CHAPTER XXIX.
USURY CENTRALIZES WEALTH.
The dictum of Bacon that "Usury gathers the wealth of the realm into few hands" is readily proven and fully verified in the experience of these times. The tendency to centralization under a system of usury or interest-taking is so strong, and the modern result so apparent that the statement only is necessary.
Usury not only enslaves the borrower and oppresses the poor who are innocent of all debt, but it also affects the rich by gathering the wealth of the wealthy into fewer and fewer hands. There is a centralizing draft that threatens and then finally absorbs the smaller fortunes into one colossal financial power. It is as futile to resist this as to resist fate. Wealth cannot be so fortified and guarded as to successfully resist the attack of superior wealth when the practice of usury is permitted. The smaller and weaker fortune, using the same weapon as the larger and stronger, must inevitably be defeated and overcome, and ultimately absorbed.
Rates of interest do not affect the ultimate result. Under a high rate the gathering is rapid, under a low rate the accretions are slower, but the gathering into few hands is none the less sure. Rates of interest only place the convergent center at a nearer or more remote period.
If any interest is right, compound interest is right. When simple interest is due and paid, it may be loaned to another party, and thus the usurer secures interest upon his interest, though not from the same debtor. When the interest is to be paid annually, it is to be a.s.sumed, if not paid, that the debtor takes it as a loan in addition to the face of the note of his obligation. This saves the care of receiving and re-loaning to another. The custom of usurers, however, is to renew the note, adding the interest to the face, if unpaid. The ma.s.s of bank paper is renewed each ninety days: Compounded four times a year, whether to the same or to another debtor, the result in accretion is the same.
Few realize the rapidity at which a loan increases, accelerating in geometrical progression as time pa.s.ses. Any loan will double itself at three per cent. in twenty-three and a half years; at seven per cent.
in ten and a fourth years, and at ten per cent. in seven and a third years. One dollar loaned for one hundred years, at three per cent., would amount to nineteen dollars; at seven per cent. one thousand dollars, and at ten per cent. thirteen thousand.
The island upon which New York stands was bought from the Indians for the value of twenty-four dollars by Peter Minuits in 1626. Yet, if the purchaser had put his twenty-four dollars at interest, where he could have added it to the princ.i.p.al at the rate of seven per cent., the acc.u.mulation would now exceed the total value of the entire city and county of New York.
M. Jennet quotes the elaborate calculation of an ingenious author to show that 100 francs ($20) acc.u.mulating at five per cent. compound interest for seven centuries, would be sufficient to buy the whole surface of the globe, both land and water, at the rate of 1,000,000 francs ($200,000) per hectare (nearly four square miles). From this we can gather that $20 at five per cent. compound interest for 700 years, would buy all the earth, mountains, and swamp lands, and water, at $80 per acre.
Another mathematical genius says, had one cent been loaned on the first day of January A.D. 1, interest being allowed at the rate of six per cent. compounded yearly, then 1895 years later--that is on January 1, 1895--the amount due would be $8,497,840,000,000,000,000,000,000, 000,000,000,000,000,000,000 (8,497,840,000 decillions). If it were desired to pay this in gold, 23.2 grains to the dollar, then taking spheres of pure gold the size of the earth, it would take 610,070,000,000,000,000 to pay for that cent. Placing these spheres in a straight row, their combined length would be 4,826,870,000,000,000,000 miles, a distance which it would take light (going at the rate of 186,330 miles per second) 820,890,000 years to travel.
The planets and stars of the entire solar and stellar universe, as seen by the great Lick telescope, if they were all in solid gold, would not nearly pay the amount. A single sphere to pay the whole amount, if placed with its centre at the sun, would have its surface extending 563,580,000 miles beyond the orbit of the planet Neptune, the farthest in our system.
It may be added that if the earth had contained a population of ten billions, each one making a million dollars a second, then to pay for that cent it would have required their combined earnings for 26,938,500,000,000,000,000,000 years.
Anyone can figure on this and see if it be correct.
Had Peter only thought to put one cent at interest, there would be no call now for Peter"s pence.
With any accretion allowed, the concentration of wealth is irresistible. However small the amount of capital, if permitted to grow at any rate of increase it will ultimately absorb everything. Any finite quant.i.ty permitted any finite rate of increase, will, in finite time, gather all that is less than infinite.
The only difficulty in this accretion is to secure debtors that will not die. We inherit the property of our fathers, but fortunately we do not inherit their personal debts. This difficulty is being overcome by bonds of corporations and nations that live on, though the individuals composing them may, age after age, pa.s.s away. This makes the increase perpetual. Generations may come and go, but the concentration of wealth goes uninterruptedly on.
This is not visionary theory, but is shown in the practical results everywhere apparent.
The usurers of England, a little over two hundred years ago, secured a charter for a bank on the condition that they loan the crown or government 1,200,000 pounds sterling, about six million dollars.
This was a perpetual loan, never to be repaid, but annual interest at eight per cent. was to be paid by the government forever. This constant annual interest paid to this bank has made it such a financial power that it reaches and draws to itself of the resources of all lands. The aggregated wealth of the inst.i.tution, if the accretions were continuous, would now be $25,165,824,000,000. The wealth of the United Kingdom is estimated at fifty billions, and all Europe two hundred billions, the United States seventy billions, and the whole world"s wealth at five hundred billions.
Were the accretions of the bank at eight per cent. undisturbed and unconsumed, it would now take fifty worlds as rich as ours to pay that debt. It is sometimes wondered how there can be such an acc.u.mulation of wealth in one inst.i.tution as to control the finances of the world.
It is often attributed to superior wisdom or some profound, occult manipulation. It is but the natural operation of the principle of interest--accretion from age to age.
The managers may be stupid dolts, only so they do not interfere with the usurious principle in its eternal pull on the resources of mankind.
The interest bearing debt of the United States, at this date, is about one thousand millions. This in one hundred years at six per cent.
would amount to $340,000,000,000; five times the whole present wealth of the nation.
The smallest national bank organized, by the deposit of $25,000 of bonds yielding two per cent. interest, and permitted to re-loan the same funds to its private customers at eight per cent., could gather to itself in one hundred years, $345,225,000.
The wealth of an individual or of a family may also grow with the years as they pa.s.s. The property may be in public bonds or that of incorporations, requiring no care or effort on their part, yet it may be continually increasing. A usurer in any community in one life comes to absorb the wealth of that community, though the amount loaned at the beginning was small.
The accretions are the irresistible result of the principle of usury.
The wealth is more and more centralized as the years pa.s.s. Great trees in the forest shadow the smaller, and rob them of the sunshine and moisture until they perish. Great fish in the crowded pond feed upon the smaller. Individual manufacturers are absorbed by the great combinations called trusts. The stockholders of a railroad are absorbed by those who have large and controlling interest. But the railroad is itself absorbed by another yet greater corporation, and this again by a great combine that eliminates the influence of all but the chief control, and tends to a complete centralization of all the systems.
There is no escaping from this centralizing draft upon all resources, when the system of interest-taking is as general as now. Freedom from personal debt does not deliver us. The farmer, the most independent of men, in his own home, free from personal debt, yet must contribute to this centralizing by paying interest on bonds in every shipment of produce, and every mile of railroad travel. He pays tribute also in all the tools that he buys, in the food that he eats and the clothes that he wears.
This centralizing draft is constant, though not always equally apparent. Certain favorable conditions may hold in check, for a time, the adverse influence and cause a temporary distribution of wealth to the producers. Its force is not, however, destroyed, but only restrained for a time, and then draws with acc.u.mulated power.
Times of industrial depression and commercial disasters are occurring over and over again. Some economists attribute them to the peculiar industrial and monetary conditions of the periods in which they occur; but they have seldom agreed as to the causes of any particular panic. They are so regular in their recurrence that some economists have thought they must be produced by some constant cause; like the moon causing the tides of the ocean. Both are true. There is a general and there is also a secondary or superficial cause.
The times of greatest commercial disasters in this country were in the years 1809, 1818, 1837, 1873, 1893.
The political economists can a.s.sign as reasons some peculiar conditions prevailing in each of these periods, but the wisest have never gone deep enough to discover the general cause; this constant centralizing draft of usury.
In these periods of commercial disaster there is no destruction of property. There is only a general shake up and redistribution. All the wealth of the country remains, but after the disaster wealth is always found to be in fewer hands. Some have become rich, many who were thought to be wealthy are ruined, and the number of the poor has been multiplied.
A patient may be afflicted with some deep-seated, chronic disease that makes him very easily affected by a change of the weather, by a change of his diet or of his bed, and these may be a.s.signed as the causes of his frequent relapses, and they are the immediate or secondary causes, but the real cause is the deep-seated, chronic disease. Cure that disease and the changes in conditions, now so serious, would not be noticed by the healthy man.
The real and constant cause of our recurring financial disasters is this centralizing usury that directly opposes the distribution of wealth that is natural, when the producers of wealth are permitted to receive and enjoy it. Root out this evil, and then the trifling differences in our harvests, changes in our tariff laws, currency legislation, and the score of other things that now affect us, would be unfelt by the healthy body politic.
If this centralizing power is destroyed then the natural distribution would be undisturbed, and these, so-called, panics would be unknown.
CHAPTER x.x.x.
MAMMON DOMINATES THE NATIONS.
The debt habit has been diligently cultivated and encouraged, until the nations are enslaved. Public bonds imply bondsmen, and the nations are no longer free. There is a mortgage upon the inventive genius, industry and productive energy of the world.
Usurers greatly prefer an organized government as a debtor. The individual may die, but a nation"s debts bind from age to age, are bequeathed by the fathers to the children, and thus descend from generation to generation. The bonds of no corporation, however great and rich, can be so secure. They embrace special industries, while national debts are a claim upon every industry and a mortgage upon every foot of soil, and every dollar of present personal property, and of all that may be produced in the whole realm.
If we express the world"s indebtedness, the national debts, in the terms of our currency, as nearly as we can reduce the currency of other nations to such an expression, we find the national debts as follows, in 1890:
Denmark $ 33,004,722 Great Britain 3,848,460,000 United States 915,962,112 Germany 1,956,217,017 Austria-Hungary $2,666,339,539 France 4,446,793,398 Russia 3,491,016,074 Italy 2,324,826,329 Spain 1,251,433,096 Netherlands 430,539,653 Belgium 360,504,099 Sweden 64,220,807 Norway 13,973,752 Portugal 490,493,599 Greece 107,306,518 Turkey 821,000,000 Switzerland 10,912,925 --------------- These debts aggregate $22,955,386,008
Hundreds of millions have been added to these national debts in the last ten years. Nearly every nation has increased its indebtedness, possibly no nation has decreased it, and others, like China, with its recent great loan, and little Korea, with its twelve millions, must be added to the list. The debts of the nations of Europe have been increased until they now amount in the aggregate to twenty-three billions. The debts of the nations of all the world have increased one-half since 1890, and now aggregate thirty-three billions.
These great national debts are practically perpetual, and though they may be at so low a rate of interest as three per cent., they absorb the energies of the people, and, like a glacier grinding over the earth, crush all beneath them.
Public debts are incurred to relieve the present wealth of the burden of present duty. Debts place the whole burden on producers of the future. They relieve those who hold the wealth now, but are a draft upon those who make the wealth that is to be.