My object in this treatise is to examine the real nature of the Interest on Capital, for the purpose of proving that it is lawful and explaining why it should be perpetual. This may appear a radical proposition, and yet, I confess, I am more afraid I may weary the reader by a series of mere truisms. But it is no easy matter to avoid this danger, when the facts with which we have to deal are known to every one by personal, familiar, and daily experience.
But then you will say, “What is the use of this treatise? Why explain what everybody knows?”
But, although this problem appears at first sight so very simple, there is more in it than you might suppose. I shall endeavor to prove this by an example. Thomas lends a tool today that will be entirely consumed in a week, yet the investment will not produce an unchanging amount of interest to Thomas and his heirs, through all eternity. Reader, can you honestly say that you understand the reason of this?
It would be a waste of time to seek any satisfactory explanation from the writings of economists. They have not thrown much light upon the reasons of the existence of interest. For this they are not to be blamed; for at the time they wrote, its lawfulness was not called in question. Now, however, times are altered; the case is different. Men who consider themselves to be in advance of their times, have organized an active crusade against capital and interest; it is the productiveness of capital that they are attacking; not certain abuses in the administration of it, but the principle itself.
Some years ago a journal was established in Paris by Mr. Proudhon especially to promote this crusade, which for a time is reported to have had a very large circulation. The first number that was issued contained the following declaration of its principles: “The productiveness of capital, which is condemned by Christianity under the name of usury, is the true cause of misery, the true origin of destitution, the eternal obstacle to the establishment of a true Republic.”
Another French journal, La Ruche Populaire, also thus expresses its views on this subject: “But above all, labor ought to be free; that is, it ought to be organized in such a manner that money-lenders and owners or controllers of capital should not be paid for granting the opportunity to labor, and for which privilege they charge as high a price as possible.” The only thought that I notice here, is that expressed by the words in the italics, which imply a denial of the right to charge interest.
A noted leader among the French Socialists, Mr. Thoré, also thus expresses himself:
The revolution will always have to be recommenced, so long as we occupy ourselves with consequences only, without having the logic or the courage to attack the principle itself. This principle is capital, false property, interest, and usury, which by old custom is made to weigh upon labor.
Ever since the aristocrats invented the incredible fiction, that capital possesses the power of reproducing itself, the workers have been at the mercy of the idle.
At the end of a year, will you find an additional dollar in a bag of one hundred dollars? At the end of fourteen years will your dollars have doubled in your bag?
Will a work of industry or of skill produce another, at the end of fourteen years?
Let us begin, then, by demolishing this fatal fiction.
I have quoted the above merely for the sake of establishing the fact that many persons consider the productiveness of capital a false, a fatal, and an iniquitous principle. But quotations are superfluous; it is well known that large numbers of poor people attribute their poverty to what they call the tyranny of capital; meaning thereby the unwillingness of the owners of capital to allow others to use it without security for its safe return and compensation for its use.
I believe there is not a man in the world who is aware of the whole importance of this question:
“Is the interest of capital natural, just, and lawful, and as useful to the borrower who pays, as to the lender who receives?”
You answer, No; I answer, Yes. Then we differ entirely; but it is of the utmost importance to discover which of us is in the right, otherwise we shall incur the danger of making a false solution of the question, a matter of opinion. If the error is on my side, however, the evil would not be so great. It must be inferred that I know nothing about the true interests of the masses, or the march of human progress; and that all my arguments are but as so many grains of sand, by which the train of the revolution will certainly not be arrested.
But if, on the contrary, men like Proudhon and Thoré in France (John Ruskin in England, and others in the United States) are deceiving themselves, it follows that they are leading the people astray—that they are showing them evil where it does not exist; and thus giving a false direction to their ideas, to their antipathies, to their dislikes, and to their attacks. It follows that the misguided people are rushing into a horrible and pointless struggle, in which victory would be more fatal than defeat; since according to this supposition, the result would be the realization of universal evils, the destruction of every means of emancipation, the consummation of its own misery.
This is just what Mr. Proudhon has acknowledged, with perfect good faith. “The foundation stone,” he told me, “of my system is the availability of free credit. If I am mistaken in this, Socialism is a vain dream.” I add, it is a dream in which the people are tearing themselves to pieces. Will it, therefore, be a cause for surprise if, when they awake, they find themselves mangled and bleeding? Such a danger as this is enough to justify me fully, if, in the course of the discussion, I allow myself to be led into some trivialities and some prolixity.