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This entry includes J. K. Ingalls’ contribution to Liberty, as well as related contributions by Benjamin R. Tucker, Marx Edgeworth Lazarus and others.
- J. K. Ingalls, “Henry George Examined,” Liberty 2 no. 1 (October 14, 1882): Supplement, 1–2.
- J. Wood Porter & J. K. Ingalls, “Land Limitation and Taxation,” Liberty 2 no. 4 (November 25, 1882): 3.
- Edgeworth, “Economic Fallacies,” Liberty 3 no. 20 (December 26, 1885): 8.
- Edgeworth, “Land Nationalization,” Liberty 3 no. 22 (January 23, 1886): 8.
- Benjamin R. Tucker, “On Picket Duty,” Liberty 4 no. 6 (July 17, 1886): 1. [William Rowe obit]
- J. K. Ingalls, “Was this George’s doing?” Liberty 5 no. 9 ( December 3, 1887): 5. [excerpt]
- Joshua King Ingalls, “Land Reform in 1848 and 1888,” Liberty 5 no. 22 (June 9, 1888): 5 [excerpts from 2-part article in the Truth Seeker]
- Benjamin R. Tucker, [editorial note], Liberty 5 no. 23 (June 23, 1888) 5 [JKI announces “Industrial Economy Lectures,” Glenora, NY]
- Joshua King Ingalls, “Increase: Economic or Tributary,” Liberty 6 no. 21 (October 5, 1889): 6
- Benjamin R. Tucker, “On Picket Duty,” Liberty 7 no. 3 (June 7, 1890): 1
- Benjamin R. Tucker, “On Picket Duty,” Liberty 7 no. 21 (February 7, 1891): 1
- J. K. Ingalls, “Land Reform and Money Reform,” Liberty 7 no. 21 (February 7, 1891): 1
- Benjamin R. Tucker, “On Picket Duty,” Liberty 7 no. 22 (February 21, 1891): 1
- Joshua King Ingalls, “Another Consistent Anti-Monopolist,” Liberty 7 no. 22 (February 21, 1891): 3
- Joshua King Ingalls, “Two Object Lessons in Equity,” Liberty 9 no. 38 (May 20, 1893): 3
- Joshua King Ingalls, “Interest Just and Unjust,” Liberty 9 no. 41 (June 10, 1893): 1
- T, “A New Conception of Interest,” Liberty 9 no. 41 (June 10, 1893): 3.
- Hugo Bilgram, “Interest is Unjust,” Liberty 9 no. 48 (March 10, 1894): 11
- Benjamin R. Tucker, “On Picket Duty,” Liberty 10 no. 14 (November 17, 1894): 1 [JKI on Lucifer]
- T, “Narrowing the Issue,” Liberty 10 no. 16 (December 15, 1894): 2.
- Joshua King Ingalls, “Unescapable Interest,” Liberty, Dec 15, 1894; 10, 16; pg. 4
- T, “Narrowing the Interest Issue,” Liberty, Jan 26, 1895; 10, 19; pg. 4
- J. K. I., “Judicial Encroachment,” Liberty 10 no. 19 (January 26, 1895): 6.
- Joshua King Ingalls, “The Interest Question Narrowed to a Point,” Liberty 10 no. 22 (March 9, 1895): 4
- T, “The Vanishing Point Reached,” Liberty 10 no. 26 (May 4, 1895): 4
- Joshua King Ingalls, “Point of the Interest Question,” Liberty 10 no. 26 (May 4, 1895): 6
- Benjamin R. Tucker, [editorial note], Liberty 11 no. 23 (March 21, 1896): 4. [final, derisive mention of Ingalls in Liberty]
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HENRY GEORGE EXAMINED.
Should Land be Nationalized or Individualized? 
BY J. K. INGALLS
Editor Irish World:—However interesting for the moment may be the questions as to whether Messrs. Parnell and Davitt are acting in unity, and as to whether Mr. George has captured the latter gentleman, a still graver question must ultimately present itself in connection with the disposition and final control of the land. Among the advocates of the “new departure” I have observed but one who has seemed to apprehend the exact issue,— viz., your correspondent, “W. M. C.” “Phillip,” indeed, apprehends that the solution must have a more individualistic application than is necessarily embraced in the term “nationalization of the land,” but, until he fully develops his ideas, I will suspend judgment on them.
Now, potentially, there can be no difference between monopoly under lease and monopoly under freehold, as we shall see on careful investigation. But let us, first ascertain what this phrase really means. Does it mean land for the whole people? Then who would want to rent or let? Does it mean ownership by the government or State? If so, it is not the solution, but only the stating, of the land problem. At the outset this is the theory of all governments.
When William of Normandy defeated Harold, he, as head of the State, assumed control of the lend, and parcelled it out to his bandit lieutenants and favorites. The English monarchs did the same in Ireland.
In ancient Rome the nation claimed the domain; but after a few hundred years it was all in the hands of a few patricians and military chieftains. The land in these United States, at adoption of the Constitution, was mainly national domain. Less then a hundred years sufficed to place it the hands of speculators, favored corporations, and domestic and foreign landlords. Less than one-quarter is now held by the government, and but a small proportion by actual cultivators, and even one-half of that is mortgaged to money-lenders beyond all hope of redemption.
I shall be told that it is not intended to allow private property in land at all, and that hence no monopolistic accumulation could arise. Well, then, there can be no public property in land; or, if so called or held, it must be with this sweeping limitation,—that the public, State, or government can never transfer it to private control. What I wish to indicate here is that no step whatsoever towards securing the individual people in their “rights of soil” can be taken without “limitation of the principle of property” in its application to the land.
But I shall be told also that for the individual to lease his land from the State or government will obviate all danger that any person will he excluded from cultivating the soil who honestly seeks to do so. This would be satisfactory if it were proposed, as “W. M. C.” proposes, to limit lease-holds so that all could have opportunity.
Without such limitation lettings would have to be made at auction; and it would be no more difficult for the millionaire to bill off all the leases of a section, township, or county than to buy up all the fees simple. Indeed, It would be far easier, for it would require him to invest none of his capital in land, as now. To nationalize the laud in any catch sense as that would help no poor man to a piece of land, but would only subject labor to dependence on a speculating and adventurer class instead of an hereditary landlord, and upon the favors of a partisan bossism, instead of a foreign government.
We should have our “seventy-thousand-acre farms” run by “produce kings,” aided by machinery and “transient help” in seed time and harvest, resulting in the ultimate exhaustion of the soil and time reduction of labor to the tramp state. Our stock-jobbing system would be mercilessly applied here, and the condition or the poor, by lack of opportunity for self- employment, would be rendered constantly worse and worse instead of being improved.
I do not mean in any degree to intimate that Mr. Davitt or Mr. George contemplates any such results, but this is the logical outcome to any plan of occupancy which does not positively assure the individual right to enter upon and cultivate the land necessary to his sustenance, and that without accounting to landlord or government official. I am gratified that the “Irish World” has not committed itself to any plan which does not effectually realize this aim.
“Rent,” according to Mr. Davitt,” is an immoral tax,” and, according to Mr. George, is “the price of monopoly,” and, whether paid to a single or to a collective landlord, is unchanged in its nature.
In view of the brave and noble work which Mr. George has done and is still doing for the cause of land reform, it pains me to say that he does not seem to have appreciated his own words, much less comprehended the clear-cut definition of Mr. Davitt, and, as to the twin blasphemy of usury, not to have apprehended it at all. Even as late as March 10, 1882, he speaks of the increase of rent with the growth of society as “a most beautiful evidence of creative design.”
In so late a number of the “Irish World” as July 8th, in the report of his Dublin lecture, after reiterating that the present agitation “means land for the whole people—every men, women, and child, rich and poor,” a” solution which gives to every man that which he fairly earns,” be gives utterance to such inconsistent economic twaddle as this, saying it is “Michael Davitt’s plan:” “To solve the land question and the labor question it is merely necessary [not to nationalize the land) to take for the benefit of the whole people those fruits coming from the land which are not due to the exertions of labor or use of capital of those who are engaged in using it.” Doubtless, Mr. George would be unable to find even in Ireland an instance where, the landlord being a judge, anything more then these fruits were taken as rent. The only difference between this plan, which Mr. George was careful to state was not “Mr. Devitt’s particularly” (I should hope not), and current landlordism is that in one instance those fruits go to a class, and in the other to the whole people; in other words, to the ruling political party or administration. He does not stop to consider that this circumstance would in no sense change the immoral nature of the tax, however it might mitigate its public impolicy. As to the portion of fruits which are to go to the use of capital employed in cultivating the land, it would be hopeless to find any farmer or operator in any field of industry to admit that more was now received than was their due. Political economists do not admit any such thing, and we look through “Progress and Poverty” in vain to find any such intimation from Mr. George.
That he aims at the same general result as other land reformers, I have no shadow of doubt; but his premises as to the use of capital end its reproductive power, together with his theory of rent—that it is the result of something produced by the land without labor,—is wholly unsupported by any known facts; and his plan of taxing back what is wrongfully wrung from labor under this false pretence can but prove delusive. If successful as a tax, it would to that extent prove useless as a measure of equity. If successful, as he conceives, in giving every one a foothold on God’s footstool, it would cease to yield any revenue whatever, and thus prove self-destructive, for no one not deprived of land by law or force would pay rent to government or landlord.
The farther discussion of the question I have put in the form of
Jonathan—Good morning, George. I am glad you have called. I am becoming deeply interested in the land question. To me it seems of importance to other countries as well as to Ireland, and that we cannot fully sympathize with the movement there until we understand it as a problem of world-wide application.
George—You cannot be interested in a question of deeper importance, and you are right in thinking it a subject of universal concern. The monopoly of the land in every country lies at the foundation of class domination and of the poverty and industrial subjection which prevail widely even in this land of civil and political freedom. Private property in land, whether under inheritance or commercial traffic, necessarily ends, sooner or later, in its absorption into the hands of a small and privileged class, while the majority of the cultivators, and, indeed, all workers, will be reduced to the condition of tenants, wage- workers, and tramps.
J.—That is also my thought, although as to private property in land I am not certain it could not be so defined and guarded as to make it operate in favor of equal opportunity and equal security. For instance, here I own forty acres. This would interfere with no one’s opportunity if some were not allowed to buy up hundreds and thousands of acres, not for the purpose of cultivating or occupying, but to hold them against the poor and homeless, in order that they may tax the toil applied in their cultivation and prevent those who need from going upon them and making homes.
G.—I see you have not studied this land question in all its phases. Private property means property, and, if you attempt to guard or control it, it ceases to be such. I think nationalization of the land the only practical solution of the question, and that can be most readily effected by taxing back the value of the land—i. e., the rent which it will bring— for the benefit of the whole people.
J.—The nationalization of the land in a comprehensive sense is a thing generally admitted, I think. No one disputes that the land of any country belongs to the whole people of that country. The only question is, how can the principle be applied to protect the individual in his natural right of access to his normal environment so as not to invalidate the right of “eminent domain,” which is exercised more or less widely and wisely by the governments of all countries, and which by the genius of our laws is supposed to reside in the whole people? The whole people cannot be evicted. It is only by allowing the individual to be evicted and debarred from his natural inheritance that society can be endangered by land monopoly. Society has, therefore, an undoubted right to prohibit the occupancy by any person of such extent of the common inheritance as would crowd or exclude the weakest member from his foothold on the soil.
Whether the occupant holds his house as property, contributing his share of the public burden in the form of a tax, or as a tenant and contributing under the form of rent, would seem to matter little so long as the large occupancy of the richer and stronger did not imperil the opportunity of the poor and weak. By the late mention of a book I have not yet read, I judge that Mr. Wallace alone among English land reformers recognizes the necessity of limitation of occupancy under leasehold, and advocates features of fixity which will secure permanent holding and the inviolability of home to the family. As to letting rent go on, as under the land system, and then taxing it all back from the benefit of the whole people, I am unable to see how that place can be made to harmonize with any democratic idea or fail to become a most dangerous experiment for any government to attempt. Industry at most should be taxed only for the reasonable necessities of government, and only after such necessity has risen and honest estimate made. To levy taxes for the accumulation of an indefinite sum, for which expenditures have to he found, is to create a fund inviting corruption and [s]peculation and the betrayal of public trusts. No experience which any people in any time have had would justify it, and it could not logically be sanctioned by anyone but the advocates of the nationalizing of industry as well as of the land, and of wholesale governmental co-operation, which would make the government the employer of all labor and the determiner of all wages. I do not understand you to advocate this.
G.—Oh, no. However I may agree in the abstract with what you say, I cannot avoid seeing that it is private property in land which is the foundation of the evil. Abolish this by making the nation the owner, and, of course, no such thing as monopoly could exist. You must admit that to equally distribute the land among the people would be impossible, even if desirable, which it is not. Many want no land, but all are entitled to their share of what it produces, minus the amount justly due the cultivator, and minus the part rightfully due the capitalist, who has furnished or advanced means to furnish the stock and general plant employed in cultivating the land.
J.—And the cost of collecting and disbursing the same among the whole body of claimants?
G.—Yes; but that is unavoidable, and must be considered as compensated by relief from all other forms of taxation. I was going to add that rent is an economical fruit not the result of labor, but in addition to it, which the holder of land who cultivates it himself receives over and above the compensation of his labor as truly as the idle landlord.
J.—Is rent at the same time, then, “an immoral tax,” as Mr. Davitt asserts?
G.—Yes, when paid to landlords, but if paid to the government, and by that applied to the public welfare, each member of the community gets his just share of the natural produce of the land. Rent, economical rent at least, arises wholly from the different fertility of special soils, as explained by Ricardo and other political economists.
J.—I am not unaware of that, or of the use Malthus and other writers have made of this theory to satisfy the laborer that eviction and starvation are in the order of Providence and not the results of unjust and barbarous laws of tenure. That under any system of freedom of the land there would be a choice of locations and of qualities of the soil there can be no doubt; that parties would be willing to pay something for such choice there can be as little; but that such transactions would degenerate into fixed rents, without landlords, is hardly conceivable,—not certainly while as at present there is abundance of land of good quality to produce all that is necessary for the public consumption. The inhuman mockery of this plausible theory is all too apparent when we reflect that much of the best land even in Ireland is now untilled, while tenants are being evicted from the poorest because they will not pay a rent at a rate almost, if not quite, as high as the best land would command. Take away the write of ejectment from the landlord, with which he now clothed, and the constabulary and military which enable him to enforce it, and all the rent he would be able to collect from choice of place or preference of soils would not distress or seriously wrong any. Ownership under such limitation as would always leave land open to occupation, even of a poor quality, would remove distressful poverty far from the door of the industrious and frugal. The few who are lazy and improvident also would improve their condition as opportunities increased and as chances of doing better by idle scheming than by honest work decreased.
G.—It seems to me you treat the rent theory with too little consideration. It is very clear to me that rent only represents the difference between the productiveness of the best lands and that which is not sufficiently productive to yield rent. If the cultivator owns the land himself, this production in excess of that of poorer land which is cultivated is a gratuity to him which comes from Nature, and not from his toil, since he has toiled no harder than the man who has produced the smaller yield; and the only way to equalize the award of industry is to tax away this excess and give it to the public. The theory is in itself so plain and generally accepted that I wonder you have the courage to dispute it. Mr. Mill denominates it the “pons asinorum.”
J.—I know it, but was always in a doubt as to his application of the term. It might be that he meant such a bridge that all asses coming near would be sure to go over. It is not so much the theory as the use which is made of it that I deprecate. That there is difference in soils and in the desirableness of situations is true enough, but that such difference constitutes the entire rental is too absurd for serious discussion. For, then, if all soils were equally fertile, and all situations equally desirable, no rent could be obtained, however the land might be monopolized. This reminds me of the thesis of the metaphysician, that, if an ass was placed equi-distant between two equally-attractive bundles of hay, he would die of starvation without being able to decide between the two. And, theoretically, this is all sound; practically, it is nonsense. In truth, rent arises from exactly the opposite direction to that here assumed. The amount any land will yield above the bare necessities of the cultivator becomes the measure of rent under land monopoly. And to apply the scheme of taxing back land values or rent for the public good means, if it means anything, the taxing of productive labor, all above a bare subsistence, and dividing it among all, whether workers or otherwise. The inequality which would arise from the working of lands of unequal fertility is greatly over- estimated, and it seems to me could be remedied by much easier and more natural methods. With a rational system of limited occupancy the restriction would embrace the consideration of superior fertility, and with more land of an inferior quality, with more varied crops and careful tillage, all serious inequalities would be overcome. There are also many compensations not discernible on the bare statement. The man with easier tillage and more productive soil will be able, doubtless, to obtain the same price for his grain or fruits as the man with poorer soil and shorter crops. He will leave somewhat more to exchange, and will with the excess purchase luxuries. This, while it may stimulate other industries, will not increase the cost of any necessaries to the neighbor. Another principle will also come in to render thee inequalities less serious, if they could be regarded as serious at all. The principle of serving first the first comer would render all such inequality of little account. Only as population increased and progress in production advanced would the less desirable places come into requisition. The older and feeble would be in possession of the more productive, while the young and strong would attack the more unfriendly situation. The rent theory goes always upon the notion that the best land will keep producing bountifully year after year and generation after generation. This is folly. Land, however fertile when first taken up or when it first comes into the possession of the cultivator, will soon work down to a condition where it will do no more than is done for it. Its productiveness will then depend on what is done in the way of returning the elements of fertility and proper culture. The original difference of most cultivable land will soon disappear under an equitable system of apportionment and intelligent use.
G.—Well, I came to read you a lecture on this subject, but you have read me one. I have never heard the “rent theory” attacked in this way before. If rent means only the different degrees of productiveness of different soils, there seems force in your suggestion that then no rent could be collected if all lands were equally desirable. But it is quite apparent that landlordism could not stand on any such position as that. I shall have to modify the statement by saying that under private ownership of the soil monopoly is enabled to exact the difference between the production of the best land and of such land as would be worked for its entire product without rent.
J.—Well, do you not see that you proceed in the wrong direction in drawing your conclusions? It comes really to an issue upon the question as to the “natural rate of wages.” Adam Smith asserts that to be the entire labor product. Ricardo, the author of the “Theory of Rent,” consistent with his theory, makes bare subsistence the natural rate. If this is true, as it must be, or the theory of economic rent be abandoned, then rent begins at this end and not at the excess end of the industrial problem, and does not absolutely require that any but the poorest lands be cultivated to produce a rent, if such lands will yield anything besides a bare subsistence to the cultivator.
Whether this theory would work if left to the operation of natural laws is another question, which it will be time enough to examine when our laws are repealed and equal opportunities are enjoyed.
It would be very easy to show that commodities have a price only because there is a difference in their quality, etc. For instance, the price of potatoes is only the difference between the size and quality of those most desired and those which are so small and of so poor a quality that they can be had for nothing. But an economist who should attempt to incorporate such a circumstance into a basic economic principle, and seek to tax back the whole value thus found for the public use, would simply stultify himself.
Your mistake arises in supposing that there is such a thing as wealth produced without labor. With equal access to the earth and its natural and spontaneous productions, the labor of gathering is all there is of production, and all that one man can justly exchange with another is the service he has rendered in such gathering. And that, in the absence of monopoly, is all that can have price. How one who stands aloof and does nothing towards this gathering can claim a portion of the wages of the gatherer is not consistent with any conceivable system of equity. Only upon repaying the service rendered is he entitled to any interest in the thing harvested, and then he receives under an equitable exchange the same proportion according to his service as the man who gathered.
In this way the right of soil is essentially vindicated. The artisan, artist, teacher, litterateur, and follower of any trade or profession is protected, for each requires and usually consumes quite as much of the earth’s products as the cultivator, and that, too, without rendering disproportionate service. Why, then, should the cultivator be taxed to benefit the others? Under free land or effective limitation of its ownership it would be optional with anyone of another calling who felt he was unfairly treated to plant and gather the fruits of the earth himself. All this would require no complicated scheme of taxation, no cumbersome official machinery, but simply a repeal of the class laws of tenure and the extension of the principle of limitation found so salutary in all other matters of civil rule.
G.—In view of all you have said, I still think that rent arises, to an extent, at least, from a “gratuity of Nature,” and does belong properly to the whole people, and I see no better method than to tax away this gratuity from the landlord for the benefit of all.
J—Without arguing that point farther, it really appears to me that to estimate that as a gratuity which is acknowledged to be “the price of monopoly,” is illogical in the last degree. If nature has gratuities, it is for those who gather them. With equal opportunity, if any refuse or neglect to gather them (not infants or disabled), they have no equitable or moral claim upon that which others have gathered; for, by rendering a reciprocal service in that which they prefer to do, they can secure what they need. Whether any such thing as economic rent exists at all can only be determined in the absence of monopoly. That rents are greatly above any possible bid for choice, and wholly separate therefrom, is seen by the fact that, where highest, premiums are often paid on leaseholds. Taxation on a basis so indefinite, so wholly dependent on monopoly and the limit of endurance which the poor will sustain, is as devoid of economic judgment as of democratic simplicity.
G.—But an end must be put to the oppression of landlordism, and, as the land cannot he divided in such a way that all shall share its benefits, I know of no other way to make the thing equitable. The tendency of productive industry to consolidate itself in the hands of large corporations must necessarily extend to the cultivation of the land, where it is seen that a few large enterprises can be carried on much more successfully than many small ones. To divide up the land into small holdings would be detrimental to production, as is held by many writers.
J.—But many writers of eminence take an opposite view, citing France, Belgium, Switzerland, &c. But, though the issue is at least evenly contested, I do not propose to make a point of that. Even if wholly as you say, in its mere relation to production, it would not be conclusive. There are other and broader questions than that of large production. The maintenance of the fertility of the soil and the development and improvement of the individuals of the race are aims to which minor economies should be sacrificed, if need be.
G.—You will admit that the “division of labor” has exerted a powerful influence in that direction!
J.—Certainly; but you must also admit that, carried to the extremes which are exhibited in our large manufacturing establishments, it tends to reduce the worker to a mere appendage of a machine, and can have only one effect,—the deterioration of all manliness and the destruction of all self-respect. The pointing of a pin, as a continual employment for twelve or fourteen hours a day, can end only by reducing the man to an automaton. Large production of pins can well be sacrificed to a greater diversity of employment for the individual, and the development of a higher manhood; if not in the interest of simple political economy, at least in the higher interest of social economy.
G.—My plan embraces the idea of “giving to every man that which he fairly earns,” and to capital what is “due for its use;” but that which goes as rent to the land I would have divided equally among all, since it belongs to all. Interest on money and profits derived from commodities in process of exchange and distribution are different in their nature from rent, and are realized “after labor has been duly rewarded.”
J.—I am aware that economists seek to draw this distinction; but it is wholly technical. The union of capital with labor is no more complete than that of the land with labor. No essential difference can be shown between rent, interest, and profits.
Rent is the interest upon the money for which the hired land would exchange. Interest is the rent of the land which the money would purchase. It can make no possible difference to the farmer whether the sum he pays is paid as rent or as interest on the purchase money of his farm. Both the rent and interest may be loaded with expenses, taxes, repairs, &c., but stripped of all these, they are identical in this: they are a tax upon the production of those who work for the benefit of those who do no work. Profits are also loaded with costs of superintendence, expenses, &c. Stripped of “dues for service,” however, they are identical with rent and interest,—an “immoral tax” on the productions of industry.
G.—But you forget that I assume that rent arises not from the labor, but independent of it, as taught by all political economists. And it is to tax that back for the benefit of all that I am contending. The question of interest and profits is held to be different from rent; but your way of putting it is novel. Yet it seems to me these are both right, and would work no great evil but for a monopoly of the land.
J.—But these, in common with rent, take so much from the annual production of labor, without any return whatsoever, when stripped of the extraneous portions with which they are usually connected. I think I have satisfactorily shown that rent arises in no such way as claimed, but wholly as “a monopoly price;” that wealth has no such power of increase as is claimed in justification of interest or usury; that trade has no power to multiply wealth, and that commerce can only add to the wealth of society by performing specific service in its production where and when needed for consumption, and that, when such service is fairly rewarded, nothing remains for profits but an immoral tax.
G.—But surely you do not propose to control interest and profits as well as rent? That would involve a degree of governmental supervision which I am sure would be repugnant to the spirit of any free people.
J.—Doubtless; but the dilemma is yours, not mine. I was just going to say that, waving my objections to the “rent theory,” admitting the power of wealth to increase of itself without labor, and of commodities in process of exchange to multiply on the hands of the holders,— though each proposition is vastly absurd,—the conclusion is unavoidable that interest on money and profits on trade are equally gratuities arising in Nature, to which all are equally entitled as well as to the economic rent arising from the land. How you can logically refuse to tax back the money and trade values, if any such naturally exist, as well as the land values is a matter of great wonder to me.
G.—But I see no other method of redressing the great wrong of land monopoly, and, that evil obviated, it seems to me that the other evils would remedy themselves, if they are evils.
J.—That is also my belief. In your plan, however, I see no certainty of remedying the basic evil. To do away with land monopoly only one course is open,—abolish it, as chattel slavery was abolished. Repeal all laws giving titles to land and make occupation the only valid tenure. This would do away with all discussion as to the nature of property in it. Production is the only thing which can be taxed. Improvements should be exempt, while coercive taxation remains. The “No-Rent” manifesto is the true gospel of Land Reform, and becomes realized as soon as the legal process for collection and for ejectment is taken away, and the constable and soldier are withdrawn from enforcing such laws. Only courage and moral purpose in the people are necessary to abolish this great evil; schemes and plans to circumvent it, by indirect means, will prove vain.
G.—But the difficulty still remains. Equal distribution is impossible. Besides, some want much land, others little, and still others none at all. “Nationalization might be changed to Townshipization,”  and so the local government, whatever its form, have control. The large holders would then share, under the system of taxation, with those who held little or none. Each would rent of all, and so the values be equally distributed.
J.—I am very glad to hear you say this. It is one step more in the right direction. This would approach nearly to the ownership in the township or village community, once the general system of land tenure in Europe. A step or two more will place you on solid ground. The familization and individualization of the land follows as a logical sequence from your admission.
G.—But you do not notice my point that many individuals do not want land at all.
J.—I was about to say that it is untrue. Every individual needs a place to live and work in. Thus far the wants of all are nearly equal. We are “tenants in common,” upon the bosom of mother Earth, and no one has any just claim against another for obtaining that which with equal opportunity he declines to appropriate. His refusal to occupy proves that he estimates his advantage greater not to occupy, and that all assumed advantage to the occupier is quite if not more than compensated through reciprocal exchange.
There exists no reason why any one should hire a home which does not apply with greater force to the reasons why he should own it. Even a single room can be owned, since it can be hired. Requiring to change his residence, one would experience no more difficulty in finding a purchaser than would the landlord (nation or township) in finding a tenant for it. Any disposition of the land which does not embrace the private ownership of home and the normal environment of the individual will not be the final one. Under that, even the changeful and migratory would find no serious inconvenience, while the many would enjoy, in its security and stability, a permanent reliance, and, in its healthful stimulus, the noblest incentives to beautify and adorn the limited portion falling to their control.
 The introductory portion of this article, preceding the dialogue, appeared originally in the “Irish World.” The remainder was offered to the editor of that paper, but rejected by him.—EDITOR LIBERTY.
 See Henry George in “Irish World” for August 26.
Land Limitation and Taxation.
The following article recently appeared in the “Irish World.”
Editor Irish World:—People, I see, are holding different ideas regarding the phrase, “the nationalization of the land.” Some retain the idea of State property in land and discard the idea of individual property in land. Now, it is very plain to see that, if the individual has no just right to property in land, the State does not justly have that right either, for the right of the State is based upon the right of the individual, as I have before shown in an article in the “Irish World,” entitled, “Unjust Taxation.”
The State has no inherent right. All its rights, duties powers, and functions are delegated to it by the people; but the people possess these rights by nature. They inhere in the individual.
When we have proved that private property in land is unjust, that fact settles the point, viz., that public property in land is also unjust.
If the State has a just right to sell land, rent land, or buy land, that power was delegated to it by the people, in whom all political power inheres naturally, and denying a power to exist in the individual or in the people that is admitted to exist in the State, is ample proof that the State has usurped a power that is unjust.
“The Land for the People” means the land for those who wish to use it without being the servant to or the master of any other person or persons; to use without paying rent to or exacting rent front ether persons.
This means that by some way we are to limit man’s use of the soil to his needs, and thus prevent a monopoly or more land than is needed for industrial use.
No one yet, to my mind, has solved the whole of this problem, but there are several able exponents in land reform that have done very much in the direction of a solution.
‘Land Limitation” solves one part of the problem, and in the minds of many it solves the whole problem. But it seems to me that this alone is inadequate. I find those who hold to land limitation do not object to private property so much as to monopoly of land, not seeming to perceive the fact that private property in land leads to monopoly.
Limitation cannot justly extend to any species of property. Man must be free to surround himself with the means to advance to a higher condition; “a pursuit of happiness” has especial reference to this. But land limitation is not property limitation. The right to restrict man to the amount of lend necessary for productive use is a power that man can justly delegate to the State, because it is in the very nature of men, for man is bounded in his natural rights by she sphere that bounds others’ rights.
The soil is a natural element, in which man has a natural right to use as his neighbour does; but the right of property in land has been sustained by the State, so that a man’s sphere may reach out and cover the land occupied by a whole people.
This right to invade another’s sphere does not inhere in man, but is often assumed, and even delegated to the State, as at the present time in reference to the use of the land; hence the necessity to discover our natural rights, and those which cannot be carried out or defended by the individual alone must be delegated to the State, and focalized there, where he can draw from a fountain of power commensurate with his necessities for protection.
Men does not surrender a right by conferring a power to the State; he simply helps create a power for the protection of his natural rights by joining, co-operating, with others for a similar purpose.
“Limitation,” then, is a part of the solution of the question of “The Land for the People,” because it is in the very nature of thing.
Land tax must also take a part in the solution of this great problem of “The Land for the People.” No other tax can be made to fail equitably upon the people.
All productive industry is based on the land. No person can surround himself with the means of happiness without occupying the land, and hence if the land alone is taxed, no person engaged in productive industry can escape paying his just contribution to the State.
It may be asked, Who would escape taxation? I answer, The sick, the insane, indolent, and those who lived on charity. Would the State lose much tax by this class that it does not lose now? I venture to say that the idle rich escape more taxation on property hid away, and exempted by unjust laws, and by false swearing, than would take to support all the insane and the beggars of this whole country.
What tax some people escape by hiding, bribing, and false swearing, comes out of other people that do not hide, bribe, nor perjure themselves. Our present tax system is a monstrous system, requiring an army of tax-gatherers and assessors, who could not, if they would, enforce the law. Although the law requires them to stick their nose into everybody’s business, it can’t he equitably enforced. Land as a basis of tax would dispense with two-thirds of this army to assess end collect tax, and could be made to fall equitably, because the land could be found and properly assessed to those who occupied it; end this arrangement would prevent all fraud on the part of the occupants of the land.
J. Wood Porter.
An article critically commenting on, but mainly approving the foregoing, was sent to the “Irish World” some time ago by one of its ablest contributors, Mr. J. K. Ingalls. Though put in type, it has not yet appeared, and the writer has extended to Liberty the privilege of its first production, of which we gratefully avail ourselves. Can it be that the “Irish World” is determined to admit to its spacious columns no further adverse criticism of the lunacies of George and Davitt? Is the great Light-Spreader afraid of the Light?
Editor Irish World: — Permit me to convey so Mr. J. Wood Porter my sincere thanks for his clear and conclusive statement in regard to the necessity of limiting “man’s use of the soil to his needs, and thus prevent monopoly,” and also in respect to the basis of all State or Governmental right depending upon the rights of the individual people.
It seems to me that his positions are unanswerable, and do not propose to make plainer what he has so clearly shown, that “if private property in laud is unjust, public property in land is also unjust” I am sure he will pardon me for pointing out in a friendly way what to me seem mistakes of detail, into which he would probably not have fallen if he had followed throughout the tendency of his original thought, instead of taking for granted the propositions of accepted writers.
I want to say first, however, in regard to a matter of fact that for more than forty years I have been familiar, and, indeed, to an extent identified, with the land limitation movement, but have never seen an advocate of the doctrine who avowed that “it solves the whole problem.” They have usually said only that it was a fundamental step necessary to any solution whatever of the monopoly problem, as Mr. Porter also clearly shows.
Matters of taxation, social order, etc., are subsequent, and may be employed to complete the movement as wisdom suggests. Provision to sustain government and the social guarantees and to carry out the principles of limitation follow as a matter of necessity. There is no call to antagonize these things with, “land limitation.”
I think the statement that “limitation cannot extend to any species of property” is made without sufficient reflection. The abolition of chattel slavery was effected by a limitation of property in living things, placing all human beings except one’s self beyond that limit. It could never have been abolished by any other process.
We greatly need to disabuse ourselves of all that nonsense about absolute property. There is no such thing. We have no such property even in our bones and tissues. They are constantly changed, and the matter of which they are composed hourly passing beyond our grasp into a “state of Nature” again. Property in our clothes does not give us the right put them on and lay them aside at pleasure without reference to the immunities we owe to others. We cannot ring our bell or blow our horn to the annoyance of our neighbor; we cannot lawfully maltreat our beast of burden, burn our house, or sell decayed meat or vegetables, notwithstanding we have paid out money for them, and they are our property, and we will be protected in the possession of them and in the use of then within certain limits.
There is no respectable civil code in which the limitations on the right of private property are no co-extensive with its guarantees. And there is no reason why property in land should not be limited to actual occupancy and improvement. If, as Mr. Porter so forcibly shows, leases were held instead of title-deeds, without limitation, the abominations of monopoly would go on just the same, for leases can be trafficked in as well as deeds.
There can be no objection to nationalization of the land, with limitation, because that would give the individual access to what is his natural environment, and to all opportunities for self-employment and self-culture.
To my mind, however, Mr. George’s suggestion of the townshipization of the land” is far better, as that would give the control to the local government and bring it nearer to the people. Another step, familization, or rather individualization, would be complete; for, when the land was possessed by everyone, it would be thoroughly nationalized. In saying this, I have no feeling averse to Socialism; but true Socialism must be voluntary—not coerced. Even In the most complete system of society we can conceive the Individual must still have rights and property. He must appropriate food in sustain his life. He must wear clothes which are his, he must have his private and exclusive apartment, and must have the right to be in some place on God’s earth from which he cannot be evicted by landlord or society.
I fully accord with my friend no the proposition to tax production from the land immediately rather than to tax back rents or have any Government rents. I trust he will more fully develop this idea hereafter. While coercive taxation remains, it were better to have all taxation levied as he suggests than to follow the exhaustive, indirect, and subtle methods now employed, which encourage bribery, false swearing, and all forms of corruption, as he points out.
But we must not forget that nothing but productive labor can he taxed. Land cannot. It can be confiscated and the occupant evicted, but that is not taxation. Property or capital cannot be taxed except by meet special and arbitrary assessments, which really are not taxation, but confiscation.
It is true that she author of “Progress and Poverty” discourses learnedly of taxing “lands which are uncultivated” and men who are idlers, but these things are known only in the study of the littérateur. Mr. Davitt even talks of taking the burdens of taxation from the shoulders of labor and placing them on property. Nothing of the kind is possible. The landlord finds no difficulty in shifting the tax front his shoulders to those of his tenant. The tenant even of a store of $100,000 annual rental finds no difficulty in shifting the whole rent, tax and all, to the shoulders of his customers, and they find as little in shifting it to theirs, and so on, until at last it gets down to the laborers, who produce the wealth from the soil.
There nature detects the counterfeit claim, refuses to honor it, and the burden crushes labor to the ground. Taxation, wherever and on whatever laid, reaches here at last, though it may be somewhat reduced by the broad shoulders of labor along the line employed in various callings. On labor, productive labor alone, it all finally falls, and by no possibility can it be made to fail anywhere else. The sooner the workers of the nation and of the world understand this, the sooner they will organize to remedy the gross imposition tinder which they now suffer.
J. K. Ingalls.
New York, October 12, 1882.
Mr. J. K. Ingalls, in the introduction to his “Social Wealth,” deals a few socdologers to economic sophisms. He does the economists, whose proper title would be, the apologists of capitalism, the justice to consider that, in explaining how the producer is crushed under production, justice is nowise in question, they not being responsible for its absence from matters of fact. The title, “Social Ethics,” would better characterize the aim of Mr. Ingalls’s work. He exposes the hypocrisy of defending the actual business world by laws of tendency, as it were, in a vacuum; while ignoring the continual intervention of circumstances, end especially of government,—i. e., of arbitrary wills,—to frustrate them. Warmly espousing the cause of oppressed labor, he shows how “opportunity is wanting for play of that free competition,” which is with economists the excuse for every iniquity. What pretension, indeed, to the name of science can a system have which
Treats “values” indiscriminately, whether increased or diminished by supply and demand, or by the interference of executive or legislative will; by scarcity of a season, or the cornering of a market, or by any speculative conspiracy; by the natural laws of trade, or by the subjecting to the rule of the market “by act of parliament” and “force of arms,” things foreign to Its away; and whether relating to the commodities which may be increased indefinitely, or to the buyer and seller, the men themselves, or to the land, of which no increased supply is possible.
The proper Illustration of this single paragraph would make a useful book, although the potential suicide of liberty in free competition or in any other mode is complete, when government controls at once taxation and the currency; for a simple contraction of the one is equivalent to Increase of the other, while enrolling as partisans, by the cohesive force of plunder, the whole creditor class, against labor. Later the author says:
Not only does this assumed law of supply and demand utterly fall in its salutary effect upon labor denied the use of the land while exerting to the full the baneful effects of a forced competition in Its operation, but upon land treated as property or capital it has an opposite effect. Increased demand not only, as with commodities, begets a temporary rise of price, but a continuous rise. Demand does not, as with commodities, beget an increased, or any supply whatever no protection [of land] being possible or conceivable, except in regard to lands transferred from a general to a specific use.
Let us analyze this paragraph, which in its spirit is a protest against injustice, but is faulty in its several propositions. There is no occasion here to pick a quarrel with the “law of supply and demand,” which is the economic translation of “Ask and ye shall receive.” Who shall ask, what shall they ask for? Row shall they ask it, and of whom? Answer: The laborers unemployed shall ask for the sell; they shall ask corporately, through theft organized unions (Knights of Labor, etc.); they shall ask it of the States or General Government, or of the railroad companies, to whom it has transferred the natural inheritance and sustenance of fifty millions.
But the labor corps must first prove, not only their need, but their ability to cultivate, and earnest intention, by devoting to farm settlements theft union funds, hitherto wasted in strikes, which only provoke the hostility of their employers, and cause the importation of cheaper labor. No use talking about abstract rights and Justice. We are dealing with selfish, greedy powers, and Labor is not prepared to right itself by force.
Mr. Ingalls sympathetically appreciates the fatality of forced competition upon laborers cut off from the use of the soil. But in the spheres of manufacturing labor, which have distracted them from agricultural ideas, aims, and habits, an ever-increasing competition for employment inevitably results from industrial progress with machinery. This machinery and the science which invents it and controls it is the property of capitalists. Laborers, unintelligent and demoralized, are bribed in guard it for capital, against theft brothers in labor.
But suppose it were otherwise; suppose cooperation in joint stock partnership, supplanting hireling labor; still, with the aid of machinery, a small part of the number of artisans formerly employed, and even of the operatives now employed, fully suffice for all needed production. If the rest are to live by their own labor, it can only be by a return to agricultural habits. Otherwise, the giant Antæus, held aloof from the soil by the Hercules of capital, must be strangled. To induce the laborer to demand the use of the soil ought to be the aim of his friends. The real limitation in question is not, as Mr. Ingalls contends, that of the soil, but of the laborer’s demand on the one side, and, on the other, of the manufacturers demand for labor. Irrespective of the great tracts of alluvion redeemed by labor from the waters of irrigated deserts, or of that oceanica which the coral polyp builds on its pedestal atolls, land is being constantly reproduced, by manure, which is more than equivalent to extension of area, because a large crop on an acre does not cost, after manuring, much more than a small one. The difference is only in manipulating the harvest, and a big ear is gathered as easy as a small ear. All improvement of the soil, all increase of productivity, increases the possibilities of life. This can be averred of no other industry, comparatively.
Under the hireling system liberty is lost; but production may be increased and cheapened to meet the needs of any population known, even In China, and without the aid of machinery.
The fall of political governments would, in annulling monopolist tenures, restore the soil to labor; but Government, under the sense of danger, may render speculation in the immediate products of the soil a penitentiary crime, and tax unimproved tracts into use.
In J. K. Ingalls’s Social Wealth, several passages leave the cursory reader in doubt of the author’s definite aims. Among these, in the beginning of his criticism upon that unflinching defender of capitalism and land monopoly, Mr. Mallock, (p. 161), he writes; “Mr. Mallock thinks a remedy like ‘nationalization of the land,’ or ‘limitation of estates in land,’ would be like prohibiting the sale of knives, because they were sometimes used feloniously to take life.” Here it would seem to be assumed by Mallock and allowed by Ingalls that nationalization of the soil is a process analogous to limitation of proprietorship, which is contrary to all our experience thus far, in the management of public lands, either by the United States or by particular States. Mr. Ingalls has also cited many historians to prove that the same betrayal of trust and privilege extended to monopolists, while disinheriting the mass of citizens, have ensued upon the national assumption of property in the soil of conquered countries in the Roman, the German, the English, and other traditions. Everywhere, with a fatal monotony to the slaves rescued from carnage by cupidity, the serfdom of the victors has succeeded, and both now stand upon the dreary level of an exploited proletariat. The Nation, the State, Government, has ever been an intermediary organ of spoliation, confiscating the soil from its cultivator and organizing landlordry.
Is Mr. Ingalls a State Socialist appealing to Government as a remedy for the evils it has caused? No; if nationalization is here quoted as a remedy against monopoly, it is only by deference to the reputation of Alfred Russell Wallace, who has artificially connected the limitation of proprietary land tenure with the revival of those feudal traditions which In the English land laws are still vivacious, and acknowledge the supreme title of the State as feudal chief.
Mr. Wallace pays homage to this in a quit-rent tax to be levied on the original value of the land distinguished from values added by labor, as in H. George’s plan, though not, as in the latter, levied up to its full value. This distinction would of necessity be arbitrary, be left to somebody’s discretion, or else really unequal by its assumption of equality; since between values and areas there is no parity.
For the rest, Mr. Wallace proposes occupancy as a principle of limitation, but no definite areas and no basis on which to compute them are stated. No British subject is to be excluded from occupancy, and sales freely allowed; but subletting prohibited,—a fantastic scheme of legislation. Mr. Ingalls relies exclusively on public opinion enlightened by science and the sense of justice for the restoration of the soil to the laborer; who on his side may help public opinion with a patent cyclone wire-fence cutter and a few bullet-headed arguments.
Mr. Wallace’s prospective liberality is not to touch any living soul among the privileged, but he forgets to add that it begs the question of that posterity which, educated in privilege, will have its own say about the execution of the new legislation, when it come to the scratch. This legislation for the exclusive benefit of future generations may be admirably conservative in its intentions to avoid revolutionary bloodshed; it recommends itself especially to the priests, from whose promised treasures in heaven it has taken the quiescent hint, and both systems require equal doses of faith. Mr. Wallace, be it remembered, is not merely a naturalist, which is positive, but an evolutionist, which is comparative, and a spiritualist, which is superlative, and may carry the endowment of prophecy. The feature of compulsory taxation, as applied to land per se, as a original value belonging to the State, representing the collective humanity, is a bit of political quackery common to Wallace and to George. The “Summary,” quoted from Wallace, does not provide for the limitation to which it alludes, in the clause of occupying ownership, which, by the employment of machinery and hired labor, might legally cover any number of acres. Probably Mr. Wallace has not formulated his plan in a business way, but merely suggested its aims and directions
As to the extension by that promising youth, Clark, in the “higher law of property,” to “the bounty of Nature in the whole material universe outside of man,” reverting to Humanity, alias Uncle Sam, by a two per cent. death rate, Ingalls, no longer restrained by his respect for popular reputations, fearlessly pricks the economic bubble.
He computes that two per cant. on all assets, including land, would amount to a double tithe, which State and Church may share, and he says of Taxation, that its power is the very essence of despotism. About this artifice for “correcting Nature’s blunders,” he remarks: “What neither George nor Clark seem capable of comprehending is that the civil power to collect rent, make compulsory exchanges, and enforce unequal contracts is the evil to be abated, and not the inability of Nature to bestow her bounty as she desires, or to effect the economy she intends.”
How loose a thinker, and at the same time how besotted with the arrogance of despotic capitalism using government as its tool, is Henry George appears from a paragraph quoted by Ingalls, which begins with “All taxes must come from the produce of land and labor, since there is no other source of wealth than the union of human exertion with the material and forces of Nature,” and ends with “We can tax land whether cultivated or uncultivated or left waste, wealth whether used productively or unproductively, and laborers whether they work or play.” This metaphysical humbug about Nature as a preface to the most fantastic and arbitrary legislation, so fashionable with our demagogues, gives a pitiful Idea of the public intelligence on which it can impose, and which mistakes for original genius of statemanship the rehash of a criticism upon patent abuses, now ventilated for the hundred thousandth time, and which St. Simon, Fourier, Owen, and Proudhon completed in the last generation.
Mr. Ingalls in several places flouts “the empiricism of political platforms,” the petrifaction of legal enactments, speak of the multitude “fruitlessly following the ignis fatuus of legislating justice into human relations and rectifying wrong by use of the ballot,” “organizing temperance by legal prohibition,” etc.
He alludes here and there to Anarchy as if deferring to conventional prejudices; yet, to be a pronounced Anarchist, he lacks only the courage of his convictions.
On Picket Duty.
On Thursday, June 24, at his home in Hackensack, N. J., died at the age of sixty-nine one of the noblest men I ever knew. I refer to William Rowe, the veteran land reformer. His life-long friend and associate in reform, J. K. Ingalls, delivered the funeral address, and the body of the deceased was buried in Arlington cemetery, near Newark. When I last saw Mr. Rowe, about six years ago, he looked so hale and hearty and robust that I thought him good for at least twenty vears more of life and therefore of usefulness to his fellow-men. It was a great and painful surprise when I heard that his health was beginning to fail. Mr. Howe was one of Liberty’s earliest friends and remained one of its stanchest to the last. No good cause appealed to him in vain. He was not a man of means, but he gave what he had without stint. As Mr. Ingalls well said, “he was ‘the friend of the poor’ in the best and truest sense.” And not only this,—he was also an inspiration to the young. The young radicals in his vicinity looked up to him almost as a father. I shall never forget his cheery face, though it was not my privilege to see it many times. Those to whom it was an almost daily well-spring of hope and courage have my especial sympathy in their loss.
Was This George’s Doing?
[J. K. Ingalls in Social Science.]
It seems beyond question that, when Mr. Parnell betrayed the cause of the Irish Land League, in the treaty of Kilmainham, by suppressing the “No Rent” manifesto, Mr. George coincided with his action, and is supposed to have influenced Mr. Davitt, who was at first opposed to it. Mr. George could hardly have failed to see that, if the doctrine of ” no rent” prevailed, there would be no land values to bu taxed away.
Land Reform in 1848 and 1888.
The veteran land reformer, J. K. Ingalls, in a fine article running through two numbers of the “Truth Seeker” under the above title, contrasts the schemes of George Henry Evans and Henry George. The whole is well worth rending, hut room can be made here only for the following extracts:
I do not propose to discuss the respective claims of George and Evans as authorities on the land question, nor, at any length, the nature of their peculiar plans or schemes; but will state the “measure” of the one, and the “remedy” of the other, briefly, leaving you to judge between them as reason or prejudice may determine. So far as a statement of the pernicious influence or land monopoly is concerned, Mr. George has simply reiterated the arguments and statements of the early reformers, and, if in more attractive phrase, it does not necessarily follow that the influence of his utterances will be more enduring. So far the two men and their eras present no important differences. Only in respect to: “What is to be done?” do they differ. They represent in this not only different eras, but quite different systems of philosophy, social and political. It is true they agree that reform must come through the ballot and through legislation. But Mr. Evans belonged to the school that believes government to be a necessary evil, and that we are to have as little to do with it as possible. That nature is to be relied on mainly, and that to correct the evils of already existing legislation is the great aim to be sought by the reformer. Thus far he is an optimist. The line of Mr. George’s thought is decidedly pessimistic. He accepts the theories of Malthus and Ricardo that rent, that synonym of all subjection and the men suffer from it, is a result of natural law, which can only be eliminated through Statecraft and the rate of force, and that the onward march of progress, with its natural adjunct, poverty, can only thus be stayed. He has some way, however, of applying the optimistic rule to interest and profits; at any rate, has never proposed that these should be taxed back for the benefit of the State, although admitting they are equally uncompensated by service, and are as truly “a gratuity of nature” as is the use of land.
The plan of Mr. Evans was this: By political agitation and control of the legislature to place a limit to the ownership of land. This principle had already been applied to religious and other corporate institutions, and to the patenting of the lands “only to actual settlers in limited quantities.” The maximum had been fixed at one hundred and sixty acres. Mr. Evans suggested this as a limit to private ownership, not as a fixed quantity, but to obtain a recognition of the right of government to so limit it, to be modified as wisdom should direct in the future. He contemplated a peaceful attainment of this object, by wise gradations, invading no “vested rights,” yet effectually preventing any further accumulation of landed estates beyond the legal limit, whether by purchase, gift, or inheritance. All of these matters are held to be subjects properly regulative by statute law. The advocates of land nationalization propose to have the State resume the title to the land it has once already sold to private parties; to be rented back to those who want and are able to hire. Mr. George simplifies this process by treating land values as simply the amount of rent the land will yield, and taxing it back entire without any disturbance to owners or to occupiers. This maybe termed “a short method” of “land nationalization.” It means “confiscation of rent.” You have here substantially the means proposed by the two men, representing different schools and distinct periods, for the reform of a universally admitted evil, the monopolized control of the only passive factor in production,—the home and standing-place and work-room of the whole human family. They are in accord fully as to the nature of the evil to be remedied, and, indeed, as to the necessity of securing political supremacy to accomplish the reform. The great object, as both agree, is justice to labor, the abolition of poverty, and the promotion of the public good. But the measures for which such political power is to he wielded in order to accomplish those ends are wholly incompatible with each other. The one sought equality through limitation of power and restriction of privilege, mutually operative as to all citizens of a State. The other seeks the annihilation of a class, allodial owners, embracing those whose ownership promotes social prosperity as well as those which endanger It, and the making of every occupant of the hued a tenant of the Stats, hut offers no-guarantee whatever against the unlimited control of the land through lease-hold, or the extension of legal privilege to the lordly rule of capital, such leases would give.
Now, limitation of powers is involved in, and is, indeed, the professed burden of, all forms of legislation whatever. Limitation to private ownership of an essential, natural element, indispensable to the life and to the well-being of the individual, is a logical and constitutional means of redress, under any view of law which ever prevailed. It accords with our system of tenure, which assumes that the right of occupancy is in every one of the whole people. “Confiscation of rent,” on the other hand, would require an entire subversion of our system of occupancy and of well-established principles of property; is inconsistent with our Constitution, if we have one; and, being revolutionary in Its character, should only he resorted to in the last extremity, even were It In itself wise and feasible. This remedy is, doubtless, compatible with the fictions of English law and of monarchy by “divine right”; but not by any theory of democracy or principles of equity with which I am acquainted. But I think the time for promoting any positive reform of the land system through political ascendancy, and by legislative preponderance of an honest purpose to effect is public good, has long since passed away, through either Mr. George’s or Mr. Evans’s schemes. For it is quite apparent now to clear-headed people that the land question, and all other questions of human interest, will take care of themselves, if governments will let them alone, withdraw their bailiffs, tax-gatherers, detective police, and bandit, mercenary soldiery.
Social industry from its primitive communal organization has passed through three phases of development. In the patriarchal state labor had some degrees of organization, in which the more spontaneous coöperation of the tribe or community became subjected to authority and to the order of an arbitrary will, whose rude directorship effected some approach to the combination and division of labor, more lately established.
Next, in the struggle and as the consequent growth of leadership in their interminable wars and the rise of monarchical rule, the warlike organization of labor was effected, under the militant spirit, and became compulsorily coöperative, system characterized by Hobbes as having “selfishness everywhere and unlimited power somewhere.” On the decline of the militant spirit end as the rule of law obtained and constitutional governments became established, what may be termed the litigant organization of labor took place and became semi-voluntary in place of wholly involuntary; but of the apparent freedom under this now existing form much is the result of a compulsory assent effected through the various fictions and subtle devices of our transmitted legalities, not less invasive than the sword of the freebooter or the lash of the slaveholder. In nothing is this so conspicuous and so fatal to social life nod progress as in the falseness of the law of property and of thin unlimited dominion of the laud, under the law of the market.
The inability to defend our land system on any ethical or economic grounds, the agreement of all thinkers that it is incompatible with any rule hut one of despotism, and the necessity for a system of organization of labor and cooperation which shall embrace division as well as production, indicates a possible future type of labor organization wherein a broader freedom and a clearer sense of mutual help and mutual benefit will secure a more fully developed sustaining system, and one which will promote, not the military, civic, or material aggrandizement of a nation or of an individual, that the development of higher activities and the pursuit of nobler aims. It is simply idle to suppose that the dangerous class who aspire to profit by making, interpreting, and enforcing, and also in evading, our system of legal quiddities will ever willingly further any such reform whatever, or propose to aid any salutary cause except for the purpose of betraying it.
* * * * *
The well-intentioned efforts of Mr. Evans and his confreres had been pertinaciously followed up for an entire generation. It is true that they looked to political action and legislative expedients as effective agencies of reform, and so in that regard their labors were fruitless. But Mr. George has not learned from their failure, but has repeated their blunders, even if he has not used the reform as a means to political preferment and the advancement of party aims. The land reformers of 1848 who followed the lead of Mr. Evans have kept alive the embers of the fire that glowed in that early day, and now by placing their reform upon the broad ground of economic and industrial law have made the scientific consideration of land ownership imperative. Mr. George’s remedy is wholly empirical, and is suggested by no principle of law or fact of economy. In subjecting the question to careful analysis, and to the test of the social good, we have placed it in the line of positive settlement, without or in spite of political scheming, caucus dictation, purchased votes, stuffed ballet-boxes; for nothing can stand before the advance of exact knowledge. There is no rebellion against mathematics; and no demonstrated truths can be suppressed by any despotic rule. In the words of Ruskin: “We live in an epoch of change, and probably of revolution; thoughts that cannot be put aside are in the minds of all men capable of thought. One principle can, in the end will, close all epochs of revolution,—that each man shall possess the ground he can use and no more.”
A peaceful evolution of industry and society will then ensue; and the rule of ignorant, arbitrary will of monarch or majority will end, when helpful science and progressive thought shall free mankind from their superstitious reverence for ecclesiastical dogmas and legal fictions.
J. K. Ingalls, the well-known pioneer in land reform and author of “Social Wealth,” announces a course of Industrial Economy Lectures, dealing with the questions of land, money, credit, competition, and cooperation. The terms are ten dollars for the course and one dollar for a single lecture. Mr. Ingalls and his wife, Mrs. O. H. F. Ingalls, live at Glenora, Yates Co., New York, one of the most healthy and picturesque spots on Seneca Lake, and parties who would like, not only copies of the lectures, but oral illustration thereof, can get good board and rooms at the Ingalls home at reasonable rates. This is an unprecedented opportunity for students of economic problems to acquire valuable knowledge, benefit their health, and pass a delightful summer.
INCREASE: ECONOMIC OR TRIBUTARY.
To the Editor of Liberty:
For more than a half a century I have contended that rent, interest, and profits were wrong and should be abated. I had all that time a half-latent idea that something was lacking to an exact conclusion, and constantly anticipated having it pointed out to me; but no advocate of capital has ever done so. Through my own investigations, aided by comparing the pro and con of the discussion among Socialists, Single Taxers and Anarchists, I have arrived at the conviction that these forces, so potent in social and industrial life, are economic as well as monopolistic.
Economists treat rent, interest, and profit as if solely embraced within the principles of exchange. Moral, and, generally, religious reformers have classed them with the tribute-gathering of despotic power. Now from neither of those suppositions alone can any satisfactory conclusion be deduced, because the terms embrace wholly contradictory and incompatible things under the same name.
It has been suggested to me by Mr. C. L. James that this distinction has been noticed by Proudhon and also by Karl Marx; but he gives me no quotation or specific reference by which I can ascertain whether they also point out that, on their economic side, rent and interest are salutary as well as inevitable in their operation. All this may, perhaps, be inferred from the “Economic Contradictions” of Proudhon, but has he anywhere put it in clear form? If Karl Marx has his whole scheme of State Socialism becomes a complete non sequitur. For then it is economic law, not human misdirection and misgovernment, he essays to rectify and reform. I do not see either how Proudhon could demand the abolition of economic rent and usury. With the broad distinction between the economic and the monopolistic force involved in these terms, we have to notice the adulatory motion of the ratio of values, and the mean or point of rest. This mean, as I distinctly stated in “Social Wealth” and more fully showed in “Economic Equities,” is zero.
Economic rent is confined to the more fertile soils and the more eligible location, But the less fertile soil becomes the more fertile by a change of culture, discovery of new uses and new methods, and nothing is more fluctuating than the valuations of location, which a thousand incidents may reverse or change. In cities the relative value of location is one of constant variation. Advantage from use of capital is balanced often by glut in market. That from growth of animals and things is balanced by their subsequent decrease and decay. There is an appearance of increase when labor of care is bestowed on them in process of growth and of loss when bestowed on them in process of decay, and these on the whole, balance each other. That which is reaped as profit under our system of legislative interference is a wholly different thing, and results from class law. Rent of land is now tribute to privilege for the use of nature’s forces and opportunities. Under a system of ownership where occupancy was the sole title it would disappear, and rent would then be a vibrating quantity, and subject to that modulating law which governs movement in every department of nature would secure always the cultivation of the best land. The grand distinction between the economic value and the monopolistic price of things is that the first constantly seeks the level, zero, from whatever cause of disturbance it may have become elevated or depressed, while the other forces an artificial level, as a dam prevents a stream from following its normal drift to the sea. Interest on money is held to a positive ratio, because of “legal tender” and exclusive currency laws, as well as by a monopoly of land, tariffs, patent rights, and other forms of privilege.
But the land, the plant, the stock, and even the currency require “care and keep,” corresponding to, indeed constituting, the value of their use. Such service and such use are the complements of and balance each other. Demand and supply regulate the value of such service and use, the same as of other services and commodities, and constantly tend to bring them into equilibrium. Whenever stock is in excess, the service demanded for its care, or its conversion into more desirable or more durable forms, will command a premium. But such premium will tend to divert labor from other fields to this, until equilibrium is restored, after many vibrations in which will occur increased demand for stock and a premium for its use. This will tend to attract labor to lines most favorable to itself and to all. Herein appears the reciprocity principle between the use and the care of things. I have not space for further illustration. Care and use are exchangeable and therefore economic, and will bear alternate direct and inverse ratios to each other, as do other things exchangeable, the mean of which ratio is zero. That is, the service which does or procures the use will equal it in price, subject to the fluctuations from plus to minus, caused by the relative supply to the demand.
Thus a distinction conclusive of the incompatibility of economic with monopolistic increase is found in their different effects on equitable exchange. Variations in price do not involve permanent loss to any party. Prof. Summer attempts to emphasize the equities oi ade by saying “he earnings of commerce are not taken from that which any one ever had.” I quote from memory. He wishes to be understood that the values added by ecommerce may be equitably taken by those who perform the services of commerce, and this is or would be true under freedom; but a patent untruth under, the reign of privilege: for even he would not admit that prices under protective tariffs or government subsidies were other than robberi of labor. In rent and interest under monopoly of land and class currency laws the steal is still more certain and quite as apparent. It is only by the use of terms capable of such opposite meanings that legal monopolism is able to appear other than it is, an organized despoiler.
STATEMENT OF THE PROBLEM,—ECONOMIC.
Care and maintenance of productiveness = Use of land.
Service of superintendence and conservation = Use of stock, plant, etc.
Care in preservation from decay = Growth of things.
Labor cost of production = Mean prices of commodities. Cost is not the limit, but the mean of price.
STATEMENT OF MONOPOLY INVOLVED.
Rent = Privilege arising from monopoly of land.
Interest = Privilege from legal tender and currency class laws, giving a monopoly.
Profits = Governmental subsidies and protection from the economic law of supply and demand.
By their very terms these are excluded from any equation with values effected through labor.
I shall be glad to have these general propositions criticized, the more severely the better.
J. K. INGALLS.
Glenora, New York.
Mr. Ingalls calls for severe criticism of the general propositions advanced in his article on “Increase.” From Liberty he will certainly receive support rather than opposition, for it never entertained a view different from that which he now holds. If it has any criticism to offer, it is that Mr. Ingalls is not justified in claiming originality and novelty for his important distinction. Even those who seemingly dissent from his main conclusion and who insist that cost is the limit of price do not in reality mean to contradict him. From the standpoint of economic logic, Mr. Ingalls’s phraseology is doubtless to be commended as superior in point of exactness and accuracy. But it should be borne in mind that, when Warren and Andrews spoke of cost as the limit of price, they did so because they aimed at emphasizing the ethical side of their doctrine and the contrast which equity presents to commercial cannibalism.
On Picket Duty.
In Liberty of December 27 appeared the following editorial remark: “Our land reformers who have nothing to say about the money monopoly and who pass sleepless nights trying to devise a way for the community to appropriate economic rent, strain at a gnat after swallowing camels.” That stanch old land and money reformer, J. K. Ingalls, comments upon this in another column, and is curious to know exactly who was meant. He “judges ” that the “ Old Guard” cannot have been meant, because its members were anti-usury and anti-government-bank men. Here Mr. Ingalls ought to do more than “judge”; he ought to know. “Land reformers who have nothing to say about the money monopoly” cannot possibly mean land reformers who have had a great deal to say about and against money monopoly. Liberty referred, as Mr. lngalls supposes, only to those who want the community to appropriate economic rent, but it pleads not guilty to Mr. Ingalls’s charge that it used language incorrectly in calling such men laud reformers. Any one who wishes to modify the relations between man and the land or the conditions upon which the former may hold the latter is a land reformer. Leaving the Galveston “News” to answer Mr. Ingalls’s questions about land in Texas, Liberty simply remarks that to ask “how non-circulating credits can ever be discounted at cost for circulating credits which are based on monopolized security” betrays a failure to comprehend the mechanism of mutual banking. Under that system the same security guarantees the non-circulating credits that guarantees the circulating credits. If a man gives a mutual bank his note secured by a mortgage on land and gets mutual-bank notes in return, the mortgage secures the bank-notes as well as the individual note. Therefore, whether the security is monopolized or not, there is no reason, in an exchange of notes alike based upon it, why either form of notes should be at a premium over the other. The discount is the cost price of producing circulating credits, and is not at all representative of a difference between the solvency of the bank-notes and that of the notes of the bank’s customers.
Land Reform and Money Reform.
To the Editor of Liberty:
My curiosity is a little piqued to find out your exact meaning, in your issue of December 27, when you say: “Our land reformers who have nothing to say about the money monopoly,” who you think “will not be missed even if they retire from the reform field altogether.” I judge you cannot include to mean the “Old Guard,” for you must be aware that George K. Evans, John H. Hunt, Louis A. Hine, John Pickering, and other old-time land reformers were anti-usury and anti-government-bank men, half a century ago. You were personally acquainted with Dr. Edward Palmer, myself, and our lamented friend Rowe.
But if you meant, as I imagine, those alone who seek to appropriate economic rent, then I submit that the term is a misnomer; for years ago they abandoned the name altogether, and took instead that of tax reformers; still later they have christened themselves “single taxers,” “limited ” or “unlimited,” as they are inclined to the leadership of Shearman or of George. Doubtless they think that in some roundabout way they will affect the evils of land monopoly. But they no longer even pretend that they propose to attack legal land ownership.
Through Liberty, I would also like to inquire, in this connection, of the Galveston “News,” how near to Galveston or to any considerable market land can be had “at a nominal price,” and what rate of interest such price will command during the forty years given to pay it in? Mr. Willis Gleed, in the “Forum” for March, states that “no land fit for agriculture can now be had from the government,” and argues from thence that capitalists may confidently look to have their rates of interest on farm mortgages Increased and the payments made more promptly, because the farmers will no longer suffer from the competition with the cultivators of free or cheap lands.
Now, does the “News,” or even Liberty, fully comprehend how largely interest on money depends upon its legal ability to buy up and monopolize the land, and the broad base land mortgages give to money monopoly? How can non-circulating credits ever be discounted at cost for circulating credits which are based on monopolized security?
Let me also say that the genuine land reformers do not object to “property in land.” The anti-slavery people did not object to ” property in person,” i. e., one’s own person. But neither the land nor person of another is property; since property in all things is limited by the law of equal freedom and of equal privilege.
J. K. Ingalls.
On Picket Duty.
J. K. Ingalls is “unable to see how credit based on a legalized monopoly can benefit such as have no interest in the monopoly, or save them from rent, tariff, and patent right tax.” Mr. Ingalls seems to be under the impression that money benefits only those to whom it is issued. This is not the case. Whenever an honest and capable business man gets credit, the whole community is benefited, because the tendency of the resulting extension of business is to raise wages and lower prices. And this will remain true whatever the basis of the credit, provided that basis has sufficient value in it to redeem the obligation if necessary. As to ground rent, tariffs, and royalties, I have never claimed that free money will abolish them, but that these result from separate monopolies, all of which must be abolished. Still I think that free money would have a tendency to diminish ground rent by lessening concentration in cities, and would lead to free foreign trade by depriving the protectionists of their only good argument, — that, in the absence of an abundance of money, importation should be discouraged in order to keep the little money that there is from leaving the country.
Another Consistent Anti-Monopolist.
I feel like thanking you for your persistent fight against numerical odds, on the patent, copyright, question. Would have offered my feeble lance (pen) to assist you; but that I saw it was occupying space to the exclusion from Liberty’s usual bill of fare of much spicy and interesting matter. But comrade Lloyd comes gallantly to your side, and, it seems to me, to the utter rout of the opposing champions.
Your illustrations might be carried to any extent. If the inventor of the revolving millstone had perpetual property in his applied discovery, all the world would now be tributary to his posterity. The same would be true of the man who made the ﬁrst application of clothing; so that indeed the right to do the slightest thing would depend, as Mr. Bilgram seems to imagine it now does, on getting someone’s permission ; and the man could do nothing till he had first obtained the assent of the one authorized by the collectivity to grant it. Some one might prove that it was his ancestor who had ﬁrst drawn breath, and so no one be allowed the right to imitate him, without paying a royalty.
I think an author who made authorship a profession would be compensated for the extensive free publication of his earlier works by the increased demand for future contributions from his pen, and which he would be able to hold as private property, until his publishers, or the general public, had agreed to pay his price for them. Doubtless the unlicensed publication of Spencer’s “Social Statics,” in this country, accounts, in a degree, for the extent to which his partially authorized editions of later works have here been circulated and read.
The author has always the power to enforce his normal right of ownership by requiring that his book be published by subscription, a method which is still resorted to under legal copyright.
Anent the “Mutual Bank”; I hope to be able to understand it, when it is put in operation; but am unable now to see how credit based on a legalized monopoly can benefit such as have no interest in the monopoly or save them from rent, tariff, and patent right tax. Yes! I knew you meant the single-tax men; but some might think you classed all land reformers together. Really, I think the mutual bank would be likely to remove land monopoly sooner than George’s tax.
J. K. Ingalls.
Glenora, N. Y., February 12, 1891.
Two Object Lessons in Equity.
In the one Mr. Yarros “thinks mit the court,” in the other he deems “the decision queer, indeed.” The general grounds upon which he forms his conclusions seem in both instances unsatisfactory.
In the Ibsen case it was clearly the intent of the lecturer to trade upon the reputation of the author. He had a legal right to use the same name, if it honestly belonged to him, but not to avail himself of the other’s repute. I know a case where a man without credit or integrity had his note discounted on the reputation of a well-known financier of the same name. In what respect were the two cases different? Somebody’s rights and pockets were invaded in either case.
In the case of the actress, he assumes that she was competent to make a contract. Perhaps the court did not think so. When parties apply to courts or comrades to help enforce contracts, the equity of the contract, as well as the fact of its violation, in justice should be enquired into, or arbitration be refused. All contracts under our inequitable social and economic relations are to a greater or less extent under duress. The earliest form of contract was the agreement to fight to see which party should have power over the person and property of the other. Such contract was enforced by the jurisprudence of those times, and continued to be down to the last ‘half of this century, in civilized courts; when at last the exigencies of our civil war, and the development of our public sense of equity, refused it longer recognition. Contract figures in all forms of gaming, so that Anarchists deem any attempt to suppress it an invasion of equal freedom. But no court of equity would enforce collection of a debt made under such contract. Would Anarchists do so? Will they align themselves rather with collective than with self-rule?
Freedom of Contract is a taking phrase, but, like equity and justice, it is qualified at any period by the degree in which evolution has raised the current thought and sentiment of the public mind.
J. K. Ingalls.
Interest Just and Unjust.
In the address of Mr. Hugo Bilgram (Liberty of April 22) is found much to approve. What he says about the interest on privileged money can be questioned by no honest criticism. It is simply unjust. Whether there is not interest of another kind, and other sources which produce monopolistic interest, are quite other questions. To me it seems plain that there are economic conditions which produce interest independent of monopoly, and that there are several monopolies, besides that of money, which bear an unjust interest.
Patent right, government privilege to follow certain productive callings and to buy and sell goods, are joint factors with privileged money in yielding onerous interest. And beneath all these lies the legal protection to unlimited dominion of the land. Whether “the government prescribes the number of shoes in the country,” or prescribes the number of shoemakers, the people will have to pay the interest or profit, and suffer the inconvenience, causal by unjust legislation, the same as when compelled to hire money from a privileged banker. It is far worse when the government yields up to the control of the class who are able to buy into it, the dominion of all the fruit-yielding land to the exclusion of the people, who have now to hire the natural sources of all wealth.
Nor do I quite agree with him that the interest-bearing power of money confers the profit-bearing power upon capital. On the contrary, I am quite sure that capital, particularly land, could not be bought at all with money which bore no interest, because, in the absence of all money, monopolized land would be let to the laborer, as has been done in all time, without valuation in the terms of money at all, for a part of the annual produce of the labor applied. I doubt not that interest would continue, if lawful money was abolished and the circulation of credits left free. If one owns a farm from which he cannot raise more than a bare subsistence, he can pay no interest to mortgagee or banker. No one hires money for its own sake. All know it to be barren. So far as a direct exchange is concerned. it matters not whether money be cheap or dear. The simultaneous exchanges will be affected in the same way. The terms in money make no difference to the relative values of the things exchanged. It is only when one wants to buy and has nothing to buy with that he needs to borrow money. It is not the producer as such, but only the borrower, who suffers wrong. It is only the lender who is benefited.
But there is a variable rate of interest, profit, or rent, arising from the use of capital, not at all attributable to legal monopolies of any kind, but which capitalism has succeeded by the aid of “appropriate legislation” in engrossing. It is the whole product of labor, save a bare support to the laborer, or, what is nearly the same thing, the difference between what he would produce cooperating with the capital, or by working without it. This is more particularly true of the land, without which labor can pay no interest on money legal or free, or in deed effect any product whatever. Hence unconditioned dominion of the land is the ultimate source of all tributary interest, rent, or profits, the three being different only in name.
Beside the tributary increment, the same thing appears under economic law, released from the State class laws, and which arises from the ability of labor to produce more than it consumes, and which normally, under equal freedom, becomes the property of the laborer, and is therefore not inequitable or unjust, because promotive of the general industrial prosperity.
J. K. Ingalls.
A New Conception of Interest.
The article on interest by J. K. Ingalls, printed in another column, does not seem to me to be written in its author’s usual clear style. Some of his positions are true without qualification, but others can be regarded as true only by using the word interest in an entirely new sense.
If rent and profit are to be considered interest, then it is true that “ there are several monopolies, besides that of money, which bear an unjust interest”; I presume that this would be readily admitted by Mr. Bilgram, whom Mr. Ingalls is criticising. This, however, is not a very serious departure from economic terminology.
More violent is the use of the word interest to express the entire extra product resulting from labor‘s use of capital. If I, who can produce only ten without a spade, succeed in producing twenty with a borrowed spade, for the use of which I pay six, then in Mr. Ingalls’s view, if I understand him, the interest on the spade includes not only the six paid for its use, but the entire extra ten produced by its use. This is intelligible, but to me it is novel. So defining interest, one finds no difficulty in granting, again, that “ there are economic conditions which produce interest independent of monopoly.” And since Mr. Ingalls appears to admit that under equal freedom the entire extra ten would fall to me as laborer, and that six would no longer go to the owner of the spade, I am not at all disposed to dispute the justice of interest so defined, and, far from desiring to abolish it, hope to see it vastly multiplied.
But I wonder if Mr. Ingalls uses the word in this sense when he says that “capital, particularly land, could not be bought at all with money which bore no interest.” If so, then still again can I understand and agree with him. For in this sense money that bears no interest means simply money that does not contribute to labor’s power of production, and such money is necessarily representative of no property whatsoever, has no power to circulate, and will not be taken in exchange for anything of value. But thus interpreted, the statement is so insignificant that Mr. Ingalls must, it seems to me, have used the word in its usual sense. In that case’, however, insignificance is simply replaced by absurdity. For what can be more absurd than to say that a non-interest-bearing note, based upon specific property and for the redemption of which said property can be legally seized, will not be taken in exchange for other property approximating in value that of the property serving as security for the note? It is indeed conceivable that, if the money monopoly were abolished and land monopoly remained, land would rise in value; but it cannot be held for a moment, with any show of reason, that it would bear no price.
Interest is Unjust.
The Manchester “Times ” of May 18 published a criticism, by J. G. Fisher, of my paper, “Is Interest Just?” (Liberty, April 22), which is a fair sample of the logic of the defenders of capitalism.
Language is a tool for conveying thoughts, but unfortunately the ambiguity of words makes it impossible to establish a rigid relation between words and thoughts. A critic should therefore endeavor to accept the words of the author in the sense in which he uses them, to the exclusion of all other meanings. Moreover, he should be well informed and not deny or ignore facts of which he happens to be ignorant. My critic has honored these maxims by their breach.
In the attempt to controvert the theory that money bears interest because of its inadequate supply and that capital brings a net profit because money bears interest, he falls back upon the stereotyped reply that in the absence of money hire would be paid for tools. This I never denied, since I admit that, in a state of no-interest, hire would be paid equal to risk and deterioration. But more than this. If interest accrues to capital because we have not enough money, then interest will rise as the volume of money is reduced, and in the absence of money interest will assume the form of abject servitude in slavery. A high rate of interest in the absence of money is therefore in full accord with the theory I defend.
According to the modern school, money bears interest because actual capital, capable of being profitably employed, can be bought with it. In contesting this explanation of the interest-bearing power of money I had assumed as self-evident that the promoters of this theory consider money as such to be barren. But Mr. Fisher declares this a fallacy, stating that gold coin is not barren, intimating that it is capable of gratifying desires. In this he does not attack me so much as his friends; but, notwithstanding, I can defend them in this particular. Barren means incapable of increase and not incapable of gratifying desires, a property of gold which cannot be denied; nor has it any bearing on the interest question.
Nowhere have I intimated that government restricts any form of credit. It is the monetization of credit which is restricted. And, quite consistent with his misconstruction, he takes exception to my comparing the government control of the issue of credit-money with a supposititious restriction of the making of shoes, saying that I should have compared it with a restriction of the amount of gold. But since I have shown how money can be made of the raw material “credit,” just as shoes can be made of the raw material “leather,” I beg to reject his suggestion, which is due to his failure to follow the spirit of my argument. In order to defend his inability to follow my reasoning, he accuses me of an erroneous classification of wealth, intimating that gold coin is money while bank-notes are not. My critic‘s forte evidently consists in misunderstanding the meaning of the words I use. By “money” I mean anything that performs the money-work; hence credit-money is included in the term as I use it, and the context plainly shows this. My critic might more successfully accuse me of an incorrect use of words, saying what I should have used the word “currency ” in place of “ money. But this does not affect my argument and would be simply a verbal quibble.
To illustrate the correctness of my classification, let us suppose that I, a stranger to Mr. Fisher, buy of him $100 worth of goods and, having no “ money” (gold coin), I offer in payment $100 in bank notes, which constitute a non-interest-bearing lien on the property of the issuing bank, monetized by act of government. Will he accept my offer? I fancy he will. But if I should offer him a non-interest-bearing lien on my property, however well secured, he will reject it. Why this difference? It is because the government has assumed the guarantee and has authorized the use in circulation of the banker’s notes, but not of mine. Can Mr. Fisher give a valid reason, other than the avarice of the conspirators, for the existence of a law, in obedience to which the government accepts the bankers’ security, assumes guarantee of payment, and authorizes the circulation of his debts, while it not only rejects my offer in the form of, say, a mortgage on real estate, even though I offer ten times greater value and agree to cover by insurance all remaining risks, but even forbids me to put my debts, however well secured, into circulation in competition with the banker’s notes? With the government’s guarantee, or possibly even by a simple withdrawal of the law forbidding the issue of such promissory notes, the lien on my wealth, properly secured, would be as acceptable as the lien on the banker’s wealth. Can Mr. Fisher deny the existence of an unjust discrimination? He appears to be ignorant of the law forbidding the circulation of bearer checks for even sums made to be used in place of currency. Nor does he seem to know that my employees would emphatically object to being regularly paid in checks, since they cannot use them in stores where they are unknown. Checks are for this reason unfit to perform the money work, and are in this sense not money. Why, then, quote them as though they were?
Mr. Fisher also impugns my assertion that bank-notes are only nominally redeemable on demand. Is he really ignorant of the fact that only a portion is so redeemable? No bank can carry a redemption fund equal to the issue of its notes. Nothing but the willingness of the people to circulate them for an indefinite period renders possible their issue in excess of the amount of true coin. I do not deny that under prevailing conditions they are, with few exceptions, practically redeemable on demand, but the fact that there are exceptions confirms my assertion.
In objecting to the inference derived from my illustration of the process of borrowing, which shows borrowing to be merely a temporary exchange of promissory notes, he reminds me that my note has been lying idle while the banker’s notes have been in active use. But he overlooks that my note was condemned to idleness because the government forcibly prevents its issue in a form in which it can take the place of the banker’s notes. This only confirms my assertion that I was compelled to pay interest to the banker merely because of the government’s discrimination between the banker’s notes and mine.
I am finally referred to the fructification theory of interest. Has my critic ever read Volume I of Boehm Bawerk‘s “Capital and Interest”? In this volume the fructification theory is so completely refuted that Mr. Fisher should think twice before digging up this graveyard. An outline of the only rational theory of interest is given below.
I can conceive no better proof of the correctness of my position than the fact that I am criticised only in the measure in which my critic misinterprets that which I have said.
Mr. J. K. Ingalls’s criticism (Liberty, June 10) of the same paper may be summed up as follows. The paper omits to condemn a number of other forms of unjust incomes; interest accrues to capital for reasons other than the monopoly of money; interest, rent, and profits are different in name only; and an excess of production over consumption, if it becomes the property of the producer, is not an unjust income.
He seems to have expected an exhaustive treatise on the Distribution of Wealth. There are but a few words to be said in response.
Every income has an economic cause, and, if different incomes have heterogeneous causes, or even if they require a different treatment in tracing the cause, the logician is compelled to classify them. A distinction must therefore be made between rent, interest on money, capital-profit, occasional profit, and profit (or wages) to the producer, the last two being perfectly just. For the same reason a distinction must also be made between land and capital, the latter being the produce of labor used in the act of further production. The land question being not pertinent to the interest question, I can here say no more than that I consider the private appropriation of rent to be unjust. The only pertinent complaint relates to my failure to trace the cause of capital-profit. I will endeavor to give an outline of the only theory which, to my mind, can account for it.
Capital-profit, or interest, is an excess of the value of a product over the cost of production, an excess which is found to be approximately proportional to the capital employed. But the theory of value teaches that market-values tend to the marginal cost of production, and, if value and cost are equal, there can be no room for an excess. But this excess can be accounted for as follows Money is a tool of trade. without which a division of labor would be impossible. The producers, as a class, need this medium for interchanging their productions. The amount of money in circulation being inadequate to mediate these exchanges, producers will borrow money, which commands a premium for reasons shown. This interest is to the producers an unavoidable outlay, and therefore a part of the cost, which as such enters the market-value of the produce. Those individual producers who were so fortunate as to escape the necessity of borrowing can sell their productions at the market-value, containing, as an item, the interest payable by their less fortunate competitors, and can accordingly score an excess over cost. This, and nothing else, is the interest proper accruing to capital, regarding which the modern economists are doing their utmost to find a theory that will not expose the system of industrial piracy of today. But, since every one of their pet theories is based on some fallacy, they cannot agree upon any one.
According to the above theory of interest it is plain that the abolition of the money monopoly will also abolish the power of capital to appropriate a net profit.
On Picket Duty.
“Lucifer,” whose “specialty is sexology,” makes J. K. Ingalls inquire “which maxim is best adapted to reduce violence and wrong-doing to a minimum, — the Golden Rule or the sex talionis.” This is one of the sad results of having sex on the brain.
Narrowing the Issue.
Mr. J. K. Ingalls, in his article in another column, written to demonstrate the existence of economic interest, gives no clear definition or measure of the term. Economic rent is measured by the difference between the poorest land in use and the grades superior thereto. But what measures economic interest? Is it the difference between the product of labor absolutely destitute of capital, and that of labor possessing capital in varying degrees? But in that case economic interest is not entirely “derived from the increase of any labor over its bare support,” since the product of labor absolutely destitute of capital would be less than a starvation wage to a man living in the midst of our civilization. Or is it measured by the difference between the product of labor possessing the poorest capital in use, and that of labor possessing better capital? Which at once gives rise to another question: what is the poorest capital in use, and how is it to be recognized as such? In the absence of a satisfactory answer to this question, Mr. Ingalls’s economic interest must be looked upon as a decidedly indeterminate economic factor. All that his theory means, so far as I can grasp it, is that interest exists because people can do more with capital than without it, and that interest actually is, in fact, this surplus obtained by the employment of capital.
Now, so defining interest, the Anarchists do not wish to abolish it. Such a wish would be absurd, for it would be a wish to lessen the World’s wealth and productive power. To Anarchists the only consequence of this new definition is the necessity of finding another term to represent that which they do wish to abolish, — namely, payment by borrower to lender for the use of capital.
But, once this necessary term is found or devised, the old question recurs: will free and mutual banking make it possible to procure capital without paying for its use?
To the determination of this question three other questions lead up, and I will put them to Mr. Ingalls straightaway.
1. If a thousand men engaged in different lines of business unite to form a bank of issue; and if this bank of issue unites with other similar banks for clearing purposes; and if said bank lends its naturally well-known circulating credit to its members (or to others, for that matter) against conditional titles to actual and specific values given by the borrowers, — do these loans of the bank’s credit cost the bank anything beyond the salaries of manager and assistants, rent of building, expenditure for paper and printing, losses by depreciation of securities, and sundry incidentals?
2. Do not statisticians and economists agree that a discount of one-half of one per cent. covers the expenses referred to in the preceding questions?
3. If men were free to unite in the formation of such banks of issue, and subject to no penalty or tax whatsoever for so doing, would not competition between the banks thus formed force the price of the service rendered by them down to cost, — that is, one-half of one per cent., — or to a figure closely approximating it?
Now, I insist, and I have a right to insist, that Mr. Ingalls shall answer these three. fair and pertinent questions directly, without extraneous discussion, without any mingling of considerations or speculations not absolutely essential to the answers. For either these direct answers will be what I think they must be, and then the case of the Anarchists (so far as finance is concerned) is established; or else they will be something else, and then the case of the Anarchists falls.
If it falls, of course I shall have nothing more to say, and the publication of Liberty will be discontinued; but, if it is established, then I shall be ready to discuss with Mr. Ingalls those interesting but at present nonessential questions of collection of debts, enforcement of contracts, the comparative good and evil of discounting the future results of labor, etc., etc., etc.
By way of caution, let me add that the Anarchists do not look forward to a time when there will be no sporadic cases of payment for the use of capital, — such, for instance, as the example cited by Mr. Ingalls where an inducement is given to the endorser of a note. They simply claim that under freedom borrowing and lending will so generally take the shape of an exchange of credits at the mere cost of the exchange that interest — or, rather, what we used to call interest before Mr. Ingalls appropriated the term to a different purpose — will disappear as an influential economic factor.
There is an economic interest as well as rent, and it differs from that which is captured by the stronger and more cunning from the weaker and more stupid through the enforcement of barbarous (not economic) laws and customs. Since the days of Jeremy Bentham, the nature of usury has been argued, pro and con, on parallel lines; nether party discovering that what he approved was not at all the thing which the other condemned. Neither traced interest to its source.
Interest is derived from the increase of any labor over its bare support; the natural wage of Adam Smith, where it exceeds the starvation wage of David Ricardo. For, without such increase, rent, interest, or profit could have no existence. Some labor, from unfavorable location, inefficiency, or lack of knowledge, is unproductive. In the application of new discoveries in machinery, and in new processes of production and exchange, and in opportunity to co-operate with others in effort, the one who holds to the old method works at a disadvantage in comparison with the one who first adopts them, and’ there seems neither utility nor equity in requiring the alert man to share his surplus with the laggard, as the State Socialist would recommend, and as the Anarchist must do before he can abolish economic interest.
In the recent discussion in Liberty more than one disputant follows grooves which prevent him from seeing the true position of his opponent. From the standpoint of the sentimentalist, interest is tribute captured from the increased wealth due to labor, by the help of State interference. But the economist sees the economic increase from successful labor, and thinks it just; and, whether just or not, it is unescapable,—not because, as he imagines, property is productive (unless, indeed, it is made to embrace the land or the laborer), but because of the uncertainty of all human endeavor, and because men are willing to pay a premium for the opportunities and instruments which best assure success, or the immediate gratification of desire. Now, that official circulating credit could eliminate the uncertainties and variability of productive industry is quite problematical. Could it affect the rate of interest in any way, it could not abolish it for the reasons given. That mutual banking, or freedom to engage in the issue of circulating credit, can eradicate usury has never been demonstrated or logically made to appear. The legal or market rate of interest is at present greatly increased by the charge for the endorsement of one firm by another. A premium of from one to three per cent., and even more, is voluntarily given to a party of well-known soundness by a party not as well known, though sound in point of fact.
Had each party the freedom to circulate their credit at will, it could in no wise alter this relation of the parties in such transactions. The credit more widely receivable would command a premium over that confined to a narrow and local circulation.
It is when contrasted indebtedness is subjected to enforced settlement that the true inwardness of our governmentalism is manifest. In soliciting the State to collect his debts, however contracted, the Archist exposes his true position. But, when the Anarchist calls upon his comrades to help him enforce his contracts, because they are contracts, and assumed to be made under freedom, in what important respects does he differ from the Archist? To me it seems quite immaterial whether abundant money makes the rate of interest higher or lower, or whether a three-cent piece could do the business of the world,—as evidently it could, were it sufficiently divisible and all other money effectually prohibited. What utility requires is material, and whether the interest we are investigating is economic or the fruit of capture and exploitation. If economic, it is necessarily variable and undulating, and yet inexpungable. If exploitive, it is Archic and involves interference and physical enforcement.
Economic interest is inevitable from the uncertain award of labor in production and the variations in the ratio of supply to demand; besides, there is a large proportion of the laborers unable and wholly disinclined to employ themselves. This state is likely to continue for generations, and they will continue to sell their labor at a rate which will yield profit to the employer, out of which he can pay interest. Government might despotically attempt to prevent this by law, with punitive sanction; or by wholesale employment of labor, at no profit. How an Anarchist could imagine a scheme of circulating credit would deviate the defects of ignorance and negligence, and the variations of values in exchange, is too deep for me.
The importance of circulating credit, or of any credit whatever, except the unavoidable balances of reciprocal commerce, is greatly overrated by fiat-money men, and by paper-money men of all classes. All time credits, all loans on bonds, etc., are but compounding the penalty for deferred payment; are not only unnecessary, but vicious, with little compensative benefit for the incalculable harm they do. Even the Christian formula: “Lord, hoping for nothing again,” proves oftener a curse than a help to the borrower. To discount the future results of one’s labor can only result in loss. This is particularly true of the wage-worker, who finds himself often under the necessity of requiring his wages before they are earned. Neither government nor comradeship can usefully interfere here. The form or material of money can in no way change the relation between borrower and lender, unless, through contraction or inflation by those holding the authority, it is made to favor the one at the expense of the other, which violates both equity and utility.
The State, as an arbitrary potency, has created and sanctioned the appropriation of the land by private greed, and of the laborer as well; has devised for a class the monopoly of opportunities of production, exchange, and finance. To divest it of the powers thus used is the only logical plan for restoring economic equity. With; the taxing power unrestrained, it can be exercised to the fattening of favorites by starving the laborer. It can tax the issues of your mutual banks out of existence, as it has already those of your State banks.
The operation of economic interest, as of rent and profit, tends to equilibrium, equality in compensations and of conditions. There is no occasion to antagonize it or decry it. Liberty has accorded to this theory of interest the merit of novelty. Will any of its writers or readers attempt to show that “what is new in it is not true?”
J. K. Ingalls.
Glenora, N. Y.
NARROWING THE INTEREST ISSUE.
To the Editor of Liberty:
To the three questions propounded to me in your issue of December 15, I make answer and say:
To the first: That the loans of the banks supposed would cost them nothing but running expenses and incidental outlays and losses. But such banks are only possible under the three conditions mentioned, neither of which is supposable without a motive to derive some profit or advantage therefrom; unless indeed they were compelled by penalty, which is in accord neither with economy or equal freedom.
To the second: It is probable that a discount of one-half of one per cent. per annum would meet the cost of such banking. But why should bankers, or their employees, be expected to work for bare support, while producers should have, when in excess of such support, the whole product of their labor, and so add to their capital the interest, not of the capital, but of their labor?
To the third: In the absence of State or collective meddling, competition would tend unquestionably to reduce discount to its lowest rate, which would ordinarily be something above cost. Otherwise at the vanishing point the banks also would disappear, though under the impulse of fierce competition they might sometimes discount, “sporadically,” at cost, or even at a loss. The editor’s words on economic rent seem appropriate here: “I believe that economic rent exists now, and would continue under freedom, but then with a tendency to decrease.” Substitute interest for rent, and you have the case of economic interest, as distinguished from plutocratic interest.
Where land is embraced in the term capital, no casuistry can show a distinction between interest and rent; for where interest is paid on mortgaged premises. The measure of both is the same. This measure, as given by economists, is highly misleading. Superior and inferior soils have very little to do with it. One man will starve on land of the same quantity and quality as those of the land from which another will obtain an increase over his support. Rent from urban and suburban places, and even much rural rent, has absolutely nothing whatever to do with the quality of land. In the latter case it is largely owing to the necessity for restoring exhausted fertility and decaying premises. Increase is determined by facility for co-operation and the practical division of labor, by the degree of utility of novel appliances employed, and by wise adaption of capacity to special work. Bankers no more than laborers can rationally be expected to work without reasonable expectation of having their capital stock increased thereby. But, whatever the associated banks do for each other, it is illogical in the extreme to suppose that they will discount gratis the non-circulating credits of others with their well-established circulating credits. Those who have little credit or capital will be taxed, not according to cost of doing business, but according to their needs, under freedom as under law. Legal or combination rule may mitigate or aggravate, but cannot help their condition permanently. Their only escape is to cease borrowing.
It is quite true that without capital or credit the laborer might not be able to earn starvation wages; but it does not follow that therefore there must be some increase which arises from capital. And if such increase arises from capital, Why not allow capital to have it? The editor must be aware that there is an obverse side to the capital and increase question. In a majority of eases the capital “comes home missing,” or is not maintained intact. Failures are not especially experienced by those who start in their industrial career without capital, but rather by those who start with borrowed or inherited capital. Not capital, then, in kind or quality is the measure of interest, but the capacity and adaptability of the labor to it. Since the editor’s principle premise is found to be erroneous, my contention is relieved of the several dilemmas in which the other five questions seek to involve it. The intrepid and ingenious worker, under freedom, will find or create the conditions and helps necessary to increase his wealth, or more desirable satisfaction, while the indolent or unwise one may only see his inherited or borrowed wealth disappear. Is it the capital or labor which has made or failed to make the increase? Surely, capital proves a most indeterminate factor as a self-creator.
I submit that, in distinguishing between economic interest and that which is the fruit of monopoly, the earning of the toiler from the plunder of the spoiler, I have invaded no right to use the old term without the qualifying phrase; I oppose that as strenuously as Liberty can. My idea explains many phenomena in wealth acquirement unexplainable by any extant theory, and is not to be accounted for as sporadic or epidemic. To me it appears the key which will open the doors of prosperity and happiness to the misguided and plundered toilers, who have but the sense and the courage to enter.
I should deeply regret the discontinuance of Liberty, or to see the doughty knight disheartened who has so long, and against fearful odds, upheld the hopeful standard, and helped me at advanced age to jump the ruts of absurd politico-economic superstitions. I should equally deplore seeing Liberty become authoritarian, or philosophical Anarchy a fossilized ism.
The power of the State or collectively to levy tribute, collect rack-rent, evict from land and home, enforce exhaustive usury, and aid plutocrats to plunder the increase labor has produced, is no non-essential, past, present, or future. The “common consent” to the exercise of these powers must be withdrawn ere we can have any salutary change in our industry, commerce, or finance. I trust that this assumption will not imperil Liberty or Anarchy. Let us have freedom, whether it will give us circulating credit without paying for its use or no.
J. K. Ingalls.
Glenora, N. Y.
Intent upon my purpose of keeping the issue narrowed, I shall ignore for the present everything, in the foregoing article except the answers to my three questions.
To my first question Mr. Ingalls answers that the bank of my hypothesis could issue its notes at a cost not exceeding its running expenses and incidental losses. So far, then, my claim is sustained.
But he answers further that such a bank could not exist in the absence of a motive for its existence. It remains for me, then, only to supply the motive. The task is easy. The thousand business men of my hypothesis would unite to form a bank of issue, and would connect this bank of issue with other similar banks for clearing purposes, because thereby they could establish a collective credit having circulating power, which each of them could obtain in exchange for his equally good but less reputable individual credit, having to pay therefore nothing but the cost of this exchange of credits. In other words, these business men would form such a bank as I describe in order to borrow money at less than one per cent. instead of paying, as they do now, from four to fifteen per cent. Is the motive sufficient?
To my second question Mr. Ingalls answers that the cost above referred to would probably be met by a discount of one-half of one per cent. Sustained again. I have not to discuss here why bank employees “should be expected to work for bare support.” It suffices for the argument to know that what these employees are now willing to accept for their services can be paid to them out of funds provided by a discount of one-half of one per cent. And this Mr. Ingalls admits. When we have exhausted the present issue, then I will consider with him how many tears I can afford to shed over the sad fate of those bank presidents for whom a discount of one-half of one per cent. provides salaries of only ten, fifteen, and twenty thousand dollars. [I did not contemplate such salaries when I said one half of one per cent. would probably pay the cost. Did he when he put the question?]
The discussion now centres, therefore, upon the following question, which I put to Mr. Ingalls:
Is the desire to borrow money at less than one per cent., instead of at four per cent. or more, a sufficient consideration to induce business men to form such banks as I have described?
If Mr. Ingalls answers that it is not, he must show why it is not. If he answers that it is, then the proposition which, according to Mr. Ingalls, has never been demonstrated, will have received its demonstration,—the proposition, namely, that free and mutual banking will make it possible to procure capital without paying for its use (the discount being charged, not for the use of capital, but to meet expenses incidental to the transfer of capital).
The Beauties of Government.
To the Editor of Liberty:
There is in the State of New York a law that the board of supervisors of any county shall provide rooms, properly lighted and heated, for the use of the county court, with a proviso that, in case such board shall neglect to do so, the court may order it done and make it a charge to the county.
Yates county has a court-house, not of modern style, which has served the purpose for a generation or two. Repairs and improvements have been made from time to time.‘ It is acknowledged by the local press that the heating is not efficient in the severest cold weather, and that the ventilation is poor, but that it cannot be said that the board have at any time neglected to do what had been required of them.
Now comes Justice Davy of the circuit court, and, without notice to the board of supervisors, makes peremptory order that the court-house shall be repaired, after certain plans and specifications by n high-toned architect of Rochester, without submission to the board, but to a commission appointed by the court and consisting of three lawyers who practise at the bar. The board is ordered, however, to assess the taxpayers of the county to foot the bill.
It is supposed that the expense of such repairs will amount to some $6,000, — more than one quarter of enough to build them a court-house of modern style, such as the supervisors were proposing to erect the coming season.
A general impression has heretofore prevailed that our government was divided into three coordinate branches, distinct and specialized in their functions. In this case the judge appears to have manufactured the law, tried and given judgment for the delinquency, and appointed the executors of the decree. The courts, having virtually abolished trial by jury, especially where a question arises between the State and an individual, may assume the functions of the legislature and direct the action of the executive, either of which, by the way, when they get plebs in their hands, are slow to recognize any power but their own. Although kicking at what they regard an abuse of power, the county papers seem at a loss whether to denounce the order as a judicial outrage or to demand a repeal of the law from the legislature. They should do both.
J. K. I.
[In a republic the functions of a monarch are discharged by the judiciary]
THE INTEREST QUESTION NARROWED TO A POINT.
To the Editor of Liberty:
To your question: “Is the desire to borrow money at less than one per cent. instead of more than four per cent. a sufficient consideration to induce business men to form such banks as I have described?” I answer: Yes! unquestionably, so far as the borrowers are concerned.
Having thus released myself from the unilateral inquest, I will add that, had you not excluded from the subject the lender, an equal factor with the borrower and complementary to him, I could not have made the answer you sought. Banks deal in “evidences of debt,” They sell as well as buy credits. Indeed, they “create them out of nothing” to sell and exchange for other credits, and buy them back to decreate into nothing again. Fiat credit is possible, not fiat money. To obtain four or more per cent. interest is, therefore, an inducement of equal strength with the one you describe, and cancels it. Interest at zero would leave the formation of your banks economically motiveless. Otherwise, they would have been formed long ago. Col. W. B. Greene informed me forty-five years since that he was pressed by borrowers to form his mutual bank, but found no lenders, except a few philanthropists who would lend their money without interest anyway, and these he was unwilling to risk sacrificing in an untried experiment. The member who had more capital than he could use, and all that he could use, would be wholly indifferent to the rate, high or low, because he would get back in dividends all he paid out in discounts, less expense of the business, and no more. The members of all classes, contemplating lending to outsiders, would desire a high rate, and so turn the scale in favor of the high rate.
The great Rochdale Association found it impracticable to sell their goods at cost, and so adopted the method of selling at the market price and dividing the profits among the members or adding to their capital. The mutual banks would find the same difficulty in selling their credits, and would doubtless adopt the same method of charging the current rate of interest, making dividends according to capital invested.
None but members could borrow at cost, or get their discounts returned in dividends.
What banking would be under industrial and commercial freedom can be foretold, I think, with some degree of certainty. What Anarchy would be under organized bank rule, mutualistic or otherwise, is as difficult to foresee as what government itself will become under our present plutocratic regime.
By what I have said I am not to be understood as affirming that some payments of interest may not be escaped, for they are now, and the costs as well, through forbearance of creditors, bankrupt acts, and other devices, honest or fraudulent. What I do mean is that in a general way interest is unescapable, like rent, profit, or taxes. The only question is whether comrades and governments shall enforce the economic or the monopolistic principle. While we have laws to enforce rent, interest, or profit-bearing contracts, other than as to the matters of equity, there is no safety for the debtor.
Whether your positions or mine have been sustained, or whether we are mutually progressing on converging lines toward the point where they coincide, can be of only personal interest. What the readers of Liberty are interested in knowing is whether Anarchy is to take along with it into the coming era rack-rent, evictions, mortgages, foreclosures, and the forces and methods of invasive power, in defiance of the public good, the economies and Isonomics of social science.
J. K. Ingalls.
Glenora, N. Y.
With apology to Mr. Ingalls for my persistence, I must continue the “unilateral inquest” a little further, regretting that I have not been relieved from doing so by an unequivocal answer to my last question. The qualified answer that Mr. Ingalls gives is this: The desire to borrow at less than one per cent. is a sufficient motive to business men as borrowers to induce them to embark in mutual banking, but the desire to lend at more than four per cent. is a sufficient motive to business men as lenders to keep them from embarking in mutual banking. Now I must ask for answers to the following questions:
(1) Does the business man who has capital but lacks cash—that is, the business man who wishes to borrow—sacrifice, by engaging with others in mutual banking, any opportunity of lending (at four per cent. or any other rate) which he enjoys before so engaging?
(2) If so, what?
(3) If not; if the business man in question, by embarking with others in mutual banking, does not thereby damage himself as lender,—is not the desire to borrow at less than one per cent. a sufficient consideration to induce him to so embark?
I respectfully insist on answers to these questions. Mr. Ingalls is a very able and sincere writer on economic problems. He deservedly exercises an influence on the class of people to whom Liberty appeals. Repeatedly during its publication he has come forward with a denial of the position that mutual banking will make it possible to borrow money without interest. I have now determined to force him, once and for all, to make good this denial by proof, or else to retract it. Only by refusing to answer me can he avoid a choice between these two courses; and, as he is an eminently frank and honest man, he will not refuse to answer me. When he has acknowledged his error, or by his answers has forced me to acknowledge mine, I will discuss with him the other points which he raises, and especially the extraordinary statement which he attributes to Colonel Greene.
POINT OF THE INTEREST QUESTION.
To the Editor of Liberty:
Before replying to your questions as amended, but still so ambiguous as to invite equivocal answers, I will briefly attempt to ascertain where we are (at) in this discussion. At the conclusion of my brief essay on “Unescapable Interest” I had invited discussion of the truth of what was new in it. I confess to surprise that, “instead of a book” or even a paragraph of argument, I was met by a string of questions, with claim of a right to force answers, and refusal to discuss the question until there were no question to discuss and until I should retract or refuse to retract a denial I had never made,—viz., that “mutual banking will make it possible to borrow money without interest;” or that a free market will have a tendency to reduce the rate of interest to an equilibrium, zero. It does not seem to have occurred to the editor that a “free market” embraced anything more than liberty to divide, coin, and circulate credits and commodities, or that freedom to produce, possess, and exchange wealth were necessary before free banking could have more than a theoretical existence.
To your early question I answered that it was based on three conditions, neither of which was even supposable without a desire to derive some advantage, profit, or interest therefrom. In the editor’s eagerness to make me “fess,” he did not become aware that, in establishing the existence of a motive for mutual banking, he at the same time established the existence of economic rent or interest for the use of capital, since the reduction of the percentage would be so much gained to capital or to the increased profit of labor in the use of capital. His contention that the use of capital increases production is an admission of the same kind.
In order to avoid misuse of terms, I think we should use the word usury for monopoly interest, which is its exact meaning, while interest proper should be called interest still, as that is its original meaning,—”premium for the use of capital” being only one, and the fifth in order, of Webster’s definitions. It might also he used to indicate that portion of interest after it has been captured from the rightful holder; but usury is a better term for that. Rent, which is synonymous with interest or usury, is also used to denote the normal advantage of superior soil or location, whether held by the occupier or captured by a landlord; and rent from use of more or better capital, whether enjoyed by user, or plundered by lord of money or capital, is still called rent, as in France, or annuity, as in England.
The discussion seems to have arrived at a point capable of reduction to a syllogism something like this: Interest, or increase of labor’s production from use of capital, or saving of the same, is the efficient motive for forming mutual banks; but mutual banks will kill interest; therefore, mutual banks will kill the motive for their formation.
A deduction less absurd would be; the interest constituting the motive to form mutual banks is a wholly different thing, or a different relation of the same thing, from the thing the banks were formed to kill. But this deduction would give the case to economic rent, interest, etc.
I can now proceed to answer the questions last propounded, in which the ambiguity still lingers. “Business men” are not all borrowers, unless they are all lenders as well. The first question relates to borrowers only. I should say that a borrowing business man would lose no opportunity he ever had to lend at any rate of interest, because to be able to lend would make him a lending business man, to whom the question does not refer; but to be able to borrow at one per cent. might increase his opportunity greatly (as a lender). For example the national banks, who borrow at one per cent., or less, of government (yet do not lend at a less rate on that account.)
The second question is made unnecessary by the answer to the first. The third requires also an alternative. The borrowing business man would have a reasonable consideration for forming a mutual bank; a lending businessman would have none. National Bankers, with little cash and considerable capital (bonds), are induced to form national banks; but there are many private banks and State banks who have more cash than capital, who do not avail themselves of the opportunity, and many national banks have thrown up their charters and gone again to private or State banking, some of whom are now paying their depositors three per cent. on their deposits, and even six per cent.
I shall be ready to recant my heresy whenever it is shown that the “saving grace” of mutual banking for discount purposes, and the capitalization of debts, is a cardinal doctrine of the Anarchistic church; but I think the editor will first retract his endorsement of economic rent, or else his denial of the existence of economic interest, unless he is able to compromise on the “sporadic” in both. I am certain he will be unable to show wherein rent and interest differ; which I would be glad to have him attempt. It would also greatly gratify me to have him explain the nature of the “appropriate legislation” by which he will prohibit the ignorant and shiftless worker from exchanging a part of his natural wages (the increase) with a boss, dealer, pawn-broker, or lender who will relieve him from a little care, exertion, or responsibility, or discount the fruits of his toil before ripening, and on such terms as the two may agree upon. [That would consist with despotism not freedom.] I think the editor mistakes greatly the character of the labor dollar of Andrews, the labor note of Warren, and particularly the labor check of the Labor Exchange. The purpose is not, as I understand, to create a bank of discount, or a loan association, but to employ an instrument or tool, to effect a ready completion of commodity exchanges, in order to counteract the evil to commerce of our present financial credits, which operate to aid the forestaller to hold commodities out of market for a rise, resulting in periodical gluts, financial panics, and industrial crises.
Lending has not the remotest relation to exchange. I can understand that completion of one side to an exchange can be deferred and usury charged up as a penalty therefore. But how a loan can become an exchange without compounding the penalty—in itself a misdemeanor—I do not see, or how it can even then become a factor in exchange. Credit other than the strictly commercial adds in no way to the circulation of commodities, to the amount of land, or to the capacity to labor. Credit and money are economic factors only as they become instruments in facilitating the completion of exchanges, [not when deferring it.]
It becomes necessary, first, to show an economic necessity for borrowing, which at the same time will prove the impossibility of killing interest, either economic or monopolistic. Indebtedness and usury are inseparable, except through repudiation or a bankrupt law. Now, if a necessity exists for borrowing, or if there be even an unreasoning demand for loans, the same remuneration, including increase, will be commanded by the lender as that which is received in other lines of business. If no such necessity exists, there can be no necessity for banks of discount. If lending be a benefit to the borrower, or compatible with the public weal, which I in general terms deny, it cannot be had without paying its market price. If it is not a benefit, but, as a rule, an injury, there is no call for interference to enforce its agreements.
I trust the editor has exaggerated his position by intimating that he has no use for Liberty, unless it will enable mutual banks to abolish interest. It is no exaggeration to say that the correspondent has no occasion for an anarchy which is to become the instrument of invasive barbarisms, bonds, mortgages, foreclosures, evictions, forfeitures of land, home, opportunity to labor, and even of personal freedom. The enslaving “sacred contract” has no attraction for me. “The light it sheds saves not, but damns, the world.”
If my answers suit the editor, and he feels sustained in his positions, and that he has demonstrated theoretically what I declared had never been demonstrated positively, my general positions still remain, unquestioned and unquestionable,—viz,
First, that from labor, through use of land and capital, all increment, economic interest, is derived.
Second, that all hiring of land, of capital (or of money, if you will), under monopoly, is tribute extracted from the interest earned by labor.
Third, that such tribute under such dependence is inevitable while the monopolies are legally sustained.
And I will add a fourth by way of suggestion: The abolition of land rent would greatly reduce the tribute now exacted by all other monopolies. Abolition of other rents could not in any way reduce tribute from the use of land or ownership of labor, but would rather tend to increase them.
J. K. Ingalls.
Glenora, N. Y.
THE VANISHING POINT REACHED.
Mr. J. K. Ingalls seems to imagine that the answers which he now gives to my last series of questions are as equivocal as his answer to my previous question. Not so. The terms in which he answered my previous question implied two opposite motives influencing at the same time a business man fulfilling a double capacity, as borrower and lender,—and canceling each other. As my question did not concern men who, as individuals, were in the market as lenders, but only those who were in the market as borrowers, this answer was equivocal. But the answers now given to my last question distinctly recognized the borrowing business man and the lending business man as two individuals, and this recognition removes all the equivocation; for the desire of a lender to lend at a high rate cannot cancel the desire of a borrower to borrow at a low rate, provided the borrower, by association with other borrowers, can provide himself with a source from which to borrow at a low rate,—a condition not as paradoxical as it seems, since the fact of association creates a credit that before had no existence.
The present answers, then, being straight-forward and satisfactory, let us review the admissions which I have secured. Mr. Ingalls has admitted that business men desiring to borrow have an adequate motive for embarking in mutual banking (see his article in the present issue); he has admitted that the loans of a mutual bank’s credit would cost the bank nothing but running expenses and incidental outlays and losses (see No. 305); he has admitted that this cost would probably be covered by a discount of one-half of one per cent. (see No. 305); and he has admitted that, “in the absence of State or collective meddling, competition would tend unquestionably to reduce discount to its lowest term, which would ordinarily be something above cost” (see No. 305). I have interpreted this last admission as meaning that in banking the force of competition would have a tendency of the same strength as that which it has in other businesses similarly free from physical limitations,—in other words, that the tendency would be strong enough to cause the price to hover around the cost limit, now rising a little above it, now falling a little below it, but averaging cost, or perhaps a shade more. In neither of the two articles which Mr. Ingalls has written since this interpretation appeared has he taken any exception to it. I am justified therefore in assuming that he admits this also.
Now, this series of admissions constitutes the entire ease for mutual banking. Whether or not it was ever demonstrated before that mutual banking would abolish the payment of interest for the use of borrowed money, I have now led Mr. Ingalls to demonstrate this himself. His declarations show that under freedom the rate of discount would fall to nearly one-half of one per cent. This is equivalent to the abolition of the payment of interest, for in such a money market an individual ease of interest payment would cut no figure economically, any more than one’s occasional payment of a quarter to an urchin for delivering a letter cuts a figure now that letter-postage has fallen to two cents. Mr. Ingalls has formally allowed that mutual banking will do all that it claims for itself, and he is forever debarred from repeating that denial or doubt of its claims which has been heard from him at intervals for many years. I began this little campaign of question and answer for the purpose of silencing this gun, and I have effectually done it.
Thus ends this matter. Now Mr. Ingalls desires me to discuss with him the question of the existence of what he calls economic interest,—that is, the question whether people can do more with capital than without it. He asks me to retract my “denial of the existence of economic interest.” I pledge him my word that I will retract it as soon as he shall quote to me the passage in which the denial occurred. There exists no such passage. To have denied so trite a truth would have been no less remarkable than Mr. Ingalls’s grave persistence in affirming it. I do not approve the new use that Mr. Ingalls makes of the word interest, but I have nothing to say in dispute of the entirely undisputed idea which he expresses by the phrase “economic interest.” When he denied my position, I had a right to expect him to answer my questions. When he shall show that I have denied his position, he will have a similar right to expect me to answer his questions. And, if he drives me into a corner, I swear that he shall hear no complaint from me that he is trying to “force answers.”
But, while I have as yet no occasion to discuss “economic interest” with Mr. Ingalls, it is fitting that I should answer him on certain incidental points that he has made concerning the manner in which mutual banking may be put into practice, and with these matters I purpose to deal in a later article.
Comrade Labadie, I am sure, will be the first to protest against Dr. Maryson’s interpretation of his perfectly true assertion (always maintained by the editor of this paper) that “Anarchism begins and ends with liberty” as meaning that the advocacy of liberty should be divorced from economic considerations. I am sure of it, because I know that Mr. Labadie, in his championship of liberty, constantly points out the economic effects that would follow from the removal of law-placed obstacles that hinder free activities in the sphere of production and exchange. I am sure of it again, because Comrade Labadie, in the lecture in which he emphasizes the negative character of the Anarchistic philosophy, quotes approvingly and in his own support from my essay on “ State Socialism and Anarchism,” which is nothing if not a demonstration of the inseparability of economy from liberty. It is perfectly true that one need not believe in mutual banking in order to be an Anarchist. It is also true that one may desire universal voluntary communism without thereby disqualifying himself as an Anarchist. Since an Anarchist is one who believes in making equal liberty the basis of social relationships, such a one cannot become less an Anarchist because of any peculiar belief that he may hold as to the effects of equal liberty. If Mephistopheles, desiring, not the happiness of humanity, but its torment, arrives by mental processes at the conclusion that the way to achieve his desire is the establishment of equal liberty, and accordingly becomes an advocate of equal liberty, then Mephistopheles is an Anarchist. But does Dr. Maryson suppose that anything is to be gained for liberty by joining hands with Mephistopheles in such a crusade in liberty’s behalf? Does he not know that the reason of State Socialism’s growth and of liberty’s retardation is found mainly in the fact that the people have been taught to look for economic benefit from the former rather than from the latter? Does he not know that Anarchism has progressed where so-called individualism has dwindled, simply because it has married liberty and economy, instead of divorcing them? If he doesn’t, Comrade Labadie does; and I counsel the latter to let his voice be heard in a manner that will make his meaning unmistakable, and so stop this nonsense which Dr. Maryson, J. K. Ingalls, and others are trying to put into his words.