from the Canadians and 
 we shall think it no less ridiculous if the Canadians go to work 
 raising pine-apples in hothouses, instead of ordering them 
 from the West Indies. A mutual exchange between the two 
 countries, the one sending pineapples, and taking back ice 
 would certainly save an immense amount of labour to both ; 
 but suppose that the West Indies instead of ordering ice 
 from Canada get it from Norway, will not the Canadians find 
 it to their advantage to employ their unoccupied iceworkers 
 in hothouses raising pineapples, rather than let them lie idle 
 in poorhouses while at the same time they run into debt for 
 the West Indian pineapples? And is it not better for un- 
 occupied West Indian pineappleraisers tomakeartificialice, if 
 nobody is willing to furnish them with ice against pineapples ? 
 All the arguments brought against the balance of trade tlieorics 
 by freetraders are nothing but sophisms. They ridicule the 
 tiiCory by making out that according to it a cargo of rice
 
 1 66 
 
 RENT, INTEREST, AND WAGES. 
 
 leaving New Orleans and getting lost by founderiiig ought to 
 be of a greater advantage to the exporting country than if it 
 had remained in port, for does it not increase exports ? A cargo 
 of imported tools getting lost on its way ought to be of equal 
 benefit, for does not the shipwreck providentially help 
 to diminish imports ? Such arguments leave out of considera- 
 tion the fact that export figures are not or ought not to be 
 counted until the exported goods are paid for, or at any rate until 
 payment is assured, and that imports have to be counted in the 
 national balance sheet, as soon as they are paid for or have to 
 be paid for, independent of their arriving or getting lost. 
 Looking at the question in this way, we find that the rice cargo 
 no more counts among exports — if they are estimated correctly 
 — than if the rice had been burnt in the storehouse of the New 
 Orleans docks, and that the tools, if they have been bought 
 by an American merchant have to figure among imports in the 
 balance sheet, because they have to be paid for just as if they 
 had arrived in good order, the risks of transportation generally 
 being charged to the buyer. National \vealth will have 
 decreased by the amount of the destroyed goods and the 
 balance of trade v/ill be affected just as much as if both ships 
 had arrived in their ports. 
 
 The argument, against a favourable balance of trade, that 
 the value of the imported article has to exceed that of the 
 one given in exchange, as otlierwise there would be no profit, 
 and that therefore by the very nature of the case a healthy 
 trade implies the excess of imports over exports is based on 
 a similar fallacy ; for the value of export figures is based on 
 the price received from the buyer and the value of the 
 imported goods is based on the price paid by the importer. 
 Though a profit may be made, even when the imported goods 
 cost more than the exported ones realise, — because the former 
 are worth more and the {latter cost less, — debts can only be 
 avoided, if the cost price of imports is balanced by the 
 proceeds of exports. 
 
 Is the author a protectionist ? the reader will now ask — a very 
 j'atural question in the time of party divisions enclosing 
 men and opinions in classified and labelled cases like 
 specimens in a collection. I am sorry for the inconvenience 
 I am causing ; but I decidedly' have to refuse to be classified.
 
 THE EFFECTS OF THE REMEDY. l6j 
 
 If asked whether I think rain or sunshine more advantageous 
 to agriculture, 1 shall decline committing myself ; but reserve 
 the right to decide according to circumstances. I am neither 
 protectionist, nor free-trader. I am for free-trade under 
 natural relations of production and consumption as well as 
 of nations. I am a most decided champion of as favourable 
 a balance oftradeascan be obtained under the circumstances, 
 never mind whether protection or free-trade will attain the 
 object. 
 
 If England thinks that by adopting protective tarifs, she 
 loses more in exportation than she gains in preventing 
 importation, my opinion is that she ought to adopt free-trade ; 
 if the benefit was the other way, protection would do her 
 more good. If she can put duties on some goods without 
 giving up a proportionate exportation of others, she ought to 
 do so. For instance, I am not at all frightened by the small- 
 loaf spectre from thinking and saying that in my opinion a 
 a duty on corn would just now attain such a beneficial result. 
 It may reconvert into cornfields millions of acres lying 
 idle or serving as pastures, and thousands of workers would 
 find employment on the fields who now depress industrial 
 wages through their competition. The relief of the labour- 
 market thus obtained will increase the amount of wages 
 much more than their purchasing power would decrease 
 through the slight rise in corn prices. It would not decrease 
 exports, for neither Americans, nor Russians buy English 
 goods, because the English buy their wheat ; but because they 
 are cheaper than those offered by other nations. The decrease 
 of corn importation would probably not decrease the exporta- 
 tion of manufactures to a very noticeable extent, for even 
 if the purchasing power of the Russian and American farmers 
 decreased in consequence this would only very slightly affect 
 English commerce, because English goods form only a very 
 small portion of the present consumption of these farmers, 
 whereas the consumption of the English farmer and agricul- 
 tural labourer consists almost exclusively in home products. 
 
 America and Russia might realise that the sword of protec- 
 tion cuts two ways. If other European nations, for example, 
 joined England, they might be able to force those two great 
 countries into entering into treaties of commerce with then*.
 
 l68 RENT, INTEREST, AND WAGES. 
 
 by wliich the present protective duties on industrial products 
 would be lowered, so as to increase English industrial 
 exportation and give employment to the labour driven 
 from the soil by agricultural imports. 
 
 Industry. 
 
 The praise of industry sounds from every pulpit, is dinned 
 into our ears by millions of leaden soldiers from the type- 
 foundry regiment, leaving the impress of their footsteps on 
 millions of tons of paper which go forth as dailies, periodicals, 
 or books. How strange, that we find a growing fear of 
 industrious workers, and that we do our best to send them out 
 of the country or to prevent their getting in. Emigration 
 societies, laws against the immigration of foreign workers are 
 enacted or demanded. The rich drone is welcomed every- 
 where, and glowing advertisements set forth in rose colours 
 the advantage of different towns in order to attract them, 
 whereas workers are warned off in every possible way. It is 
 a natural result of the unnatural state of things we live under, 
 for consumers are wanted and producers shunned in a world 
 in which the purchasing power of the masses lags more and 
 more behind their producing capacity. 
 
 A better Organisation of Production and Exchange. 
 
 What greater blessing can there be than labour-saving 
 machines ? What greater bane under present circumstances 
 than the invention of better machines or modes of productions 
 increasing our productive power without at the same time 
 proportionately increasing our consumption, because a 
 surfeited minority reaps the main benefit of the increase in 
 production ? I have already shown how a better organisa- 
 tion of exchange would only harm us, how the organisation 
 of immense co-operative stores all over the country, diminish- 
 ing the waste in the present modes of exchange between 
 producers and consumers, would only enable the 
 capitalist minority to supply their wants more cheaply and 
 in consequence to save more, thus increasing their tribute 
 rights, whereas millions of people employed in mercantile 
 business would loose their occupations and consequently 
 their purchasing power. In the age of reform thtse would
 
 THE EFFECTS OF THE REMEDY. 
 
 find employment in production and the power thus saved 
 would benefit everybody ; in our time they would only swell the 
 ranks of the employed and help to depress wages and the purchasing 
 power of the masses. 
 
 Cheaper Government. 
 
 The dismissed employes would only decrease consumption and 
 depress wages. 
 
 Poisons Sometimes Remedies. 
 
 Enough. I think, I have shown satisfactorily that all 
 our ideas of right and wrong have completely changed. 
 If we still hypocritically proclaim the old teachings of 
 morality and the fitness of things, our practical code has 
 long since completely changed to the very reverse of what we 
 preach. 
 
 Poisons may become remedies in cases of disease and 
 what is poison to the social organisation in times of health 
 may be a remedy, or at any rate a palliative in time of social 
 disturbance. In nature there seems to exist a law, which 
 might be called the law of parasitism. Parasite is killed by 
 parasite. A noxious insect multiplies to an enormous degree ; 
 it would soon destroy all vegetation ; but another little insect 
 appears and lays its eggs in the larvae of the destructive 
 little animal. The larva grows ; but it is only to feed the 
 enemy encamped in its very life-blood and finally it is he who 
 makes his appearance from the empty shell of the larvae. 
 
 Another smaller insect in turn plays the same part with 
 him to prevent his undue multiplication, and so forth. This 
 parasite-law finds its application in the social organism as 
 well. The parasite "capitalism " raised from the caterpillar 
 " rent " and the larva " interest " would destroy the social 
 organism much faster, if those different parasites which 1 
 have been enumerating : militarism, waste in exchange, bad 
 government, intemperance and want of thrift, protection, 
 etc., were not all the time doing their best to tap the life-blood 
 of the ogre, so that his growth gets somewhat retarded. 
 
 Effects of a Return to Nature. 
 All this will completely change, after ihe social body has 
 returned to its natural health by discarding the parasite
 
 170 RENT, INTEREST, AND WAGES. 
 
 which is eating away its life-blood. All the other smaller 
 parasites can now safely be killed, will even die of inanition 
 through want of food. When the artificial obstacles, which 
 capitalism has interposed between production and consump- 
 tion, are put out of the way, when plenty of work in every 
 department of production has raised wages by making one 
 employer look out for two workmen, instead of two workmen 
 seeking one employer, there will be such an immense increase 
 of production, that gradually all those forces now wasted in 
 the different ways described will be turned to productive 
 work. This will not take place in a day, of course. We shall 
 not see all of a sudden every shopkeeper liquidate business 
 and engage in productive work ; but we shall find the rising 
 generation keep away from less remunerative occupations 
 and turn to the better paying ones. If our boys overcrowd 
 the liberal and mercantile professions, if we see them fight 
 for government offices, it is not because they dislike manual 
 work ; but because it does not pay, or is too difficult to obtain. 
 Let there be plenty of well-paid work in the trades and we 
 shall soon see the current turn in their direction. We shall 
 gradually accomplish in this way a reduction of waste. 
 Slowly but surely we shall see a better organisation of 
 mercantile work. Large bazaars will take the place of 
 hundreds of small shops, and manufacturers will contract 
 with them directly, saving travelling, advertisments and 
 other expenses of a similar nature. Whereas now on an 
 average loo per cent, are added to the cost price of goods, 
 before they reach the consumer, less than one tenth of this 
 amount will pay for all the work of exchange. All the 
 immense savings thus made will go to labour, will raise 
 wages. The disappearance of interest will add another item 
 to the balance turned over to labour. Rent will remain, but 
 going into the coffers of the state it will takeoff all present 
 taxes and still leave a balance either for distribution, or 
 better yet to be spent for the common benefit of all citizens. 
 Even if no further improvements in the arts of production 
 were made, the savings here mentioned would by themselves 
 treble wages. 
 
 Let us now consider for one moment what trebling of 
 wages really means.
 
 THE EFFECTS OF THE REMEDY. I7I 
 
 Counting only 8 million workers in the United Kingdom, 
 and assuming one pound a week to represent present wages 
 "ind salaries, a trebling of this amount would increase the 
 yearly income of the lower and middle classes to the amount of 
 ;^8oo,ooo,ooo beyond present figures. All this income would 
 be consumed sooner or later. For that part which is saved 
 other parts formerly saved will be consumed, as our present 
 system of so-called saving (in reality a system only of 
 increasing the power to blackmail our fellow man,) will have 
 given place to real saving of unconsumed wealth. Just 
 imagine what an increase of consumption and consequently 
 of production Boo million pounds yearly represent ! There 
 will be no more want of work but of workers in any depart- 
 ment of labour, for human wants never cease, and if one of 
 them is satisfied new ones will appear. Human ingenuity 
 will increase working facilities to an extent now undreamed of. 
 All the immense increase of productive power thus generated 
 will no longer benefit monopolists alone, enabling them to 
 increase the weight of the chains with which they weigh 
 down labour ; but will result in a proportionate increase of 
 wages and rent. Rent being common property will be only 
 another form of wages. It will constitute a wage fund, not 
 distributed but employed for the benefit of all workers 
 collectively. They would reap greater benefit by such 
 collective enjoyment than if each had to spend his share 
 personally. Free means of transportation, free museums, 
 free theatres, free schools, free universities, free concerts, and 
 perhaps free lighting and heating and such like, would afford 
 so many different modes of collective enjoyment of wealth, 
 which individuals could never secure in equal quality and 
 cheapness by their private exertions. All such investments 
 of the public rental income would help to increase this 
 income, and thus enable the community further and further 
 to increase public improvements to an extent now 
 undreamed of, every improvement soon paying for itself through 
 increased rental income. 
 
 We are so blinded by habituation to the present state of 
 things, that we are apt to treat as the illusions of a dreamer 
 such a forecast of the possibilities ot a world freed from the 
 bane of landlordism and usury, and yet when we look at the
 
 172 RENT, INTEREST, AND WAGES. 
 
 present state of things with unbiassed eyes we shall be 
 astonished to find how much stranger things appear 
 quite natural to us in our time. We see railroads built by 
 private companies payingdividendsor none as thecase maybe. 
 "Whether they do, or do not, one thing is certain, viz., that the 
 rents of all land in the neighbourhood of the new road will 
 immediately increase enormously witliout the landowners 
 doing the least thing towards the building of the road. We 
 call this unearned increment. Miss Helen Taylor said : 
 " Properly speaking it is not unearned. Those who earn it 
 don't get it, and those who get it don't earn it." It is earned 
 by the community ; and private parties, who have done 
 nothing towards this earning, but who accidentally are the 
 owners of a certain part of the globe's surface, without the use 
 of which the benefit of the improvement creating ttie incre- 
 ment cannot be enjoyed, take most of it for their own exclu- 
 sive use. We think this perfectly natural, because we are so 
 used to it, though in fact, nothing could be more unnatural. 
 The community ought to enjoy what it creates, and it will 
 do so when the ownership of natural opportunities reverts 
 to it. We then shall have the common fund absorbing the 
 increased rental mcome created by a new railroad, and in 
 most cases we shall find that this increase of income will not 
 only gradually pay for the making of the road — especially 
 after interest has disappeared — but even for its free use by 
 the public. To those who smile at this idea, I recall the 
 fact, that in a great many office-buildings we find elevators 
 running for the free use of the public. We all know, that 
 this is not done by any generous whim of the party who runs 
 ithe elevator, but that the house owner pays these expenses 
 out of his own pocket, because he knows he gets his money 
 back with interest from the parties who rent his rooms. 
 They willingly pay for the facility of getting to their rooms. 
 Not only is it easier for them to get there, but people will 
 come and see them, who would keep away if they had to 
 climb so many flights of stairs. Many customers would be 
 lost, or not won, if the elevator did not run. Is there a 
 difference between a railroad and an elevator ? The one 
 performs in a vertical direction what the other does in a 
 horizontal. Whether it is a room rendered easier of
 
 THE EFFECTS OF THE REMEDY. .I73 
 
 access, by riding up towards it, or by riding horizontally 
 towards it, is the same. The owner of a house connected 
 by a tramway with the centre of the town can ask more rent 
 for it, than the owner of one without such accommodations, 
 just as the owner of a room accessible by an elevator gets 
 more rent than one who can offer nothing but a staircase. 
 If the one builds and runs the instrument of communication 
 free of charge why should not the other ? Why does he not 
 do it ? Because it is impossible to produce a fair agreement 
 between the different owners of occupied and unoccupied land 
 as to the relative advantages reaped by them from the new 
 road and, in consequence, as regards the proportion to be contri- 
 buted towards building and managing it. In a house we have 
 not this difficulty, because all the rooms belong to the same 
 owner who pays all and recoups hmiself by increasing the 
 rent of his rooms in proportion as the demand enables him 
 to. Where the whole land of the town belongs to one owner 
 means of communication could be supplied by the landlord 
 without making the users pay for them, as the increased 
 rent obtainable in such a town would amply pay for 
 the outlay. The same principle holds good for any other 
 improvement. If the owner of a house furnishes the 
 heating and lighting, he will be able to get a higher rent 
 and so will the owner of a town who does the same 
 thing. 
 
 What holds good in a town will hold good in a whole 
 country. The owner of all the land in it can afford to 
 build and to run a railroad or many railroads, connect- 
 ing its different parts, without charging for the privilege 
 of their use, because the higher rents he will get will 
 amply repay him. So it will be with all other advantages 
 offered to the tenants. Rents will be higher in a well 
 governed country than in one which offers no security for 
 life and property. Is it unreasonable to ask that those who 
 supply such advantages ought to earn the benefit arising 
 from them ? Who supplies them, the landlords or the 
 community ? Under our present system the taxes paid by 
 the community at large, of which the land tax forms only a 
 small part, furnish the means for supplying all those inesti- 
 mable advantages enj -ycd by civilised communities, viz.,
 
 174 RENT, INTEREST AND WAGES. 
 
 protection of life and property, education, and so forth, and 
 the landlords enjoy the benefits of these sacrifices. Under the 
 system of state ownership the community will earn the 
 equivalent of its outlays in increased common incomes. Can 
 there be anything more just? Is it not ridiculous to see cities 
 like Rome, becoming bankrupt, because the debts made for 
 public improvements overwhelm them, whereas in these 
 very same cities landowners have earned untold millions, 
 sums by far exceeding the municipal debts, through these 
 very improvements, whichr uined the community, that made 
 them ? 
 
 Increase of Rent after Land-nationalisation. 
 
 With the advances made by humanity in science and pro- 
 ductive facilities not only the earnings of labour will rise in 
 proportion to the productivity of labour; but rent, the 
 common fund, will also increase enormously. But how does 
 this agree with the theory that the more rent rises the more 
 will wages go down ? Why is this theory correct to-day and 
 wrong after land nationalisation ? The answer is easily 
 given after our investigation of the real nature of the 
 relations between rent and interest. As long as rent is 
 privately owned it forms the base of interest, the foundation 
 of spurious capital, which with the accumulating power of 
 compound interest tends to make a small number of men the 
 owner of this whole earth and of all its rental income. By 
 using a continually diminishing portion of this income for 
 the employment of labour and a growing part for the increase 
 of their tribute rights, — in the prohibition of consump- 
 tion and production, — they create that well-known state of 
 things, which finds its expression in want of work with its 
 concomitants of low wages and business depression. The 
 very moment rent returns into the possession of the people 
 at large, spurious capital and interest will have their death 
 knell sounded ; improvements in production will no longer be 
 the helpmate of capitalism by increasing the rate of progress 
 at which spurious capital and interest are accumulating, but 
 will instead increase the earnings of labour. The greater 
 these earnings are, the greater must be the value of raw 
 materials as a whole and consequently of land, the source from
 
 THE EFFECTS OF THE REMEDY. 175 
 
 which they are taken, as without this foundation work is 
 impossible, and to begin work, workers must first begin by 
 competing for land. Such a competition cannot result in 
 rack renting, for this earth is large enough for a iiundred 
 times its present number of inhabitants, if speculators can 
 no longer lay their hand on it. Nobody will bid more for 
 land than what he expects to earn beyond the usual wages 
 of his labour in other departments of production. Suppose 
 an industrial worker can earn fifteen shillings a day by 
 spending the same amount of intelligence and in working as 
 hard as an agricultural worker, we shall find that the latter 
 in his bids tor the use of land will not go higher than his 
 calculation of a profit at least equivalent to the wages earned 
 by the said industrial worker will warrant him in going. 
 What he finally pays will not be a rackrent, in the present 
 sense of the word, but only a just payment for the real value 
 of natural opportunities, a value corresponding either to the 
 work done by nature or that of society. The value of this 
 work will increase with the growth of population and 
 technical progress. The neighbourhood of consumers as 
 well as the greater productivity of work through technical 
 progress will make land more valuable. One of these causes 
 affects the land of towns more, the other agricultural land, 
 though both come into play in the two cases. 
 
 In regard to town land the objection has been made, that 
 through the withdrawal of workers to the country, when 
 agricultural land is freed from the bane now weighing upon 
 it, and through the extension of the area disposable for build- 
 ing when the hand of the speculator is taken from the land 
 around our towns, urban rents will fall. A decrease of town 
 populations through land nationalisation is not impossible 
 and if a sinking of urban rents should result from this cause, 
 it would be a very hopeful sign, for the present overcrowding 
 of towns is an unhealthy symptom. A decrease of urban 
 rents due to this cause would be more than compensated by 
 a corresponding increase of agricultural rents ; but it is more 
 than questionable whether town populations would decrease 
 at all. We must not forget that population in most of our 
 civilised countries is increasing at the rate of not less than 
 I per cent a year. If this increase no longer fills our towns
 
 I75 RENT, INTEREST, AND WAGES. 
 
 as it does for the most part now, but stays in the country 
 leaving to the towns only the natural increase of their 
 population, or draining off even this increase to the country, 
 we should nevertheless have an increase of the total of town- 
 rents, for the increased rural population would tend to 
 increase town business to a great extent, especially when 
 rural prosperity increases. The great central bazaars, 
 where goods can be bought to best advantage, places of 
 amusement and instruction, which can command first class 
 capacities only where a central situation ensures a suffi- 
 ciently large custom to pay for services of such quality, can 
 be found no where but in towns. Not only will the rural 
 population resort thither, when they have a want in this 
 direction, but people retiring from active work will very 
 often prefer to spend the rest of their days in towns, where a 
 great many social comforts can be procured for very little 
 money, especially in the time of land nationalisation, when 
 towns will no more be crowded beehives but garden cities, 
 and when instruction and amusement will be furnished free 
 of charge to everybody. There will be a great many more 
 people retiring from work and living on their income, or 
 rather on their outcome ; for they will live by the consump- 
 tion of their savings not by tributes obtained through them. 
 It is certain that town rents in general will not be as high as 
 to-day, if we estimate them by the square toot, except 
 perhaps in the centre of the town, in which places of 
 business and pleasure resorts of certain kinds will mostly 
 congregate. The rent paid for building ground needed for 
 lodging houses will be cheaper, for as no speculators 
 hold back the land surrounding the town for miles until they 
 can get their usury prices, the extent of the supply will 
 prevent demand from forcing up prices beyond reasonable 
 limits. The fact that rents in English towns are more 
 reasonable than those of prosperous continental or American 
 resorts can be explained by the absence of ihe smaller 
 inducement to hold land for a speculative rise. The land 
 surrounding English towns is mostly owned by landlords, 
 who do not sell it at all, but let it out on building leases. 
 They do not lose the unearned increment as does the seller of 
 freehold property on the continent of Europe and America
 
 THE EFFECTS OF THE REMEDY. I77 
 
 from the moment he disposes of his property. They 
 are sure of getting all future increase of value either for 
 themselves or for their descendants, even if they allow others 
 to build on their land. They are even anxious to let their 
 land for such a purpose, for while they do not lose the 
 advantage of the unearned increment, but on the contrary 
 appropriate the improvements, they get rent in the mean- 
 time and whatever they obtain is so much extra profit 
 beyond the profit made by the Continental speculator, who 
 only counts on what he can make by a future sale, and who 
 in the interim is glad if he can get enough out of his land to 
 pay the taxes. 
 
 If rents of building sites be cheaper after land- 
 nationalisation has done away with the speculator, wherever 
 this class of men at present keeps up land prices, this does 
 not mean that the total of rent will be less. On the contrary 
 it will be higher, for people will use more land for buildings 
 and gardens, especially at a time when their greater 
 prosperity allows them to live better than they do now. 
 
 The average annual rent of a room with a fireplace in 
 Berlin is £\i now. This amount would pay the interest of 
 a whole house for a workman's family and yet leave as much 
 ground rent as they pay now, when, through building 
 lodgings vertically on each other, their ground-rents are 
 heaped together on a small surface of land ; but after interest 
 has disappeared the whole amount could be paid for rent, 
 deduction of a small amount being made for repairs and 
 insurance. Rent could be doubled, and accommodation 
 greatly increased, even if we leave out of consideration the 
 fact that workers could pay a much higher rent than at 
 present. English towns furnish a proof of the fact that 
 where ground rents are reasonable, their total is much 
 greater than where they are dear. London with its suburbs 
 has about three times as many inhabitants as Berlin, about 
 two and a half times as many as Paris. Why ? Is it because 
 people are driven away from the land more ? Certainly this 
 partly accounts for it ; but as on the other hand France has 
 got more inhabitants than the United Kingdom, and has a 
 much greater centralisation, the difference could not be so 
 great, if it was not for the fact that the suburban manner of
 
 178 RENT, INTEREST, AND WAGES. 
 
 living in London with its cottage system, presents a much 
 greater attraction to those who have to make choice of a 
 place of residence, than Paris with its tenement system. 
 It is not the character and taste of the two nations which 
 has made the difference, for the ideal of every Frenchman is 
 the possession of a little house of his own with a garden 
 surrounding it, an ideal which very few ever realise, as they 
 could only do so by leaving the city. The Englishman can 
 find his cottage in every town of England and at a moderate 
 price. It is the system of land tenure, to which he owes 
 this inestimable advantage, and after the era of land- 
 nationalisation, the throwing down of the walls of land 
 speculation will everywhere result in much more beneficent 
 results of this nature. 
 
 We must never leave out of calculation that the disappear- 
 ance of interest benefits rent as much as it benefits wages. 
 This manifests itself not only in urban rents, which, without 
 increasing the cost of living, can be almost doubled through 
 the saving of interest on the cost of building, but plays a 
 very important part in the question of agricultural rents. 
 We here find the best argument against the attacks of those 
 who expect a falling of agricultural rents from the effects of 
 foreign competition. Our rents are too high, they say, to 
 compete with the cheap land of America and the cheap 
 labour of India and unless we get protective tariffs, our 
 rents will have to be lowered very much, before we can think 
 of competing. 
 
 I have already tried to prove in the preceding pages that 
 there is some cogency in this logic under present circum- 
 stances. In the days of land-nationalisation the farmer will 
 laugh at those who talk to him of protection. 
 
 Capital plays a much more important part in modern 
 scientific agriculture than virgin soil or rent. Even as it is 
 we have proofs furnished by practical farmers, that 
 agronomical writers like Dr. Ruhland are correct when they 
 say that our European soil with its present rents can, if 
 scientifically cultivated, very well compete with the virgin 
 soil of America or with the black loam of Southern Russia. 
 We have proofs furnished by the accounts of practical 
 farmers. How much easier will such competition be, when
 
 THE EFFECTS OF THE REMEDY. I79 
 
 the difficulty of raising capital, the hardest obstacle to 
 scientific farming, shall have been put out of the way, when 
 the heaviest item in the calculation of cost "interest" will 
 have disappeared. The savings obtained on this score 
 would more than pay for higher wages, even if invention did 
 not counteract their effect by the introduction of labour- 
 saving machinery and if the same causes did not tend to 
 raise wages in the competing countries. 
 
 Interest the Greatest Obstacle to Progress. 
 
 The French economist, Turgot, compires the lowering of 
 interest to the falling of the level of a sea covering a vast 
 extent of country. As the waters retire fruitful fields 
 appear, and valleys are covered with luxurious vegetation. 
 Turgot would have been correct in his expectations as to 
 the effects of a lowering of interest if he had known, that 
 they can only be based on the descent of real interest, 
 whereas the falling of interest which he has in view is only 
 that of spurious interest which as we have seen, is equivalent 
 to a rise of real interest. The falling of real interest will in 
 reality open undreamt of vistas of blessings to working 
 humanity. There will be nothing nature allows us to 
 accomplish, which will have to be left undone. 
 
 There are great difficulties in the way of one of the greatest 
 enterprises man ever undertook, viz., the cutting of the 
 Panama Isthmus ; but the greatest obstacles and those 
 which prove unconquerable are not the Chagres river or the 
 Culebra mountains. Human ingenuity could overcome 
 these ; but there is one obstacle in the way, which all the 
 energy and perseverance of a Lesseps in vain tries to fight 
 against. It is called " 5 per cent." Technical science has 
 done wonders in our day ; it has given us the means to 
 remove millions of tons of rocks and soil with a celerity 
 formerly inconceivable ; it has enabled us to yoke the power- 
 ful forces of fire and water with their child steam to the 
 triumphal car of our progress; but it has not taught us one 
 thing and it never will ; it has not taught us how to squeeze 
 5 per cent, interest out of an enterprise which will only yield 
 four, three, two,one, or less. If this terrible interest question 
 was not in the way, the Panama canal would soon be built ;
 
 l8o RENT, INTEREST, AND WAGES. 
 
 for nobody can doubt, that it will earn enough to yield a 
 revenue and finall}' to repay the capital invested in it, if we 
 only have time to wait long enough and if the heavy weight 
 of interest and compound interest is taken out of the way. 
 
 It is the same with all other enterprises calculated to benefit 
 man. It is not enough to show that they are well planned 
 and that the advantage they will afford sooner or later 
 will repay the outlay they entail; they also will have to pay 
 as much interest as can be obtained through the farming out 
 of monopoly-rights. The very moment this steep bar to all 
 progress is taken out of the way, the face of the world 
 will be changed. Seeming impossibilities become possible 
 and easy of execution. Nowhere will the magical effect of 
 the transformation be felt more than in the field of 
 agriculture. 
 
 With capital man can do almost anything in this branch 
 of human work. Give me an asphalt pavement, said one of 
 the French market gardeners, and I will raise the finest crops 
 on it. I do not remember whether it was the same man or 
 another of his class, who started an asparagus farm on half 
 an acre of ground at Asnieres, near Paris and who by means 
 of steampipes heating the ground and by scientific culture 
 produced one thousand bunches of asparagus daily at the 
 value of eight pence a bunch during ten months of the year — 
 a crop for which sixty acres would have been required in the 
 ordinary way. I have already mentioned this case in the 
 first chapter as a proof against the bugbear of Mal- 
 thusianism. There is no rock so bare, no desert so barren, 
 but that labour and capital, which means past and present 
 labour, can make a paradise out of it. 
 
 When the question of realising interest is no more in the 
 way, English enterprise and activity will raise better crops 
 from English soil, leaving a higher ground-rent, in spite of 
 paying high wages to the labour employed, than the best 
 American virgin soil ever produced or ever will produce with- 
 out manure. 
 
 Effects of the People's Prosperity on Agriculture. 
 
 There is another very important reason why agriculture 
 will prosper, so as to afford high rents and good wages.
 
 THE EFFECTS OF THE REMEDY. l8l 
 
 It IS because the greater prosperity of the people will give a 
 better market for the produce of the dairy, for poultry rearing, 
 for market gardenmg.* At the present day the greater part 
 of the English nation cannot afford to drink milk, to put 
 eggs, butter, chickens, fruit and anything but the cheapest 
 vegetables on their tables. They have to be satisfied, if 
 they can obtain enough of the coarsest food to sustain life. 
 The increase of their income will in the first place be 
 employed in better living. There will be such an enormous 
 demand for the better paying products of agriculture just 
 mentioned, that farmers will be able to get a good revenue 
 from this source alone, independently of the raising of corn, 
 hay, and such products. Even if the prices of this kind of pro- 
 duce are not raised for the consumer, it will pay much better 
 than it does to-day, not only because the great quantities 
 needed allow a more scientific production but because they 
 allow the enormous exactions of middlemen to be done away 
 with. 
 
 Profits of Middlemen Saved. 
 
 To give an idea how large the profits of these are in our 
 time, and consequently how great the saving of the producers 
 will be after social reform has done away with all waste in 
 the sale of goods, I give an extract from a French 
 
 *The best proof of what a greater consuming power of the 
 people can do for agriculture is turnished by the United Stater. If 
 competition against western wheat is hard anywhere it is in the 
 Atlantic Coast States of the north. There is no protection and 
 less freight difference. If agriculture could prosper in the face of 
 such odds, to which a soil deprived of its virgin strength has to be 
 added, it was only because the better table kept by American 
 workers created such a want for the better paying products of 
 agriculture, that a profit could be made in spite of the drawbacks 
 agriculture had to contend against. Such immense sales of peaches, 
 strawberries and the like which made it possible for large farms to 
 l;ve on these specialties alone would not have been feasible with- 
 out a large consumption of such fruits by the labouring classes. 
 Since the wages of these have begun to be so scanty as only to 
 allow them the coarser and cheaper kinds of food, we hear the 
 complaints of eastern farmers. The Vanderbilts, Goulds, etc. are 
 beginning to produce their effect.
 
 l82 RENT, INTEREST, AND WAGES. 
 
 agricultural paper La terre aux paysans. According to 
 the communications of the chairman of a Breton syndicate 
 a market gardener gets 8J centimes for a cauliflower, the 
 agent 15-20, the merchant 28 and the greengrocer 30-70, 
 which are paid by the consumer. In 1887 the market 
 gardeners got 347,000 francs for their cauliflowers, the 
 merchants 1,105,000. We can safely assume that the con- 
 sumers paid not less than 2 millions. 
 
 With a good organisation of large markets, attended 
 co-operatively by the market gardeners, we may take lo per 
 cent on sales as more than sufficient to pay all expenses of 
 transportation and selling. This would leave 1,800,000 
 francs to the gardeners, who now get 347,000, without raising 
 a single penny the price paid by the consumer. The pro- 
 ducers would receive more than five times as much as they 
 do now. The immensely increased consumption of the 
 people would at least treble the sales of each gardener and 
 yet keep a much greater number of them busy than now. 
 Let us now strike the balance sheet of one of them. To-day 
 he sells 1,000 francs worth of cauliflowers, which leave him, 
 say 500 francs after all expenses have been paid. Let us 
 further suppose that his expenses increase in proportion to the 
 increase of production — which in reality will not be the case, — 
 and we shall get a sale of 1 5,000 francs' worth at a cost of 1,500, 
 or a net profit of 13,500, instead of one of 500, Supposing 
 an acre of land was needed to produce these cauliflowers in 
 the first case, and three to produce the increased quantity, — 
 which is again exaggerating on the right side, for with 
 capital our man can improve his mode of culture and 
 perhaps get as much from one acre as he formerly got from 
 three, — 100 francs' worth of rent paid by him in the first case 
 forced him to sacrifice a considerable part of his petty income. 
 Every penny thus paid can be considered as taken from 
 his well deserved wages. He could not help it, for whatever 
 other occupation he would have turned to, interest or rent 
 would haxe curtailed his legitimate earnings quite as much. 
 
 In the time of land-nationalisation he could pay 1,000 
 francs an acre on three acres, and even if we do not take 
 into account the saving of interest, he would have not less 
 than 10,000 francs over and above his former earnings.
 
 THE EFFECTS OF THE REMEDY. 183 
 
 This gives us an example how agricultural rent might 
 be increased ten fold and yet the earnings of the worker 
 be twenty times higher. 
 
 A New Era for Agriculture. 
 I cannot enter any further into this subject. The object 
 of this book is to map out new ways of looking at these 
 questions, not to walk leisurely in them. It must suffice, if 
 I can show how the disappearance of interest will completely 
 reverse all our present notions of these things. What use, 
 for instance, shall we have for the well known economic law 
 that the ratio of productivity of capital devoted to the 
 culture of land decreases with its quantity ? To-day this 
 law is of the greatest importance, for it shows us the limit 
 beyond which the increase of intensive culture cannot go, 
 because capital will only be invested as long as there is a 
 promise of its yielding at least the rate of interest obtainable 
 from secure investments. After the disappearance of interest 
 we shall have no earthly use for such a law. As long as 
 capital is of any use at all, it will pay to employ it, and as 
 the additional yield obtainable through its application will 
 only cease with the limit reached by human mtelligence to 
 finding better methods and new systems, we shall probably 
 never come to the last limit, at which a farther application 
 of capital will cease to give an additional yield. I have 
 already shown that the income thus obtained through capital 
 will not be a root of interest, but will only result in raising 
 wages and rent, for every such improvement will increase the 
 national capital in uncommonly larger ratio than the number 
 of hands making use of it. Capital cannot go to work on its 
 own account ; it has to depend on labour being kind enough 
 to deign to employ it. As acres do not multiply at all, it is 
 quite obvious how the increase of capital looking for invest- 
 ment on them will be bound to increase their net produce 
 and consequently their rent. 
 
 No competition of foreign produce will be an obstacle to 
 the development of English agriculture to a state of prosperity 
 such as it has never yet known, if only the emancipation of 
 production and exchange from the artificial obstacles of 
 capitalism will raise the earnings of the people to the full
 
 184 RENT, l.Nl'liREST, AND WAGES. 
 
 value of their productive work. No exportation is needed 
 for this ; nothing but free home circulation is wanted. If 
 other countries were not forced to follow suit by their dis- 
 contented workers, England need not fear their competition. 
 In case they should become troublesome in the English 
 home-market, there are easy preventitives against such a 
 contingency, and if they should depress England's exporta- 
 tion figures by underselling her in foreign markets it would 
 not matter. English goods will always sell well enough to 
 Duy the colonial raw materials she needs. The interest due 
 to her from the whole world would more than pay for them, 
 until the universal introduction of land-nationalisation had 
 done away with the interest income together with the compet- 
 ing cheap wages. All these considerations disappear in view 
 of the enormous effect land-nationalisation will have upon the 
 home-market. If the English people produce all they would 
 like to consume there will never be want of work for them, 
 and if to-day the whole world beside should be swallowed up by 
 the sea, English industry working for the benefit of the whole 
 English nation and no longer for that of a small minority 
 would make this country more prosperous than any the 
 world ever saw. On the other hand, if England continues in 
 the same groove she has been wallowing in, until now almost 
 two-thirds of her food supply have to be imported ; if she 
 becomes more and more dependent on foreigners for the 
 staff of life, while these very foreigners gradually emulate 
 her in manufacturing industry, how long will her greatness 
 last? Just think that of 47,144,661 acres of soil capable of 
 cultivation only 3,500,000 are actually under plough, while 
 the rest is for the greater part turned over to cattle and 
 deer. Is it astonishing that the United Kingdom, which in 
 1852 produced three quarters of the wheat it consumed, 
 in 1880 only grew one third ? Formerly Englishmen went 
 hunting in the American prairies, and England grew her 
 bread on her own soil giving work to a hardy peasantry. 
 Now Americans come to hunt on English ground and 
 English bread is grown on the American prairie, while 
 the descendant of the hardy yeoman stands hungry at 
 the docks anxiously waiting for a job to feed his poor 
 starving family.
 
 THE EFFECTS OF THE REMEDY. Iii5 
 
 Mining-Royalties. 
 If we turn from agriculture to mining as the next important 
 sphere in which man gets the benefit of nature's immense 
 storehouse, we shall find a similar state of things. The 
 direct robbery of labour there is great enough. The royalties 
 paid to landlords amount to about 40 million pounds. The 
 duke of Hamilton alone draws ;^i 50,000 out of them. I am told 
 there exist cases where the miner gets i share for every 3 
 shares paid as royalty to a drone.* I shall leave out 
 
 *" Permit me to give a few illustrations of the way in which these 
 royalties operate to the detriment of the community, The 
 capitalist, in his own way, is quite as much their victim as the toil- 
 worn miner. 
 
 "One of the greatest of our Royalty robbers — he extorts at least 
 /"i43,ooo per annum — is the Duke of Hamilton. So unreasonable 
 are his exactions, that for several years he has succeeded in pro- 
 ducing a sort of special local depression of trade in Lanarkshire. 
 His method of blackmail is this. He grants leases for twenty-one 
 years at fixed 'rents' varying from ^"500 to ;^5,ooo. These are 
 payable whether the mines are worked or not. If worked 
 ' royalties ' varying from gd. to is. 6d. per ton are exacted the 
 moment a certain out-put is attained. What is the consequence ? 
 The hewer's wages have been forced down to lod. per ton, while 
 the ducal highwayman's spoil averages is. 3d. per ton. 
 
 " I knew of an instance in the west of Scotland where the follow- 
 ing occurred. A company sank ^"50,000 in order to get at a seam 
 of coal. They reached it, but found rent and royalty would absorb 
 every penny of profit. Not only would there be no interest on 
 capital, but even the 'wages of superintendence' wi uld be nil. 
 In these circumstances the landlord was importuned to n,ake some 
 abatement of his dues for the sake of all concerned. He was 
 obdurate, and the machinery has consequently been idly corroding 
 for five year. 
 
 " In another instance a number of philanthropic gentlemen in 
 Cumberland, some short time ago, when the scarcity of employ- 
 ment was very great, offered to sink ;£"20,ooo in raising iron ore on 
 the estate of a flinty-hearted landlord. He demanded a royalty 
 of 2S 6d. per ton on the ore that might be raised. The directors 
 found that with this handicap they were bound to be losers, inas- 
 much as they could import ore more cheaply from Spain. They 
 accordingly with great reluctance, abandoned their undertaking. 
 
 "Nor are mining rents and royalties the only instruments of 
 landlord rapine. The enormous ' fines ' on the renewals of leases
 
 l86 RENT, INTEREST, AND WAGES* 
 
 of account this direct robbery, because the community 
 would step into the shoes of the landlords, and though 
 this would be an indirect way of increasing the incomes of 
 the workers, it would not procure them a direct increase of 
 wages. It is only through their getting the benefit of the 
 waste inherent in the present system that their wages will 
 increase just as fast as those in any other department, with- 
 out an increase in the price of the raw material furnished by 
 means of their work. I have no English calculations at 
 hand ; but I find some important statistics in an American 
 paper, the Philadelphia Press. The accounts of a coal-mine in 
 
 are, if possible, yet more intolerable. The Duke of Bedford, in 
 the Case of the Devon Consols Mine, levied a fine of ;f 20,000 on 
 the lessees. For renewal of the lease of the Dolcoath Mine the 
 yet larger sum of ;f25,ooo was exacted. In either case the lessees 
 were placed between the devil and the deep sea. If they refused 
 compliance, their engine-houses and all their improvements went 
 to the lord of the manor without a penny of compensation. 
 
 "A still more startling example ot landlord robbery is to be 
 found in the Barrow Hematite Steel Company. It has a share 
 capital of /"2, 000, 000. For years not a penny was paid in 
 dividends. Three noble lords — Devonshire, Buccleuch, and 
 Muncaster — divide between them both the site of the town and 
 the minerals under and around it. They receive from the company 
 as their dues ;f 126,000 per annum, while the numerous 'hands' 
 who swelter at the furnaces have to content themselves with an 
 aggregate oi £6^,000 a year. In addition to this, the 'hands ' pay 
 the rates, while the three aristocratic Brahmins get off scot-free. 
 
 "There is a cotton mill near Manchester which consumes 480 
 tons of coal a week. At a royalty of only gd. a ton the firm is 
 mulcted /"900 per annum, and a similar ratio of robbery obtains in 
 all the other mills. 
 
 " For the following interesting and instructive calculations I am 
 mainly indebted to the late lamented William Forsyth, of the 
 Cobden Hotel, Glasgow, some time President of the Scottish Lard 
 Restoration League : — 
 
 " One blast furnace produces in a week 600 tons of pig iron. 
 On that quantity the landlord's royalties amount to ;f20i ; while 
 the wages of the employes — managers, engineers, chemists, work- 
 men included — are but £g^, or less than one-half of the spoils of 
 the royalty footpad. 
 
 "A Cunard liner making the double voyage across the Atlantic 
 consumes, 4,125 tons of coal. This signifies a royalty of ;^2o6 5s.,
 
 THE EFFECTS OF THE REMEDY. 1S7 
 
 Askem, Lucerne county, Pennsylvania, which furnishes 500 
 tons of coal a day are given. AH imaginable expenses are 
 stated, including bad debts and 25 cents royalty. The 
 result is that a ton delivered on board the cars costs 
 i'38idollars. This agrees fairly well with the calculations 
 of the official statistician of Pennsylvania, who finds i'i8 
 dollar without the royalty. The cost of transportation on the 
 Reading R.R., is 20 cents., the consumer pays 6 dollars on an 
 average. Let us take half a dollar as necessary to pay the 
 costs of distribution and we could still divide nearly 4 dollars 
 between the mineowner and the miners, without raising the 
 retail price of coal. Wages could be increased four fold, and 
 still the state would get a much higher royalty than the 
 private owners are now getting. 
 
 EflFect on Morals. 
 We thus come to the conclusion that, in spite of the 
 enormous rise Oi wages which would be the result of the 
 great reform, the rental income of the community would 
 increase at least in the same proportion, and thus furnish an 
 immense fund, making all taxes unnecessary, and enabling 
 the state and the municipalities to provide free of charge 
 a great many useful things, which only the rich can now pro- 
 
 or more than the wages of the entire crew, from captain to cabin- 
 boy ! An aggregate ot ;£"2,400,ooo per aunum is thus levied on the 
 Steam Ship Companies. 
 
 " The royalties paid tu British landlords on steel rails are not less 
 than gs. 6d. per ton. In Belgium, the country which next to ourselves 
 is most unfavourably situated, the mineral dues average is. gd. per 
 ton. Need we wonder, then that it costs so much more to lay down 
 a mile of British railway than of any other, colonial or foreign ? 
 
 " This heavy royalty on steel rails, taken in conjunction with the 
 fact that about /"So, 000,000 over market value have been extorted 
 for the land taken for railway construction, has produced the 
 following startling results: In the United Kingdom one mile of 
 railway costs ^42,000; in France, /"aS.ooo ; in Germany, ;^2i,ooo ; 
 in Russia, ;ri5,ooo; in the United States, ;ri3, 000 ; in Canada, 
 £12.000; and in the other colonies, ;ri2, 000, higher wages not- 
 withstanding. These combined robberies have imposed on the 
 passenger and goods traffic of the nation an annual mulct of not 
 less than ;{"2,500,ooo at least." J. Morrison Davidson, 
 
 " The Old Order and the New."
 
 l88 RENT, INTEREST, AND WAGES. 
 
 cure, and yet leaving a large fund for distribution, which 
 those, who are well off, will probably leave to the needy. 
 
 In Transylvania where the remnant of the old law once 
 enjoyed by all nations, was partially kept inviolate, even at 
 the beginning of this century, i.e., where a portion of the 
 land was common property, the habit existed of cultivating 
 this land in common after the private lands had been 
 attended to. After the harvest of the corn on the common 
 land was reaped, the minister gave thanks to God for the 
 blessings He had vouchsafed them, and exhorted his hearers 
 to remember the poor, and if possible to leave to them their 
 part of the common crop, finally asking those who would do 
 so to raise their hand. First one of the richest would begin, 
 then another followed, till finally all those who could afford 
 it, had renounced their share for the benefit of the poor. 
 At that time there existed no beggar among the native 
 Saxon population.* 
 
 There is nothing wonderful about such acts of devotion. 
 Man by his nature is sympathetic, and it is only the 
 unnatural battle we are forced into, which turns the good of 
 our nature into greed and selfishness. It will be different 
 when the great reform has delivered us from the grinding 
 cares which this terrible battle of life entails on most of us. 
 
 I do not intend to enter into a description of the change 
 which a real social reform will make in the character of men ; 
 nor do I want to paint the moral, social, physical and 
 political effects we may expect from it. 
 
 Henry George and others have done this better than I 
 possibly could, but I wish it to be mentioned, that I am far 
 from ignoring the eminently important moral and religious 
 side of the social question ; only I am inclined to think that 
 the master-builder of a house has first to concern himself 
 with the foundation and the chief walls, before he thinks of 
 the division into rooms, the carpets, and the internal equip- 
 ments. The material basis is the foundation and chief wall 
 without which all the rest of the social ideal floats in the 
 
 ♦ I have this information from one of the descendants of this 
 old Germanic tribe, my friend, Ch. F. Maurer, Director of a 
 Girl's School at Landau.
 
 THE EFFECTS OF THE REMEDY. 189 
 
 air, remaining only a Fata Morgana in the desert of life. Not 
 till this is laid, not till there is a secure basis of existence 
 for the superstructure of a healthy society, is it time to 
 devote oneself to those other tasks. Whether afterwards 
 the rooms are to be arranged in the Christian-Germanic 
 style, or in the Moorish-Mahommedan, the Oriental-Jewish, 
 or the modern humanitarian, is quite a secondary matter. It 
 will be found, to people's surprise, that these diverse styles 
 of social architecture will be less and less differentiated 
 from each other, and will in fact coalesce, sooner than is now 
 anticipated, in the great future structure of humanity, when 
 once the battle-sword shall have been buried that now 
 drives people apart in the struggle for existence — which 
 sword's name is ** the fear of want." This sword comes not 
 only between brother and brother, it strikes not only the 
 poor and wretched. Even to the rich man it appears in 
 dreams as a ghost of terror, urging him on to fresh acquisi- 
 tion in the vain delusion that he will thereby obtain a secure 
 position for himself and his children for all time. Foolish 
 effort ! With those accumulations of riches on riches you 
 deluded men are doing the exact opposite! You are pulling 
 away the stones from the foundation to build with them 
 higher storeys that you may make for yourselves a safe 
 refuge aloft from the ever-growing ocean of human misery ! 
 Verily you are making a mad beginning ! As sure as there 
 are eternal natural laws that with all your riches you cannot 
 change, your building must fall, burying you, and all, 
 beneath the dreadful waves. There is only one way oif 
 safety for you, and that not for much longer, for already the 
 building is tottering which you are raising ever higher on a 
 foundation growing ever narrower. This way of escape lies 
 in your full self-sacrificing co-operation in bringing about a 
 fundamental economic reform. I know well that the work 
 to be done is a gigantic one, but it is practicable if you 
 apply towards breaking the way even a small part of the 
 hoarded wealth with which now you are only worsening the 
 world's misery. Would the joy of having shared in accom- 
 plishing what is grandest and noblest not be niore satisfying 
 to you than all other joys you might acquire by your riches ? 
 A. T. Stewart, the famous New York millionaire, who left
 
 igO RENT, INTEREST, AND WAGES. 
 
 over 50,000,000 dollars, once said to an acquaintance: 
 " What am I the better for these riches ? I cannot take a 
 cent, away with me when I die ; and down here, after all, it 
 brings me nothing but food, clothing, and shelter." No, it 
 brought him something more. It brought him the body- 
 snatcher who outraged his grave ! It is a disease — this 
 passion for accumulation that gives rise to the Stewarts, 
 Joneses, Huntingdons, Mackays, Vanderbilts, Rothschilds, 
 Westminsters, Bleichroders, a disease, not to be healed, 
 but by cutting away the ground on which it has developed 
 so terribly — the monopolisation of the earth. Religious 
 consciousness, moral elevation, culture, are beautiful and 
 precious stones whose value in the social structure of 
 humanity I do not ignore. But they crumble to dust under the 
 economic pressure created by our unnatural conditions — pres- 
 sure inevitable so long as the main pillars of wholesome develop- 
 lopment are lacking. Without these the individual is helpless. 
 
 The best intentioned people are much in the position of 
 the dog that was trained to fetch rolls from the baker's, and 
 was once attacked by a number of his mates. He defended 
 the goods entrusted to him with all his might until he saw 
 that he would be overpowered. Then he ate along with the 
 rest. Self-denial on his part would not have saved a single 
 roll for his master. So long as the present conditions last, 
 to share the spoils is the only policy for the individual. But 
 whatever power one gains, one ought to use for fighting the 
 great battle of reform. 
 
 This can only be done by beginning at the beginning. I 
 repeat it, there is only one way of building a house intended 
 to stand the attacks of time, and that is by giving it a good 
 foundation. If you forget this, it will fall to the ground, and 
 it will do so the faster the higher you build it. All the work 
 spent on such a building is wasted, is worse than wasted. 
 What is the use of all our benevolent efforts, in all direc- 
 tions, if we do not begin by building a good foundation ? I 
 have shown how the good is bound to produce the bad 
 to-day; and so every effort of reform, if it does not begin at 
 the foundation is bound to do more harm than good. Tem- 
 pf^rance societies,* prison reformers, promoters of co-oper- 
 
 * Temperance Societies certainly do a great deal of good in their
 
 THE EFFECTS OF THE REMEDY. I9I 
 
 ative societies, religious reformers, peace societies, etc., if 
 successful in their noble efforts could only load the old 
 building with a supplement of valuable furniture, and thus 
 
 way ; but they must not overshoot the mark, as they certainly are 
 doing when they expect Social Reform from temperance. I have 
 already shown that under present circumstances, temperance 
 would increase the evils we suffer from, but I have not shown yet 
 the want of foundation underlying the fears of those economists, 
 who expect an increase of drunkenness from a rise of wages. They 
 generally try to prove this assumption by alluding to cases of an 
 exceptional and temporary increase of income, which resulted in 
 dissipation. There is no doubt that such cases occured, or always 
 are apt to occur, where an exceptional good fortune befalls people 
 who are not prepared for it and who know that it will not last. 
 We have a German proverb: " Wie gewonnen, so zeronnen," (as 
 it is gained, so it is spent.) Lottery gains very often go as quick 
 as they come. It is different with a regular increase of income. 
 The ways of living of workmen, and of all classes, who earn good 
 wages all the year round, show us, that better houses, better furni- 
 ture, better clothing, better food, a better education of the children, 
 healthy amusements, 6i:c., are the consequences of regular high 
 earnings. 
 
 John Rae, in his "Contemporary Socialism," (New York, Charles 
 Scribner Sons, 1S91), gives expression to similar ideas and cites a 
 very interesting proof of their correctness on p.p. 345 and 346 : — 
 
 "But the increase in the number of apprehensions for drunken- 
 ness that frequently accompanies a rise in wages proves neither 
 one thing nor another, as the general effect of the rise on the whole 
 class of labourers who have obtained it ; it proves only that the 
 more dissipated among them are able to get oftener drunk. Nor 
 can the singular manifestations, which the full hand sometimes 
 takes with the less instructed sections of the working class, 
 especially if it has been suddenly acquired, furnish any valid 
 inferences a? to the way it would be used by the working class in 
 general, particularly if it were their permanent possession. The 
 evidence laid before the House of Lords' Committee on intem- 
 perance shows that the skilled labourers of this country are becom- 
 ing less drunken as their wages and general position are improving, 
 and Porter in his •' Progress of the Nation "adduces some striking 
 cases of a steady rise of wages making a manifest change for the 
 better in the case of unskilled labourers. He mentions on the 
 authority of a gentleman who had the chief direction in the work, 
 that the formation of a canal in the North of Ireland for some time 
 afforded steady employment to a portion of the peasantry, who 
 before that time were suffering all the evils so common in that
 
 192 RENT, INTEREST ANU WAGES. 
 
 hasten the final crash ; for they increase the power of those 
 forces, which are carrying down the old social structure by 
 adding to the weight of the causes that are bringing on the 
 
 country which result from precariousness of employment. Such 
 work as they could previously get came at uncertain intervals and 
 was sought by so many competitors, that the remuneration was ot 
 the scantiest amount, In this condition the men were improvident 
 to recklessness. Their wages, insufficient for the comfortable 
 maintenance of their families, were wasted in procuring for them- 
 selves a temporary forgetfulness of their misery at the whiskey shop, 
 and the men appeared to be sunk into a state of hopeless degrada- 
 tion. From the moment however that work was offered to them 
 which was constant in its nature and certam in its duration, and 
 in which their weekly earnings would be sufficient to provide for 
 their comfortable support, men who had been idle and dissolute 
 were converted into sober hard-workmg labourers, and proved 
 themselves kind and careful husbands and fathers ; and it is stated 
 as a fact, that, notwithstanding the distribution of several hundred 
 pounds weekly in wages, the whole of which would be considered 
 as so much additional money placed in their hands, the consump- 
 tion of whiskey was absolutely and permanently diminished in the 
 district. During the comparative short period in which the con- 
 struction of the canal was in progress, some of the most careful 
 labourers, men who most probably before then never knew what 
 it was to possess five shillings at any one time, saved sufficient 
 money to enable them to emigrate to Canada, where they are now 
 labouring in mdependance, for the improvement of their own land, 
 (page 451.) 
 
 It may be difficult to extirpate drunkenness in our climate even 
 with good wages, but it is certainly impossible with bad, for bad 
 vages mean insufficient nourishment, comfortless house accom- 
 modation, and a want of that elasticity after work which enables 
 men to find pleasure in any other form of enjoyment. As with 
 better wages so with shorter hours. The leisure gained may be 
 misused, especially at first, bat it is nevertheless a necessary lever 
 for the social amelioration of the labouring class, and it will more 
 and more serve this purpose, as it becomes one of their permanent 
 acquisitions. There can be no question that long hours and hard 
 work are powerful pre-disposing causes to drunkenness. Studnitz 
 mentions that several manufacturers in America had informed him 
 that they had invariably remarked, that with solitary exceptions 
 here and there, the men who wrought for the longest number of 
 hours were most prone to dissipation, and that the others were more 
 .intelligent, and formed on the whole a better class."
 
 THE EFFECTS OF THE REMEDY. 193 
 
 catastrophe. They increase production and they decrease 
 consumption, thus further reducing the chance of finding 
 work. 
 
 Pohtical reformers, champions of universal suffrage, the 
 emancipation of women, free education, etc., are only 
 hastening the downfall by strengthening those elements 
 which are working at the undermming of the social building. 
 Not that I would wish to discourage such noble efforts ; on 
 the contrary, I think they are eminently useful even in the 
 present state of things, for there are two ways of building a 
 new social structure. The one is by gradually taking out 
 the rotten beams on which the present one is resting, and 
 replacing them by solid foundations, after which we may 
 gradually proceed to renovate the rest of the building ; the 
 other by hastening the downfall of the rickety thing, and 
 building something entirely new. I, for my part prefer the 
 former system. The other may work faster and may be more 
 thorough, but a great many good things worth preserving, 
 and not so soon replaced, may be carried down by the 
 crushing of the old house, and besides, I am one of those 
 who hold a fairly comfortable berth in it, which I would not 
 like to lose. I invite all those who belong to the same class 
 with me, to that small minority for whom the masses are 
 working, to do all in their power to bring about a peaceful but 
 thorough reform while their power lasts, which they may 
 rest assured will not be for very long. Let them give up 
 all their efforts in other directions, let them put off for the 
 time being their charitable and humane efforts, never mind in 
 which direction they are exerted, and join those instead who 
 are busy at reforming the very foundation of the vicious 
 system, which is leading us to rapid perdition, the robbery 
 of God's earth, private land ownership. 
 
 The next and last chapter will be devoted to the question 
 how the reform is to be carried on by peaceful means, in 
 organic development, without shaking the fabric of society.
 
 194 RENT, INTEREST, AND WAGES. 
 
 CHAPTER V. 
 
 Carrying through the Reform, 
 
 There are three ways of carrying through the great 
 reform : — i. By confiscation of the land. 2. By purchase. 
 3. By a mixture of both systems. 
 
 Confiscation a bad Policy. 
 
 Confiscation may have two forms : — i. Direct confiscation. 
 2. Indirect confiscation through taxation. The choice 
 between the two would be that given to the rabbit, whether 
 it preferred to be cooked in white or in black sauce. The 
 objection that it did not want to be cooked at all was 
 considered out of order. I think it is always honest to call 
 things by their names, and though it may sound better to 
 style oneself a single taxman, a land-confiscator would be 
 more honest ; for there can be no doubt, and Henry George 
 the great leader of single taxmen, fairly acknowledges it in 
 his writings, that to take rent by taxation is an equivalent 
 to taking the land. As I desire to keep to my plan of not 
 unnecessarily repeating what others have said better than I 
 could, I refer the reader to " The Land for the People," by 
 Charles Wicksteed (London, William Reeves,), who to my 
 great surprise has adduced some of the same arguments I 
 used in my German book three years before his work was 
 written. I have not much to add to this excellent book, 
 which no one who takes an interest in this great question 
 ought to fail to read. I do not believe in confiscation, at 
 least not for England and the European continent, for the 
 same reasons which caused Mr. Wicksteed's opposition to 
 it. I believe that honest purchase is not only the best 
 policy ; but that it is the cheapest in the end. It is carried 
 through fastest and therefore will be more apt to benefit
 
 CARRYING THROUGH THE REFORM. I9 
 
 the living generation than any other method. I believe 
 that it would have cost a good deal less to buy out the 
 southern slaveholders than to go to war, and finally to pay 
 at least three times as much as the purchase of all the 
 slaves would have cost. One might say, that slaveholders 
 v.-ould not have submitted to being bought out, and the \yar 
 would have been unavoidable in any case. This is possible ; 
 but it would be no excuse for not making the experiment. 
 I would not in the least object to confiscate the land of all 
 those landlords who would not submit to being bought out, 
 if the law were once passed. I would even go further and 
 advocate the insertion of a clause in the law to the effect 
 that compensation is only to be given to those landlords, who 
 leave off all opposition after this bill has been adopted by the 
 House of Commons ; while those who continue to fight it, be 
 it by trying to raise opposition in the House of Lords, or in 
 any other way, should lose all claims to compensation. 
 
 Here are my reasons for such a rigorous proposal. There 
 can be no question as to the origin of English landlordism. 
 It was an undisguised robbery of the people and English land 
 legislation has been a continuation of this robbery. But that 
 does not give us a right to call the present landlords robbers. 
 They may plead that a wrong which had been tolerated so 
 long, had at least got the semblance of a right. If their fore- 
 fathers had wronged the people, this wrong had been allowed 
 to last such a time, that they had every right to suppose that 
 the nation did not object to landlordism, as otherwise it 
 would certainly have made an end of it before. There would 
 be no excuse in pleading the want of power, for there was at 
 least one period of English history when the power of king 
 and nobles was completely broken and when the people might 
 have resumed their rights, if they had thought fit to do so. 
 Excepting a comparatively small number of Levellers, who 
 held some very advanced ideas on this subject the great body 
 of the English nation in the time of the Commonwealth did 
 not dream of such a thing. We find the best proof of the 
 fact that public opmion was not at all prepared for the idea 
 of land resumption in the system introduced in the United 
 States by the Pilgrim Fathers and others. What William the 
 Conqueror had done to their forefathers, they did to the poor
 
 ig6 RENT, INTEREST, AND WAGES. 
 
 Indians. They robbed them of their land, and took it into 
 private possession in a much more thorough manner than 
 under the Norman system of feudal tenure, which at 
 least kept up the right of resumption by the Crown, a right 
 which though gradually falling into desuetude is still formally 
 existent. No such mitigating feature existed in the system 
 adopted in the new country. An absolute right of possession 
 to use or abuse was given. On both sides of the ocean 
 landlords can claim that they hold their land by a right, which, 
 though unjustifiable in the base it rests on, can certainly 
 claim the acknowledgment of centuries of direct or tacit 
 toleration. " If we have not learnt anything which could be 
 useful to us in earning our bread," landlords might plead, *' it 
 was not our fault. It was with your connivance that we grew up 
 in the belief that those rights you want to take from us, belonged 
 to us to all eternity. You ought to compensate us in some way, 
 if all of a sudden you have changed your mind, especially as a 
 great many of us have undertaken heavy responsibilities to 
 mortgagees and others on the faith of our old and undisputed 
 possesions." I should be very much mistaken in the temper 
 of the English people' if such an appeal passed unheard. 
 The feeling of esteem for vested rights is inborn in the nature 
 of the average Englishman, so much so, that it may be con- 
 sidered as a national element of strength, which, however, 
 under certain circumstances may prove to be a source of 
 weakness. If through this feeling England has escaped the 
 shock of continual revolutions and counter revolutions, under 
 which their passionate and changeable neighbours on the 
 other side of the channel have for a century past been 
 suffering, she has also missed an opportunity of improving 
 the lot of the masses, such as did not recur for two 
 centuries and a half. If the Long Parliament had confiscated 
 or resumed the lands of all the rebels against the national 
 will, it would have got possession of a greater part of the 
 English, Scottish, and Irish land. If this land had never been 
 given away again, but had been leased out by the nation to 
 those who wanted to cultivate it, while the rent obtained 
 from it had been employed to buy out the remaining land- 
 lords, England would to-day be the paradise of the world, and 
 the school of real liberty for humanity. France in following
 
 CARRYING THROUGH THE REFORM. I97 
 
 her in the revolutionary career more than a century later 
 would not have committed the folly of selling the lands she 
 confiscated from her nobility, but by keeping them for the 
 people would have laid the foundation of social prosperity, 
 such as would have preserved her from that continual 
 discontent of the masses, which in vain tries to find the cure 
 of the evils, pushing them to one revolution after another, by 
 manufacturing new constitutions by the dozen, forgetting that 
 only a social reform can afford the lasting remedy for which 
 the people are pining in vain. 
 
 In spite of its drawbacks, the conservative feeling 
 inherent in the average English breast is so estimable 
 a factor of sound national progress, that even temporary 
 disadvantages ought not to induce us to slight it. 
 Compensation, therefore, has much to recommend it ; but even 
 the most conservative need not go as far as the Long Parlia- 
 ment did, when it left their lands to the repenting cavaliers. 
 After a vote of the House of Commons, in favour of land- 
 nationalisation, (which certainly could not be obtained 
 without an agitation of great magnitude), the questions of 
 right and wrong of landlordism would be fully ventilated to 
 the heart's content of all who have ears to hear and eyes to 
 read. For those who wanted to continue a wrong which at 
 last had been recognised as such by the majority of the 
 nation, there would be no more excuse to slight a principle 
 which from an ethical truth — never successfully disputed by 
 any body who had the courage to look truth in the face — had 
 advanced into a measure practically adopted by the majority 
 of Englishmen. Those who opposed the nation's decision 
 after such an unmistakable proof of the general recognition 
 of a universal truth would have forfeited every claim to com- 
 pensation, especially as their opposition would endanger the 
 public peace, if the people, through not being able to over- 
 come the resistance of the House of Lords and perhaps of the 
 Crown, would have to take refuge in the ultima racio of 
 revolutionary proceedings. 
 
 Decrease of the Interest Rate will hasten Redemption. 
 
 Compensation would be easier even than Mr. Wicksteed 
 thinks. He makes out a table showing that by calculating
 
 lg8 RENT, INTEREST, AND WAGES. 
 
 on a yearly increase of rent amounting to 2 per cent, the land 
 will be paid for in 40 years, and 2 per cent, according to his 
 showing was the yearly increase during the last 40 years. 
 I think, we can safely say, that the increase will be much 
 faster in the reform time, when agriculture and industry are 
 no longer handicapped by the increasing weight of landlordism 
 and its effects, as I have shown in the last chapter ; but 
 another much more important element, the decrease of 
 interest, is left out of consideration by Mr. Wicksteed, though 
 he is one of the few land-nationalisers who have clearly seen 
 that interest will disappear with private rent. As it is impos- 
 sible to foresee, in what ratio interest will go down during 
 the time required for redeeming the bonds issued for the land, 
 it is not easy to calculate the exact number of years, by 
 which the saving of interest would shorten the period 
 required for this purpose. If rent did not increase at all this 
 saving alone if it averaged2per cent during the whole period, 
 would redeem the bonds in 40 years. I think, the saving 
 would average rather more than less, if we take Mr. 
 Wicksteed's assumption that land-owners receive 30 years 
 purchase, so that 3 one-third per cent will be the rate at which 
 rent is capitalized. 
 
 At present landvalues offer an elastic reservoir for the 
 spurious capital yearly accumulating through compound 
 interest. When the value of land in the United Kingdom, 
 including mines, urban land, railroad land, and ports is 
 estimated at a yearly rental of 150 millions, its capital value 
 at 3 one-third per cent would be 4500 millions ; at 2 per cent, 
 it would be 7500 millions. In the United Kingdom the effect 
 on the capital market of this rise through the decrease of 
 interest would not be so sensible, because the greater part of 
 the land is bound by entail and therefore is not saleable ; 
 but the same cause produces the same effects everywhere 
 and in countries where land is freely saleable, as in France, 
 for instance, the effect of capital accumulation by forcing 
 down interest raises the multiplicator by which the capital 
 value of land is computed from rent, and landvalues rise 
 proportionately. We thus see that the very cause, which 
 forces down the rate of interest, the accumulation of spurious 
 capital looking for investment, increases the spurious
 
 CARRYING THROUGH THE REFORM. igg 
 
 capital offering itself for investment. As no doubt land- 
 nationalisation in one country will soon be followed by the 
 same system in the others, we shall at an early period have a 
 rigid enclosure put round the rubber reservoir of spurious 
 capital, i.e. of landvalues, which under present circumstances 
 expands with the new capital looking out for investment in 
 it. The future increase of spurious capital, will either 
 have to change into real capital, by investing in business 
 enterprises, or will have to compete for the limited amount of 
 spurious, but safe investments. The greater the fortune of a 
 spurious capitalist, the less will he be inclined to choose the 
 former method ; for the faculties of supervision are limited and 
 the larger the capital invested in business enterprises, the 
 greater will be the risk. Under present circumstances the des- 
 cendants of a Rothschild, who by his financial genius has 
 founded the colossal fortune of his family might be the most 
 stupid fellows, but that fact would not prevent them from getting 
 richer everyyear,if only they keep to the traditions of their house 
 which enjoin them to invest in spurious capital and to shun the 
 real. After the disappearance of spurious capital all this will 
 change. Large capitalists like these would be the last to risk 
 their fortunes in business investments. They would rather pay 
 it into the government bank and leave it there without interest, 
 and they would do well ; for when real capital pays no interest, 
 but only yields a risk premium, this premium will mostly be 
 paid by them to smaller investors, who are better qualified to 
 watch their investments. Whatever these gain, they 
 will lose. It would be no advantage to them, if they turned 
 their fortunes into gold and kept it to raise its purchasing 
 power by diminishing its quantity in the market. Indepen- 
 dently of the reasons given in the second chapter, the risk and 
 expense of storage might finally be greater than the profit 
 realised in spending their gold. It is only on what they spend 
 for consumption, that they could profit at all, for if they 
 wanted to sell their gold in larger quantities, they would force 
 down prices. They certainly could not create any difliculties 
 in the circulation, for real metal is not needed for this purpose. 
 The treasury notes of the State will be just as good as actual 
 gold, in as much as the income of the State is greater than 
 her expenses enabling her to get in more gold than
 
 2O0 RENT, INTEREST, AND WAGES. 
 
 she pays out, or in other words freeing her from the neces- 
 sity of paying out any gold at all, as clearinghouse operations 
 will always be in her favour. Even in the worst case the 
 profit made by capitalists in increasing the purchasing power of 
 their savings will never have the effect of their present tribute 
 rights. They are only effective at the moment of consumption, 
 whereas the danger of present tribute rights consists in their 
 not being exercised consumptively but being only used for the 
 purpose of a further accumulation. Hoarding gold therefore 
 never can have the effect of proving an obstacle to production. 
 
 The deposits in the State treasury or State bank will not 
 remain idle there. They will be lent out to workers without 
 any risk to the community. Credit insurance companies 
 will take this risk. They will spring up all over the country, 
 probably on a co-operative basis. Borrowers will get their 
 insurance policies from them, as they now do from fire, life and 
 other insurances. The rate of insurance will depend on the 
 risk likely to be run. A temperate, industrious workman 
 will pay a lower premium than one who is less trustworthy in 
 this respect. There will be an excellent element of education 
 in this, as the social standing of a man will come to be rated 
 in accordance with his insurance premiums, and as intem- 
 perate people will rate lower than abstainers, there will be a 
 strong inducement for them to practice temperance so as to 
 get a better rating, and thus not only to save money, but to 
 rise on the social ladder. The State bank will give the 
 money free of charge on presentation of the policies. If it 
 is not paid back at the end of the year, or if a new policy is 
 not presented to replace that which has expired, the Insur- 
 ance Company will have to pay the State, and try to get 
 reimbursement from the insured. 
 
 We have seen now that when spurious capital has dis- 
 appeared from the market, the great capitalists will rather 
 deposit their money without interest than risk it in business, 
 but of course as long as there exist investments in spurious 
 capital, they will eagerly compete for them with the natural 
 consequence of raising their price or in other words forcing 
 down their rate of interest. If interest is going down even 
 to-day, when the elastic reservoir of spurious capital, mostly 
 represented by land, is offering an expanding store-room, how
 
 CARRYING THROUGH THE REFORM. 20I 
 
 fast will the decrease be, when once that store-room is closed 
 for ever through land-nationalisation, or rather when its 
 walls have lost their expanding power, so that there is no 
 more room for the new capitals created by compound 
 interest ! If, therefore, I estimate at 2 per cent the average 
 saving of interest made by the State within the time needed 
 to pay back the debt, I think 1 have kept within the bounds 
 of reality. In this way the land debt could be paid back 
 within 40 years, even if there were no rise of rent at all 
 during tljat period ; but as the rise will not only be as fast as 
 it is now but much faster, when as I have shown in the last 
 chapter, the increasing prosperity of the land users will 
 enable them to make higher bids for land, I think, I may 
 safely say that in 25 years not only the land would be paid 
 for, but even the present debt as well would be redeemed. 
 Three or four years of the increased national rental would do 
 this. 
 
 Compensation preferable to Confiscation. 
 
 The absence of interest will be an important moment 
 in appeasing those who do not want to incur eternal national 
 obligations towards the successors of generations of drones 
 fed for centuries from the national exchequer and by the 
 sweat of hard working tenants and labourers. The whole 
 financial operation would be over, all would be paid off long 
 before the advocates of confiscation could hope to carry 
 through their plans, especially if the confiscation is to be a 
 gradual one by a successive increase of the ground tax. 
 They think such a process less painful, as did the man 
 who, wishing to cut his dog's tail off, only cut a small piece 
 every day, so as to hurt the poor beast as little as possible. 
 The tail at least did not grow during the cutting operation, 
 but rent will, for the effects of land taxation would certainly 
 be in the direction of increasing rents. George shows this 
 very clearly himself, when he maintains that any tax, which 
 is taken off will increase rent, rent being always the highest 
 price obtainable for the use of land through the competition 
 of workers, who can pay a higher price when they have no 
 other taxes to pay, than when taxation reduces their rent 
 paying capacity. For this reason I am not over enthusiastic
 
 202 RENT, INTEREST, AND WAGES. 
 
 over the plan of taxing ground rents, unless the proceeds are 
 to be used for the purpose of buying the land for the people ; 
 for if they are to be employed solely to take off other taxes 
 or rates, landlords will recoup themselves in raised rent for 
 what they have lost in taxes. 
 
 If a tenant pays^ioo rent and £^o rates he will have to pay 
 ;^i3o rent when the landlord pays the rates, and if he does 
 not because his lease has yet to run for a certain time, there 
 are /"30 put into his pocket, which an}' body else would 
 willingly pay, as it is not the landlord, but supply and 
 demand which fixes rents. An individual would get the 
 entire benefit of a good law, which ought to benefit the 
 public. It is only in its effects on unused land, that taxation 
 of ground rents would benefit tenants, for this land would be 
 thrown into the market and would force down rents as the 
 landlords could no longer afford to keep it idle, when heavy 
 rates have to be paid from it. A tax on land differs in one 
 important particular from all other taxes. Whereas these 
 increase the price of the goods they are imposed upon, a tax 
 on land decreases the price of land and renders it more 
 accessible to those who want to use it. 
 
 For the same reason Herbert V. Mill's plans, of which I 
 gave a short outline in Chapter III., would only help to 
 raise rent, if his intention of relieving the parishes from the 
 poor tax was carried out. Rents would rise in proportion 
 and the parties mostly benefited would be the landlords. If 
 I approve of his plans it is chiefly, because I would not 
 reduce the poor taxes one penny, but would use the 
 economies made to purchase land for the nation. The first 
 condition for the carrying through of this or any other plan 
 of reform must be a general appraisement of land values all 
 over the country and the passing of a law empowering the 
 State or the County Councils to purchase the land at this 
 valuation at any future time, only taking account of the 
 improvements which increase the value. If this was not 
 done all the advantages obtained through the reforms would 
 In the last resort benefit the land owners by increasing the 
 value of their land, and thus raising the price the nation 
 would have to pay for it. If we have been fools in the past, 
 this ought not to mean that we are to continue so in the
 
 CARRYING THROUGH THE REFORM. 2O3 
 
 future. If we have been crazy enough to allow dogs in the 
 manger to swallow all the benefits accruing from any 
 improvement due to the workers of the nation, we ought to 
 act more sensibly from the moment the great truth has 
 dawned upon us, that the land belongs to the people. No 
 sane man will then listen to the proposal of making a present 
 to Irish tenants of the advantages to be reaped from the use 
 of imperial credit. " Neither the landlord, nor the tenant, but 
 the whole people" will be the cry, not the fortification of 
 landlordism by creating a greater number of landlords. By 
 going back to the system of peasant-proprietorship, which 
 has produced such bad results wherever it has been tried, 
 capitalist landlordism through division by inheritance, sale, 
 mortgaging and any other process of disintegration, becomes 
 simply inevitable !" 
 
 I do not depreciate the help of ground rent taxation, or the 
 reimposition of the four shillings in the pound. All such laws, 
 if they can be carried, will force down the selling value of land 
 and hasten the day of full redemption. Inheritance taxes 
 might further help to bring on that much desired time. The 
 wave of prosperity for the people will not have to wait till then, 
 for the effect of the reform will be felt almost immediately, 
 and will be more marked from year to year. First of all large 
 public enterprises undertaken by the nation, the pauper 
 system advocated by Mill, and small land allotments given to 
 cultivators with the additional help of a loan of the small 
 capital required by them for their start * would soon do away 
 
 * The fact I have before me in two forms. The first is supplied 
 by Mr. Sidney Smith : 
 
 " The parish of Cholesbury, in Buckinghamshire, was entirely 
 occupied by two large farmers. Fertile, populous, within forty 
 miles of the metropolis, its cultivators, notwithstanding, fell behind. 
 There were 139 inhabitants in the parish, but only two had an inch 
 of the soil. Was not this civilisation run mad ? Was it not a 
 glaring and starmg evidence of the monstrous abuse of the principle 
 of private property that only one man out of 69 tillers of the ground 
 should have exclusive occupation of the earth, which God made 
 common to all, and the appropriation of which can only be tolerated 
 upon the clearest proof of public advantage ? What was the 
 consequence of this beau ideal of politico-economical arrangement? 
 Simply this : out of the 159 inhabitants 119 were paupers. The
 
 204 RENT, INTEREST, AND WAGES. 
 
 with the arm}' of the unemployed and by taking away the dead 
 weight which their competition puts upon the active workers, 
 would soon enable the latter to get higher wages. Gradually the 
 effects which we are entitled to expect from the reduction of 
 the large incomes and of the deficit between production and 
 consumption, will come into play, even if other nations do 
 not follow suit immediately. In this case interest would 
 decrease more slowly, and the disappearance of the capitalist's 
 blackmail would not be as fast, because capital could emigrate. 
 
 Emigration of Capital, a Bugbear. 
 
 This emigration of capital is one of those terrible bugbears 
 which ignorant or malevolent journalists and public speakers 
 are in the habit of presenting to workmen, whenever these 
 latter see fit to present their demands for a greater share in 
 the produce of their work. Let us see what capital can 
 really emigrate. The real ? Very little of it can get away at 
 all and only a small part will ever dream of doing so, because 
 
 ^and monopolists became bankrupt, the parson got no tithes, the 
 landlords' acres were in rapid course of being eaten up with rates, 
 and the whole property of the parish, beiug unable to feed the 
 inhabitants, a rate in aid had to be levied on the neighbouring 
 parishes, which were rapidlj' degenerating into the same state. 
 The Labourers' Friend Societ}' came to the rescue. They leased 
 the land at a fair rent. They parcelled it out among the very 
 worst class of persons upon whose habits to hazard the result of 
 such an experiment. Some got five, some ten acres, according to 
 the size of their families ; and what was the effect ? At the end of 
 four years the number of paupers liad diminihed from 119 to five, 
 and these were persons disabled from old age or disease. These 
 once paupers could now afford to pay a rate in aid of the neigh- 
 bouring parishes — and it was found that every one of them was in 
 a state of independence and comfort ; each had a cow, many two 
 or three, to which some added a horse, others some oxen ready for 
 the market, and all had pigs and poultry in abundance. No experi- 
 ment could be more conclusive than this. Persons once degraded 
 to the condition of paupers lose self-respect, the love of indepen- 
 dence, the spirit of self-help. " 
 
 I have before me a copy of a letter from the Rev. H. P. Jestin, 
 the rector of the parish, too long to give here entire. He says 
 that for the previous ten years the poor-rates had been 30s. in the 
 pound ; and that this amount brought the parish to wreck. The
 
 CARRYING THROUGH THE REFORM. 20 
 
 it would almost entirely lose its value. Houses, factories, 
 wharves, mines and the like cannot emigrate at ail. Machines 
 can only do so to a very limited extent, because their removal 
 would be so expensive that a great part of their value would 
 be lost. This loss would be certam, whereas the possible 
 gain arising from working them with less obstreperous labour 
 would be very problematical in these times of universal 
 workingmen's manifestations. Goods and gold could leave ; 
 but the very thing workers want, is to have the surplus of 
 goods out of the way, to enable them to go to work and produce 
 new stock, which soon would bring back the money that had 
 emigrated. All the workers want is to be allowed to produce 
 wealth, and capitalists cannot take away with them what 
 they require forthispurpose, viz., land andnaturalopportunities. 
 Even if they could take away all the machines in the country, 
 the hands of the British workman would soon have made 
 others. In a very short time there would be more wealth in 
 the country than had left it. No, the exodus of real capital 
 will never harm the workers, if natural opportunities are open 
 to them, if the land, the soil of their country is restored to 
 them, and this soil cannot be taken away. Landlords have 
 
 gates were removed from the fields, the hedges allowed to be 
 broken down, and the land thrown out of cultivation, that it should 
 not be rated. Previously the land was let at 13s. an acre, the 
 landlord guaranteeing a maximum amount of rates. In those days, 
 the tenant, when he went to the rent audit, had to carry a lot of 
 money away instead of leaving any. Of course an end ot such a 
 state of things soon came. The landlord was without rent, and the 
 parson without tithe, and the farmers bankrupt and gone. But 
 when the monopoly system had brought all things to chaos the 
 remedy came. The paupers had to rescue the land from barren- 
 ness, tlie landlord and parson from ruin, and redeem themselves. 
 And nobly they did it all. The land was divided up amongst them, 
 not at 13s. an acre though, the price the farmers paid, but at 26s., 
 just double ! However, the rates quickly went down from 30s. to 
 3s. ! The parson got his tithes, and the landlord his rent, and the 
 people food, the produce of the land. For ten years after not a 
 single pauper thus raised to independence committed any offence 
 to bring him before a magistrate. They were all changed at once 
 from paupers into decent people, tax-payers, law-abidmg men. 
 And the clergyman wrote, '■^ there is not a vaggcd, ill-dressed person in. 
 the parish !"
 
 206 RENT, INTEREST, AND WAGES. 
 
 to leave behind this source of spurious capital. An exporta- 
 tion of the spurious capital, therefore, is nothing but the 
 expatriation of tribute rights derived from the possession of 
 things which cannot be taken away, but must remain in the 
 country. The annulling of such rights would of course do away 
 with their exportation. This alone would be sufficient to 
 show the idleness of the exportation threat. As long 
 as the workers have it in their power to prevent any injurious 
 actions of capitalists by holding the confiscation sword over 
 them, they need not be afraid of them. Salus populi snprema 
 lex. If exportation of tribute rights should prove an obstacle 
 to peaceable reform, such exportation would have to be 
 prohibited. Exportation of spurious capital would entail its 
 connscation. What did the French emigrants take with 
 them a hundred years ago ? A few jewels and a little gold 
 which they could secrete about their persons, was all. The 
 great bulk of their fortunes had to remain behind. What 
 would it have helped them, if their title — or mortgage — deeds 
 had been taken with them? They were just so much waste 
 paper, if the rights they conveyed were no further recognised. 
 Real capital is too heavy to fly away, and spurious capital is 
 like a kite. It depends altogether on the goodwill of the 
 string-holder. Land and other monopoly values are the ' 
 strings of the kite, " spurious capital." By their means 
 it can always be brought back to its starting place, or if 
 the string is cut, will fall down a worthless bit of paper, and 
 henceforth cease to be a kite, as long as the connexion with 
 the string is not renewed. 
 
 But confiscation is not needed to prevent the exportation 
 of spurious capital ; let it go away, it will not do harm long. 
 Even if other countries did not follow England's example, the 
 withdrawal of English land from the capital market, the 
 substitution of government bonds, of an unchangeable field of 
 investment for an expanding one will have a certain effect on 
 the capital market of the world. Such an important change 
 in the international field of investments, as the withdrawal of 
 English land values would certainly tend to lower the rate of 
 interest to a certain extent, and thus provide a fund for the 
 redemption of the government bonds. Their gradual with- 
 drawal and the yearly decrease of the spurious capital of the
 
 CARRYING THROUGH THE REFORM. 207 
 
 world would further force down interest and quicken the re- 
 demption of government bonds. If meanwhile the increasing 
 national income from the land — increasing even if rent does not 
 rise, because the interest debt rapidly decreases — was partly used 
 for public improvements, giving work to the unemployed, and 
 thus enabling workers to force up wages, immense progress 
 could be made in bettering the position of workers, especially 
 if we take into account the effect of the impulse given to 
 agriculture through the opening of natural opportunities. 
 If other nations after this would not follow England in a 
 reform which thus ensures the prosperity of the people, they 
 would be blind, or their workers would be devoid of all 
 energy. 
 
 We can hardly suppose this, but even if we did, the effect 
 of the reform on England would be almost the same. 
 Spurious capital would have disappeared from within her 
 borders in any case, or what would remain of it would not 
 be based on English tribute rights, but on those of foreigners. 
 This would harm the latter, and thus would hasten their 
 social revolution ; but it would affect England only so far as 
 to prevent real interest from disappearing, as long as spurious 
 interest could be obtained from foreigners. 
 
 I have already shown, in the second chapter, how impossible 
 it is for real capital and real interest to create the 
 unnatural prohibition of work, which spurious capital has 
 to answer for, and I have also shown that it is impossible to 
 accumulate large fortunes in real capital. But can there not 
 arise a deficiency of real capital in England, if capitalists prefer 
 to export iheir savings, for the purpose of investing them in the 
 securer spurious capital of foreign countries ? Is it so certain 
 that there is greater security ? America will, perhaps, carry 
 through the great reform before England, and it is not every 
 other people that possesses the law-abiding spirit of the 
 English. Socialists on the continent of Europe do not, and 
 their numbers are rapidly increasing, so that if things have 
 their course the time will soon come when they will form the 
 overwhelming majority. What security is there for a 
 continuance of the present state of things, if these multitudes, 
 who form the armies which are to restrain them, once get it 
 clearly fixed in their heads, that their masters have nothing
 
 2o8 RENT, INTEREST, AND WAGES. 
 
 else wherewith to coerce them but their own arms, and if by 
 common consent, by one of these epidemics reigning in the 
 spiritual empire as well as in the physical, all at the same 
 time refuse obedience to their officers, when commanded to 
 fire on their brethren, as they did in the French Revolution? 
 But we do not even have to wait for a revolution ; we have 
 seen that the laws of arithmetic are fighting against the 
 continuance of the present state of things, and if revolution 
 will not put an end to it, bankruptcy will. Productive work 
 cannot keep up with the magic power of compound-interest 
 figures. Before another doubling of these figures takes place, 
 the inevitable general crash will have come. Where will be 
 the security of foreign investments in such a case ? If 
 foreign investments are becoming more doubtful, from year 
 to year, the very opposite would take place with English real 
 capital investments after land-nationalisation. The absence 
 of spurious capital means, that capitalists are no longer able 
 to accumulate tribute-rights to any extent. Real interest 
 cannot accumulate beyond a certain limit, the same limit, 
 to which spurious interest is subject, the solvency of the 
 debtor. The only difference is, that if the debtor of spurious 
 interest fails, the creditor gets possession of something, by 
 which he can force others to take the place of the ruined . 
 man. If the interest on a mortgage is not paid, the land on 
 which this debt is secured is sold to anybody, on the condition 
 that he is to undertake the obligations of the ruined pre- 
 decessor, including the outstanding interest. If the rent of 
 a farm is not paid, the improvements made by the tenant 
 or his personal propert}' will have to make up for it. The 
 next tenant who steps into his shoes will pay the back rent 
 by reimbursing these improvements or this property either 
 in cash or by a higher rent. 
 
 It is entirely different with real interest. If a manufacturer 
 fails his creditors who have not secured their claim by a 
 mortgage on the land on which the factory stands, at the 
 valuation based on the rent which anybody would pay who 
 needed the land, even if the factory had to be pulled down, 
 i.e., the creditors, not secured by spurious capital but by the 
 real, will have nothing left, save what the machines and the 
 building will fetch in the market, unless they want to run
 
 CARRYING THROUGH THE REFORM. 209 
 
 the risk of continuing the business themselves, or of renting 
 the stock to somebody else, in which cases the likelihood, 
 nay on the average even the certainty will be, that they lose 
 every penny of their investment. At a sale of this kind 
 generally not a quarter of cost is obtained, and the creditor 
 has very little left. 
 
 What makes investments of this kind so insecure ? It is 
 the state of business brought about by the effects of capital 
 accumulations. After land nationalisation these accumu- 
 lations are no longer possible in the country, which carries it 
 through ; business consequently will improve, failure will 
 diminish, real investments will become securer. This would 
 seem to make accumulations again possible, and so it may, 
 but only to a certain extent, as otherwise they would again 
 injure business and in consequence, losing their security would 
 become reduced again. In this way there would be a natural 
 adjustment, preventing the recurrence of the present state of 
 things. If capitalists could no longer interfere with the free 
 exchange between production and consumption, because any 
 such interference would destroy their capital, and thus 
 immediately remove the obstruction, labour would hold the 
 balance of power. Wherever a capitalist loses, through the 
 sale of a failing factory, labour will be bound to win, being 
 able to buy the tools of production cheaper. The capitalist 
 has no use for them unless somebody works with them, and 
 the workers will be able to make their own terms. Gradually 
 the workers would be able to save as much capital as they 
 need to carry on their work. They would be more and more 
 independent of the great capitalists, and with this growing 
 independence their purchasing power would increase and 
 business would improve. With improving business the risk 
 inherent to commercial enterprises would diminish and 
 capital would look out more and more for real home invest- 
 ments instead of spurious foreign ones. The small capitalists, 
 especially, would rather invest at home, where they can 
 better watch their investments than abroad. A tradesman 
 would rather lend his savings to another tradesman, whom 
 he knows and whose business he can watch than look out 
 for foreign investments. This used to be the general case in 
 times gone by, when state-loans were almost unknown and 
 
 14
 
 21© RENT, INTEREST, AND WAGES. 
 
 land held by feudal tenure offered only a small field of invest- 
 ment. Capitalists then used to lend their capital to 
 merchants and tradesmen who had any use for them and 
 whom they thought they could trust. (According to Adam 
 Smith business men in Holland borrowed at three per cent 
 in the last century). These times would come back again. 
 Even those investments which were made in foreign countries, 
 would not do any harm. To export real capital, work would 
 have to be employed to produce it, certainly not a very 
 appalling prospect in a time when over-production and want 
 of employment are the reigning complaints. 
 
 But supposing that our great capitalists expovted gold mst&z.d of 
 goods ? Let us suppose they did, which might happen, if 
 instead of getting in their foreign interest tribute they not 
 only invested it anew there, but continued to invest in the 
 same way all the interest income collected from the British 
 government for their bonds. Let us suppose that in spite of 
 the superiority of English industry, the high wages paid 
 would diminish exports to such a degree, that the increased 
 home production of food stuffs would not make up for them 
 and that the balance of trade would be against England to 
 the full extent of the wealth exported by' the great capitalists 
 to pay for their interest. 
 
 In this case the gold would soon be drained from the 
 country and would be at a premium. England would for the 
 time have a paper currency. This paper money would not 
 be less good than it is to-day, the State being responsible for 
 it and the State would be richer than to-daj', as she would own 
 the whole land of tne country with a continually diminishing 
 debt on it. There would be no difficulty to keep the paper 
 floating, for it is only when its circulation exceeds the demand 
 for a circulating medium that it flows back into the coffers of 
 the bank. What would it matter if gold was at a premium ? 
 It would rather have a beneficial effect on the relations between 
 labour and capital, for a depreciating currency hurts the 
 creditor and benefits the debtor ; nor would it in the least 
 interfere with production and consumption, with the purchas- 
 ing power of wages. Prices of goods and wages might be 
 depreciated if measured by the gold standard, but their 
 mutual relation would not change, as the depreciation would
 
 qARSYING THROUGH THE REFORM. 'SJ^^I I 
 
 be the same. Both would be lower than in conntries with a 
 gold currency, and this fact would stimulate exports so, that 
 the final result would be that the gold premium would only 
 rise high enough to increase exports sufficiently to cover the 
 requirements of the exporting capitalists. Gradually, as the 
 bonds of the latter were becoming redeemed, their exports 
 would decrease until finally these creditors after being paid oflf, 
 would disappear altogether from the home market. All this 
 time their influence may have diminished the amount of 
 wealth enjoyed by the total of English workers, but it 
 certainly would not have interfered between production and 
 consumption in England. Their interference in this direction 
 would have been entirely exerted on foreign producers, and by 
 thus hastening there the process of capital accumulation, would 
 have precipitated the catastrophe in those countries. They 
 would have done their share in bringing about international 
 reform and international disappearance of spurious capital. 
 It is then that real interest would follow spurious interest and 
 that the full effects of the great reform would be felt the world 
 over. 
 
 The Case in New Countries. 
 
 We have now seen how easy it will be to carry out land- 
 nationalisation by giving full compensation to landlords. I 
 think that this would decidedly be the plan for old countries, 
 where landlordism is an old and deeply rooted disease, 
 inherited through generations, of which all those whom it 
 infects, the oppressors and the oppressed, are the innocent 
 bearers. The case may be different altogether in new countries, 
 where the living generation of landlords is partly responsible 
 for the growth of the evil. It will be different in a country 
 like the United States, in which millions of acres have been 
 acquired by present owners or by their fathers in the most 
 reprehensible ways, either by fraud, or by lobbying, by rail- 
 road jobbery, or any other of the different methods by which 
 uncle Sam got swindled out of his inheritance, till in a 
 country large enough to accommodate and feed the whole 
 population of our earth, with only 65 millions inhabiting the 
 country, people talk of over-population because every particle 
 of available space has been taken hold of by greedy landsharks* 
 
 * An immense continent, large enough to accommodate the whole
 
 12 RENT, INTEREST, AND WAGES. 
 
 Or in a country like Australia, where a landowning 
 minority influenced the law-making machinery and cleverly 
 managed it in their own mterest, so as to facilitate theii 
 getting a hold on the inheritance of future generations. 
 
 In such countries single-taxism may perhaps prove to be a 
 better system than compensation, though even this is doubt- 
 population of this earth, has been squandered to enrich a few 
 thousand speculators. There is not a square foot of land worth 
 the having which is not appropriated, and that for the most part 
 by men who never had and never will have the slightest idea of 
 cultivating it. The immigrant farmer vainly looks out for land, 
 which he can cultivate without paying some landshark for the 
 privilege. W. A. Phillips in " Labour, Land and Law," gives 
 extracts of official statistics for 1880, according to which more than 
 on© fourth of the farms in the United States are held by tenants 
 and as this includes on the average mostly the larger sized farms, the 
 proportion of the territory taken up will be much more pernicious. 
 It is very probable that by this time as much as half the farm 
 land of the United States is in the hands of rackrenting landlord- 
 ism. But even this does not give the full extent of the evil which a 
 false system of landownership has entailed on the United States. 
 Of 7,670,493 persons engaged in agriculture, only 670,944 can be 
 said to actually cultivate the soil they own; 804,522 do part of the 
 work on their farms ; 1,024,601 pay rent to persons not cultivating 
 the soil; 1,508,828 are capitalists or speculating owners, who own 
 the soil and employ labourers. The rest consists of labourers and 
 employes. We may safely say that not one tenth of the improved 
 land is actually worked by its owners. And even this does not 
 give the full truth, for it leaves the mortgage indebtedness out 
 of the question. Phillips estimates that not less than 40 per cent, 
 of the farmers owe interest to the full amount of the rental value. 
 How much of the land after this can be really considered as cultivated 
 by peasant proprietors, a class the land-laws intended to foster ? 
 If we take into account the cumulative effect of capitalism we 
 can feel sure that if the present state of things lasted, if George and 
 his friends did not begin to wake the people to a sense of the danger 
 they are running, less than 50 years would elapse before a free 
 peasant proprietor would be as rare a thing in the United States 
 as in England. The Duke of Sutherland, the largest landholder in 
 Great Britain already owns 425,000 acres in the United States; 
 the Marquis of Tweedale 1,750,000 acres, etc. And what did 
 the State get for the patrimony of the people, which has thus 
 been given away ? The total amount received for public lands 
 up to and including 1884 was not more than 230, 285, 893, dels.
 
 CARRYING THROUEH THE REFORM. 213 
 
 ful. In the United States it has been customary to make 
 land support the expenses of government. It is only since 
 the war has loaded the country with a heavy debt, that the 
 custom duties have to bear the greatest part of the public 
 burden. Every landbuyer knew, or ought to have known, 
 that such a method of supporting the expenses of the State was 
 only a temporary one and that the time might arrive when 
 land would have to take heavier burdens. In old countries, 
 where only fixed taxes are levied irom land, the capitalised 
 value of these taxes is taken into account when land is bought 
 or sold. They are no longer a tax, but a certain part of 
 the land value may be considered as belonging to the State, as 
 is clearly understood by anybody who buys land. A new tax 
 on land is considered as an increase of the State's share, for 
 which a compensation is due to the landowner. When in 
 Prussia the land-tax was extended to the lands of a certain 
 part of the nobility, which had been freed from it, the land- 
 lords got a compensation to the amount of the capitalised 
 value of the tax. This was in 1865 and 20 times the amount 
 of the tax was paid. This does not prevent at present the 
 same landlords from agitating for a removal of this very tax 
 which they got paid for, or rather for having it applied to 
 local purposes and thus to be relieved from a corresponding 
 amount of local taxation. 
 
 Important Objection against the Single Tax. 
 
 This is one of the great objections to a tax. It never will 
 present to the mind of the people the unmistakeable impres- 
 sion of common ownership ; it will leave to a certain degree 
 the idea of private ownership. The tax will be considered a 
 burden on rightful owners, a burden which they will always 
 
 It will thus be seen that the total proceeds of the sale of half a 
 continent amounted to less than one year's revenue of the 
 government in the years 1882, 1883, or 1884. If we consider 
 that the time will come when the rental mcome of the United 
 States will be ten times, nay a hundred times as great as 
 now, we are forced to arrive at the result, that the government has 
 bartered away the people's land for the future income of a single 
 week. Verily the lentil business transacted by Esau was a thrifty 
 speculation by the side of this !
 
 214 RENT, INTEREST, AND WAGES. 
 
 do all in their power to lighten or to remove, as they have 
 done in times past whenever their influence on legislation has 
 allowed them to do so. Are we perfectly sure that such a case 
 could never happen in the time of the single tax ? Can we be 
 so confident that it will be impossible for the great body of 
 landholders, much greater than to-day, who will always 
 wield a certain influence, to get some kind of legislation 
 passed, which will alleviate the burdens put on them ? There 
 is a natural sympathy with people who petition against 
 taxation. A tax has become a very unpopular thing and the 
 great philosophical truth which underlies the principle of the 
 single tax may not always remain so clear and generally 
 understood as it will be to the generation which carries it to 
 victory. Even great truths need continual freshening up, or 
 people, who have not got the time to make a special study of 
 such subjects as embody these truths, will be very apt to 
 forget them. The history of almost any abuse under which 
 we are suffering will furnish the proof of this. The tyranny 
 of the most absolute ruler was originally nothing but the 
 leadership of a patriarch or of a hero. The teacher gradually 
 became the governing and stake erecting priest. The head 
 of the clan became the landlord who now has the power to 
 drive into exile the descendants of those who were his equals 
 in possession. As times passed the people forgot the origin 
 of rights which are nothing but legalised usurpation, legalised 
 by the usurpers. " Now arose a new king over Egypt, which 
 knew not Joseph." We might add " and a new people which 
 did not know the rights Joseph had enjoyed." All history 
 lies in this. And not only do the ignorant people forget the 
 origin of their slavery, but men of the highest intelligence 
 champion the perpetuation of wrongs on the ground of their 
 great antiquity. In the article of Mr. Huxley which I have 
 already referred to, the great scientist invokes " a statute of 
 limitation " for certain past wrongs. 
 
 " There is nothmg more fatal to nobility of personal character 
 than the nursing of the feeling of revenge; nothing more clearly 
 indicates a barbarous state of society than the carrying on of a 
 vendetta, generation after generation ' Must immer thun wie 
 ^eugeboren,' is the best of maxims for the guidance of the life of 
 states, no less than that of individuals," says Mr. Huxley. 
 
 1 replied: — "i think I am of as forgiving a nature as Mr. Huxley.
 
 CAKRVING THROUGH THE REFORM. 121^ 
 
 If I ever should meet a man whose great-grandfather had killed 
 mine, I do not think this would prevent my enjoying his society in 
 the least, and even inviting him to my house. But if not only the 
 children of the ancestor in question had acted similarly with those 
 of mine, if even the gentleman in my presence himself was to my 
 certain knowledge quietly preparing to put an end to my mortal 
 life, I do not think that I would vote for a statute of limitation 
 limiting my revenge, but not limiting his murderous proceedings, 
 nor do I believe that I would carry personal nobility so far as to 
 invite the gentleman to dinner. If anybody robbed my great- 
 grandfather of some goods produced by his labour, it would be 
 wrong if I wanted to make his innocent grandchild responsible for 
 the action. Human productions are perishable, and ten to one the 
 object in question is no more in existence, would be no more in 
 existence if my great-grandfather had kept it. But supposing the 
 object not only was of an imperishable nature, but its possession 
 was a condition of life and death, not only lor my ancestor, but for 
 me, that whoever holds it has it in his power to murder me, as it 
 gave our friend's grandfather the power to murder mine, and sup- 
 posing that I felt sure of this power being exercised on me as it 
 was exercised on my grandfather, does Mr. Huxley really think that 
 I ought to carry the nobility of personal character so far as to 
 quietly leave the gentleman in possession of the object in question? 
 
 •' Well, land is exactly a thing of this description. The man who 
 owns it has got certain rights over the life of his fellowmen, the ex- 
 tent of which can go and very often goes to the taking of this life. 
 Or can it perhaps be denied that the perpetrators of the Sutherland 
 clearances were downright murderers, though they did nothing but 
 what the law allowed them to do and even to this day allows every 
 landlord to do ? The man who starves in a London slum, is he 
 not murdered by the landlord who drove him or the man who took 
 his place from the land ?" 
 
 When we see men like Mr. Huxley stand up tor a wrong, 
 because it is an old one, I become frightened at the idea, first 
 of seeing the masses forget the origin of the single tax, and 
 next of having men of ability prove to them that their drifting 
 back into the old abuces took from them the right to reform 
 those abuses. Could there be anything more popular, m ore 
 engrafted in men's methods of thought than the principle, that 
 land belonged to all and that no individual owner had the right 
 to deprive the people of their inheritance, was among the old 
 Germanic nations ? Did this prevent their descendants all 
 but forgetting that there ever was a time when land was 
 common property ? Npne of our forefathers would, have
 
 2l6 RENT, INTEREST, AND WAGES. 
 
 thought that the time could ever come, when words like these 
 would need to be|written by a learned man : s^ 
 
 " In general it seems, that when we speak of land property, that 
 it can only exist under one form, the one which we see in force 
 among us. This is a profound and regrettable error, which prevents 
 us from rising to a higher conception of right. The exclusive, per- 
 sonal and transferable dominion, appHed to land is a comparatively 
 very new conception and during a very long time men have only 
 known and practised common ownership. * • * The right of full 
 property applied to land is a very young institution ; it has always 
 been an exceptional phenomenon." 
 
 It is Emile de Lavaleye from whom I quote these words. 
 
 This is the reason that I like to call a thing by its name. 
 If land is common property and the periodical payments for 
 the use of a piece of property is called " rent," or hire, it is well 
 to use these words, which clearly show the mutual relation 
 between the people as landowner and the landusers. They 
 are not likely to lose their real meaning in the course of 
 centuries, as the word "tax" might, which is open to com- 
 pletely different interpretations. The fundamental difference 
 is, that a tax is levied for the purpose of supplying public 
 necessities, a very elastic conception, whereas rent is claimed 
 as a remuneration corresponding to the value put on the use 
 of the object in question by the laws of supply and demand. 
 It is only as a means to an end in view, that I can approve of 
 the single tax idea. If the constitutional habits ofthe United 
 States allow the collection of all taxes on land, the introduc- 
 tion of the single tax may be a very good method to enable the 
 State to get back the land at reasonable prices ; but a real 
 nationalisation of land could only be carried out by the final 
 resumption of land possession by the State. 
 
 Other Objections against the Single Tax. 
 
 There are grave objections to the confiscation by way of the 
 single tax, even in the United States. I need only adduce the 
 mortgage question. It is all very well to tell the farmer, that 
 he will gain more through his liberation from personal taxes and 
 taxes on improvements, as well as from protective duties, than 
 he loses through the single tax, especially as it will fall for the 
 most part upon unused land ; but this will not prevent his land 
 losing almost the whole of its selling value. In fact if it did
 
 CARRYING THROUGH THE REFORM. 217 
 
 not take away the selling value of the bare land after leaving 
 a trifle for the collection of the tax, the single tax would not 
 answer as a means of reform; for it is only when we remove 
 the source of spurious capital with private rent that we can 
 really expect the full effects of the reform. If land loses its 
 selling value, mortgages lose their security. The George men 
 do not deny this, and in fact it is just this effect of the reform 
 which I think most important. They usually answer, that, 
 as the reform will not be carried out immediately, mortgagees 
 will have ample time to demand payment for their outstanding 
 debts. There is no doubt of that and I am perfectly confi- 
 dent, that one of the immediate effects of the single tax 
 movement, after people begin to believe in its final success, 
 will be the general calling in of mortgages. The consequence 
 must be that nine tenths of American farmers will be bank- 
 rupts; for they will not be able to repay their creditors, and 
 the forced sale of their farms will throw these with all their 
 improvements and probably even with their personal property 
 into the hands of the mortgagees. The independant farmer 
 will become a poor tenant or an agricultural labourer. 
 
 Another feature of the single tax plan does not seem to 
 me very practical. The tax is to be taken out of the selling 
 value of the land. Mr. Post explains the manner, in which 
 the system will operate, in the Standard. The whole rental 
 value is to be taxed away excepting a small per centage 
 sufficient to pay the landlord for the trouble of collection, 
 say lo per cent. Supposing the selling value of a piece of 
 land to be 2,000 dollars, this system, according to Mr. Post, 
 would make its rental value to be 100. He seems to 
 think, that there is a law of nature which says that the rental 
 value has to be five per cent of the selling value ; for other- 
 wise he would have to find out two things, instead of one. 
 Whereas we only have to find out the rent offered in the 
 market, by those who want to rent land, Mr. Post has also 
 to find the rate of interest at which rent is capitalised, in 
 order to get at the market value of land, which is nothing 
 but the capitalisation of rent at the rate of interest paid in 
 the market at the time and in the locality. This rate varies 
 in the United States, as everywhere else. It gets higher 
 the further you go west. Unless Mr. Post knows very
 
 2l8 RENT, INTEREST, AND WAGESi 
 
 exactly how much in each case this rate is to be, he will gel 
 into the greatest difficulties. In the article mentioned,- he 
 says, that if we leave ten dollars to the landowner, the state 
 will collect a tax of go dollars. This would reduce the 
 market value of the property to 200 dollars, of which 45 per 
 cent has to be taken in taxation. Now, let us suppose, says 
 he, that the market value wiU rise to 250 dollars. In this 
 case, the state would get 1 12-50 and the owner would keep 
 12*50. Now, let us suppose, say I, that the rate of interest 
 has gone down to four per cent, which would put the value 
 of our land at 250, though the rental value has not increased. 
 If the State now takes 112-50, the land owner not only gets 
 nothing for his trouble, but has to pay from his pocket 12-50. 
 He is a loser, because the tax-collector does not know, that 
 the rate of interest has changed, and is calculating on five 
 per cent, when only four per cent was earned. The State 
 will have to be well informed in regard to the rate of interest, 
 as well as to the market price of land, whereas if she only 
 collects the rental value, she has merely to - find out by 
 supply and demand how much this will be, thus having one 
 operation, instead of two, of equal difficulty. I should very 
 much have liked to discuss this point with Mr. Post in the 
 columns of the Standard ; but a previous experience had 
 taught me, that Mr. Post does not publish any objections, 
 which he cannot answer. A letter which I had written him 
 about some false theories of his, in regard to the interest 
 question, has gone into the waste-basket, a proceeding which 
 I did not think very consistent in the editor of a paper, 
 which is bravely fighing against economical lies. He ought 
 to be the last man to shirk from discussing a truth, or 
 acknowledging it, if it is brought home to him in an un- 
 answerable way. 
 
 There would be no absolute need to give up the tax system 
 altogether, even if we preferred the simple method of rental 
 values to the roundabout way of selling values. Anybody 
 who wanted land could make his offer to the authorities of 
 the locality. The average of a certain number of such offers 
 would determine the amount of the tax, and all such land 
 owners as were unwilling to pay it, would have the right to 
 offer the land to the State at a corresponding rental. The State
 
 caWrVing through the reform. 2ig 
 
 would either havq Jo rent it at the rate, sublettingit to the party 
 who wanted it, or she would have to reduce the tax. The 
 tax in this case would be nothing but another name for rent. 
 As long as the occupier of a piece of land is willing to pay 
 the tax which others are ready to pay, he can keep it ; if he 
 finds it too high, he must give it up. His improvements 
 will be credited to him according to a valuation. As I have 
 said before, I believe in calling a thing by its real name, and 
 for this reason I prefer complete land nationalisation to the 
 single tax system. 
 
 Fear of Corruption. 
 
 I am not afraid of corruption, or of putting too 
 great a power into the hands of the State and thus 
 endangering public liberty. As for corruption, I am con- 
 vinced that two potent factors in its present production will 
 be absent in the time of reform. 
 
 The one is that where an honest way of making a living is 
 just as easy as a dishonest one, people will prefer to be 
 honest. The social effects of land nationalisation would en- 
 able any one to employ his labour in that department of 
 work best suited to him, at a good remuneration, and office 
 seeking will be a thing of the past. In this department of 
 work, as in any other, the demand of workers will exceed 
 the supply, and the pay will have to be in proportioii to the 
 work done ; otherwise nobody will do it, unless men who 
 have retired from business will undertake it as a post of 
 honour. A great deal of this kind of work is done thus 
 even in our time, done honestly and efficiently, without any 
 remuneration whatever. I need only mention that done by 
 men employed in church work or charities. If we have got 
 thousands of men, who thus toil from morning till night 
 without any pay but that given to them by their conscience 
 or the approval of their fellow-men, if this is done 
 in a timeof greedy battling for life and "the devil take the hind- 
 most,'" how much more shall we find such men after social 
 reform has smoothed the path of life to all who honestly 
 want to work for their living, turning to a pleasant emula- 
 tion what now proves to be a most fearful struggle. 
 
 The other factor on which we can depend for an honest
 
 220 RENT, INTEREST, AND WAGES. 
 
 administration will be the interest which the people will take 
 in the management of the public domain. The indifference of 
 the masses of voters is the cause of present mismanagement. 
 Politics have become a business in which a lively interest is 
 taken by those alone who expect to make something out of 
 it, be it money or honour. Those who do not make them a 
 speciality give their principal attention to their own private 
 business. The financial interests at stake in the public 
 domain are too small for each individual voter, to induce 
 him to take much trouble about them. It will be entirely 
 different, when such important interests come into play as 
 will be connected with the administration of the common 
 land. The money value by which each voter participates in 
 the public domain is too considerable to be slighted. 
 
 I have lived for long years in a small German village and 
 had occasion to observe our peasants. The conclusion I 
 have come to is, that if to-day the German parliament was 
 dissolved for ever, not a single man of them would lift his 
 hand in defence of this popular institution ; but if the govern- 
 ment were to take away the privilege of gathering in the 
 communal forests dry leaves, which are needed as a litter 
 for the cows, a revolution would break out. Local elections 
 in such places create such passionate interest, that a great 
 many of the criminal cases treated by the courts in that 
 special locality (Baden) spring from such elections. The 
 elections for parliament pass off comparatively quietly. Why ? 
 Because in the one case private interests may be affected. 
 The mayor of the village has to give out little jobs (stone 
 breaking, roadmaking, etc.), and it pays to be on the winning 
 side, to be counted among his friends and to be patronised 
 by him. 
 
 Fear of Oppression and Bad Management. 
 
 The same causes will prevent the abuse of governmental 
 power. Social independance will close the source from 
 which rulers could find help for oppression. The interest 
 taken by the people in the administration of their country, 
 and a better education, the consequence of a better income or 
 of the manner in which the state employs her rental revenue, 
 will be the best security for the maintenance of those
 
 CARRYING THROUGH THE REFORM. 221 
 
 guarantees of liberty and of public control, which the laws 
 that provide for the great reform will have to furnish. 
 
 Th^ye will he no worse management through state officials than 
 through those of our present landlords. We certainly can improve 
 on their system of confiscating improvements as a considera- 
 tion for a very long lease. Leases might be shorter and 
 improvements paid for on a valuation of their market- 
 value. 
 
 We find this system in the United States ; for instance 
 the Randall farm property in New York is administered on 
 this plan. The free city of Hamburg in Germany has made 
 another kind of arrangement in regard to the land bought by 
 her for the free port. She gave a lease of this land to a 
 Stock Company, by which the Company engages to build 
 and to administer all the offices, storehouses, elevators, etc., 
 required. The city gets a certain share of the net income, 
 about 56 per cent, the Company keeps the balance to pay 
 for the work and for the interest of the capital. Every year 
 a certain number of shares are redeemed by the city from 
 the profit she makes beyond the interest of the funds paid 
 for the land, and after 1899 she has the privilege of buy- 
 ing back the balance for a certain maximum price fixed in 
 the agreement. 
 
 Large and Small Farms. 
 
 A provision might be inserted in the law by which large 
 farms will only be let when there is no demand for smaller 
 ones ; but I hardly think there will be a necessity for this. 
 A large farmer who has to work with paid labour cannot 
 compete with the peasant working on his own account, for 
 the simple reason, that the profit which satisfies the latter 
 would only pay the expenses of the farmer, as the peasant's 
 net earnings are the minimum wages at which he would 
 agree to work for the farmer. He would not think of 
 working for less than he could make on his own account and 
 if land and capital are easily accessible to him, he will have 
 no difficulty in making a living on his own account. 
 
 At present landlords do not like small allotments. It 
 raises the wages of agricultural labourers and it puts obsta- 
 cles in the way of their sport. Mr. William Saunders
 
 222 RENT, INTEREST, AND WAGES. 
 
 repdrte'd a case of this hature at the Paris congress. In 
 Wiltshire the small farmers have to pay ^3 an acre where 
 the big farmer gets the land at 12s. 6d. and yet has to stop 
 payment, while the little men make a living. This shows 
 clearly that the big farmers cannot underbid the small ones. 
 
 The Fallacy of tlie Net-proceed's Reasoning. 
 At any rate the present state of things by which net pro- 
 ceeds are the only governing principle will be rendered 
 impossible. Let us suppose the gross proceeds of a piece of 
 land to be ;^i,ooo out of which have to be paid, to 20 workers 
 ;^5oo wages and ;^250 more for other expenses. The net pro- 
 ceeds in this case are ;^25o. Turned to sheepgrazing the same 
 land, gives ;^6oo gross proceeds, of which £2^ for a shepherd 
 constitute the whole wage-account, besides which ^200 
 have to be deducted for other expenses. The net profit will 
 have risen to £^15- £^'^5 more net income, an increase of 
 50 per cent ; who will hesitate a moment in this percentage- 
 governed time ? The 20 workers are evicted and the sheep take 
 their place. Who cares for the ig families losing their bread ? 
 " Let them find work elsewhere ! " says the political economist. 
 But there is no work anywhere else for them, as all the other 
 landowners in the country have acted on the same principle 
 of highest net proceeds, and industrial work has certainly 
 not increased through the diminished custom of agricultural 
 buyers. " Well in that case we have overpopulation and we 
 have to find remedies for it." But would it not be better to 
 force landlords to return to the old system, to make them 
 change their meadows back again into agricultural land ? 
 The unemployed workers would find employment and instead 
 of forcing down wages, they would consume industrial 
 products and give employment to other workers. Of what 
 benefit can the higher net proceeds be to us, if the gross 
 proceeds have been reduced? "Gross proceeds must be 
 left out of account. Expenses have to be deducted and 
 wages are expenses. We do not live in a patriarchical or 
 socialist state but in the world of free individual development, 
 of"laissez faire, laissez passer." The economic law says 
 that every individual in furthering his own interest must also 
 best further the common welfare. It would therefore be
 
 CARRYING THROUGH THE REFORM. 225 
 
 against all principles of sound political economy to force 
 landowners into using their land in a way opposed to their 
 best interests and this interest is governed by the height of 
 the net proceeds they can draw from their land." According 
 to these principles, when our landowners find that it pays 
 them better still to let their land as hunting grounds, they 
 will evict the shepherd as well ? There is no more employ- 
 ment for anyone on the land; but the net proceeds have 
 increased and that is all that is required ? " Certainly, for 
 the common interest is best served by serving the interest of 
 the individual,'' is the final decision of our economist. Is 
 this true ? Has the common interest pvojited by working on the net 
 proceeds line ? We all know how the circle from the wilder- 
 ness to the meadow, from the meadow to the cornfield and 
 back again from cornfield to meadow and from meadow to 
 wilderness is being closed in these islands ; but there are 
 other parts of the world where the folly of the net proceed 
 system is demonstrated with equal clearness. One of 
 the best proofs is furnished in a new book which has lately 
 been published by a German scholar of great ability, Mr. 
 Werner Sombart. In " Die romische Campagna, eine 
 social okonomische Studie." Leipzig, 1888, he gives a 
 statistical history of the Roman Campagna, from official 
 documents of the Vatican library. The Roman Campagna, 
 as is well known, is the rural district of Rome. Its size is 
 about 2000 square kilometers. In the time of the Emperor 
 Hadrian it was the garden of Italy, and was peopled by two 
 million inhabitants, who lived in plenty. 
 
 Now a few thousand miserable people find a poor living 
 there, and it has become one of the unhealthiest parts of the 
 world. It is harrowing to read how the labourers attending 
 to the cattle and sheep grazing on this land once so fruitful, 
 live in caverns where they get the terrible malaria fevers, 
 which take them off, unaided by medical help, and half starved. 
 Why all this ? What is the cause which has changed 
 this garden of Italy into such a desert ? Why do they not 
 raise wheat and corn, vegetables and fruit on it, as before ? 
 Because it does not pay so well. Sombart shows, that the 
 experiments made with corn-growing gave a loss of 9,50 
 Lire per Rubbio (1,85 hectares), if the present rent is to. be
 
 224 RENT, INTEREST, AND WAGES. 
 
 paid,whereas grazing leaves 6,21 Lires. Gross proceeds have 
 doubled in a hundred years. If a century ago the amount 
 produced is put at lOO it has risen at least to 200. Of this 
 the workers got 30 all the time, whereas capital earns 50 now, 
 where it earned 35 100 years ago, and rent gets 120 against 
 35 at that period. 
 
 Nobody can blame the landlords or the capitalists. They 
 act strictly in accordance with business principles ; we have 
 only to blame the State for allowing the practice of such 
 principles in regard to the foundation of all life : land. If 
 the State had held possession of the land, she would have 
 calculated in quite a different manner. She would have 
 considered that gross proceeds are composed of a number of net 
 proceeds, that what the individual landowner and capitalist 
 farmer count as charges and expenses are nothing hut the net 
 proceeds of other people, whose welfare is just as important as 
 theirs. For the State the ;^5oo of wages in our first example 
 are the net incomes of 20 families, and she can find no 
 advantage in economising part of these ;^5oo and depriving 
 these people of their employment, even if it increased the rent 
 paid into her pockets. She will calculate that there can be 
 no real profit to the community if thousands and millions of 
 hardy workers are thrown out of emplo3^ment, if the minus- 
 production of these people diminishes the national income 
 which is composed of gross proceeds. Net proceeds can 
 only come into account where individuals are concerned. 
 The total of net proceeds and the total of gross proceeds 
 amount to the same if looked at from the bird's eye view of 
 the state. The community has to strike quite a different 
 balance sheet from the individual. She has to feed these work- 
 men as paupers if she cannot give them work, and this alone 
 will make a complete change in the calculation. The 
 individual can make a profit by making the State feed the 
 workers he replaces by sheep ; the State cannot, for she has 
 to do the feeding of these men in any case. But this is not 
 all. These men, if they have a piece of land of their own will 
 work with quite a different zest to that with which they work 
 for others. They will become capitalists, and will gradually 
 greatly multiply the produce of their fields, so that finally 
 they can pay a much higher rent to the State than she would
 
 CARRYING THROUGH THE REFORM. 225 
 
 have got, if she had let on the capitalistic principle of to-day. 
 Even if she had to take less rent in the beginning she would 
 finally get more. The disappearance of interest will change 
 the whole calculation. To-day the greater capital required 
 for corn-raising and the interest outlay for this additional 
 capital are the principal items, which make grazing pay 
 better. If capital can be had without interest, corn-growers 
 can pay a higher rate than graziers and still thrive. Real 
 peasant-proprietorship is the healthiest foundation of a state; 
 but real peasant-proprietorship cannot be obtained by selling 
 the land to the peasants. Experience has shown, that in this 
 case it will soon get into the hands of the capitalists, and the 
 curse of rent will be doubled by rent's child " Interest." 
 
 Injustice of the New Irish Land-purchase Act. 
 
 Independently of this there would be no possibility of creating 
 peasant-proprietors without committing the greatest injustice 
 to other citizens, who do not get any land, or only inferior 
 land. The land belongs to the people, to the whole people, 
 not to any section of it, and nobody has the right to earn 
 special advantages by getting more or better land than his 
 average share would be. There can be no greater injustice 
 to the Irish and English people, than the establishment 
 of peasant-proprietorship through laws like the Ashbourne 
 Act, an enlargement of which is in contemplation, while I am 
 writing these lines. 
 
 Such laws are only in the interest of a land holding class, 
 who want to perpetuate the injustice of the system, which has 
 allowed them to plunder the people for centuries, by 
 increasing the number of landlords and thus strengthening the 
 base of the building of iniquity. The Irish tenants, who 
 happen to be holding the Irish land now have not got a 
 particle more right to this land than the Irish labourers or any 
 other Irishman. Not only has the work done by nature to be 
 common property, but also all advantages accruing from 
 social causes, as for instance the enjoyment of a good credit 
 by the State and the lower interest at which in consequence 
 she can get money. 
 
 If a financial operation is possible, by which rent can 
 be reduced and yet owing to the low interest at which the
 
 226 RENT, INTEREST, AND WAGES. 
 
 State can f^et the necessary means, landlords can be paid 
 off in 49 years, the benefit of this operation ought to 
 belong to the community, not to a few tenants, who are 
 accidentally in possession. Why is the tenant, who was 
 evicted yesterday to be ruined for ever, to be the labourer of 
 the tenant who has held out a few months longer and not 
 only gets a reduction of rent such as would have saved the 
 other, but without paying a penny, by-and-by becomes the 
 full owner of the land he cultivates, so that his descendants 
 in times to come will be the masters of the children of his 
 less fortunate colleague ? It is not through better manage- 
 ment, through harder work that he and his descendants earn 
 such enormous advantages, but through the legislation of 
 landlords, which made him a present of wealth created by 
 nature and the community, because their selfish interests manted 
 a fort fi^cation of unjust monopoly rights. It is the motive which 
 made them create landlords out of Indian Zemindars, men 
 who were nothing but tax-collectors for the government. 
 Such a bad example as that afforded by the sight of state 
 officials collecting the rent of the land for the community 
 could not be tolerated and it was much better to have land- 
 lords collect this rent and pay off the State by delivering 
 part of the booty after keeping the lion's share. 
 
 How little the very object, which is ostensibly aimed at, 
 how little peasant-proprietorship is attained by such means 
 is shown by a report on the working of the Ashbourne Act, 
 given in the Times of 29 Jan., i8go. A case is cited where a 
 tenant bought a farm at £6j los., subject to a small annuity 
 and sold it for ;^go, subject to the same annuity. Another 
 who had paid ^^550, sold, subject to the repayment of this suni, 
 for ^970. A farm bought for ;^539 was sold, subject to the 
 purchase money, for ;^i,28o. Another bought for ^^775, has 
 been sold, subject to this sum, for ^1,725. In these last three 
 cases the fortunate tenants made a profit of ;^3,g75, obtaining 
 more than three times their purchase money. The new owners, who 
 paid so much beyond the value, which official estimation 
 put upon these farms, and beyond the real value, though there 
 was a certain increase due to the enjoyment of the cheap 
 money of the State, are bound to be subject to worse rack- 
 renting than the former tenants. Whether the rent is paid
 
 CARRYING THROUGH THE REFORM. 227 
 
 to a landlord or whether it is paid in the shape of mortgage- 
 interest is unessential. Sooner or later such imprudent 
 buying will thvoiv the farm into the hands of the movtgagee, 
 or of some other capitalist, and absenteeism will be re-enacted 
 in a worse form than before, as it is well known that there 
 is no worse landlord than the capitalist. He expects the 
 interest of his outlay. It is a pure arithmetical problem 
 with him, in which human beings play no part. The 
 personal interests which influenced the descendant of 
 the cavalier, whose family had been connected with the farm for 
 centuries, has disappeared completely in this case. If two 
 more cases are mentioned, in which farms bought for £yso 
 and ^880 were sold for ;^i,300 and^i,88o, what does it mean 
 but that two tenants became little capitalists, who in buying 
 consols have obtained the right to extract an eternal tribute 
 from the English taxpayer, whereas new landlords have been 
 created, who probably sooner or later have to become the 
 victims of capitalism, unless they succeed in selling and 
 putting another into the same plight, or of letting and getting 
 the state to buy them out in favour of their tenants. The 
 Times had better attach a little more importance than 
 it does to the words of Michael Davitt, which it quotes, " It 
 must be borne in mind, that what is bartered away by this 
 public money is, in reason and justice, national propcvty, in the 
 disposal and future administration of which every individual 
 in the country whether tenant, labourer, artisan or mechanic, 
 has an equal right to have a determining voice." 
 
 Or take the following, also cited from a speech made by this 
 real friend of the Irish people, the greatest patriot the Green 
 Isle can boast of, delivered at Cork : "The labourers of Ireland 
 in country and town must, if true to their own best interests 
 and to tliose of the nation, resist all attempts to create a tenant 
 landlordism as an anti-climax to the nation's fight for the aboli- 
 tion of the entire landlord system. Those are the tenants best 
 friends who warn him of what will happen if he is induced by 
 the absconding landlord to purchase what will not free him 
 from the taxes winch the State is certain to exact from the land 
 hereafter." 
 
 Though I do not agree with Mr. Davitt'splan of taxing out 
 the Irish landlords without any compensation whatever, — he
 
 228 RENT, INTEREST, AND WAGES. 
 
 stands on the same ground as Henry George, if I am well 
 informed, — I certainly should not think it correct to compen- 
 sate the tenants buying under the new land act, except for 
 improvements created by them, as they do not pay anything 
 but a reduced rent and certainly should not compensate those 
 who buy from them. Whoever now buys land in a country 
 whose people are standing up as one man against landlordism 
 knows what he is about and has only to blame himself, if he 
 is a loser. The most ardent defender of vested interests 
 could not find much to say for him. It is just as if the impor- 
 ter of corn during the hottest of the fight against the corn- 
 laws, after the victory of freetrade wanted an indemnity for 
 the duty he paid. It was his fault if he risked the importa- 
 tion instead of waiting for the expected abolition of the duty. 
 But buying of the new landlords, after having paid the old 
 ones with the profit made by the State credit, -would be paying 
 for the land hvice, giving double compensation. If the principle of 
 compensation was to lead to the sanctioning of such abuses, I 
 would rather join the single tax party and leave compensation 
 out of the question. Anyhow, there is one great advantage in 
 their agitation. It frightens landlords and makes them more 
 accessible to moderate proposals such as land-nationalisers are 
 making. I for the most part favour the mixed system of "tax 
 AND TAKE." It will be advisable to impose all the taxes which 
 can begot, especiRlly the four shillingsinthcpound, andtopurchase 
 the rest at a valuation to be made at as early a date as possible. 
 If the tax would be imposed on the value of the land, which 
 might be preferable, let the owners fix the value, the State 
 obtaining the privelege of purchasing at such valuation. 
 
 How to do it, of Secondry Importance. 
 
 I do not consider this whole question of ])aramount impor- 
 tance for the present. The first task of land reformers is to 
 prove that the terrible evils we are suffering from are caused 
 by land monopoly. If we can prove that without a reform of 
 this greatest of all abuses, landlordism and capitalism, its 
 offspring, are sure to gain upon us like an avalanche descend- 
 ing from the mountains, increasing in size as it comes 
 thundering along and certain to engulf us in a most fearful 
 crash, if we succeed in proving this we may safely leave
 
 CARRYING THROUGH THE REFORM. 22g 
 
 the "how to do it" to public opinion. Once frightened 
 out of its false confidence, once seeing che whole truth, 
 the best way out of the difficulty will not be hard to find. 
 If once there is no doubt left about the " must," the "how" 
 will easily be fcund. It was guided by such considerations 
 that the first international congress of land reformers, which 
 met in Paris on June nth, 1889, did not even try to come 
 to an agreement on this point, but confined itself to the 
 following resolutions : 
 
 " Wheyeas land is not tJie product of lahouv hit is the vaiv material, 
 or source from uJiich all that is necessary for existence is drawn, 
 " Whereas labour is the only rational base of property, 
 " Whereas the private ownership of land results in the enslavement 
 
 or exploitation of labour, 
 " Whereas, finally this social condition begets dangers which, if 
 
 neglected, will end by making all order impossible, 
 " This assembly declares that the private ownership of land shonld- 
 cease, and give place to its collective ownership for the common- 
 wealth.'' 
 This resolution was unanimously adopted by all the different 
 schools, by Mr. Henry George and his followers, by the 
 adherents of Collins, a French land-nationaliser, who began 
 his work as long as 50 years ago, and whose most important 
 follower, Mr. Agathon de Potter was mainly concerned in 
 the draft of this resolution ; by the German, Austrian and 
 Swiss adherents, who stand by those theories, which I liave 
 been trying to elucidate in the course of this work ; by the 
 Danish, Italian and French land-reformers of differenL schools, 
 by English and Irish friends as well as by Socialists. It 
 contains the great truth by which all stand, who want a real 
 reform by getting at the root of the evil, we are suffering 
 under. It is the truth, which shows us the only way of 
 salvation by peaceful means from the terrible abyss, which 
 is threatening us. Every man who loves his fellow man, 
 whose religion is not a mere empty form, any man who has 
 got an interest at stake in maintaining peace and order, in 
 preserving as much as is possible of what good fortune has 
 done for liim, ought to join us for we offer the last chance of 
 such a solution. Men like the Duke of Argyle, who oppose 
 Henry George by discharging at him all the artillery of
 
 230 RENT, INTEREST, AND WAGES. 
 
 sophistry they are master of, do not understand their real 
 interest. I do not object to their opposing schemes of con- 
 fiscation ; but they can do so only in one way, i.e., by further- 
 ing some plan or other of land-nationalisation by reasonable 
 compensation. They can get it yet ; but not for a very long 
 time. If they hesitate, if they continue to oppose the very 
 principle of land-nationalisation, they will experience a 
 revival of the old story of the Sybilline books. They finally 
 will be glad to pay for a fraction, what would have bought 
 them the whole. With every liberal bill thrown out by the 
 House of Lords the adherents of Henry George and those of 
 Socialism are increased by the thousand. People begin to 
 see more and more clearly, that there is no hope of getting 
 their aristocracy to see reason and to come to a compromise, 
 and, say they, *'if there is to be a fight, we might just as 
 well go for the whole hog," in putting aside the question of 
 compensation. "If there is to be a compensation, let there 
 be one for the robbed, not for the robbers," said my friend 
 Saunders at the Paris Conference. His opinion is becoming 
 that of a daily increasing number of land reformers. I am glad 
 of it ; for it may serve to obtain for those of us a better hearing, 
 who are trying the path of peace and conciliation. If we 
 should find, that the views of a Duke of Argyle are shared 
 by all those who are in power, and that these people are 
 completely unable to profit by the teachings of history, we 
 shall join those who go in for confiscation. If there is to be 
 a fight, let us at least reap the full benefit from it. Furious 
 radicalism is the fruit of stubborn conservatism. 
 
 The Georgian confiscation scheme will work a great deal 
 of good, if it succeeds in convincing the upper classes, that 
 the offers we, the compensators, are making are the best they 
 will ever get, and if their alliance will secure a speedy 
 victory to the only reform which can save society from a 
 terrible day of reckoning, which can offer relief to the 
 sufferers without depriving the usurpers of their spoils. All 
 the latter will have to do, is to sacrifice the right of %ture 
 spoliation, a sacrifice they ought to be the more willing to 
 make as the simplest mathematical calculation will show 
 them, how impossible the continuance of their rights proves 
 to be. We are already on the thirty-ninth square of the chess board
 
 CARRYING THROUGH THE REFORM. 23 1 
 
 of demon interest. We cannot stand another doubling. General 
 bankruptcy and vevolution will finish the game, if we do net stop in 
 time. Arithmetic is as inexorable as destiny. 
 
 The Terrible Danger. 
 
 Now I come to the end of this task— a task imposed on me 
 by the inner constraint I felt to show the abyss towards 
 which we are rushing and to find, even in the eleventh hour, 
 a way of escape from the terrible danger. Let us, as the 
 first step to improvement, throw away that false sense of 
 security that so fatally prevails among us, as it did a hundred 
 years ago among the aristocracy of France, who held high 
 revel over the abyss, little suspecting (as Carlyle says) that 
 their skin ere long would be tanned into glove-leather at 
 Meudon. 
 
 For years past I have looked on in despair at the drift of 
 our political parties ; I have seen how they are contending 
 over secondary points, neglecting what is vital — a sure sign 
 of approaching downfall. Meanwhile beneath us rises the 
 glowing lava of the social globe, whose thin crust (composed 
 of our comfortable classes) includes (like the crust of the 
 earth) not 2 per cent, of the diameter. The fiery mass 
 is surging and rolling. Already the weak rind is quaking 
 under its pressure. And we are going on quarreling over 
 constitutional questions, trifling away the precious time like 
 the ancient inhabitants of Pompeii at the circus while 
 already the shower of ashes that was to bury them was 
 beginning to fall. Just think of the proud civilisation that 
 flourished two thousand years ago on the banks of the Tiber, 
 and what remained of it all after a few centuries ! Do you 
 ask, whence then the destroying barbarians are to come ? 
 As Henry George says with keen insight, the streets of our 
 great cities shelter worse Vandals and Huns than those 
 that shattered the civilisation of Rome. Since these words 
 were written, they have been strikingly illustrated by events 
 in Belgium, London, Chicago, Amsterdam, and elsewhere. 
 
 And we might do so much ! Even the weakest among us 
 can. The first thing we have to do is to search out 
 tlie trutl: with honest effort, to extricate the real truth from
 
 232 RENT, INTEREST, AND WAGES. ' 
 
 the midst of the heap of lies that the struggle of interests is 
 day by day throwing up around us. 
 
 The truth, the whole truth — if we discover and spread 
 that we have done enough. The rest will follow of itself. 
 We may trust the victorious power of truth to assert itself 
 in the world of facts. 
 
 The aim of mankind should be, what was the last cry of 
 our great poet, Goethe — '* more light ! " 
 
 I have done. It was a thankless task which I had under- 
 taken. Cassandras are never welcome. Writers like Giffen, 
 or the American, Atkinson, who prove by all kinds of sophis- 
 tries and by a preparation of statistics which the best French 
 cook could not equal, that everything is going on splendidly 
 in this magnificent nineteenth century, and that we are living 
 in the best of possible worlds, are much greater favourites. 
 It does not matter. I feel that I have done my duty and that 
 is something at any rate. Is it not too late in any case ? 
 God only knows. I am almost afraid it is. The reign of 
 individualism seems to be passing away too rapidly, to permit 
 the hope, that the current of Socialism can be stemmed at 
 the eleventh hour. How sad ! What noble aspirations will 
 be buried under the ruins ! What wonderful springs of 
 untold blessings will be dried up, when the free aspirations 
 of independent manly work are pressed down under the heel 
 of state governed uniformity. Poor individualism ! Thouhast 
 only made one single mistake, but it was a deadly one. Thou 
 hast forgotten, that a free development of individual enter- 
 prise is only possible, if the base of all life and effort, if 
 mother earth, is freely open to all who want to exert their 
 powers in the infinite storeroom she offers to humanity. If it 
 is yet possible, retrace thy steps, reform at the last hour by 
 opening to all men the only field in which individual freedom 
 can be exerted : " Land.'' If thou canst not take this 
 decision very soon, farewell to thee and welcome Socialism ! 
 Death is hard and life is precious, even if it be life in a prison 
 
 THE END.
 
 233 
 
 APPENDIX. 
 
 H A N S A N D HIS CAKES 
 
 A PARABLE. 
 By M. FLURSCHEIM. 
 
 TranslaUd hij L. H. Berens. 
 
 [Reprinted from the South Australian Register, June igth, i8S8.] 
 
 Once upon a time there was an Island upon which two men and 
 their famihes lived. The one was named Hans and the other 
 Peter. They were not rich, but had enough to eat and drink, 
 which, after all, is of the most importance. Each had a small 
 tield in which he grew corn. They ground the corn into flour in a 
 small hand-mill and baked the flour into cakes, upon which they 
 lived and of which they were very fond. Although they had to 
 work hard and continuously they were on the whole happy and 
 comfortable. 
 
 One day when walking on the sea-shore Peter found a great big 
 book which had been washed ashore in a box. He took it home, 
 and on openmg it found it was ''The Wealth of Nations,'' written 
 by a man named Adam Smith. This book Peter used now to 
 read on Sundays, when there was no work to do ; and although 
 he did not understand all he read, yet from it he soon learned 
 that the way in which he and his neighbour wei'c working, each 
 doing all his own work, was not the best way, and that they often 
 wasted both time and labour. So one day he went to Hans and 
 said : — 
 
 " My dear neighbour, we have in the past both been foolish, and 
 wasted much time and work because we did not understand how 
 to make use of the advantages which the division of labour would 
 give us. I have now a proposition to make, I will take over our 
 fields as my property, will cultivate them and grow corn enough 
 for both of us. You shall take over all our capital, ovens, mills, 
 &c., as your property, and you must grind the flour and bake the 
 cakes, then our labour will be divided ; and by the better use
 
 234 
 
 APPENDIX. 
 
 of our time and the increased skill we should soon gain in our 
 respective occupations would enable both of us to produce more, 
 and so obtain a better living by the same amount of work, or we 
 could live as we are doing now with less labonr and shorter hours." 
 Hans had always had a high opinion of Peter's smartness, 
 especially since he had seen him readmg such a thick book, so he 
 agreed to this proposition. Everything turned out as Peter had 
 prophesied. Their increased skill and the improvements they 
 were enabled to make in their tools and methods of working soon 
 enabled them to produce more cakes in the same space of time 
 than they ever did before. They honestly and equally divided the 
 results of their united labour, and when they had enough they 
 used to take it easy, sleep, play games, and otherwise amuse 
 themselves. 
 
 But Peter read more of Adam Smith, and one day came again 
 to Hans and said — 
 
 " My dear Hans, we are, after all, a pair of careless fellows ; we 
 are enjoying the present, but making no provision for the future, 
 when we shall be old and weak. We should really occupy our 
 time in doing so. Besides, our communistic method of dividing 
 our goods is not in accordance with the doctrmes of political 
 economy, which teaches us that ' it is only when each one knows 
 that he is producing entirely for himself that the largest amount of 
 goods is produced. How would it be if each kept that which he 
 produces, and then exchanged one with the other ? " 
 
 Hans again agreed. Peter now commenced to cultivate corn 
 for stock, and Hans also started making flour and baking cakes 
 for stock. They exchanged their products, so that each received 
 an equal amount of corn, flour, and cakes. They, however, soon 
 found that although corn would keep pretty well, flour did not do 
 so, whilst their cakes soon became useless. Peter then soon found 
 it more practical to keep his corn in stock, and only exchanged it 
 for flour and cakes as he required them. The result was that 
 Hans only had work to do so long as his own stock of corn lasted, 
 and then he had to remain idle until Peter wanted some more 
 cakes ; Peter thus had a great advantage over poor Hans. On the 
 one hand, Peter could steadily increase his stock of grain, and 
 only exchanged it for cakes as he required them ; whilst, on the 
 other hand, Hans, having exhausted his stock of corn, and his 
 cakes having been consumed or become useless, soon only had 
 work when Peter wanted cakes, and gave him corn for them. So 
 Hans lived from hand to mouth without being able to make any 
 provision for his old age, whilst Peter soon became the happy 
 possessor of large stores of grain. 
 
 In order to get more corn Hans soon commenced to work in the
 
 Al'I'ENUlX. 235 
 
 fields for Peter; his wife and growing sons soon had to help also. 
 He invented labour-saving machines, which enabled him to pro- 
 duce more corn, more flour, and more cakes with the same amount 
 of labour. 
 
 Unfortunately now that Peter had nothing to do, he lost much 
 of his appetite and required less cai<es than ever, and the fewer 
 cakes he consumed the less opportunities Mans had to work and 
 earn corn. Because Peter had no appetite Hans had to starve. 
 
 At last Hans mustered up courage, went to see Peter, and told 
 him that there must be something wrong somewhere, as although 
 Peter did nothing the whole day long, whilst he and his family 
 worked from morning to night, yet Peter had enormous supplies of 
 corn and cakes, whilst he had not enough to live upon and could 
 not obtain work to supply his wants. Peter then replied : — " Ach, 
 my dear Hans that cannot be helped. Here, look for yourself. 
 Adam Smith distinctly states that the relations between employer 
 and employed are solely to be determined by the laws of supply 
 and demand. I have no more requirements ; there is no demand 
 for your cakes, therefore the supply of labour exceeds the demand. 
 It is no wonder, then, that you cannot find employment and are 
 suffering want." 
 
 "No," Hans at once replied; "there is a big demand for 
 cakes. Last night we all went hungry to bed, as we had nothing 
 to eat." 
 
 Peter smiled at Hans' simplicity, and was surprised that after 
 all the trouble he had taken, Hans had no real comprehension of 
 the doctrines of the orthodox political economists. ''That may 
 be," he replied ; "that sort of demand Smith does not mean, but 
 the effective demand by those who can pay. In order to command 
 cakes you must first have some corn, and, of course, I cannot give 
 up any of my corn, because I do not require 3'our goods. I have 
 more than enough already. The truth is that with your new 
 machines you have produced too many cakes ; so that at the 
 present moment we are suffering from ' a wave of depression.' 
 and there is a ' commercial crisis,' caused by your ' over-pro- 
 duction.'' " 
 
 Now, ^^over-production" was a word which Hans had never 
 heard before, so it made a great impression upon him ; he had 
 besides a great deal of respect for Peter and his Adam Smith. 
 He returned home nearly convinced that there was an over- 
 production of cakes, and that was the reason that tlicre was 
 nothing for him to do, and all his machines, ovens, &c., had to 
 remain idle ; Peter was indeed the only one who could pay for 
 them, and he had already too many. And yet he could not under- 
 stand how it was that he was not able to get any cakes because of
 
 236 APPENDIX. 
 
 his having produced too many. Besides, he remembered that all 
 the corn that Peter possessed was the result of his work; he had 
 planted and harvested it with the help of his family and his 
 machines, and yet Peter had everything in abundance, whilst he 
 and his family were starving. 
 
 One day a stranger came to the island and stayed there a few 
 hours. His name was Mr. Bi-metalism. from the Kingdom of 
 Paper-money. Hans told him his grievances, "Yes, my dear 
 fellow," Mr. Bi-nietalism replied, " I can easily understand that 
 under existing conditions you can make no progress ; you use corn 
 as money, as the standard of value, and as the production of corn 
 is naturally restricted, so your currency is also restricted. No 
 wonder then that you are suffering from over-production, that 
 your goods are too cheap and yet can find no purchasers. There 
 is, however, a very simple remedy for these evils ; you must have 
 a double currency : look out for all the pebbles which your island 
 contains and use them as money, as a second medium of exchange; 
 then everything will come right." 
 
 " But supposing Peter won't agree," said Hans. 
 
 " Then force him to adopt the new currency ; you are the 
 stronger, so you can easily do so," answered the stranger. 
 
 Hans did as he was told, went to Peter and insisted upon the 
 adoption of a pebble currency as well as of a corn currency. Peter 
 thought over the matter, but as he saw that Hans would stand no 
 nonsense he at last agreed. 
 
 Now. the pebbles which had been adopted as a niedium of pay- 
 ment of course belonged to Peter as owner of the soil. Great 
 confusion at first resulted from the adoption of the double currency, 
 because when Peter paid for cakes with corn he never dreamt of 
 giving so much as when he paid in pebbles. He gave at least ten 
 times as much weight in pebbles as in corn, and when plenty of 
 pebbles had been found he gave even a hundred times as much. 
 The relative value of pebbles and corn altered every day according 
 to their relative supply. In a word, corn instead of money, soon 
 became simply a commodity, the price of vvhich v.'as determined 
 by pebbles. Soon nothing was heard of a double currency ; 
 pebble currency was the only one upon the island. In con- 
 sequence of the small value of the medium of payment prices rose 
 enormously. Hans now received a hundred pounds' weight of 
 pebbles in exchange for a certain quantity of cakes, for which he 
 had previously received one pound weight of corn. But, strange 
 to say, his position was not improved. Peter consumed no more 
 cakes than previously ; Hans was always hungry and wanting 
 employment. 
 
 In the course of time both Hans and Peter died ; the descendants
 
 APPENDIX. 237 
 
 of Peter, of course, inherited the soil of tlie island, and through its 
 ownership possessed also the greater part of tlie accumulated 
 wealth ; the descendants of Hans, although working j'car in, year 
 out, from morning to night, could never permanently improve 
 their condition, but for the most part hved scantily from hand to 
 mouth. 
 
 In the course of time the origin of the difference in the condition 
 of the two classes of inhabitants was entirely forgotten. The 
 Peters at last came to regard themselves as a different race of men, 
 with different blood (blue blood) ; even most of the Hanses also 
 believed it, they had been told it so often; and really tlie leisure 
 which the Peters enjoyed gave them opportunities of obtaining 
 education and culture which was denied to the Hanses, who had 
 to work hard and continuously. The Hanses had also become 
 disunited. Some of them had secured for themselves the posses- 
 sion of all the capital, i.e., the machinery and tools. These divided 
 amongst themselves the lion"s share of the cakes before they 
 allowed the others to have any at all. But as the Peters were the 
 lords of the soil they owned all the corn and pebbles, and so 
 even those Hanses who owned the machinery and tools did not 
 have too luxurious lives, because in order to obtain corn and 
 pebbles they competed one against the other ; one offering more 
 cakes or other articles, which were now manufactured in the 
 island, for a given quantity of corn or pebbles than the other, until 
 they often ruined one another. In spite of this many of the 
 Hanses, who did not possess any machinery and tools, laid all 
 their sufferings at the door of those who did. In this false belief 
 they were at first naturally supported by the Peters, until the poor 
 Hanses commenced to attack them also. Then the Peters and 
 those of the Hanses who owned most of the machines and tools 
 met together in solemn conclave and in the name oi law and order 
 — to protect their law and theiy order — the}' passed Coercion Acts 
 and anti-Socialist laws. 
 
 In the course of time some of the Peters were extravagant, and 
 managed their estates so badly that some few of the Hanses had 
 obtained portions of their landed property. These Hanses were 
 the smartest and most cunning of all the race. Wherever there 
 was a Peter who managed badly, some of them used to come 
 smelling round and started business with him and conspired 
 against him to obtain his land, which was of course a much valued 
 possession. Through their continual smelling round, a certain 
 portion of the Hanses developed extra large bent noses, by which 
 they were easily recognised. The anger of the Peters was specially 
 directed against these people, who became richer and richer, and 
 who, with other of the Hanses, were gradually usurping the power 
 and position of the Peters. The Peters, therefore, worked up an
 
 238 APPENDIX. 
 
 agitation amongst the poorer Hanses against their brothers with 
 the peculiar shaped noses ; some of the Hanses went so far into 
 the trap as to murder and maim some of their brothers with the 
 peculiar shaped noses. This agitation was called by a big name — 
 " Tlie Anti-Semitic Movement." 
 
 The confusion and misery now became worse and worse. In the 
 olden times one knew exactly who were the oppressors and who 
 the oppressed, every child knew that the Peters were the tyrants, 
 and the Hanses their victims. But now some few Hanses had 
 become rich and possessors of those means of robbing and oppress- 
 ing the people which formerly belonged solely to the Peters. 
 Some of the Peters had become poor so that no one could easily 
 trace the reason of all the troubles. Everything was in confusion 
 and each man's hand was against his neighbour. The socialist 
 Hanses, as they were called, thought that everything would be 
 right if they could only get possession of all the machines and 
 tools, the anti-Semitic Hanses wanted to exterminate all the 
 men with tlie long, bent noses. The protectionist Hanses thought 
 that the trouble arose through the increasing trade with some 
 other islands which suffered from the same evils as themselves. 
 The maltluisian Hanses ascribed all the evils to overpopulation, 
 and talked about the advantages of emigration and the restriction 
 of the number of children, although there was plenty of land in the 
 island which was not cultivated, and there was no absolute 
 scarcity of supplies of all necessities. In fact there seemed to be 
 too much of everything ; all the storehouses and shops were full. 
 The real cause of their troubles was that the Hanses and Peters' 
 who now owned everything gave out too little corn and pebbles, 
 because they required but little of Ihe cakes and other goods now 
 made on the island ; theirs was the only "effective demand," and 
 when their requirements were satisfied there was no trade and no 
 work. 
 
 And so these stupid people continue until the present time, 
 unless they are all dead or have not yet all killed one another in the 
 confusion and quarrelling. No one amongst them now everthinks 
 of abolishing the real cause of their troubles, viz., the private 
 ownership of the soil, which was in.'tituted by Peter, still less is 
 the real remedy known, viz., resumption tJie of tJie soil as common 
 property. They will have to adopt it some day though, for wrong 
 cannot last for ever; right must at last triumph.
 
 December, iSgi. 
 
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