'ARASiTic Wealth
. , /, . anifesto to the people
A the Unitea States ....
By JOHN BROWN
THE LIBRARY
OF
THE UNIVERSITY
OF CALIFORNIA
LOS ANGELES
PARASITIC WEALTH
OR
MONEY REFORM.
A Manifesto to the People of the United States and
to the Workers of the Whole World.
BY
JOHN BROWN.
CHICAGO;
CHARLES H. KERR & COMPANY.
1898.
Copyright 1897
By Charles H. Kerr «& Company.
r?
if
Dedicated to the cause of Social Justice
by the Author.
1 61 7 ! 9H
PREFACE.
As these pages go to press, there comes a message
of unspeakable sadnesss bearing news of Henry
George's death.
A great and good man has passed away ; a staunch
and intrepid champion of the wronged and oppressed
has laid down his life in their service.
The world is better and purer for the life of such a
man, for as long as there are leaders in our midst so
fearless, so incorruptible, so outspoken, there is hope
for moral regeneration, hope for self-government,
hope for industrial emancipation. This man stood
up for the righting of deep-seated wrongs and has
labored nobly in the cause of social justice. Other
shoulders must take up the burden where awearied
he has left it.
It is right and fitting that this preface be the eulo-
gy of one whose works and deeds largely inspired
the writing of this book, and that it be a tribute of
respect and affection, more deeply felt than duly ex-
pressed, to the memory of one who devoted his life
to the betterment of mankind. And though the
views of social reform herein set forth diverge widely,
VI PREFACE
in some respects, from those held by Mr. George
— though they differ in method, detail and appli-
cation, yet in the main their object is the same — the
setting aright of grievous and oppressive v^Tongs.
It has been the writer's duty to attack a deepl} -
rooted economic fallacy, and to lay bare a monstrous
social crime. It requires a certain amount of cour-
age to assail accepted beliefs never before seriously
questioned, but it requires infinitely more courage to
abandon old beliefs for new ones. The mind warped
by the prejudices and superstitions of centuries of
race training and education, becomes more or less
fixed and inflexible, and well-nigh impermeable to
new views and conceptions. But this is an age of
research and unsparing criticism ; of an uprooting of
cherished ideas and opinions; of an unsettling of be-
liefs and convictions. Even the fundamental concepts
of physical science have been put on trial for bearing
false witness, and are in a fair way to be convicted
by the evidence. In the interpretations of nature, we
now endeavor to make the mind fit and harmonize
with the phenomena, instead of distorting the facts
of nature to fit our mental preconceptions and preju-
dices. Antiquity and "respectability'' are no longer
credentials of reliability nor even of veracity, and
we contemplate the dogmas of authority and tradition
prefacj: VII.
with more distrust and suspicion than with reverence
and awe.
If, therefore, the views here advanced do not ac-
cord with accepted ideas, and run counter to popular
beliefs and traditions, it is no indication that tliey are
not substantially true.
In the presentation of his ideas the author has sac-
rificed much detail for the sake of brevity, leaving
the elaborations arid amplifications for those more
competent for the work. It has been his fond ambi-
tion to present a feasible and practicable scheme of
social reform which should guarantee even justice to
all men, and whether he has successfully accom-
plished his task or not, is left to the judgment of the
reader.
INTRODUCTION.
A great social problem confronts us, pregnant with
man's destiny, and as old as history itself. It
has confronted other civilizations with visage no less
sullen and foreboding. It is the question of ques-
tions, the paramount issue, beside which all other
issues are trifling and unimportant. Upon its peace-
ful solution depends the very life and fate of our in-
stitutions, and it therefore challenges the thoughtful
consideration of ever}' good citizen who has the peace
and welfare of his country at heart. The duty and
responsibility of citizenship seeking the general good,
is the writer's only excuse for publication.
As a layman trespassing on a domain of science of
exceptional difficulty he keenly feels the responsibil-
ity of his position and conclusions, and should have
wished that some one better equipped and better able
had assumed it.
If the views here submitted shed a ray of hope on
the miserable lot of those so grievously wronged by
existing conditions, — if they contribute in the least
toward an orderly and peaceful solution of a great
6 INTRODUCTION
and urgent problem, then time has not been
wasted.
It is of course too much to expect that the benefici-
aries of the present unjust system should agree with
the deductions ; indeed, so strong is the force of habit,
so powerful the bias of education, and so great the
inertia to change in accepted ideas, that those
drilled and schooled in economic methods hoary and
venerable with age and heavy with the weight of
authority, will of course consider it presumptuous
to even put these theories to the test of criticism.
And even if prejudices of custom and training could
be removed, the falsity of present conditions exposed,
and the social crime of centuries laid bare, yet as the
interests of the socially benefited depend on the
continuation of the present system, we should hardly
expect this class to become elated over any prospec-
tive change.
But while the majority of the socially benefited
will reluctantly agree with the logical conclusions
even when convinced of their truth, there are some
men in this class so conscientious, and so strong in
the sense of honor and justice, that when converted
to the views here set forth will not only cheerfully
relinquish the unfair advantage society gives them
over their fellow men. but will gladly aid the cause
of justice and reform.
INTRODUCTION >]
To such of the unselfish and truly noble, these pages
come greeting, asking their sympathy and co-opera-
tion in the cause of humanity.
To rail at millionaires is a waste of breath. It is
not only useless but senseless. The millionaire class
neither individually nor collectively are responsible
for our social miseries. Like the tramp and pauper,
the millionaire is a natural outgrowth of social per-
versions — the product of a faulty civilization. It is
the system and not its product that must be as-
sailed.
Those whom our social maladjustments so cruelly
oppress are naturally anxious for relief, and it will not
be difficult to enlist their sympathies in the overthrow
of a most pernicious and unjust social system.
But the socially benefited will not be so anxious
for a change, for the righting of these wrongs implies
a surrender of advantages enjoyed for ages. We can
only appeal to their sense of justice and honor, and
indeed to their instinct of self-preservation, for society
as now organized is built on a volcano, and there is
no safety for any one until its foundations rest on
righteousness.
The rich and powerful could hasten social reform
by active sympathy and co-operation. Thev can also
thwart the forces of justice by obstructive measures,
8 INTRODUCTION
but they cannot stop them. Whether the socially
benefited co-operate in the movement toward social
equity or not, the present system is doomed and its
overthrow certain. In the wake of social regenera-
tion and readjustment, follows the downfall of privi-
lege and despotism.
It is not the aim of the author to appeal to the
passions of men, but to their reason, and if in the heat
of argument, by metaphor or figure of speech he take
the liberties of counsel pleading the cause of justice
for the wronged and oppressed, he begs to assure his
readers that no feelings against classes or individu-
als have prompted the writing.
Principles are more potent than denunciation, and
arguments more effective than eloquence. It is upon
these alone that he relies for proof of his theories.
PARASITIC WEALTH.
CHAPTER I.
That much social misery prevails even in times of
comparative prosperity, no observant student will deny.
That the symptoms of suffering are periodically
aggravated by v^adespread industrial distress, we have
had nearly five years of convincing proof, and the
end is not yet.
Instinctively people feel that underlying these nor-
mal and abnormal social disorders there is some great
latent wrong, which if righted would make mankind
whole.
The reasons assijined for these social ills are as nu-
merous as the remedies proposed for their cure. None
of the schemes, however, seem to bring us nearer to
the practical solution of the problem, and the Sphinx
of Fate is still busy putting the riddle to an anxious
and puzzled civilization. Shall we solve it, or will it
solve us?
Of course, if no organic defect can be disclosed in
our present social system ; if no economic condition
lO PARASITIC WEALTH
or principle has been violated, as would appear from
our text books on Political Science, then there can be
no redress for our social woes and we must be con-
tent to plod along in the traditional groove and make
the best of it. If the nightmare of human misery
and depravity which confronts us be the natural re-
sult of a well ordered civilization, then there can be
no help for it. We might as well let the mad rush
go on unhindered, and if millions be trampled under
foot and perish in the struggle, that is their lookout ;
we have the comforting theories of Political Science
to fall back on to soothe the troubled conscience and
relieve us of moral responsibility for the social havoc.
The social question is first of all a question of
moral accountability to ourselves. Can we look our
crime and pauperism in the face and without reproach
of conscience say that we are not to blame ?
If on a fairly honest investigation, we can establish
a clean and blanreless record, then there is no griev-
ance that reform can grapple with, and there can be
no social problem. If on the other hand, we dis-
cover a fundamental wrong in our Social Economics,
to which this misery can be traced, then it is our
moral duty to at once set about removing it, for fur-
ther temporizing with such an evil is a crime.
If our grievances be real and the present social ar-
PARASITIC WEALTH I^
rangements be inadequate to cope with them, then
there must be some one true way, apart from the
present system, in which the evil may be met, and
this must be the common ground on which the
present system and all other schemes of social reform
can agree. There must be some economic condition
or principle on which all reform forces may combine
for the common good. To find this condition or
principle is the aim of the writer.
Applying deductively the test of ethics to the social
problem, we should consider that system of society the
best, which while conceding to the individual the
greatest possible personal freedom consistent with the
highest welfare of society as a w^hole, guarantees to
every member of the community an equal chance in
the race of life without prejudice, an equal opportunity
without favor or hindrance.
The criterion of Social Equit}' resolves itself,there-
fore, simply into "Fair-play." If we enter the arena
of life on equal terms as regards natural opportuni-
ties, then all the requirements of social ethics are
satisfied. We have but to exert our faculties and
make the proper effort, and rew^ard comes to us in a
direct ratio of our services to society. Our reward is
then a measure of our effort and ability. This is justice ;
more we cannot ask.
12 PARASITIC WEALTH
Now, with our boasted " equal rights and privileges,"
do our laws and economic conditions guarantee fair-
play to every member of the communit}- whatever
his station in life ? Are we quite sure that effort and
ability are rewarded according to merit, that benefits
reaped are in proportion to services rendered ? If so,
then the present social conditions must bear witness
to such equit}', and the wealth of the rich must be an
equivalent of prodigious services they rendered to so-
ciety, and the poverty of the poor must be an indica-
tion of utter incapacity. We judge of the tree by its
fruits. If our economic conditions are right, then the
distribution of wealth and income must be just. If
not just, then the economic conditions cannot be
right.
Let us for a moment contemplate the disparities of
wealth as we see them, and take a mental inventory
of the comparative commercial and industrial efficiency
of those who possess colossal fortunes and those who
do not.
Reliable statistics could throw much light on a
dark subject, but no serious investigation has been
undertaken to map out the possessions of the rich and
poor, and the figures are riot available. However,
fairly good estimates have been independently made
by different competent persons as to the distribution
of wealth in tlie United States.
PARASITIC WEALTH 1 3
Mr. Henry Gannett in his interesting book, "The
Building of a Nation," has been at some pains to ob-
tain data for his estimates. For the classification of
the rich he used Bradstreet's book of ratings and util-
ized the eleventh census returns as far as available in
estimating the wealth of other classes.
The distribution of wealth in percentages of the
total on basis of population percentages appear from
his abstracts as follows :
60 00 per cent, of the population own 6 per cent, of total v/ealth.
37 24 " " " " 37 " "
28 " " " " 27 " " "
Q A1 ■< <« <• <i C. II II (1
On a basis of 62,600 millions of dollars of pri-
vate wealth in the United States in 1890, the average
wealth of these classes divided among 12,690,151
families would be :
No. of Families.
Wealth.
Averages
7,614.091
$ 3,756,000,000
493
4,725,812
23,162,000,000
4,901
313,447
15,650,000,000
49.927
35,532
16,902,000,000
475,684
1.269
3,130,000,000
2.466,510
12.690.151 $62,600,000,000 4.933
To construct a curve of "Wealth Distribution" from
the above data is a comparatively easy matter. We
14 PARASITIC WEALTH
may safely assume that among the 7,614,091 families
constituting the first group, there will be every possi-
ble gradation of holdings, from nothing at the starva-
tion end up to $986 at the other end. The second,
third, fourth and fifth groups, must without break
form a continuous curve from a possession of 986
dollars up to wealth amounting probably to a hundred
millions or more. Plate I. shows the development
of these data into a curve. The limits of the page
allow us to reach a level of ^150,000. Imagination
must supplement the shortcomings of the page. If
the limit of aggregated wealth is one hundred and
fifty millions, then we must imagine the page magni-
fied one thousand times in order to vertically represent
this high level!
The contrast between the few enormously rich and
the many wretchedly poor is bewildering. But this
disparity might prove nothing but prodigious capacity
and productive efficiency on the one hand and utter
incapacity and worthlessness at the other, unless we
can show that there is a bacillus in the "body social"
producing symptoms of turgescence on the one hand
and atrophy on the other.
According to Mr. Gannett's estimate 350,000 fami-
lies (less than 3 per cent.) own 57 per cent, of the
total wealth, while 12,340,000 families own the bal-
ance of 43 per cent.
POPULATION.
JP^rterviaot^ du/t^t<rrus-eac^oit^/^caTi- can&xrnin^ ^ Z^9y oocyumj^^j
ZO
■JO
J^
&0
-Z°-
so
ffo /CO
. /OO, oacZercl .
PLAT Ell^
CURVE OF.WEALTH.
SOj £0<7jr^>^> ^ ^
/o^oco Zet^el .
^>^^^^^^^^^^^^^»■^^^^^^«. ^>^<^^^^^^'v^■^ t^
1 6 PARASITIC WEALTH
In the *' Political Science Quarterly" for Decem-
ber. 1893, Mr. G. K. Holmes, basing his estimates on
the Eleventh Census returns, starts with the wage
earning and farming class, to obtain holdings of the
very rich, his method being the opposite of that of
Mr. Gannett. His figures for this class when ar-
ranged appear as follows :
Families.
Per Cent.
Wealth.
Average
1,440,000
11.35
216,000,000
150
5,159,796
40.66
2,579,898,000
500
720,618
5.68
1,142,531,550
1585
752,760
5.93
1,359,741,600
1806
1,756,440
13.84
5,309,589,600
3023
1,764,273
13.90
6,749,076,593
3825
11,593,887 91.36 17,356,837,343
Reducing these for convenience to three items, we
have :
Families.
Per Cent.
Wealth.
Average
6,599,796
52.01
2,795,898,000
424
1,473,378
11.61
2,502,273,150
1698
3,520,713
27.74
12,058,666,193
3425
11,593,887 91.36 17,356,837,343
It thus appears that 91 per cent, of the people own
29 per cent, of the wealth, while 9 per cent, own 71
per cent, of the wealth. Completing the above state-
ment with the celebrated classification of 4.047
PARASITIC WEALTH 1 7
millionaires given by the New York Tribune, and
arranging the remaining wealth on a basis of progres-
sion, the wealth curve would appear something like
that shown on Plate II.
In his excellent book "The Present Distribution of
Wealth," Dr. Chas. B. Spahr, b}' an independent
method of research, arrives at substantially the same
results as Mr. Holmes, and his figures, falling within
a similar wealth curve, are valuable as corroborative
evidence. Dr. Spahr estimates that one per cent, of
the people own half of the wealth of the country, or
as much as the remaining ninety-nine.
In the Forum for November 1889, Mr. Thos. G.
Shearman gave estimates of distribution, based on the
wealth of the millionaire class, and on the application
of the known law of averages to such holdings, to ob-
tain the relative* wealth of the other classes. His es-
timates of the nation's wealth and population very
closely approximate subsequent census returns. Sub-
joined figures are taken from his article in the New
York World of June 20, 1897.
Two tables were prepared ; one on the basis of the
British Income Tax, and the other on the basis of tax
returns from the City of Boston. On the former basis,
the distribution when reduced to three great classes,
is found to be as follows :
POPULATION
yerCen.ix^& c/ioz^^u>?z^ (U'/^i/'jresr'-i^ /, Z^^.C'Oo/iim.g./tej evzoi
/o_
zo
J£0_
&0
TO
fo
u
J^ /Oq, OCOj:ei-ei.
-PLATE IL„
CURVE OF WEALTH
1^
I
-I
PARASITIC WEALTH
Class.
Families.
Wealth.
Average.
Rich,
235,310
$43,900 millions
$186,567
Middle
1,200.000
7.500
6,250
Working
11,565.000
11,175
968
From this it would appear, that less than two per
cent, of the people own seventy per cent, of the
wealth of the United States.
In the table on the basis of American Tax Re-
turns, the classification is as follows :
Families
Total Wealth.
Average Wealth
70
$ 2.625 millions
$37,500,000
90
1,025
If
11,500,000
180
1,440
If
8,000,000
135
968
II
6,800.000
360
1.656
II
4,600,000
1755
4.036
tt
2,300,000
6000
7.500
If
1,250,000
7000
4,550
If
650,000
11000
4,125
ff
375,000
14000
3,220
If
830,000
16500
2,722
It
165.000
50000
5,000
II
100,000
75000
4,500
If
60,000
200000
4,000
ff
20.000
1000000
3.500
II
8,500
11620000
11.215
If
13002090 62,082
The above condensed under head of three great
classes becomes:
20 PARASITIC WEALTH
Families. Total Wealth. Average Wealth.
182,090 $ 43,367 millions $238,135
1,200,000 7,500 " 6,250
11,620,000 11,215 " 968
From this table it would appear that 40,000 fami-
lies own over one-half, while one-seventieth part of the
population (1-4/10 per cent.) owns more than two-
thirds of the country's wealth.
As the influences at work in the concentration of
wealth in the United States are more potent than
those in England, on account of much higher rates of
interest, the estimates on basis of American tax re-
turns should be more reliable than those on basis of
British Income Tax. That these influences are con-
stantly at work and the accummulations of wealth are
becoming greater and greater there can hardl}' be
any doubt. It is probably safe to say that 250,000
families own more than two-thirds of the United
States. These 250,000 families practically dictate
the government policy of the nation, control our legis-
latures and mould public opinion largely to suit their
own class interests. The masses are mere puppets
in the hands of these shrewd manipulators — mere
tools. to do the bidding of masters. A highly efficient
and influential press largely in the service and control
of these people, manufactures public sentiment to
order, and schools the masses within the narrow lines
PARASITIC WEALTH 21
of political orthodoxy and blind party allegiance.
The herd is driven shouting to the quadrennial
round-up, rushing blindly where the party lash impels
it into one political groove or another. It cannot go
wrong, for it doesn't matter much which wins. The
tariff goes up or the tariff goes down, according to
which party is in control : the work of the outgoing
administration is promptly undone and reversed ;
finances are manipulated, tariffs juggled, commerce
and industry upset, and this is government — the gov-
ernment of the most enlightened people on earth!
On Plate III. Mr. Shearman's figures have been de-
veloped into a curve of distribution. This curve is
pitched to a steeper gradient, being more sudden and
pronounced than its predecessors, but while the pitch
varies in degree in each, these curves all show some
cumulative force or agency at work rapidly heaping
up the millions into the hands of a constantly dimin-
ishing minority, whilst the vast bulk of the people
seem to grow relatively poorer. They all testify to
some powerful influence tending to absorb and ap-
propriate the nation's productive output and turn it
over to swell the wealth of the redundantly rich.
A class of apologists for our social perversions has
been coming forward with hopeful and optimistic
arguments, pursuading us, that after all, mankind is
POPULATION
■ Perceniccocdc-t/c^cc/t^ C<!mprcJC7io /, Zi>ff^Ccoyamt/eej
2o
■Jo
^o
^o
&0
yo
S-O
90
/
/oo, oooXet^cl !
i
PLATE^nr:
— CURVE OF WEALTH.—
jL. SCy l/OO Jlfor^/
/OjCooZcKal .
. _ Z':in(Z i^'s^^v(\^ao i^ '^fe <3^JM . _» .
\\\\\\s\\\sss^vs^^\ss^;-;^^''
^\S\S\S\\S\S\^:^^^
PARASITIC WEALTH 23
doing fairly well ; that the disparities are decreasing,
and the immensely rich are becoming poorer ; that the
middle classes are looming up, while the "working
classes" are better off than before. English statis-
tics are quoted to show the decline of English fortunes
tracing back to eras prior to the modern industrial
movement. The fact is, that in England and other
old countries in Europe, there has been a decline in
non-productive incomes, due to gradual decline in
money premium. Productive effort has settled down
to a condition of industrial and commercial repose.
New enterprises and undertakings have not been
seeking the money function very eagerly, while money
volume has been expanding and its circulation has
increased by improved banking methods, thus greatly
reducing competitive demand for its use. In this way
" Capital" yields less profit than in countries where
natural resources are not yet exploited, inventive
activities are keen and industrial movement intense,
all making the competition for money eager and
premium rates high. Land rents have also remained
stationary or declined, owing to the overflow popula-
tion emigrating to new countries, thus relieving the
pressure of over-population and checking any advance
in rents. Thus the non-productive sources of income
are not as active in accumulating fortunes as on this
side of the Atlantic.
24 PARASITIC WEALTH
With processes and methods of production vastly
improved, we should naturally expect that the very
lowest stratum of society would be affected b}- the
increased productive efficiency. But while the
"working classes" have been benefited in a
marked degree, aggregated wealth has not apparently
relaxed its grip on the sources of its inordinate
growth and the disparities do not seem to have grown
less. But even if it were proved, that the differences
are really growing less, it would leave the problem
untouched. Why should there be injustice ? While
we have the industrious poor with us always, we also
have the idle rich with us, drawing vast fortunes from
non-productive sources.
In the "Arena" for March, 1896, Mr. Geo. B.
Waldron has made an attempt to estimate the income
of the people of the United States by families, on
fairly conservative and reasonably reliable lines. By
consolidating the first two items of his classification,
the averages appear to be as follows :
Families Average Income
53.26 per cent. 393
14.75
10.89
9.04
7.12
3.59
735
1,013
1,438
2,267
3,950
POPULATION IN EQUAL percentage:' SUBDIVISIONS
/o
ZO
<30
4^g
cTC
£o
TO
^o
S'O
/op
H
/co,ooo Jievcd
I
-H
PUTE E
CURVE OFINCOMES
-X
^
— •§
so, coo Zet/e^
26 PARASITIC WEALTH
Families Average Income
1.10 per cent. 8,590
.22 " 24,600
.03 •■ 206,325
100.00 1,075
Plate IV shows the figures developed into a curve
of incomes. As in the case of the curves of wealth,
it may be safely assumed that there will be all possible
gradations of income from zero at the low level of
despair and destitution, up to an amazing income of
from six to nine millions of dollars at the end of
wealth and affluence. The distribution of incomes is
based on a total productive capacity of 13,641 mil-
lions of dollars per year, to be divided among 12,-
690,151 families, each family consisting of 4-93/100
persons, of whom 1-8/ 10 (1.7915) are workers. The
average income per family on this basis is $1075 per
year. An analysis of the figures will show that
nearly 80 per cent, of the families live below this
average income. The average of this So per cent.,
in a diminishing series, must therefore be just one-
half of the general average, or $537.50. The bal-
ance of the 20 per cent, range from $1075 per year up
to several millions. It is at this end chiefly, that
bank savings are accumulated. In 1891 there were
4.533,217 depositors on the books of some 1,011 sav-
PARASITIC WEALTH 27
ings banks. Figuring these depositors as being the
workers, and assuming that the savings were not
pooled, it would appear on the basis of i. 7915 workers
per family, that 2,530,000 had money deposits in
banks. This is less than 20 per cent, of the whole
number of families. Within certain limitations, these
deposits doubtless follow the income curve. We
may safely assume that fully two-thirds of these range
between one dollar and one hundred dollars and
average only fifty dollars. The balance will range
between one hundred dollars and the bank limit. A
large number of depositors no doubt maintain a multi-
plicity of accounts at the various banks thus fictitiously
swelling the number of depositors. If these estimates
are fair, something like 95 per cent, of the people
derive very little or no benefit whatever from money
savings as a non-productive source of income, and
when it is explained that the money volume is only
about one-foriieth (1/40) of the wealth volume, and
that therefore interest on money represents only about
one-fortieth (1/40) of the interest on other forms of
"Capital" held by the very rich, it will be seen that
the benefits from interest on savings among the 95
percent, of the people amounts to practically nothing.
A dollar per day wage per worker is considered a
low plane of living, but one on which people could
28 PARASITIC WEALTH
live in comparative comfort. At one dollar per day
for 300 working days in the year, a family of average
number of workers could earn $537 per year, or half
the average income. According to the figures given,
about 40 per cent., or five million families, live below
the dollar level of comfort, the average income being
50 cents per day per worker. Four millions of these
live below the 80 cents per day level of comfort,
averaging 40 cents per day. Three millions of these
receive less than 60 cents, averaging 30 cents per day
per worker. Two million live below the 40 cents
per day level, and average only twenty cents per day
per worker, and a million of the most wretched onl}^
average 10 cents per day per worker, unless helped
out by charity. We may assume that about three per
cent, of the population is at all times more or less de-
pendent on charity. They consist of the superan-
nuated, decrepid, crippled, -and incapable, — the deaf,
dumb, blind and halt — the insane, idiotic and other-
wise dependent; 380,700 families would embrace this
class. A liberal estimate might place the num-
ber at 500,000 families. This would leave 4,-
500,000 self-supporting families living on from 15
cents up to one dollar per day per worker. This
level of "comfort" is based upon a period of relative
industrial prosperity. What the level of "comfort"
PARASITIC WEALTH 2g
has been during the last four and a half years of hard
times, we can better imagine than realize.
The same potent factor active in rolling up the
millions into the hands of the few, must also operate
in the distribution of incomes. The curve of income
shows this in the rapid rise of the level at the end of
''affluence." The curve takes the same sudden leap
into space. We can follow the vertical line of ex-
aggerated income only up to the $150,000 level. To
reach six to nine millions, we must imagine the page
increased vertically from forty to sixty times to show
the dizzy height of wealth aggregation. In the case
of the curve of wealth we imagined the page verti-
cally increased one thousand times to show the 150
million level. These figures are amazing and we fail
to grasp their real meaning. What are we to sa}^ of
a system which produces such results ?
When the people of the Uuited States fully realize
that the nation's wealth output is slowly but surely
finding its wa}' into the hands of a diminishing minority
— that the possessors of this wealth are virtually mas-
ters of industrial production — in a word, the "owners"
of the domain and its products, while the balance of
mankind is a kind of incidental chattel to this wealth
absorbing system of Political Economy, then we may
expect an investigation into our economic methodn.
30 PARASITIC WEALTH
We cannot be industrially enslaved and remain po-
litically free. Great disparities in power make kings
and subjects. Democracy and servitude are incom-
patible terms. The aggressions of wealth are a m^en-
ace to free institutions and must be checked if we
prize our liberty. The corrupting influence of the
money power permeates societ}' from stem to core
and has struck deep into our political methods. Be-
hold the government of a great people legislating
away special privileges to Trusts, Combines and
Monopolies, and the disgraceful spectacle of a hungry
horde of vultures over the tariff spoils ! Truth is
perverted to maintain this class in power, and by the
most specious and shallow reasoning the people are
deluded into the belief that embarassment of com-
merce by tariff restrictions will improve business,
that to hinder trade is to encourage it, that the For-
eigner pays our taxes, that monopoly privileges to
the few will enrich the many, and make us all pros-
perous !
What are we to think of these surprising theories,
and the class that promulgates them .^ The hand-
writing is on the wall and the time of reckoning with
the people is at hand.
No fair student of Political Science will honestly
and conscientiously maintain that the conditions which
PARASITIC WEALTH 3I
result in such enormous disparities of well-being are
of normal origin. No fair minded person will con-
tend that such conditions can have the sanction of jus-
tice or morality, or that they may be even justified on
the plea of expediency. There is a fundamental
wrong somewhere. The subject matter is not new ;
it has been fully treated by capable and well equipped
scholars. The grinding injustice of present conditions
has been discussed with great eloquence and ability,
but all theories and schemes of reform have been
dashed and shattered on the stubborn rock of Political
Science. Is the science to blam^ ? No, but the per-
version of its factors to private instead of public use is
the cause of our social undoing.
CHAPTER 11.
Before proceeding with the further discussion of
the subject, a few words of explanation in regard to
economic terms and factors will be necessary to make
our meaning clear.
All wealth is the offspring of human effort exerted
on the materials of the earth. All human effort,
whether physical or mental, is work. If in deference
to the terms used by Political Economists we call hu-
man effort in its broad sense " Labor,'' then Wealth is
the offspring of " Land" and " Labor. " Only in its
expanded sense will the term ''Labor'' be employed.
Commerce is the exchange of the products of labor
that is, of forms of wealth ; and Industry is the cre-
ation of new wealth.
Primitive commerce and industry were conducted
by the wasteful and unsatisfactory method of barter.
They were the clumsy inefficient methods of barbar-
ism. When money came into use, civilization was
born, and money became the third factor of produc-
tive effort. Land, labor and money constitute the
economic trinity. The writer is conscious of uttering
a most "dangerous" economic "heresy" in proclaim-
32
PARASITIC WEALTH 33
ing money as a prime factor of production; it marks
his departure from prevailing opinions. The usual
classification in our text books on Political Science,
is Land. Labor and Capital, with a fourth factor
sometimes added as "business ability." Business
ability being a form of human effort, is simply a dif-
ferential of Labor and may be ignored. The word
"Capital" implies two very separate and distinct
things, and is therefore the source of much confusion
of thought. "Capital," in the sense of v%'ealth is a
product and not a factor. It is the offspring of Land,
Labor and Mone\-. "Capital" when used in the
sense of money is a true factor of production and only
in that sense can it be so understood. We are now
concerned with modern methods of commerce and in-
dustry — the methods of civilization — which were made
possible by the use of money alone. Money takes the
place of concrete wealth in exchange and production,
and becomes so efficient a means of wealth creation,
that to be without it implies a return to barbarism.
Concrete wealth is a mere dead product, an inert tool
requiring human effort to operate it. But labor must
remain idle until set free by some agent or incentive.
That agent is money. Money is therefore the prime
mover of industrial effort, the initiative of production,
the indispensable factor of wealth creation. It is as
34 PARASITIC WEALTH
it were the controlling valve of Industrial energy —
selling the wheels of industry in motion. It is the
magic switch which turns on the electric power of
human effort. Wealth or Capital, is the machinery
through vv'hich the energy set free b}' the money func-
tion operates to produce more wealth ; it is the dead tool
of productive ei^ort. All wealth which conduces to
comfort and shelter, all improvements which assist
commerce and industry and make human effort
effective, are Capital. They are the tools of produc-
tion. The land is our workshop and the nation's
wealth the tools, and upon the elaboration and exten-
siveness of the plant depends the efficitncy of man's
effort.
Can we carry on the business of civilization by
means of goods? No, it would reduce us to the dull,
sluggish methods of barter, and death and famine
would overtake us — civilization would perish.
Is it British wealth we want when we desire to de-
velop our resources or build railroads? No, we do
not need the wealth, for at this moment we are the
richest nation on the face of the globe. We need the
money.
Is it the landed or personal wealth of our American
'• Capitalist" we need to set going the wheels of in-
dustry? No, it is the money he can exchange for
these properties. That and nothing else.
PARASITIC WEALTH 35
Money is one of the industrial opportunities of
man, and the most efficient tool at his command. So
important is the money function that we could afford
to sacrifice more than half our labor rather than do
without it. Indeed so essential is it, that for centur-
ies money was considered the only true wealth of a
nation, and that idea has survived to this day as the
"balance of trade" fallacy — a ver}' excusable error.
Like an invention of great utility, money multiplies
the effectiveness of labor many fold. To create
wealth without the aid of money is to produce it un-
der conditions of greatest disadvantage. The money
function confers on productive effort an efficiency un-
assisted labor does not possess, so that properly speak-
ing wealth may be said to be the offspring of Labor
and the money function. These two factors of pro-
duction are always associated together and cannot be
separated without causing immediate industrial col-
lapse. It thus appears that money is indispensable
to production, and if in any way it may be made arti-
ficially scarce, and its function be monopolized, then
premium must emerge as the price of its limitation.
Such premium, though pressing heavil}- on produc-
tive effort, would not. if confined simply to mone\".
affect us seriously, were it not that "money use"
confers on "property use" the same prerogative of
36 PARASITIC WEALTH
premium, and when we fully realize that the wealth
volume capable of bearing premium, is about forty
times that of the money of circulation, v/e will better
appreciate the enormous proportions such a premium
charge will assume.
As without the money function wealth cannot be
reproduced except under conditions of greatest dis-
advantage, it is quite natural tiiat if money bear a
premium, all wealth, the product of money's magic
power, should also bear a premium. Were this not
so, then the owners of money would not part with it
except in usury, and its conversion into any sort of
permanent investment would be undesirable, which is
absurd. It follows, therefore, that whatever interest
money brings for its hire, property, the offspring of
its function, must also bring for its use. It should be
noted, that all wealth, the product of human effort, is
perishable, and will become less valuable with ad-
vancing time. Why should it bear interest when it
has a depreciating value ? Money, however, is not
perishable. Honest money will purchase the same
equivalent of labor to-da}' that it will ten years hence.
Money is the parent of modern industr\'. the creator
of wealth. When money is at a premium, its off-
spring, wealth, born under the adversities of currency
limitations, carries with it as the price of its parent-
PARASITIC WEALTH 37
age, similar premium tendencies. Experience shows
that as premium declines on money, it straight-way
declines on its products. As rent emerges from the
monopoly of land, so interest emerges from the limi-
tation of money.
These views are completely at variance with those
advanced by economic writers and will be referred
to again.
Money has two separate and distinct functions. It
is the medium of exchange for commodities, or past
services, impressed on the products of labor. This
is commerce.
It is also the agent of production as setting labor
free to produce new wealth. This is Industry. In
both cascs it becomes a measure of value, of services.
Money is either a form of wealth or representative
of wealth. In either case it is simply an order on
society for services rendered, for energy usefully ex-
pended, giving the possessor the power to levy on
society for an equivalent in past or present services.
It is a voucher of human effort expended productively,
and as such, it is a sight draft on the products of in-
dustry, or an order on the world's productive effort.
Money should therefore come to us merely as a re-
ward for services rendered. If it comes to us in any
other way, then we posses an order on society for
38 PARASITIC WEALTH
productive effort for which no equivalent has been
rendered. Tliis is appropriation.
Wages and profit, or incomes under any other
name, vinless they be the measure of actual productive
services, or services conferring benehts, must be a
tribute on the productive efforts of others, and simpl}'
mean injustice — a violation of the eighth command-
ment.
Money in its last analysis, is a medium for the ex-
change of services.
"Whatever performs this function, does this money-
work, is money, no matter what it is made of." (F.
A. Walker. Political Econom}'.)
In primitive socict}' mone\" had to be some form of
wealthier sc in order to pass uncliallenged as a me-
dium of final payment. It took the forrii of coin made
of metals used iov personal adornment. The money
of the past is still the money of the present. An im-
provement was made in substituting paper for metal,
and holding the metal as a reserve for its redemption.
This improvement led to the abuses of inflation, and
caused so many panics and failures, that the good
features of the s} stem v\ ere to a large degree counter-
balanced.
Excepting that the so called "precious'' metals are
a form of wealth /ycr sc. there has been no valitl
PARASITIC WEALTH 39
reason assi<^ned why gold or silver should be used for
money. There are some good reasons why they should
not be so used. In the tirst place. if money be a form of
wealth then to perform its money function lliis wealth
must be withdrawn from its legitimate field of utility
in the arts and industries, and this is a waste of its
value in use, and therefore a useless waste of wealth.
Secondly, the volume of coin metal is not controll-
able and the output is a constant source of anxiety.
Nothing short of an unlimited coinage law will main-
tain these metals at a uniform value and prevent the
fluctuations of demand and supply, and vmlimited
coinage is not without grave dangers as will appear
later.
Thirdly, an unlimited coinage law arbitrarily fixes
a price on these money metals and confers a fictitious
value upon them far in excess of cost of production
for industrial purposes alone, thus further contribut-
ing to a waste of wealth.
The coinage law is simply a form of "'protection''
for a hoary headed ''infant industry" — gold mining.
Demonetize gold universally, and down goes the
price of this privileged metal probably two-thirds of
its artificial value. So thoroughly, however, are
financiers and writers on Political Science committed
to a metal basis, that doubtless any project of reform
40 PARASITIC WEALTH
will be met in a spirit of intolerance and be opposed
with stubborn resistance. And yet our financial sys-
tem is the survival of a primitive civilization and is
entirely inadequate to the growing needs of a high
social development. The shortcomings are so glar-
ing and the social disasters caused by present methods
so wide-spread, that it should be superllous to point
them out. All our panics and hard times are directly
traceable to financial derangements, mainly due to
efforts at inflation or expansion of a limited and in-
adequate money volume. Our business depressions
invariably originate in a money panic. Antecedent
periods of similar business collapse recurring ap-
parently at regular inter\als, strengthen the general
idea that such hard times are to be expected, and this
adds to the feeling of insecurity and helpless resigna-
tion. An epidemic of fear and apprehension seizes
the popular m,ind and all prepare for the worst. En-
forced idleness stares millions in the face and re-
trenchment begins its fatal work. Demand for lux-
uries decreases and producers of these are laid off
first. Loss of waives of the idle further reduces con-
sumption of Ihe less urgent articles and more pro-
ducers are thrown out of work. These again lessen
the demand for products, and so the hard times
cumulatively become harder, until the rock bottom of
PARASITIC WEALTH 4 1
social misery and distress has been reached. The
descent to adversity is slow and deliberate. The
vast and ponderous machinery of industrial produc-
tion gradually slows down ; to overcome the inertia
of its great mass and momentum requires much time.
The ascent to prosperity is no less slow ; it requires
fully as much time to start the ponderous machinery
going again. The cycle is usually completed in four
or five years according to circumstances, in wliich
legislative interferences with trade must figure very
largely.
Neither over-production nor under-consumption had
anything to do with our business paralysis. The
wheels of industry stopped in the midst of compara-
tive prosperity without apparent cause. It originated
in a distrust of our financial integrity and the tendency
of gold to go to a premium. This precipitated a
money panic causing financial stringency and under-
mining confidence in business. Fear and apprehen-
sion did the rest. There may have been no immedi-
ate occasion for the disastrous stoppage, a mere rumor
may have started the financial scare, but once started
we lacked the resources to check it. and like a fren-
zied panic-stricken crowd at the false alarm of fire,
we rushed pell-mell to destruction leaving wreck and
ruin in our wake.
42 PARASITIC WEALTH
What has the panic cost us?
The following figures of Bank Clearances of the
United States are taken from the Bureau of Statistics,
Treas. Dept. Abstract for 1896. The population es-
timates come from U. S. Treas. Dept. Circular No.
123. In order to eliminate the disturbing influence
of the panic year, we are justified in leaving it out of
our comparisons. We shall therefore compare figures
for the three years prior to the panic 3ear and the
three years subsequent to the panic year. This
should give us a very fair and reliable comparison.
Years Bank Clearances Population Per Capita
62,622,250
63,975,000
65,520,000
1890
1891
1892
$58,845,279,505
57,298,737,938
60,883.572,4.38
Average
1894
1895
1896
S.59,009,196,627
$4.5,028,496,746
50,975,155,046
51,977.799,114
Average
$49,.327, 1,50,302
64,039,083 $921.43
68,397,000
69,878,000
71, .390.000
69,888,333 §705.80
Decrease per capita since the panic $215.65 or 23.4
per cent. According to this showing, the countr\''s
bnsiness has fallen off 23.4 per cent, since the panic
of 1893. Unfortunately these figures are misleading
and cannot be accepted without important qualifica-
tions which in themselves would introduce an error.
Prior to May. 1892, the Nev/ York Bank Clenrances
PARASITIC WEALTH 43
contained the share sales of the Stock Exchange,
which very U^rGfelv swelled the returns. Since the
establishment of the Stock Exchange Clearing House
at that date, most of the sales have been cleared
through the latter institution and have ceased to
figure in the returns of Bank Clearances. It thus
becomes clear that unless these share sales be
eliminated from the Bank Clearings, we cannot ex-
pect to make a fair comparison between the volume
of business prior and subsequent to the panic 3'ear.
The correct amount of these stock sales is however
not available and estimates would land us into doubt.
Fortunately there is a way out of the difficulty. We
can compare Bank Clearings of the nation outside of
New York City. The following Bank Clearance
figures are taken from the Commercial and Financial
Chronicle, for January 1897, and are for clearances
outside of New York City.
Years Bank Clearances Population Per Capita
1890 $23,165,332,888 62,622,250
1891 22,987,037,805 63,975.000
1892 25,348.638,020 65,520,000
Average
$23,833,669,571
64,039,083
1894
1S95
1896
$21,188,928,055
23,440,735.558
22,304,476,717
68.397,000
09,878,000
71,390,000
$372.17
Average $22,311,380,110 69,888,333 319.24
Decrease per capita since the panic $52.93
or 14.22 per cent, (about 1/7),
44 PARASITIC WEALTH
If these returns may be taken as a fair criterion of
the country's business, and there seems to be no good
reason to the contrary, then it would appear that the
country has sustained a loss of one-seventh of its
legitimate business since the mone}' panic of 1893.
Can we realize what this loss means? There were
employed in gainful occupations in 1890, according
to census returns, 22,735,661 persons which is 36.306
per cent, of the population. Applj-ing this percent-
age to the average population for 1894-95-96, there
should have been employed in gainful occupations
during that period an average of 25,411,398 persons.
On the basis of loss to business which Bank Clear-
ances reveal to us, 3,613,500 workers must have
been thrown out of employment by virtue of the busi-
ness collapse. This enforced idleness was doubtless
distributed more or less over the whole field of occu-
pations, among nine-tenths of the people, leaving less
workers in absolute idleness, but more of them on the
margin of a precarious subsistance. Mr. Geo. B.
Waldron, whom we have already quoted, estimates
the value of the nation's products for 1890 at 13.641
millions of dollars. The average advance in popula-
tion for the years 1894-5 and 6 as compared with
population in 1890. is about 12 per cent. On the
basis of this average increase, the nation's productive
PARASITIC WEALTH
45
output would have reached the sum of 15,275 mil-
lions. Assuming this to be a conservative estimate,
we have lost yearly through enforced idleness the
sum of 2,170 millions of dollars, which is a sum
nearly equal to the entire money volume of the
United States. On this basis, during the four years
of business depression ending June, 1897, we have
lost in actual production a sum more than three times
as great as the cost of our civil war. The value thus
lost, would duplicate and equip all the railroads in
the Union. This is the price we paid for a depre-
ciated and inflated currency. The figures are not at
all fanciful ; they are painfully real and quite within
the truth.
Could this national disaster have been avoided?
Most assuredly, yes. Our financial policy however,
has lacked the resourcefulness of courage, self-
reliance and independence. It bears the shop marks
of incompetency and subserviency to foreign method?
and influence. Perhaps the most ruinous piece of
legislation ever perpetrated on a long suffering and
patient people was that which discredited our United
States notes, known as the Greenback issue, by not
making them, receivable for customs. This ill-ad-
vised measure surrendered the people into the hands
of u.surers. and caused all our financial troubles since
46 PARASITIC WEALTH
that time. The nation owned in public lands and
buildings several timss the value of thv^se obligations.
and why it could not have pledged its credit and good
faith for their redemption, is a marvel to man. By
making these legal tenders a niDney of final payment
with a stipulation for their gradual redemption and
retirement within specified periods, they would have
circulated on par with the best money in the world.
The demonetization of silver was another blunder
which contributed to our financial undoin"-. With a
fairly good influx of gold and silver coin under an
unlimited coinage law, the gretn-backs could have
been retired without causing any apparent hardship,
and we should have had at Icasi a reliable currency,
though not a desirable S3'stem of money. Of course
ultimate disaster miust overtake the metal basis, for at
best it is a temporary expedient, but in the mean-
while the country would have been saved incalculable
loss, and in spite of the growing disparities between
the rich and the poor, a tide of unexampled prosperity
would have swept the nation recklessly onward,
drowning in the din and roar of industrial activity
the warning voice of the reformer. The quondam
millionaires, having burst their chrysalis of poverty,
would now emerge as billionaires not aspiring for
commonplace titles, but for real kingdoms. Thus
PARASITIC WEALTH 47
social reforms might have been successfully warded
off for an indefinite time. Our business collapse, and
the terrible suffering and havoc it caused could have
been averted in due time b}- a judicious use of the
aggregated wealth of these millionaires, for it was
only necessary to turn some of the redundant wealth
into industrial channels to inspire confidence in busi-
ness and tide over the dangers of retrenchment, but
they did not come to the rescue and their class in-
terests have sustained irreparable damage in conse-
quence. The wide-spread suffering of the masses has
called attention to the crying economic evils and
hastened the day of industrial emancipation.
CHAPTER III.
One of the most surprising things about our monev
system, is the absurdly small ratio of money volume
to wealth volume. The amount of money in actual
circulation in 1890, according to Treasury Depart-
ment Circular No. 123 was $1,429,251,270, while
the wealth of the nation exclusive of coin and bullion
was '1^63,878,316,247, thus showing the money volume
to be less than 2-1/4 per cent of the wealth volume.
That is to 333% if all the money in the land could be
taken out of circulation and made available for im-
mediate use, it could purchase less than 2-1/4 per
cent, of the permanent wealth of the country ; or in
other words, if all this money were available, it might
be possible to convert 2-1/4 per cent, of the nation's
wealth into cash, and no more.
Fig 2 Plate V shows diagramatically the ratio of
money volume to wealth volume. As nearly the
whole volume of available currency must be in per-
petual flux and movement to satisfy the demands of
commerce and industry, it is plain, that under the
present svstem money cannot be the permanent re-
pository of savings, except in a limited way. The
48
PARASITIC WEALTH
49
present repository of permanent savings is land, and
improvements on land, and the money is simply used
as an instrument of investment in these properties.
In other words, we have no capitalists in the sense of
"moneyed men." They are simply "propertied men"
who can convert their property into a part of the avail-
able but limited stock of money. This is an important
point to bear in mind, and we shall have occasion to
refer to it later.
If we take the amount of Bank Clearances for
1890, and divide the same by the population of that
year, we obtain the money movement per capita.
The result is $940. If now we divide this sum by
the per capita circulation of that year (22.82), we ob-
tain 41 as the number of times every available dollar
in the country functioned in the Clearing House
either directly or indirectly. In other words, although
only a small percentage of this money really passed
from hand to hand, the dollars were in evidence
forty-one times, or actually figured in fortv-one tran-
sactions. But the Clearing House is not the medium
of all business transactions. There are the dealings
between employers and employes, between the people
and the retailers, between the retailers and the whole-
salers, between the people and the banks and all
minor transactions not requiring credit paper, which
50 PARASITIC WEALTH
would very considerably increase the actual niovcnicnt
of money. There are also the Stock Exchange tran-
sactions which have not been included. Probably a
velocity of 75 times per year per dollar w'ould fairly
represent its working energy. Truly a wonderful
activity — would that labor were in such great de-
mand.
If we wish to drive a large quantity of watr through
a small pipe we apply pressure to give it velocity.
If we desire to force a large quantity of electricity
through a conductor of certain resistance, w^e increase
the potential of the circuit. How can we carry on a
large volume of business with a small volume of
money? By increasing the velocity of its circu-
lation. Credit paper and the clearing house are the
instruments of propulsion or the money potential.
The dollar must be in evidence in all these transact-
ions, it must be available, but its circulation is done
by proxy through credit paper by a method of debt
cancellation. It is a system of swapping accounts
where only a limited amount of currency actually
changes hands. It is estimated that the dollar need
circulate less than ten times to do one hundred dollars
worth of money work, and some people have inferred
that we may eventually dispense with money alto-
gether. We might as well speak of dispensing with
PARASITIC WEALTH 5 I
pipes and conduits to carry water, or conductors to
convey electricity. as to speak of dispensing with money
to carry on business.
In the Clearing House methods the limit of money
propulsion has been practically reached, and we may
expect but little if any further improvement in the veloc-
ity of its circulation. But we are constantly reminded
by economic writers that the present money volume
is ample to do the business of the country, that we
need onl}' our distributive share, to successfully carry
on business and industry. The laws of demand and
supply are cited to show that increase in volume will
depreciate the value of an expanded money, or in
other words that prices will advance as money volume
expands. That decn ased interest on an expanded
currency is onl}' apparent, and merely indicates a dif-
fused premium on a diluted currency.
These are astonishing theories. It is argued that
as "price is the ratio between two items, money and
commodities," therefore an expanded money must
raise prices. ''Money — what it shall be worth will
"depend, demand being fixed, upon the supply. The
"cost of production of money will influence its value
"only as it affects that supply." (Francis A. Walker,
Quar. Jn'l. Economics, vol. 8, page 64.) This is
virtually the "Quantity Theory" of money.
52 PARASITIC WEALTH
Inthejnl. of Pol. Econ. for March 1895, Dr. S.
McLean Hardy examines this theory by the induc-
tive method. Miss Hardy cites statistics of money
vokime. clearing house returns and average prices of
staple commodities in the United States from i860
to i8g2 inclusive, and finds, that while money volume
and clearing house transactions have increased very
largely since i860, prices have not risen, but actual-
ly fallen eight per cent.
Using Miss Hardy's figures, to obtain per capita
circulation and clearances, the results are as fol-
lows:
PER CAPITA CIRCULATION AND CLEARANCES.
Date. Circulation. Per Cent. Clearances. Per Cent.
1860 $ 13 85 100 $230 ICO
1R92 24.44 176 554 241
Multiphi ng the circulation into the velocity of its
movement as shown in the clearing house transactions,
we have :
1.76 X 2.41=4.2416, or in round numbers 4. It
thus appears, that money movement per capita was
four times as great in 1892 as in i860; or on the
basis of its "clearance" movement in i860 the money
volume was in effect four times as great in 1892 as
in i860. Therefore to satisfy the requirements of
the "quantity theory" of money, prices in 1892 should
PARASITIC WEALTH 53
have been four times as high as in i860, instead of
which prices declined eight per cent. The refutation
of the theory is complete, and humanity owes
Miss Hardy a vote of thanks. It should be particu-
larly noted also in this connection, that while bank
rates of interest have very materially declined since
i860 on an increasing circulation, they have not
fallen on a diluted currency, contrary to accepted
ideas.
But why should an inductive test have become nec-
essar}' to disprove this theory ? That price is the
ratio between money and commodities is relatively
quite true, but it does not follow that the value of
money is affected thereby, for its value is fixed by
coinage law and is therefore a constant. Money as an
exchange medium, is convertible at sight into any and
all forms of commodities, or services. It is not onh'
a standard of present value, but of deferred payments
and purchases, and therefore equally potent for pres-
ent as for future varied wants and requirements.
These qualilications. together with its imperishabilil}'.
have made monev the chief object of human desire
and ambition. It thus became the one article of ulti-
mate, constant, and unlimited demand, and the ordi-
nary rules of exchange cannot be said to apply to it
in the sense they apply to goods. Goods are eager,
54 i'ARASITIC WEALTH
money reluctant in exchanges. Goods are variable,
money constant in value. Goods are competitive and
money non-competitive under normal conditions. Ail
commodities eagerly seek conversion into cash, antl
tend to overtake its available volume. Nothing short
of the limit of actual cost of production stops them in
their mad competition for money conversion, and thus
the cost of "goods production" constantly approxi-
mates, through the laws of exchange, the cost of
''money production"; the cost of "money production"
being the "value constant." The demand for goods
is limited, and their value depends upon the tempo-
rary supply meeting the temporary demand, but this
law functions independently of, and entirely outside
of money as a factor in their exchange.
Money as a factor of production, when industries
and undertakings compete for its use, may become
subject to the laws of supply and demand, but that it
is subject to fluctuations of value i,n effecting exchanges
of commodities, is un^^ arranted in fact or thcor\' and
a baseless assumption. Money is a value constant
and therefore non-competitive, and how an expansion
of its volume b}' legitimate means, should affect its
value is dillicult to undertand.
The error of the "Quantity Theory" is that it
makes of money a sort of llnancial '-Dr. Jek}ii and
PARASifiC 'nVKALTH 55
Mr. Hyde, "'one day performing its legitimate function
as a respectable medium of exxhange. and the next
prowling and skulking about as a depraved, degraded
commodity. No doubt our clumsv and barbaric S}'3-
tem of metal currency and bullion is responsible for
the confusion, but it must be remembered that when
coin or bvdlion is used as money, it ceases to be a
commodity, and when used as a commodity, it is no
longer a monc}'. It cannot be both at the same time.
If a money possess any virtue at all, it must be that
of absolute permanence and stability of value. Lack-
ing these qualifications, money becomes a treacherous
and unreliable medium, and cannot function as a true
standard of value. What gives our currency uni-
formitv of value? Assuredly nothing but the coinage
law.
Assuming an unlimited coinage law, we have two
separate and distinct markets for gold ; a natural mar-
ket, where the metal is used in the arts and industries
as a commodit}-, and an artificial market, where the
metal is used in the mints for money.
The mint receives gold for coinage at a fixed rate
of say, eighteen gold dollars per ounce. As long as
gold obtains more than eighteen dollars per ounce in
the natural market, it will not go to the mint for coin-
age ; but when the natural market is glutted and bids
56 PARASITIC WEALTH
less than eighteen dollars per ounce, then the metal
goes to the mint. With an eager natural market,
gold coins have a natural tendency to go to the melt-
ing pot, but with a surfeited natural market, trinkets
have a tendency to go to the mint. Thus the value
of the 23.22 grains of gold in the dollar is automati-
cally and very satisfactorily regulated and maintained
as between these two markets. The dollar can
never go below its coinage value. The theory of de-
preciation as following legitimate expansion, contem-
plates, therefore, that although the market is equal-
ized and normal, and gold just as scarce as before
expansion, it has in some way become depreciated as
compared with other commodities, and its purchasing-
power has become impaired ! The falsity of this rea-
soning is apparent, and should require no refutation,
and yet upon such reasoning the ethics of usury have
indirectly rested for centuries.
Although the natural and coinage markets auto-
matically maintain gold at a normal and uniform
value, yet this value is largely Hat and fictitious when
considered simplv in relation to the natural market.
We iiave seen that since its demonetization, silver has
steadily declined in value until the metal in our
Standard Silver Dollar is to-day worth less than 40
cents. But silver has not yet touched bottom. It
PARASITIC WEALTH 57
has not yet been universally discarded, is still used as
token money and lives in the hopes of rehabilitation
with its former coinage privileges. Remove these
sustaining hopes of recovered prestige, and the nat-
ural market will then appraise its value at its true
worth. We may see it sold for 30 cents per ounce if
not less. Restore its unlimited coinage privileges by
an international coinage law, and what will be the
result? Silver will go to par with gold at once at
any arbitrary ratio ; providing that the law is guaran-
teed unassailable permanence and stability. Make the
ratio 15 to I and immediately thousands of worthless
holes in the ground will become valuable, and the
owners of mines profitably worked before re-mone-
tization will become enormously rich ; we shall reap a
fresh crop of millionaires and multi-millionaires, and
all for what ? To dig up a lot of useless metal and
convert it into money of fiat value.
But how about gold? It is the same. Even at the
rate of 16 to i gold is probably worse puffed up than
silver. The methods of gold extraction have been
vastly improved within the last twenty-five years. Be-
fore me is a statement from an expert miner who has
spent his lifetime in gold and silver mining, and who is
the owner of valuable patents for treating gold and
silver ores. He claims that, speaking in a general
58 PARASITIC WEALTH
way, ores carrying less than twenty dollars' worth of
gold per ton were unprofitable to mine twenty years
ago. That ten years later, ores carrying half that amount
could be profitably worked, and that now gold can be
profitably extracted from ores carr3'ing five dollars
per ton, and as low as two and a half dollars per ton
in an exceptional case.
Now, here is a decline in the margin of cultivation
from superior to inferior soils of ''four to one" in
twenty years, and while these improved processes
may not be generally available for all kinds of ores,
the fact remains that the methods of extraction have
been greatly cheapened, and that these cheapening
processes have enabled us to work inferior mines
' profitably. It therefore must cost a great deal less to
mine gold now than formerly from equally rich
mines. Only by virtue of the coinage law has it been
possible to maintain gold at a uniform value during
all these years. The improved methods of ore treat-
ment have simply crowded down the margin of culti-
vation to inferior mines, where now it costs as much
to mine gold by superior methods, as it used to cost
to mine it from rich mines by primitive methods.
Like the price of rent, the price of gold is determined
at the lowest margin of cultivation. It tlius appears
that the present vakie of gold is largely fiat and
PARASITIC WEALT^I 59
fictitious as that of silver was before its demonetixa-
tion. and were gold suddenly demonetized, the fiction
would be squeezed out of it at once. Revoke its
privileges, and its glory will depart forever. The
halo of "mysterious fascination'' which it is said to
possess and which holds spell-bound its numerous
eager votaries and worshippers, will vanish into thin
air. Its hollow pretense of "nobility" exposed, its
fiction of "intrinsic" w^orth exploded, this "precious"
fraud, degraded and humiliated, will take its place
among the baser herd to be appraised there at its true
worth. Its value will probably sink more rapidly
than that of silver, for it is commercially less useful
and valuuable. Where its depreciation will stop is
difficult to predict, but it will hardly reach its former
relative value of i to i6.
The mint value of gold is purely arbitrary and may
readily be changed so as to expand or contract the
money volume. Assuming that an International
Agreement could absolutely guarantee the perma-
nence and stability of a coinage law, and that by the
enactment of an International Monetary Congress it
were decreed, that twelve grains of fine gold should
.constitute a dollar all over the world, immediately the
present dollar would become possessed of double its
purchasing power — would do the nionc'v work of two
6o PARASITIC WEALTH
dollars. Interest would fall and price of gold in the
arts and industries would be doubled. Trinkets and
jewelry would have a tendency to go to the melting
pot — the demand for gold in the natural market would
be greatly cut down on account of price, and nearly
all the out-put of gold would go to the mint under an
unlimited coinage law. The ratio of silver to gold
would stand at something like 75 to i. Worthless and
inferior mines would be reopened, the tailings of ex-
hausted mines reworked, and the owners of present
productive mines would become rich beyond the
dreams of avarice. Gold extraction would be stimu-
lated to the highest efficiency, new Klondikes would
be discovered by eager prospectors and the stream of
gold flowing to the mints would expand the money
volume at a dangerous pace. Gold mine owners
would vie with the owners of protected monopolies
and become the masters of the world.
But where will this metal basis ultimately land us?
Is not the system fraught with the greatest peril even
now ? Can we foresee the day when by advanced
chemical research gold may be produced at such low
cost and in such large quantities as to smash all coin-
age agreements and send us to the limbo of general
ruin and bankruptcy ?
There is a well founded suspicion fhnt most of the
PARASITIC WEALTH 6l
60 or 70 so called chemical elements known to science
are not elementary bodies at all, but are molecular in
structure, and have simply defied our present analytic
methods. May not some future synthesis based on a
better knowledge of chemistry than we now possess,
produce gold from true elements?
But aside from this possibility, there is always the
risk of finding exhaustless deposits of gold to shake
our confidence in the metal basis. Besides, invention
follows in the wake of improvement and there is no
telling how soon an enormously increased output in
the ever increasing number of mines may overwhelm
us with the yellow metal. Indeed, as long as the
present metal basis is in force, this element of risk
and uncertainty will tend to a panicky and speculative
feeling, portending serious disturbances, if not com-
mercial and industrial disaster.
CHAPTER IV.
It has been shown, that money volume and money
movement have both largely increased since i860,
and statistics will bear us out that productive efficiency
and material advancement have kept pace with money
circulation.
We had reason to believe, that the movement of
money had reached a practical limit, and that greater
velocity of circulation cannot be expected. The con-
clusion is forced upon us that whatever advance in
money efficiency is to be looked for in the future must
come from an expansion of its volume. We have
taxed the energies of the dollar to its utmost capacity,
we have goaded and pushed it to the limits of en-
durance, and now we can do no more. We must
either hire more dollars to relieve the arduous duties
of the present overtaxed force, or we must pay more
premium as population advances. The dollar is the
busiest factor in our civilization. While labor is at a
discount, the dollar is at a premium. While labor is
idle, the dollar is overworked. While labor is starv-
ing, the dollar is piling up income. Why rush the
dollar so.'*
6a
PARASITIC WEALTH 6^
We have seen that money volume as compared with
weahh volume is very small, and that the onus of
exchange and wealth productive function falls upon a
limited number of hustling dollars. So small is the
volume of dollars, that the bulk of the countrv's
business is conducted on time paper or credit money,
resulting in such a state of hopeless credit interdepend-
ence, that the failure of one business firm often
involves and affects the stability of all, causing wide-
spread panics and bankruptcies. So inadequate is the
money volume that no considerable reserve fund can
be kept in the public treasurv without seriously
impairing circulation, and in critical times business is
kept on the verge of a panicky feeling lest contraction
through hoarding cripple trade.
So small is the money force, that a premium has to
be offered to coax the reluctant dollars into the finan-
cial harness, greatly to the disparagement of all in-
dustrial and business undertakings upon which this
premium falls as a heavy tribute. This premium or
interest is a symptom of money scarcity, and of abun-
dant industries and undertakings competing for its use.
The word interest as used by financiers has tv>'o dis-
tinct meanings. The percentage charge v.hich in-
sures money against the risk of loss, is one form of
interest, and the charge for the use or hire of money
64 PARASITIC WEALTH
Otherwise amply secured, is also called interest. All
enterprises and undertakings partake of risk, that is,
risk of loss of money invested. To cover such risk
where money is loaned without adequate security, a
rate of insurance is charged proportionate to the risk
involved. This insurance goes under the name of in-
terest. Such a charge is perfectly legitimate and jus-
tifiable. We shall not call into question the propriety
of this kind of interest. What concerns us here is the
premium on money amply secured, and its origin.
We shall not question the propriety of the charge for
banking and clerical work, and the fees and percent-
ages for effecting loans, to cover expenses and salar-
ies of that highly efficient and useful class, the
Bankers. What we shall examine is the origin and
ethical warrant of usur}- proper. It is to be clearly
understood at the outset therefore, that the word
"interest" is to be used simply in the sense of money
hire and apart from any risk of loss of the principal
being involved.
How does interest emerge? There are, say,
one thousand business men of various abilities, all
anxious to engage in some commercial or industrial
undertaking. All of them need cash advances to de-
velop their business and all can furnish securities for
monev loans. One hundred of these men have ex-
PARASITIC WEALTH 6^
ceptional executive ability and business genius and
sagacity, andean afford to pay as high as 20 per cent,
on money adxances rather than go idle. Two hun-
dred men possess a very high order of business capac-
ity and talent and can pay 15 per cent. rather than do
without the cash. Five hundred men of good judg-
ment and ability can pay 10 per cent, and swim, but
the two hundred remaining possessing only average
ability must have a five per cent, rate or go oat of
business.
If it require at least 700 business men to properly
take care of the industries and commercial enterprises
of the community and there is not quite enough monev
to satisf}- the needs of that number, the competition for
funds will be confined to the live hundred men of
good judgment and ability, and as they cannot bid
more than 10 per cent. premium for the money, that
must be the normal rate of interest at which the lim-
ited money volume may be borrowed on adequate
security. x\t least one hundred of the live hundred
men of good judgment will be non-suited for lack of
funds at 10 per cent., and the two hundred men of
average ability will not be in the race at all. It is
thus apparent that business has been competing for a
limited volume of money. We may formulate a defi-
nition of interest as follows:
66 PARASITIC WEALTH
Interest or premium on money depends upon its
volume and the demand made upon that volume by
competing industrial and commercial undertakings.
Interest on money emerges when the number of in-
dustrial and commercial undertakings requirino- its
use, tend to overtake its available volume. The rate
of interest increases as the pressure of competition for
the hire of money increases and is determined by what
the least remunerative of the actually operative indus-
tries are obliged to pay and yet maintain themselves
in competition with more successful rivals.
In plain language, interest emerges when an ex-
panded volume of industrial and commercial enter-
prises is competing for a limited volume of monev.
Interest discourages the less remunerative industries
and the less efUcient promoters of business.
Scarcity of money occasions a premium charge for
money use. Like rent of land emerging from land
limitation or monopoly, so rent of money emerges
from its limitation or monopoly. The rent collectors
of these industrial opportunities obtain without exer-
tion what naturally belongs to productive effort.
Here is the optimistic view of interest as taught by
one of our most popular textbooks on Political Econ-
omy.
"Is the high rate of interest a hardship.^ No,
PARASITIC WEALTH 67
the hardship lies in the scarcity of capital. The
high rate of interest becomes the active means of
removing that hardship through increasing the
supply of capital available to meet the demand.
A high rate of interest is not an evil but the cure
of an evil.''
Indeed the cure never cures ; the evil persists and
is simply aggravated at times. The world's money
volume is as it were, a limited sheet of Avater upon
which it is proposed to float the ships of commerce
and industry. The water is so shallow however, that
whenever a successful enterprise is to be floated, the
level must be raised artificially. As the level is raised
in some financial dry-dock by the hydraulic power of
Interest, it must be simultaneously depressed some-
where else. The volume of water is never sufficient
to successfully float all the ships that would naturally
ply the ports of trade, but only that number that can
afford to have the water pumped up. Less water,
more hydraulic power, less money, more interest.
Let us use another illustration : Suppose we have
150 fields to cultivate. 75 wMlling men to work,
and only 50 hoes to cultivate with. Assume that the
150 fields have 30 overseers who rent them according
to productiveness. The hoes are owned by "'capital-
ists." Let us imagine that in some way these 50
hoes possess the marvelous efficiency of money and
68 PARASITIC WEALTH
the fields cannot be successfully cultivated without
them. What will happen ?
Fields are in excess of men, but hoes are scarce.
The fields will compete for hoes, and as they cannot
all have the use of them, only 50 of the more produc-
tive will be able to enter tiie contest. Whatever the
least productive of these 50 tields can afford to pav,
that will be the normal hire of the hoes. In other
words, hoes will go to a premium, fields and men
will be at a discount. One hundred fields must re-
main uncultivated, and twenty-five men after destruct-
ive competition with the other fifty for work, will re-
main idle. Twenty field overseers must also remain
idle.
Let us reverse this. Assume now that there are
500 hoes in stock, the same 150 fields and the same 75
men willing to work. What will happen ?
There are now more hoes than fields and more fields
than men. The competition must be for the men,
and not only will all of them be employed at advanced
rates, but the owners of the fields will likewise bene-
til by the collapsed monopoly of the hoes. Fifteen
of the overseers will be employed superintending and
the balance mav find lucrative work as field hands if
they desire. In other words, the men are at a prem-
ium and natural opportunities are a drug. Men arc
busv. hoes are idle and fields are idle.
PARASITIC WEALTH 69
This is an ideal condition of things. The natural
opportunities for employment are boundless, limited
by space only. Work is in overwhelming abundance
everywhere, and an army of one hundred million
workers, representing a populaiion of nearly half a
billion, could be continuously employed, and not half
exhaust the resources of work in the United States,
if the industrial opportunities, land and ''capital,"
were not limited by monopoly. There can never be
any competition for work in a normal social condi-
tion, any more than there is for air or water. The
competition would be for efficient men to do it.
It is a well known economic phenomenon that
when opportunities for investment are plenty, the
demand for money is brisk and interest is high.
Incidental to this active competition for money,
labor is in greater demand and business im-
proves. But like an air brake applied to the wheels
of industr}-, interest slows up the speed of productive
effort as the premium pressure increases. The money
limit, as it were, calls a halt to industrial effort, and
throws labor, seeking emplo3'ment, into competition
with itself, thus not only taxing it, but likewise leav-
injr it in enforced idleness.
In over-crowded Europe, where agricultural possi-
bilities have reached their limit, where productive
70 PARASITIC WEALTH
efficiency and the plane of living are lower, where
commercial and industrial effort is less active, the de-
mand for the money function is not so brisk and the
interest rates are not so high as in this country. Up
to the fall of the year 1896, the bank rates in England
were two per cent. But an era of activity set in dur-
ing the spring of that year, owing to development of
colonial enterprises and South African gold mining.
The papers teemed with Promotor's Investment
schemes, and demand for money became so brisk
that interest rates, following the laws of exchange,
increased, and shortly doubled in amount.
Now if the mone}' volume were so ample that in a
period of greatest possible industrial activity, five, or
ten times as much money lay idle in the banks as
could be used in commercial and industrial undertak-
ings, premium could not arise to act as a deterrent to
production. Money being eager for investment, by
virtue of its abundance, would yield no premium, and
the price of its hire would simpl}- be the cost of bank
services, as will be explained later.
Perhaps no question in Political Science has so puz-
zled economic writers as the question of interest,
and in view of the apparent simplicity (jf the problem,
it seems rather surprising that it has not ere this been
satisfactorily answered. As if quite dominated
PARASITIC WEALTH 7 1
by the powerful influence of authority and pre-
cedent, our teachers have chosen the beaten track and
followed in the wake of their predecessors. Tiiey
have indulged in abstruse speculations, and strained
fact and fancy in the elaboration of ingenious theories
to account for a very common-place phenomenon.
Laymen and professionals have treated in learned
books and essays of this subject and as many theories
have been advanced as there have been writers to in-
vent them.
Be it to the lasting honor and credit of the Church
that for centuries she refused her moral support and
sanction to the practice of usury and yielded onh'
when it was demonstrated beyond a doubt that legis-
lative restrictions actually worked hardship and re-
tarded social development, and that it was better to
tolerate the apparently unavoidable evils of usury,
than to stifle social progress.
In his Political Economy, the late lamented Gen.
Walker says:
"For many centuries, and even within a compara-
tively recent period, the Christian Church proscribed
the taking of interest as a moral offense, and the laws
of nearly all civilized countries made it a crime,
while the voice of publicists and ethical writers alike
was raised against it as a wicked and pernicious prac-
tice. Whence came the fjeneral consent in denounc-
72 PARASITIC WEALTH
ing that which to-day is accented as a rigJit in morals,
and as practically beneficial by all except a few fanat-
ics.?''
The author is responsible for the italics. He gladly
owns to beinp" one of the few fanatics.
The philosophical conscience was not soothed,
however, until some one suggested that interest, after
all, was not paid on money, but on what money pur-
chased, as if shifting the iniquities of usury on the
shoulders of wealth palliated the crime of it!
John Calvin is credited with making this discovery,
and since his time writers on Economics have been
trying to reconcile Political Economy with this view,
and endeavoring to find a plausible theory of interest
on the basis of some inherent properties in wealth or
in human nature.
Speaking of Aristotle's philosophical objection to
usury, Gen. Walker says, in First Lessons of Politi-
cal Economy, edition of 1893 :
"The error lies in the assumption that interest is
paid for the use of money, whereas in fact interest is
paid for the use, not of money, but of capital. A
man buys a house and promises to pay the price at
some future time with 'interest' meanwhile. Inter-
est upon what .^ Interest upon money? lie has no
money. The interest promised is upon capital in-
vested in the house. '^
Passing by the confusion of ideas in the citation.
PARASITIC WEALTH 73
the reader's attention is drawn to the last sentence
which virtually surrenders his case to his adversary.
The loose manner of interchangeably using the word
'■* Capital'' to mean money in one sense and the pro-
ducts of the money function in another, has landed
the writer into a verbal inconsistency. It was by the
money function that the materials of the house were
created. It was the money function that built the
house with the materials created by the money func-
tion. It was the money invested in the house on
which interest must be paid, seeing that '*he has no
money" to pay cash. In the last analysis all invest-
ment consists of money, and all interest is paid on the
investment. We pay for the hire of the money in-
vested, because there is a constant demand for money
in other commercial and industrial undertakings which
eagerly seek its function. It must be released and
interest is the forfeit price of its ransom.
Again he says :
" A merchant or manufacturer buys a stock of goods
and gives his note promising to pay the price 'with
interest'. Not interest upon money, for money was
not used in the transaction, but interest upon Capital
in the form of merchandise or materials which have
been entrusted to him and out of which he expects to
make a profit which he is to share with the owner of
the capital."
74 PARASITIC WEALTH
Most marvelous reasoning ! Surely the goods, for
which note was given have not only been the product
of the money function, but in turn they have cost the
wholesaler money, and he doubtless gave his note for
them "with interest"' to pay the manufacturer for
money used productively ; and the manufacturer in
turn gave the bank a mortgage to secure not only the
principal but the interest also. The interest is always
paid on money and on nothing else. How can it be
otherv^ise ? Do what we will, we cannot get away
from the money function in commerce and industry, for
even barter is carried on in terms of money. Money
is an industrial factor and wealth is its product. We
can no more escape the subtle, all-pervading influence
of money in our civilization, than we can get out of
the influence of the atmosphere and breathe.
When we unlearn the fallacy of the '-Capital" theory
of interest of John Calvin, and fully realize that the
premium is paid on the money function of capital,
then it will become quite clear that usury as we know
it. with all its deplorable consequences, is simply the
result of abnormal economic conditions and may be
practically abolished.
The history of "usury" speculations forms a curious
and interesting chapter in Political Economy. A
summary of them is given in a late work by Von Bohm
PARASITIC WEALTH 75
Bavverk — (^Capital and Interest— Prof. Smart's trans-
lation). It is a review of the various theories of In-
terest with an elaboration of one of his own, based on
the "tendency in human nature to under-value the
future in comparison to the present." This theory
Professor John B. Clark aptly calls Interest for "vi-
carious waiting".
Among several others are the theories of " Land
Investment, ""Spontaneous Reproduction " and " Re-
ward for Abstinence."
The first assumes that, as money invested in land
brings an income, that therefore investment in any
form of capital must pay an interest.
The reproductive theory assumes that as crops grow
and animals breed v/ithout man's assistance, there-
fore it is in the nature of capital to possess like power
of reproduction.
The reward for abstinence theory is expressed in
Prof. Iladley's Economics, pages 268-269, as follows:
"The system of interest was approved by jurists
because the accumulation and use of capital was ad-
vantageous to society as a whole and increased the
public wealth." "With this end in view, society was
willing to offer rewards to those who would abstain
from destroying wealth and would use it product-
ively."
The land and reproductive theories carry their own
76 PARASITIC V.'EALTM
refutation. Von Bohm Bawerk's explanation, like
that of the reward for abstinence, appears plausible
in theory, but is lacking in practice. They are both,
speaking generally, based on personal sacrilice.
Let us examine the reward for abstinence theor}'.
The sacrifice of abstinence has its full measure of
reward in possession. That the possession should in
addition give the possessor an undue advantage over
the productive effort of others is not contemplated in
the reward.
Human effort tends to move in the line of least dis-
comfort. The idea of discomfort in the normal man
embraces not only the pressing needs of the present,
but likewise the urgent wants of the future. This
gives rise to prudence and thrift. The discomfort of
present abstemiousness is fully counterbalanced by the
satisfaction and comfort of providing against the dis-
tresses of future privation and penury. In the miser
this instinct is abnormally developed, and in the spend-
thrift wholly lacking. Except in the case of the
morally depraved, the motive of thrift and saving is
independent of the sordid instinct our economic writ-
ers would have us believe. In other words, people
do not save money for the sake of obtaining usury on
it, but for the purpose of providing against sickness
and old age. A high premium might act as an addi-
PARASITIC WEALTH 77
tional inducement for the sordid-minded to save their
money ; in fact, usury is doubtless responsible for
much of the immorality of greed and avarice, but
even then the incentive must be weak compared with
the real motive of thrift.
It thus appears, that under normal and natural
conditions, capital would be saved from "destruction"
and accumulate without the stimulus of other than
purely moral motives of thrift. Usury then, seems to
have no real economic value as an inducement to sav-
ing and must simply be an incident to certain econo-
mic conditions.
The prevailing ethics of usury seemingly resolves
itself into this: How can we get something for
nothing?
Usury is defended on the plea that capital "snatched
from the jaws of appetite'' at great personal sacrifice,
is a factor of industrial effort and benefits society b}''
creating wealth. Society is willing to reward those
making this sacrifice by giving them interest on this
capital when used productively.
Divested of its ethical glamour, the real condition
is this: By virtue of certain economic limitations,
capital is enabled to unjustly appropriate a large share
of the products of industry as the price of its hire.
Rev\'ard for sacrifice does not enter into the problem
yS PARASITIC WEALTH
at all, for barring a few exceptional cases, the suffer-
inp- and sacrifice are entirely vicarious, and fall on
those who make a desperate effort to save on reduced
earnings. A limited few obtain control of the natural
opportunities of the earth and place all productive
effort under tribute. It costs them no effort or incon-
venience to save— deferred hopes do not figure in
patient waiting, and sacrifice of abstinence is not even
thought of. The v/ealth rolls up of its own accord,
and keeps on accumulating. It grows at the expense
of the sweat and toil of those paying tribute for in-
dustrial opportunities. The suffering is vicarious.
Five per cent, of the people do the saving and ninety-
five per cent, do the suffering.
Another popular notion, is that Labor is under obli-
gations to capital for its subsistence. Capital is ad-
vanced by the employer to enable Labor to subsist.
Capital is a reserve fund or "grub stake," and
therefore entitled to interest as the price of its use.
But Labor owes capital nothing, capital has no claim
whatever on Labor in that respect. Labor anticipates
its reward in wages by producing wealth before being
paid for it.
It is not a question v/hether society benefits by
virtue of wealth being used productively, it is a ques-
tion whether it is economically necessary to pay inter-
TARASITIC WEALTH 79
est for its hire except at a negligible rate, such hire
charge being an equivalent of actual services rendered.
If we can prove that under normal financial con-
ditions, interest on money will practically cease, then
we have solved the problem. What are the conditions ?
The answer has been plainly indicated — expand the
money volume. How this can be done practically
and how we can secure a currency of unchallenge-
able stability, will be explained further on. When
will the money volume be sufficient? The money
volume will be sufficient, when it is so abundant that
banks will refuse to pay any premium on it — when
the}' will charge a price for its safe-guarding. Not till
then will the money volume be ample ; not till then
will all property cease to jield non-productive revenue
and industry bear a tribute to idleness.
In his article on the "Cause of Financial Panics"
in the Arena for March, 1894, Mr. J. W. Bennett
writes as follows :
"The borrowed capital of the country claims more
in remuneration than the country can produce. Every
dollar invested in business claims a return called in-
terest. Every dollar representing debts unpaid claims
a like remuneration. There is not wealth enough to
meet all these obligations and the business of the
world must go into the hands of a receiver every now
j}r)d then so that a new start in business may be made.
8o PARASITIC WEALTH
The industrial world is always in a state of potential
bankruptcy, but credit tends to keep it out of the
hands of a receiver."
"Any disturbance of credit precipitates a panic."
"The present wealth of the United States may be
placed in round numbers at $72,000,000,000. That
fully 80 per cent, of this sum pays interest may be
verified by any person who cares to give the subject
a thought."
"Something like 80 per cent, of the wealth of the
country is in the hands of about 250,000 persons, or
about one two hundred and fortieth of the popula-
tion. This excludes the wealth of the well to* do
farmers and merchants, and it goes without saying
that nine-tenths of this wealth held by the immensely
rich is interest bearing. Nearly all of it is lent, or if
not lent out it is invested in some business where in-
terest on the money invested is added to the return
or profits of the undertakers. The wealth in the
hands of farmers and merchants is paying interest on
all that is not used for the personal wants of them-
selves and their families, and even many of the home-
steads of the country are paying interest."
"At least one-half of such wealth is interest bear-
ing. An examination of the mortgage lists of the
several States will more than bear out this estimate.
We are then paying fixed charges, as the railroads
put it, on about $55,000,000,000 of the country's
wealth. The net rate will average about five per
cent., and taking into consideration commissions and
PARASITIC WEALTH 8 1
Other charges, six per cent, is a low estimate of the
gross rate. The interest on $55,000,000,000 at six
per cent, is $3,300,000,000 per year. To get the.
average interest charges for the last decade, we must
take the average of interest paying capital, which is
about $50,000,000,000. We have then an average
interest of $3,000,000,000, a sum which more than
absorbs the entire veariv increase of wealth in the
United States. During the last decade the wealth of
tiiis country has increased about $22,000,000,000.
During the same period the interest charges were
$30,000,000,000." (Mr. Bennett has since em-
bodied his views on usury in his book, "A Breed of
Barren Metah'')
Thus it seems that premium interest more than ab-
sorbs the yearly wealth increase. The cumulative
power of interest will better appeal to the imagina-
tion when plotted into a curve as shown on Plate V. At
ten per cent the principal is doubled every seven
years, so that in less than a century the interest is six-
teen thousand, three hundred and eighty-four times
the principal, and after that the principal increases at
such a stvipendous rate that the figures soon become
unmanageable. At five per cent the principal doubles
every fourteen years, just half as rapidly as at ten
per cent. Interest accumulates in a geometrical ratio,
while savings increase aritb.metically. Thus if $10
is saved up, say every seven years, in 140 years the
£i^A,iA -ZeKe.i.
— MONEY VOLUME TO WEALTH VOLUME
Seven^iii- J^eyei^ .
PLATE T. curve: OF INTEREST.
1
rea.ai,ej <5£e ^:je ^-He^yOa^&j and
ai iAe, t3Z ':^ le-t^^Z i^ tycli 7-ecctA
ccn c^ei^a-fce-n, ^n,cre, tA^n. OTt.e^
ScxiA J^er-ci ■
sr^/eA. Ziefci .
PARASITIC WEALTH 83
principal will amount to ^200. If, however, ten dol-
lars is put into a bank at ten per cent, interest every
seven years, at the end of 140 years the principal will
have become over twenty millions of dollars !
On comparing the curves of wealth with the curve
of interest, the resemblance is very striking and be-
trays their kinship. The curves of w^ealth and in-
come suddenl}^ leap into space at the end where rent
and interest absorb the nation's yearlj' output.
Here then is the subtle principle which makes
wealth parasitic in the body of industry — the potent
influence which takes from the weak and gives to the
strong ; which makes the rich richer and the poor
poorer ; which builds palaces for the idle and hovels
for the dilioent. This, then, is the bacillus of con-
gested wealth — the disease germ of pauperism.
But worse than that, interest enslaves labor. We
might condone the injustice of interest, if it left us
free to earn, but it limits industry by closing up the
avenues of employment, and fetters industrial effort
by making it competitive. Employment which should
be free and accessible, instead of a right, becomes a
favor and a privilege ! Interest is the price every in-
dustry pays capital as a license to do business. If it
cannot pay the tax it must shut down. Interest is a
sort of tariff on human effort to discourage enterprise ;
84 PARASITIC WEALTH
it is a fixed charge on commerce and industr}^ Thus
it is that we always have a glut of labor instead of a
glut of employment. Think of it, even now there are
millions of unemployed actually begging for work in
a land of boundless opportunities and resources! Such
a perverted state of things should long ago have con-
demned the economic conditions that produced it, and
set our teachers of Political Economy to thinking.
Three per cent, of the people control the avenues of
employment and ninety-seven per cent. are dependent
on their pleasure. And as the wealth piles up in the
hands of these monopolizers of opportunities, the
tribute must be heavier and escape from industrial
slavery more hopeless. The wealth of the few be-
comes a burthen to the many — a millstone about the
neck of labor — and as it grows the burthen increases.
We thus realize, how that industry with its own hands
forges the chains of its enslavement. And are we
not reminded of it on every hand? Have we not the
spectacle of lordly display and ostentation on the one
hand, and abject flunkeyism on the other? Has not
a perverted social condition led to perverted ideas of
personal worth and respectabilit}- ? Do we not see the
despised "Bread Winners'' treated with scorn and con-
tempt while the idle rich are received with distin-
guished courtesy and respect ?
PARy\SITIC WEALTH 8$
The predatory class has heretofore been located in
the lower, strata of society; but what shall we say of
the parasitic wealth on top? The social loot is not at
the bottom, it is among the dizzy millions.
Where shall we place the blame for a social per-
version so long endm-ed ? While instinctively all
right minded people have felt that usury was morally
reprehensible, and philosophic writers could find r.o
ethical warrant for its justification — while economic
writers themselves approached the subject with moral
misgivings, yet all these years interest was approved
as "right in morals," and land ownership (with a few
honorable exceptions) justified. Symptoms of social
unrest and miser}- counted for nothing. The pertur-
bations and disturbances brought forth no Leverrier
of Political Science to trace their cause in the eco-
nomic firmament. All this time there lay at the root
of our social miseries the dread germ of disease "in-
terest," for the cultivation of which in the soil of in-
dustry, the "capital" theory of usury was and is
economically responsible.
This pernicious theory has been the bane of Politi-
cal Science — the evil spirit leading it from the path of
economic rectitude and righteousness — and its over-
throw will mark a new era in the history of a noble
science, long under the shadow of doubt and suspi-
cion as to its moral integrity.
86 PARASITIC WEALTH
Here is a hand sample of our present Political
economy, as culled at random from a recent financial
work :
"Capital is an economic quantity used for the pur-
pose of profit."
"Whatever gives a proft is capital."
Could anj'thing be more brutally frank and blunt
than this plain statement of the case ?
Let us apply this definition to land, the other fac-
tor of industry :
"Land is an economic quantity used for the pur-
pose of profit."
"Whatever gives profit is land."
Here we have the two industrial opportunities of
productive effort used as instruments of extortion for
private gain, and economic writers have seen nothing
wrong in a condition which permits of their limitation
and monopoly. The doctrine is monstrous, and as
we contemplate the enormity of it, the iniquity of the
social crime grows upon us. These two great mono-
polies practically control the avenues of employment
and place Labor entirely at the mercy of those in
possession. A shrewd minority taking advantage of
unjust economic conditions places the majority under
tribute. Labor rendered hopelessly competitive, be-
comes helpless, degraded and enslaved, is sold in the
PARASITIC WEALTH 87
open market like chattels. Can anything be more
strategic ? Can slavery be more absolute than under
the compulsion of hunger ?
The shrewd minority is in control. It is, and has
been, a government of the rich, by the rich and for
the rich. The masses and their interests have been
a secondary consideration as we may discover by read-
ing our text books on Political Science. The shoe
pinched the poor, ignorant and down-trodden, but not
the rich and clever, and therein lies the whole secret
of reluctant reform. An income tax affecting the
unjustly rich is promptly set aside as "unconsti-
tutional," while a tariff tax which further depletes
those already otherwise despoiled, is enforced
as being just and proper. The interests of the rich are
promoted by special legislation, and laws prejudicial
to them set aside or not enforced.
The rich misdemeanant escapes punishment by pay-
ing a fine ; the poor man unable to do so, is put in jail
and his family further pauperized. The parasitic
idler is shown all possible social courtesies and con-
sideration, while the w^orker is socially ostracized and
discriminated against. And so this precious social
system of ours which creates a predatory idle class,
and a despoiled productive class, simply reflects the
ethical features of the economics that produced it.
88 PARASITIC WEALTH
All our laws seem to be framed to further encour-
age those socially benefited and discourage those
socially wronged. The whole machiner}' of state,
the legislative, judicial and social arrangements, all
favor loot and oppress the looted.
If we examine the constituents of our leofislature,
we find therein, with here and there an exception, the
rich and the representatives of the rich. They are
either the so-called "successful" business men, or
corporation lawyers whose interests are with wealth
aggregations. The "successful"' business man does
not necessarily mean one who benefited the commun-
ity as much as himself, but one who grasped the op-
portunities a perverted 4social condition offered, to be-
come Vv'ell to do at the expense of society. Naturally
such people see nothing wrong in a social condition
which gives them such enormous advantages over
their fellowmen, and are quick to denounce those who
find fault with the system, as "agitators", "dema-
gogues", "socialists" and what not. But calling
names is poor argument, and will not avail a moment
against a well defined policy backed by a solid eco-
nomic principle. The people are becoming very tired
and impatient. They have lost confidence in the
two great parties, and from sheer desperation to ob-
tain relief, have alternately punished them by over-
PARASITIC WEALTH 89
whelming defeats. They are tired of promises and
apologies ; they want reform and they will have re-
form.
CHAPTER V.
We have thus far confined our remarks to the
money question and the evils of interest, but the solu-
tion of the money problem involves the solution of the
land question. Money and Land are the two econo-
mic factors for the use of which industrial effort is
taxed. Money and the products of its function take
their toll in interest, and land in rent.
Thanks to the classical works of Mr. Henry George,
very little if anything remains to be said on the land
question that has not already been discussed with
great eloquence and ability in his books.
Up to a certain point, the private ownership of
land might be indifferently defended on the plea of
expediency, but when immense tracts of land are
monopolized for speculative purposes and rent is
charged as the price of idle possession, then such
forestallment becomes a question of ethics. Titles
to land when traced far enough back are found in
their last analyses to rest on forestallment. with pos-
sible intermediate stages of Conquest or plunder,
which condition of acquisition could hardly be con-
sidered valid claims to ownership.
99
PARASITIC WEALTH
91
Forty-seven 3'ears ago Mr. Herbert Spencer clearly
and conclusively proved in his "Social Statics'' that
from the standpoint of abstract ethics, private owner-
ship of land is not justifiable. And foreseeing the
difficulties of reorganization on a basis of compensa-
tion to present owners, he says: "To justly estimate
and liquidate the claims, is one of the most intricate
problems society one day will have to solve."
In view of the apparent difficulties in the way of
the economic realization of the abstract rights to land,
Mr. Spencer had occasion later to somewhat modify
his views as to the practicability or even desirability
of its nationalization, seeing that in any scheme of
just compensation to land owners, the interest on pur-
chase money would probably exceed the cost of rent.
Mr. Henry George has found fault with ?vlr. Spencer
for this change of front, but when we fairly consider
the reasons, we can hardly blame Mr. Spencer for
believing that the lot of the dispossessed would not
be improved by simply converting land rent into
mone}' rent.
Is there any wonder, in view of the doctrines of
Political Science, that this master mind of the century
should be puzzled over the apparent discordance be-
tween abstract ethics and practical politics, and that
he should be obliged to say in his letter to the London
Times;
92 PARASITIC WEALTH
"The reason for this state of hesitancy is, that I
cannot see my way toward reconciliation of the ethi-
cal requirements with the politico-economical require-
ments."
Had Mr. Spencer's attention been as vitally drawn to
the question of money as it had been to that of land, it
is presumable he would not have been misled by the
false reasoning of economic writers, and we should
have had a corroborative chapter on the ethics of
usury, instead of views modified to meet perverted
social conditions.
A recognized principle in political ethics concedes
to man the right of life, liberty and pursuit of happi-
ness consistent with the free and unrestricted exercise
of similar rights by all other men.
From this principle Mr. Spencer deduced the law
that "Equit}' does not permit property in land." From
the same principle he would have reasoned that
equity does not permit the limitation by monopoly of
any industrial opportunity of man, and that control or
possession of such opportunities constituted an
abridgment of his rights and a violation of justice.
As these opportunities are used to wrest tribute
from toil, their limitation by monopoly is morally
wrong. It must follow as a rule of Political Science
based on equity, that incomes derived from non-pro-
ductive sources are unjust.
PARASITIC WEALTH 93
The ultimate test of all social conditions, must be
the test of abstract ethics. Unless the conditions
square with rectitude and morality, they cannot be
just. Let our teachers of Political Science re-ex;uninc
their theories and revise their treatises. If a tlr.ng is
wrong in essence, the most subtle arguments of expe-
diency will avail not to make it right in jv.actice.
Sophistry and plausible speech will not condone a
wrong.
The ethics of Political Science centers about the
word " Services." All human effort, in its last analysis,
is a service. Wealth in its various forms is crystal-
lized human effort, or •' past services." Creation of ser-
vices and the exchange of services, is the sum total
of Political Science. On the basis of such ethics, in-
terest taking cannot be justified unless as a reward
for actual services rendered. After money has been
made "competitive for investment" by an expansion of
its volume, "Premium" interest will cease, but a
nominal residual charge of negligible but constant
quantity will remain as a service charge, of which we
shall speak later.
But while we can render money and therefore
"Capital" premiumless, we cannot make land rent-
less. Land area is limited and cannot be expanded like
money. It must therefore be emancipated from private
94 PARASITIC WEALTH
control. Premiumless money and emancipated land
are the watchwords, and the ''Declaration of Indus-
trial Independence,'' the motto of Social Reform,
Land rent seems to be nothing but interest on the
purchase money, and on money invested in improve-
ments. But it is more than that, land is a factor of
production, and competition for its use like competi-
tion for the hire of money, gives rise to a ''premium."
Limited money volume bears a premium — Interest.
Limited land area bears a premium — Rent.
Rent and Interest are the price society pays for li-
mitation. They are exactly the same thing under
two different names.
By the gradual expansion of the money volume and
by improved methods of its circulation, interest on
money declines but land cannot be expanded like
money, and as population encroaches upon its avail-
able area, land premium or rent advances. If there-
fore, we had a premiurnless money, land values would
rise enormously as compared with prices of competi-
tive products. Land being then the only non-pro-
ductive source of income — the only medium where
idle possession could get something for nothing — de-
mand for its ownership would be great. The Social
Problem, v.-ould be only partially solved.
In any true scheme of money reform these twin
PARASITIC WEALTH 95
evils, interest and land ownership, must be abolislied
together.
The value of land increases in two ways : First
by competitive demand for it, due to pressure of popu-
lation, and second by public and private improvements
in its vicinitv. Every roadway, boulevard, railroad,
canal and other transportation and business facilities,
every library, art gallery, educational institution. park,
public building and in fact all manner of public con-
veniences and improvements that make life worth
livinir, enhance the value of land. Such increase in
land values is incidental to co-operative influences,
and therefore belongs to the community. x\ll the
people of the country contribute directly or indirectly
to make land valuable, therefore all the people sliould
participate in its benefits. This increased valuation is
the "economic surplus"' which is now appropriated by
land owners to the great hurt and injur}^ of the land-
less.
In this country population increases at the rate of
about three per cent yearly, therefore the average land
values should increase at the same rate independently
of any improvements on the land, public or private.
This fact largely accounts for the encouragement of
immigration by the owners of land. Over-population
is a curse to all but the land rich, for it enhances their
96 PARASITIC WEALTH
wealth and places the masses under better control and
subjugation to the masters of the soil.
Rent is estimated from the level of the least desir-
able or least productive land, called "no-rent'' land.
This is the level on which the "economic surplus" is
drained into the pockets of land owners. As this
level is forced down to less desirable lands by the
pressure of advancing population, or by speculative
monopoly, this "economic surplus" increases, and the
drain on industry is greater. Let us not be misled
by the childish arguments that rent does not affect
the price of products, or the wages of labor. It is
enough that it affects the purse. Rent and interest
take their slice out of productive effort in a suffi-
ciently real and tangible way. The capitalist does
not feed on coin, nor does the land-lord eat soil.
Thev both, however, take the lion's share of the na-
lion's output.
Rent may be defined as follows :
Rent on land depends upon its available area and
the demand made upon that area by competition for
its use. Rent on land is the toll productive effort
pays to ownership; this toll advances as demand for
the soil increases, and rent, therefore, bears a defi-
nite ratio to the pressure of population. Tiie limit to
advancing rent is that limit where pressure of popu-
PARASITIC WEALTH
97
lation trenches on the margin of subsistence.
The available land area is fast disappearing, as ad-
vancing population encroaches upon it. and land spec-
ulators obtain control.
In the Arena for September. 1S96. the Rev. B. \V.
Williams gives some interesting tigures in regard to
appropriation of the public domain to private monop-
olv. Twenty -seven private individuals hold between
them nearlv twelve millions of acres of land. Fifty-
six foreign corporations own more than twenty-sLx
millions of acres of land in the United States, an area
greater than the State of Indiana. With lavish ex-
travagance and recklessness Congress deeded awav
over 191 millions of acres of public land to railroads
and other corporations, a tract nearly as large as the
combined area of France and Germany. These are
astonishing facts, and show the pace at which expa-
triation is being accomplished.
The level of desirabilitv is becoming lower and
lower, and rents are steadily advancing. Land is
the great stronghold of non-productive incomes, and
in all probabilitv the vast fortunes of the wealthy have
all of them directly or indirectly been connected with
land speculation and values. Speaking of the cele-
brated classification of millionaires published by the
New York Tribune in June. 1S92. Prof. Commons
98 PARASITIC WEALTH
says in his book on the ''Distribution of weahh,"that
takino- into account the size of the fortunes, it will
be found that perhaps 95 per cent, of the total valuo
is due to investment classed as land values and
natural monopolies, and industries aided by such mo-
nopolies. But as in the case of money premium, this
is not its worst offense. We might overlook the ex-
actions of rent on land and the vast fortunes made by
land speculation, if it left us otherwise free to earn.
But land monopoly closes up the avenues of agricul-
tural employment to those unable to purchase land,
and thus makes unemployed labor competitive and
helpless.
It is a remarkable fact and one which we have
already noticed, that land is probably the chief repos-
itory of savings. Land is the most desirable medium
of investment, for like money and its products, it yields
an income without productive exertion. It has the
further advantage that as it cannot be lost, destroyed or
stolen, it is therefore absolutely safe. Naturally, and
by preferment therefore, land becomes the repository
of savings and an instrument for drawing income from
industrial effort. Our absurdly small money volume
13' simply a medium for effecting the conversion of one
property into another and not a permanent repository
of savings as it should be. If land were not purchase-
PARASITIC WEALTH 9^
able, money would either go into some useful inclustriai
investment or remain idle as a deposit in some savings
bank. Assuming the volume of money to be greatly
in excess of business requirements, it would then com-
pete for in\estment and bring no interest. It could
be used to advantage only in productive effort and
would eagerly compete for all manner of business and
industrial investments where speculation and risk
would give it an Insurance interest. It could be had
from the banks, when amply secured, at par, with a
nominal charge for bank services added. This ser-
vice charge would be as a compensation for the care
and responsibility of safe-guarding the money against
loss, the exercise of judgment and discretion in effect-
ing riskless loans, and all the legal, clerical and other
necessary expenses connected with money transac-
tions. Such charge for bank services would become
recognized as the price of money hire. In the case of
rents on dwellings and other buildings, machine plants,
etc., this residual charge will probably be included as
money hire. The balance of the rent will of course con-
sist of cost of maintenance and superintendence. The
use of propert}', causes deterioration and this waste
must be covered by cost of repairs and maintenance
which is a natural and just charge. Thus "rent'' on
Capital resolves itself into services.
rOO PARASITIC WEALTH
Under such a money system productive effort would
receive a stimulus it never had before. With land
speculation closed, money would seek investm.ent in
productive undertakings and enterprises. With land
rent equalized and money rent neutralized, numerous
industries and undertakings would spring up that had
no chance in the race before.
Labor freed from the galling yoke of industrial
slavery would take fresh courage and acquire a dig-
nity and independence it never before possessed.
CHAPTER VI.
Let us retrace our arguments :
We assumed, that if our present social conditions
were right, the wealth distribution would be found to
be just, but if the distribution were not just, then the
conditions could not be right. We showed the curves
of wealth and incomes, estimated independently b}-
tive different competent writers. We found the dis-
parities of well-being so great as to leave no doubt in
the mind that some great economic wrong lay at the
root of our social miseries. We traced this wrong to
the monopoly of the two great factors of production —
money and land. In money, and not "capital,'" we
identified the active factor of production, and to its
limitations we traced the emergence of interest ; to
its derangements we traced our panics and hard
times. We found that the money function conferred
its premium prerogatives on its offspring wealth. We
found that the "quantitv theorv " of monev and the
"capital"' theory of interest misled writers as to the
true nature of usury. We found that the velocity
of money movement had probably reached its limit,
and that no improvement in circulation could be
lol
102 PARASITIC WEALTH
looked for except through the expansion of the money
volume to meet the demands of social and material
advancement in the future. We discussed the metal
basis, and found it unsuitable and unsatisfactory as a
money medium, and, in fact, dangerous. We exam-
ined the ethics of usury, and found that charge for
money hire had no warrant in equity, unless based on
actual productive service. We examined the ethics
of land ownership, and found that its limitations, like
that of money, gave rise to a premium called rent;
that while money could be rendered premiumless by
expanding its volume, land could not be made rentless
by the same means, and therefore should be emanci-
pated from private ownership, and its benefits equal-
ized. We concluded that any radical improvement
in money reform must include land emancipation.
We indulged in a speculation as to the effect on indus-
trial production of an expanded money volume un-
able to take refuge in land investment.
Can we realize such conditions practically ? We
certainly can. Paradoxical as it may appear, out of
two evils we may produce a good — out of two wrongs
make a right, and all th;il without violating any prin-
ciple of justice.
To be an ideal currency, our money must possess
the following properties: it i.j.-t be:
PARASITIC WEALTH IqJ
A money of final payment and uniform power in ex-
change.
A money of unassailable security.
A money of unchallenged value.
A money of unquestioned stability and permanence.
A money of sufficient volume to be premiumless.
What fountain source of exhaustless wealth can it
be that promises such guarantees of stability and
value? The answer has no doubt been anticipated.
What else could it be but land?
Land value or the economic surplus in the United
States ma}- be estimated at about 30 billions of dollars.
This does not of course include the value of improve-
ments, such as structures and buildings. Nearly all
of this land valuation is novv' in possession of private
individuals and corporations. This valuation is con
stantly appreciating and will never have a tendency
to depreciate except through race decadence. Its
value, stability and permanence therefore rests on the
persistence of the race itself.
I\Ione\' based on land values and of ample volume
cannot be '"cornered" and otherwise manipulated b\-
speculators, as our gold coin and bullion have been.
It is not subject to any lluctuations of value to upset
commerce and cause panics. As the source of all
wealth, the value of land as a money basis stands
104 PARASITIC WEALTH
unchallenged. It is always in evidence, always in
demand, it cannot be lost, stolen or destroyed, and
possesses, therefore all the desirable qualifications of
a true and ideal basis of value.
How shall we emancipate this land from private
ownership on principles of fair compensation, and
convert it into money of circulation ? Very easily in-
deed. The people of the United States will simply
agree to pool their interests in the use of the earth.
The individual owners will agree to transfer their
land to the collective people of the United States on
condition that the collective people issue to the indi-
vidual owners receipts or certificates to the full and
just value of their holdings. The United States to
declare these certificates to be the constitutional
money of the country — the lawful money of ultimate
payment receivable for all debts, public and private.
All metals heretofore used as money to be declared
demonetized by law. The United States to redeem
its metal currency at par in the lawful money of the
land, if presented within a certain limited time, the
bullion to be sold in the open market for whatever it
may bring. All its paper obligations to be redeemed
in the law^ful money and cancelled.
We will thus at once possess a currency backed by
pledges and guarantees of unchallenged value, of un-
assailable permanence and stability.
PARASITIC WEALTH IO5
How shall we regulate the value of this money?
Simply by making "land value" the Standard of
"exchange value"; the ''Money Reform Dollar"' will
read about as follows :
UNITED STATES OF AMERICA.
A LIEN ON THE USE OF THE PUBLIC DOMAIN,
IN THE SUM OF ONE DOLLAR.
LEGAL TENDER FOR ALL DEBTS PUBLIC
AND PRIVATE.
The value of the dollar will be definitely fixed by
its renting power. The average price of land in the
United States exclusive of improvements upon it, is
about $14.00 per acre. If the land yields in rent, say
five per cent.net at the present price level, then one
acre of average land will rent for 70 cents per year.
Seven dollars of our present gold standard money will
therefore rent ten acres of average land. If seven
" Reform Money" dollars will likewise when presented
rent ten acres of average land, then the purchasing
power of the reform money will be the same as that
of the present currency. The reform dollar will then
purchase the same quantity of goods as the gold
dollar, and their power in exchange will be equal.
The value of the reform dollar will not depend so
much on their number as upon their renting power,
and as tax now takes the place of rent, the tax rate
on land will determine exactly the value of the reform
I06 PARASITIC w];altii
dollar. If tax rates are high, more dollars will be
required to rent ten acres of land, an.d the dollar will
buy less goods; if the tax rates are low. less dollars
will be required to rent ten acres of land, and the
dollar will purchase more goods. The value of the
reform dollar is entirely a matter of the land tax. It
m.av be well to state here that all taxation, save that
on land, is a violation of the rights of private prop-
erty. The government oversteps its true functions
when it levies a toll on human effort, and it can not
be justihed in doing so on any grounds of equity.
Land, as we have said, is man's natural opportunity,
the limitation of which by private ownership works
injustice and hardship on the landless. Right here is
the real and true excuse for a government. Tiie
State should not only be a policeman, but the arbiter
of fair play. It should not only "restrain men from
injuring one another" physically and socially, but like-
wise industrially. In all natural and industrial oppor-
tunities the State should step in as umpire to equalize
benefits, and this, in the case of land, is its only warrant
for imposing a land tax. As rem s cannot be abolished,
the State collects them for liie people and applies
them for the public good. It performs the useful
function of equalizing the benefits of land tenure.
The same argument applies to die money question.
PARASITIC WEALTH IO7
One of the most surprising propositions is that which
advocates leaving the issue of the people's money to
private eftterprise. Here is a vital factor of produc-
tion to be left to the vicissitudes of private speculation
and profit! A most essential and important State
function to be surrendered to individuals! Of course
the proposition is on a par v^'ith our present theories
of money and our barbaric commodity currency. Pri-
vate issue and control of money is the source of great
hardship and oppression to the people, but it is a
boon and source of profit to individuals. Like land,
money must be forever emancipated from private con-
trol and speculation.
It is entirely within the legitimate sphere of the
people's government not only to issue its money, but
to establish mercantile and savings banks and to
transact all the riskless financial business of the coun-
try at the actual cost for banking services. As pre-
vailing bank rates of interest determine what capital
shall exact from industry for its hire, the great im-
portance of establishing such a rate at its actual cost
of bank service, becomes apparent. The people sim-
ply pool their financial issues, and resolve themselves
into a "bank trust.'' The volume of mercantile bus-
iness is constantly increasing and if healthy conditions
prevailed should this year show a movement of some-
I08 PARASITIC WEALTH
thing like 75 to 80 billions of dollars. If the banking
charge for transacting this amount of business aver-
ages one tenth of one per cent., the gross yearly re-
ceipts would foot up from 75 to 80 millions of dollars,
which should be far in excess of any possible expense
of a very elaborate system of banking institutions.
The Savings banks should receive the people's money
for a small charge and guarantee absolute safety to
the deposits. This money could be loaned for a very
small bank service rate on proper security. It is pre-
sumable that such a rate would fall considerably be-
low the half of one per cent. This rate would con-
stitute a legitimate charge for legal, clerical and other
bank services. All capital would claim the right to
collect for such a charge, apart from its cost of main-
tenance and superintendence. It is of course under-
stood that the establishment of these national insti-
tutions should carry with it no restriction on private
enterprise. If private banks can serve the people
better than public institutions they should be encour-
aged and not placed at any disadvantage.
Indeed we cannot dispense with private banks, for
they will be useful where risks are involved and where
speculati\c enterprises aid the industrial movement.
Such risks of course carry with them an insurance
premium. It has been explained, that "monc}' re-
PARASITIC WEALTH IO9
form" does not contemplate the discontinuance of in-
surance or risk premium on money or property, but a
premiumless money will uniformly reduce the risk
rates to the full extent of bank rates formerly charged
for money hire where no risk was involved.
All money received at the peoples' banks should be
destroyed, and new bills issued in its place so as to
maintain the circulation clean and bri<;ht.
The issue of money is most certainly a State func-
tion. If ever there can be an urgent demand for a
Government, it is to establish money, and do what
private enterprise has never done and cannot do,
divorce it from speculation and profit, and make it
premiumless.
The State has done about everything it could do in
violation of its true functions, and has left undone
about everything it should do within the legitimate
scope of its duty.
If the issue of money is not a legitimate function of
the government then it has no legitimate function, and
had better go out of business. If the issue and
control of money be left to private enterprises,
everything else may be left to private enterprise.
The vigilance committee will protect the people,
— Judge Lvnch will keep order, and the other public
functions will be carried on by private enterprise for
no PARASITIC WEALTH
private gain and profit. Individualism will run riot.
We can hardly be worse off without a government
than with one continually interfering with commerce
and industry by a vicious and discriminating class
legislation based on a degrading paternalism. We
are cursed with too much legislation and too much
government. Its functions are daily growing more
complex, more corrupt and more expensive. We will
do well to heed the words of one of the greatest
statesmen of the century :
"A wise and frugal government, which shall re-
" strain men from injuring one another; shall leave
"them otherwise free, to regulate their own pursuits
"of industry and improvements, and shall not take
"from the mouth of labor the bread it has earned;
"this is the sum of good government."
(Thomas Jefferson — First Inaugural).
It thus appears that the equalizing function of the
State is its ethical warrant for the collection of the
land tax and that such exercise of taxing power works
in the interest of justice and prevents the spoliation of
one class by the other. It further appears that the
purchasing power of the Reform Dollar is simply a
matter of the tax rate and under perfect control of the
people. All values in exchange are thus referred to
the tax rate as a standard, and whether the dollar
PARASITIC WEALTH III
purchases much or little of the competitive products,
will depend on how much land it will rent.
If the land values in the United States amount to 30
billions of dollars, and if they have been yeilding six
per cent.net income in rent, then in order that the
reform dollar should maintain exactly the same pur-
chasing power as the Standard gold dollar, the assess-
ment should be made on the same basis. The land
tax in theorv would therefore yield on that basis 1800
millions of dollars per year. But practically the net
vield would fall considerably below this estimate, for
all land held speculatively would be at once released,
and people would occupy only what they actually
needed. This would set free vast tracts of valuable
but unoccupied land for cultivation, and probably
millions of families would now take up agricultural
land at a rental who could not heretofore purchase.
This would at once relieve the congested condition of
the cities wliere rents would decline. The relief thus
offered to competitive labor in the overcrowded trades
and occupations would be very beneficial. Productive
efficiency would be increased, and the rate of wages
would therefore naturally advance.
The intelligent reader will not be apt to confound
the proposed money reform with the "Real Estate
Loan Association" scheme of John Law. nor will it
112 PARASITIC WEALTH
be necessary to say that the reform money has noth-
ing in common with the notorious French " Assignat/'
This absurd financial scheme was not a land emanci-
pation reform, but a political measure for distributing
confiscated church property and to replenish an ex-
hausted treasury. The assignat was a sort of interest
bearing bond, based on church real estate. With
criminal recklessness these paper obligations were
multiplied until they were inflated to ten times the
value of the estates they represented, with the natural
result — bankruptcy.
To satisfactorily and practically put the proposed
Money Reform into operation will require great judg-
ment and wisdom and much work, but once launched it
will be an enduring fimancial reform. In order to re-
deem the metal coins and paper obligations of the gov-
ernment at their par value, the new reform money must
have the same purchasing power as the gold stand-
ard, and the tax rate must therefore approximate the
rent rate as closely as possible.
No discretionary powers must be given to congress
in regard to the issue of money except wathin the lim-
its of a well defined constitutional lav/, unless by con-
sent of the people through the Referendum. The
money must be issued v.ithin certain prescribed rules
at a per capita rate, that rate to be constantly main-
PARASITIC WEALTH II3
tainecl and never exceeded. The lax rate must also
be clearly defined by law on a basis of "population
density" and ••improvement valuation'' within the
district taxed.
The money may be printed and engraved by meth-
ods of such elaboration and refinement, and on special
fabrics, requiring such difiicult and complicated pro-
cesses to reproduce that counterfeiting could not be un-
dertaken without a most elaborate plant and very
expensive appliances, leading to immediate detection.
A sudden issue of so great a volun:ie of money as
v,^ould liquidate the claims of land owners could not
be undertaken witnout financial dissipation, and a
profound disturbance of the price level. Mone}' would
seek goods on a short and unprepared market, and
prices would temporarily advance very much. Goods
must have time to overtake the money volume seek-
ing them, and become competitive. All undue stim.-
ulation of trade is hurtful, and must be avoided, as it
leads to eras of spasm.odic prosperity, extravagance
and wild speculation, and winds up in ultimate
financial collapse. We here expect to accomplish by
reform within a few years, what should have come to
us as a natural heritage of centuries of growth and
development. The financial innovation, therefore,
must be introduced on the conservative lines of far
114 PARASITIC WEALTH
sighted judgment and wisdom. The issue should
take place very slowly and in small installments to
maintain an economic equilibrium between a stimu-
lated money circulation and competitive products
seeking it. It should be a gradual process of some
years, so that the enormous spur given to commerce
and industry v/lll not lead to reckless extravagance
among the people. It should be clearly understood
that an augmented money volume need not imply a
greater circulation. We may have ten times as great
a volume of money as at present, and circulate it
only one-tenth as fast, or we may use onlv one-tenth of
it and let the other nine-tenths remain idle.
But there is no doubt that the reform money will
give industry a great impetus, increase the productive
output, and correspondingly increase the consumption
of goods. There will be an enlarged money circu-
lation on an enlarged market, for all labor will be
fully employed, and both the demand for the com-
forts of life and the supply of these comforts will be
greatly augmented.
Long looked for prosperity will have come at last,
and the social well-being will be without any limit
except that of productive efficiency.
What will be the effect on interest of so large a
volume of money .^
PARASITIC WEALTH II5
Where we had "propertied" men, we will now have
"'moneyed" men, and banks will overflow with the
savings of thrift. Money will nov/ have become the
repository of savings. It cannot take refuge in land
investment and draw income, for speculation in land
is forever closed ; it must either go into improvements
and buildings or other productive effort, or it must
lie idle in banks. There will be more money, ten
times over, than undertakings and enterprises seeking
it, and consequently it will bring in no revenue. Nine-
tenlhs of it will lie idle in banks — the dollar will have
a long needed rest. Commercial banks will now re-
quire compensation from depositors for clerical and
other expenses connected with money movements,
and even savings banks guaranteeing absolute secur-
ity to deposits would really be entitled to some nomi-
nal recompense for safe guarding the people's cash.
Instead of a horde of idle money getters exacting
tribute from industry by land rent and money rent,
we will have men honestly earning their living in
some calling useful to society. The dollar they earn
will represent a dollar's worth of servies rendered.
The day for getting something for nothing will have
passed. Industries and business enterprises will com-
pete with each other for capable men, and labor for
the first time in the history of the world will get its
Il6 PARASITIC WEALTH
just due. The farmers of the country who more than
any other class have suffered from vicious tariff legis-
lation, will benefit immensely by land emancipation.
They will not only have their land but its value in
money too, and their tax rates will be no more than
now. The first effect of the money reform will be a
general liquidation of debts and mortgages and then
vv'ill follow an era of prosperity and progress never
before equalled in the history of civilization. We
may expect a social development exceeding the wild-
est dreams of reformers and a national growth and
advancement equally great.
CHAPTER VII.
We lack the cohesion of race, habits and religion.
We lack the bonds of a common purpose in our in-
dustrial and social life. We are an aggregation of
different nationalities, heterogeneous in tastes, habits
and religous beliefs, a polyglot nation, each national
component striving to perpetuate its language and
customs on this common soil. Our disparities make
us weak and assailable as a nation — in a word we
lack cohesion.
But collective ownership of the public domain will
harmonize all differences and weave into the warp of
our disparities the weft threads of a common interest
and destiny, uniting us into a national bond of great
strength and cohesion. Citizenship will acquire a
new dignity, and patriotism enlarged duties and obli-
gations. But lest we make this country a haven of
refuge for the degraded and depraved of other coun-
tries — the dumping ground for European offal and
refuse, we must control immigration. We must set
an exalted estimate on American citizenship and hold
the test of fitness to the mark. Our immigration laws
must be eminently selective.
117
II 8 PARASITIC WEALTH
It becomes a patriotic duty — a matter of National
self-preservation — that all race-degrading and deter-
iorating influences be kept out of the country. We
have enough of our own depravity and worthlessness
to take care of, and it will require a few generations
to fully assimilate and elevate what raw material of
native and foreign debasement and incompetency we
now have in our midst. It is the duty of every na-
tion to aspire to race supremacy, to raise its level of
comfort and living to the highest possible standard,
and to elevate those falling below the mark. By such
race emulation and rivalry, the general well-being
and happiness of mankind will be best conserved.
The criterion of material advancement is a high
plane of living, and this, in fact, is a sign of produc-
tive efficiency. The test of naturalization should not
only be selective as to morality, but also as to self-
support. The ignorant and inefficient are an undesir-
able element in any community. The lower the
scale of intelligence and greater the incompetency,
the more numerous the breed ; the higher the intelli-
gence and ability, the fewer but more select the off-
spring. Reckless propagation is a menace to the
continued well-being of any country. Over-popula-
tion is a curse, and he is the greatest benefactor of
mankind who teaches it procreative restraint, and
PARASITIC WEALTH IIQ
raises its plane of living. If parental responsibility
carries with it the high ideal of qualitv instead of
quantity in offspring, trained efficiency instead of ne-
glected education, then the millenium will be in
sight. Look at India. All who have read of the
horrors of plague and famine in this unfortunate land
of early marriages and low plane of efficiency and liv-
ing, need not wonder that some twenty millions of
this criminally prolific people must die of starvation
this year. Ignorance, incompetency and over popu-
lation have done it. Nor will economic reform afford
permanent relief to such people, for any social ameli-
oration will at once be met and overtaken by a reck-
less increase in population, which nothing but the
starvation limit will check.
The limit of subsistence is the lowest plane of com-
fort and decency on which a people will agree to live
and rear families. According as people increase in
intelligence and efficiency, this plane of living is
raised, and consequently, in times of distress, the
plane of life of such communities does not descend to
the low level of starvation and disease. But these
people are satisfied to live on a plane, in comparison
with which our paupers are in affluence. Can we
wonder then that a local famine will work so much
distress?
I20 PARASITIC WEALTH
The plane of living is the criterion of a nation's
civilization, and marks the difference between a
superior and an inferior race. If the nationalities of
the earth were arranged into a curve of productive
efhciency, it would be found that the level of comfort
and plane of civilization fall within the same curve.
The great problem of civilization is therefore, how to
raise the standard of comfort, or more corrcctl}^ speak-
ing, to raise its productive efficiency. '' Pauper" labor
is worth only pauper wages because of its inferiorit}'
and inefficiency. It goes to the poor house. Under
healthy economic conditions all labor has its opportun-
ity and can get employment, but the inefficient labor
though cheap, will not be sought for as eagerly as
efficent labor though dear. The competition is for
the best, and the more efficient will obtain the great-
er reward.
We have found that our average productive effici-
ency, taking Mr. Waldron's estimate, is about two
dollars per day per worker. This efficiency is prob-
ably from tvv'enty-five to forty per cent, higher than
that of English, French or German workers, and so
down the gamut of nationalities until we reach the
low level of efficiency among the Chinese and Hin-
dus.
Dur level is two dollars. Why not three? The
PARASITIC WEALTH 121
author sees no reason why changed conditions alone
should not advance our prosperity to that level within
a presidential term. There is no valid reason why
we cannot double our productive capacity within an-
other decade under conditions of economic justice and
fair-play.
What must be the condition of material advance-
ment? Commercial and industrial freedom. Tariffs
and meddlesome paternalism must go. Restrictions
on commerce and industry must be abolished.
Two great political superstitions have dominated the
mind of American workmen as the result of abnormal
and perverted economic conditions. One is. that labor
saving machinery and improved processes of produc-
tion rob us of employment, and the other, that the so-
called" Protection" by tariff tax increases employment.
NothiniT could be more wide of the truth. Statistics
show that nearly twice as many workers per capita
were engaged in the manufacturing industries in 1890
as were employed per capita in 1850. and the capital
invested in these industries per capita in 1890 was
nearly five times as great as in 1850, showing quite
conclusively that labor saving machinery and processes
have not closed the avenues of employment.
But what shall we say of that pitiful plea of nation-
al incompetency — that humiliating confession of weak-
122 PARASITIC WEALTH
ness and incapacity which cries out aloud for help and
"Protection?" Do the strong and capable need pro-
tection ? The word should be beneath the contempt
of every self respecting American who believes in
manliness and self-reliance.
Protection against what? Is it against "Pauper"'
labor? We are importing it as fast as the steam-ship
lines can carry it to these shores. It brings with it its
native incompetency and degradation and tills our
poor-houses and pauper institutions.
What then is the protection for? Simply to "pro-
tect" the people from buying at natural market rates
what they now must purchase at monopoly rates. It
is not protection but black-mail.
According to the investigations of the New York
Tribune in 1892, to account for the great fortunes
of the millionaire class, the statements abundantly
prove that about 28 per cent, of the immensely rich
obtained their wealth from protected industries. Pro-
tection means a monopoly. We have seen that the
natural monopolies of Capital and Land have caused
enormous disparities of wealth, but not content with
these instruments of exaction, we must create a special
monopoly and call it "protection," to assist the pro-
cess.
The tariff is a restriction. It says to commerce and
PARASITIC WEALTH 123
industry :•• we want less wealth." It says to human
effort: ''we want less efficiency."
If trade confers no benefit on man it should be .
stopped. If it does not increase the efficiency of
human effort, it should be discontinued.
The theory of protection is the belief that by tariff
restrictions vvc encourage the development of home
industries, and that home competition is a guarantee
of ultimate low prices ; that by protection we encour-
age home labor as against foreign labor, in fact we
get the better of the foreigners at every point. Osten-
sibly we are doing this, but in reality it works very
much like the patent water-gas stove of many years
ago, which was advertised to make its own gas from
water, and to require no other fuel. It did make its
own gas from water, but at the expense of its iron,
and consumed itself chemically in the process of burn-
ing. So with these protected industries ; they thrive
on the national substance ; they flourish at the people's
expense.
Trade cannot be made one-sided ; it must be recip-
rocal in its benefits. By trade res'trictions we pun-
ish the foreigner and we punish ourselves equally.
He cannot trade with us so as to get cheaply what
costs him dearly to produce and give us in return
cheaply what costs us dearly to produce. It hinder§
124 PARASITIC WEALTH
the exchange of benefits. It makes human effort less
effective and is a loss of wealth.
When it once becomes clear to the American work-
man that legislative restrictions can add nothing
to our wealth, but that they can and do divert money
from pockets where it belongs into pockets where it
does not belong ; when he understands that tariff laws
divert labor from natural and productive channels in-
to artificial and unproductive channels, and that they
make continued employment contingent on these arti-
ficial props, which when removed throw labor out of
work, then perhaps he will no longer listen to the
seductive arguments of the monopolist.
Like interest on capital and the land monopoly,
these restrictions on trade exact a tribute from indus-
trial effort. The}' close up the avenues of employ-
ment, make labor competitive, and place it at the
mercy of the monopolist.
Make money premium-less, emancipate land, and
abolish all trade restrictions and you open up three
great avenues of employment now guarded by mon-
opoly. When these are thrown open, labor will be
emancipated from industrial slavery. Work — endless,
infinite work — will be a drug competing for men to
do it. We will then be as anxious for the foreigner
to do it, as we are now that he should not do it.
PARASITIC WEALTH I 25
To the two parasites on industry, capital and land,
we have added a third parasite, "Trade Monopoly."
Not enough that we are held up by those Claude Du-
vals of Political Econom}-, Rent and Interest, the state
must now step in with paternal solicitude, and hand
us over to the Dick Turpins of tariff protection.
And does protection encourage home industry ?
Not unless pampered indolence is a spur to effort,
and helplessness leads to self support.
■ We have by tariff legislation artificially nurtured
and rendered chronically helpless and dependent the
industries of the nation. We have withdrawn them
from the wholesome and invigorating effects of open
competition, and exposed them to the baneful and un-
healthy influence of State paternalism. With most
unjust discrimination against self-respecting and self-
supporting industries of our land and at their expense,
we are maintaining a perpetual pension fund for in-
dustrial failures and incapables — a sort of public alms-
house to prop up business incompetency.
The great stimulus to excellence is this very com-
petition from which we are shielding our "protected"
industries. Under its spur, ingenuity, skill and abil-
ity are brought into full play, which backed by manly
^^elf'feliance is the foundation of enduring success,
put we have done worse. Not only are we under-
126 PARASITIC "WEALTH
mining industrial integrity and self-reliance, but the
enervating influences of a pernicious state inter-
ference is invading our social life. Our meddlesome
paternalism is breeding a race of moral weaklings,
lacking the stamina of manhood and self-restraint. As
physical and mental excellence and supremacy are
the result of persistent effort to overcome obstacles
and difEculties, so character and moral fibre are the
result of a constant struggle to overcome temptation.
And yet forsooth, we must discourage self-restraint
and brinL{ up a race coddled into an artificial state of
respectability and rectitude b}' restrictive measures
prompted by a narrow puritanical religious paternal-
ism ! We must be our brother's keeper lest he go
wrong !
We are presumably a nation of freemen and pride
ourselves on our free institutions, and yet our person-
al liberties are curtailed to a degree that would not
be tolerated in any monarchy in Europe. We dare
not trust ourselves lest freedom for good become a
license for evil ! Let us be men, and prove ourselves
worthy of the blessings of liberty. Let us forever
and without revocation annul all blue-laws and other
laws restrictive of personal freedom and give charac-
ter a chance. Let manhood and personal responsi-
bility assert themselves, and v/e shall bring up men
PARASITIC WEALTH 127
worthy of self government, a race of freemen, self-
respecting, self-supporting and self-reliant.
Neither morality nor prosperity can be legislated
into a nation, but they may be seriously hindered b\-
restrictive laws. Family training and home in-
riuences determine the one and individual effort the
other.
Let us not delude ourselves further in regard to
state paternalism, for it spells " social slavery." Annul
all trade limitations and abolish all restrictions. Let
us have social and industrial freedom in the widest
sense. Revoke all tariff duties, excises and other
taxes, for they are not only restrictive of personal
freedom, but they are violations of the rights of pro-
perty. There is but one justifiable tax and that is
the land tax — the "single tax'" advocated by Mr.
Menry George. This tax equalizes the beneiits of
land tenure and therein lies its warrant in jus-
tice.
What is the basis of material prosperity ?
First, as explained, we must set right our pervert-
ed economic conditions. This will emancipate labor
from monopoly dictation and make it non-competitive
as far as opportunities of emplo3'ment are concerned.
If under such favorable conditions, we likewise make
our labor effective, and prevent unnecessary wastes oi
128 PARASITIC WEALTH
effort, all the requirements for a rapid material ad-
vancement are satisfied.
At the head of all wastes of human effort is the ap-
palling waste due to the maintenance of large standing
armies and floating navies. Fortunately in this coun-
try the expenditures for military and naval establish-
ments are not very great, though there is a dangerous
tendency to increased appropriations for that purpose-
Corrupt political influences, however, competing for
the vote of the veterans of the late war by promises
of liberal party legislation has swelled the pension
roll until by reckless and criminally extravagant ap-
propriations the burthens of ihe people have been
enormously increased. The lofty ideal of patriotic duty
has been degraded and debased to the sordid level
of party spoils, and an indiscriminate grant of pensions
has resulted in a disgraceful scramble for State patron-
age, so that, to be enrolled on the pension list, no
longer confers honor or distinction to the beneficiary,
greatly to the disparagement of the truly deserving
heroes of the war.
What we now pay in pensions alone will rival the
outlays of some of the great European powers in the
maintenance of large standing armies.
Justice must be the aim of Social Reform and our
pension laws should be revised. The pension roll
should be a roll of honor and merit,
PARASITIC WEALTH 1 29
Expenses for military and naval purposes must be
kt pt in check.
The greatest waste of the country's wealth, not ex-
cepting even the waste due to standing armies, is the
waste due to enforced idleness, which in the case of
our present hard times, we tried to measure statistical-
ly. It must not be forgotten, however, that much en-
forced idleness prevails in the most prosperous times
due to the monopoly influences we have traced. This
waste under normal conditions, probably greatly ex-
ceeds the amount of our pension rolls. This enormous
loss will be eliminated when we emancipate labor
from these monopolies by our Money Reform.
The wastes due to Government extravagance
through party corruption will cease when the "spoils"
system is eradicated from politics. Social justice will
improve the public morals, and constitutional limita-
tions will prevent abuse of the public patronage.
Much effort is uselessly wasted in the production of
unnecessary and injurious luxuries, such as alcoholic
drinks, which not only imply a waste of wealth,
but are a deteriorating influence on productive
efficiency. However, reform here must be left to
strengthening of character and moral responsibility,
which will come from greater personal freedom and
greater well-being.
130 PARASITIC WEALTH
The wastes of efficiency due to trade restrictions we
have already noticed. These will cease when such
restrictions are removed. The wastes of effort in the
useless mining of gold and silver for money use will
cease with the issue of the Reform Mone}'.
Our system of industrl;d production and distribution
of products is fortuitous and unscientific ; and as a con-
sequence very wasteful. The losses due to our com-
petitive business methods are great ; indeed the sums
annually spent for profitless advertising and useless
maintenance of an army of middlemen and agents to
stimulate trade are enormous. The waste due to
misdirected energy and misapplied effort in conduct-
ing production and exchange is appalling. But the
process is improving. The system of industrial pro-
duction and exchange by Trusts and Combinations is
simply an improved method with the wasteful features
of competition and fortuitous production eliminated.
The Trust is a scientific method of industrial produc-
tion and distribution, and shovild be encouraged.
These combinations are beneficial where free trade
and free competition prevail, but tariff restrictions
make of them dangerous and unscrupulous monopolies.
The trust is the germ of a great movement toward
productive efficiency and must revolutionize our pres-
ent wasteful methods. The output and distribution
PARASITIC WEALTH I3I
of all the industries of the world must sooner or later
come under the control of organized intelligence, and
the Trust is such an organized effort. It should be
noticed, that the trend of industrial effort is constantly
toward greater efhciency. Every invention, every
labor saving device, every short cut to wealth produc-
tion, every improvement which increases the efficiency
of human labor is a blessing. It makes our houses
better, our clothes better, our conveniences greater,
and stimulates to greater industry and effort. We
obtain more of the conveniences of life for less effort
than before. These improved methods do not lessen
employment — on the contrary they open up new
opportunities. If our efficiency were a hundred times
greater than now, the opportunities for employment
would not be less, but more numierous, for with every
new opportunity, new possibilities would be opened
up. Work is infinite, and if the avenues to it are
closed, it is our own fault.
There is another source of waste, which with eco-
nomic justice and scientific management will vastly
decrease and in time entirely disappear, providing
the tendency to over-population can be kept in check.
I refer to the physically, morally and mentally
afflicted — the crippled, blind, insane and otherwise
physically incapable ; the drunkards and criminals and
132 PARASITIC WEALTH
Otherwise morally depraved ; the indolent, incompe-
tent, paupers and beggars — all of them wards of the
State.
The pauper and criminal are to a great extent more
sinned against than sinning. When we have first ex-
tirpated the great economic crime at the root of our
social system — when civilization rhymes with equali-
zation and not spoliation, then we may be able to
deal successfully with the class for whose wrong-do-
ing our social injustice is largely responsible. With
one hand society robs the laborer of the means of sub-
sistence and self support, and with the other punishes
him for stealing bread to save his family from starva-
tion. And this is justice! A social system based
on injustice naturally breeds crime and moral de-
pravity.
Our economic perversions are probably largely re-
sponsible for all social immorality and corruption, for
they teach that wealth may be had without compensa-
tory effort. They have converted us into a nation of
financial speculators, stock gamblers and cunning
schemers, all in a mad, reckless, frenzied rush for
wealth — all expecting to get rich without honest
work — rich and independent at some one's else ex-
pense. Honesty is a relative term. The ethics of
social morality is largely a matter of method. There
PARASITIC WEALTH I33
is method even in appropriation. The methods of
house-breaker and tliicf are crude and unscientific be-
side the subtle refinements of economic absorption.
The robber goes to jail for stealing a purse. He is
disgraced and degraded. He suffers privations and
indignities. But parasitic wealth, with its hand in
every wage earner's pocket, dwells in a palace in
luxurious ease and affluence, while an army of indus-
trial slaves does its bidding and society goes down on
its deferential knees to its kind. It is fondled, flattered,
and eulogized. It is merely a difference in method.
We cannot expect pure water from a polluted source,
any more than we may expect virtue from vice.
The moral diseases of mankind are, all of them, in
their last analysis, traceable to abnormal social con-
ditions present and past, and their cure must of ne-
cessity imply social reform. Chronic destitution leads
to despair. Poverty is the margin where human en-
durance ends either in self-abasement and depen-
dence, or asserts itself in self-destruction or crime.
The unjust distribution of wealth, the affluence of the
corrupt, and the success of the unscrupulous, all seem
to proclaim the absence of social justice and fair play,
and furnish the criminal what he believes to be a justi-
fication for his crime. We must therefore begin w ilh
society first before we apply our morality to those
whom its sin helped to deprave.
134 PARASITIC WEALTH
We should invoke science in the treatment of vice
and crime. Chronic cases of depravity should not be
permitted to breed their kind. Vice should not be sup-
pressed, but extirpated by scientific and humane meth-
ods. All criminals should be made self-supporting.
Enforced idleness in our prisons is a crime against the
prisoners and against society. It is a great waste of
wealth and a tribute on honest labor. The position
taken by trade organizations on the subject of prison
labor is another instance of fallacious reasoning due
to our wretched economic perversions. When it be-
comes clear, that under healthy economic conditions
the opportunities for work will always overtake the
labor seeking them and that employment and not labor
is competitive, the short sighted policy in regard to
prison labor will become quite apparent.
Then there is the army of the incompetents and in-
capables, from which pauperism is largely recruited.
These are the stragglers, weaklings and social fail-
ures, bringing up the rear of the industrial proces-
sion who, in the race of life, are left to perish by the
wayside. The requirements of race superiority in^.-.
ply under the cruel operation of nature's law the des-
struction of the weak. To foster disease and inferi-
ority by protective methods is to encourage race de-
terioration, therefore all congenital cases of general
PARASITIC WEALTH I35
worthlessness must not be permitted to perpetuate
their kind. By the wise enforcement of humane
methods of prevention, chronic, physical and moral
worthlessness will gradually disappear and cease to
be a burthen on the rest of mankind.
Another source of waste is the enforced idleness
due to labor strikes and lockouts. These are the
protests of oppressed labor against unjust economic
conditions, which make it competitive and place it at
the mercy of monopoly.
The avenues of employment are closed bv the toll-
gates of monopoly, and helpless labor stands without,
asking permission to earn a living. The toll is tlie
price labor pays for the privilege of earning, and only
those who can pay the price pass through.
Labor hopelessly competitive has no redress but
that which may come from organization for the com-
mon defense, and concerted action. The strike is a
protest against industrial injustice.
Under normal conditions labor will be free and non-
competitive. Wages and services will be reciprocal ;
laborer and employer will meet on equal terms, both
earning their income by productive services, neither
having any advantages over the other, except in brains
and efficiency, each rewarded according to his indus-
trial ability.
136 PARASITIC WEALTH
Under such conditions Trades Unions and other
Labor Organizations will have no grievances, and no
enemy, and will resolve themselves into societies for
social and intellectual advancement.
With all these great wastes of human effort elimi-
nated, the productive efficiency will be largely en-
hanced. The increased well-being of the depleted
millions, will tend to their elevation and refinement,
and conduce to still greater efficiency.
It must not be imagined that we have reached the
zenith of industrial advancement. We are still only
at the beginning and evolution is slow and painful.
The vicissitudes of industrial progress are great and
throw out of employment temporarily, specialized
labor, through pressure of constant changes in methods
and improvements. It should be a fixed State policy
to lessen waste through temporary idleness of such as
are stranded in industrial centers through the exigen-
cies of trade.
The land tax will yield revenue far beyond purely
State uses and the surplus must be applied to public
improvements. Work on public improvements should
always be on tap to anyone passing the requisite test
of efficiency. There should be a lowest rate of pay
for a certain recognized class of work and this pay
should not be so large as to be an inducement to seek
PARASITIC WEALTH 1 37
public work in preference to private enterprise, but
to relieve honest and efficient effort fairlv. Promotions
to higher grades of work could be made from this class.
The Public Improvement Bureau would then always be
a guarantee of employment to the efficient and prove
a national boon^ as establishing a labor overflow out-
let, and a lowest level of comfort below which com-
petent labor could never fall. The different Bureau
districts should be competitive with one another as lo
comparative showings of expenses for paving and ex-
cavating, etc., to insure greater efficiency for money
expended.
A surplus fund for Public Improvements should
always be kept on hand to meet industrial and other
emergencies. Droughts, floods, local disasters and
other derangements temporarily throw workers out of
employment and debar them from earning a living.
Public improvement work is an asylum for such as
cannot at once accommodate themselves to new con-
ditions, welcoming them to earn an honest living in-
stead of depending on charity. Public improvements
add to the nation's wealth and benefit the commun-
ity to the full value of the money expended ; why then
allow any waste of human effort ? Enforced idleness
is a public loss and a great hardship to the unem-
ployed. To be out of work means not to earn : not
T38 PARASITIC WEALTH
to earn means not to spend, and therefore, not to
consume ; lessened consumption means lessened pro-
duction, and this means hardship to other producers,
so that one part of the community cannot be affected
'.vithout affecting the well-being of the Vv'hole. Here,
th( refore, comes in the legitimate function of the
State. The individual can look after his own affairs
better than the State, but the State can look after the
collective welfare better than the individual. Of
coarse, if relief measures could be assured by private
enterprise, by some method of insurance, it might be
;: preferable method, as self-help is the best help, but
in the absence of such some public provision must be
made for lessening the evils of temiporary idleness.
The money volume being ample, the surplus fund
may be allowed to accumulate without prejudice to
commerce and industry.
Reckless extravagance of government must be
checked. One of the reasons of corruption and job-
bery is that no efficient system of competitive checks
on public expense and work output have been intro-
duced. All government work must be competitive
as to expense and efficiency, and ''comparison state-
ments" should be instituted as a test gauge of public
service. The comparison blanks should be designed
pn a per capita or some other convenient basis of
PARASITIC WEALTH I 39
comparison, and should show items of expense of the
past year as compared with expenses of some prior
year of greatest economy. The heads of departments
should be held responsible for expenses, and subject
to removal for lack cf economy. In this way only
can we expect efficiency in public service. There
are several industrial branches where collective effort
would be more efficient and beneticial than private
enterprise, if political corruption could be eliminated.
Public management of the post office has been a
source of great convenience and saving. In like
manner, but to a vastly greater degree, the public
management of money and banking will be a boon.
In a minor though very important degree, the collective
management of the telegraph and public highways
would be a blessing. The telegraph, railroads and
canals are national industrial opportunities, and the
benefits of same should be equalized. Franchises
should not be granted to private individuals,
and highways should not be permitted to fall
under the control of any individual or corpora-
tion. But unless we divorce the public business from
party corruption and pillage, we are probably better
off to entrust as little business to Government as pos-
sible- That under proper checks these public enter-
prises can be successfully carried on and economically
I.jO PARASITIC WEALTH
managed, there is absolutely no doubt, but such effici-
ency implies constitutional reforms, limiting political
interferences in the people's business and establishing
the public service on a scientific basis. Then and
only then may we expect honesty in office. Most of
our public and private corruption is due to the im-
morality underlying our civilization. When social
justice has been inaugurated we may expect a very
material change in public morals.
Public outlays must be jealously watched and ad-
ministrations must be judged by standards of public
economy.
Extravagance leads to corruption and to national
decadence. However, all immoral tendencies will be
more or less checked when the efficient and strong
are taxed exactly in proportion to their land holdings,
and are obliged to pay these taxes out of the proceeds
of honest effort and not out of the sweat of other
men's labor. The same men, who with criminal
recklessness, voted away extravagant appropriations
of the people's money under the spoils system,
will now begin to consider their own pockets into
which the tribute of despoiled labor will have ceased
to flow.
If our present imperfect civil service system is in-
fidequate to give us an honest administration of public
PARASITIC WEALTH I4I
affairs, we must so alter it that partisan interference
can affect civil service only on lines of greater effi-
ciency and economy.
No social reform can be complete which does not
provide for the nationalization of public monopolies.
While we fully realise the corruptions and short com-
ings of public service, we are forced to admit one of
two things or both of them ; either the corruptions of
public office and inefficiency of public service are due
to some inherent wrong in our system which may be
removed, or we are incapable of self-government.
There seems to be no doubt as to the true cause of
misgovernment. With the advent of social justice,
new social conditions, and political regeneration must
logicall}' follow. Under such conditions the corrupt
dispensation of public patronage, the granting of trade
monopolies, the lobbying of franchises and privileges,
and the general legislative catering to private greed
and selfishness, cannot continue very long. Political
corruption and depravity must in a large measure
cease when class legislation and paternalism are pro-
hibited, and when partisan interference in public
business is checked.
Under improved social conditions, and proper civil
(service regulations, we may expect efficient service
^nd economy in public affairs.
142 PARASITIC WEALTH
The highways belong to the people and it seems
like a great privilege that any one person or corpora-
tion should monopolize a public convenience. Rail-
roads, roadways, waterways and telegraphs must
ultimately come under the management of the people,
and though immediate change from private control
may be undesirable, such nationalization should be
kept constantly in view. The ''land purchase act"
should cover the purchase of all the improvements
and equipments of such of the public monopolies as
it may be deemed expedient to nationalize.
In the managements of the railroads, telegraphs
and the post office, and in the control of land and
money, the State function is not only legitim.ate and
proper, but urgent. These are public interests and
not private concerns.
But the commerce and industries are essentially
private affairs and should be left to regulate them-
selves. We should not only resent any approach to
State interference with trade, but even insist upon
the annulment of the constitutional clause which en-
powers congress "to regulate commerce with foreign
nations and among the several States,"' seeing what
injury has been done by the injudicious exercise of
this power. Under no pretext whatever should con-
gress be permitted to place restrictions on trade.
PARASITIC WEALTH
43
Both in the regulation and management of the com-
merce and the industries we are justified in warning
the State, "Hands off."
CHAPTER VIII.
In a Society based on injustice the "survival of the
littest" means the survival of the unscrupulous.
There can be no honor in wealth acquired under
unjust conditions. Do we not all of us feel that some-
how the millionaires could not possibly have earned
a tithe of their vast fortunes ?
Let us for a moment contemplate Mr. Thos. G.
Shearman's classification of some of the millionaires of
eight years ago which he used in his estimates of
wealth distribution. The figures are taken from the
New York World of June 20th, 1897. While the es-
timates may now be wide of the mark in some cases,
in a general wa}' they will answer our purpose.
J. J. Astor. -
ISO
millions,
C. Vanderbilt. -
- lOO
W. K. Vanderbih, -
100
Jay Gould.
100
Leland Stanford.
100
;. D. Rockefeller.
- 100
Estate of A. Packer,
70
John I. Blair,
- 60
Estate of Chas. Croker, -
60
William Astor, -
- so
W. W. Astor,
50
m
PARASITIC WEALTH 1 45
Russell Sage, - - - 50 "
E. A. Stevens, - - 50 "
Etc.. etc., etc.
Referring back to our definition of money we
found it to be simply a receipt for services rendered —
a voucher for work done usefully and productively —
which empowered the holder to levy on Societv for
an equivalent either in present services, or in past ser-
vices as represented in commodities.
If we come honestly by this money it must repre-
sent something we have done productively for the
comfort or advancement of our fellow men upon whom
we levy for an equivalent. In other words, the monev
must come to us as a reward for useful effort.
How much of this wealth represents actual services
- rendered mankind by the possessors of it ? Are these
men intellectual or industrial giants, possessing pro-
digious powers of production and conferring on so-
ciety vast benefits? If not, how did they come by
this money? If these millions do not represent the
productive effort of the millionaires possessing them
whose productive effort can they represent? Plainly
speaking, how much of this wealth is of parasitic
growth and how maich honest flesh and blood, and
where in justice should the knife of confiscation be
applied? Let us see. What is a million dollars?
The average yearl}- reward of human effort in the
146 PARASITIC WEALTH
United States is about six hundred dollars per year
per worker. If by excellent management and great
self-denial half of the sum be saved yearly, it would
take three thousand three hundred and thirty-three
years of continuous work and abstinence to save one
million of dollars. That is, if a man of average abil-
ity commenced saving up half of his earnings about
the time of the exodus of the Israelites, he would by
this time have accumulated about one million dollars;
and yet some of these people are able to draw an in-
come of from six to nine millions a year!
If, after the ground had been cursed for his sake,
and he was condemned to eat bread in the sweat of his
face, Adam had thought best to invest in a Life In-
surance policy maturing A. D. 1897, and had saved
half the earnings of a man of average ability, his
total deposits up to date would amount to only about
1,800,000 dollars. And yet we have men reputed
to be possessed of something like one hundred times
that amount of wealth! Surely the earth brinffs forth
no thorns and thistles for these men, nor do they eat
their bread in the sweat of their brow. How did
they get it.^ Will Mr. Astor claim that he or his an-
cestors have actually rendered to society in services
an equivalent of his enormous possessions? Will he
claim, honor bright, that his useful efforts to human
PARASITIC WEALTH I47
kind equalled the productive work of say live men of
average ability? Will' the natural modesty of Mr.
Vanderbilt permit him to claim that he has conferred
on his fellowmen services worth the efforts of say ten
men of average ability ? Perhaps the author is not
very appreciative, but he really doubts if some of our
millionaires could earn an honest living if left to their
own resources. And as to those capable of self sup-
port, has not the leisure of Labor's competence been
sacrificed to give' them training and education ?
Whence came these millions and whose money are
they? They surely represent the sweat of good
honest toil and effort. Whose toil is it? The
people's. These millions are almost wholly the tri-
bute exacted from human effort for thc^ use of the
artificial monopoly, money, and the natural miOnopoly,
land. Interest on "Capital'^ and rent on land and
speculation in these monopolies have been chiefly the
sources of these fortunes. They represent the drain
on human industry by the idle and unjust possession
of the people's natural productive opportunities.
It is not here contended that there are not men
capable of earning great wealth. On the contrary,
there are thousands of intellectual and industrial giants
and leaders of industrial effort who have conferred
great benefits on society. It is difHcult to see, for in-
148 PARASITIC WEALTH
Stance, how millions could pay an Edison for the
benefits he has conferred on mankind. There is no
doubt whatever that many of our very wealthy men
have by real ability and efficiency conferred on society
certain substantial benefits, but as a rule the rewards
are out of all proportion to the services. An honest
social condition based on fair play, will give all men
their deserved reward, and wealth under such a con-
dition will be a true criterion of -'worth" and a cer-
tificate of honor. It is quite probable that many of
the competent rich, who have conferred benefits on
society, would be glad if the parasitic features of
wealth did not exist, as there can be no honor in
wealth acquired without compensatory effort.
We have spoken of equity in the liquidation of the
claims of present land holders. In the face of the
great injustice to the expatriated and dispossessed,
would it really be justice to those whom present social
condhions have so grievously wronged, that on top of
other private fortunes of these unjustly rich, the State
should cash their holdings in full H It would seem to
be a great perversion of justice to do it. The State
ought to set a price limit to land tenure, beyond
which, compensation should not, in justice to the
common interest, be permitted. The land in excess
of such holdings should revert to the national domain.
PARASITIC WEALTH I49
Abstract justice can not of course be done ; the
iniquities of our social conditions have caused irrepar-
able suffering to the despoiled. Out of the priva-
tions and sufferings of the wronged, the unjustly ricii
have for centuries enjoyed especial comforts and ad-
vantages, and neither the sufferings of the despoiled,
nor the pleasures and privileges of the benefited can
be revoked. The past lies beyond the reach of jus-
tice. The present may however be remedied, though
at best the reorganization on lines of justice must
largely partake of relative ethics. The aim should
be, the greatest justice to the greatest number, seek-
ing the even justice of all.
But while the injustice of full liquidation of the
claims of the immensely rich is quite apparent, can
we consistently and within the scope of constitutional
rights establish an arbitrary limit of land compensa-
tion, and will not such distinction in land claims work
hardship as between those rich in land, and those rich
in other properties? At best, ethically speaking,
social re-organization is full of difficulties. Our aim
should be first, to establish just economic conditions
and relieve the socially wronged from further spoli-
ation ; if then some of the wealth acquired under un-
just social conditions can be recovered to the people,
it certainly seems right that an effort should be made
to do so.
150 PARASITIC WEALTH
The people are greater than constitutions, and
whether Hquidation to the full value or within pre-
scribed limits be agreed upon, will wholly depend
upon the interpretation of the word "Justice."
There is no doubt, however, that pending reor-
ganization and readjustment on reform lines, which
must be a very slov,' process, self-interest will in the
meanwhile so operate, as to defeat any government
scheme seeking to appropriate any part of the vast
estates of the unjustly rich to public use. We will
thereby be spared any ethical qualms of conscience on
the score of possible injustice being done to the para-
sitic minority.
Were it, however, practicable to restore to the people
some of this unjustly acquired wealth, and the limit
of land ownership subject to compensation were fixed
at, say, the average wealth of the nation per family,
which is about five thousand dollars, it is fair to esti-
mate that more than ninty-eight per cent. of the popu-
lation would have their land claims liquidated in full
and that less than two per cent, would be affected by
such compensation limit. The immensely and unjustly
rich would still possess an enormous advantage over
the masses by virtue of their vast industrial and com-
mercial investments, but no one would begrudge them
these advantages, if further drain on the people's re-
sources might be stopped.
PARASITIC WEALTH l^t
It is fair to estimate the value of the land reverting
to the national domain by virtue of such a compensa-
tion limit, as exceeding ten billions of dollars. Reform
money to the full value of this land might be issued
and held in the public treasury as a reserve fund.
From this reserve fund our nine different kinds of
money and obligations could be redeemed. There is
no doubt that the demonetization of gold by the
United States will at once depreciate its value and the
nation will lose the difference between its money
value and its metal value. What the loss will be on
silver bullion we are in a fair position to estimate: the
depreciation on gold will be fully as much. Our loss on
coin and bullion will probably reach the neighborhood
of 800 millions of dollars or more. This together
with our irredeemable paper will deplete the new
treasury of something like 1150 millions of Reform
Dollars, but it will be cheap riddance of bad rubbish
to forever retire our absurd coin and paper money.
To briefly recapitulate : — We inferred deductively
that an ideal system of societ}' w'ould be such, that
while conceding to the individual the greatest possible
personal freedom consistent with the highest welfare
of society as a whole, it w ould guarantee to ever}-
member of the community an equal chance in the race
of life without prejudice — an equal opportunity with-
152 PARASITIC WEALTH
out favor or hindrance. That if we enter the arena
of life on equal terms as regards the industrial oppor-
tunities, then all the requirements of social ethics will
be satisfied.
Does our present system fulfill the requirements of
such an ideal ? Are the conditions such as to guar-
antee fair play to every one in the struggle for sub-
sistence ? Our investigations can leave no room for
doubt or hesitation, and we declare most conclusively
and emphatically. No. The conditions are unfair
and unjust. At the base of society we find a grievous
wrong — at the core of civilization a social crime.
Two great industrial opportunities of productive ef-
fort, the benefits of which should be common, have
been left to the sport of private speculation and mon-
opoly. The shrewd and cunning obtain control of
these opportunities, monopolize the avenues of em-
ployment and thus hold the key to the industrial sit-
uation. The restrictions which tribute puts upon
industry, render labor hopelessly competitive and place
industrial effort completely at the mere}' of idle pos-
session. Labor is degraded and enslaved; pauperism,
crimo and immorality are encouraged. A small
minority absorb the nation's productive output and
live in luxurious ease and idleness at the expense of
depleted millions. This in short is the present social
PARASITIC WEALTH I 53
condition. The evils have been known for centuries,
but the causes were not traced to the perversions of
Political Economy. All social reformers have keenly
felt the injustice of these conditions and have sug-
gested measures of relief, but these schemes of reform,
if not simply ameliorative and superficial expedients,
were subversive of a natural order of social evolution.
Nearly all of them imply legislative acts and forms
restrictive of personal freedom, and obstructive of
natural and healthy progress and development. No
social reform can ever become practical or successful
which does not rest on natural laws, and which has to
be propped up by artificial legal contrivances to make
it operative. Such a system implies coercion and
can mean but one thing — social despotism. No
social reform can be lasting which does not guarantee
to every individual that greatest of all boons — freedom.
We must be free ; socially free, industrially free, poli-
tically free— free to move and have our being with-
out "paternal'' restraints.
The money reform here outlined contemplates no
abridgment of personal freedom. It implies no
social restrictions, beyond those absolutely necessary
to maintain national coherence and integrity and those
social safeguards which prevent men from injuring
one another not only sociallv and physically, but also
154 PARASITIC WEALTH
industrially. It guarantees even justice to every man
and rewards exertion in the exact ratio of useful effort.
The individual who renders human kind the highest
service obtains the highest rewards, but these rewards
do not empower him to enslave his less favored brother,
or levy tribute on the sweat and toil of other men. His
superior abilities do not permit him to take undue ad-
vantage of his fellowman.
Emancipate Land and render Capital premiumless,
and social reform is an accomplished fact, without the
sacrifice of the only thing worth living for in this
world— personal freedom. The much abused senti-
ment " Liberty, Equality and Fraternity" will then
for the first time be more than an empty phrase, and
the grand word "'Democracy," as an embodiment of
equality, will acquire a meaning it never had before.
Plutocracy and aristocracy, the offspring of parasitic
wealth, will be things of the past.
How much will the "Money Reform" system save
to the nation ?
On the basis of Mr. Shearman's estimates, more
than 76 per cent, of the nation's wealth is in the
hands of less than three per cent, of the people. As
the forces of wealth concentration have not ceased
operating since Mr. Shearman published his figures
over eight years ago. it is presumable that the dis-
PARASITIC WEALTH I55
parities have not, since that time, grown less, but
rather more intensified.
It is quite fair to estimate that about 70 of the 76
per cent, of the vveahh in the hands of the parasitic
"three per cent." is interest bearing, and that
probably 10 of the remaining 24 percent, is involved
in one way or another in indebtedness and also yields
rent or interest. Thus four fifths of the capital of the
United States would be yielding "income." To be
quite within reason we will assume that only three-
quarters of the nation's capital yields such revenue.
If, on the basis of the Eleventh Census $62,600,-
000,000 out of the $65,000,000,000 bs the value
of private wealth in 1890, then the capital on
which interest was paid will foot up about $46,-
950,000,000.
All conveniences conducive to shelter and comfort ;
all improvements and facilities aiding industrial effort ;
all methods, appliances and machinery may be classed
as the tools of production. They are man's equip-
ment, and land is his workshop. More than three-
quarters of the workshop and the tools of industrial
production are in the hands of the parasitic "three."
Perverted economic conditions have made it possible
for an insignificant minority to obtain control of this
vast wealth and to use it with despotic power for the
156 PARASITIC WEALTH
indefinite and continued exploitation and enslave-
ment of the helpless wealth producers. It is a system
of economic plunder for which the term "social in-
famy" is a mild expression.
The prevailing bank rate on "gilt edge" security
is six per cent. All capital therefore assumes as its
right a toll of six per cent, in addition to the costs of
its maintenance and superintendence. The whole of this
46950 millions of dollars worth of property, in addi-
tion to the price of its maintenance, therefore claims
a toll of six per cent, for hire. We have assumed
that if the collective people undertook banking, the
actual cost of banking services would probally fall
below the half of one per cent. Let us assume this
excessive rate of the half of one per cent, as covering
the cost of banking. Then such percentage will con-
stitute a legitimate charge for services, and all capital
will claim a right to collect for such services in addi-
tion to charges for cost of maintenance and services
connected with its renting. While now we are paying
six per cent, interest for capital's hire, we would
under the new conditions pay only this "bank vSer-
vice" charge of the half of one per cent. The five and a
half per cent, additional we are now pa\'ing thu:;
appears to be a tribute to idle possession, and in ex-
j:ess of any productive service. Five and a half per cent
PARASITIC WEALTH I57
on 46,950 millions of dollars per year is 2,582 millions
of dollars, which amount goes to build up an aristo-
cracy of wealth, and for which society receives no
equivalent. Let us see what this sum of money means.
Remember that these estimates apply to the year 1890,
and that since then the nation's wealth has very largely
increased, and the conditions for the depleted major-
ity are probably more unfavorable.
On the basis of the population for 1890 and our
estimate, every family in the land is paying these
social parasites, on an average, over two hundred
dollars per year! On the basis of Mr. Waldron's
estimate of yearly productive efficiency this tribute to
parasitic wealth corresponds to nearly twenty per
cent, of the average yearly income ! In other words,
our economic perversions have taken twenty per cent,
from the gross earnings of labor and put the money
into the pockets of an idle aristocracy ! These are
amazing figures and it behooves us to thoroughly un-
derstand how they are obtained. Let us measure
this economic drain on human effort by a more direct
method.
The country's total wealth value at this moment
will probably not fall short of 80 billions of dollars,
while the annual industrial output may be safely esti-
mated at about 16 billions of dollars. Thus for every
1^8 PARASITIC WEALTH
5 dollars'worth of wealth, there is a dollar's worth of
productive output per year. About three-quarters of
this 5 dollars'worth of wealth may be considered as
interest bearing capital, so that it takes $3-75 in cap-
ital to yield productively i dollar's worth of new
wealth per year. For the repairs and maintenance
of this capital it will cost on an average about 4 per
cent., and for bank service charge about ^2 P^^ cent,
making a legitimate charge of 4 1-2 per cent,
on $3.75, or nearly 17 cents. This amount must be
deducted from the gross productive output of i dollar
to obtain labor's just earnings. But over and above
this legitimate charge, there remains a tribute of 5^^
per cent premium for which there is no service equiv-
alent to society. This premium amounts to about
twenty cents on the gross productive output of
one dollar. Deducting the 17 cents for maintenance
and for services, we obtain 83 cents as the legitimate
income of labor. Upon every 83 cents which labor
earns, this premium charge of 20 cents falls as a
tribute, or in other words, on every dollar of labor's
just earnings, capital levies a toll of 24 percent!
In these estimates no account is taken of the
volume of paper money in circulation, nor the value of
products in process of consumption on which interest
is being paid, which would tend to swell the
economic drain on labor's income.
PARASITIC WEALTH
159
But this is not all. Something like twenty-eight
per cent of the millionaires owe their wealth to pro-
tected industries. The tariff tax on necessities, by
shifting the burthen of taxation on the ninety-five per
cent socially wronged, relieves parasitic wealth from
just assessment, thus again favoring its growth. The
enhanced cost of living to the despoiled ninety-five
per cent.. from which tariff monopoly wrings its
millions, further reduces their earnings. We may
safely say that through enhanced cost of living alone
the infamous tariff tax probably takes ten per cent,
more out of the pockets of the unfortunate worker.
Thus the worker's tribute to the monopoly of opportun-
ities is about thirty three per cent, of his actual earnings,
an average of about three hundred dollars per family
for the creation and maintenance of an idle proprietary
class ! Thus a sum much larger than the cost of
the civil war, is diverted annually from the pockets
of the people and goes to swell the redundance of
the "parasitic" rich.
For about five years during and after the civil war.
a period of unexampled prosperity prevailed owing
to the release yearly into industrial channels of some
five or six hundred millions of dollars. When through
jobbery and economic plunder these millions found
their way back again to the coffers of the rich, and the
l6o PARASITIC WEALTH
people assumed the liquidation of the debt at rates
which more than doubled the principal, industrial
activity ceased and prosperity came to an end.
If setting free such an amount of money per year
under a system of economic spoliation caused so much
prosperity, what may we not expect under a system
of social justice, when something like four times that
amount of money per capita remains annually in the
hands of the people for circulation in trade channels?
It mightappear to the reader that the words " Industrial
Enslavement" and "Industrial Independence" are
mere figures of speech. Far from it. On the basis
of the census of 1890 there were 12,690,151 families
in the land. If our estimates of labor's tribute to idle
possession are correct, then more than four million
families were exclusively devoted to the maintenance
in idle luxury of less than four hundred thousand
parasitic families! Is this not industrial slavery? It
is worse in a way than actual slave ownership, for
here, starvation is the whip of compulsion, and the
slave owners are spared the bother and inconvenience
of taking care of their human chattels. Our Political
Economy does that, and assumes the moral responsi-
bility too. Is there any wonder that we are rushing
headlong to national self-destruction? The greater
the wealth output, the heavier the tribute and more
PARASITIC WEALTH l6l
hopeless the bondage. The economic blackmail not
only depletes the workers but prevents them from earn-
ing, by putting a toll on opportunity. Better abandon
civilization and go back to primitive methods than
submit to this social loot. Better any form of social-
istic despotism, than such iniquity. Better the dead
level of a joyless and depressing communism than a
civilization based on injustice.
Establish Money Reform and Industrial bondage is
at an end. The idle rich will cease to thrive and the
money power will be broken. The chronically idle
will be profitably employed ; the vagrant, tramp and
criminal, will now join the industrial army in an
honest effort to earn a living, and become self-sup-
porting. With fully employed labor, with increased
productive efficiency, .and with the establishment of
social justice, what degree of advancement may we
not expect?
That these economic wrongs should have been borne
in silence these many years, might show how long
human nature may be imposed upon before being-
provoked to overt acts of social revolt. But forbear-
ance is not one of the virtues of the slumbering giant,
and it is to be hoped that social reform will overtake
his awakening to the true realization of his wrongs, or
the earth may tremble with his wrath and fury.
1 62 PARASITIC WEALTH
The provocation has been great and the injustice
monstrous, and were it not that familiarity with mis-
ery breeds indifference to it, and that we grow callous
to suffering, the social iniquities would seem to be
past endurance
But nature is not without a parallel strongly sug-
gestive of our social perversions of justice, and the
comparison is not without its lessons.
The ichneumon fly is parasitic in the living bodies of
caterpillars and the larvae of other insects. With cruel
cunning and ingenuity surpassed only by man, this
depraved and unprincipled insect perforates the strug-
gling caterpillar, and deposits her eggs in the living,
writhing body of her victim. Eruptions appear on
the surface of the unfortunate worm, and in due
course of time the atrocious brood is hatched. With
the refinement of innate cruelty, these parasites eat
their way into the living substance of their unwilling
but helpless host, avoiding all the vital parts to pro-
long the agony of a lingering death. The worm is
their "capital" and they are taking their "income."
They are consuming the " interest" and "saving" up
the "principal." The toil and suffering of saving is
entirely vicarious — the worm does that. We might,
did we possess the eloquence of a Bastiat, go into
ecstacies over the glorious "harmonies" of nature's
PARASITIC WEALTH 1 63
economic methods ! But what about the worm ?
Nature's malevolence may be beneficial to man, but
how about the worm ? Is there no redress for the
poor worm ? No ; he must bear the invasion with
good gracQ, for should he presume to complain about
the social " harmonies", the "parasites" would straight-
way turn upon him and denounce him as an "agita-
tor" — perhaps call him a "socialist" or some other
disagreeable name. And as to the eviction of these
unwelcome tenants, who could be so shockingly
heartless as to propose such an outrageous measure !
The presumption ! Is it not their inheritance, and have
they not the right of possession?
Such appear to be the arguments of the parasitically
rich and of their parasitic supporters.
People of America ! Will you tolerate this state of
things any longer? Will you see the continued per-
petration of a great social wrong and remain the
passive victims of it ? Delays are dangerous, the power
of aggregated wealth grows apace and is becoming
more aggressive as it grows stronger. Further deg-
radation and enslavement of the masses can be the
only outcome.
Even now strong repressive measures are invoked
to keep down social uprisings and discontent. Only
"strong" governments can successfully maintain
164 PARASITIC WEALTH
^' order" in a society where Labor is forcibily "held
up'' and fleeced by its refined economic methods.
Already the staunch supporters of Monarchy, taunt-
ingly point, in vindication of "strong government"
theories, to our social and political corruptions, and
watch with secret joy the forces of disintegration which
are slowly but surely hastening our downfall.
The menace to our liberties is this unjust wealth
accumulation. No republic can long withstand the
subtle influence of a corrupt plutocracy. This wealth
rightfully belongs to the people and its unjust appro-
priation is a usurpation of power which must logically
lead to despotism and ultimate national decadence.
Other great nations have succumbed to these very
influences, and from the sepulchres of the past, their
buried civilizations appeal to us in mute eloquence,
and bid us beware of their untimely fate. But we
have our warnings. Already the rights of free speech
and protests of labor have been judicially assailed.
Even now over-zealous partisans of strong govern-
ment measures, would lead to overt acts of oppression
and repression, and an unscrupulous and mendacious
press has voiced the sentiments. Thousand and one
silent influences are at work slowly and impercept-
ably leading to greater arrogation of power by the
rich and to the gradual abridgment of the people's
liberties.
PARASITIC WEALTH 165
Shall we stem the tide that is bearing us on to
national destruction ? Let every man who has the
welfare of mankind at heart, who loves his country
and values liberty — who believes in justice and fair
play, and desires a peaceful solution of our social woes,
put his heart and soul into the cause of righting these
iniquities. Let him assume the sacred duties of
citizenship and vote for a reform.
The money power is formidable — vested rights and
interests are powerful. The social parasites will be
up in arms and fight for their very life, for all the
"incomes" of the rich are menaced. All institutions
which idly thrive at the expense of industry will be
arra3-ed against us; even churches and "endowed"
colleges depending on "annuities" have common inter-
ests with parasitic capital. A powerful press in the
service of present interests will wage war to the
death.
Shall we crush the money power or shall it crush
us? We must face the foes of social justice at the
polls in overwhelming numbers and forever efface the
crime of centuries! Over ninety-five per cent. of the
people are wTonged by existing conditions and nothing
but apathy and political indifference will put off reform
so long deferred.
The principles we have enunciated may be con-
densed into a political creed as follows ;
1 66 PARASITIC WEALTH
I. Land emancipation by purchase; present hold-
ers of land to receive certificates to the full appraised
value of their holdings. The nationalization by pur-
chase, of railroads, waterways and telegraphs by the
issue of similar certificates.
The Government of the United States to declare
these certificates to be the lawful and constitutional
money of the nation.
3. The value of the money to be regulated by
the land tax rate on a uniform per capita assess-
ment basis.
4. The volume of the money to be maintained on
a uniform per capita basis and to be of such amplitude
as to make it premiumless.
Gold and other mone3'-metals to be demonetized.
All coin money and paper obligations to be redeemed
into lawful money.
6. The organization of national Mercantile and
Savings banks, and the establishment of a bank ser-
vice charge.
7. The repeal of all tariffs, excise and internal
revenue laws and all other taxes and the substitution
therefor of the land tax.
8. Maintenance of a public improvement fund.
The establishment of a perpetual employment oppor-
tunity for overflow labor seeking occupation, and the
fixing of a lowest standard rate of pay for labor pas-
sing a certain prescribed test of fitness.
9. The passing of such constitutional measures or
[imendments as will place all public service out of
PARASITIC WEALTH 1 67
the reach of partisan influence or interference on any
pretext but that of greater efficiency and economy of
service.
10. Selective immigration.
Shall we proceed at once to organize the forces of
reform, or shall we temporize and wait until the mis-
eries of another industrial and business collapse drive
the socially wronged to desperation and revolt.'^
We are now entering upon a period of so-called
••prosperity.'' The monopoly guarded opportunities
are once more opening up to anxious and expectant
labor, starved into unconditional submission by en-
forced idleness. For the privilege of this "prosperity"
labor will continue to pay the usual 33 per cent, com-
mission to capital and the tariff monopolies, but it
will gladly pa}' the tribute, if only permitted to earn.
Were an attempt made to openly rob labor of 33
per cent, of its earnings on some economical pretext,
the people would immediately rise in their might and
crush the taxing power out of existence, but by the
subtle and insidious methods of economic absorption,
parasitic wealth takes its toll out of labor's earnings
before the worker's pay is considered, and so the
stealage is not even suspected.
Can we bring the people to a realization of these
great wrongs?
1 68 PARASITIC WEALTH
Between the apprehension of a social wrong and
the tardy righting of it, there are for the reformer,
many stages of bitter disappointment, vexation and
trial. The obstacles are many, the inertia to change
great, and the resistance obstinate. Look what it cost
to break the chains of chattel slavery in this country !
Will the emancipation of the industrial slave be as
stubbornly contested ? Yes, we may expect opposition
which for rancour and malevolence will find no parallel
in history. The rotten foundations of a thoroughly
corrupt and dishonest civilization are threatened. The
props of privilege and despotism are menaced. We
must prepare for a long and desperate struggle with a
powerful and unscrupulous foe. Fortunately there
need be no violence. The social dry-rot and political
corruption have not yet deprived us of our franchise ;
we may organize and vote, and if we suffer social in-
justice to continue, it will be our own fault.
The appeal goes forth to ministers of religion in
the name of morality and righteousness — to journalists,
publicists and writers in the name of justice and fair-
play — to all men in the name of humanity, to join in
the righting of these wrongs.
The appeal goes forth to every political sect and
social reform party without distinction of creed — to
every industrial and trade organization of whatever
PARASITIC WEALTH
following, to sink their differences and successfully
unite for the common good on the lines and principles
herein set forth. Heretofore the social forces have
been more or less at variance and working at cross-
purposes for want of a definite economic principle on
which all could unite and agree. That pri^nciple has
now been proclaimed and a definite policy formulatet-.
The opportune moment for concerted action is at
hand. Let all unite in one grand protest against the
iniquities of the present social maladjustments and
forever crush the money power.
If the movement have in it the inspiration of truth
and justice, it will sweep the country like a mighty
tidal wave and cany everything before it. The time
is ripe and the goal is in sight, but we need men, we
need leaders, we need organization. Who will lead
us out of the Industrial Bondage ?
Workers : Industrial deliverance and social eleva-
tion are within your reach. You have the power, if
you but use it, to be the masters of your own desti-
nies.
Unite ! Organize ! Vote !
FINIS.
University of California
SOUTHERN REGIONAL LIBRARY FACILITY
305 De Neve Drive - Parking Lot 17 • Box 951388
LOS ANGELES, CALIFORNIA 90095-1388
Return this material to the library from which it was borrowed
I ^ \.^ ii ^
DUE 2 WKS FROiV] bkTc RECEiVHD '
XuL
, UCLA ACCESS
' IntarfiMiry Loen^
11930 Untuiardny
B«e( 961575
SERVICES BL19
Rodooro^
hti Zbl. B817P
UC SOUTHFRN RFGinNAL IJRRARV FACILITY
AA 000 566 466 9