Lysander Spooner

Passages from
Financial Imposters:
Or the Great Fraud in Regard to the Value of Money

(1876-1877)

 



Note

A vision of the economy well beyond what capitalist and socialist ideologues have ever imagined. For this reason, probably, we are still in a very primitive stage as far as the social sciences are concerned.

 


 

FINANCIAL IMPOSTERS 1 - SECTION I.

Incomparably the most important economical discovery that was ever made was this, viz.: that property in actual use, and whose actual use as property cannot be dispensed with, can nevertheless be represented by paper, and thus made to furnish a credit and currency that might otherwise not exist. (1)

Theoretically all the vendible material property in the world can be thus represented — and practically nearly all of it can be — without interfering with the ordinary use of it as property.

The employment of all this credit and currency is practicable, without interfering with the ordinary use of the property represented, because, in the common course of things, the currency comes back to the banks in payment of the notes discounted, without any demand being made for the actual delivery of the property itself. And this is all the redemption which a currency KNOWN TO BE SOLVENT, usually needs. If it be only known that property represented CAN be delivered, its actual delivery is seldom called for. Nevertheless, as it will sometimes be called for, the necessity arises at this point, and only at this point, for a more perfect system than has ever been adopted, for represented the property. That is to say, it is desirable that the property represented should be put into such shape as shall make it immediately and certainly available for delivery, on demand, or at the times agreed on, in redemption of the paper, without resort to legal process. Whenever this shall be accomplished, there will be no further obstacle to the representation of nearly all the vendible material wealth of the world, for purposes of credit and currency. (2)

Under such a system, paper, representing property in any one part of a country, can not only be made to furnish credit and currency in its own immediate neighborhood, but can also be used to pay debts, and make purchases, in every other part of that country, even the most distant; and that, too, without serious expense, or loss of time; when the property itself could either not be moved at all, or moved only at such cost, and loss of time, as would make traffic impossible.

So long as this currency remains in circulation, it is equivalent to an actual increase of property to that amount. In fact, it is something vastly more important than an actual increase of property to that amount. In fact, it is something vastly more important than an actual increase of material wealth would be of little or no benefit, so long as it could not be divided into small parcels, and loaned, bought, sold, and transported, and thus distributed to those who want it for their uses. Without such facility for division, for loans, for buying and selling, and for transportation, it would be impossible to have any such credit, or currency, any such division of labor, or exchange of commodities, as are indispensable to any considerable progress in wealth. But paper, representing property, supplies all these defects in the property itself; for the paper is divisible — as the property otherwise could not be — into such precise amounts, large and small, as traffic requires. It is also manipulated, counted, transferred, and transported, with an ease, rapidity, and freedom from expense, that are impossible in regard to the property itself.

In the nature of things there can be no considerable increase of wealth except through the division of labor, and the employment of machinery. And there can be no considerable division of labor, or employment of machinery, unless the raw materials can be taken from the producers, and distributed to the manufacturers; nor unless the manufactured products can be taken from the manufacturers, and distributed to the consumers. But all this is impossible, except through the agency of money; for every person, through whose hands the raw material or the manufactured product passes, must be paid for such material or product, or for his or her labor upon it. Hence the necessity for great amounts of money. But evidently this money can be created only by paper representing property, that is in use as property. And by most persons this money can be obtained only by borrowing. It is, therefore, only by the loaning of the paper, representing property in use — and that, too, in vast amounts — that the whole people can be supplied with all the materials and machinery necessary to make their industry most effective, and all the facilities for distributing and exchanging the products of this industry, with the least expense of time and labor.

The experience of the whole world, from time immemorial, demonstrates the truth of these propositions. That experience has proved that without any representation of property by paper, there can be, almost literally, no money, no credit, no diversity of industry, no employment of machinery, no exchange of commodities, no production, and no wealth. But with such a representation, it is evident, both from reason and experiment, that sufficient credit and currency — credit in the form of currency — can be supplied, to set in motion, and forever keep in motion, the greatest and most diversified industrial agencies that man has ever devised, securing all the while a cheap, easy, rapid, and equitable exchange of all the commodities produced.

Thus the whole system of production and exchange, substantially the whole progress of the world in wealth, rests upon the credit and currency that can be furnished only, by the representation of property by paper.

All this has been evident for the last fifty years at the least; not to say for the last hundred and fifty.

If, now, it be asked why this great discovery — capable of giving wealth to all mankind — has not been heretofore more fully utilized? And why the many examples of its successful employment, under such imperfect systems of representing the property as have been tried, have not taught mankind the wisdom of still greater freedom, and still greater perfection of system? The answer is, that substantially all governments are mere conspiracies of tyrants and robbers, who prefer to secure to themselves, by force, or fraud, or both, the fruits of other men's labor, rather than content themselves with their own just share of a universal prosperity. As in all past ages, and in most countries, a few men — rather than become honest laborers themselves, and be content with their own earnings — have chosen to combine, and by military power seize all lands and other wealth, and reduce all other men to slavery or dependence; so to-day, those who control governments, seeing the vast power of credit, currency, and machinery, in the production of wealth, desire to monopolize them, and make all other men their servants and victims. Hence their opposition to all credit and currency, except such as they themselves can employ and control. And as force alone might not be sufficient to enable them to accomplish this purpose, they have resorted also to fraud.

Notes

(1) By the representation of property by paper is here meant simply this: That a man having, say, a hundred thousand dollars of property, that can be made available for the payment of his notes, or other obligations, can issue his notes, or other obligations, for that amount, to circulate as currency; his property being holden, and liable to be taken, for the redemption of his paper.

(2) To what precise extent personal property can be thus represented, satisfactorily to all concerned, is perhaps not as yet entirely settled; although that it can be advantageously represented to a very large extent, is proved by the bank notes, the checks, drafts, and bills of exchange, which usually represent personal property alone, and yet perform so large a part in the industrial and commercial transactions of the most wealthy, productive, and commercial peoples in the world. But that real estate everywhere can be thus represented, to nearly the amount of its true and natural market value, is shown in the Outline of a New Banking System, hereafter to be given. And it is probable that, by the aid of this latter system, the representation of personal property (if it should be needed) could be carried to a still greater extent than it ever has been.

 


 

FINANCIAL IMPOSTERS 1 - SECTION III.

The true and natural market value of all money is that value, and only that value, which it will bear in free and open market, in competition with all other money, and all other property. We have no means of ascertaining the true and natural market value of any money whatever — any more than of any other property — otherwise than by putting it into the market in competition with all other money, and all other property, that may there be offered, and then seeing how much of other money, or other property, people will voluntarily give in exchange for it.

Money, in its true, natural, practical, commercial, and universal sense — as distinguished from its narrow, legal and technical sense — is simply property cut up into such pieces or parcels as are convenient and acceptable to be given and received in exchange for other property. And anybody who has property of any kind whatever that can be cut up into such pieces or parcels as will be convenient and acceptable to be given and received in exchange for other property has an unquestioned natural right to cut it up into such pieces or parcels, and then to offer them freely in the market, in competition with all other money, and all other property. And if any of these pieces or parcels shall be too heavy or too bulky to be carried about in the pocket, he has the same right to offer and sell them, by means of contracts on paper, promising to deliver them on demand, or at times agreed on, as he has to offer and sell them, by delivering them at once in exchange for other property.

To be, if possible, still more explicit, the true and natural market value of every material of which real money can be made, is that market value, and only that market value, which it has for use or consumption as a material. At that value it will be freely bought and sold from hand to hand as money, if it can but be put into such shape as will make it convenient and acceptable for that purpose. That is, if it can be put into such shape that it can either be itself carried about in the pocket, and delivered at once in exchange for the property purchased with it; or if it can be represented by paper, and be delivered on demand, or at a time agreed on, in redemption of the paper. This latter mode of making property into money is, intrinsically and naturally, as legitimate and lawful as the former; and any one kind of material wealth has the same right as any other kind to be thus represented, and to be thus bought and sold as money. And any attempt to limit the amount of property that shall be thus represented, and bought and sold as money, is only an attempt to give to the holders of the licensed money a power of extortion and robbery, as against the holders of all other property. This power of extortion will of course be greater or less — by making the amount of licensed money less or greater — the principle and the motive are forever the same, viz.: to enable the holder of the licensed money to get more of other men's property in exchange for it, than the money is really and truly worth. If, for example, AB had ten bushels of wheat, and he were to ask government to license it as money, and to prohibit all other money, obviously his only motive for so doing would be that he might extort, from other men's necessities for money, an hundred, a thousand, or a million times more, for his ten bushels of wheat, than they were truly and naturally worth. And this is the motive which all men have who ask for restrictions upon money.

 


 

FINANCIAL IMPOSTERS 3 - SECTION I.

The true theory of money — as has already been explained, but which seems necessary to be repeated here — is that money, practically speaking, is simply property cut up, or divided, into pieces or parcels that are convenient and acceptable to be given and received in exchange for other property; that any vendible property whatever, that can be, may rightfully be, cut up or divided into such pieces or parcels — or what is the same thing, may rightfully be made into money — and be freely offered for sale in the market, in competition with all other money, and in exchange for all other property; that any material for which money can be made, has the same true and natural market value, as money, that it has for use or consumption, as a material, no more, no less; that its being called money, or being made into money, adds nothing to the value of any material of which money can be made; that all equitable traffic, by which money is given in exchange for other commodities, is therefore really nothing but the exchange of two different commodities for each other, at their true and natural market values for use or consumption as commodities; that the free and open market, where all money and all other commodities are freely offered, bought, and sold, in competition with, and in exchange for, each other, is the only test of the true and natural market value of any and all commodities; that the only really important things about any piece of money are, first, that it should have the same amount of true and natural market value with the property for which it is to be exchanged, and, secondly, that it should be such that the parties to bargains may know its market value, relatively to other property; that there is no more necessity that it should have a government stamp on it, than there is that the commodities to be bought with it should have government stamps on them; that there is no more need that it should be inspected and certified by a government, or a government officer, than there is that the commodities purchased with it should be thus inspected, and certified; that when a man knows the quantity and quality of the material of which a piece of money is composed, he is as competent to judge of its value as he is to judge of the value of the commodities that are to be exchanged for it; that any attempt, on the part of a government, to restrain men from buying and selling such money as they prefer, and thus to coerce them into buying and selling such money as they do not prefer, is as gross a tyranny, and as gross a violation of men's natural rights, as it would be to restrain them from buying and selling such other commodities as they prefer, and thus coerce them into buying and selling such commodities as they do not prefer.

...

The false theory is that money should not be a true or natural equivalent of the property that is to be bought with it; that, on the contrary, it is the right and duty of government to specially license a few pieces of money, having little or no true or real market value, and to prohibit all other money; thus enabling the holders of this licensed, privileged, and comparatively worthless money, to extort, in exchange for it, from all other persons, their property and labor for less than they are worth. To state the case a little differently: the true theory of money is simply this, that all commerce should be the exchange of any and all such real and bona fide equivalents as the parties to bargains may voluntarily agree to exchange. The false theory is, that commerce should not be an exchange of equivalents; but that some particular kind and amount of property, of little or no real value, should be called money, and be specially licensed to be exchanged for all other property; and that all other money should be prohibited, for the sole purpose of enabling the holders of this privileged money to get all other men's property, without giving an equivalent.

The practical operations of these two opposite theories cannot be properly contrasted otherwise than by supposing each to be carried out to its legitimate and logical results.

Let us look first at the practical operation of the true theory. For greater convenience of calculation — although the sum is probably much below the truth — we will suppose that, with all the property of the United States represented by paper, that property would be valued at only forty thousand millions of dollars ($40,000,000,000). This would give forty thousand million dollars of money. It would also give forty thousand million dollars of loanable capital. That is to say, all this property could be represented by paper, and the paper loaned for circulation as money. This would be equal to a thousand dollars of loanable capital for each and every man, woman, and child in the country. It would give two thousand dollars for every male and female person of sixteen years of age and upwards. It would give twenty-five hundred dollars ($2,500) for every male and female person of twenty-one years of age and upwards. It would give five thousand dollars ($5,000) for every male person of twenty-one years of age and upwards.

These numbers may not be exact, but they are sufficiently so for the purpose of illustrating this theory.

Supposing, now, that such an amount of credit and currency could be employed, what would be the effect upon the diversity of industry, the employment of machinery, the exchange of commodities, the aggregate production, and the equitable distribution, of wealth? Certainly it would far surpass everything that has ever been witnessed on earth.

Machinery being the great power in the production of wealth, and money being the great instrumentality for creating and moving machinery, nothing but experiment can give us any rational idea of the variety and amount of wealth mankind would be able to produce, if they were only aided by the money and machinery which the property of the world, under this theory, is capable of supplying.

And how would it be as to the distribution of the wealth thus produced?

No person having the ordinary capacities of mind and body for producing wealth, and known to have such integrity, industry, and economy as to entitle him to credit, would ever need either to stand idle, or to sell his labor to another, for the want of capital to make him the master of his own industry, and thus enable him to secure to himself the whole of its proceeds, except what he should pay as interest. From the competition among money lenders, he would be able to get his capital certainly at a moderate, and likely at a low, rate of interest. From the abundance of currency, he would always be able to sell the products of his labor for cash, and at their full value.

And as it would be with men, in these respects, so also would it be with women. They would be dependent upon men for employment and subsistence, no further than they should choose to be.

How long could there be any poverty in the world, after such a system should have gone into full operation? How long could any one man oppress another, by extorting from him either his labor, or the products of his labor, at less than their true and natural value? Plainly, such oppressions, extortions, and robberies, of which the world is now full, would soon become obsolete, never to be known again among men.

Under this system, therefore, the diversity of industry, the amount of machinery, the variety and amount of production, and the equitable distribution of wealth, would all be such as only a small portion of mankind have ever expected to see.

 


 

FINANCIAL IMPOSTERS 3 - SECTION VII.

[M]oney and military power have always gone together. Caesar said that money and soldiers mutually supported each other; that with money he could hire soldiers, and with soldiers extort money. And he and others like him could hire money, in immense sums, in Rome, for their plundering expeditions; when money could not be hired at all, unless by a very few persons, for honest and useful purposes. And thus the Roman Empire was established and maintained. And in the same way all the other great governments of the world have been established and maintained. The chief actors, the ruling classes, have always been mere bands of robbers. When they had become fully organized, and sufficiently powerful, and made sufficient conquests, they have called themselves governments, and then proceeded forever after, in a systematic way, to consolidate and fortify their power, and plunder and enslave everybody, at home and abroad, whom they could subdue. Thus mankind at large have forever been in the hands of such robbers as these.

Take, for example, the case of England. For a thousand years and more, the government of England has been a mere band of robbers; and is so to-day. Both the Anglo-Saxons and Normans came into England simply as robbers. They seized the country, or the greater part of it, by military power; reducing the natives, or the larger portion of them, some of them to absolute slavery, others to a state of poverty and dependence that was but one step removed from absolute slavery. Land being, in that barbarous age, the main source — almost the only source — of wealth, it was parcelled out among the robbers; giving to the military leaders — that is to the king, the dukes, earls, marquises, etc. — the larger share. By combining together, these military leaders, and their families, made themselves, in time, the rulers of the country; even to the exclusion of those — and the descendants of those — the common soldiers, who had followed them into the country as robbers. That is, the great robbers — the king and nobility — so called — acting in concert, finally succeeded in robbing even those by whose help their own robberies had originally been accomplished.

This original band of great robbers — king and nobility — has been kept strong by the admission of such new members as they have found it for their interests to admit to membership. Constituting themselves the government, they have enacted such laws — such as primogeniture and entail — as secured their lands to their oldest sons, in perpetual succession; and have made these oldest sons the inheritors also of their political power.

In this way, for hundreds of years, a few robbers held control of the greater part of the property, and all the political power, of the nation; making the mass of the people their dependents, serfs, and slaves.

But in process of time — that is, in the seventeenth century — wealth having accumulated somewhat in other hands than those of the nobility, to wit, in the hands of some of the farmers, and some of the residents in the cities — these latter classes, greater in numbers than the nobility, although individually inferior to them in wealth, combined to achieve for themselves, and, after a struggle of seventy or eighty years, succeeded in achieving for themselves an undisputed right to participate with the king and nobility in the government of the nation. This achievement was called a revolution — a revolution in favor of liberty. And it is so called to this day. Nevertheless, from that day to this the government has been as much a band of robbers as it was before. The only difference has been that the number of robbers who compose the government has been increased. But they are still few, as compared with the whole people. And the government is still as much a mere band of robbers as it was three or five hundred years ago.

The object of the robbers — that is, of the government — three and five hundred years ago, was the monopoly of the land; that being, at that time, the chief wealth of the nation. That object was, in great part, accomplished long ago; although the process of concentrating the land in fewer and fewer hands, still goes on. But new sources of wealth — that is, in manufactures — having sprung up within the last two hundred years, the present object of the robbers — that is, of the government — is to monopolize all the wealth that is to be derived from these manufactures. In the pursuit of this object, the monopolists of the land, although a distinct body from the monopolists of manufactures, act in concert with them. This they do because neither party is strong enough, without the help or the other, to keep the rest of the nation in subjection, and in a condition to be plundered. But acting in concert, and mutually supporting each other, both classes are enabled to accomplish their purposes. The monopolists of land are enabled to plunder and enslave the farm laborers; while the monopolists of manufactures are enabled to plunder and enslave the manufacturing laborers. And all the home legislation of the government is now directed to these two ends.

Money being the great instrumentality in manufacturing, the policy of these robbers has been to prohibit all money except such as they themselves needed and could monopolize. By prohibitions, or limitations, upon banking, they have made it impossible for the mass of the people to obtain capital with which to carry on any kind of business for themselves; and have thus reduced them to the alternative of starvation, or of selling their labor to these monopolists of money at just such prices as the interests of these latter dictated. And these interests have dictated that the laborers should have no such prices for their labor as would enable them to make any accumulations, but only such as would enable t hem to live from day to day in the capacity of laborers. They have considered the laborers simply as parts of their manufacturing machinery; and, like their other machinery, to be kept simply in running order. The rights or interests of their laborers, as human beings, are not taken at all into account. In this way the enormous wealth, created by the machinery of England, is all kept in the hands of a few; and these few, acting in concert with the monopolists of land, constitute the government of England at this time, and have no purpose in view but to perpetuate their power in their own families, and to plunder, to the verge of starvation, everybody at home and abroad whom they think it will be safe and profitable to plunder.

And the present monopoly of money in the United States has the same objects in view as the similar monopoly in England.

 


 

FINANCIAL IMPOSTERS 3 - SECTION XVII.

It will now be taken for granted that the last three preceding sections have sufficiently established these several propositions, viz.:-

(1) That the wealth of individuals and nations depends upon the number of different things they possess, rather than upon the quantity of any one thing; and that there is no limit to the number of different things we can possess, except the as yet unknown limit to men's power of inventing new commodities, and their as yet equally unknown power of producing them, when aided by adequate science, capital, and machinery.

(2) That if the industry of a people be but directed to the production of a sufficient variety of commodities, we need have no fear that there will not be a sufficient quantity of each; since the prices which the different commodities, new and old, will bear in the market, compared with the labor it costs to produce them, will insure the production of all commodities in such proportions, relatively to each other, as are most desired; and will also, if credit and currency be unrestricted, insure the employment of all the capital that is needed, and also the employment of the highest science and skill, and the best machinery, in the production of each commodity; and thus insure the greatest possible amount of each that is consistent with the greatest variety.

(3) That the enormous power of science and machinery, as compared with that of ignorant manual labor, in the production of wealth, teaches us that mere manual labor is life and time wasted; that every man, woman, and child whose labor is to be employed at all in the production of wealth, should be aided by all the science, skill, machinery, and capital, that are necessary to make their industry most effective.

(4) That to equip every human being with all the science, skill, machinery, and capital, that are necessary to make their industry most effective, great amounts of both credit and money are necessary; amounts that can be determined only by those who have credit and money to lend, and those who wish to borrow; and who have the natural right to decide for themselves, in each separate case, whether their capital and labor are likely to be successfully directed,

(5) That all persons, who are engaged in the production of any one commodity, have a direct personal interest that all other persons shall have all the machinery and capital that can be necessary to enable them to produce as great a variety and amount of other commodities as possible; inasmuch as the former class thereby secure the greatest market for their own productions, and also the greatest variety and amount of commodities in exchange for them; whereas all restrictions upon credit and currency have the inevitable effect of restricting industry to the production of a correspondingly few commodities; and, consequently, of producing sharp competitions in the production of those commodities, and low prices for them when produced. Hence a man, who advocates restrictions on credit and currency, in order to prevent competition in his own business, is really advocating the destruction or depreciation of his own markets: the markets on which he depends for the sale of his own productions. As often as he succeeds in killing off one competitor, he will be likely to succeed in killing off a hundred or a thousand customers. The game is an utterly suicidal one. Fools and knaves play at it a great deal; but it is generally the death of them; as has been abundantly demonstrated in the last four years. Men who have advocated contractions or limitations of the currency, in order to bring the monopoly of money and business into as few hands as possible (into their own among the number), have thereby destroyed the industry of their own customers and consumers, and thus annihilated their power to purchase. In this way the contractionists have destroyed their own markets. They seem to have forgotten that every man's power to purchase depends upon his power to produce something himself with which to pay; and that the more money a man has with which to produce his own particular commodity, the more he will be able to buy of the commodities produced by others.

(6) That the greatest possible diversity of production tends directly to the greatest possible equality of wealth; since the production of each separate commodity gives a separate support to a separate class of producers; and since, also, where perfect freedom of industry prevails — with ample capital everywhere — the different industries will all find their proper levels, in point of profit, relatively to each other.

From the six propositions now stated, we may infer a seventh, viz.:

(7) That the amount of money capital needed to make every man's industry most effective; to bring into existence the greatest possible variety and amount of commodities, is probably greater than can be furnished by any system of banking by the issue of promissory notes, made payable on demand; and that, consequently, a new system may be found necessary; one that can furnish larger loans, and loans for a longer time, than can be furnished by banks issuing ordinary promissory notes, payable on demand. If such a system should be found necessary, it can be found.

 


 

FINANCIAL IMPOSTERS 3 - SECTION XX.

From all that has now been said-and especially from all that has been said in the last five preceding sections — the following inferences may be drawn, viz.:-

(1) That mankind are capable of creating almost boundless wealth, if they only have the means to work with, to wit, the money and machinery that are necessary to enable them to engage in the production of all new and desirable commodities, as fast as they shall be invented.

(2) That the greater the variety and amount of commodities produced, the nearer will be the approach to a general equality of wealth.

(3) That the rise in prices, resulting from the greatest variety and amount of production, makes necessary such an amount of money as mankind have heretofore had no real conception of; an amount, in comparison with which the sums now in use, either in our own, or in any other country, are the merest fractions, hardly worthy to be mentioned.

(4) That this necessary amount of money can be supplied only by paper, that shall represent property that is in actual use as property, and that can be legally held and made available for the redemption of the paper.

(5) That inasmuch as the great body of mankind are now without property that can be used as banking capital, they are under the necessity to borrow the money that is necessary to enable them to control their own labor, and engage in the greatest variety of industries.

(6) That inasmuch as the greater the variety of production, the greater will be the profits of each individual producer, and the higher will be the rate of interest he can afford to pay for his hired capital; and the greater, consequently, will be the inducement which the holders of property will have to use their property as banking capital, and lend their money to the producers of wealth.

(7) That where the greatest variety and amount of production prevail, the amount of wealth created by each individual producer will be so great that all producers can afford to pay very high rates of interest for their necessary capital, if it cannot otherwise be obtained. And when they shall have obtained it, they cannot afford to be otherwise than faithful and industrious in the use of it, and honest in repaying it. They could not afford to be either indolent, negligent, or dishonest, because they would there by lose their credit; the credit on which alone they relied for their capital, and on which their whole power to do business for themselves would depend. This credit would be to them an estate; an estate so valuable that they could no more afford to lose it than men can afford to lose any other estates. For these reasons all persons having the ordinary capacities of mind and body, and skilled in any particular industry, and having known characters for integrity, would be able to borrow the capital necessary to enable them to control their own industry, and put the whole of its proceeds into their own pockets, except what they should pay as interest.

The credits that should thus be given, in small sums, to a large number of actual producers of wealth, would be far safer and better for the lenders of money than those that are now given, in large amounts, to a small number of employers. For example, it would be far safer and better for the bankers to lend a hundred thousand dollars, in sums of a thousand dollars each, to a hundred different men, actual producers of wealth, than to lend the whole hundred thousand to a single employer. Each of the hundred laborers could afford to pay a much higher rate of interest for a thousand dollars, than the one employer could afford to pay for the whole hundred thousand. Each of the hundred laborers would also be much more likely to repay his one thousand dollars, than the one employer would to repay his hundred thousand. So that, in point both of profit and safety, it would be far better for the bankers to lend money, in small amounts, to a large number of laborers, than in large amounts to a small number of employers.

That the hundred loans, of one thousand dollars each, to the hundred laborers, would be much safer than the one loan, of a hundred thousand dollars, to the one employer, will more fully appear from the following considerations:

The hundred laborers would be free of all debts except the single one which each would incur for his hired capital. They would then buy everything for cash, and sell everything for cash. This would make all business safe. The single laborer, with only a thousand dollars capital in hand, and depending upon his own labor alone for success, would be dazzled by no such visions of sudden wealth, and would have no such temptation to run risks, or indulge in extravagant living, as has the one borrower of a hundred thousand, who depends upon the labor of others for his income. The laborer would also work under the constant stimulus of knowing that a single year's success would give him such a return, over the cost of living, as would enable him afterwards to borrow his capital at a low rate of interest, even if he had been compelled to pay a high rate for it at first. He would also work under the constant stimulus of knowing that the whole proceeds of his labor, except what he should pay as interest, would go into his own pocket, and not into another's, and that in a very few years he would be independent.

If it should be said that manufacturing industry can be carried on more economically in large establishments, under the guidance of a single mind, than in numerous small establishments, each under a different control from all the others, the answer is, first, that an indefinite number of small but useful commodities are being constantly invented, which large establishments will not attempt to manufacture — at least until a large demand for them shall have been created — but which can be manufactured advantageously by single individuals, single families, or small partnerships; secondly, that where large establishments are really necessary (if there are such cases) an abundance of loanable capital facilitates the formation of such associations of actual laborers as are needed for the work; thirdly, that there will always be a vast number of small industries, which it would be folly to attempt to carry on by large establishments, and which must forever remain in the hands of single individuals, single families, or small partnerships; and fourth, if we admit that there will always be large establishments, in which the labor will be done by wage laborers, these laborers will be able to obtain much higher wages in consequence of the great diversity of industry, the great demand for their labor, the ease with which they can hire capital for industries of their own, and from their consequent freedom from any necessity to sell their labor to others.

(8) Still another inference to be drawn from all that has now been said, is that the holders of all property that is suitable for banking capital, and especially all holders of real estate, have a great inducement to use it as banking capital, and to lend their money to the actual producers of wealth. Take farmers, for example. By using their farms as banking capital, and lending money to mechanics, they not only get an income as money lenders, but they create, at their own doors, the best possible markets for their agricultural products; and also get in return the greatest possible variety and amount of manufactured commodities.

 


 

FINANCIAL IMPOSTERS 3 - SECTION XXI.

The system, therefore, of no credit, and no money, or even the system of little credit, and little money, necessarily condemns the great mass of mankind to perpetual poverty. Producing nothing directly for themselves, they will never have anything to sell except their labor, and that they will be compelled to sell for the smallest pittance that will sustain life. But with abundant credit, and abundant money, these otherwise helpless, destitute people will be enabled to engage in the production of an immense variety of commodities; and, with the aid of science and machinery, will produce immense quantities of each. They will increase the aggregate wealth of the world to a hundred, a thousand, ten thousand, perhaps even a hundred thousand times what it would otherwise be; and this wealth will be distributed among the producers, with some near approach to equity and equality.

 


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