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PARASITIC W E ALTH

MON E ! R E F ORM .

A Manifesto to the P eople ofthe U nited States and

to the Workers ofthe WholeWo rld .

JOHN BROWN .

CHICAGO ;

CHARLE S H . KE RR 8: COMP AN ! .

1898 .

C opyright 1897

By Charl es H . Kerr Company .

PREFACE .

A s the se pages go t o press , there comes a message

o f un speakabl e sadnesss beari ng news o f H enry

George ’s death .

A grea t and good man has passed away ; a staunch

and in trep id champion of the wronged and oppressed

ha s l a id down h i s l i fe i n the i r serv ice .

The world i s bet t er and purer for the l i fe o f such a

man , for a s long as there are l eaders i n our m idst so

fearl ess,so in corrupt ibl e

,so out spoken , there i s hope

for mora l regenerat i on,hope for se l f-government

hope for i ndustri a l emancipat i on . Th is man stood

up for th e r ight i ng o f deep-seated wrongs and has

labored nobly i n the cause of soc i a l j ust i ce . Other

shoulders must t ake up th e burden where awear i ed

he has l e ft i t .

I t i s r ight and fitting tha t th i s pre face be the eulo

gy of on e whose works and deeds largely in sp i red

the wri t i ng of th i s book , and that i t be a tr i bute of

respect and a ffect i on , more deeply fel t than duly ex

pressed , t o the memory of one who devoted h i s l i fe

to the bet terment of mank ind . And though the

v iews o f soc ia l re form here in set forth d i verge w idely ,

VI P R E F AC E

i n some respect s , from those held by Mr. George

though they d i ffe r i n method , deta i l and appli

cat i on , yet i n the ma in the i r obj ect i s the same— the

set t i ng ar ight of gr i evous and oppress i ve wrongs .

I t has been the wr i ter ’s duty to at t ack a deeply

rooted econom ic fal l acy , and to lay bare a monstrou s

soc i al cr ime . I t requ i re s a certa in amount o f cour

age to a ssa i l accepted bel i e fs never be fore ser iously

quest i oned , but i t requ i re s infin itely more courage to

abandon old bel i e fs for new ones . The m ind warped

by the prej ud ices and superst i t i on s o f centur i es o f

race t ra i n ing and educat i on , becomes more or l ess

fixed and inflex ible , and wel l -n igh impermeabl e to

n ew v i ews and concept ion s . But th i s i s an age o f

research and un spar ing cr i t i c i sm ; o f an uproot i ng of

cheri shed idea s and op i n i on s ; o f an unset t l i ng o f be

l i e fs and conv ict i on s . Even the fundamenta l concept s

of phys ical sc i ence have been put on t r i a l for bear ing

fal se w i tness,and are i n a fa i r way to be conv icted

by the evidence . I n the i nterpre ta t i on s o f nature,we

now endeavor to make the m i nd fit and harmon i ze

w i th the phenomena , i n stead o f d i stort i ng th e fact s

of na ture t o fit our mental preconcept i ons and preju

d ices . Ant iqu i ty and “ respecta b i l i ty” are no longer

credent i a l s o f re l i ab i l i ty nor even o f veraci ty , and

we cont emplate the dogmas o f author i ty and t rad i t i on

P R E F AC E V I I .

wi th more d i strust and susp i c i on than w i th reverence

and awe .

'

If, there fore , th e v i ews here advanced do not ac:

cord w i th accepted ideas , and run counter to popula r

bel i e fs and t rad i t i on s , i t i s no i nd i cat i on that they are

not substan t i a l ly t rue .

In th e presen tat ion o f h i s ideas the author has sac

rificed much deta i l for the sake o f brev i ty , l eav i ng

the elaborat i on s and am plifica tions for those more

competen t for the work . I t ha s been h i s fond amb i

t i on to present a feas ibl e and pract i cabl e scheme o f

soc ia l re form whi ch should guarantee even j ust i ce t o

al l men , and whether h e ha s success ful ly aecom

plished h i s ta sk or not , i s l e ft t o the j udgment o f th e

reade r .

IN TRODU CTION .

A great soc i al problem con fronts us , pregnant w i t h

man ’s dest i ny , and as old as h i story i t se l f . I t

has con fronted other c iv i l i zat i on s w i th v i sage no l ess

sul l en and forebod ing . I t i s the quest i on o f ques

t i ons,the paramount i ssue

,bes i de wh ich a l l other

i ssues are trifl ing and un important . Upon i t s peace

ful sol ut i on depends the very l i fe and fate of our in

stitutions , and i t there fore chal l enges th e thought ful

cons iderat i on o f every good c i t i zen who has the peace

and wel fare o f h i s country at heart . The duty and

respon s i b i l i ty o f c i t i zensh i p seek i ng the general good,

i s th e wr i ter ’s only excuse for publ i ca t i on .

A s a l ayman t re spass ing on a domai n of sc i ence o f

except i onal d iffi culty he keen ly feel s th e responsibil

i ty o f h i s pos i t i on and conclus ion s,and should have

w i shed that some one bet ter equ ipped and bet t er abl e

had assumed it .

I f the v i ews here subm i t t ed shed a ray of hope on

th e m iserable lot of those so gri evously wronged by

exi st i ng cond i t i on s,

—if they contr ibut e i n the l east

toward an orderly and peace ful solut i on o f a grea t

6 I NTROD U CTION

and urgent problem , then t ime has not been

wasted .

I t i s o f course too much to expect that the benefic i

ar i es o f the presen t unjust system should agree w i th

the deduct i ons ; i ndeed , so strong i s the force o f hab i t ,

so power ful the b ia s o f educat i on,and so great the

i nert i a to change i n accepted ideas , that those

dr i l l ed and school ed i n econom ic methods hoary and

venerabl e w i th age and heavy wi th the we ight of

author i ty , wi l l o f course cons ider i t presumptuous

to even put these theori e s to the t est o f cr i t i c i sm .

And even i f prej ud i ces o f custom and tra i n ing could

be removed , th e fal s i ty o f presen t cond i t i on s exposed ,

and the soc i al cr ime o f Centuri es l a i d bare,yet a s the

i n terest s o f the soci a l ly benefited depend on th e

cont i nuat ion of the presen t syst em , we should hardly

expect th i s cla ss to become ela ted over any prospec

t i ve change .

But wh i l e the maj ori ty o i. th e soci a l ly benefited

wi l l reluctant ly agree w i th the log ical conclus i on s

even when convi nced o f the i r t ruth,th ere are some

men i n th i s Cl a ss so con sc i en t i ous , and so st rong i n

the sense of honor and j ust i ce ,‘ tha t when converted

to the v i ews here se t forth w i l l not on ly cheerful ly

re l i nqui sh the un fa i r advan tage soci e ty g ives them

over the i r fe l l ow men , but w i l l g lad ly a id the cause

of j ust i ce and re form .

I NTROD U CTION 7

To such of the unselfish and truly nobl e , these pages

come greet i ng , ask i ng the i r sympathy and co-opera

t i on i n th e.

cause o f human i ty .

To ra i l a t m i l l i ona i res i s a waste tof breath . I t i s

not only usel ess but sensel ess .'

The m i l l i ona i re cla ss

ne i ther i nd i v idua l ly nor col l ect i vely are respons i bl e

for our soci a l m i ser i e s . L ik e th e t ramp and pauper,

t he m i l l iona i re i s a natura l outgrowth o f soci a l per

vers i ons— th e product o f a faul ty c iv i l i zat i on . I t i s

the system and not i t s product that must be a s

sa i l ed .

Those whom our soci a l maladj ustment s so cruel ly

oppress are natural ly anxi ous for rel i e f , and i t w i l l not

be d iffi cult t o en l i st th e i r sympath i e s i n the overthrow

of a most pern i c i ous and unj ust soci a l syst em .

But the soc i al ly benefi ted w i l l not be so anx ious

for a change , for the ri ght i ng of these wrongs impl i e s

a surrender of advan tages en j oyed for ages . We can

only appeal to the i r sen se of j ust i ce and honor , and

i ndeed to the i r i n st i nct o f sel f-preservat i on , for soci ety

a s now organ i zed i s bu i l t on a volcano,and there i s

no sa fety for any on e un t i l i t s foundat i on s rest on

r i ghteousness .

The ri ch and powerful could ha sten soci a l re form

by act i ve sympathy and co-operat i on . They can a lso

thwart the force s of j ust i ce by obstruct i ve measures ,

8 I NTROD U CTION

but they cannot stop them . Whether the soc i al ly

benefited co-Operate i n the movement toward soci al

equi ty or not , th e presen t syst em i s doomed and i t s

overthrow certa i n . In th e wake o f soc i al regenera

t ion and readj ustment , fol low s the down fal l o f pr iv i

l ege and despot i sm .

I t i s not the a im o f the author t o appeal to th e

pass i ons o f men,but t o the i r reason , and i f i n the hea t

o f argument , by metaphor or figure o f speech h e take

th e l ibert i e s o f coun sel pl ead i ng the cause o f j ust i ce

for the wronged and oppressed , he begs to assure h i s

readers that n o feel i ngs aga i n st cl a sses or i nd iv idu

a l s have prompted the wr i t i ng .

Pr i nci pl e s are more poten t than denunc i at i on,and

argumen t s more e ffect i ve than el oquence . I t i s upon

these a lone that he rel i e s for proo f o f h i s theori es .

PARASITIC W E ALTH.

CHAPTER I .

That much soci a l m i sery preva i l s even i n t imes o f

comparat i ve prosper i ty , no observant student wi l l deny .

That the symptoms of. su ffer i ng are per iod ica l ly

aggravated by w idespread i ndust r i a l distress ,we have

had nearly five years o f conv i nci ng proo f , and the

end i s not yet .

Inst i nct i ve ly peopl e feel that underly i ng these nor

mal and abnormal soci a l d i sorders there i s some great

l atent wrong , which i f r ighted would make mank ind

whol e .

The reason s ass igned for these soc i a l i l l s are a s nu

m erous a s the remed i es proposed for the i r cure . None

of the schemes , however , seem to br i ng us neare r to

the pract i cal solut i on o f the problem , and the Sph i nx

o f Fate i s st i l l busy putt i ng the r iddle t o an anxi ous

and puzzl ed c iv i l i za t i on . Shal l we solve it, or w i l l i t

solve us ?

Of course , i f no organ i c de fect can be d i sclosed i n

our present soc ial system ; i f n o econom ic cond i t i on9

IO PARAS IT IC WEALTH

or pr i nci pl e has been v iolated , a s would appear from

our text books on Pol i t i ca l Sc i ence , then there can be

no redres s for our soci a l woe s and we must be con

t en t to pl od a long i n the t rad i t ional groove and make

the best o f it. I f th e n ightmare o f human m i sery

and deprav i ty wh ich con front s us be th e natura l re

sul t o f a wel l ordered c i v i l i zat ion , then there can be

no help for it. We m ight a s wel l l e t the mad rush

go on unh i ndered ,and i f m i l l i on s be trampled unde r

foot and per i sh i n the st ruggle , tha t i s the i r l ookout ;

we have th e com fort i ng theor i e s o f Pol i t i ca l Sci ence

to fa l l back on to soothe the t roubl ed consc i ence and

rel i eve us of mora l respon s ib i l i ty for the soc ia l havoc .

The socia l quest i on i s first o f al l a quest i on o f

moral accountab i l i ty to ourse lve s . Can we l ook our

crime and pauper i sm i n the face and w i thout reproach

o f con sci ence say that we are not to b lame 9

I f on a fa i rly honest i nvest igat i on , we can estab l i sh

a cl ean and bl ame l e ss record , then there i s no griev

ance that re form can grappl e w i th,and there can be

no soc i a l probl em . I f on the other hand , we d i s

cover a fundamenta l wrong in our Soci a l Econom ics,

t o wh ich th i s m i sery can be t raced , then i t i s our

mora l duty to a t once set about remov ing i t,for fur

the r t empori z i ng w i th such an ev i l i s a crime .

I f our gr i evances be real and the presen t soc i al a r

PARAS IT IC WEALTH I Q,

rangement s be i nadequate to cope w ith them , then

there must be some one t rue way , apart from the

presen t system , i n wh i ch the ev i l may be met , and

th i s must be the common ground on wh ich the

presen t system and al l other schemes of soci a l re form

can agree . There must be some econom ic cond i t i on

or pr i nc ipl e on wh i ch al l re form forces may comb ine

for the common good . To find th i s cond i t i on or

pr i nc ipl e i s the a im of the wr i t er .

Apply i ng deduct ively the te st of eth i cs to the soc ia l

probl em,we should con s ider tha t system of soci e ty the

best,wh ich wh i l e conced ing to the ind iv idua l the

greatest poss i bl e personal freedom consi sten t w i th the

h ighest wel fare o f soc i e ty as a whol e , guarantees to

every member of the commun i ty an equal chance i n

the race o f l i fe w i thout prejud i ce , an equal opportun i ty

w i thout favor or h indrance .

The cr i ter i on o f Soc ia l Equi ty resol ve s i tself,there

I f we enter the arenafore , s imply into “ Fai r-play .

’

of l i fe on equal te rm s a s regards natura l opportun i

t i e s , th en al l th e requ i rement s of soc i a l eth i cs a re

sa tisfied . We have but to exert our facul t i e s and

make the proper e ffort , and reward comes to us i n a

d i rect rat i o o f our serv i ces to soci ety . Our reward i s

then a measure of our e ffort and ab i l i ty . Thi s i s j ust i ce ;

more we cannot a sk .

12 PARAS IT IC WEALTH

Now,w ith our boasted equal r ight s and pri v i l eges ,

do our laws and econom ic cond i t i on s guaran tee fa i r

pl ay to every member o f th e commun i ty Whatever

h i s stat i on i n l i fe ? Are we qu i t e sure that e ffort and

ab i l i ty are rewarded accord i ng to meri t , that benefits

reaped are i n proport i on to serv i ces rendered ? I f so ,

then the pre sen t soc i a l cond i t i on s must bear w i tn ess

t o such equ i ty , and th e weal th of the r i ch must be an

equ i val en t o f prod ig i ous serv i ces th ey rendered to so

c iety ,and the poverty o f the poor must be an i nd i ca

t i on of utter incapac i ty . We judge o f th e t ree by i t s

fru i ts . I f our econom ic cond i t i on s are right, then the

d i st r i but i on o f weal th and i ncome must be j ust . I f

not j ust , then the econom ic cond i t i on s canno t be

r ight .

Let us for a moment contemplate the d i spar i t i e s o f

weal th a s we see them , and take a men tal i nventory

o f the comparat i ve commerc i a l and i ndustr i a l effic iencyof those who possess colossa l fortune s and those who

do not .

Rel i abl e stat i st i cs could throw much l ight on a

dark subj ect , but no ser i ous i nvest igat i on has been

undertaken to map out the posse ss i on s o f the ri ch and

poor , and th e figures are riot ava i l abl e . However ,

fa i rly good est imates have been i ndependent ly made

b y d i fferen t competen t person s a s t o the d i st r i but ion

ofweal th in the Un i ted S ta te s .

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may sa fe ly assume that among the fam i l i es

const i tut i ng the first group , th ere w i l l be every poss i

b l e gradat i on o f hold ings , from noth i ng at the starva

t i on end up to $986 at the o ther end . The second ,

th i rd,fourth and fifth groups , must wi thout break

form a cont i nuous curve from a possess ion o f 986

dol l ars up to weal th amount ing probably to a hundred

m i l l i on s or more . P l ate I . shows the developmen t

o f these data i n to a curve . The l im i t s o f th e page

a l low us to reach a l evel o f Imagina t i on

must supplemen t th e shortcom i ngs o f the page . I f

t he l im i t o f aggregated wea l th i s one hundred and

fifty mi l l ions , t hen we must imag i ne the page magn i

fied one thousand t imes i n order to vert i ca l ly represen t

th i s h i gh l eve l !

The contra st between the few enormously r i ch and

the many wretchedly poor i s bew i lder i ng . But th i s

d i spar i ty m ight prove noth i ng but prod ig i ous capac i ty

and product ive effi c iency on the on e hand and utt er

i ncapac i ty and worth le ssn ess a t the other , unle ss we

can show that there i s a bac i l lus i n the “ body soc i a l”

produci ng symptoms o f turgescence on the one hand

and atrophy on the other .

Accord i ng to Mr. Gannett’s e st imate fam i

l i e s (l e s s than 3 per cent .)own 57 per cen t . o f thetota l weal th , wh i l e fam i l i es own th e bal

ance o f 43 per cent .


In the “ Pol i t i ca l Sc i ence Q uarterly” for Decem

ber . 1893, Mr. G . K . Holmes , bas ing h i s e stimate s on

the E l eventh Cen sus returns , st art s W i th th e wage

earn i ng and farm i ng cl ass , t o obta i n hold ings o f the

very r i ch , h i s method be i ng the oppos i t e o f tha t o f

Mr. Gannett . H i s figures for th i s cl a ss when ar

ranged appear a s fol lows

F am i lies .P er Cen t .

R educ i ng the se for conven i ence to three i tem s , we

have '

F am i l ies .

It'

thus appears that 91 per cent . o f the peopl e own

29 per cen t . o f the weal th , wh i l e 9 per cent . own 7 1

per cent . o f th e weal th . Compl et i ng the above sta t e

men t w i th th e cel ebrated cla ss ifica tion o f

PARAS IT IC WEALTH I 7

mi ll i ona i res g i ven by the New York Tr ibune,and

arrangi ng the remai n i ng weal th on a bas i s o f progres

s i on , the Weal th curve would appear someth i ng l ikethat shown on P l a t e I I .

In h i s excel l en t book “The Presen t D i st r ibut i on o f

Wea l th,

” Dr . Chas . B . Spahr , by an i ndependent

method of research , arr ive s a t substant i a l ly th e same

resul t s a s Mr. Holmes , and h i s figures , fal l i ng w i th i n

a s im i l ar weal th curve , are valuabl e a s corroborat i ve

ev idence . Dr . Spahr est imates that one per cen t . o f

the people own hal f o f the weal th o f the country,or

as much as the rema in i ng n i nety-n i ne .

In the Forum for November 1 889, Mr. Thos . G .

Shearman gave est imates of d i str ibut i on , based on the

weal th o f the m i l l i ona i re class , and on the appl icat i on

o f the known law of averages to such hold ings,t o ob

ta i n t he relative’

wealth of the other cl asses . H i s es

tim ates o f the nat i on’ s weal th and populat i on very

close ly approximate subsequen t census returns . Sub

j o i ned figures are taken from h i s art i cl e i n th e New

York World of June 2 0 ,1897 .

Two table s were prepared ; one on the bas i s o f the

Br i t i sh I ncome Tax , and the o ther on the bas i s o f tax

return s from th e C i ty o f Boston . Ou the former bas i s ,

th e d i str i but i on when reduced to three great cla sses,

i s found to be as fol lows :


C lass . F am i lies. Wea lth . Average.

R ich , m i ll ionsMidd leWork ing 968

From th i s i t would appear , that l e ss than two per

cen t . o f the peopl e own seventy per ‘ cen t . o f the

weal th o f the Un i ted S tat es .

In the tab l e on the bas i s o f Amer ican Tax Re

turn s , the class ification i s a s fol lows

F am i l ies Tota l Wea lth .

70 m i l l ions90

180

135 968

360

1755

6000

7000

11000

14000

16500

50000

75000

200000

1000000

11620000

13002090

The above conden sed under head of three grea t

cl a sses becomes :

Average Wea lth .

1

2 0 PARAS IT IC WEALTH

F am i l ies . Tota l Wea lth . Average Wea lth .

3 m i l l ions

968

From th i s t abl e i t would appear that fam i

l i es own over one-hal f , Wh i l e one -sevent i eth part o f the

populat i on ( 1 per cent .)owns more than twoth i rds o f the country ’s weal th .

A s th e influences a t work in the concen tra t i on o f

weal t h i n the Un i t ed S ta t e s are more potent than

those i n Engl and , on accoun t o f much h igher rat es o f

i n terest,th e e st imates on bas i s o f Amer ican tax re

turns should be more rel i abl e than those on bas i s of‘

Bri t i sh Income Tax . That these influences a re con

stantly a t work and the accum m ula tion s o f weal th are

becom ing greater and greater th ere can hardly be

any doubt . I t i s probably sa fe to say that

fam i l i e s own more th an twoth i rds o f th e Un i t ed

S ta tes . These fam i l i e s pract i cal ly d ictat e

the government pol i cy of th e nat i on,control our l eg i s

latures and mould publ i c op i n i on largely to sui t the i r

own class i nt erest s . The masses are mere puppet s

i n the hands o f these shrewd man i pul ators - mere

tool s to do th e b idd i ng o f masters . A h igh ly effi c ient

and influentia l press l a rgely i n th e serv i ce and cont rol

o f these peopl e , manufacture s publ i c sen t iment t o

order , and school s the masse s w i th i n the narrow l in e s

PARAS ITIC WEALTH 23

doing fa i rly wel l ; tha t the d i spar i t i e s are decreas ing ,

and the immense ly r i ch are becomi ng poorer ; that the

m iddl e cla sses are loom ing up , wh i l e the“work ing

classes” are bet t er o ff than be fore . Engl i sh stat i s

t i cs are quoted to show the decl i ne o f Engl i sh fortune s

t rac i ng back to eras pr i or t o the modern i ndust r i a l

movement . The fact i s , that i n England and other

old countr i e s i n Europe , there has been a decl i n e i n

non—product i ve i ncomes , due to gradual decl i n e i n

money prem ium . Product i ve e ffort has set t l ed down

to a cond i t i on o f i ndustr i a l and commerc ia l repose .

New enterpr i ses and undertak i ngs have not been

seek i ng the money funct i on very eagerly , wh i l e money

volume has been expand ing and i t s c i rculat i on has

i ncreased by improved bank ing methods , thus great ly

reduc ing compet i t i ve demand for i t s use . I n th i s way“ Cap i ta l” yi e lds l e ss profit than i n countr i e s where

natura l resources are not yet explo i ted , i nvent i ve

act i v i t i e s are keen and i ndustr i al movement i n t ense,

a l l mak ing the compet i t i on for money eager and

prem ium rates h igh . Land rents have al so rema ined

stat i onary or decl i ned , ow ing to the overflow p0 pula

t i on em igrat i ng to new countr i e s , thus rel i ev i ng the

pressure o f over-populat i on and check ing any advance

i n rent s . Thus the non-product i ve sources o f i ncome

are not a s act i ve i n accumulat i ng fortun e s as on th i s

s ide o f the A t l an t i c .

24. PARAS IT IC WEALTH

W i th processes and method s of product i on vast ly

improved , we should na tural ly expect that t he very

lowest'

stra tum of soc i e ty would be affected by the

i ncreased product i ve effic iency . But wh i l e the“work ing cla sse s have been benefited i n a

marked degree , aggregated weal th has not apparent ly

relaxed i t s gr i p on the sources of i t s i nord i nate

growth and the d i spari t i e s do not seem to have grown

l e ss . But even i f i t were proved , that the d i fferences

a re real ly grow ing l e ss , i t would leave the probl em

untouched . Why should there be i nj ust i ce ? Wh i l e

w e have th e i ndustr i ous poor w i t h us always , we al so

have the i dl e r i ch w ith us , draw ing vast fortunes from

non-product ive sources .

I n the “ Arena” for March , 1896, Mr. Geo . B .

Waldron has made an at t empt to e st imat e the in com e

o f the peopl e o f the Un i t ed Sta t e s by fam i l i e s , on

fa i rly con servat i ve and reasonab ly re l i abl e l i ne s . By

consol i da t i ng the first two i tem s o f h i s cla ss ification ,

t he average s appear to be a s fol lows

F am i l ies Average Incom e

per cent. 393

735


F am i l ies Av erage Incom e

per cen t..22

.03

P l a t e IV shows t he figures developed i n to a curve

o f i ncomes . A s i n the case o f the curves of weal th ,

i t may be sa fely assumed that there w i l l be al l possibl e

gradat ions o f i ncome from zero at t he low l evel o f

de spa i r and desti tution , up t o an amazing i ncome o f

from s ix t o n i n e m i l l i on s o f dol lars a t the end o f

weal th and affl uence . The d i st r ibut i on o f i ncomes i s

based on a tota l product i ve capaci ty o f m i!

l i on s o f dol la rs per year , to be d i v ided among 1 2 ,

fam i l i e s , each fam i ly cons i st ing o f 4persons

,o f whom 1 are workers . The

average i ncome per fam i ly on th i s ba s i s i s 931 0 75 per

year . An analy s i s o f th e figures wi l l show that

nearly 80 per cent . o f the fam i l i e s l i ve bel ow th i s

average i ncome . The average o f th i s 80 per cent . ,

i n a d im in i sh i ng ser i es,must there fore be j ust one

hal f o f the genera l average , or The bal

ance o f the 20 per cent . range from $ 1 0 75 per year up

t o severa l m i l l i on s . I t i s at th i s end ch iefly , tha t

bank sav i ngs are accumulated . I n 1891 there were

depos i tors on th e books o f some sav

PARAS IT IC WEALTH 2 7

i ngs banks . Figur ing these depos i tors as be ing the

workers , and assum ing that the sav ings were not

pool ed,i twould appear on the bas i s o f 1 . 7915 workers

pe r fam i ly , that had money depos i t s i n

banks . Th i s i s l e ss than 2 0 per cent . of the whol e

number of fam i l i e s . W i th i n certa i n l im i tat i ons,these

depos i t s doubt l e ss fol l ow the i ncome curve . We

may sa fely a ssume that ful ly two- t h i rds o f these range

between one dol l a r and one hundred dol lars and

average only fifty dol la rs . The balance w i l l range

between one hundred dol l ars and the bank l im i t . A

l a rge number o f depos i tors no doubt ma inta i n a mul t i

plicity o f account s a t the var i ous banks thus fictitiously

swel l i ng the number of depos i tors . I f these est imate s

are fa i r,someth ing l i ke 95 per cent . o f the peopl e

der ive very l i t t l e or no benefit whatever from money

sav ings a s a non-product i ve source o f i ncome , and

when i t i s expla i ned t hat the money volume i s on ly

about one- fort i eth o f the weal th volume , and

that there fore i n terest on money represent s on ly about

one- fort i eth of the i n tere s t on other forms o f“ Capi ta l” held by the very r ich

,i t w i l l be seen tha t

th e benefi t s from i nterest on sav ings among the 95per cent . o f the peopl e amount s to pract i ca l ly noth i ng .

A dol la r per day wage per worker i s cons idered a

low pl an e o f l i v i ng , but one on wh ich peopl e could


l i ve i n comparat i ve com fort . At one dol la r per day

for 30 0 work i ng days i n the yea r , a fam i ly of. average

number o f workers could earn $537 per year , or hal f

the average i ncome . Accord ing to the figures g i ven ,

about 40 per cen t . , or five m il l i on fam i l i e s , l i ve below

the dol la r l eve l o f comfort , th e average i ncome be i ng

50 cent s per day per worker . Four m i l l i on s o f these

l i ve bel ow the 80 cent s per day level o f com fort ,

averag i ng 40 cent s per day . Three m i l l i on s o f the se

rece i ve l ess than 60 cent s , averag i ng 30 cent s per day

per w orker . Two m i l l i on l i ve bel ow the 40 cent s

per day l evel , and average only twen ty cent s per day

per worker , and a m i l l i on o f the most wretched only

average 1 0 cents per day per worker , unl ess helped

out by chari ty . We may assume that about three per

cent . o f the populat i on i s a t a l l t ime s more or l e ss de

pendent on char i ty . They con si st o f the superan

nua ted , decrepi d , crippled , ~and i ncapabl e , — the dea f ,

dumb , bl i nd and hal t— the i n sane , i d i ot i c and other

w i se dependent ; fam i l i e s would embrace th i s

cl ass . A l i beral est imate m igh t pl ace the num

ber at fam i l i e s . Thi s would l eave 4 ,

sel f-support i ng fam i l i e s l i v i ng on from 1 5

cent s up to one dol la r per day per worker . Th i s

l evel o f “ com fort” i s ba sed upon a per i od o f rel at i ve

i ndustr i a l prosper i ty . What the leve l o f “ com fort”


We cannot be indust r i a l ly ensl aved and rema i n po

litically free . Great d i spari t i e s i n power make k ings

and subj ect s . Democracy and serv i tude are incom

pat i bl e t erms . The aggress i on s of w eal th are a men

ace to free i nst i tut i on s and must be checked if we

pr i ze our l iberty . The corrupt i ng i n fluence o f the

money power permeat es soc i ety from stem to core

and has st ruck deep i nto our pol i t i ca l methods . Be

hold the government of. a grea t peopl e l eg i sl a t i ng

away spec i a l pr i v i l eges t o Trust s, Comb ines and

Monopol i e s,and the d i sgrace ful spectacl e of a hungry

horde o f vul ture s over the tar i ff spo i l s ! Truth i s

perverted to ma in ta i n th i s class i n power , and by th e

most spec ious and shal l ow reason i ng the people a re

deluded i nto the bel i e f that em bara ssm ent o f com

merce by tar i ff restr i ct i ons w i l l improve bus i ne ss ,

tha t to h i nde r t rade i s t o encourage it, that the For

e igne r pays our taxes , that monopoly pr i v i l eges t o

the few w i l l enr i ch the many,and make us al l pros

perous !

What are we to th ink o f th ese surpr i s i ng theor i e s

and th e cla ss that promulgate s them ? The hand

wri t i ng i s on the wal l and t he t ime o f reckon i ng w i th

the peopl e i s at hand .

No fa i r studen t o f Pol i t i cal Sc i ence w i l l honestly

and con sc i ent i ously ma i nta i n that the cond i t i on s wh ich

PARAS IT IC WEALTH 31

resul t i n such enormous d i spar i t i e s o f wel l-be i ng are

o f norma l or ig i n . No fa i r m inded person w i l l con

tend that such cond i t i on s can have the sanct ion o f j us

t i ce or moral i ty , or that they may be even justified on

the pl ea o f exped iency . There i s a fundamen ta l

wrong somewhere . The subj ect matt e r i s not new ;

i t has been ful ly t rea ted by capabl e and wel l equipped

schol ars . The gr i nd ing i nj ust i ce o f pre sen t cond i t i on s

has been d i scussed w i th great e loquence and ab i l i ty,

but al l th eor i es and schemes o f re form have been

dashed and shatt ered on the stubborn rock of Pol i t i ca l

Sc i ence . I s the sc ience to blame ? No , but the per

vers ion o f i t s factors to pr i vate i nstead o f publ i c use i s

the cause of our soc i a l undoi ng .

CHAP TER I I .

Be fore proceed ing w i th the further d i scuss ion o f

th e subj ect,a few words o f explanat i on in regard to

econom ic t erms and factors w i l l be necessary to make

our mean i ng cl ear .

A l l wea l th i s t he o ffspr ing of human e ffort exerted

on the mater i a l s o f the earth . A l l human e ffort ,

whether phys i ca l or men tal , i s work . I f i n de ference

to the terms used by Pol i t i cal Econom i st s we ca l l hu

man e ffort i n i t s broad sen se “ Labor,"then Weal th i s

t he o ffspr i ng of Land” and Labor . ” Only i n i t s

expanded sen se w i l l th e te rm “ Labor” be employed .

Commerce i s the exchange o f th e product s o f l abor

that i s , o f forms of weal th ; and I ndustry i s th e cre

at i on o f n ew weal th .

Pr im i t i ve commerce and i ndustry were conducted

by the waste ful and unsat i s factory method o f barte r .

They were the clumsy ineffi c ient methods o f barbar

i sm . When money came int o use , c i v i l i za t i on wa s

born , and money became the th i rd factor o f produc

t i ve e ffort . Land , l abor and money con st i tut e the

econom ic t r i n i t y . The wri te r i s consc ious o f ut teri n g

a most “ dangerous econom ic “ heresy” i n procla im32


i ng money as a pr ime factor of product i on ; i t marks

h i s departure from preva i l i ng Op in ions . The usual

cla ss ification'

i n our text books on Pol i t i ca l Sci ence ,

i s Land , Labor and Cap i ta l , wi th a fourth factor

Bus i nesssomet imes added as “ bus i ness a b i l i ty .

’

abi l i ty be i ng a form of human e ffort , i s s imply a d i f

ferential o f Labor and may be ignored . The word“ Cap i ta l” impl i e s two very separat e and d i st i nct

th i ngs , and i s there fore the source o f much con fusi on

o f thought . “ Cap i ta l,

” i n the sense o f weal th i s a

product and not a factor . I t i s the o ffspri ng o f Land ,

Labor and Money .

“ Cap i ta l” when used i n the

sense o f money i s a true factor o f product i on and onl y

i n that sense can i t be so understood . We are now

concerned w i th modern meth ods o f commerce and in

dustry— th e methods o f c iv i l i za t i on — which were made

poss i bl e by the use o f money alone . Money takes the

place o f concrete weal th i n exchange and product i on ,

and becomes so effic ient a means o f weal th creat i on ,

tha t to be w i thout i t impl i e s a return to barbar i sm .

Concrete weal th i s a mere dead product , an inert ' tool

requ i r i ng human e ffort to operate it. But labor must

rema in idl e unt i l se t free by some agent or i ncen t i ve .

That agen t i s money . Money i s there fore the pr ime

mover o f i ndust r i a l e ffort , the i n i t i a t i ve o f product ion ,

the i nd i spensable factor o f weal th creat ion . I t i s a s


i t were the cont rol l i ng valve o f I ndustr i al energy

set t i ng the wheel s o f i ndust ry i n mot i on . I t i s the

magi c sw i tch wh i ch turn s on the e l ectr i c power o f

human e ffort . Weal th or Cap i ta l , i s t he mach i nery

through wh ich the energy set free by the money func

t i on opera tes to produce more weal th i t i s the dead tool

o f product ive e ffort . A l l weal th wh i ch conduce s to

com fort and shel t er , al l improvemen t s wh ich assi st

commerce and i ndust ry and make human effort

e ffect i ve , are Cap i t a l . They are the tool s o f p roduc

t i on . The land i s our work shop and the nat i on ’s

weal th th e tool s , and upon the elaborat i on and exten

s iveness o f the plant depends the efii c i t ncy ofman’s

e ffort .

C an we carry on the bus i ness o f c i v i l i zat i on by

means of goods ? No , i t would reduce us t o the dul l ,

sluggi sh m ethods o f barter , and death and fam i ne

would overtake uS— c i v i l i zat i on would per i sh .

I s i t Br i t i sh weal th we want when we des i re t o de

v elop our resources o r bu i ld ra i l roads? N o ,

we do

not need the weal th , for a t th i s moment we are the

r i chest nat i on on th e face o f the globe . We need the

money .

I s i t t he l anded or personal weal th o f our Ameri can'

Cap i tal i st” we need to se t go i ng the wheel s o f in

dustry? No , i t i s th e money he can exchange for

these propert i e s . That and noth i ng el se .

I’ARASIT IC WEALTH 35

Money i s one of: the indust r i a l opportun i t i e s o f

man , and the most effic ient tool at h i s command . So

m portant is the money funct ion that we could a fford

to sacrifice more than ha l f our l abor rather than do

w i thout i t. I ndeed so essent i a l i s i t, that for centur

i es money was cons idered the on ly t rue weal th o f a

nat i on , and that idea has surv i ved to th i s day as the“ balance o f t rade” fa l lacy — a very excusabl e error .

L i ke an i nvent i on o f great ut i l i t y , money mul t ipl i e s

t he e ffect i veness o f labor many fold . To create

weal th w ithout the a i d o f money i s t o produce i t uh

der cond i t i on s o f greatest d i sadvantage . The money

funct i on con fers on product i ve e ffort an effi c iency un

ass i sted labor does not posse ss , so tha t properly speak

i ng weal th may be sa i d to be the o ffspri ng o f Labor

and the money funct i on . These two factors o f pro

duct i on are always assoc i a ted together and cannot be

separated wi thout causing immed iat e i ndust ri a l col

lapse . I t thus appears that money i s i nd i spensable

t o product i on , and i f i n any way i t may be made art i

fic ially scarce , and i t s funct i on be monopol i zed . then

prem ium must emerge as the pri ce o f i t s l im i tat i on .

Such prem ium , though press i ng heav i ly on produc

t ive e ffort , would not , i f confined s imply to mone y .

a ffect us seri ou sly , were i t not that “ money use ’

con fers on “ property use” th e same prerogat i ve of


prem ium , and when we ful ly real i ze tha t the weal th

volume capabl e o f bea ri ng prem ium , i s about forty

t imes that o f the money of c i rculat i on , we w i l l bet t er

apprec i ate the enormous proport i on s such a prem ium

charge w i l l a ssume .

A s w i thout the m onev funct i on weal th cannot be

reproduced except under cond i t i ons o f greate st d i s

advan tage , i t i s qu i te natura l that i f money bear a

prem ium , al l weal th . th e product o f money ’s magi c

power , should a l so bear a prem ium . Were th i s not

so , then th e owners o f money would not part w i th i t

except i n usury , and i t s convers ion i n to any sort o f

permanent i n vestmen t would be undes i rabl e , wh ich i s

absurd . I t fol lows , there fore , tha t whatever i nt erest

money bri ngs for i t s h i re , property , the offspri ng o f

i t s funct i on , must al so br ing for i t s use . I t should be

noted , that a l l weal th , th e product o f human e ffort , i s

per i shabl e,and w i l l become l e ss va luabl e w i th ad

vanc ing t ime . Why should i t bear i nterest when i t

ha s a deprec iat i ng value ? Money , however , i s not

per i shabl e . Honest money w i l l purchase the same

equi val en t o f l abor t o-day tha t i t w i l l t en years hence .

Money i s the parent o f modern i ndust ry , th e creator

o f weal th . When money i s a t a prem ium , i t s o ff

Spri ng,weal th , born under the advers i t i e s o f currency

l im i tat i on s . carri e s w i th i t a s the pr i ce o f i t s paren t


product i ve e ffort for wh ich no equ ival en t ha s bee “

.

rendered . Thi s i s appropr ia t i on .

Wages and profit, or incomes under any other

name , un less they be the measure of actua l product i ve

serv i ces or serv i ce s con ferr i ng benefits , must be a

t r i but e on the product i ve e ffort s o f others , and s imply

mean i nj ust i ce— a v i olat i on o f the e i ghth command

ment .

Money in i t s l a st analys i s , i s a med ium for the ex

change o f serv i ces .

“Whatever performs th i s funct i on , does th i s money

work,i s money , no matte r what i t i s made of. ”

(F .

A . Walker , Pol i t i ca l Economy .)I n pr im i t i ve soc i e ty money had to be some form of

w eal th 1567‘

5 0 i n order to pass unchal lenged a s a me

d ium o f fina l pa ymen t . I t took th e form of co in made

o f metal s used for persona l adornment . The money

of the past i s st i l l th e money of the pre sen t . An im

provement was made i n subst i tut i ng paper for metal ,

and hold i ng the meta l a s a re serve for i t s redempt ion .

Thi s improvement l ed to the abuses o f i nflat i on , and

caused so many pan i cs and fa i l ure s , tha t the good

feature s o f the sys tem were to a la rge degree count er

balanced .

Except i ng that th e so cal l ed “ prec ious metal s a re

a form 0 1 weal th per s‘

c . the re ha s been no va l id

P ARASlT lC WEALTH 39

reason a ss igned why gold or s i l ver should be used for

money . There are some good reason s why they should

not be so'

used . In the first place , ifmoney be a form o f

weal th then to perform i t s money funct i on th i s weal th

must be w i thdrawn from i t s l eg i t imat e field o f ut i l i ty

i n the art s and i ndustr i es , and th i s i s a waste o f i t s

va lue i n use,and there fore a usel ess waste o f weal th .

Secondly , th e volume of co i n metal i s not cont rol l

abl e and the output i s a constan t source o f anx i e ty .

Noth ing short o f an un l im i ted co inage law w i l l ma i n

ta i n these meta l s at a un i form value and preven t the

fluctua tions o f demand and supply , and unl im i ted

co i nage i s not w i thout grave dangers as w i l l appear

la t er .

Thi rd ly , an unl im i ted co i nage l aw arbitrarilv fixes

a pr i ce on these money metal s and con fers a fictitious

value upon th em far i n excess o f cost o f product i on

for i ndustr i a l purposes al one , thus further contribut

i ng to a waste o f weal th .

The co inage l aw i s s impl y a form o f “ protect i on

for a hoary headed “ i n fan t i ndust ry”— gold m in ing .

Demonet i ze gold un i versal ly , and down goes the

pr i ce o f th i s pr i v i l eged metal probably two-th i rds o f

i t s artific ial value So t horough ly , however , are

financ iers and wri t ers on Pol i t i ca l Sc i ence commi t ted

to a metal bas i s,tha t doubtl e ss any project o f re form


w i l l b e met i n a sp i r i t o f i n tol erance and be opposed

w i th stubborn re s i s tance . And yet our financ ial_sys

t em i s the surv i va l o f a prim i t i ve c i vi l i zat i on and i s

en t i re ly i nadequat e t o th e grow ing needs of a h igh

soci a l development . The shortcom ings a re so glar

i ng and the soci a l d i sa ste rs caused by present method s

so w idespread , tha t i t should be superflous t o po i n t

t hem out . A l l our pan i cs and hard t imes are d i rectly

t raceabl e to financ ial derangement s , mai nly due to

e ffort s a t infla tion or expans i on o f a l im i t ed and in

adequate money volume . Our bus ine ss depress i on s

i nvari ably ori g inate i n a money pan i c . Anteceden t

per i ods o f s im i la r bus i ness col lapse recurr i ng ap

paren tly a t regul ar i n t erva l s , st rengthen the genera l

i d ea that such hard t imes are to be expected , and th i s

adds to th e feel i ng o f i n securi ty and helpless res igna

t i on . An ep idem ic o f fear and apprehen si on se i zes

th e popul ar m i nd and al l prepare for the worst . E h

forced idl eness sta re s m i l l i on s i n the face and re

trenchm en t beg in s i t s fata l work . Demand for lux

uries decrease s and producers o f these are l a id o ff

first. Loss o f wages o f th e i d l e further reduces con

sumpt i on 0 1 the l es s urgen t a rt i cl e s and more pro

ducers are thrown out o f work . These aga i n l e ssen

the demand for product s , and so the hard t imes

cumulat i vely become harder,un t i l th e rock bot tom o f

PARAS IT IC WEALTH 4 I

soc i a l m i sery and d i stress has been reached . The

descent to advers i ty i s slow and del i berate . The

vast and ponderous mach i nery o f i ndustr i a l produc

t i on gradual ly sl ows down ; t o overcome the i n ert i a

of i t s great mass and momentum requi re s much t ime .

The ascent to prosper i ty i s no l ess slow ; i t requi res

ful ly a s much t ime to start the ponderous mach inery

go ing aga i n . The cycl e i s usual ly completed i n four

or five years accord ing to c i rcumstances , i n wh i ch

l eg i s la t i ve i nt er ferences w i th t rade must figure very

largely .

Ne i the r over-product i on nor under-consumpt i on had

anyth i ng to do w i th our bus i ness para lys i s . The

wheel s o f i ndustry stopped i n the m idst o f compara

t i ve prosperi ty w i thout apparent cause . I t or ig i nated

i n a d i st rust o f our financ ia l i n t egr i ty and the t endency

o f gold to go t o a prem i um . Thi s prec ip i tated a

money pan ic causi ng fi nanci a l st r i ngency and under

m i n i ng confi dence i n bus i ness . Fear and apprehen

s i on d id the rest . There may have been no im m ed i

ate occa s i on for the di sast rous stoppage , a mere rumor

may have start ed the financ ial scare , but once sta rted

we l acked the resources to check i t, and l ike a fren

z i ed pi

an ic-str i cken crowd at the fal se alarm o f fire ,

we rushed pel l-mel l t o dest ruct i on l eav i ng wreck and

ru in i n our wake .

42 PARAS ITIC WEALTH

Wha t has the pan i c cost us ?

The fol lowing figures o f Bank C l earance s o f the

Un i t ed S ta tes are taken from the Bureau ofS ta t i s t i cs,

Treas . Dept . Abst ract for 1896. The populat i on es

tim ates come from U . S . Treas . Dept . C i rcula r No .

1 23. I n order t o el im i nate the d i sturb ing influence

o f the pan i c year,we are justified i n l eav ing i t out o f

our compar i son s . We shal l there fore compare figures

for the three years pr ior to the pan i c year and the

three years subsequen t to the pan ic year . Thi s

should g ive us a very fa i r and rel i abl e compari son .

! ears Ba nk C learances Popula tion P er Cap i ta

1890

1891

1892

Average $921 45

1894

1895

1896

Average

Decrea se per cap i t a s i nce the pan i c or

per cent . Accord ing to th i s show ing , th e count ry’s

bns iness has fal l en o ff per cent . s i nce the pan ic

o f 1893. Un fortunately these figures are m i sl ead i ng

and cannot be accepted w i thout importan t qualifica

t i on s wh i ch i n themsel ves would i n t roduce an error .

Pr i or t o May , 1892 , th e New York Bank C l ea rances


conta i ned the share sa l es o f the S tock Exchange ,

wh ich very largelv swel l ed t he returns S i nce the

establ i shment of th e. S tock Exchange C l ear i ng House

at that dat e , most o f the sa l es have been cl eared

through the l atter i n st i tut i on and have ceased to

figure i n th e returns of Bank C l earances . I t thus

becomes clear tha t unl ess these share sa l e s be

elim i nated from the Bank C l ear i ngs , we cannot ex

peet to make a fa i r compar i son between the volume

of busin ess pr ior and subsequen t to the pan i c year .

The correct amount o f these stock sal es i s however

not ava i lab l e and est im at e s would land us i n to doubt .

Fortunately there i s a way out o f the d iffi culty . We

can compare Bank C l ear i ng s o f the nat i on out s i de of

New York C i ty . The fol l ow ing Bank C l earance

figures are taken from the Commerc i al and Financ ia l

Chron i cl e , for J anuary 1897 , and are for cl earances

out s ide o f New York C i ty .

! ears Bank C learances P er Cap i ta

1890

1891

1892

Average

1894

1895

1896

Average

Decrease per cap i ta s ince the pan icor per cent . (about

44 PARAS ITIC WEALTH

I f these return s may be taken as a fa i r cr i t eri on o f

the country ’s bus iness , and there seems to be no good

reason to th e con trary , then i t would appear that the

count ry has susta i ned a loss o f one-seventh of i t s

l eg i t imate bus iness s i nce the money pan i c o f 1893.

Can we rea l i ze what th i s loss means ? There were

employed i n ga in ful occupat i on s in 1890 , accord ing

to cen sus returns , person s wh i ch i s

per cent . o f the populat i on . Apply i ng th i s percent

age to the average populat i on for 1 894-

95-

96, the re

should have been employed in gai n ful occupat ion s

dur i ng that per i od an average o f person s .

On th e bas i s o f l oss to bus i ness wh ich Bank C l ear

ances reveal to us , work ers must have

been thrown out o f employment by v i rtue o f the bus i

n ess col lapse . Thi s en forced idl eness was doubt l ess

d i st r i buted more or l ess over the whol e field o f occu

pations , among n ine-t en th s o f th e peopl e , l eav ing le ss

workers i n absolute id l eness , but more o f them on the

marg i n o f a precar i ous subs i st ance . Mr. Geo . B .

Waldron,whom we have al ready quoted , est imates

the va lue o f the nat i on ’s product s for 1890 at

m i l l i on s o f dol l ars . The average advance i n popula

t i on for the years 1894-

5 and 6 a s compared w i th

popul at i on i n 1890 i s a bout 1 2 per cen t . On the

ba s i s o f th i s average i ncrea se , the na t i on’s product i ve

46 P ARAS IT IC WEALTH

that t ime . The nat i on owned i n publ i c l and s and

bui ld ings several t imes the value ofthe se obl i gat i on s .

and why i t could not have pl edged i t s cred i t and good

fa it h for the i r redempt i on , i s a marve l to man . By

mak ing these l egal t enders a money o f fi nal paymen t

w i th a st i pulat i on for the i r gradua l redempt ion and

ret i rement w i th i n spec ified per i ods , th ey would have

c i rcul at ed on par w i t h the best money i n the world .

The demonet i zat i on o f s i l ver was another blunder

whi ch cont r i buted to our financ ial undoing . W i th a

fa i rly good influx o f gold and s i lver coi n under an

un l im i t ed co i nage law,the green —backs could have

been ret i red w i thout caus i ng any apparent hardsh i p ,

and we should have had at l ea st a re l i abl e currency ,

though not a des i rabl e sy stem of money . Of course

ul t imat e d i sa st er must overtake the meta l ba si s , for a t

best i t i s a tem pora ry expedi en t but i n the mean

wh i le th e coun try would have been saved i ncal cul abl e

loss , and i n sp i t e of the growing d i spar i t i e s between

the r i ch and the poor , a t ide of unexampled prosper i ty

would have swept th e n at i on recklessly onward ,

drown ing i n th e d i n and roar o f i ndustr i a l activ itv

th e warn i ng voice of the re former . The quondam

m i l l i ona i re s,havi ng burst t he i r Chrysa l i s o f poverty ,

would now emerge a s b i l l i ona i res not a sp i r i ng for

commonpl ace t i t l e s,but for rea l k i ngdoms . Thus


soc ia l re form s m ight have been success ful ly warded

o ff for an indefin ite t ime . Our bus i ness col l apse , and

the terr i bl e,

su ffer i ng and havoc i t caused could have

been averted i n due t ime by a j ud i c ious use o f the

aggregated weal t h of t hese m i l l i ona i res , for i t was

only necessary to turn some of the redundan t weal th

i n to i ndustr i a l channel s t o in sp i re confidence i n bus i

ness and t ide over the dangers o f retrenchmen t , but

they d id not come to the re scue and th e i r cla ss in

terests have susta i n ed i rreparabl e damage i n couse

quence . The w ide-spread suffer i ng o f t he masses ha s

cal l ed attent i on to the cry i ng econom i c ev i l s and

hastened the day o f industr i a l emancipat i on .

CHAPTER I I I .

One of the most surpr i s ing th ings about our money

system , i s the absurdly smal l ra t i o of money volume

to weal th volume The amoun t o f money i n actual

c i rculat i on i n 1890 , accord i ng to Treasury Depart

ment C i rcular No . 1 23 was wh i l e

the weal th o f the nat i on exclus ive of co i n and bul l i on

was 247 , thus show i ng the money volume

to be l e ss than 2 per cent o f the weal th volume .

That i s t o say , i f a l l th e money i n the land could be

taken out o f c i rcul at i on and made ava i labl e for im

med i ate use , i t could purchase l e ss than 2 per

cent . o f the permanen t weal th o f th e count ry ; or i n

other words i f al l th i s money were ava i l abl e , i t m i gh t

be poss i bl e to convert 2 per cent . o f the nat i on ’s

weal th in to cash , and no more .

Fig 2 P l a t e V shows d iagram a tically th e rat i o o f

money volume to weal th volume . A s n early the

whol e volume of ava i l able currency must be i n per

petual flux and movement to sat i s fy the demands o f

commerce and i ndust ry , i t i s pl a i n , t ha t under the

presen t system mon ey cannot be the permanent re

pos itory o f sav i ngs , except i n a l im i ted way . The48

PARAS IT IC WEALTH49

presen t repos i tory o f permanent sav i ngs i s l and,and

improvement s on l and , and the money i s s imply used

as an i nstrument of i nvestmen t i n these propert i e s .

In other words , we have no cap i tal i st s i n the sen se o f

moneyed men .

” They are s imply propert i ed men”

who can convert the i r property i nto a part of the ava i l

abl e but l im i ted stock of money . Th i s i s an important

po in t to bear i n m ind , and we shal l have occas ion t o

re fe r to i t l a ter .

I f we take the amount o f Bank C l earances for

1890 , and d iv ide the same by th e populat i on o f that

year , we obta i n the money movemen t per capi ta .

The resul t i s $940 . I f now we d iv i de th i s sum by

the per cap i ta c i rculat i on o f that yea r we ob

t a i n 4 1 a s the number o f t imes every ava i l abl e dol la r

i n t he country funct i oned i n the C l ear i ng House

e i ther d i rectly or i nd i rect ly . In other words , a l though

only a smal l percentage of th i s money real ly passed

from hand to hand , t he doll ars were i n ev idence

forty-one t imes , or actual ly figured i n forty — one t ran

sactions . But the C l ear i ng House i s not the med ium

o f al l bus i ness t ransact i ons . There are the deal i ngs

between employers and employes , between the people

and the reta i l e rs,between th e reta i l e rs and the whol e

sa l e rs,between the peopl e and th e banks and al l

m inor transact i on s not requ i r i ng cred i t paper , which


would ve ry co n s iderably i ncrease the actual movement

o f money . There are al so the S tock Exchange t ran

sactions wh ich have not been in cluded . Proba bly a

veloci ty o f 75 t imes per year per dol la r would fa i rl y

represent i t s worki ng energy . Truly a wonderful

act i v i ty — would that l abor were i n such great de

mand .

I f we w i sh to dr i ve a l arge quan t i ty o f wat e r through

a smal l p ipe we apply pressure to gi ve i t v eloci ty .

I f we des i re to force a l arge quant i ty o f electric i tv

through a conductor o f certa in res i stance , we increase

the potent i a l o f the ci rcu i t . How can we carry on a

l arge volume of bus i ness w i th a smal l volume of

money ? By i n creas i ng the v eloc i ty o f i t s c i ren

l a t i on . C red i t paper and th e clear ing house are the

i nst rument s o f propul s i on or the money potent i al .

The dol la r must be i n ev i dence i n al l th ese t ransact

i on s . i t must be ava i l abl e , but i t s c i rcula t i on i s don e

by proxv th rough cred i t paper by a method of debt

cancel la t i on . I t i s a system of swapp i ng accounts

where on ly a l im i ted amount o f currency actual l y

changes ha nds . I t i s e st imated that the dol la r need

ci rcula te l ess than ten t im es to do one hundred dol l a rs

worth o f m one y work,and some peopl e have i n ferred

that we may eventual ly d i spense w i th money a l to

gether . We m ight a s wel l speak o f d i spens i ng w i t h

PARAS IT IC W'EALTH SI

p ipes and condu i t s to carry water , or conductors to

convey elec tric i ty , a s t o speak o f d i spens i ng wi th mone y

t o carry on busi ness .

In t he C l ear i ng House methods th e l im i t o f mone y

propul s i on has been pract i ca l ly reached , and we may

expect but l i t t l e i f any further improvement i n the veloc

i ty o f i t s c i rculat i on . But we are con stan tly rem inded

by econom i c wr i ters that the present money volume

i s ampl e to do the bus i ness o f the country , tha t we

need on ly our d i st r i but i ve share , to success ful ly carry

on bus in ess and i ndustry . The laws o f demand and

supply are c i t ed to show that i ncrease i n volume w i l l

d eprec i a te the value o f a n expanded money , or i n

other words that pr i ce s w i l l advance as money volume

expands . That decre ased i n tere st on an expanded

currency i s only apparent , and merely i nd icate s a d i f

fused prem ium on a d i l uted currency .

These are aston i sh i ng theor i e s . I t i s a rgued that

a s pr i ce i s the rat i o between two i t ems , money and

commod i t i es , ” there fore an expanded m onev must

ra i se pr i ce s .

“ Money — what i t shal l be worth w i l l“ depend

,demand be ing fixed , upon the supply . The

cost o f product i on o f money w i l l influence i t s value

on ly a s i t a ffect s that supply .

”(Franci s A . Walker ,

Q uar . Jn’

l. Econom ics , vol . 8 , page Thi s i s

v i rtua l ly the Q uant i ty Theory” o f money .

52 PARAS IT IC WE ALTH

In theJnl. o f Pol . Econ . for March 1895, Dr . S .

McLean Hardy exam ines th i s th eory by th e i nduc

t i ve method . Miss Hardy c i te s stat i st i cs o f money

volume . clear ing house returns and average pri ce s of

stapl e commod i t i e s i n the Un i ted S tate s from 1860

t o 1892 i nclus i ve , and finds , that wh i l e money volume

and cleari ng house t ran sact i on s have i ncrea sed very

largely s ince 1860 , pr i ce s have not r i sen , but actual

ly fa l l en e ight per cent .

Using Mi ss Hardy'

s figures , to obta in per cap i t a

c i rculat ion and cl earances , the re sul t s are as fol

l ows

P E R CAP ITA C IRCU LATION AN D CLEARANCES .

Da te . C i rcula tion . P er Cent . C learances . P er Cen t .1860 1385 100 $230 100

1892 176 241

Mul t i ply i ng th e c i rcul at i on i n to th e vel oc i ty o f i t s

movemen t a s shown in th e cl ear ing house t ran sact i on s ,

w e have

x or i n round numbers 4 . I t

thus appears , that money movemen t per cap i ta w as

four t imes a s great i n 1892 a s i n 1860 ; or on the

bas i s o f i t s “ cl ea rance” movemen t i n 1860 th e money

v olume was i n e ffect four t imes a s great i n 1892 as

i n 1860 . There fore to sat i s fy the requi remen ts o f

the “ quant i ty theory ofmoney . pri ce s i n 1892 should

54 PARAS I'

T IC W E ALTH

money reluctan t i n exchanges . Goods are var iable,

money con stan t i n va lue . Goods are compet i t i ve and

money non -compet i t i ve under normal cond i t i on s . All

commod i t i e s eagerly seek convers ion i n to cash,and

tend to overtake i t s ava i l abl e volume . Noth ing short

o f the l im i t o f actual cost o f product i on stops them i n

the i r mad compet i t i on for money convers i on , and thus

the cost o f “ goods product ion” constantly approx i

mates , th rough the l aw s o f exchange , th e cost o f

money product i on " ; t he cost o f “ money product i on”

be ing the “ val ue constan t . ” The demand for goods

i s l im i ted . and the i r val ue depends upon th e tempo

rary supply meet i ng the temporary demand , but th i s

l aw funct i on s i ndependent ly of, and ent i rely outs i de

o f money as a factor i n th e i r exchange .

Money as a factor o f product i on , when indust r i e s

and undertak ings compete for i t s use , may become

subj ect to the l aws o f supply and demand , but tha t i t

i s subj ect to fluctuations o f va lue i n e ffect i ng exchanges

o f commod i t i es , i s unwarranted i n fact or theory and

a base l e ss a ssumpt i on . Money i s a value constan t

and there fore non -compet i t ive,and how an expans ion

o f i t s volume by leg i t imate means,should a ffect i t s

va lue i s d itli cult t o undertand .

The e rror of the Q uant i ty Theory i s tha t i t

makes o f money a sort o f fina nc ial “ Dr . j ekyl l and

PARAS I I‘

lC W E ALTH

Mr. Hyde , ” one day perform ing i t s l eg i t imate funct i on

a s a re spectable med ium o f exchange , and the next

prow lingr and skul ki ng about as a depraved , degraded

commod i ty . No doubt our clumsy and barbar i c S\

t em of meta l currency and bul l i on i s respon s i bl e 10 r

the con fus i on , but i t must be remembered that when

coi n or bul l i on i s used a s money , i t ceases to be a

commod i ty , and when used as a commod ity , i t i s no

l ong er a mone y . I t cannot be both at the same t ime .

I f a money possess any vi rtue at al l , i t must be tha t

of absolute permanence and stab i l i ty o f va lue . Lack

ing these q ualifica tions , money becomes a t reacherous

and unrel i able med ium , and cannot funct i on as a true

standard o f va lue . What g ives our currency un i

form ity o f va lue p Assuredly noth ing but the co i nage

law .

A ssum ing an unl im i t ed coi nage law , we have two

separate and d i st i nct market s for gold ; a natura l mar

ket,where the metal i s used i n the art s and industr i e s

a s a commod i ty , and an artific ial market . where the

meta l i s u sed i n the m in ts for money

The m in t rece i ve s gold for co i nage at a fixed rat e

o f say,e ighteen gold dol l ars per ounce . A s long a s

gold obta i n s more than e ight een dol l a rs pe r ounce in

the natura l market,i t w i l l not go t o th e m in t for co i n

age ; but when th e natural m a rket i s glut ted a nd bids


less than e ight een dol lars per ounce , then th e metal

goes to the m i n t . W i th an eager natural market ,

gold co i n s have a natura l t endency to go t o the mel t

i ng pot , but w i th a surfe i ted natural market , t r i nket s

have a tendency to go to the m i n t . Thus the value

o f the gra in s of gold i n the dol l a r i s autom a ti

cal ly and very sat i s factor i ly regul ated and ma in ta i n ed

as between these two market s . The dol la r can

never go below i t s co inage v alue . The theory of de

prec i at i on as fol l ow ing l eg i t imate expan s ion,contem

plates , there fore , tha t a l though the market i s equa l

i z ed and normal , and gold j ust as scarce a s before

expan s i on , i t has i n some way become deprec ia t ed a s

compared w i th other commod i t i es,and i t s purchas i ng

power has become impa i red ! The fal s i ty o f th i s rea

son i ng i s apparent , and should requ i re no re futa t i on ,

and yet upon such reason ing the eth i cs o f usury have

i nd i rect ly re st ed for centuri e s .

A l th ough th e natura l and coi nage market s auto

m a tically mai nta i n gold a t a normal and un i form

value , yet th i s va lue i s la rgely fla t and fictitious when

con si dered simply i n relat i on to the na tura l market .

We have seen that s i nce i t s demonet i zat i on , s i l ve r ha s

st ead i ly decl i ned i n value unt i l the metal i n our

S tandard S i l ve r Dol l a r i s to-day worth less than 40

cent s . But s i l ve r ha s not yet touched bottom . I t


has not yet been un i versa l ly d i scarded , i s st i l l used a s

t oken money and l i ve s i n the hopes o f rehab i l i ta t i on

w i th i t s former co i nage pr iv i l eges . Remove these

susta i n i ng hope s o f recovered prest ige , and the nat

ura l market w i l l then appra i se i t s value at i t s t rue

worth . We may see i t sold for 30 cent s per ounce i f

not l e ss . Restore i t s unl im i ted co i nage pr iv i l eges by

an in ternat i onal co i nage l aw,and what w i l l be the

resul t ? S i l ve r w i l l go t o par w i th gold at once a t

any arbi t rary rat i o ; prov id ing that the law i s guaran

t eed unassa i l abl e permanence and stab i l i ty . Make th e

rat i o 15 t o 1 and immed i ate ly thousands o f worthl ess

hol es i n the ground w i l l become valuable , and the

owners of m ine s profitably worked be fore re-mone

ti z ation wi l l become enormously r i ch ; we shal l reap a

fre sh cr0 p of m i l l i ona i re s and mul t i -mi l l i ona i re s , and

al l for what ? To d ig up a lot o f usele ss metal and

convert i t i n to money of fla t value .

But how about gold ? I t i s the same . Even at the

rate of 16 t o 1 gold i s probably worse puffed up than

s i l ver . The methods o f gold ext ract i on have been

vast ly improved w i th i n the last twenty-five years . Be

fore me i s a sta tement from an expert m iner who has

spent h i s l i fe t ime i n gold and s i l ve r m i n ing , and who i s

the owner o f va luabl e paten t s for t rea t i ng gold and

s i l ver ores . He cla ims that , speak i ng i n a genera l


way,ores carry ing l ess than twen ty dol l ars ’ worth o f

gold per ton were unprofitable to m in e twenty years

ago . That t en years la ter, ores carry i ng hal f that amount

could be profi tably worked , and that now gold can be

profitably extracted from ores carry ing five dol l ars

per ton , and as l ow as two and a hal f dol lars per ton

i n an except i onal case .

Now , here i s a decl i ne i n th e marg in o f cul t i va t ion

from super i or to in fe r i or so i l s o f “ four to one i n

twenty years , and wh i l e these improved processe s

may not be general ly ava i l abl e for a l l k i nds o f ore s

the fact remai n s that the methods o f extract i on have

been great ly cheapen ed , and that these cheapen i ng

processe s have enabl ed us t o work i n fer ior m ines

profitably . I t there fore must cost a great deal l e ss t o

m in e gold now than formerly from equal ly r ich

m in es . Only by v i rtue o f the co inage law ha s i t been

poss i bl e to ma inta i n gold a t a un i form value duri ng

al l t he se years . The improved methods o f ore t reat

ment have s imply crowded down the marg i n o f cul t i

vat i on to i n fer i or m ines , where now i t cost s a s much

to m i ne gold by super ior methods , as i t used to cost

to m in e i t from r i ch m i nes by prim i t i ve methods .

L i ke the pri ce o f ren t , t he pri ce o f gold i s determ ined

at the l owest marg i n o f cul t i va t i on . It thus appears

that the presen t va lue o f gold i s la rgely l i a t and

P ARAsrri c WEALTH 59

fict i t i ous as that o f s i l ver was be fore i t s dem oneti z a

t i on , and were gold sudden ly demonet i zed,th e fiction

would be squeezed out of i t at once . Revoke i t s

pr i v i l eges , and i t s g l ory wi l l depart forever . The

halo o f “ myster i ous fasc i nat i on" wh ich i t i s sa id to

possess and wh ich holds spel l - hound i t s numerous

eager votar i es and worsh i ppers , wi l l van i sh i nto th i n

a i r . I t s hol l ow pre ten se o f “ nobi l i ty” exposed,i t s

fiction o f “ i nt r i n s i c" worth exploded,th i s “ prec i ous”

fraud,degraded and humi li a ted , w i l l take i t s pl ace

among the baser herd to be appra i sed there at its t rue

worth . I t s va lue w i l l probably s ink more rap idly

than that o f s i lver , for i t i s commerc i a l ly l ess use ful

and v aluuable . Where i ts depreci a t i on w i l l st op i s

d ifficult to pred i ct , but i t w i l l hard ly reach i t s former

rel at ive val ue o f 1 t o 16.

The m int val ue o f gold i s purely arb i t rary and may

read i ly be changed so a s to expand or contract the

money volume . A ssum ing tha t an I n ternat i onal

Agreem ent could absolutely guaran tee the perma

nence and stab i l i ty 0 1 a co inage law , and that by the

enactmen t o f an Internat i onal Monetary Congress i t

were decreed , tha t twel ve gra i n s o i: fine gold should

.const i tut e a dol l ar a l l over the world

,immed iately the

present dol l a r would become possessed o f doubl e i t s

purchas i ng power — would ( lo th e money work of two


dol la rs . In tere st would fal l and pr i ce of gold i n the

art s and industr i e s would be doubl ed . Trinket s and

j ewel ry would have a t endency to go t o the mel t i ng

pot — th e demand for gold i n the natural market would

be great ly cut down on account of pr i ce , and nearly

a l l th e out-put o f gold would go to the m i nt under an

un l im i ted co i nage law . The rat io o f s i l ver t o gold

would stand at someth i ng l ike 75 t o 1 . Worth l ess and

i n fer i or m ines would be reopened , th e ta i l i ngs o f ex

han sted m i nes reworked , and the owners o f pre sen t

product i ve m in es would become r i ch beyond the

dream s o f avar i ce . Gold extract i on would be stim u

l a t ed to the h ighest effic iency , new K l ond ikes would

be d i scovered by eager prospectors and th e st ream of

gold flow ing to the m in t s would expand the money

volume at a dangerous pace . Gold m ine owners

would v i e w i th the owners o f protected monopol i e s

and become the masters o f the world .

But where w i l l th i s meta l bas i s u l t imately land us ?

I s not the system fraught w i th the greatest peri l even

now ? Can we foresee the day when by advanced

chem ical re search gold may be produced a t such l ow

cost and i n such large quan t i t i e s as t o smash a l l co in

age agreemen t s and send us t o th e l imbo o f gen era l

ru in and bankruptcy ?

There i s a wel l founded suspi c i on tha t most o f th e

CHAP T E R IV .

I t has been shown , that money volum e and money

movemen t have both largely i ncreased s ince 1860 ,

and stat i s t i cs w i l l bea r us out that product i ve effi c iencyand mater i a l advancemen t have kept pace w i th money

ci rculat i on .

We had reason to bel i eve , that the movement of

money had reached a pract i cal l im i t , and that greate r

vel oci ty of c i rculat i on cannot be expected . The con

clus ion i s forced upon us that whatever advance i n

money effic iency i s t o be looked for i n the future must

come from an expan s i on o f i t s volume . We have

taxed the energ i e s o f the dol l ar to i t s utmost capac i ty ,

we have goaded and pushed i t to th e l im i t s o f en

durance , and now we can do no more . We must

e i ther h i re more dol lars t o rel i eve the arduous dut i e s

o f the presen t overtaxed force,or we must pay more

prem ium as popul at i on advances . The dol la r i s the

busi e st factor i n our c i v i l i zat ion . Wh i l e l abor i s at a

d i scount,th e dol la r i s a t a prem i um . Wh i l e labor i s

i dl e , t he dol la r i s overworked . Wh i l e labor i s starv

i ng,th e dol la r i s p i l i ng up i ncome . Why rush the

dol l ar so >


We have seen that money volume as compared w i th

weal th volume i s very smal l , and that the onus o f

exchange and weal th product i ve fun ct i on fal l s upon a

l imi t ed number o f hust l i ng dol lars . 8 0 smal l i s the

volume of dol l ars,tha t the bulk o f the count ry ’s

bus in ess i s conducted on t ime paper or cred i t money ,

resul t i ng i n such a state of hopel e ss cred i t i n terdepend

ence , that the fa i lure o f one bus i ness fi rm often

i nvol ves and a ffect s the stab i l i ty o f al l , caus ing w ide

spread pan i cs and bankruptci e s . So i nadequat e i s the

money volume that no cons iderabl e re serve fund can

be kept i n the publ i c treasury w i thout ser i ously

impa i r i ng c i rcula t ion , and i n cr i t i ca l t imes bus i n ess i s

kept on the verge o f a pan i cky fee l i ng l es t con tract i on

through hoard i ng cr ippl e trade .

So smal l i s the money force , tha t a prem ium has to

be o ffered to coax the reluctan t dol lars i n to th e finan

c ial harness , greatly to the d i sparagement o f al l in

dustria l and bus i ness undertaki ngs upon wh ich th i s

prem ium fal l s a s a heavy t r i bute . Thi s prem ium or

i nterest i s a symptom of money scarc i ty,and o f abun

dant i ndustr i e s and undertak i ngs compet i ng for i t s use .

The word i ntere st as used by financ iers has two d i s

t i nct mean i ngs . The percentage charge wh i ch in

sure s money aga in st the r i sk o f loss,i s one form o f

i n terest , and the charge for the use or h i re of m oney


otherw i se amply secured , i s also ca l l ed intere st . A l l

ent erpr i ses and undertak i ngs partake o f r i sk , tha t i s

r i sk of loss of money i nvested . To cover such r i sk

where money i s l oaned w i thout adequate secur i ty , a

rate of i n surance i s charged proport i onat e to the r i sk

i nvol ved . Thi s in surance goes under the name of in

terest . Such a charge i s perfect ly l eg i t imate and j us

tifiable . We shal l not ca l l i n to quest i on the propri e ty

o f th i s k ind o f in tere st . What concerns us here i s theprem ium on money amply secured , and i t s ori g i n .

We shal l not quest i on the propr i ety of the charge for

bank i ng and cl er i cal work ,and t he fee s and percen t

ages for e ffect i ng l oan s,t o cover expen ses and sala r

i e s o f that h ighly effi c ient and use ful cl ass , th e

Bankers . What we shal l exam in e i s th e or ig i n and

eth i cal warrant o f usury proper . I t i s to be cl early

understood a t th e out set there fore , tha t th e word“ i n t ere st” i s t o be used s imply i n the sen se o f money

h i re and apart from any r i sk o f loss o f the pr inc ipa l

be i ng i nvolved .

How doe s i nt erest emerge ? There are , say ,

one thousand bus in ess men o f vari ous ab i l i t i es , al l

anx ious t o engage i n some commerci a l or i ndustr i a l

undertak i ng . A l l o f them need cash advances to de

v elop the i r bus i ness and al l can furn i sh secur i t i e s for

mone y l oan s . One hundred o f these men have ex


u)

ceptional execut i ve ab i l i ty and bus i ness gen iu s an

sagac i ty,and can a fford to pay as h igh as 2 0 per cen t .

on money advances rather than go i d l e . Two hun

dred men posses s a very h igh order of bus iness capac

i ty and ta l en t and can pay 15 per cen t. ra tli er than do

w i thout the cash . Five hundred men of good j udg

ment and ab i l i ty can pay 1 0 per cen t. and sw im , but

the two hundred rema in i ng possess i ng on ly average

ab i l i ty must have a five per cent . rat e or go out of

bus iness .

I f i t requ i re a t l ea st 70 0 bus i n ess men to properly

take care o f the i ndustr i e s and commerc ia l en terpr i ses

o f the commun i ty and there i s not qu i te enough mone y

to sat i s fy the needs o f that n um ber, the compet i t i on for

funds w i l l be confined t o th e five hundred men of

good j udgment and ab i l i ty,and a s t hey cannot b id

more than 1 0 per cent. prem ium for the money , tha t

must be the normal rate o i. i n t erest a t wh ich th e l im

i ted money volume may be borrowed on adequate

securi ty . At l ea st one hundred of the five hundred

men of good j udgment w i l l b e non - su i ted for l ack o f

funds a t 10 per cent and the two hundred men of

average abi l i ty w i l l not be i n the race at a l l . I t i s

thus apparent that bus i ness has been compet ing for a

l im i ted volume o f money . We may formulate a de fi

n ition o f i n terest a s fol lows


Interest or premi um on money depends upon i t s

volume and the demand made upon that voltJm e by

compet i ng i ndust r i a l and commerc ia l undertak i ngs .

In tere st on money emerges when the number o f in

dustrial and commerc i a l undertak i ngs requ i r i ng i t s

use , t end to overtake i ts ava i l abl e volume . The rate

of i n tere st i ncreases as the pre ssure o f compet i t i on for

the h i re of money increase s and i s determ ined by what

the l east remunerat i ve o f the actual ly operat i ve i ndus

t r i es are obl iged to pay and yet ma in ta i n themsel ves

i n compet i t i on w i th more success ful r i val s .

In pla i n l anguage , i n terest emerges when an ex

panded volume of i ndust r i a l and commerc i al enter

pr i se s i s compet i ng for a l im i ted volume o f money .

In t erest d i scourages the l ess remunerat i ve i ndustr i e s

and the l ess effi c ient promoters o f bus i ne ss .

Scarc i ty o f money occas ion s a prem ium charge for

money use . L i ke ren t o f land emerg i ng from land

l im i ta t i on or monopoly , so ren t o f money emerges

from i t s l im i tat i on or monopoly . The rent col l ectors

o f the se i ndustr i al opportun i t i e s obta i n w i thout exer

t i on what natural l y belongs to product i ve e ffort .

H ere i s the opt im i st i c v i ew of i n tere st a s taught by

one o f our most popular t ext books on Pol i t i ca l Econ

om y .

I s the h igh ra te o f i n t ere st a hard sh i p ? No ,


th e hardsh i p l i e s i n the scarc i ty o f cap i ta l . Theh igh rate o f i n t ere st becomes th e act ive mean s o fremoving that hardsh i p through increas i ng th e

supply of cap i ta l ava i l abl e t o meet the demand .

A h igh rat e of: i n t erest i s not an ev i l but the cureo f an ev i l .

I ndeed the cure never cures ; the ev i l pers i st s and

i s s imply aggravat ed at t imes The world ’s money

volume i s a s i t were , a l im i ted sheet o f water upon

wh ich i t i s proposed t o float the sh ips of commerce

and industry . The water i s so shal low however , tha t

whenever a success ful enterpr i se i s to be floated , the

l eve l must be ra i sed artific ially . A s the leve l i s ra i sed

i n some financ ial dry-dock by the hydraul i c power of

Int ere st , i t must be s imul taneously depressed some

where el se . The volume of water i s n ever suffi c ien t

t o successful ly floa t a l l the sh ips that would natural ly

ply the port s o f t rade , but only that number that can

a fford to have the water pumped up . Less water .

more hydraul i c power , l e ss money ,more i nterest .

Let us use another i l l ust rat i on : Suppose we have

1 50 fields t o cul t i vat e . 75 wi l l ing men to work ,

and only 50 hoe s t o cul t i vat e w i th . A ssume that th e

150 fi eld s have 30 ove rseers who rent them accord ing

to product i ven ess . The hoes are owned by “ cap i tal

ists .

” L et us imagi ne that i n some way these 50

hoes posse ss the marvel ous effi c iency o f money and


the fields cannot be success ful ly cul t i vated w i thout

them . What w i l l happen ?

Fi elds are i n excess o f men , but hoe s a re sca rce .

The fields wi l l compet e for hoes,and as they cannot

a l l have the use o f them , only 50 o f the more produc

th e w il l be abl e to enter the contest . What ever the

l ea st product i ve o f these 50 fi eld s can a fford to pay,

tha t w i l l be th e normal h i re o f the hoes . In other

words , hoes w i l l go t o a prem ium , fields and men

w i l l be at a d i scount . One hundred fields must re

mai n uncul t i vated , and twenty-fiv e men a fter dest ruct

i ve compet i t i on w i th th e other fi fty for work,wi l l re

mai n i dl e . Twenty field overseers must a l so rema in

i dl e .

Let us reverse th i s . A ssume now that there are

50 0 hoes i n stock , th e same 150 fields and th e same 75men w i l l i ng to work . What w i l l happen ?

There are now more hoes than fields and more fields

than men . The compet i t i on must be for th e men,

and not only wi l l a l l o f t hem be employed a t advanced

rate s,but the owners o f th e fields w i l l l ikew i se bene

fi t by the col lapsed monopoly o f th e hoes . Fi fteen

o f the overseers w i l l b e employed super i n tend i ng and

the bal ance may find l ucrat i ve work a s field hands i f

they des i re . I n othe r words , th e men are at a prem

ium and natural opportun i t i e s are a drug . Men are

busy,hoes are idl e and fields are id l e .


effic iency and the plane o f l i v i ng are lower , where

commerc i a l and i ndustr i a l e ffort i s l es s act i ve,the de

mand for the money funct i on i s not so br i sk and the

i nt ere st ra te s are not so h igh as i n th i s country . U p

t o the fa l l o f the year 1896, the bank rate s i n England

were two per cent . But an era of act i v i ty se t i n dur

i ng the spr ing o f tha t year , ow i ng to developmen t o f

colon i a l enterpri se s “ and South A fr i can gold m i n i ng .

The papers t eemed w i th P romotor ’s Investment

schemes , and demand for money became so br i sk

that i n tere st ra tes , fol l ow ing the l aws of exchange ,

i ncreased , and short ly doubl e d i n amount .

Now i f the money volume were so ampl e that i n a

peri od of great est poss i bl e i ndust r i a l act i v i ty , five , or

t en t imes a s much money l ay id l e i n the banks a s

could be used i n commerc ia l and i ndustr i a l undertak

i ngs , prem ium could not ar i se to act a s a dete rren t t o

product i on . Money be i ng eager for i nve stment , by

v i rtue o f i t s abundance , would y i eld no prem ium , and

the pr i ce o f i t s h i re would s imply be the cost o f bank

serv i ces , a s w i l l be expla ined later .

Perhaps no quest ion i n Pol i t i ca l Sc i ence has so puz

z led econom ic wri t ers a s the quest i on o f i n terest ,

and i n v i ew of th e apparen t s impl i c i ty o f the problem ,

i t seems rather surpr i s ing that i t has not e re th i s been

sa t isfactorily a nswered . A s i f qu i te dom ina t ed

PARAS IT IC W E ALTH 7 1

by the powerful influ ence of author i t y and pre

ceden t,our teachers have chosen the beaten track and

fol lowed in' th e wake o f the i r predecessors . They

have i ndulged i n abst ruse speculat i ons , and stra i ned

fact and fancy i n the e labora t i on o f i ngen iou s theor i es

to account for a very common-place phenomenon .

Laymen and pro fess i ona l s have treated i n l earned

books and essa y s o f th i s subj ect and as many theor i es

have been advanced as there have been wr i ters t o in

vent them .

Be i t t o the l ast i ng honor and cred i t o f the Church

that for centur ies sh e re fused he r moral support and

sanct i on to the pract i ce o f usury and y i elded onl y

when i t was demonstra ted beyond a doubt that leg i s

lat i ve re str i ct i ons actual ly worked hardsh i p and re

tarded soc ia l development , and that i t was bet t e r t o

tol erate the apparen t l y unavoidabl e ev i l s o f usury ,

than to st ifle soc i a l progress .

I n h i s Pol i t i ca l Economy , the lat e lamented Gen .

Wal ker says '

“ For many centuri e s . and even w i th i n a compara

t iv ely recent per iod , the Chr i st i an Church proscr i bedthe tak i ng of i n tere st as a moral o ffen se , and the l awso f nearly al l c i v i l i zed countr i e s made i t a cr ime .

whi l e the voi ce o f publ i c i st s and eth i ca l wri ters a l ik ewa s ra i sed aga in st i t a s a w i cked and pern ic i ous prac

t i ce . Whence came the genera l con sen t i n denounc

7 2 P ARAS IT i C WEALTH

ing that wh i ch to-day i s a ccepted a s 0 ”ya in mora ls ,

and as pract i cal ly benefic ial by a il except afewfam zties ?”

The author i s re sponsi bl e for the i ta l i cs . He gladly

owns to be ing on e o f the few fanat ics .

The ph i losoph ical con sci ence was not soothed,

however , unt i l some one suggested tha t i n t e res t , a ft er

al l , was not pa id on money , but on what money pur

chased, a s i f sh i ft i ng the i n iqui t i e s o f usury on the

shoulders o f weal th pa l l i at ed th e cr ime 0 1 i t i

j ohn Calv i n i s cred i ted w i th mak ing th i s d i scovery ,

and s i nce h i s t ime wr i t ers on Econom ics have been

t ry i ng to reconc i l e Pol i t i ca l Economy w i th th i s v i ew ,

and endeavor i ng to find a pi aus ible theory o f i n t e rest

on the basi s o f some i nherent propert i e s i n w eal th or

i n human nature .

Speak ing o f A r i stotl e ’s ph i l osoph i cal obj ect i on t o

usury , Gen . Walke r says . i n Fi rst Lesson s o f Pol i t i

ca l Economy , ed i t i on o f 1893The error l i e s i n the a ssumpt ion that i n t erest i s

pa id for the use o f money,wherea s i n fact i n t erest i s

pa i d for the use , not o f money ,but o f capi ta l . A

man buys a house and prom i se s to pay the pr i ce a t

some future t ime w i th ‘ i n t ere st ’ meanwh i l e . I nter

e st upon what ? I n te res t upon money ? He ha s no

money . The in terest prom i sed i s upon cap i ta l ihvested i n the house .

”

P ass i ng by t he cons ion o f i deas i n the c i tati on


th e reader ’s a tt en t i on i s drawn to the la st sen tence

wh i ch v i rtua l ly surrenders h i s ca se t o h i s adversary .

The loose manner o f i n terchangeably us ing the word“ Cap i tal” t o mean money i n one sense and the pro

duct s of the money funct i on i n another , has landed

the wr i t er i n to a verbal i ncons i st ency . I t was by the

money funct i on that the mater i a l s o f th e house were

creat ed . I t was the money funct i on that bu i l t th e

house w i th the mater i a l s creat ed by the money func

t i on . I t was the money invested i n the house on

wh ich i ntere st must be pa id , see i ng that“ he has no

money” t o pay cash . I n the la st analys i s a l l i nvest

ment con s i st s o f money,and al l i nt erest i s pa i d on the

i nvestmen t . We pay for th e h i re o f the money in

vested , because there i s a con stan t demand for money

i n other commerc i a l and i ndustr i a l undertak ings wh ich

eagerly seek i t s funct i on . I t must be re l eased and

i ntere st i s the for fe i t pr i ce of i t s ransom .

Aga i n he says“ A merchant or manufacturer buys a stock of goods

and g ive s h i s note prom i s ing to pay the pr i ce ‘with

i ntere st ’

. Not i nterest upon money , for money wasnot used i n the t ran sact i on , but i n t e re st upon Cap i ta li n the form o f merchand i se or mater i a l s wh ich have

been entrusted to h im and out of wh ich he expect s t omake a profit wh ich he i s to share w i th the owner o f

the cap i tal . ”

PARAS IT IC WEALTH

Most marve lous reason ing ! Surely the goods , for

wh ich note was g iven have not only been the product

o f th e money funct i on , but i n turn they have cost the

whol esal er money , a nd he doubt le ss gave h is note for

them “ with in tere st” t o pay the manufacturer for

money used product ively ; and th e manufacturer i n

turn gave the bank a mortgage to secure not on ly th e

pr inc ipal but the i n te res t a l so . The intere st i s a lways

pa i d on money and on noth i ng el se . How can i t b e

otherw i se ? Do what we w i l l , we cannot get away

from the money funct i on i n commerce and i ndustry , for

even barte r i s carr i ed on i n t erms o f money . Money

i s an indust r i a l factor and weal th i s i t s product . We

can no more escape the subtl e , al l-pervad i ng influence

o f money i n our c i v i l i zat i on , than we can get out o f

th e influence o f the atmosphere and breathe .

When we unl earn th e fa l lacy of th e Cap i tal” theory

o f i n terest o f J ohn Calv in , and ful ly real i ze that th e

prem ium i s pa id on the money funct i on o f cap i ta l ,

then i t w i l l become qui t e c l ea r that usury as we know

it, wi th a l l i t s deplorable consequences , i s s imply the

resul t o f abnormal econom ic cond i t ion s and may be

pract i cal ly abol i shed .

The h i story o f “ usury speculat i on s forms a cur i ous

and i n terest i ng chapte r i n Poli t i ca l Economy . A

summary of them i s g i ven i n a la t e work by V on Bohm


Bawerk — (Cap i ta l and In terest - Prof . Smart ’s t rans

l at i on). It i s a rev i ew of the var i ous theor i es o f Interest w ith an elabora t ion o f on e of h i s own , based on

the “ t endency i n human nature t o under-value the

future i n compari son to th e presen t . ” Th i s theory

Pro fessor John B . C la rk apt ly cal l s In terest for “ v i

cari ous wa i t i ng

Among severa l others are the theor i e s of “ Land

Spon taneous Reproduct i on and Re

ward for Abst i nence .

”

The first a ssumes that , as money invested i n land

bri ngs an i ncome , that there fore i nvestment i n any

form of cap i ta l must pay an in t erest .

The reproduct ive theory assumes that as crops grow

and an imal s breed w i thout man ’s a ss i stance , there

fore i t i s i n th e nature o f cap i ta l to posse ss l i ke power

o f reproduct i on .

The reward for abst i nence theory i s'

expressed i n

Pro f . Hadley ’s Econom ics , pages 268- 269, a s fol l ows“The system of i n terest was approved by j ur i st s

because the accumulat i on and use o f cap i ta l was ad

v antageous t o soc i ety a s a whol e and i ncreased the

publ i c weal th .

” “W i t h th i s end i n v i ew , soc i e ty was

w i l l i ng to o ffer rewards to those who would absta i nfrom destroy i ng weal th and would use i t product

ively .

The land and reproduct i ve theor i e s carry the i r own


re futa t i on . Von Bohm Bawerk’

s explanat i on,l i ke

that o f t he reward for abst i nence,appears pl aus i bl e

i n theory , but i s l ack ing i n pract i ce . They are both,

speak ing general ly , based on persona l sacrifice .

L e t us exam i ne the reward for abst i nence theory .

The sacrifice o f abst i nence has i t s ful l measure of

reward i n possess i on . That the possess i on should i n

add i t i on g ive th e possessor an undue advantage over

the product i ve e ffort o f others i s not con temp lated i n

the reward .

Human e ffort t ends to move i n the l ine o f l ea st d i s

com fort . The idea o f d i scom fort i n the normal man

embraces not on ly the press i ng needs o f the present,

but l i kew i se the urgent want s o f th e future . Th i s

g ives r i se to prudence and thr i ft . The d i scom fort o f

pre sen t abstem iousness i s ful ly counte rbalanced by the

sat i s fact i on and com fort o f prov id ing aga i n st the d i s

t re sses o f future pr ivat i on and penury . In th e m i se r

th i s i n st i nct i s abnormal ly devel oped , and i n the spend

thr i ft whol ly l ack ing . Except i n the case of the

mora l ly depraved , th e mo t i ve o f thri ft and sav i ng i s

i ndependent o f th e sord id instinct our econom i c wr i t

e rs would have us bel i eve . In other words , peopl e

do no t save money for the sake of obta i n i ng usury on

it, but for th e purpose o f prov id i ng aga i n st s i ckn ess

and old age . A h igh prem ium m i ght act a s an add i


at al l, for barr ing a few except ional ca se s , the suffer

i ng and sacrifice are ent i rely v i car i ous , and fal l on

those who make a de sperat e effort to save on reduced

earn i ngs . A l im i t ed few obta i n control o f the natura l

opportun i t i e s o f th e earth and pl ace al l product i ve

effort under t r ibute . I t cost s them no e ffort or incon

ven ience t o save — de ferred hopes do not figure i n

pat i ent wa i t i ng , and sacrifice o f abst i nence i s not even

thought of. The weal t h rol l s up o f i t s own accord,

and keeps on accumulat i ng . I t grows at th e expense

o f the sweat and to i l o f those pay ing t r i but e for i n

dustrial opportun i t i e s . The su ffer i ng i s v i car i ous .

Five per cent. of the peopl e do the sav ing and n i nety

five per cent. do t he su ffe r i ng .

Another popul ar not i on , i s that Labor i s under obl i

gations t o cap i ta l for i t s sub s i stence . Cap i ta l i s ad

vanced by th e empl oyer t o enabl e Labor to subs i s t .

Cap i tal i s a re serve fund or grub stake , ” and

there fore enti tl ed to i n te re st a s the pr i ce of i t s use .

But Labor owes cap i ta l noth ing , cap i ta l ha s no cla im

whatever on Labor i n that re spect . Labor an t i c i pate s

i t s reward i n wages by produc ing weal th be fore be i ng

pa id for it.

I t i s not a quest i on wheth er soc i e ty benefits by

v i rtue o f weal th be i ng used product ively , i t i s a ques

ti on whether i t i s econom ic a l ly nece ssary t o pay inter


est for i t s h i re except at a negl ig i bl e rate,such h i re

charge be ing an equ ival en t o f actual se rv i ces rendered .

I f we can prove that under normal financ ial con

d itions , i nt ere st on money wi l l pract i cal ly cease , then

we have sol ved the probl em . What are the cond i t i on s 8

The answer has been pla i n ly i nd i cated— expand the

money volume . How th i s can be don e pract i cal ly

and how we can secure a currency of unchal l enge

abl e stab i l i ty , wi l l be expla i ned further on . When

w i l l th e money vol ume be suffic ient 9 The money

volume w i l l be suffi c ient, when i t i s so abundant that

banks w i l l re fuse t o pay any prem ium on i t— when

they w i l l charge a pr i ce for i t s sa fe-guard i ng . Not t i l l

th en w i l l th e money volume be ample ; not t i l l then

w i l l al l property cease toy ield non-p roduct i ve revenue

and i ndustry bear a t r i but e to id l eness .

In h i s art i c l e on the “ Cause o f Fi nanc ia l Pan i cs

i n the Arena for March , 1894 , Mr. J. W. Bennet t

wri t e s as fol l ows“The borrowed cap i ta l o f th e coun try cl a im s more

i n remunerat i on than the count ry can produce . Every

dol l a r i nvested i n busi n ess cl a im s a return ca l l ed in

terest. Every dol l ar represen t i ng debts unpa id cla im sa l ike remunerat i on . There i s not wealt h enough to

m eet all these obl igat i on s and the bus in ess o f theworld must go i n to the hands of a rece i ver every now

and then so tha t a n ew start i n bus in ess may be made .


The i ndustr i a l world i s a lway s i n a state o f poten t i a l

bankruptcy , but cred i t t ends to keep i t out o f the

hands o f a rece iver . ”

“ Any d i sturbance of cred i t prec ip i tat e s a pan ic .

“The presen t weal th o f the Un i ted S tat es may beplaced i n round numbers a t That

ful ly 80 per cent . of th i s sum pays i nterest may be

v erified by any person who care s to g ive the subj ect

a thought

“ Someth i ng l ike 80 per cen t . o f th e weal th of the

coun try i s i n th e hands of about person s,or

about’

one two hundred and fort i eth of th e populat i on . Th i s excludes th e wea l th o f th e wel l to dofarmers and merchan ts , and i t goes w i thout say i ng

that n in e- t en th s o f th i s weal th held by the immen sely

r i ch i s i n t erest bear i ng . Nearly a l l o f i t i s l en t,or i f

not l en t out i t i s i nvested i n some busi ne ss where in

terest on th e money i nvest ed i s added to th e re turn

or profits of the undertakers . The weal th i n the

hands of fa rmers and merchant s i s p ay i ng i n te re st on

al l tha t i s not used for the personalw ants o f them

selves and the i r fam i l ie s , and even many of the homestead s o f the count ry are pay i ng i n tere st . ”

“ At l ea s t one-hal f o f such wea l th i s i n t e re st hea ri ng . An exam inat i on of the mortgage l i st s o f t he

several S tat es w i l l more than bear out th i s e s t imat e .

We a re then pay ing fixed charge s,a s the ra i l roads

put i t, on about of the coun t ry ’

s

weal th . The net rate w i l l average about fi ve pe r

cent . , and tak i ng i nto cons i dera t ion commi ss i on s and


other charge s,s i x per cent . i s a low est imate o f the

gross rate . The i nt erest on at s ix

per cent .'

i s per year . To get th eaverage i n tere st charges for the la st decade , we must

take the average of i nt ere st pay ing cap i tal , wh ich i sabout We have then an average

i n terest o f a sum wh i ch more than

absorbs the ent i re yearly i ncrease of weal th i n the

Un i ted S tate s . During the l a st decade the weal th o f

th i s count ry has i ncrea sed aboutDuri ng th e same per iod the i n terest charges were

(Mr. Bennet t has s i nce em

bod i ed h i s v i ews on usury i n h i s book , “ A Breed of

Barren

Thus i t seems that prem ium in tere s t more than ab

sorbs the yearly wea l th i ncrease . The cumulat i ve

power o f i n terest w i l l bet ter appeal to the imagi na

t i on when plot t ed i nto a curve a s shown on P l a t e V . At

t en per cen t the pri nc i pa l i s doubl ed every seven

years , so tha t i n l ess than a cen tury the i n terest i s s ix

t een thousand , th ree hundred and e ighty - four t imes

the pr i nc ipal , and aft er that th e pr incipal i ncrease s a t

such a stupendous rat e that the figures soon become

unmanageabl e . At fiv e per cen t the pr i nci pal doubl e s

every fourteen years , j u st hal f a s rap idly as a t t en

per cen t . I n teres t accumulate s i n a geometr i ca l rat i o,

whi l e savi ngs i ncrease ar i thmet i cal l y . Thus i f $ 10

i s saved up , say every seven years , i n 140 years the


pri nc ipa l w i l l amoun t to $ 2 0 0 . If, however , t en dol

lars i s put i n to a bank at t en per cent . i n tere st every

seven years,at t he end of 140 years the pr i ncipal w i l l

have become over twenty m i l l i on s o f dol lars !

On compari ng the curves of weal th w i th the curve

o f i nterest , th e resemblance i s very str ik i ng and be

trays the i r k i n sh ip . The curves o f weal th and in

come sudden ly l eap i nto space at the end where ren t

and i nterest absorb the nat i on ’s yearly output .

H ere t hen i s the subtl e pr i nc ip l e wh ich makes

weal th paras i t i c i n th e body o f i ndustry— the poten t

influence wh ich take s from the weak and g ives to th e

st rong ; wh ich makes the ri ch r i cher and the poor

poorer ; wh ich bui ld s palace s for the idl e and hovel s

for the d i l igent . Thi s,then , i s the baci l lus of con

gested weal th — th e d i sease germ of pauper i sm .

But worse than that , i nt erest ensl aves labor . We

m ight condone the inj ust i ce o f i n t eres t , i f i t l e ft us

free to earn , but i t l im i t s i ndustry by clos ing up the

avenues o f employmen t , and fet ters i ndustr ia l e ffort

by mak ing i t compet i t i ve . Employmen t wh ich should

be free and access i bl e , i n stead o f a r i ght , becomes a

favor and a pri v i l ege ! Interest i s t he pr i ce every in

dustry pays cap i ta l a s a l i cen se to do bus i ness . I f i t

cannot pay the tax i t must shut down . In terest i s a

sort o f t ar i ff on human e ffort to d i scourage ent erpr i se ;


i t i s a fixed charge on commerce and i ndustry . Thus

i t i s tha t we a lways have a glut o f l abor in stead o f a

glut o f employment . Th i nk of i t, even now there are

m i l l i on s o f unemployed actual ly begging for work i n

a l and o f boundle ss opportun i t i e s and resources ! Such

a perverted stat e o f th i ngs should long ago have con

dem ned the econom ic cond i t i ons that produced it, and

set our teachers of Pol i t i ca l Economy to th i nki ng .

Three per cent. of th e peopl e control th e avenues o f

employment and n i nety- seven per cent . are dependent

on th e i r pl ea sure . And as the weal th p i l e s up i n th e

hands o f these monopol i zers o f opportun i t i e s , th

t r i bute must be heav i e r and escape from i ndust r i a l

sl avery more hopel ess . The weal th o f the few be

comes a burthen to th e many — a m illston e about th e

n eck o f l abor and a s i t grows the burthen i ncrea ses .

We thus rea l i ze,how that i ndust ry w i th i t s own hands

forges th e cha i n s of i t s en slavement . And are we

not rem i nded o f i t on every hand ? Have we not th e

spectacl e o f lord ly d i spl ay and osten ta t i on on the one

hand , and abj ect fiunkey i sm on the other ? Has not

a perverted soci a l cond i t i onl ed to perverted ideas o f

persona l worth and respectab i l i ty ? Do we not see the

desp i sed Bread W i n ners” t rea ted w i th scorn and con

t empt wh i l e the id l e r i ch are rece i ved w i th d i st i n

gu ished cour te sy and respect ?

86 P ARAsITi c WEALTH

H ere i s a hand sampl e o f our presen t Pol i t i ca l

economy , as cul l ed at random from a recent financ ial

work“ Cap i ta l i s an econom i c quan t i ty used for the pur

pose o f profi t . ”

“Whatever g ives a profit i s cap i t al .

Could anyth ing be more bruta l ly frank and bl un t

than th i s pla i n stat ement o f the case ?

Le t us apply th i s defin ition t o l and , the other fac

tor o f i ndust ry“ Land i s an econom ic quant i ty used for the pur

pose o f profit .

”

“Whatever g ives profit i s l and .

”

H ere we have the two i ndust r i al opportun i t i e s o f

product i ve e ffort used a s i n st rument s o f extort i on for

pr i vate ga i n , and econom i c wr i ters have seen noth i ng

wrong i n a cond i t i on wh i ch perm i t s o f the i r l im i tat i on

and monopoly . The doct r i ne i s monstrous , and as

we con templ at e the enorm i ty o f it, t he i n i qu i ty o f the

soci a l cri me grows upon us . These two great mono

pol i e s pract i cal ly cont rol the avenue s o f employment

and place Labor ent i re ly at the mercy o f those in

possess i on . A sh rewd m inor i ty tak i ng advantage o f

unj ust econom ic cond i t i ons places th e maj or i ty under

t r i bute . Labor rendered hopele ssly compet i t i ve, be

comes hel pl e ss , degraded and en slaved , i s sol d i n the


open market l i ke chat te l s . Can _ any th ing be more

strategi c ? C an slavery be more absol ute than unde r

the compul s i on o f hunger P

The shrewd m inor i ty i s i n control . I t i s,and has

been,a government o f the r i ch , by the r i ch and for

the r i ch . The masse s and the i r i nt erest s have been

a secondary cons iderat i on as we may d i scover by read

i ng our t ext books on Pol i t i ca l Sc i ence . The shoe

p i nched the poor , i gnorant and down- t rodden , but not

the r i ch and clever , and there i n l i e s the whol e secret

o f re luctan t re form . An i ncome tax a ffect i ng the

unj ust ly r i ch i s promptly set as i de a s “unconsti

tutional,” wh i l e a tar i ff tax wh ich further depl ete s

those a l ready otherw i se despo i l ed , i s en forced

as be i ng j ust and proper . The i n te rest s o f the r ich a re

promoted by spec i a l l eg i slat i on , and l aws prej ud ic ia l

t o them set a s ide or not en forced .

The r i ch m i sdemeanant e scapes pun i shment by pay

ing a fine ; the poor man unabl e to do so,i s put i n j a i l

and h i s fam i ly further pauperi zed . The para s i t i c

idl er i s shown al l poss i bl e soci a l courtes i es and con

s iderat i on,wh i l e th e worke r i s soc i al ly ostraci zed and

d iscr im inated aga in st . And so th i s prec i ous soc ia l

system of ours wh i ch creates a predatory idl e class ,

and a despo i led product i ve cla ss , s imply reflects th e

eth i ca l feature s o f th e econom ics that produced it.

88 P ARAS ITIC WEALTH

A l l our l aw s seem to be framed to furth er encour

age those soci al ly benefited and.

d i scourage those

soci a l ly wronged . The whol e mach i nery o f stat e,

th e l egi sl at i ve , j ud ic i a l and soc ia l a rrangements , a l l

favor l oot and oppress t he looted .

I f we exam i ne th e con st i tuen ts o f our l eg i sl ature,

we find th ere i n , w ith here and there an except i on , th e

r i ch and th e representat i ve s o f the r i ch . They are

e i ther the so-cal l ed “ success ful” busi ness men,or

corporat i on lawyers whose i n te re st s are w i th weal th

aggregat i ons . The “ success ful" bus i ness man does

not n ecessar i ly mean one who benefited the commun

i ty a s m uch as h imsel f , but on e who grasped the 0 p

portun ities a perverted s oc i a l cond i t i on o ffered , t o be

come wel l to do at the expense o f soc i e ty . Natural ly

such peopl e see noth i ng wrong i n a soc ia l cond i t i on

wh ich g ives them such enormous advantages over

the i r fe l lowmen , and are qu ick to denounce those who

find faul t w i th the sy stem , as “ ag i tators”,

“ dema

gogues”,

“ soc i a l i st s” and what not . But cal l i ng

names i s poor a rgument,and w i l l not ava i l a moment

aga in st a w e l l defined pol i cy backed by a sol id eco

nom ic pr i ncipl e . The peopl e a re becom i ng very t i red

and impat i en t . They have lost con fi dence i n the

two great part i e s , and from sheer desperat i on to oh

ta i n rel i e f,have al t ernately pun i shed th em by over


whelm ing de feats . They are t i red o f prom i ses and

apolog i e s ; they wan t re form and they w i l l have re

form .

CHAPTER V

We have thus fa r con fi ned our remarks to the

money quest ion and the ev i l s o f i n t erest , but the solu

t i on o f the money probl em i nvolves th e sol ut i on o f the

land quest i on . Money and Land are the two econo

m ic factors for th e use o f wh i ch i ndustr i al e ffort i s

t axed . Money and the product s o f i t s funct i on take

th e i r tol l i n i n t eres t , and land i n ren t .

Thanks to th e cla ss icalworks oe . H en ry George ,

very l i tt l e i f anyth i ng rema in s t o be sa id on the lan d

quest i on that ha s not al ready been d i scussed w i th

grea t e loquence and ab i l i ty i n h i s books .

U p t o a certa i n po in t , th e pr i vat e ownersh i p of

l and m ight be i nd i fferen tly de fended on the pl ea o f

exped i ency , but when immense tract s o f land are

monopol i zed for specul at i ve purposes and ren t i s

charged as the pr i ce o f id le possessi on , then such

fore stal lment becomes a quest i on of eth i cs . Ti tl e s

to l and when t raced far enough back a re found i n

the i r l a st analy se s to rest on foresta l lmen t , w ith pos

s i bl e i n termed ia te stages o f Conquest or plunder ,

wh ich cond i t i on of acqui s i t i on could hard ly be con

s idered va l i d cla im s to ownersh ip .

99


Forty-seven years ago Mr. H erbert Spencer cl early

and conclus i vely proved i n h i s “ Soci al S tat i cs” that

from the Standpo i n t o f abstract e th i cs , pri vat e owner

sh ip o f land i s not j ustifiable . And fore see ing the

d iffi culties of reorgan i za t i on on a bas i s o f compensa

t i on to present owners , he says : “To justly est imate

and l iqu idate the cla ims , i s one of the most i n t r i cate

probl em s soc i ety one day w i l l have to solve .

”

In v i ew of the apparen t d ifii culties i n the way of

the economi c rea l i zat i on o f the abstract r i ght s to l and ,

Mr. Spencer had occa s ion lat er to somewhat modi fy

h i s v i ews a s to the pract i cabi l i ty or even des i rab i l i ty

o f i t s nat i onal i zat i on,see i ng that i n any scheme of

j ust compensati on to land owners , the i n terest on pur

chase money would probably exceed the cost o f rent .

Mr. H enry George has found faul t w i th Mr. Spence r

for th i s change o f fron t,but when we fa i rly cons ider

the reasons , we can hard ly blame Mr. Spencer for

bel i ev i ng that th e lo t o f the d isposse ssed would not

be improved by s imply convert i ng land rent i n to

money ren t .

I s there any wonder , i n v i ew of the doctr i nes of

Pol i t i cal Sc i ence , that th i s maste r m i nd of the century

should be puzzl ed over the apparent d i scordance be

tween abst ract eth i cs and pract i ca l pol i t i cs , and that

he should be obl iged to say i n h i s l ett er to the London

T im es


The reason for th i s stat e o f hes i tancy i s, that I

cannot see my way toward reconc i l i a t i on of th e eth i

ca l requ i rement s w i th the pol i t i co-econom ica l requ i re

ments . ”

Had Mr. Spencer ’s at t ent i on been a s v i ta l ly drawn to

th e quest ion o f money a s i t had been to that o f l and,i t

i s presumabl e he would not have been m i sl ed by th e

fa lse reason i ng of econom ic wr i te rs , and we should

have had a corroborat i ve chapte r on the eth ics o f

usury , i n st ead of v i ew s m odified to meet perverted

soc i a l cond i t i ons .

A recogn ized pr i nc i p l e i n pol i t i ca l e th i cs concedes

to man th e r ight of l i fe , l i berty and pursu i t o f happ i

ness consi sten t w i th th e free and unrestr i cted exerc i se

o f s im ilar r igh ts by al l other men .

From th i s pr i nci pl e Mr. Spencer deduced the law

that Equi ty does not perm i t property i n l and .

” From

the same pr i nc i pl e he would have reasoned that

equi ty does not perm i t the l im i ta t i on by monopoly of

any i ndustr i al opportun i ty of man , and that cont rol or

posse ss i on o f such opportun i t i e s const i tuted an

abri dgmen t o f h i s r i ght s and a v i ola t i on o f j ust i ce .

A s the se opportun i t i e s are used to wrest t r i bute

from to i l,th e i r l im i tat i on by monopoly i s moral ly

wrong . It must fol l ow as a rul e o f Pol i t i cal Sci ence

based on equi ty,that i ncomes der i ved from non-pro

ductive sources a re unj ust .


control . P rem ium less money and emancipated l and

are the watchwords , and the “ Declarat i on o f I ndus

tr i a l Independence,

” the mott o of Soc i a l Re form .

Land rent seems to be noth ing but i n t ere st on the

purchase money,and on money i nvested i n improve

m ent s . But i t i s more than that , l and i s a factor oi.

product i on and compet i t i on for i t s use l i ke compet i

t i on for the h i re of money,g ives r i se to a prem ium .

”

L im i t ed money vol ume bears a prem i um — In tere st .

L i m i t ed land area bears a prem ium — Ren t .

Rent and In terest are th e pr i ce soc i ety pay s for l i

m itation . They a re exactly the same th i ng under

two d iffercn t names .

By the gradual expan si on o f the money vo l ume and

by improved methods o f i t s c i rcula t i on , i nt erest on

money decl i n es but l and cannot be expanded l ike

mon ey , and as popul at i on encroaches upon i t s ava i l

abl e area , l and prem ium or ren t advance s . I f there

fore , we had a prem ium less money , l and values would

r i se enormously as compared wi th pr i ce s o f compet i

t i ve product s . Land be i ng then the on ly non-pro

ductive source o f i ncome-fl the on ly med ium where

id le possess i on could get someth i ng for noth ing— de

m and for i t s ownersh i p would be great . The Soci a l

Problem would be on ly part i al ly sol ved .

In any t rue scheme o f money re form the se tw in


ev i l s,i n t erest and l and ownersh i p , must be abol i shed

together .

The value o f land increa se s i n two ways : Fi rst

by compet i t iv e d emand for it, due to pressure o f popa

l at i on . and second by publ i c and pr i vate improvement s

i n i t s v i c i n i ty . Every roadway , boul evard , ra i l road .

cana l and other t ransportat ion and bus i ne ss fac i l i t i e s,

every l i brary , art gal l ery , educat i ona l institution , park ,

publ i c bu i ld i ng and i n fact a l l manner o f publ i c con

v en iences and improvements tha t make l i fe worth

l i v i ng , enhance the value o f l and . Such increase i n

l and values i s i nc i dental to co-operat i ve influences ,

and there fore be longs to the commun i ty . A l l the

peopl e o f the count ry cont r i bute d i rect ly or ind i rect ly

to make land valuab l e , th ere fore al l the peopl e should

part i c i pate i n i t s benefi ts . Thi s i ncreased valua t i on i s

the “ econom i c surpl us” whi ch i s now appropri a ted by

land owners to the great hurt and i nj ury of th e land

l ess .

In th i s coun tr y populat i on increa se s at the rat e o f

about three per cen t yearly , there fore the average land

values should i ncrease at the same rate independently

o f any improvement s on the land , publ i c or pr ivate .

Th i s fact la rgely account s for th e encouragemen t of

immigrat i on by the owners o f land . Over-populat ion

i s a curse to al l but t he land r i ch,for i t enhances the i r

96 PARAS IT IC W E ALTH

weal th and places the masse s under bett e r control and

subj ugat i on to the masters of th e soi l .

Ren t i s est imated from the l evel o f th e l east des i r

abl e or l east product i ve l and . cal l ed “ no- ren t” l and .

Th i s i s the l evel on wh ich the “ econom ic surplus” i s

d ra i n ed i nto the pocket s of l and owners . A s th i s

l eve l i s forced down to l ess des i rabl e l ands by the

pressure of advanc i ng popula t i on . or by specula t i ve

monopoly,th i s “ econom ic surplus” i ncreases , and th e

dra i n on i ndustry i s greater . Let us not be m i sl ed

by the ch i ld i sh arguments that ren t does not a ffect

th e pr i ce o f products , or the wages o f l abor . I t i s

enough that i t a ffect s the purse . Rent and i n terest

t ake the i r sl i ce out o f product i ve e ffort i n a suffi

c iently rea l and tang ibl e way . The cap i ta l i st does

not feed on co i n , nor does the land-l ord eat so i l .

They both , however , take th e l i on’

s share of the na

t i on ’s output .

Rent may be defined as fol l ows

R en t on l and depends upon i t s ava i l abl e area and

the demand made upon that a rea b y compet i t i on for

i t s use . Ren t on land i s the tol l product ive e ffort

pays to ownersh i p ; th i s t ol l advances a s demand for

the so i l i ncrea se s , and ren t , there fore . bears a deh

n i t e rat i o to the pressure o f popula t i on . The l im i t to

advanc i ng rent i s that l im i t where pressure o f popu


say s i n h i s book on the “ Distr i but i on o f weal th , ” t ha t

tak i ng i n to account th e s i ze of the fortun es , i t w i l l

be found that perhaps 95 per cent.

’

of th e tota l value

i s due to i nvestm ent cl assed as l and va lues ‘

an’

natura l monopol i es,and industr i e s a ided by such mo

nopolies . But a s i n the case o f money prem i um , th i s

i s not i t s worst o ffense . We m ight overlook th e ex

act i on s o f ren t on land and th e vast fortunes made by

l and specul at i on,i f i t l e ft us otherw i se free to earn .

But land monopoly closes up the avenues o f agricul

tura l employment t o those unabl e to purchase land ,

a nd thus makes unemployed labor compet i t i ve and

helpl e ss .

I t i s a remarkabl e fact and on e wh i ch we have

a l ready not i ced , tha t l and i s probably the ch i e f repos

i tory o f sav i ngs . Land i s th e most des i rabl e med i um

o f i n vestmen t , for l i ke money and i ts product s , i t y i e ld s

an income w i thout product ive exert i on . I t ha s the

further advantage that a s i t cannot be lost , dest royed or

stol en , i t i s th ere fore absol utely sa fe . Natural ly , and

by pre ferment there fore , l and becomes the repos i tor y

of sav ings and an i n st rumen t for d raw i ng i ncome from

indust r i a l effort . Our absurdly smal l money volume

is s imply a med i um for e ffect i ng the convers ion of one

property i n to another and not a permanen t repos i tory

o f sav ings as i t should be . I f l and were not purchase


able , 1noney would e i ther go i nto some use ful i ndust ri a l

i nvestment or rema i n id l e as a depos i t i n some sa y i ngs

bank . Assum ing the volume o f money t o be great ly

i n excess ofbus iness requ i rement s , i t would th en com

pete for i nvestment and bri ng no i nterest . I t could

be used to advantage only i n product i ve e ffort and

would eagerly compete for al l manner o f bus i ness and

i ndustr i al i nvestment s where speculat ion and r i sk

would g i ve i t an I nsurance in tere st . I t could be had

from the banks , when amply secured , at par , wi th a

nom inal charge for bank servi ces added . Thi s se r

v ice charge would be a s a compensat i on for the care

and respons ib i l i ty of: sa fe-guard ing the money aga i n st

l oss , the exerc i se o f j udgment and d i scret ion i n e ffect

i ng r i skles s loan s , and al l the l egal , cl er i ca l and other

necessa ry expen ses connected w ith money transac

t i on s . Such charge for bank serv i ce s would become

recogn ized a s the pr i ce o f money h i re . I n the ca se of

rent s on dwel l i ngs and other bui ld ings , mach ine plan ts ,

etc ., th i s res idua l charge w i l l probably be i ncluded as

money hi re . The balance o f the ren t w i l l o f course con

s i st o f cost o f main tenance and super in tendence . The

use o f property , causes deteri ora t i on and th i s wast e

must be covered by cost o f repa i rs and ma i ntenance

wh i ch i s a natura l and j ust charge . Thus “ ren t“ on

Cap i ta l resolve s i t sel f i n to serv ices .

I OO PARASIT IC WEALTH

Under such a money system product i ve e ffort would

rece i ve a st imulus i t neve r had be fore . W i th l and

specul at i on closed , money would seek i nvestmen t i n

product i ve undertak ings and enterpr i ses . W i th l and

ren t equal i zed and money ren t neut ral i zed , numerous

i ndustr i e s and undertak i ngs woul d spr i ng up that had

no chance i n th e race be fore .

Labor freed from the gal l i ng yoke o f i ndustr i a l

sl avery would take fresh courage and acqu i r e a d ig

n ity and i ndependence i t never be fore possessed .

10 2 PARASITIC \VE ALTH

l ooked for except through the expan s ion o f the money

volume to meet the demands of: soc i a l and materi a l

advancement i n the future . We d i scussed the meta l

bas i s , and found i t un su i table and unsat i s factory as a

money med ium , and , i n fact , dangerous . We exam

ined th e eth i cs of usury , and found that charge for

money h i re had no warran t i n equ i ty,unl ess based on

actual product i ve serv i ce . We exam i ned the eth i cs

of l and ownersh ip , and found that i t s l im i tat ions , l i ke

that o f money , gave r i se t o a prem ium cal l ed ren t ;

that wh i l e money could be rendered prem ium less by

expand i ng i t s volume , l and could not be made ren t l es s

by the same means , and there fore should be emane i

pated from pr i vat e ownersh ip , and i t s benefits equal

i z ed . We concluded that a ny rad ica l improvemen t

i n money re form must i ncl ude la nd emancipat i on ,

\Ve i ndulged in a specula t i on a s to the e ffect on i ndus

t r i a l product i on of an expanded money volume un

abl e to take re fuge i n l and i nvestment .

Can we real i ze such cond i t i ons pract i cal ly ? We

certa i n ly can . Paradox i cal a s i t may appear , out o f

two ev i l s we may produce a good — out oftwo wrongs

make a r ight , and al l that w i thout v i ol a t i ng any pr i n

c iple o f j ust i ce .

To be an idea l currency , our money must posses s

the fol l ow i ng propert i e s : i t 1-7 us t be


A money of finalpayment and un i form power i n ex

change .

A money of unassa i l abl e secur i ty .

A money o f unchal l enged value .

A money of unquest i oned sta bi l i ty and permanence .

A money of suffic ient volume to be prem ium less .

What founta i n source o f exhaust l ess weal th can i t

be tha t prom i se s such guarantees o f stab i l i ty and

val ue ? The answer has no doub t been ant i c i pated .

Wha t el se could i t b e but l and ?

Land value or th e econom ic surplus i n th e Un i t ed

S ta te s may be est imated a t about 30 b i l l i on s o f dol la rs .

Thi s does not o f course include the va lue o f improve

ment s . such as structure s and bu i l d ings . Nearly a l l

o f th i s land valua t i on i s now i n posses s i on of pr i vate

i nd i v idual s and corporat i ons . Thi s valuat i on i s con

stantly apprec i at i ng and w i l l n ever have a t endenc y

t o depreci at e except through race decadence . I t s

value,stab i l i ty and permanence there fore re st s on the

pers i stence o f the race i t sel f .

Money based on land val ues and o f ampl e volum e

cannot be “ cornered" and otherw i se man ipul ated b y

Speculators , as our gold co in and bul l i on have been .

I t i s not subj ect to any fluctua tions o f value to upset

commerce and cause pan i cs . A s the source of a l l

weal th , the value o f l and as a money bas i s stands


unchal l enged . I t i s a lways i n e v ide nce , a lways i n

demand , i t cannot be l ost , stol en or dest royed , and

possesses , th ere fore a l l th e des i rabl e qualifications o f

a true and idea l bas i s o f value .

How shal l w e emancipate th i s land from pr i vat e

ownersh i p on pr i nc ipl e s o f fa i r compensat i on,and

convert i t i n to money of c i rcul at i on ? Very eas i ly i h

deed . The people o f the Un i t ed S tat es w i ll s imply

agree to pool t he i r i n te rest s i n the use o f the earth .

The i nd i v idua l owners w i l l agree to trans fe r the i r

land to the col lect i ve peopl e of the Un i t ed S ta tes on

cond i t i on that the col l ect i ve peopl e i ssue to the i nd i

v i dual owners rece i pt s or certifica tes t o the ful l and

j ust value o f the i r hold ings . The Un i ted S ta te s to

decl are these certifica tes t o be the const i tut i onal

money of th e count ry — th e l aw ful money of ul t imate

paymen t rece i vabl e for a l l debts , publ i c and pr i vate .

A l l metal s here to fore used as money to be decla red

demonet i zed by law . The Un i ted S ta tes to redeem

i t s metal currency at par i n the law ful money o f the

la nd , i t present ed w i th i n a certa i n l im i ted t ime , th e

bul l i on t o be sold i n th e open market fo r whateve r i t

may br ing . A l l i t s paper ob l igat i ons to be redeemed

i n the l aw ful money and cancell ed .

We w i l l thus at once possess a currency backed by

pl edge s and guarant ees o f unchal l enged value , o f nu

assa i l abl e permanence and stab i l i ty .

I OU PARAS IT IC WEALTH

dol lar . I f t ax rate s are h igh,more dol l ars w i l l be

requi red to ren t t en acres o f l and . and the dol l a r w i l l

buy l e ss goods ; i f the tax rates are l ow . l ess dol l ars

wi l l be requ i red to ren t ten acre s o f la nd , and the

dol l a r w i l l purcha se more goods . The value o f the

re form dol l a r i s en t i rely a matter o f the land tax . It

may be wel l t o stat e here that a l l taxat i on , sav e that

on land,i s a v i ol at ion o f th e r ight s o f pri vat e prop

erty . The governmen t oversteps i t s t rue funct i on s

when i t l ev i e s a tol l on human e ffort , and i t can not

be justified i n do i ng so on any grounds o f equi ty .

Land , a s we have sa id , i s man’s natura l opportun i ty ,

the l im i tat i on o f wh ich by pri vat e ownersh ip works

i n j ust i ce and hard sh ip on the l andl ess . R i gh t here i s

the real and t rue excuse for a government . The

S ta t e should not only be a pol i ceman,but the arbi t e r

of fa i r pl ay . I t should not on ly “ rest ra i n m en from

i njuri ng one a nothe1"’

phys icallv and soci al ly , but l i ke

w i se i ndustr i a l ly . In al l natural and i ndustr i a l oppor

tun ities the S ta t e should step i n a s umpi re to equal i

benefits , and th i s , i n the ca se ofland , i s i ts on ly wa rran t

for impos i ng a land tax . A s ren ts cannot be abol i shed ,

th e S ta te col lect s them for th e peopl e and appl i e s

them for the publ i c good . I t per forms the use ful

funct i on o f equal i z i ng the benefits o f l and tenure .

The same argument appl i e s to th e money quest i on .

PARAS IT IC WEALTH 1 0 7

One of the most surpri s ing propos i t ion s i s that wh ich

advocates l eav i ng the i ssue o f the peopl e ’s money to

pr ivate ent erpri se . H ere i s a v i ta l factor o f produc

t i on to be l e ft to the v i c i ss i tude s o f pr i vat e speculat i on

nd profit ! A most e ssent i a l and important S tat e

funct i on to be surrendered to i nd iv idual s ! O i course

the propos i t i on i s on a par w i th our presen t theor i es

o f money and our barbar i c commod i ty currency . Pr i

vat e i ssue and cont rol o f money i s the source o f great

hardsh ip and oppress i on to th e peopl e , but i t i s a

boon and source o f profit to i nd iv idual s . L i ke land,

money must be forever emancipated from pri vate con

t ro l and specul at i on .

I t i s ent i rely w i th i n the l eg i t imate sphere o f th e

peopl e ’s government not only to i ssue i t s money,but

to e stabl i sh mercant i l e and sav ings banks and to

t ransact al l the r i skle ss financ ial bus i ness o f the coun

t ry at the actual cost for bank i ng serv i ces . A s pre

va i l i ng bank rate s o f i n terest determ in e what cap i ta l

shal l exact from indust ry for i t s h i re , the great im

portance o f establ i sh ing such a rat e a t i t s actua l cost

o f bank serv i ce , becomes apparent . The peopl e s im

ply pool the i r financ ial i ssue s , and resolve them se lve s

i nto a “ bank trust . ” The volume of mercant i l e bus

iness i s con stantly i ncreas ing and ifhealthy cond i t i on s

preva i l ed should th i s year show a movemen t o f some

1 0 8 PARAS IT IC WEALTH

th i ng l i ke 75 t o 80 b i l l i on s of dol lars . I f the bank i ng

charge for t ransact i ng th i s amount o f bus i nes s aver

age s one tenth o f one per cent .,th e gross yearly re

ce ipts would foot up from 75 t o 80 m i l l i ons o f dol la rs ,

wh i ch should be far i n excess of any poss i bl e expen se

o f a very el aborate sy stem of bank ing i n st i tut i on s .

The Sav i ngs banks should rece ive the people ’s money

for a smal l charge and guarantee absolute sa fety to

the depos i t s . Th i s money could be l oaned for a very

smal l bank serv i ce rate on proper secur i ty . I t i s pre

sumabl e that such a rat e would fal l con s iderably be

l ow the hal f o f on e per cent . Th i s ra t e would con

stitute a leg i t imate charge for l egal , cl er i ca l and other

bank serv i ce s . A l l cap i ta l would cl a im th e r ight to

col l ect for such a charge , apart from i t s cost o f mai n

tenance and super i n tendence . I t i s o f course under

stood that the establ i shmen t of these nat i onal i n st i

tutions should carry w i th i t n o rest r i ct i on on pr i vat e

en terpri se . 11 pri vat e banks can serve the peopl e

bet ter than publ i c i n st i tut i ons they should be encour

aged and not placed at any d i sadvantage .

I ndeed we cannot d i spen se w i th pr ivate banks , for

they w i l l be use ful where r i sks are i nvol ved and where

specula tiy e enterpr i ses a i d the i ndust r ia l movement .

Such r i sks o f course carry w i th them an i n surance

prem ium . I t ha s been expl a in ed , that “money re

I I O PARAS IT IC WEALTH

pri va te‘

ga in and profit. Ind i v i dual i sm w i l l run r i ot .

We can hard ly be worse o ff w i thout a government

than w ith one cont i nual ly i n t er fer i ng w i th commerce

and i ndust ry by a v i c i ous and d i scr im i nat i ng cl ass

l eg i sl at i on based on a degrad ing paternal i sm . W e

are cursed w i th too much l egi sl at i on and too much

government . I t s funct i on s are da i ly grow i ng more

compl ex,more corrupt and more expen s i ve . We w i l l

do wel l to heed th e words o f one o f the greates t

sta te smen o f th e century“ A wi se and frugal government , wh ich shal l re

“St ra i n men from i n j ur ing one another ; shal l l eave

“ them otherw i se free , t o regul at e the i r own pursu i t s

of i ndustry and improvement s , and shal l not take

from the mouth o f l abor the bread i t ha s earned ;“ th i s i s the sum of good governmen t . ”

(Thomas J e ffe rson — Fi rs t I naugural).I t thus appears that the equal i z i ng funct i on o f th e

S ta te i s i t s eth i cal warrant for the col l ect i on o f the

l and tax and that such exerc i se o f tax i ng power works

i n th e i n tere st o f j ust i ce and prevent s t he spol i at i on o f

one class by the other . I t further appears that the

purchas i ng power of the Re form Dol la r i s s imply a

matt er of the tax rat e and under perfect cont ro l o f the

peopl e , A l l values i n exchange are thus re ferred to

the tax rate a s a st andard , and whethe r the dol l ar

PARAS IT IC WEALTH I I I

purchases much or l i t t l e o f th e compet i t i ve product s ,

w i l l depend on how much land i t w i l l ren t .

I f the l and values i n the Un i t ed S ta t es amoun t to 30

b i l l i ons of dol la rs , and i f they have been ye i ld i ng s ix

per cent. net i ncome i n rent , th en i n order that the

re form dol l a r should ma in ta i n exactly th e same pur

chasi ng power as the S tandard gold dol la r , the a ssess

men t should be made on the same bas i s . The land

tax i n theory would there fore y i eld on that bas i s 180 0

m i l l i ons o f dol l ars per year . But pract i ca l ly the net

V ield w ould fal l cons i derably below th i s e st imate , for

al l l and held speculat i vely would be at once rel eased ,

and peopl e would occupy only what they actua l ly

needed . Thi s would set free vast t ract s of va luabl e

but unoccupi ed land for cul t i va t i on , and probably

m i l l i on s o f fam i l i e s woul d now take up agr i cul tura l

l and at a rental who could not here to fore purchase .

Th i s would at once re l i eve the congested cond i t i on of

t he c i t i e s where rent s would decl i ne . The rel i e f thus

o ffered t o compet i t i ve l abor i n the overcrowded t rades

and occupat i ons would be very benefic ial. Product i ve

efli c iency would be increased , and the rat e o f wages

would there fore natural ly advance .

The i n tel l i gent reader w i l l n ot be apt to con found

the proposed money re form w i th th e “ Real Estat e

Loan Associ at i on” sch eme o f John Law , nor w ill it

I I 2 PARAS IT IC WEALTH

be necessary to say that th e re form money has noth

i ng i n common w i th the notori ous French Ass i gnat . "

Th i s absurd financ ial scheme wa s not a l and emane i

pation re form , but a pol i t i cal measure for d i str i but i ng

confisca ted church property and t o replen i sh an ex

hausted t reasury . The ass igna t was a sort o f i n tere st

bear i ng bond , based on church rea l esta t e . W i t h

cr im ina l reckl essness these paper obl iga t i on s were

mul t i pl i ed unt i l th ey were inflated t o t en t imes the

value o f the estat e s they represen ted , with the natural

resul t — bankruptcy .

To sat i s fa ctor i ly and pract i cal ly put the proposed

Money Re form i n to operat i on wi l l reqn ire great j udg

ment and w i sdom and much work , but once laun ched i t

w i l l be an enduri ng financ ia l re form . In order t o re

deem the meta l co i n s and paper obl i gat i on s o f the gov

ernm ent at the i r par value , the new re form money must

have th e same purcha si ng power as th e gold stand

ard,and th e tax rat e must there fore approx imat e th e

ren t rat e a s closely a s poss i bl e .

No di scret i onary powers must be g iven to congress

i n regard to the i ssue of money except w i th i n th e l im

i t s o f a wel l defined const i tut i ona l l aw , unl ess by con

sent o f th e peopl e through th e Re ferendum . The

money must be i ssued w i th i n certa in prescr ibed rul e s

a t a per capi ta rat e . that rate to be constantlv main

I I 4. PARAS IT IC WEALTH

s ighted j udgment and wi sdom . The i ssue should

take place very slowly and i n sm al l i n stal lment s to

ma inta i n an econom ic equ i l ib r i um between a stim u

l a ted money ci rcul at i on and compet i t i ve product s

seek i ng i t . I t should be a gradual process of som e

years,so that the enormous spur g iven to commerce

and indust ry w i l l not l ead to reckl ess extravagance

among the peopl e . I t should be clearly understood

that an augmented money volume need not imply a

greater ci rculat i on . We may have ten t imes a s great

a volum e o f money a s at pre sen t,and ci rcul at e i t

only one- t en th a s fa st , or we may use on ly one-t enth of

i t and let the other n in e-‘

t enth s rema i n i dl e .

But there is no doubt th at the re form money w i l l

g i ve i ndustry a great i mpe tus , i ncrea se the product i ve

output , and corre spond i ngly i ncrea se the con sumpt i on

o f goods . There w i l l b e an en larged money ci ren

l at i on on an en larged market , for a l l l abor w i l l be

ful ly employed,and both the demand for the com

forts o f l i fe and the supply o f these com fort s wi l l be

great ly augmented .

Long looked for prosper i ty w i l l have come at la st

and the soc i a l wel l-be i ng wi l l be w i thout any l im i t

except that o f product i ve effic iency .

What w i l l be th e e ffect on i nt erest o f so large a

volume of money ?


Where we had “ propert i ed”men , we wi l l now have“ moneyed” men , and banks w i l l ov erflow wi th the

sav ings o f thr i ft . Money w i l l now have become th e

repos i tory o f sav ings . I t cannot take re fuge i n land

i nvestment and draw income , for specul at i on i n l and

i s forever cl osed ; i t must e i ther go i n to improvements

and bu i ld ings or othcr product i ve e ffort , or i t must

l i e id l e i n banks . There w i l l b e more money , t en

t im es ove r , than undertak i ngs and en terpr i se s seek ing

i t, and consequently i t w i l l br i ng i n no revenue . Nine

tenths o f i t w i l l l i e i d l e i n banks— th e dol l ar w i l l have

a long needed rest . Commerci al banks w i l l now re

qui re compensat i on from deposi tors for cl er i ca l and

other expen ses connected w i th money movement s ,

and even savi ngs banks guarantee i ng absolut e secur

i ty to depos i t s would real ly be ent i t l ed to some nom i

nal recompense for sa fe guard ing the peopl e ’s cash .

I n stead o f a horde o f idl e money get ters exact i ng

t r i but e from industry by land ren t and money rent ,

we'

w i l l have men honest ly earn i ng th e i r l i v i ng i n

some cal l i ng use ful to soc i ety . The dol l a r they earn

w i l l represent a dol l ar ’s worth o f serv i es rendered .

The day for get t i ng someth ing for noth i ng w i l l have

passed . Indust r i es and bus ine ss en te rpr i se s w i l l com

pete w i th each other for capabl e men , and labor for

the first t ime i n th e h i st or y o f the worl d w i l l get i t s


j ust due . The farmers o f the country who more than

any other class have su ffered from vic i ous t ar i ff l eg i s

l at i on , w il l benefit immensely by land emancipat i on .

They w i l l not on ly have the i r l and but i t s value i n

money too , and th e i r t ax rate s w i l l b e no more than

now . The first e ffect o f the money re form w i l l b e a

general l iqu idat i on o f debt s and mortgages and then

w i l l fol l ow an era o f prosper i ty and progre ss n ever

be fore equal l ed i n the h i st ory o f c iv i l i za t i on . We

may expect a soci al devel opment exceed i ng the w i l d

e st dream s o f re formers and a nat i ona l grow th and

advancem ent equa l ly great .


I t becomes a patr i ot ic duty — a matter o f Nat i onal

sel f-preservat i on that a l l race-degrad i ng and deter

iorating influences be kept out o f the country . We

have enough of our own deprav i ty and worthle ssness

to take care o i , and i t w i l l requi re a few generat i on s

t o ful ly ass im i l at e and el evate what raw mater i a l o f

nat i ve and fore i gn debasement and incompetency we

now have i n our m idst . I t i s th e duty o f every na

t i on to a sp i re to race supremacy,t o ra i se i t s l evel o f

com fort and l i v ing to the h ighest poss ibl e standard

and to e l evat e those fal l i ng below the mark . By such

race emulati on and r i val ry , th e general wel l-be i ng

and happ i ness o f mank ind w i l l be best con served .

The cr i t er i on o f mater i a l advancement i s a h igh

plane o f l i v i ng , and th i s , i n fact , i s a s ign o f produc

t i ve effic iency . The test o f natura l i zat i on should not

on ly be sel ect i ve a s t o moral i ty,bu t a l so a s to sel f

support . The ignoran t and ineffi c ient a re an undes ir

abl e e l ement i n any commun i ty . The l ower the

sca l e o f i n tel l i gence and greater th e i ncompetency

the more numerous the breed ; th e h igher the intelli

gence and ab i l i ty , the fewer but more sel ect th e o ff

spr i ng . Reckl ess propagat i on i s a menace to the

cont i nued wel l-be ing o f any count ry . 0 ver~

popula~

t i on i s a curse , and he i s the greate st bene factor o f

m ank i nd who t eaches i t procreat i ve rest ra i nt , and

PARAS IT IC WEALTH I I 9

ra i ses i t s p lane o f l i v i ng . I f paren tal respon s i b i l i ty

carr i e s w i th i t the h igh ideal of qual i ty i n stead o f

quant i ty in o ffspr i ng , t ra i ned efii c iencv i n stead o f ne

glected educat i on , th en the m i l l en ium w i l l b e i n

s igh t . Look at Indi a . A l l who have read o f the

horrors o f plague and fam i ne i n th i s un fortunat e land

of early marr i ages and low plane o f effi c iency and l i v

i ng , need not wonder that some twenty m i l l i on s o f

th i s cr im inal ly prolific peopl e must d i e of starvat i on

th i s year . I gnorance . i ncompetency and over pOpu

l at i on have don e it. Nor w i l l econom ic re form a fford

permanen t rel i e f to such peopl e , for an y soc i a l amel i

orat i on w i l l a t once be met and overtaken by a reck

l e ss i ncrease i n popula t i on , wh ich noth i ng but th e

starvat i on l im i t w i l l check .

The l im i t o f subs i stence i s the lowest pl ane o f com

fort and decency on wh ich a peopl e w i l l agree to l i ve

and rear fam i l i e s . Accord i ng a s people i ncrea se i n

i n t el l i gence and effi c iency , th i s p lane of l i v i ng i s

ra i sed,and con sequently , i n t imes o f d i stre ss , the

plan e of l i fe o f such commun i t i e s does not descend to

th e low l eve l o f starvat i on and d i sea se . But these

peopl e are sa tisfied t o l i ve on a plan e , i n compar i son

w i th wh ich our paupers are i n aflluence . Can we

wonder then that a l ocal fam i n e w i l l work so much

d i st ress ?

I 20 PARAS IT IC WEALTH

The pl ane o f l i v i ng i s the cr i t er i on of a nat i on ’

s

c i v i l i za t i on , and marks the d i fference between a

superi or and an i n fer i or race . I f the nat i ona l i t i e s o f

the earth were a rranged i n to a curve o f product i ve

effic iency , i t would be found that th e l eve l o f com fort

a nd pl ane ofi

ci v i l i zat i on fal l w i th i n the same curve .

The great probl em of c i v i l i zat i on i s there fore,how to

ra i se the standard of com fort , or more correct ly speak

ing , t o ra i se i t s product i ve effi c iency .

“ Pauper” l abor

i s worth on ly pauper wages because o f i t s i n fer i or i ty

and i neffi ci ency . I t goe s to the poor house . Under

heal thy econom ic cond i t i on s al l l abor has i t s opportun

i ty and can get em ploym ent,

'

but the inefficient l abor

though cheap,wi l l n ot be sought for a s eagerly a s

eth cent l a bor though dear . The compet i t i on i s for

the best,and the more effi cient wi l l obta i n the great

er reward .

We have found tha t our average product i ve effic i

ency,tak i ng Mr. Wa ldron

’

s est ima te , i s a bout two

dol l ars per day per worker . Thi s effi c iency i s prob

ably from twen ty — five t o forty per cent. higher than

that o f Engl i sh , French or German workers , and so

down th e gamut o f n at i onal i t i e s unt i l we reach the

l ow l evel o f effic iency among the Ch inese and H i n

dus .

Dur l evel i s two dol lars . Why not th ree ? The

I 22 PARAS IT IC WEALTH

ness and i ncapaci ty wh i ch cr i e s out aloud for help and“ P rotect i on 3” Do the strong and capabl e need pro

tection ? The word should be beneath the con tempt

o f every se l f respect i ng Amer ican who bel i eves i n

manl in ess and sel f- re l i ance .

P rotect i on aga i n st what ? I s i t aga i n st “ Pauper ’

l abor ? We are import i ng i t a s fa st a s the steam- sh i p

l i n es can carry i t to these shores . I t br i ngs w i th i t i t s

nat i ve i ncompetency and degradat i on and fills our

poor-houses and pauper i n st i tut i ons .

What then i s th e protect i on for ? S imply to “ pro

teet” the peopl e from buy ing a t natura l market rat es

what they now must purchase at monopoly rate s . It

i s not protect i on but bl ack-mai l .

Accord i ng to the i nvest igat i on s o f the New York

Tr i bune i n 1892 , t o account for th e grea t fortun es

o f the m i l l i ona i re cla ss , t h e stat ement s abundant ly

prove that about 28 per cent. of th e immensely r i ch

obta i n ed the i r weal th from protected i ndustr i e s . Pro

tection means a monopoly . We have seen tha t the

natura l monopol i e s o f Cap i ta l and Land have caused

enormous d i spar i t i e s o f weal th , but not conten t w i th

these i n strument s o f exact i on , we must create a spec i a l

monopoly and cal l i t “ protect i on , ” t o ass i st the pro

cess .

The ta ri ff i s a rest ri ct i on . I t say s to commerce and

PARAS IT IC W’EALTH 1 23

i ndustry : "w e want less weal th .

” I t say s to human

e ffort : “we want l ess effi c iency .

I f t rade con fers no benefit on man i t should be

stopped . I f i t does not i ncrease the effic iency o f

human e ffort,i t should be d i scon t i nued .

The theory of protect i on i s the bel i e f that by tar i ff

restr i ct i on s we encourage the devel opment o f home

i ndustr i e s,and that home compet i t ion i s a guarantee

o f ul t imat e l ow pri ces ; that by protect i on we encour

age home labor a s aga i n st fore ign l abor . i n fact we

get the bet t er o f the fore igners at every po in t . Osten

s ibly we are do ing th i s . but i n real i ty i t works very

much l ike the paten t water-gas stove o f many years

ago,wh ich was advert i sed to make i t s own gas from

water,and to requ i re no other fuel . I t d i d make i t s

own gas from water , but a t the expen se o f i t s i ron ,

and consumed i t sel f chem ical ly i n the process o f burn

ing . So wi th these protected i ndustr i e s ; they thr i ve

on the nat i ona l substance they flourish at the peopl e ’s

expense .

Trade cannot be made one-s ided ; i t must be reci p

rocal i n i t s benefits . By t rade rest r i ct i on s we pun

i sh the fore igner and we pun ish oursel ve s equal ly .

He cannot t rade w i th us so a s t o get cheaply what

cost s h im dearly to produce and g ive us i n return

cheaply what costs us dearly t o produce . I t h i nders

I 24. PARASIT IC W E ALTH

the exchange o f benefits . I t makes human e ffort l e ss

e ffect i ve and i s a loss o f weal th .

When i t once becomes cl ear to the Amer ican work

man that l eg i sl at i ve rest r i ct i on s can add noth ing

to our weal th , but that they can and do d ivert money

from pocket s where i t belongs i nto pocket s where i t

does not belong ; when he understands that tar i ff l aws

d i vert l abor from natura l and product i ve channel s in

t o artificial and unproduct i ve channel s , and that they

make cont i nued employment cont i ngent on these art i

fic ial props , wh ich when removed throw labor out o f

work , t hen perhaps he w i l l no longer l i s ten to the

seduct ive argumen t s o f the monopol i st .

L i ke i ntere st on cap i t al and,the land monopoly ,

these re st r i ct i ons on trade exact a tr ibute from i ndus

tr i a l effort . They close up the avenue s o f employ

men t , make l abor compet i t i ve , and place i t at th e

mercy of the monopol i s t .

Make money prem ium - l e ss , emancipate land , and

abol i sh al l t rade restr i ct i on s and you open up three

great avenues of empl oyment now guarded by mon

opoly . When these are th rown Open , l abor w i l l be

emancipated from i ndustr i a l sl avery . Work — endl ess ,

infin ite work— wi l l be a drug compet i ng for men to

do i t. We w i l l th enbe as anx ious for th e fore igner

to do it, a s we are now that he should not do it.


m in i ng i ndust r i a l i n t egri ty and sel f-rel i ance,but the

enervat i ng influences o f a pern i c i ous stat e i n ter

ference i s i nvad i ng our soci a l l i fe . Our meddl esome

paternal i sm i s breed ing a race o f moral weakl i ngs,

l ack i ng the stamina of manhood and sel f-rest ra i n t . A s

phys i cal and mental excel l ence and supremacy are

the re sul t o f pers i s ten t e ffort to overcome obstacl e s

and d iffi culties , so character and mora l fibre are th e

resul t o f a con stan t st ruggl e to overcome temptat i on .

And yet forsooth , we must d i scourage sel f— re stra in t

and br i ng up a race coddled i nto an artific ial stat e o f

respectab i l i ty and rect i tude by restr i ct i ve measures

prompted by a narrow puri t an i ca l rel i g ious paterna l

i sm ! We must be our brother ’s keeper l e st he go

wrong !

We are presumably a nat i on o f freemen and pr ide

oursel ves on our free i nst i tut i ons , and yet our person

al l i bert i e s are curta i l ed to a degree that would not

be t ol erated i n any monarchy i n Europe . We dare

not t rust oursel ve s l est freedom for good become a

l i cense for ev i l ! Le t us be men , and prove oursel ves

worthy of the bl ess i ngs o f li berty . L et us forever

and w i thout revocat i on annul al l b lue-l aws and oth er

laws restr i ct i ve o f personal freedom and g ive charae

t er a chance . Let manhood and personal re spon s i

b ility a ssert themsel ves . and we shal l br i ng up m en


worthy of sel f government , a race o f freemen . sel f

respect i ng , sel f- support i ng and sel f— re l i an t .

Ne i ther moral i ty nor prosper i ty can be l egi sl ated

i n to a nat ion , but they may be ser iously h i ndered b y

re st r i ct i ve l aws . Fam i ly tra i n i ng and home in

fluences determ i ne the one and i nd i v idual e ffort the

other .

Let us not delude ourselve s furth er i n regard to

stat e pat ernal i sm , for i t spel l s soc ia l s l avery .

” Annul

a l l t rade l im i t at ions and abol i sh al l rest r i ct i on s . Let

us have soc i a l and i ndust r i a l freedom i n the w i des t

sense . Revoke al l ta r i ff dut i e s,exci ses a nd other

taxes , for they are not only rest r i ct i ve o f persona l

freedom,but they are v i ol at i on s o f th e ri ght s of pro

perty . There i s but one justifiable tax and that i s

the land tax — the “ s i ngl e tax” advocated by Mr.

H enry George . Thi s tax equal i ze s the benefi ts of

l and tenure and there i n l i e s i t s warrant i n j us

t i ce .

What i s the bas i s o f mater i a l prosper i ty ?

Fi rst,a s expl a ined , we must set r igh t our pervert

ed e conom ic cond i t i on s . Thi s w i l l emanci pate l abor

from monopoly d icta t i on and make i t non - compet i t i ve

as fa r a s opportun i t i es o f employment a re concerned .

Ifunder such favorabl e cond i t i on s , we l ikew i se mak

our l abor e ffect i ve , and prevent unnece ssary wastes o f

1 28 PARAS ITIC WEALTH

e ffort , al l th e requ i rements for a rap id mater i a l ad

vancement are sat i sfi ed .

At the head of al l wastes o f human e ffort i s the appal l i ng waste due to the ma intenance of large stand i ng

arm i es and floa ting nav i e s . Fortunately i n th i s coun

t ry th e expend i ture s for m i l i tary and naval establ i sh

ment s are not very great,though there i s a dangerous

t endency to i ncrea sed appropr i at i on s for that purpose .

Corrupt pol i t i ca l influences , however , compet i ng for

the vot e o f the veteran s of the l at e war by prom i ses

o f l i beral party l eg i sl at i on has swel l ed the pen si on

rol l un t i l by reckl ess and cr im i nal ly ext ravagant ap

propria tions th e burthen s o f the peopl e have been

enormously i ncreased . The lofty ideal o f patr i ot i c dut y

has been degraded and debased to th e sord id l evel

o f party spoi l s , and an i nd i scr im i nat e grant of pen si ons

has resul ted i n a d i sgrace ful scrambl e for S tat e pat ron

age , so tha t , t o be enrol l ed on th e pen si on l i st , no

l onger con fers honor or d i st i nct i on to the benefic iary ,

great ly to the d i sparagement o f the t ruly deserv i ng

heroes of the war .

What we now pay i n pen si ons al one w i l l r i val th e

out l ay s o f some o f the great European powers i n the

mai n tenance o f l arge stand i ng arm ies .

j ust i ce must be the a im of Soci a l Re form and on .

pens i on l aws should be rev i sed . The pen s i on rol l

should be a rol l o f honor and m er it.


The waste s o f effi c iency due to trade re str i ct i on s we

have al ready not i ced . The se w i l l cease when such

rest r i ct ion s are removed . The waste s o f e ffort i n the

usel ess m i n ing of gold and s i lver for money use w i l l

cease w i th the i ssue o f the Re form Money .

Our system of i ndust r ia l product i on and d i st r i but i on

o f product s i s fortui tous and un sc ientific ; and as a con

sequence very waste ful . The losses due to our’

com

petitive bus in ess methods are great ; i ndeed the sums

annual ly spent for profitless advert i s i ng and usel ess

ma in tenance o f an army o f m iddlemen and agents to

s t imulat e t rade are enormous . The wast e due t o

m i sd i rected energy and m i sappl i ed e ffort i n conduct

i ng product i on and exchange i s appal l i ng . But the

process i s improvi ng . The system of i ndustr i a l pro

duct i on and exchange by Trust s and Comb i nat i on s i s

s imply an improved method w ith th e waste ful fea ture s

o f compet i t i on and fortu i tous product i on el im inated .

The Trust i s a sc ien t i fi c method o f i ndustr i al produc

t i on and d i st r i but i on , and should be encouraged .

These combinat i on s are benefi c i a l where free t rade

and free compet i t i on preva i l , but tar i ff rest r i ct i on s

make o f them dangerous and unscrupulous monopol i e s .

The trust i s the germ o f a great movement toward

product i ve effic iency and must revolut i on i ze our pres

en t waste ful methods . The output and d i st r i but i on

PARAS IT IC WEALTH I 3I

o f a l l the i ndust ri es o f the world must sooner or later

come under the cont rol o f organ i zed i nte l l igence , and

the Trust i s such an organ i zed e ffort . I t should be

not iced , tha t the trend o f i ndustr i a l e ffort i s constantly

toward greater effic iency . Every i nvent i on , every

l abor sav ing dev ice , every short cut to wealth‘

produc

t i on , every improvement wh ich i ncreases th e efli c iency

of human labor i s a bl ess i ng . I t makes our houses

bet te r , our clothes bet te r , our conven i ences greate r ,

and st imulates to greate r i ndustry and e ffort . We

obta i n more o f the conven i ences o f l i fe for l ess e ffort

t han be fore . These improved methods do not l essen

employment— on th e cont rary they open up new

opportun i t i e s . I f our efii c iency were a hundred t imes

greater than now , th e opportun i t i es for employment

would not be l ess , but more numerous , for w i th every

new opportun i ty , new poss i b i l i t i e s would be opened

up . Work i s infin ite , and i f the avenues to i t are

closed , i t i s our own faul t .

There i s another source o f waste , wh ich w i th eco

nom i c j ust i ce and sc ientific managemen t w i l l va st ly

decrease and i n t ime en t i rely d i sappear , prov id ing

the tendency to over-popul at i on can be kept i n check .

I re fer to the phys ical ly,moral ly and menta l ly

affl icted — the cri ppl ed , bl i nd , i n sane and otherw i se

phys i cal ly i ncapabl e ; the drunkards and crim i na l s and


otherw i se mora l ly depraved ; th e i ndolent , incom pe

t en t , paupers and beggars— al l o f them wards o f the

S ta t e .

The pauper and cr im i na l are to a great exten t more

s i nned aga i n st than s i nn ing . When we have first ex

tirpa ted the great economic cr ime at th e root o f our

soc i a l system — when ci v i l i za t i on rhymes w i th equal i

z ation and not spol i a t ion , th en we may be abl e to

dea l success ful ly w i th the class fo r whose wrong-do

ing our soci a l i n j ust ice i s largely respons i bl e . W i th

one hand soc i e ty robs the laborer o f the mean s o f sub

s i stence and se l f support , and w i th the othe r pun i shes

h im for stea l ing bread to save h i s fam i ly from starva

t i on . And th i s i s j ust i ce ! A soci a l system based

on i nj ust ice natural ly breeds cr ime and mora l de

prav i ty .

Our econom ic pervers ion s are probably l argely re

spons ib l e for al l soc i a l i mmoral i ty and corrupt ion,for

they teach that weal th may be had wi thout compensa

tory e ffort . They have converted us i n to a nat ion o f

financ ia l speculators , stock gamblers and cunn ing

schemers,al l i n a mad

,reckl ess

,frenz ied rush for

weal th— al l expect i ng t o get r ich w i thout honest

work— r ich and i ndependent a t some one ’s el se ex

pense . Honesty i s a re lat i ve t erm . The eth i cs o f

soc i a l moral i ty i s l a rgely a matter o f method . There

I 34 PARAS IT IC W E ALTH

We should i nvoke sc i ence i n th e t reatment of V i ce

and cr im e . Chron i c case s o f deprav i ty should not be

perm i t ted to breed the i r k i nd . Vice should not be sup

pressed , but ext i rpated by sc ientific and humane meth

ods . A l l cr im inal s should be made se l f- support i ng .

En forced idl eness in our pr i son s i s a crim e aga i n st the

pri soners and aga in st soci e ty . I t i s a great waste o f

weal th and a tr i bute on honest l abor . The pos i t i on

t aken by trade organ izat i on s on the subj ect o f pri son

labor i s another i n stance o f fa l l ac ious reason i ng due

to our wretch ed economi c pervers i ons . When i t b e

comes clear,that under heal thy econom ic cond i t i on s

the opportun i t i e s for work w i l l a lways overtake the

labor seek i ng them and that employment and not labor

i s compet i t i ve , th e short s ighted pol i cy i n regard to

pr i son l abor w i l l becom e qu i te apparen t .

Then there i s the army o f th e i ncompetent s and in

capabl es,from whi ch pauper i sm i s largely recru i ted .

These are the st ragglers , weakl i ngs and soc ia l fa i l

ures,br i ng i ng up the rear o f the i ndustr i a l proces

s i on who,i n the race o f l i fe , are l e ft to peri sh by th e

ways ide . The requ i rement s of race super i or i ty in

ply under the cruel opera t i on o f nature’s law the des

st ruct i on o f the weak . To foste r d i sease and i n fer i

ority by protect i ve methods i s to encourage race de

terioration ,the re fore a l l congen i ta l cases o f genera l


worth lessness must not be perm it t ed to perpe tuate

the i r k i nd . By the w i se en forcement o f humane

methods o f prevent i on , chron ic , phys ical and mora l

worthl essness w i l l gradual l y d i sappear and cea se to

be a burthen on the rest o f mank ind .

Another source o f waste i s the en forced idl eness

due to l abor st r ikes and lockout s . These are th e

prote sts o f oppressed l abor aga in st unj ust economi c

cond i t ions , wh ich make i t compet i t i ve and place i t at

the mercy o f monopoly .

The avenues o f employment are closed by the tol l

gate s of monopoly , and helpl ess l abor stands w i thou t .

ask i ng perm i ss i on to earn a l i v i ng . The tol l i s the

pr i ce labor pays for the priy i lege o f earn ing , and only

those who can pay the pr i ce pa ss t hrough .

Labor hopel essly compet i t i ve has no redress but

that wh i ch may come from organ i zat i on for the com

mon de fen se , and concerted act i on . The st ri ke i s a

protest aga in s t i ndust r ia l i nj ust i ce .

Under normal ccnd itions l abor w i l l be free and non

compet i t i ve . Wages and serv i ces w i l l be reci proca l ;

l aborer and employer w i l l meet on equal t erms . both

earn ing the i r i ncome by product i ve serv ices , ne i ther

hav i ng any advantages over the other , except i n bra i n s

and effic iency ,each rewarded accord ing to h i s i ndus

t r ial ab i l i ty .

136 PARAS IT IC W E ALTH

Under such cond i t i ons Trades Un ion s and other

Labor Organ i zat i ons w i l l haVe no gri evances , and no

en emy , and w i l l resolve themselves i nto soc i et i e s for

soc i al and i ntel l ectual advancement .

Wi th a l l t hese great wastes o f human e ffort elim i

nated , the product i ve effi c iency w i l l be largely en

hanced . The i ncrea sed wel l-be ing‘

of th e depl eted

m i l l i on s,w il l t end to the i r e levat i on and refinem ent,

and conduce to st i l l great er effi c iency .

I t must not be imagi ned that we have reached th e

zen i th o f i ndustr ia l advancement . We are st i l l on ly

a t the beg in n i ng and evolut ion i s slow and pa i n ful .

The v ic i ss i tudes o f i ndustr ia l progress are great and

throw out o f employment t emporar i ly,spec i al i zed

l abor , through pressure of constan t changes i n methods

and improvement s . I t should be a fixed S ta te pol i cy

to l essen waste t hrough temporary idl en ess o f such a s

are st randed i n i ndustr ia l cent ers through the exigen

c i es o f t rade .

The land tax w i l l y i eld revenue far beyond purely

S tat e uses and the surplu s must be appl i ed to publ i c

improvemen ts . Work on publ i c improvement s should

a lways be on tap to anyone pass i ng the requi s i t e t est

o f effi c iency . There should be a l owest ra te o f pay

for a certa in recogn i zed cl ass o f work and th i s pay

should not be so l arge a s to be an i nducement t o seek

138 PARAS IT IC W'

E ALT I—I

to earn means not to spend , and there fore , not to

consume ; l essened con sumpt ion means l essened pro

duct i on,and th i s mean s hardsh ip t o other producers

,

so that one part o f the commun i ty cannot be a ffected

w i thout a ffect ing the wel l-be ing of the whol e . H ere ,

tli t refore , comes i n the l eg i t imate funct i on o f th e

S ta t e . The ind iv idual can look a fter h i s own a ffa i rs

bet t er than th e S ta t e,but the S ta t e can look a fte r the

col l ect i ve wel fare bet t er than the i nd iv i dual . O i

c ourse , i f rel ie f mea sures could be assured by pri vate

en terpr i se , by some method of i nsurance , i t m ight be

pre ferabl e method , a s se l f— help i s the best h elp,but

in th e absence of such some publ i c prov i s i on must be

m ade for l essen i ng the ev i l s o f t emporary idl eness .

The money volume be i ng ampl e , th e surplus fund

may be al lowed to accumulate w i thout prej ud ice to

commerce and i ndustry .

Reckless ext ravagance of government must b

checked . One of the reasons of corrupt i on and j ob

bery i s that no effic ient system of compet i t i ve checks

on publ i c expen se and work output have been i n tro

duced . A l l governmen t work must be compet i t i ve

as to expen se and effi c iency , and “ compar i son state

men t s" should be i n st i tuted a s a test gauge of publ i c

serv i ce . The compar i son blanks should be des i gned

on a per cap i ta or some other conven i ent basi s of


compari son , and should show i tems o f expense o f the

past year a s compared w i th expenses o f som e pr i or

year of greate st economy . The heads o f departmen ts

should be held respons i bl e for expenses,and subj ect

to removal for l ack o f econo a y . In th i s way only

can we expect effi c iency i n publ i c serv i ce . There

are severa l i ndustr ia l branches where col lect i ve e ffort

would be more effic ient and benefic ial than pr i vate

en terpr i se , i f pol i t i ca l corrupt ion could be el im i nated .

Publ i c managemen t o f the post office has been a

source o f g rea t conven i ence and sav ing . I n l i ke

m anner,but to a vast ly greate r degree , the publ i c

management o f money and bank ing w i l l be a boon .

I n a m inor though very important degree,th e col l ect i ve

managemen t o f the tel egraph and publ i c h ighways

woul d be a bless i ng . The te l egraph , ra i l roads and

canal s are nat i ona l i ndust r i a l opportun i t i e s , and the

benefits o f same should be equal i zed . Franch i ses

should not be granted to pr i vate i nd iv i dual s ,

and h ighways should not be‘

perm i t ted to fa l l

under the control o f any i nd ivi dual or corpora

t i on . But un l ess we d ivorce the publ i c bus in ess from

party corrupt i on and pi l lage , we are probably bet te r

off t o en trust a s l i t t l e busi ness t o Governmen t as pos

s i ble. That under proper checks these publ i c enter

p rises can be success ful ly carr i ed on and econom ically


managed,there i s absolute ly no doubt , but such efii c i

ency impl i e s const i tut i onal re forms , l im i t i ng pol i t i ca l

i n t er ferences i n the peopl e ’s bus i ness and establ i sh i ng

the publ i c serv i ce on a sc ien tific bas i s . Then and

only then may we expect hon esty i n office . Most o f

our publ i c and pr i vat e corrupt i on i s due to the im

moral i ty underly i ng our c iv i l i zat i on .. When soc i a l

j u st i ce ha s been i naugurated we may expect a very

materi a l ch ange i n publ i c moral s .

Publ i c out l ays must be j eal ously watched and ad

m in i st rat i on s must be j udged by standard s of publ i c

economy .

Extravagance leads to corrupt i on and to nat i onal

decadence . However , al l immora l t endenci es w i l l be

more or l ess checked when th e effi c ien t and strong

are taxed exact ly i n proport i on to the i r l and hold i ngs,

and are obl iged to pay these taxes out o f the proceeds

o f honest e ffort and not out of the sweat o f other

men ’s l abor . The same men,who w i th cr im inal

reckle ssness , vot ed away extravagan t appropr i at i on s

o f the people ’s money under the spoi l s syst em,

wi l l now begi n to con sider the i r own pocket s i n to

wh i ch the t r i bute of despoi l ed labor wi l l have ceased

to flow .

I f our presen t im perfect c i v i l serv i ce system i s i n

adequat e t o g i ve us an honest adm ini strati on o f publ ic

14 2 PARAS ITIC WEALTH

The h ighways belong to the peopl e and i t seems

l ike a great pr i v i l ege that any one person or corpora

t i on should monopol i ze a publ i c conven i ence . Rai l

road s,roadways

,waterways and t el egraphs must

ul t imately come under th e management o f the peopl e,

and though immed iat e change from pri vate control

may be undesi rabl e , such nat i onal i zat i on should be

kep t constan tly i n V i ew . The “ l and purcha se act”

should cover th e purchase o f a l l the improvement s

and equ ipment s o f such of the publ i c monopol i e s as

i t may be deemed exped i en t to nat i onal i ze .

I n the management s o f the ra i l roads , t e l egraphs

and the post ofii ce ,and i n the control o f l and and

money , th e S ta te funct i on i s no t only l eg i t imate and

proper , but urgent . These are publ i c i n te rest s and

not pr i vate concerns .

But th e commerce and i ndustr i e s are e ssent i al ly

pr i vate a ffa i rs and should be l e ft t o regulate them

sel ve s . We shoul d not on ly resen t any approach t o

S ta t e i n terference w i th t rade but even in s i s t upon

the annulmen t o f th e con st i t ut i onal cl ause wh i ch en

powers congress “ t o regul ate commerce w i th fore ign

nat i on s and among the several S tates ,” see i ng what

i n j ury has been done by the i n j ud i c i ous exerci se o f

th i s power . Under no pretext what eve r should con

gress be perm i t ted to pl ace rest r i ct i on s on t rade .


Both i n the regula t ion and management o f the com

merce and the i ndustr i e s we are justified i n warn i ng

the S tate,Hands o ff . ”

CHAPTER V I I I .

I n a Soci e ty based on i nj ust i ce the “ surv i val o f th e

fittest” mean s th e surv i va l o f the un scrupulous .

There can be no honor i n weal th acqu i red under

unj ust cond i t i ons . Do we not al l o f us fee l that some

how th e m i l l i ona i res could not poss i bly have earn ed

a t i th e of the i r va st fortunes ?

Let us for a moment con template Mr. Thos . G .

Shearman ’s cla ss ifica tion o f some of the m i l l i ona i res o f

e ight years ago wh ich he used i n h i s est imates o f

weal th d i st r i but ion . The figures are taken from the

New York World of June 2oth,1897 . Wh i l e the es

tim ates may now be w ide o f th e mark i n some case s

i n a general way th ey w i l l answer our purpose .

J. J. A stor , 150 mi l l i on s .

C . Vanderb i l t , 1 0 0

W. K . Vanderb i l t , 1 0 0

J ay Gould . 1 0 0

Lel and S tan ford , 10 0

J. D . Rocke fel l er , 10 0

E stat e o f A . Packer, 70

John I . Bla i r,

60

Estat e o f Chas . Croker , 60

W i l l i am A stor, 50

W. W. A stor , 50


Un i ted S tate s i s about s ix hundred dol la rs per year

per worker . I f by excel l en t managemen t and great

se l f-den ia l hal f o f the sum be saved yearly , i t would

take three thousand three hundred and th i rty- thre

years of con t inuous work and abst i nence to save one

m i l l i on o f dol lars . That i s,i f a man o f average ab i l

i ty commenced sav ing up hal f o f h i s earn ings about

the t ime o f the exodus o f the I srael i t es , he would by

th i s t ime have accumula ted about one m i l l i on dol l ars ;

and yet some o f these peopl e are abl e to draw an in

come of from six to n i ne m i l l i on s a year !

If, a ft e r the ground had been cursed for h i s sake ,

and he was condemned to eat bread i n th e swea t o f h i s

face , Adam had thought best to i nvest i n a L i fe In

surance pol i cy matur i ng A . D . 1897 , and had saved

hal f the earn ings o f a man of average ab i l i ty , h i s

tota l depos i t s up to date would amoun t t o only about

dollars . And yet we have men reputed

to be posse ssed o f someth ing l i ke on e hundred t imes

that amount o f wea l th ! Surely the earth br ings forth

no thorns and th i st l e s for these men,nor do they ea t

th e i r bread i n the sweat of the i r brow . How d id

they get it ? W i l l Mr. Astor cla im that he or h i s an

ces tors have actual ly rendered to soc i ety i n serv i ce s

an equi va l en t o f h i s enormous posses s i on s ? W i l l h e

cla im , honor bri gh t , that h i s use ful e ffort s t o human


kind equal l ed the product ive work of say five men o f

average ab i l i ty ? W i l l ' th e natura l modesty o f Mr.

Vanderbilt perm i t h im to cla im that he has con ferred

on h i s fe l lowmen serv i ce s worth the e ffort s o f say ten

men of average ab i l i ty ? Perhaps the author i s not

very apprec i at i ve but he rea l ly doubts i f some o f our

m i l l i ona i re s could earn an honest l i v i ng i t l e ft t o th e i r

own resources . And as to those capable o f sel f sup

port , has not the l e i sure of Labor’s competence been

sacrificed t o g i ve ' them tra i n ing and educat i on ?

Whence came these m i l l i on s and whose money are

they ? They surely represen t the swea t o f good

honest to i l and e ffort . Whose to i l i s it ? The

peopl e ’s . These m i l l i on s are almost whol ly the tr i

bute exacted from human e ffort for the use o f th e

artific ial monopoly , money , and the natura l monopoly ,l and . Interest on “ Cap i ta l” and rent on land and

speculat ion i n these monopol i es hav e been ch i e fly the

sources o f these fortunes . They represen t the dra i n

on human i ndustry by the id l e and unj ust possess i on

o f the peopl e ’s natural product i ve opportun i t i e s .

I t i s not here contended that there are not men

capable o f ea rn i ng grea t weal th . On th e contrary ,

the re are thousands of i n tel l ectua l and i ndustr ia l g i ant s

and l eaders o f i ndustr i a l e ffort who have con ferred

great benefits on soc i ety . I t i s d ifli cult t o see , for in


stance , how m i l l i on s could pay an Ed i son for the

benefits he has con ferred on mank ind . There i s no

doub t whatever tha t many of our very weal thy men

have by real ab i l i ty and effi c iency con ferred on soc i e ty

certa in substan t i al b enefits , but as a rul e the rewards

are out o f al l proport i on to the serv ices . An honest

soc i a l cond i t ion based on fa i r play , w i l l g i ve a l l men

the i r deserved reward , and weal th under such a con

d i t i on w i l l be a true cr i ter i on of “worth” and a cer

t ifica te o f honor . I t i s qu i t e probabl e that many o f

th e competen t r i ch , who have con ferred benefits on

soc i ety,would be glad i f the paras i t i c feature s of

wea l th d id not ex i st , a s there can be no honor i n

weal th acqu i red w i thout compensatory e ffort .

We have spoken o f equ i ty i n the l i qu idat i on o f the

cla im s o f pre sen t l and holders . I n th e face o f the

great i n j ust ice t o th e expa tr i ated and d i spossessed,

would i t real ly be j ust i ce to those whom present soci a l

cond it i on s have so gr i evously wronged,that on top o f

other pr i vat e fortunes o f these unj ust ly r i ch,th e S ta t e

should cash the i r hold ings i n ful l ? I t would seem to

he a great pervers ion o f j ust i ce to do i t. The S tat e

ought t o set a pri ce l im i t t o l and t enure,beyond

wh ich , compensat i on should not , i n j ust i ce t o the

common interest, be perm it ted . The land i n excess

o f such hold i ngs should revert to the nat i onal doma i n .


The peopl e are greater than con st i tut ion s , and

whether l iquidat i on to the ful l value or w i th i n pre

scri bed l im i t s be agreed upon,wil l whol ly depend

upon the i n terpre tat i on of th e word “Just i ce .

There i s no doubt , however , tha t pend ing reor

gan iz a tion and readj ustmen t on re form l i nes , wh ich

must be a very sl ow process , sel f— i n terest w i l l i n the

m eanwh i l e so operat e,as to de fea t any government

sch eme seek ing to appropr i at e any part o f the vast

e sta tes o f th e unj ust ly r i ch to publ i c use We w i l l

thereby be spared any eth ical q ualms o f con sc i ence on

the score o f poss ib l e i n j ust i ce be i ng done to the para

s i t i e m inor i ty .

Were it, however , pract i cabl e t o re store to the peopl e

some o f th i s unj ust ly a‘cqu i red weal th , and the l im i t

o f land ownersh i p subj ect to compensat i on were fixed

a t , say , the average weal th o f the nat i on per fam i ly ,

wh ich i s about fi ve thousand dol la rs , i t i s fa i r to est i

mate that more than n in ty-e ight per cent. of the popu

l a t i on would have the i r l and cla i ms l i qu idated i n ful l

and that l ess t han two per cent. would be a ffected by

such compensat i on l im i t . The immensely and unj ust ly

r i ch would st i l l possess an enormous advantage over

the masses by v i rtue o f the i r vast i ndustr i a l and com

m erc ial i n vestm ent s , but no one would begrudge them

these advantages , iffurther dra i n on the peopl e’s re

sources m ight be stopped .

PARASIT IC W E ALTH I S1

I t i s fa i r to e st imate the va lue of the land revert i ng

to the nat ional doma i n by vi rtue o f such a compensa

t i on l im i t,a s exceed ing ten b i l l i on s o f dol lars . Re form

money to the ful l va lue of th i s l and m ight be i ssued

and held i n the publ i c t reasury as a reserve fund .

From th i s re serve fund our n i ne d i fferen t k i nds o f

money and obl igat i ons could be redeemed . There i s

no doubt that th e demonet i zat ion o f gold by the

Un i ted S ta tes w i l l a t once depreci ate i t s value and the

nat i on w i l l l ose the d i fference between i t s money

value and i t s meta l value . What the l oss w i l l be on

s i l ver bul l i on we are i n a fa i r pos i t i on to est imate : th e

deprec i at i onon gold w i l l be ful ly as much . Our loss on

coi n and bul l i on w i l l probably reach the ne ighborhood

of 80 0 mi l l i ons o f dol l ars or more . Th i s together

w i th our i rredeemabl e paper w i l l depl et e the n ew

treasury o f someth i ng l ike 1 150 mi l l i ons o f Re form

Dol lars,but i t w i l l be cheap r i ddance o f bad rubb i sh

to forever ret i re our absurd co i n and paper money .

To bri e fly recap itula te z— We i n ferred deduct ively

that an ideal system of soci ety would be such,tha t

wh i l e conced ing to the i nd i vi dua l the greates t poss i bl e

personal freedom cons i sten t w i th the h ighest wel fare

o f soc i e ty as a whol e , i t would guarantee to every

member o f the commun i ty an equal chance i n the race

o f l i fe w i thout prej ud i ce — an equal opportun i ty w i th


out favor or h i ndrance . That i f we enter the arena

01 l i fe on equal t erms as regards th e i ndustr i al oppor

tun ities , then a l l the requ i rement s o f soc ia l e th i cs w i l l

be satisfied .

Does our presen t system fulfill th e requi rements o f

such an ideal ? A re the cond i t i on s such as to guar

ante e fa i r pl ay to every on e i n the struggl e for sub

si stence ? Our invest i gat i ons can l eave no room for

doubt or hes i tat i on , and we declare most conclus i vely

and emphat i cal ly , No . The cond i t i on s are un fa i r

and unj ust . At th e base o f soc i ety we find a gr i evous

wrong— at t he core of c i v i l i za t i on a soc i a l cr ime .

Two great i ndustr i a l opportun i t i es o f product ive ef

fort,the benefits o f wh ich should be common , have

been l e ft t o the sport o f pr i vat e speculat ion and mon

opoly . The shrewd and cunn ing obta i n contgol o f

these opportun i t i e s , monopol i ze the avenues o f em

pl oymen t and thus hold the key to the i ndustr i a l s i t

nat i on . The rest r i ct i on s wh i ch t r i bute put s upon

industry , render l abor hopel essly compet i t i ve and place

i ndustr i a l e ffort complete ly at the mercy o f i dl e pos

ess ion . Labor i s degraded and en slaved ; pauper i sm ,

cr im e and immoral i ty a re encouraged . A smal l

m i nor i ty absorb the nat i on ’s product i ve output and

l i ve i n l uxur ious ease and idl eness at t he expense o f

depl eted m i l l i on s . Th i s i n short i s the presen t soci a l


i ndustr i a l ly . I t guarant ee s even j ust i ce to every man

and reward s exert i on i n th e exact rat i o of use ful e ffort .

The i nd i v i dual who renders human k i nd the h ighest

serv i ce obta in s the h i ghest rewards,but these rewards

do not empower h im to en slave h i s l e s s favored brother,

or l evy t r i bute on the sweat and to i l o f oth er men . H i s

super i or ab i l i t i e s do not perm i t h im to take undue ad

vantage o f h i s fel l owman .

Emancipat e Land and render Cap i ta l prem ium less ,

and soc ia l re form i s an accompl i shed fact,wi thout the

sacrifice o f the only th ing worth l i v i ng for i n th i s

world— persona l freedom . The much abused sent i

m ent“Liberty , Equal i ty and Fratern i ty w i l l then

for the first t i me be more than an empty phrase , and

the grand word “ Democracy , ” a s an embod imen t o f

equal i ty,wi l l acqu i re a mean i ng i t n ever had be fore .

P l utocracy and ar i stocracy , the offspr ing of paras i t i c

weal th , wi l l be th ings o f the past .

How much w i l l th e “Money Re form system save

to the nat i on ?

On the basi s o f Mr. Shearman ’s est imate s , more

than 76 per cen t . o f th e nat ion‘ s weal th i s i n the

hands of l e ss than three per cent . o f the people . A s

the forces o f weal th concentra t i on have not cea sed

operat i ng s ince Mr. Shearman publ i shed h i s figures

over e i ght years ago , i t i s presumabl e that the d i s


par i t i e s have not,s i nce that t ime , grown l ess , but

rather more intens ified .

I t i s qu i t e fa i r to est imate that about 70 o f the 76

per cent . o f the weal t h i n the hands o f the para s i t i c“ three per cen t . ” i s i n t ere st beari ng , and that

probably I O o f th e rema i n ing 2 4 per cen t . i s i nvolved

i n one way or another i n indebtedness and al so y i e lds

ren t or i nterest . Thus four fifths o f the cap i ta l o f the

Un i t ed S tat es would be y i eld i ng “ i ncome To be

qui t e w i th i n rea son we w i l l a ssume that only three

quarters o f the nat i on ’s cap i t al y i elds such revenue .

If, on the bas i s o f t he E l eventh Census

out of the be the value

o f pri vat e weal th i n 1890 ,then th e cap i tal on

wh i ch i ntere st was pa id w i l l foot up about $46,

A l l conven i ences conduci ve t o shel ter and com fort ;

al l improvement s and faci l i t i e s a id i ng i ndustr i a l e ffort ;

a l l method s , appl iances and mach inery may be cl assed

a s th e tool s o f product i on . They are man ’s equ ip

ment , and l and i s h i s workshop . More than three

quarters o f the workshop and the tool s o f i ndustr i a l

product i on are i n the hands o f the paras i t i c “ three .

”

Perverted econom ic cond i t i on s have made i t poss i bl e

for an insign ificant minori ty to obta i n contro l o f th i s

va st weal th and to use i t w i th despot i c power for the


indefin i te and cont i nued explo i tat i on and ensl ave

ment of the helpl e ss weal th producers . I t i s a system

of econom i c plunder for wh ich the term “ soci a l in

famy” i s a m i ld express i on .

The preva i l i ng bank rat e on“ gi l t edge” secur i ty

i s s ix per cent . A l l cap i tal there fore assumes a s i t s

r igh t a toll of s i x per cen t . i n add i t i on t o the cost s o f

i t s mai n tenance and superin t endence . The whol e of th i s

46950 mil l i on s of dol l ars worth of property , i n add i

t i on to the pri ce of i t s mai ntenance , th ere fore cla ims

a tol l o f s i x per cent . for h i re . We have assumed

that i f the col lect i ve peopl e undertook bank ing , th e

actua l cost o f bank i ng serv i ce s would probally fal l

below the hal f o f on e per cent . Let us assum e th i s

excess ive rate o f the hal f o f one per cent . a s cover ing

th e cost o f bank ing . Then such percentage w i l l con

stitute a l eg i t imat e charge for serv i ces , and al l cap i tal

w i l l cl a im a r ight to col l ect for such serv i ce s i n add i

t ion to charges for cost o f maintenance and serv i ces

connected w i th i t s ren t i ng . Wh i l e now we are pay ing

s ix per cent . i n terest for cap i ta l ’s h i re , we would

under the n ew cond i t i on s pay on ly th i s “ bank ser

v i ce”charge o f the hal f o f one per cent . The five and a

hal f per cen t . add i t i onal we are now pay ing thus

appears to be a tr i but e to i dl e possess ion , and i n ex

cess o f any product i ve serv i ce . Fiveand a hal f per cent.


5 dollars’

worth o f weal th,there i s a dol l ar ’s worth o f

product i ve output per year . About three-quarters o f

th i s 5 dollars’

worth o f weal th may be con s i dered a s

i n terest bear i ng capi tal,so that i t t akes 5 i n cap

i ta l to y i e ld product i vely 1 dol l ar ’s worth of new

weal th per year . For the repa i rs and ma in tenance

o f th i s cap i ta l i t w i l l cost on an average about 4 per

cen t . , and for bank serv i ce charge about y, per cen t . ,

mak ing a l eg i t imate charge o f 4 1 - 2 per cent .

on or nearly 1 7 cents . Th i s amoun t must be

deducted from th e gross product i ve output o f 1 dol l ar

to obta i n l abor ’s j ust earn ings . But over and above

th i s l eg i t imat e charge , there rema i n s a t r i but e o f 5%per cent prem ium for wh i ch there i s no serv i ce equ iv

alent t o soci ety . Thi s prem ium amount s to about

twenty cent s on th e gross product ive output of

one dol lar . Deduct i ng the 1 7 cent s for ma i n tenance

and for serv i ces , we obta i n 83 cent s a s the l eg i t imat e

i ncome of l abor . Upon every 83 cent s wh i ch labor

earn s,th i s prem ium charge o f 2 0 cents fa l l s as a

t r i bute,or i n other words , on every dol la r of labor

’s

j ust earn ings,cap i ta l l ev i e s a tol l o f 24 per cent !

I n these est imate s no accoun t i s taken o f the

volume of paper money i n c i rculat i on , nor the value o f

product s i n process o f con sumpt i on on wh ich i n tere st

i s be i ng pa id , wh ich would tend to swel l the

econom i c dra i n on l abor ’s i ncome .


But th i s i s not a l l . Someth ing l ike twenty-e igh t

per cent o f the m i l l iona i res owe the i r weal th to pro

tected i ndustr i es . The tar i ff t ax on necess i t i e s,by

sh i ft i ng the burthen o f taxat i on on the n i n ety— five per

cent soci a l ly wronged , rel i eves paras i t i c weal th from

just a ssessment , thus aga i n favor ing i t s growth . The

enhanced cost o f l i v i ng to the despo i l ed n i nety-five

per cent from wh ich tar i ff monopoly wr i ngs i t s

m i l l i on s , further reduces the i r earn ings . We may

sa fe ly say that th rough enhanced cost o f l i v i ng alone

the i n famous tar i ff t ax probably takes ten per cent .

more out o f the pockets o f the un fortunat e worker .

Thus the worker ’s t r i but e to the monopoly o f opportun

i t i e s i s about th i rty three per cent. ofh i s actual earn ings,

an average o f about th ree hundred dol lars per fam i ly

for the creat ion and ma intenance o f an idl e propr i etary

cla ss ! Thus a sum much l arger than th e cost o f

the c i v i l war , i s d iyerted annual ly from the pocket s

o f t he peopl e and goes t o swel l the redundance o f

the “ paras i t i c” r i ch .

For about five years dur i ng and a ft er the c i v i l war .

a per iod o f unexampled prosper i ty preva i l ed ow ing

to the re l ease yea rly i n to i ndust r i a l channel s o f some

fi ve or s i x hundred m i l l i on s o f dol la rs . When th rough

j obbery and econom i c plunder these m i l l i ons found

the i r way back aga i n to the coffers of the r i ch , and the


people assumed th e l i qui da t i on of the debt at rates

wh ich more than doubl ed th e pr i nc i pal,i ndustr ial

act i v i ty ceased and prosper i ty came to an end .

I f se tti ng free such an amount o f money per year

under a system of econom ic spol i at i on caused so much

prosper i ty , what may we not expect under a system

of soci a l j ust i ce , when someth ing l ike four t imes that

amoun t o f money per cap i t a rema i n s annual ly i n the

hands o f the peopl e for c i rcul at i on i n t rade channel s?

I t m ightappear t o the reader that the words I ndustr i a l

En sl avemen t” and I ndust r i al Independence” are

mere figures o f speech . Far from i t. On th e bas i s

o f the censu s o f 1890 th ere w ere fam i l i e s

i n the land . I f our est imate s of l abor ’s t r i but e to i d l e

possess i on are correct , th en more than four m i l l i on

fam i l i e s were exclus iv ely devot ed to the ma i n tenance

i n i d l e luxury of l ess than four hundred thousand

para s i t i c fam i l i e s ! I s th i s not i ndustr i a l sl avery ? I t

i s worse i n a way than actual slave ownersh i p , for

h ere,starvat i on i s the wh ip of compul s i on , and the

sl ave owners are spared th e bother and i nconven i ence

o f tak i ng care of the i r human chat tel s . Our Pol i t i ca l

Economy does that , and assumes the moral re spon s i

bility t oo . I s there any wonder that we are rush i ng

headlong to nat i onal sel f—dest ruct i on ? The greater

th e weal th output , th e heav i e r the t r i bute and m ore


The provocat i on has been great and the inj ust ice

monstrous , and were i t not that fam i l i ar i ty w i th m i s

e ry breeds i nd i fference to it, and that we grow cal lous

to su ffer i ng , the soc i a l i n i qui t i e s would seem to be

past endurance

But nature i s not w i thout a paral l e l strongly sug

gestive of our soci al pervers ions o f justice , and th e

compar i son i s not w i thout i t s l e sson s .

The i chneumon fly i s para s i t i c i n the l i v i ng bod i es of

cat erp i l l ars and the l arva e o f other i n sect s . W i th crue l

cunn ing and i ngenu i ty surpassed only by man , th i s

depraved and unpr i ncipl ed i nsect per forate s the st rug

gl i ng caterp i l l ar,and depos its

l

her eggs i n the l i v i ng ,

wri thi ng body of her v i ct im . Erupt ions appear on

the surface o f the un fortunat e worm , and i n due

course o f t ime the at roc i ous brood i s hatched . W i th

the refinem ent o f i nnate cruel ty , th ese paras i te s eat

the i r way i n to the l i v i ng substance o f the i r unw i l l i ng

but helpl ess host,avoid ing al l th e v i tal part s to pro

l ong the agony o f a l inger ing death . The worm i s

the i r “ cap i ta l” and they are tak i ng the i r “ i ncome .

”

They are consum ing the “ i nt eres t” and “ sav i ng” up

the “ pr inc ipal . ” The to i l and su ffer i ng o f sav ing i s

ent i re ly v i car i ous — the worm does that . We m ight ,

d id we possess the el oquence of a Ba stiat, go i n to

ecs .ac ies over the glorious “ harm on i es” o f nature’

s


econom i c methods ! But what about the worm ?

Nature’s mal evol ence may be benefic ial to man , but

how about the worm ? I s there no redress for the

poor worm ? No ; he must bear the i nvasi on w i th

good grace, for should he presume to compla i n about

the soc i al harm on ies”, the paras i t e s”would stra ight

way turn upon h im and denounce h im a s an “ agi ta

tor” -perhaps cal l h im a “ soci a l i st” or some other

d i sagreeabl e name . And as to the ev i ct i on o f these

unwelcome tenants , who could be so shock i ngly

heart l e ss as to propose such an outrageous measure '

The presumpt ion ! I s i t not the i r i nher i tance , and have

they no t the righ t o f posse ss ion ?

Such appear to be the argument s o f the para s i t i ca l ly

r i ch and o f the i r para s i t i c supporters .

Peopl e o f Ameri ca ! W i l l you tol erate th i s stat e o f

th i ngs any l onger ? W i l l you see the con t i nued per

petra tion o f a great soci a l wrong and rema i n the

pass ive v i ct ims of it ? Delays are dangerous , the power

o f aggregated weal th grows apace and i s becom ing

more aggress i ve a s i t grows stronger . Further deg

rada tion and ensl avement o f the masse s can be the

on ly outcome .

Even now strong repress i ve measures are i nvoked

tokeep down soc ia l upri s i ngs and d i sconten t . Only“ st rong ' government s can success ful ly ma in ta i n

164 PARASIT IC WEALTH

order” i n a soc i ety where Labor i s forc ib ily“ held

up” and fleeced by i t s refined economic methods .

A l ready the staunch supporters o f Monarchy , taunt

ingly poi n t , i n v i nd i cat i on of“ st rong governmen t”

t heor i e s,t o our . soc i al and pol i t i cal corrupt i ons

,and

watch w i th secret j oy the forces o f d i s i n tegrat i on wh i ch

are sl owly but surely hasten ing our down fal l .

The menace to our l ibert i e s i s th i s unj ust weal th

accumulat i on . No republ i c can l ong w i th stand the

subt l e influence of a corrupt plutocracy . Thi s weal th

r ight ful ly bel ongs to th e peopl e and i t s unj ust appro

priation i s a usurpat i on o f power wh i ch must l og ical ly

l ead to despot i sm and ul t imate nat i onal decadence .

Other great nat i on s have succumbed to these very

influences , and from the sepulch re s o f the past , th e i r

bur i ed c i v i l i zat i ons appeal t o us i n mute el oquence,

and b id us beware o f the i r unt imely fat e . But we

have our warn ings . A l ready the ri ght s o f fre e speech

and protest s o f l abor have been j ud ic i a l ly a ssa i l ed .

Even now over-zeal ous part i san s of st rong govern

men t measures , would lead to overt act s o f oppress i on

and repress i on , and an unscrupulous and mendac i ous

press has vo i ced the sen t iment s . Thousand and one

s i l en t i n fluences are at work slowly and im percept

ably l ead ing to great e r arrogat i on o f power by the

r i ch ‘ and to th e gradual abr idgment o f the peopl e ’s

l i berti e s .

PARAS ITIC WEALTH

1 . Land emancipat i on by purchase ; presen t holders o f l and to rece i ve certifica tes t o the ful l appra i sed

va lue o f the i r hold i ngs . The nat i onal i zat i on by pur

chase , o f ra i l roads , waterways and tel egraphs by the

i s sue o f s im i l a r certificates .

The Governmen t o f the Un i t ed S ta tes to decl are

these certificates t o be the l aw ful and const i t ut i onal

money of the nat i on .

3. The value o f the money to be regul ated byth e land tax rate

'

ou a un i form per cap i ta assess

ment bas i s .

4 . The volume of the money to be ma inta i n ed on

a un i form per cap i ta bas i s and to be o f such ampl i tudea s to make i t prem ium less.

Gold and other money-metal s to be demonet i zed .

A l l co i n money and paper obl igat i ons to be redeemedi n to law ful money .

6. The organ i zat i on o f nat i ona l Mercant i l e and

Sav ings banks, and th e establ i shment of a bank ser

v i ce charge .

7 . The repeal o f al l tar iffs , exc i se and i n ternal

revenue l aws and al l other taxes and the subst i tut i on

there for o f the l and tax .

8 . Maintenance o f a publ i c improvement fund .

The establ i shment o f a perpetual employment oppor

tun ity for overflow l abor seek i ng occupat i on , and the

fix ing o f a lowest standard rate o f pay for l abor pas

s i ng a certa i n pre scr i bed test o f fi t ness .

9. The pass i ng o f such con st i tut i onal measures or

am endm ents a s w i l l pl ace a l l publ i c serv i ce out o f


th e reach o f part i san influence or i n ter ference on anypretext but that o f greater effi c iency and economy o f

serv ice .

10 . Sel ect i ve imm igrat i on .

Shal l we proceed at once to organ i ze the forces o f

re form , or shal l we tempor i ze and wai t unt i l th e m i s

er i e s o f another industr i al and bus in ess col lapse dr i ve

the soc ia l ly wronged to desperat i on and revol t ?

We a re now enter i ng upon a per iod o f so-cal led

prosper i ty .

” The monopoly guarded opportun i t i e s

are once more open i ng up to anxi ous and expectan t

l abor,starved i nto uncond i t i ona l subm i ss i on by en

forced i dl eness . For the pr i v i l ege o f thi s “prosperity

”

l abor w i l l cont i nue to pay the usual 33 per cent . com

m i ss i on to cap i ta l and the tar i ff monopol i e s , but i t

w i l l glad ly pay the tr i bute , i f on ly perm i t ted to earn .

Were an at t empt made to openly rob labor of 33

per cen t . o f i ts earn i ngs on some econom ical pre text ,

th e peopl e would immed iate ly r i se i n the i r m igh t and

crush the taxi ng power out of ex i stence,but by the

subt l e and i n s id ious methods o f econom ic absorpt i on ,

paras i t i c weal th takes i t s tol l out o f l abor ’s earn i ngs

be fore the worker ’s pay i s con s idered , and so the

stealage i s not even suspected .

Can we bri ng the peopl e to a real i zat i on o f these

great wrongs ?


Between the apprehens i on of a soc i a l wrong and

the tardy r ight i ng o f i t, there are for th e re former ,many stages o f b i t ter d i sappo i n tmen t , vexat i on and

t r i a l . The obstacl e s are many , the i nert i a to change

great , and the res i stance obst i nat e . Look what i t cost

t o break the cha in s o f chat te l sl avery in th i s country !

W i l l the emancipat i on o f the i ndustr i a l sl ave be a s

stubbornly conte sted ? Yes , we may expect oppos i t i on

wh i ch for rancour and mal evol ence wi l l find no para l l e l

i n h i story . The rot t en foundat i ons of a thoroughly

corrupt and d i shonest c i v i l i zat i on a re threatened . The

props o f pr i v i l ege and despot i sm are menaced . We

must prepare for a long and desperate st ruggl e w i th a

powerful and unscrupulous foe . Fortunate ly there

need be no v i ol ence . The soc i al d ry- rot and pol i t i ca l

corrupt i on baxi e not ye t depr i ved us o f our franch i se ;

we may organ i ze and vot e , and i f we su ffer soci a l in

j ust i ce t o con t i nue , i t w i l l be our own faul t .

The appeal goes forth t o m i n i ste rs o f rel i g i on i n

the name o f moral i ty and r ighteousness — t o j ournal i st s .

publ i c i st s and wri t ers i n the name o f j ust i ce and fa i r

play— to al l men i n the name of human i ty , t o j o i n i n

the r i ght i ng o f these wrongs .

The appeal goes forth to every pol i t i ca l sect and

soci al re form party w i thout d i st i ncti on o f creed — t o

every i ndustr i a l and t rade organ i za t i on o f whatever

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