V. CAPITAL AND INTEREST 1. INTRODUCTION

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.

2. OUGHT CAPITAL TO PRODUCE INTEREST?

I address this treatise to working men, more especially to those who have enrolled themselves under the banner of Socialist democracy. I proceed to consider these two questions:

First. Is it consistent with the nature of things, and with justice, that capital should bear interest?

Second. Is it consistent with the nature of things, and with justice, that the interest of capital should be perpetual?

The working men everywhere will certainly acknowledge that a more important subject could not be discussed. Since the world began, it has been allowed, at least in part, that capital ought to produce interest. But latterly it has been affirmed that herein lies the very social error that is the cause of pauperism and inequality; it is, therefore, most essential to know now on what ground we stand.

For if levying interest from capital is a sin, the workers have a right to revolt against social order, as it exists. It is in vain to tell them that they ought to have recourse to legal and peaceful means: it would be a hypocritical recommendation. When on the one side there is a strong man, poor, and a victim of robbery—on the other, a weak man, but rich, and a robber—it is ridiculous that we should say to the former, with a hope of persuading him, “Wait till your oppressor voluntarily renounces oppression, or till it shall cease of itself.” This cannot be; and those who tell us that capital is by nature unproductive ought to know that they are provoking a terrible and disastrous struggle.

If, on the contrary, the interest of capital is natural, lawful, consistent with the general good, as favorable to the borrower as to the lender, the economists who deny it, the writers who grieve over this pretended social wound, are leading the workmen into a senseless and unjust effort which can have no other issue than the misfortune of all. In fact, they are arming labor against capital. So much the better, if these two powers are really antagonistic; and may the struggle soon be ended! But, if they are in harmony, the struggle is the greatest evil that can be inflicted on society. You see then, workmen, that there is not a more important question than this: “Is the interest of capital rightful or not?” In the former case, you must immediately renounce the struggle to which you are being urged; in the second, you must carry it on resolutely, and to the end.

Productiveness of capital—perpetuity of interest. These are difficult questions. I must endeavor to make myself clear. And for that purpose I shall have recourse to example rather than to demonstration; or rather, I shall place the demonstration in the example. I begin by acknowledging that, at first sight, it may appear strange that capital should pretend to a remuneration, and above all to a perpetual remuneration. You will say, “here are two men. One of them works from morning till night, from one year’s end to another; and if he consumes all that he has gained, even by superior energy, he remains poor. When Christmas comes he is in no better condition than he was at the beginning of the year, and has no other prospect but to begin again. The other man does nothing, either with his hands or his head; or at least, if he makes use of them at all, it is only for his own pleasure; it is allowable for him to do nothing, for he has an income. He does not work, yet he lives well; he has everything in abundance; delicate dishes, sumptuous furniture, elegant equipages; nay, he even consumes, daily, things that the workers have been obliged to produce by the sweat of their brow, for these things do not make themselves; and, as far as he is concerned, he has had no hand in their production. It is the workmen who have caused this corn to grow, decorated this furniture, woven these carpets; it is our wives and daughters who have spun, cut out, sewed, and embroidered these materials. We work, then, for him and for ourselves; for him first, and then for ourselves, if there is anything left.

“But here is something more striking still. If the former of these two men, the worker, consumes within the year any profit that may have been left him in that year, he is always at the point from which he started, and his destiny condemns him to move incessantly in a perpetual circle, and in a monotony of exertion. Labor, then, is rewarded only once. But if the other, the ‘gentleman,’ consumes his yearly income in the year, he has, the year after, in those which follow, and through all eternity, an income always equal, inexhaustible, perpetual. Capital, then, is remunerated, not only once or twice, but an indefinite number of times! So that, at the end of a hundred years, a family that has placed 20,000 francs, at five percent will have had 100,000 francs; and this will not prevent them from having 100,000 francs more in the following century. In other words, for 20,000 francs, which represents its labor, it will have levied, in two centuries, a tenfold value on the labor of others. In this social arrangement is there not a monstrous evil to be reformed? And this is not all. If it should please this family to curtail its enjoyments a little—to spend, for example, only 900 francs, instead of 1,000—it may, without any labor, without any other trouble beyond that of investing 100 francs a year, increase its capital and its income in such rapid progression that it will soon be in a position to consume as much as a hundred families of industrious workmen. Does not all this go to prove that society itself has in its bosom a hideous cancer, which ought to be eradicated at the risk of some temporary suffering?”

These are, it appears to me, the sad and unsettling reflections that must be excited in your minds by the active and notorious crusade that is being carried on against capital and interest. On the other hand, there are moments in which, I am convinced, doubts are awakened in your minds, and scruples in your conscience. You say to yourselves sometimes: “But to assert that capital ought not to produce interest is to say that he who has created tools, or materials, or provisions of any kind, ought to yield them up without compensation. Is that just? And then, if it is so, who would lend these tools, these materials, these provisions? Who would take care of them? Who would even create them? Everyone would consume his proportion, and the human race would not advance a step. Capital would be no longer accumulated, since there would be no interest in accumulating it. It would become exceedingly scarce. This would be a most peculiar step for the obtaining of loans gratuitously! A peculiar means of improving the condition of borrowers, to make it impossible for them to borrow at any price! What would become of labor itself? For there will be no money advanced, and not one single kind of labor can be mentioned, not even hunting, that can be pursued without capital of some kind. And, as for ourselves, what would become of us? What! We are not to be allowed to borrow, in order to work in the prime of life, nor to lend, that we may enjoy repose in its decline? The law will rob us of the prospect of laying by a little property, because it will prevent us from gaining any advantage from it. It will deprive us of all stimulus to save at the present time, and of all hope of repose for the future. It is useless to exhaust ourselves with fatigue; we must abandon the idea of leaving our sons and daughters a little property, since the new views render it useless, for we should become traffickers in the toil of men if we were to lend it at interest. Alas! the world that these persons would open before us, as an imaginary good, is still more dreary and desolate than that which they condemn, for hope, at any rate, is not banished from the latter.” Thus, in all respects, and in every point of view, the question is a serious one. Let us hasten to arrive at a solution.

The French civil code has a chapter entitled, “On the manner of transmitting property.” When a man by his labor has made some useful things—in other words, when he has created a value—it can only pass into the hands of another by one of the following modes: as a gift, by the right of inheritance, by exchange, loan, or theft. One word upon each of these, except the last, although it plays a greater part in the world than we may think. A gift needs no definition. It is essentially voluntary and spontaneous. It depends exclusively upon the giver, and the receiver cannot be said to have any right to it. Without a doubt, morality and religion make it a duty for men, especially the rich, to deprive themselves voluntarily of that which they possess in favor of their less fortunate brethren. But this is an entirely moral obligation. If it were to be asserted on principle, admitted in practice, sanctioned by law, that every man has a right to the property of another, the gift would have no merit—charity and gratitude would be no longer virtues. Besides, such a doctrine would suddenly and universally arrest labor and production, as severe cold congeals water and suspends animation; for who would work if there was no longer to be any connection between labor and the satisfying of our wants? Political economy has not considered the matter of gifts. This has led people to conclude that it is opposed to such things and that it is therefore a science devoid of heart. This is a ridiculous accusation. That science which treats of the laws resulting from the reciprocity of services had no business to inquire into the consequences of generosity with respect to him who receives, nor into its effects, perhaps even more beneficial, on him who gives. Such considerations belong evidently to the science of morals. We must allow the sciences to have limits; above all, we must not accuse them of denying or undervaluing what they look upon as foreign to their department.

The right of inheritance, against which so much has been objected of late, is one of the forms of gift, and assuredly the most natural of all. That which a man has produced, he may consume, exchange, or give. What can be more natural than that he should give it to his children? It is this power, more than any other, that inspires him with the drive to labor and to save. Do you know why the principle of right of inheritance is thus called in question? Because it is imagined that the property thus transmitted is plundered from the masses. This is a fatal error. Political economy demonstrates, in the most peremptory manner, that all value produced is a creation which does no harm to any person whatever. For that reason it may be consumed, and, still more, transmitted, without hurting anyone; but I shall not pursue these reflections, which do not belong to the subject.

Exchange is the principal department of political economy, because it is by far the most frequent method of transmitting property, according to the free and voluntary acquiescence in the laws and effects of which this science treats.

Properly speaking, exchange is the reciprocity of services. The parties say between themselves, “Give me this, and I will give you that” or, “Do this for me, and I will do that for you.” It is well to remark (for this will throw a new light on the notion of value) that the second form is always implied in the first. When it is said, “Do this for me, and I will do that for you,” an exchange of service for service is proposed. Again, when it is said, “Give me this, and I will give you that,” it is the same as saying, “I yield to you what I have done, yield to me what you have done.” The labor is past, instead of present; but the exchange is not the less governed by the comparative valuation of the two services; so that it is quite correct to say that the principle of value is in the services rendered and received on account of the products exchanged, rather than in the products themselves.

In reality, services are scarcely ever exchanged directly. There is a medium that is termed money. Paul has completed a coat, for which he wishes to receive a little bread, a little wine, a little oil, a visit from a doctor, a ticket for the play, etc. The exchange cannot be effected in kind, so what does Paul do? He first exchanges his coat for some money, which is called selling; then he exchanges this money again for the things he wants, which is called purchasing; and now, only, has the reciprocity of service completed its circuit; now, only, the labor and the compensation are balanced in the same individual—“I have done this for society, it has done that for me.” In a word, it is only now that the exchange is actually accomplished. Thus, nothing can be more correct than this observation of J.B. Say: “Since the introduction of money, every exchange is resolved into two elements, sale and purchase. It is the reunion of these two elements which renders the exchange complete.”

We must note, also, that the constant appearance of money in every exchange has overturned and misled all our ideas: men have ended in thinking that money was true riches, and that to multiply it was to multiply services and products. Hence the protectionist system; hence paper money; hence the celebrated aphorism, “What one gains the other loses;” and of the errors that have impoverished the earth, and imbrued it with blood. After much investigation it has been found, that in order to make the two services exchanged of equivalent value, and in order to render the exchange equitable, the best means was to allow it to be free. However plausible at first sight, the intervention of the State might be, it was soon perceived that it is always oppressive to one or other of the contracting parties. When we look into these subjects, we are always compelled to reason upon this maxim, that equal value results from liberty. We have, in fact, no other means of knowing whether, at a given moment, two services are of the same value but that of examining whether they can be readily and freely exchanged. Allow the State, which is the same thing as force, to interfere on one side or the other, and from that moment all the means of evaluation will be complicated and entangled, instead of becoming clear. It ought to be the part of the State to prevent, and, above all, to repress artifice and fraud; that is, to secure liberty, and not to violate it. I have enlarged a little upon exchange, although loan is my principal object: my excuse is that I conceive that there is in a loan an actual exchange, an actual service rendered by the lender, and that makes the borrower liable to an equivalent service—two services whose comparative value can only be appreciated, like that of all possible services, in freedom. Now, if it is so, the perfect rightfulness of what is called house-rent, farm-rent, interest, will be explained and understood. Let us consider what is involved in a loan.

Suppose two men exchange two services or two objects, whose equal value is beyond all dispute. Suppose, for example, Peter says to Paul, “Give me ten ten-cent pieces, I will give you a silver dollar.” We cannot imagine an equal value more unquestionable. When the bargain is made, neither party has any claim upon the other. The exchanged services are equal. Then it follows that if one of the parties wishes to introduce into the bargain an additional clause advantageous to himself but unfavorable to the other party, he must agree to a second clause, which shall reestablish the equilibrium, and the law of justice. It would be absurd to deny the justice of a second clause of compensation. This granted, we will suppose that Peter, after having said to Paul, “Give me ten ten-cent pieces, I will give you a dollar,” adds, “You shall give me the ten ten-cent pieces now, and I will give you the silver dollar in a year;” it is very evident that this new proposition alters the claims and advantages of the bargain; that it alters the proportion of the two services. Does it not appear plainly enough, in fact, that Peter asks of Paul a new and an additional service; one of a different kind? Is it not as if he had said, “Render me the service of allowing me to use for my profit, for a year, the dollar that belongs to you, and that you might have used for yourself?” And what good reason have you to maintain that Paul is bound to render this especial service gratuitously; that he has no right to demand anything more in consequence of this requisition; that the State ought to interfere to force him to submit? Is it not incomprehensible that the economist, who preaches such a doctrine to the people, can reconcile it with his principle of the reciprocity of service? Here I have introduced money; I have been led to do so by a desire to place, side by side, two objects of exchange, of a perfect and indisputable equality of value. I was anxious to be prepared for objections; but, on the other hand, my demonstration would have been more striking still if I had illustrated my principle by an agreement for exchanging of services or commodities directly.

Suppose, for example, a house and a vessel of a value so perfectly equal that their proprietors are disposed to exchange them even-handed, without excess or abatement. In fact let the bargain be settled by a lawyer. At the moment of each taking possession, the ship-owner says to the house-owner, “Very well; the transaction is completed, and nothing can prove its perfect equity better than our free and voluntary consent. Our conditions thus fixed, I will propose to you a little practical modification. You shall let me have your house today, but I will not put you in possession of my ship for a year; and the reason I make this demand of you is that during this year of delay, I wish to use the vessel.” That we may not be embarrassed by considerations relative to the deterioration of the thing lent, I will suppose the ship-owner to add, “I will engage, at the end of the year, to hand over to you the vessel in the state in which it is today.” I ask of every candid man, if the house-owner has not a right to answer, “The new clause that you propose entirely alters the proportion or the equal value of the exchanged services. By it I shall be deprived for the space of a year, both at once of my house and of your vessel. By it you will make use of both. If in the absence of this clause the bargain was just, for the same reason the clause is injurious to me. It stipulates a loss to me, and a gain to you. You are requiring of me a new service; I have a right to refuse, or to require of you, as a compensation, an equivalent service.” If the parties are agreed upon this compensation, the principle of which is incontestable, we can easily distinguish two transactions in one, two exchanges of service in one. First, there is the exchange of the house for the vessel; after this, there is the delay granted by one of the parties, and the compensation corresponding to this delay yielded by the other. These two new services take the generic and abstract names of credit and interest. But names do not change the nature of things; and I defy any one to disprove that there exists here, when all is done, a service for a service, or a reciprocity of services. To say that one of these services does not challenge the other, to say that the first ought to be rendered gratuitously, without injustice, is to say that injustice consists in the reciprocity of service—that justice consists in one of the parties giving and not receiving, which is a contradiction in terms.

But to give an idea of interest and its mechanism, allow me to make use of two or three anecdotes. But first, I must say a few words upon capital.

3. WHAT IS CAPITAL?

There are some persons who imagine that capital is money, and this is precisely the reason why they deny its productiveness; for, as John Ruskin and others say, dollars are not endowed with the power of reproducing themselves. But it is not true that capital and money are the same thing.

Before the discovery of the precious metals, there were capitalists in the world; and I venture to say that at that time, as now, everybody was a capitalist, to a certain extent.

What is capital, then? It is composed of three things:

First, of the materials upon which men operate, when these materials have already a value communicated by human effort, which has bestowed upon them the property of exchangeability—wool, flax leather, silk, wood, etc.

Second, instruments that are used for working—tools, machines, ships, carriages, etc.

Third, provisions that are consumed during labor—victuals, fabrics, houses, etc.

Without these things the labor of man would be unproductive and almost void; yet these very things have required much work, especially at first. This is the reason that so much value has been attached to the possession of them, and also that it is perfectly lawful to exchange and to sell them, to make a profit off them if used, to gain remuneration from them if lent. Now for my anecdotes.

4. THE SACK OF CORN

William, in other respects as poor as Job, and obliged to earn his bread by day-labor, became, nevertheless, by some inheritance, the owner of a fine piece of uncultivated land. He was exceedingly anxious to cultivate it. “Alas!” said he, “to make ditches, to raise fences, to break the soil, to clear away the brambles and stones, to plow it, to sow it, might bring me a living in a year or two; but certainly not today, or tomorrow. It is impossible to set about farming it, without previously saving some provisions for my subsistence until the harvest; and I know by experience that preparatory labor is indispensable in order to render present labor productive.”

The good William was not content with making these reflections. He resolved to work by the day, and to save something from his wages to buy a spade and a sack of corn, without which things he must give up his agricultural projects. He acted so well, was so active and steady, that he soon saw himself in possession of the wished-for sack of corn. “I shall have enough to live upon till my field is covered with a rich harvest.” Just as he was starting, David came to borrow his accumulation of food of him. “If you will lend me this sack of corn,” said David, “you will do me a great service; for I have some very lucrative work in view, which I cannot possibly undertake for want of provisions to live upon till it is finished.” “I was in the same situation,” answered William; “and if I have now secured bread for several months, it is at the expense of my arms and my stomach. Upon what principle of justice can it be devoted to the carrying out of your enterprise instead of mine?”

You may well believe that the bargain was a long one. However, it was finished at length, and on these conditions:

First—David promised to give back, at the end of the year, a sack of corn of the same quality, and of the same weight, without missing a single grain. “This first clause is perfectly just,” said he, “for without it William would give, and not lend.”

Second—He further engaged to deliver one-half bushel of corn for every five bushels originally borrowed, when the loan was returned. “This clause is no less just than the other,” thought he; “for unless William would do me a service without compensation, he would inflict upon himself a privation—he would renounce his cherished enterprise—he would enable me to accomplish mine—he would cause me to enjoy for a year the fruits of his savings, and all this gratuitously. Since he delays the cultivation of his land, since he enables me to prosecute a lucrative employment, it is quite natural that I should let him partake, in a certain proportion, of the profits that I shall gain by the sacrifice he makes of his own profits.”

On his side, William, who was something of a scholar, made this calculation: “Since by virtue of the first clause, the sack of corn will return to me at the end of a year,” he said to himself, “I shall be able to lend it again; it will return to me at the end of the second year; I may lend it again, and so on, to all eternity. However, I cannot deny that it will have been eaten long ago.”

It is singular that I should be perpetually the owner of a sack of corn, although the one I have lent has been consumed forever. But this is explained thus: It will be consumed in the service of David. It will enable David to produce a greater value; and consequently, David will be able to restore me a sack of corn, or the value of it, without having suffered the slightest injury; but on the contrary, having gained from the use of it. And as regards myself, this value ought to be my property, as long as I do not consume it myself. If I had used it to clear my land, I should have received it again in the form of a fine harvest. Instead of that, I lend it, and shall recover it in the form of repayment.

“From the second clause, I gain another piece of information. At the end of the year I shall be in possession of one bushel of corn for every ten that I may lend. If, then, I were to continue to work by the day, and to save part of my wages, as I have been doing, in the course of time I should be able to lend two sacks of corn; then three; then four; and when I should have gained a sufficient number to enable me to live on these additions of a half a bushel over and above and on account of every ten bushels lent, I shall be at liberty to take a little repose in my old age. But how is this? In this case, shall I not be living at the expense of others? No, certainly, for it has been proved that in lending I perform a service; I make more profitable the labor of my borrowers, and only deduct a trifling part of the excess of production, due to my lendings and savings. It is a marvelous thing that a man may thus realize a leisure that injures no one, and for which he cannot be reproached without injustice.”

5. THE HOUSE

Again, Thomas had a house. In building it, he had extorted nothing from any one whatever. He obtained it by his own personal labor, or, which is the same thing, by the labor of others justly rewarded. His first care was to make a bargain with a handyman, in virtue of which, on condition of the payment of a hundred dollars a year, the latter engaged to keep the house in constant good repair. Thomas was already congratulating himself on the happy days he hoped to spend in this pleasant home, which our laws declared to be his own exclusive property. But Richard wished to use it also as his residence.

“How can you think of such a thing?” said Thomas to Richard. “It is I who have built it; it has cost me ten years of painful labor, and now you would come in and take it for your enjoyment?” They agreed to refer the matter to judges. They chose no profound economists—there were none such in the country. But they found some just and sensible men; it all comes to the same thing; political economy, justice, good sense, are all the same thing. And here is the decision made by the judges: If Richard wishes to occupy Thomas’s house for a year, he is bound to submit to three conditions. The first is to quit at the end of the year, and to restore the house in good repair, saving the inevitable decay resulting from mere duration. The second, to refund to Thomas the one hundred dollars Thomas pays annually to the handyman to repair the injuries of time; for these injuries taking place while the house is in the service of Richard, it is perfectly just that he should bear the expense. The third, that he should render to Thomas a service equivalent to that which he receives. And as to what shall constitute this equivalence of services, this must be left for Thomas and Richard to mutually agree upon.

6. THE PLANE

One further illustration to the same ethic. A very long time ago there lived in a poor village, a carpenter, who was a philosopher, as all my heroes are in their way. James worked from morning till night with his two strong arms, but his brain was not idle for all that. He was fond of reviewing his actions, their causes, and their effects. He sometimes said to himself, “With my hatchet, my saw, and my hammer, I can make only coarse furniture, and can only get the pay for such. If I only had a plane, I should please my customers more, and they would pay me more. But this is all right; I can only expect services proportioned to those which I render myself. Yes! I am resolved, I will make myself a plane.”

However, just as he was setting to work, James reflected further: “I work for my customers 300 days in the year. If I give ten to making my plane, supposing it lasts me a year, only 290 days will remain for me to make my furniture. Now, in order that I be not the loser in this matter, I must earn henceforth, with the help of the plane, as much in 290 days as I now do in 300. I must even earn more; for unless I do so, it would not be worth my while to venture upon any innovations,” James began to calculate. He satisfied himself that he should sell his finished furniture at a price which would amply compensate him for the ten days devoted to the plane; and when no doubt remained in his mind on this point, he set to work. I beg the reader to note, that the power that exists in the tool to increase the productiveness of labor, is the basis for the successful solution of the experiment that James the carpenter proposed to make.

At the end of ten days, James had in his possession an admirable plane, which he valued all the more for having made it himself. He danced for joy—for like the girl with her basket of eggs, he reckoned in anticipation all the profits he expected to derive from the ingenious instrument; but, more fortunate than she, he was not reduced to the necessity of saying good-by, when the eggs were smashed, to the expected calf, cow, pig, as well as the eggs, together. He was building his fine castles in the air, when he was interrupted by his acquaintance William, a carpenter in the neighboring village. William having admired the plane, was struck with the advantages that might be gained from it. He said to James:

W. You must do me a service.

J. What service?

W. Lend me the plane for a year.

As might be expected, James at this proposal did not fail to cry out, “How can you think of such a thing, William? But if I do you this service, what will you do for me in return?”

W. Nothing. Don’t you know that John Ruskin says a loan ought to be gratuitous? Don’t you know that Proudhon and other notable writers and friends of the laboring classes assert that capital is naturally unproductive? Don’t you know that all the new school of liberal advanced writers say we ought to have perfect fraternity among men? If you only do me a service for the sake of receiving one from me in return, what merit would you have?

J. William, my friend, fraternity does not mean that all the sacrifices are to be on one side; if so, I do not see why they should not be on yours. Whether a loan should be gratuitous I don’t know but I do know that if I were to lend you my plane for a year it would be giving it you. To tell you the truth, that was not what I made it for.

W. Well, we will say nothing about the modern maxims discovered by the friends of the working classes. I ask you to do me a service; what service do you ask me in return?

J. First, then, in a year the plane will be used up, it will be good for nothing. It is only just that you should let me have another exactly like it; or that you should give me money enough to get it repaired; or that you should supply me the ten days which I must devote to replacing it.

W. This is perfectly just. I submit to these conditions. I engage to return it, or to let you have one like it, or the value of the same. I think you must be satisfied with this, and can require nothing further.

J. I think otherwise. I made the plane for myself, and not for you. I expected to gain some advantage from it, by my work being better finished and better paid; by improving my condition. What reason is there that I should make the plane, and you should gain the profit? I might as well ask you to give me your saw and hatchet! What a confusion! Is it not natural that each should keep what he has made with his own hands, as well as his hands themselves? To use without recompense the hands of another, I call slavery; to use without recompense the plane of another, can this be called fraternity?

W. But, then, I have agreed to return it to you at the end of a year, as well polished and as sharp as it is now.

J. We have nothing to do with next year; we are speaking of this year. I have made the plane for the sake of improving my work and condition: if you merely return it to me in a year, it is you who will gain the profit of it during the whole of that time. I am not bound to do you such a service without receiving anything from you in return; therefore, if you wish for my plane, independently of the entire restoration already bargained for, you must do me a service which we will now discuss; you must grant me remuneration.

And this was what the two finally agreed upon: William granted a remuneration calculated in such a way that, at the end of the year, James received his plane quite new, and in addition a new plank, as a compensation for the advantages of which he had deprived himself in lending the plane to his friend.

It was impossible for anyone acquainted with the transaction to discover the slightest trace in it of oppression or injustice.

The singular part of it is, that, at the end of the year, the plane came into James’s possession, and he lent it again; recovered it, and lent it a third and fourth time. It has passed into the hands of his son, who still lends it. Poor plane! How many times has it changed, sometimes its blade, sometimes its handle. It is no longer the same plane, but it has always the same value, at least for James’s posterity. Workmen; let us examine further these little stories.

I maintain, first of all, that the sack of corn and the plane are here the type, the model, a faithful representation, the symbol of all capital; as the half bushel of corn and the plank are the type, the model, the representation, the symbol of all interest. This granted, the following are, it seems to me, a series of consequences, the justice of which it is impossible to dispute.

First. If the yielding of a plank by the borrower to the lender is a natural, equitable, lawful remuneration, the just price of a real service, we may conclude that, as a general rule, it is in the nature of capital when loaned or used to produce interest. When this capital, as in the foregoing examples, takes the form of an instrument of labor, it is clear enough that it ought to bring an advantage to its possessor, to him who has devoted to it his time, his brains, and his strength. Otherwise, why should he have made it? No necessity of life can be immediately satisfied with instruments of labor; no one eats planes or drinks saws, unless, of course, he is a magician. If a man determines to spend his time in the production of such things, he must have been led to it by the consideration of the increased power these instruments give to him; of the time which they save him; of the perfection and rapidity they give to his labor; in a word, of the advantages they procure for him. Now these advantages, which have been obtained by labor, by the sacrifice of time that might have been used for other purposes, are we bound, as soon as they are ready to be enjoyed, to confer them gratuitously upon another? Would it be an advance in social order if the law so stated, and citizens should pay officials for enforcing such a law by force? I venture to say that there is not one amongst you who would support it. It would be to legalize, to organize, to systematize injustice itself, for it would be proclaiming that there are men born to render, and others born to receive, gratuitous services. Grant, then, that interest is just, natural, and expedient.

Second. A second consequence, not less remarkable than the former, and, if possible, still more conclusive, to which I call your attention, is this: Interest is not injurious to the borrower. I mean to say, the obligation in which the borrower finds himself, to pay a remuneration for use of capital, cannot do any harm to his condition. Observe, in fact, that James and William are perfectly free, as regards the transaction to which the plane gave occasion. The transaction cannot be accomplished without the consent of one as well as of the other. The worst that can happen is that James may ask too much; and in this case, William, refusing the loan, remains as he was before. By the fact of his agreeing to borrow, he proves that he considers it an advantage to himself; he proves that after every calculation, whatever may be the remuneration or interest required of him, he still finds it more profitable to borrow than not to borrow. He only determines to do so because he has compared the inconveniences with the advantages. He has calculated that the day on which he returns the plane, accompanied by the remuneration agreed upon, he will have effected more work, with the same labor, thanks to this tool. A profit will remain to him, otherwise he would not have borrowed. The two services of which we are speaking are exchanged according to the law that governs all exchanges, the law of supply and demand. The demands of James have a natural and impassable limit. This is the point at which the remuneration demanded by him would absorb all the advantage that William might find in making use of a plane. In this case, the borrowing would not take place. William would be bound either to make a plane for himself, or do without one, which would leave him in his original condition. He borrows because he gains by borrowing. I know very well what will be told me. You will say, William may be deceived, or, perhaps, he may be governed by necessity, and be obliged to submit to a harsh law.

It may be so. As to errors in calculation, they belong to the infirmity of our nature, and to argue from this against the transaction in question, is objecting to the possibility of loss in all imaginable transactions, in every human act. Error is an accidental fact, which is incessantly remedied by experience. In short, everybody must guard against it. As far as those hard necessities are concerned that force persons to borrow under onerous conditions, it is clear that these necessities existed previously to the borrowing. If William is in a situation in which he cannot possibly do without a plane, and must borrow one at any price, does this situation result from James having taken the trouble to make the tool? Does it not exist independently of this circumstance? However harsh, however severe James may be, he will never render the supposed condition of William worse than it is. Morally, it is true, the lender will be to blame if he demands more than is just; but in an economical point of view, the loan itself can never be considered responsible for previous necessities, which it has not created, and which it relieves to a certain extent. But this proves something to which I shall return. It is evidently for the interest of William, representing here the borrowers, that there shall be many Jameses and planes, or, in other words, lenders and capitals. It is very evident that if William can say to James, “Your demands are exorbitant; there is no lack of planes in the world;” he will be in a better situation than if James’s plane was the only one he could borrow. Assuredly, there is no maxim more true than this—service for service. But let us not forget that no service has a fixed and absolute value compared with others. The contracting parties are free. Each pushes his advantage to the farthest possible point, and the most favorable circumstance for these advantages is the absence of rivalship. Hence it follows that if there is a class of men more interested than any other in the creation, multiplication, and abundance of capital goods, it is mainly that of the borrowers. Now, since capital goods can only be formed and increased by the stimulus and the prospect of remuneration, let this class understand the injury they are inflicting on themselves when they deny the lawfulness of interest, when they proclaim that credit should be gratuitous, when they declaim against the pretended tyranny of capital, when they discourage saving, thus forcing capital to become scarce, and consequently interest to rise.

Third. The anecdote I have just related enables you to explain this apparently objectionable phenomenon, which is termed the duration or perpetuity of interest. Since, in lending his plane, James has been able, very lawfully, to make it a condition that it should he returned to him at the end of a year in the same state in which it was when he lent it, is it not evident that he may, at the expiration of the term, lend it again on the same conditions? If he resolves upon the latter plan, the plane will return to him at the end of every year, and that without end. James will then be in a condition to lend without end; that is, he may derive from it a perpetual interest. It will be said that the plane will be worn out. That is true; but it will be worn out by the hand and for the profit of the borrower. The latter has taken this gradual wear into account and taken upon himself, as he ought, the consequences. He has reckoned that he shall derive from this tool an advantage that will allow him to restore it to its original condition after having realized a profit from it. As long as James does not use this capital himself, or for his own advantage—as long as he renounces the advantages that allow it to be restored to its original condition—he will have an incontestable right to have it restored, and that independently of interest.

Observe besides that if, as I believe I have shown, James, far from doing any harm to William, has done him a service in lending him his plane for a year; for the same reason, he will do no harm to a second, a third, a fourth borrower, in the subsequent periods. Hence you may understand that the interest from capital is as natural, as lawful, as useful, in the thousandth year, as in the first. We may go still further. It may happen that James lends more than a single plane. It is possible, that by means of working, of saving, of privations, of discipline, of activity, he may come to be able to lend a multitude of planes and saws; that is to say, to do a multitude of services.

I insist upon this point—that if the first loan has been a social good, it will be the same with all the others; for they are all similar, and based upon the same principle. It may happen, then, that the amount of all the remunerations received by our honest operative, in exchange for services rendered by him, may suffice to maintain him. In this case, there will be a man in the world who has a right to live without working. I do not say that he would be doing right to give himself up to idleness—but I say that he has a right to do so; and if he does so, it will be at nobody’s expense, but quite the contrary. If society at all understands the nature of things, it will acknowledge that this man subsists on services that he receives certainly (as we all do), but that he receives lawfully in exchange for other services, that he himself has rendered, that he continues to render, and that are real services, inasmuch as they are freely and voluntarily accepted.

And here we have a glimpse of one of the finest harmonies in the social world. I allude to leisure: not that leisure that the warlike and tyrannical classes arrange for themselves by the plunder of the workers, but that leisure which is the lawful and innocent fruit of past activity and economy.

In expressing myself thus, I know that I shall shock many received ideas. But see! Is not leisure an essential spring in the social machine? Without it the world would never have had a Newton, a Pascal, a Fênelon; mankind would have been ignorant of all arts, sciences, and of those wonderful inventions prepared originally by investigations of mere curiosity; thought would have been inert—man would have made no progress.⁴ On the other hand, if leisure could only be explained by plunder and oppression—if it were a benefit that could only be enjoyed unjustly, and at the expense of others, there would be no middle path between these two evils; either mankind would be reduced to the necessity of stagnating in a vegetable and stationary life in eternal ignorance from the absence of wheels to its machine—or else it would have to acquire these wheels at the price of inevitable injustice, and would necessarily present the sad spectacle, in one form or other, of the ancient classification of human beings into masters and slaves. I defy anyone to show me, in this case, any other alternative. We should be compelled to contemplate the Divine plan that governs society with the regret of thinking that it presents a deplorable chasm. The stimulus of progress would be forgotten or, which is worse, this stimulus would be no other than injustice itself. But no! God has not left such a chasm in His work of love. We must take care not to disregard His wisdom and power; for those whose imperfect meditations cannot explain the lawfulness of leisure, are very much like the astronomer who said, at a certain point in the heavens there ought to exist a planet that will be at last discovered, for without it the celestial world is not harmony, but discord.

Therefore I say that, if well understood, the history of my humble plane, although very modest, is sufficient to raise us to the contemplation of one of the most consoling but least understood of the social harmonies.

It is not true that we must choose between the denial or the unlawfulness of leisure; thanks to rent and its natural duration, leisure may arise from labor and saving. It is a pleasing prospect, which everyone may have in view; a noble recompense, to which each may aspire. It makes its appearance in the world; it distributes itself proportionately to the exercise of certain virtues; it opens all the avenues to intelligence; it ennobles, it raises the morals; it spiritualizes the soul of humanity, not only without laying any weight on those of our brethren whose lot in life makes severe labor necessary, but it relieves them gradually from the heaviest and most repugnant part of this labor. It is enough that capital should be formed, accumulated, multiplied; should be lent on conditions less and less burdensome; that it should descend, penetrate into every social circle, and that by an admirable progression, after having liberated the lenders from onerous toil, it should bring a similar liberation to the borrowers themselves. For that end, the laws and customs ought all to be favorable to economy, the source of capital. It is enough to say, that the first of all these conditions is not to alarm, to attack, to deny that which is the stimulus of saving and the reason of its existence—interest.

As long as we see nothing passing from hand to hand, in the operations of loan, but provisions, materials, instruments, things indispensable to the productiveness of labor itself, the ideas thus far exhibited will not find many opponents. Who knows, even, that I may not be reproached for having made a great effort to burst what may be said to be an open door. But as soon as money makes its appearance as the subject of the transaction (and it is this which appears almost always), immediately a crowd of objections are raised. Money, it will be said, will not reproduce itself, like your sack of corn; it does not assist labor, like your plane; it does not afford an immediate satisfaction, like your house. It is incapable, by its nature, of producing interest, of multiplying itself, and the remuneration it demands is a positive extortion.

Who cannot see the sophistry of this? Who does not see that money is only an instrumentality that men use to represent other values, or real objects of usefulness, for the sole object of facilitating their exchanges of commodities or services? In the midst of social complications, the man who is in a condition to lend scarcely ever has the exact thing the borrower wants. James, it is true, has a plane; but, perhaps, William wants a saw. They cannot negotiate; the transaction favorable to both cannot take place, and then what happens? It happens that James first exchanges his plane for money; he lends the money to William, and William exchanges the money for a saw. The transaction is no longer a simple one; it is resolved into two transactions, as I explained above in speaking of exchange. But for all that, it has not changed its nature; it still contains all the elements of a direct loan. James has parted with a tool which was useful to him; William has at the same time received an instrument that facilitates his work and increases his profits; there is still a service rendered by the lender, which entitles him to receive an equivalent service from the borrower; and this just balance is not the less established by free mutual bargaining. The obvious natural obligation to restore at the end of the term the entire value of what was borrowed still constitutes the principle of the rightfulness of interest.

At the end of a year, says Mr. Thoré, will you find an additional dollar in a bag of a hundred dollars?

No, certainly if the borrower puts the bag of one hundred dollars on the shelf. In such a case, neither the plane nor the sack of corn would reproduce themselves. But it is not for the sake of leaving the money in the bag, nor the plane on the shelf, that they are borrowed. The plane is borrowed to be used, or the money to procure a plane. And if it is clearly proved that this tool enables the borrower to obtain profits he could not have made without it; if it is proved that the lender has given up the opportunity of creating for himself this excess of profits, we may understand how the stipulation of a part of this excess of profits in favor of the lender is equitable and lawful.

Ignorance of the true part money plays in human transactions is the source of the most fatal errors. From what we may infer from the writings of Mr. Proudhon, that which has led him to think that gratuitous credit was a logical and definite consequence of social progress, is the observation of the phenomenon that interest seems to decrease almost in direct proportion to the progress of civilization. In barbarous times it is, in fact, a hundred percent, and more. Then it descends to eighty, sixty, fifty, forty, twenty, ten, eight, five, four and three percent. In Holland, it has even been as low as two percent. Hence it is concluded that “in proportion as society comes to perfection, the rate of interest will diminish and finally run down to zero, or nothing, by the time civilization is complete. In other words, that which characterizes social perfection is the gratuitousness of credit. When, therefore, we shall have abolished interest, we shall have reached the last step of progress.” This is mere sophistry, and as such false arguing may contribute to render popular the unjust, dangerous, and destructive dogma that credit should be gratuitous, by representing it as coincident with social perfection, with the reader’s permission I will examine in a few words this new view of the question.

7. WHAT REGULATES INTEREST?

What is interest? It is the service rendered, after a free bargain, by the borrower to the lender, in remuneration for the service he has received by or from the loan. By what law is the rate of these remunerative services established? By the general law that regulates the equivalent of all services; that is, by the law of supply and demand.

The more easily a thing is procured, the smaller is the service rendered by yielding it or lending it. The man who gives me a glass of water among the springs of the mountains does not render me so great a service as he who allows me one in the desert of Sahara. If there are many planes, sacks of corn, or houses, in a country, the use of them is obtained, other things being equal, on more favorable conditions than if they were few, for the simple reason that the lender renders in this case a smaller relative service.

It is not surprising, therefore, that the more abundant capital is, the lower is the interest. Is this saying that it will ever reach zero? No; because, I repeat it, the principle of a remuneration is in the loan. To say that interest will be annihilated, is to say that there will never be any motive for saving, for denying ourselves, in order to form new capitals, nor even to preserve the old ones. In this case, the waste would immediately create a void, and interest would soon reappear.

In that, the nature of the services of which we are speaking does not differ from any other. Thanks to industrial progress, a pair of stockings, which used to be worth six shillings, has successively been worth only four, three, and two. No one can say to what point this value will descend; but we can affirm that it will never reach zero, unless the stockings finish by producing themselves spontaneously. Why? Because the principle of remuneration is in labor; because he who works for another renders a service, and ought to receive a service. If no one paid for stockings they would cease to be made; and, with the scarcity, the price would not fail to reappear.

The sophism I am now combating has its root in the infinite divisibility that belongs to value, as it does to matter.

It may appear at first paradoxical, but it is well known to all mathematicians, that, through all eternity, fractions may be taken from a weight without the weight ever being annihilated. It is sufficient that each successive fraction be less than the preceding one, in a determined and regular proportion.

There are countries where people apply themselves to increasing the size of horses, or diminishing in sheep the size of the head. It is impossible to say precisely to what point they will arrive in this. No one can say that he has seen the largest horse or the smallest sheep’s head that will ever appear in the world. But he may safely say that the size of horses will never attain to infinity, nor the heads of sheep be reduced to nothing. In the same way, no one can say to what point the price of stockings nor the interest of capital will come down; but we may safely affirm, when we know the nature of things, that neither the one nor the other will ever arrive at zero, for labor and capital can no more live without recompense than a sheep without a head. The arguments of Mr. Proudhon reduce themselves, then, to this: Since the most skillful agriculturists are those who have reduced the heads of sheep to the smallest size, we shall have arrived at the highest agricultural perfection when sheep have no longer any heads. Therefore, in order to realize the perfection, let us behead them.

I have now done with this wearisome discussion. Why is it that the breath of false doctrine has made it needful to inquire into the innate nature of interest? I must not leave off without remarking upon a beautiful moral which may be drawn from this law: “The reduction in the rate of interest is proportional to the abundance of capital.” This law being granted, if there is a class of men to whom it is more important than to any other that stocks of capital should accumulate, multiply, abound, and super-abound, it is certainly the class that borrows capital directly or indirectly; it is those men who operate upon materials, who gain assistance by tools, who live upon accumulations produced and saved by other men.

Imagine, in a vast and fertile country, a population of a thousand inhabitants, destitute of all capital as thus defined. It will assuredly perish by the pangs of hunger. Let us suppose a case hardly less cruel. Let us suppose that ten of these savages (for persons without capital are savages) are provided with tools and provisions sufficient to work and to live themselves until harvest time, as well as to remunerate the services of ninety laborers. The inevitable result will be the death of nine hundred human beings. It is clear, then, that since 990 men, urged by want, will crowd upon the supports that would only maintain a hundred, the ten capitalists will be masters of the market. They will obtain labor on the hardest conditions, for they will put it up to auction or the highest bidder. And observe this—if these capitalists entertain such pious sentiments as would induce them to impose personal privations on themselves, in order to diminish the sufferings of some of their brethren, this generosity, which attaches to morality, will be as noble in its principle as useful in its effects. But if, duped by that false philosophy that persons wish so inconsiderately to mingle with economic laws, they take to remunerating labor in excess of what it is worth, and in excess of what they are able to pay, far from doing good, they will do harm. They will give double wages, it may be. But then, forty-five men will be better provided for, while forty-five others from the diminution in the supply of capital, will augment the number of those who are sinking into the grave. Upon this supposition, it is not the deprivation of wages that primarily works the mischief, but the scarcity of capital. Low wages are not the cause, but the effect of the evil. I may add that they are to a certain extent the remedy. It acts in this way: it distributes the burden of suffering as much as it can, and saves as many lives as a limited quantity of available sustenance permits.

Suppose now, that instead of ten capitalists, there should be a hundred, two hundred, five hundred—is it not evident that the condition of the whole population, and, above all, that of the mass of the people will be more and more improved? Is it not evident that, apart from every consideration of generosity, they would obtain more work and better pay for it?—that they themselves will be in a better condition to accumulate capital, without being able to fix the limits to this ever-increasing facility of realizing equality and well-being? Would it not be madness in them to accept and act upon the truth of such doctrines as Proudhon and John Ruskin teach, and to act in a way that would reduce the source of wages, and paralyze the activity and stimulus of saving? Let them learn this lesson, then. Accumulations of capital are good for those who possess them: who denies it? But they are also useful to those who have not yet been able to form them; and it is important to those who have them not that others should have them.

Yes, if the laboring classes knew their true interests, they would seek to know with the greatest earnestness what circumstances are, and what are not favorable to saving, in order to encourage the former and to discourage the latter. They would sympathize with every measure that encourages the rapid accumulation of capital. They would be enthusiastic promoters of peace, liberty, order, security; the unity of classes and peoples, economy, moderation in public expenses, simplicity in the machinery of government; for it is under the sway of all these circumstances that saving does its work, brings plenty within the reach of the masses, invites those persons to become the owners of capital who were formerly under the necessity of borrowing under hard terms. They would repel with energy the war-like spirit, which diverts from its true course so large a part of human labor; the monopolizing spirit, that deranges the equitable distribution of riches, in the way by which liberty alone can realize it; the multitude of public services which attack our purses only to check our liberty; and, in short, those subversive, hateful, thoughtless doctrines, that alarm capital, prevent its formation, oblige it to flee, and finally to raise its price, to the especial disadvantage of the workers, who bring it into existence.

Take for example the revolution that overthrew the government of France, and disturbed society in February, 1848, is it not a hard lesson? Is it not evident that the insecurity it has thrown into the world of business on the one hand; and, on the other, the advancement of the fatal theories to which I have alluded, and which, from the clubs, have almost penetrated into the regions of the legislature, have everywhere raised the rate of interest? Is it not evident that from that time the laboring classes of France have found greater difficulty in procuring those materials, tools, and provisions, without which labor is impossible? Is it not that which has caused stagnation of business; and does not paralysis of industry in turn lower wages? Thus there is a deficiency of work to those who need to labor, from the same cause that loads the objects they consume with an increase of price, in consequence of the rise of interest. High interest and low wages signify in other words that the same article preserves its price, but that the remuneration of the capitalist has invaded, without profiting himself, that of the workman.

A friend of mine, commissioned to make inquiry into Parisian industry, has assured me that the manufacturers have revealed to him a very striking fact that proves, better than any reasoning can, how much insecurity and uncertainty injure the formation of capital. It was noted that during the most distressing period of this revolution the popular expenditures for personal gratification did not diminish. The small theatres, the public-houses, and tobacco depots, were as much frequented as in prosperous times. On inquiry, the operatives themselves explained this phenomenon as follows: “What is the use of economizing? Who knows what will happen to us? Who knows that interest will not be abolished? Who knows but that the State will become a universal and gratuitous lender, and that it will annihilate all the fruits that we might expect from our savings?” Well! I say that if such ideas could prevail during two single years, it would be enough to turn our beautiful France into a Turkey—misery would become general and endemic, and, most assuredly, the poor would be the first upon whom it would fall.

Laboring men! They talk to you a great deal of the artificial organization of labor; do you know why they do so? Because they are ignorant of the laws of its natural organization; that is, of the wonderful organization that results from liberty. You are told that liberty gives rise to what is called the radical antagonism of classes; that it creates, and makes to clash, two opposite interests—that of the capitalists and that of the laborers. But we ought to begin by proving that the antagonism exists by a law of nature; and afterwards it would remain to be shown how far the arrangements for intervention are superior to those of liberty, for between liberty and intervention I see no middle path. Again, it would remain to be proved that intervention would always operate to your advantage, and to the prejudice of the rich. But, no; this radical antagonism, this natural opposition of interests, does not exist. It is only an evil dream of perverted and intoxicated imaginations. No; a plan so defective has not proceeded from the Divine Mind. To affirm it, we must begin by denying the existence of God. And see how, by means of social laws, and because men exchange amongst themselves their labors and their products, a harmonious tie attaches the different classes of society one to the other! There are the landowners; what is their interest? That the soil be fertile, and the sun beneficent: and what is the result? That wheat abounds, that it falls in price, and the advantage turns to the profit of those who have had no patrimony. There are the manufacturers—what is their constant thought? To perfect their labor, to increase the power of their machines, to procure for themselves, upon the best terms, the raw material. And to what does all this tend? To the abundance and the low price of produce; that is, all the efforts of the manufacturers, and without their suspecting it, result in a profit to the public consumer, of which each of you is one. It is the same with every profession. Now, the capitalists are not exempt from this law. They are very busy making schemes, economizing, and turning them to their advantage. This is all very well; but the more they succeed, the more do they promote the abundance of capital, and, as a necessary consequence, the reduction of interest. Now, who is it that profits by the reduction of interest? Is it not the borrower first, and finally, the consumers of the things the capital contributes to produce?

It is therefore certain that the final result of the efforts of each class is the common good of all.

You are told that capital tyrannizes over labor. I do not deny that each one endeavors to draw the greatest possible advantage from his situation; but in this sense, he realizes only that which is possible. Now, it is never more possible for capitalists to tyrannize over labor, than when capital is scarce; for then it is they who make the law—it is they who regulate the rate of sale. Never is this tyranny more impossible to them than when capital and capitalists are abundant; for in that case, it is labor which has the command. [Where there is one to sell and two to buy, the seller fixes the price; where there are two to sell and one to buy, the buyer always has the advantage.—Editor.]

Away, then, with the jealousies of classes, ill-will, unfounded hatreds, unjust suspicions. These depraved passions injure those who nourish them in their heart. This is no declamatory morality; it is a chain of causes and effects, which is capable of being rigorously, mathematically demonstrated. It is not the less sublime in that it satisfies the intellect as well as the feelings.

I shall sum up this whole dissertation with these words: Workmen, laborers, destitute and suffering classes, will you improve your condition? You will not succeed by strife, insurrection, hatred, and error. But there are three things that always result in benefit and blessing to every community and to every individual who helps to compose it; and these things are—peace, liberty, and security.

---

⁴Of all the results that are produced among a people by their climate, food, and soil, the accumulation of wealth (capital) is the earliest, and in many respects the most important. For although the progress of knowledge eventually accelerates the increase of wealth, it is nevertheless certain that, in the first formation of society, the wealth must accumulate before the knowledge can begin. As long as every man is engaged in collecting the materials necessary for his own subsistence, there will be neither leisure nor taste for higher pursuits. But if the produce is greater than consumption, a surplus arises by means of which men can use what they did not produce, and are thus enabled to devote themselves to subjects for which at an earlier period the pressure of their daily wants would have left them no time.”—Buckle’s History of Civilization.