This is part of a series
After Nestor: The Knights of Paper Promises
Tucker goes back on “picket duty,” tackling a slew of money- and trade-related topics and battling foes from the Knights of Labor to Henry George.
Instead of a Book, By a Man Too Busy to Write One
Part Three: Money and Interest
A Great Idea Perverted.
(published in Liberty on June 19, 1886)
The Knights of Labor Convention at Cleveland voted to petition Congress for the passage of an act which embodies in a very crude way the all-important principle that all property having due stability of value should be available as a basis of currency. The act provides for the establishment of loan offices in every county in the United States, which, under the administration of cashiers and tellers appointed by the Secretary of the Treasury, shall issue legal tender money, redeemable on demand in gold coin or its equivalent in lawful money of the United States, lending it at three per cent. a year to all who offer satisfactory security.
The Knights have got hold of a great idea here,—one which has in it more potency for the emancipation of labor than any other; but see now how they vitiate it and render it impracticable and worthless by their political and arbitrary methods of attempting its realization!
One section of the act, by forbidding all individuals or associations to issue money, makes a government monopoly of the banking business,—an outrageous denial of liberty!
Another section, instead of leaving the rate of discount to be governed by cost to which, were it not for the monopoly, competition would reduce it, arbitrarily fixes it at three per cent., thus recognizing labor’s worst foe, usury. As three per cent. represents the average annual increase in wealth,—that is, the difference between the annual production and the annual consumption,—this section means that what ought to be labor’s annual savings, and would be if usury did not abstract them from labor’s pockets, shall be turned into the government treasury to be squandered as Congress and corrupt officials may see fit.
Another section establishes a uniform usury law for the entire country, providing that any person who shall lend money at any other rate than three per cent. shall forfeit to the borrower both principal and interest. Legislators have heretofore been satisfied to limit the rate of interest in one direction; but this limits it in both, subjecting the lender at two per cent to the same forfeit that the lender at four must suffer.
This piece of tyranny, however, as well as numerous others in the act, are thrown entirely into the shade by a section providing that any person convicted of offering for sale gold and silver coin of the United States “shall forfeit as a fine his entire estate, goods, money, and property, or may be imprisoned at hard labor for fifty years, or suffer both fine and imprisonment, and in addition forever forfeit the right of citizenship in the United States.” What an opportunity for Recorder Smythe, should this offence ever come within his jurisdiction! His insane lust for cruelty, which lamented its inability to hang John Most for making an incendiary speech, might find greater gratification under this statute. Imagine him addressing the prisoner at the bar:
“John Jones, a jury of your peers has found you guilty of a most heinous crime. You have presumed to offer in the market-place and subject to sacrilege of barter our sacred cart-wheel, the emblem of civilization, the silver dollar of the United States. It is evident that you are a member of the dangerous classes. You are probably the greatest scoundrel that ever disgraced the face of the earth. It is a great pity that our too merciful law will not permit me to burn you at the stake. But as it will not, I must be contented, in the interest of law, order, and society, to go to the extreme verge of the latitude allowed me. Therefore, I impose upon you a fine equal to your entire estate, I sentence you to imprisonment at hard labor for fifty years, and I strip you forever of the right to vote me out of office.”
A beautiful organization, these Knights of Labor, for an Anarchist to belong to!
On Picket Duty.
The outcry against middlemen is senseless. As E. H. Heywood puts it, “Middlemen are as important as end men.” And they are as truly producers. Distribution is a part of production. Nothing is wholly produced until it is ready for use, and nothing is ready for use until it has reached the place where it is to be used. Whoever brings it to that place is a producer, and as such entitled to charge for his work. The trouble with middlemen is that they charge consumers not only for their work, but for the use of their invested capital. As it is, they are useful members of society. Eliminate usury from their methods, and they will become respectable members also.—Liberty, October 1, 1881.
Those who would have the usurer rewarded for rendering a service always find it convenient to forget that the usurer’s victims would not need his service were it not that the laws made at his bidding prevent them from serving themselves.—Liberty, October 15, 1881.
Of the absolute correctness of the principle, and advisability of the policy, of free trade there can be no reasonable doubt; but it must be thorough-going free trade,—no such half-way arrangement as that which the so-called “free traders” would have us adopt. David A. Wells, Professor Perry, and all the economists of the Manchester school are fond of clamoring for “free trade”; but an examination of their position always shows them the most ardent advocates of monopoly in the manufacture of money,—the bitterest opponents of free trade in credit. They agree and insist that it is nothing less than tyranny for government to clip a large slice out of the foreign product which any one chooses to import, but are unable to detect any violation of freedom in the exclusive license given by the government to a conspiracy of note-shaving corporations called national banks, which are enabled by this monopoly to clip anywhere from three to fifteen per cent. out of the credit which the people are compelled to buy of them. Such “free trade” as this is the most palpable sham to any one who really looks into it. It makes gold a privileged product, the king of commodities. And as long as this royalty of gold exists, the protectionists who make so much of the theory of the “balance of trade” will occupy an invulnerable position. While gold is king, the nation which absorbs it—that is, the nation whose exports largely exceed its imports—will surely govern the world. But dethrone this worst of despots, and that country will be the most powerful which succeeds to the largest extent in getting rid of its gold in exchange for products more useful. In other words, the republicanization of specie must precede the freedom of trade.—Liberty, March 18, 1892.
Some nincompoop, writing to the Detroit Spectator in opposition to cheap money, says: “If low interest insured high wages, during times of business depression wages would be high, for then interest reaches its minimum.” Another man unable to see below the surface of things and distinguish association from causation! The friends of cheap money do not claim that low interest insures high wages. What they claim is that free competition in currency-issuing and the consequent activity of capital insure both low interest and high wages. They do not deny that low interest sometimes results from other causes and unaccompanied by any increase in wages. When the money monopolists through their privilege have bled the producers nearly all they can, hard times set in, business becomes very insecure, no one dares to venture in new directions or proceed much further in old directions, there is no demand for capital, and therefore interest falls; but, there being a decrease in the volume of business, wages fall also. Suppose, now, that great leveller, bankruptcy, steps in to wipe out all existing claims, and economic life begins over again under a system of free banking. What happens then? All capital is at once made available by the abundance of the currency, and the supply is so great that interest is kept very low; but confidence being restored and the way being clear for all sorts of new enterprises, there is also a great demand for capital, and the consequent increase in the volume of business causes wages to rise to a very high point. When people are afraid to borrow, interest is low and wages are low; when people are anxious to borrow, but can find only a very little available capital in the market, interest is high and wages are low; when people are both anxious to borrow and can readily do so, interest is low and wages are high, the only exception being that, when from some special cause labor is extraordinarily productive (as was the case in the early days of California), interest temporarily is high also.—Liberty, November 22, 1884.
“To produce wealth in the shape of coal,” says Henry George, “nothing is needed but a bed of coal and a man.” Yes, one thing else is needed,—a pick-axe. This neglect of the pick-axe and of the means of obtaining it is a vital flaw in Mr. George’s economy. It leads him to say that “what hinders the production of wealth is not the lack of money to pay wages with, but the inability of men who are willing to work to obtain access to natural opportunities.” That this lack of access, in the proportion that it exists, is a hinderance to production is indisputable, but in this country it is but a molehill in labor’s path compared with the mountain that confronts labor in consequence of the lack of money. In fact, the lack of access is largely due to the lack of money.—Liberty, July 30, 1887.
In disposing with his usual cleverness of the economists’ apologists for interest G. Bernard Shaw takes a position upon the money question not at all in harmony with the State Socialism toward which he usually inclines. He would be taken, in fact, for a first-class Anarchist. Speaking of the tax which the banker who has a monopoly levies upon all commerce, he says: “Only by the freedom of other financiers to adopt his system and tempt his customers by offering to share the advantage with them, can that advantage eventually be distributed throughout the community.” Only, observe. No other method will do it. Government monopoly will not do it. Nothing but laissez-faire, free competition, free money, in short, as far as it goes, pure Anarchism, can abolish interest on money. When Mr. Shaw shall apply this principle in all directions, he and Liberty will stand on the same platform.—Liberty, September 24, 1887.
It is a common saying of George, McGlynn, Redpath, and their allies that they, as distinguished from the State Socialists, want less government instead of more, and that it is no part of the function of government to interfere with production and distribution except to the extent of assuming control of the bounties of nature and of such industries as are naturally and necessarily monopolies,—that is, such as are, in the nature of things, beyond the reach of competition’s influence. In the latter category they place the conduct of railroads and telegraphs and the issue of money. Now, inasmuch as it takes an enormous capital to build a railroad, and as strips of land three thousand miles long by thirty feet wide are not to be picked up every day, I can see some shadow of justification for the claim that railroads are necessarily exempt to a marked extent from competition, although I do not think on that account that it will be necessary to hand them over to the government in order to secure their benefits for the people. Still, if I were to accept Mr. George’s premise that industries which are necessarily monopolies should be managed by the State, I might possibly conclude that railroads and some other enterprises belong under that head. But how his premise is related to the issue of money I do not understand at all. That the issue of money is at present a monopoly I admit and insist, but it such only because the State has laid violent hands upon it, either to hold for itself or to farm out as a privilege. If left free, there is nothing in its nature that necessarily exempts it from competition. It takes little or no capital to start a bank of issue whose operations may become worldwide, and, if a thousand banks should prove necessary to the prevention of exorbitant rates, it is as feasible to have them as to have one. Why, then, is the issue necessarily a monopoly, and as such to be entrusted exclusively to the State? I have asked Mr. George a great many question in the last half-dozen years, not one of which he has ever condescended to answer. Therefore I scarcely dare hope that he will vouchsafe the important information which I now beg of him.—Liberty, October 8, 1887.
The different uses of the word free lead to many misunderstandings. For instance, a writer in the Denver Arbitrator gives the preference to free trade and free land over free money and free transportation on the ground that the former are “natural rights” while the latter are “privileges that can be conferred only by society.” Here free money is evidently taken to mean the supply of money to the people free of cost by some external power. But it no more means that than free rum means the supply of rum free of cost. It means freedom to manufacture money and offer it in the market, and is a part of free trade itself. One may look upon free money and free trade as privileges, or as rights, or as simple equalities recognized by contract; that is a matter of ethics and politics. But whichever way one views them, he must view both alike, for economically they are the same in principle. There is no possible justification for calling one a right and the other a privilege, and giving a preference to one or the other on the basis of that distinction.—Liberty, September 29, 1888.
“A right theory of the functions of money,” writes Robert Ellis Thompson in the Irish World, “is of the first necessity for understanding the controversy between protection and free trade.” This is an important truth, first expressed, I think, by Proudhon. It is precisely because Mr. Thompson does not understand the money question that he is a protectionist. Supposing that State control of money is a foregone conclusion, he sees as a logical result of this false premise that the State must also control the balance of trade. That his premise may be doubted does not seem to have occurred to him. “The most extreme free trader,” he says, “opposes free trade in money.” Evidently he is unaware that the extremity of free trade is not to be found in the New York Evening Post. The Anarchists are the extreme free traders; and they, to a man, favor free trade in money,—most of them, in fact, recognizing it as a necessary condition of free trade in products. For, as Mr. Thompson truly says, it is “the height of folly for a country to exchange industrial power for industrial products.” In the absence of a tariff, the tendency would be to just that sort of exchange, provided the State should continue to deprive all products, save one or two, of the monetary function, and therefore of industrial power. Mr. Thompson, supposing this restriction of the monetary function to be necessary and wise, clings very sensibly to the tariff. He would have the State hem in industrial power and bar out industrial products. Of two wrongs he tries to make a right. The simpler way, involving no wrong at all, is to give industrial power to industrial products by endowing them with the monetary function, and then strike down all commercial barriers whatsoever.—Liberty, February 2, 1889.
Part Four: Land and Rent
“The Land for the People”
(published first in Liberty, June 24, 1882)
The Liverpool speech, it seems, was delivered by Davitt in response to a challenge from the English press to explain the meaning of the phrase, “the land for the people.” We hope they understand it now.
“The land for the people,” according to Parnell, appears to mean a change of the present tenants into proprietors of the estates by allowing them to purchase on easy terms fixed by the State and perhaps with the State’s aid, and a maintenance thereafter of the present landlord system, involving the collection of rents by law.
“The land for the people,” according to Davitt, as explained at Liverpool, appears to mean a change of the whole agricultural population into tenants of the State, which is to become the sole proprietor by purchase from the present proprietors, and the maintenance thereafter of the present landlord system involving the collection of rents in the form of taxes.
“The land for the people,” according to George, appears to be the same as according to Davitt, except that the State is to acquire the land by confiscation instead of by purchase, and that the amount of rental is to be fixed by a different method of valuation.
The land for the people,” according to Liberty, means the protection (by the State while it exists, and afterwards by such voluntary associations for the maintenance of justice as may be destined to succeed it) of all people who desire to cultivate land in the possession of whatever land they personally cultivate, without distinction between the existing classes of landlords, tenants, and laborers, and the positive refusal of the protecting power to lend its aid to the collection of any rent whatsoever; this state of things to be brought about by inducing the people to steadily refuse the payment of rent and taxes, and thereby, as well as by all other means of passive and moral resistance, compel the State to repeal all the so-called land titles now existing.
Thus “the land for the people” according to Liberty is the only “land for the people” that means the abolition of landlordism and the annihilation of rent; and all of Henry George’s talk about “peasant proprietorship necessarily meaning nothing more than an extension of the landlord class” is the veriest rot, which should be thrown back upon him by the charge that land nationalization means nothing more than a diminution of the landlord class and a concentration and hundred-fold multiplication of the landlord’s power.