We reply to this, that, according to learned physicians, the left side of the body has a natural weakness, which is very reassuring for the future of labor.

Finally, Sire, consent to sign the law, and a great principle will have prevailed: All wealth comes from the intensity of labor. It will be easy for us to extend it, and vary its application. We will declare, for instance, that it shall be allowable to work only with the feet. This is no more impossible (for there have been instances) than to extract iron from the mud of the Seine. There have even been men who wrote with their backs. You see, Sire, that we do not lack means of increasing national labor. If they do begin to fail us, there remains the boundless resource of amputation.

If this report, Sire, was not intended for publication, we would call your attention to the great influence which systems analogous to the one we submit to you, are capable of giving to men in power. But this is a subject which we reserve for consideration in private counsel.



XVII.

SUPREMACY BY LABOR.

"As in a time of war, supremacy is attained by superiority in arms, can, in a time of peace, supremacy be secured by superiority in labor?"

This question is of the greatest interest at a time when no one seems to doubt that in the field of industry, as on that of battle, the stronger crushes the weaker.

This must result from the discovery of some sad and discouraging analogy between labor, which exercises itself on things, and violence, which exercises itself on men; for how could these two things be identical in their effects, if they were opposed in their nature?

And if it is true that in manufacturing as in war, supremacy is the necessary result of superiority, why need we occupy ourselves with progress or social economy, since we are in a world where all has been so arranged by Providence that one and the same result, oppression, necessarily flows from the most antagonistic principles?

Referring to the new policy toward which commercial freedom is drawing England, many persons make this objection, which, I admit, occupies the sincerest minds. "Is England doing anything more than pursuing the same end by different means? Does she not constantly aspire to universal supremacy? Sure of the superiority of her capital and labor, does she not call in free competition to stifle the industry of the continent, reign as a sovereign, and conquer the privilege of feeding and clothing the ruined peoples?"

It would be easy for me to demonstrate that these alarms are chimerical; that our pretended inferiority is greatly exaggerated; that all our great branches of industry not only resist foreign competition, but develop themselves under its influence, and that its infallible effect is to bring about an increase in general consumption capable of absorbing both foreign and domestic products.

To-day I desire to attack this objection directly, leaving it all its power and the advantage of the ground it has chosen. Putting English and French on one side, I will try to find out in a general way, if, even though by superiority in one branch of industry, one nation has crushed out similar industrial pursuits in another one, this nation has made a step toward supremacy, and that one toward dependence; in other words, if both do not gain by the operation, and if the conquered do not gain the most by it.

If we see in any product but a cause of labor, it is certain that the alarm of the protectionists is well founded. If we consider iron, for instance, only in connection with the masters of forges, it might be feared that the competition of a country where iron was a gratuitous gift of nature, would extinguish the furnaces of another country, where ore and fuel were scarce.

But is this a complete view of the subject? Are there relations only between iron and those who make it? Has it none with those who use it? Is its definite and only destination to be produced? And if it is useful, not on account of the labor which it causes, but on account of the qualities which it possesses, and the numerous services for which its hardness and malleability fit it, does it not follow that foreigners cannot reduce its price, even so far as to prevent its production among us, without doing us more good, under the last statement of the case, than it injures us, under the first?

Please consider well that there are many things which foreigners, owing to the natural advantages which surround them, hinder us from producing directly, and in regard to which we are placed, in reality, in the hypothetical position which we examined relative to iron. We produce at home neither tea, coffee, gold nor silver. Does it follow that our labor, as a whole, is thereby diminished? No; only to create the equivalent of these things, to acquire them by way of exchange, we detach from our general labor a smaller portion than we would require to produce them ourselves. More remains to us to use for other things. We are so much the richer and stronger. All that external rivalry can do, even in cases where it absolutely keeps us from any certain form of labor, is to encourage our labor, and increase our productive power. Is that the road to supremacy, for foreigners?

If a mine of gold were to be discovered in France, it does not follow that it would be for our interests to work it. It is even certain that the enterprise ought to be neglected, if each ounce of gold absorbed more of our labor than an ounce of gold bought in Mexico with cloth. In this case, it would be better to keep on seeing our mines in our manufactories. What is true of gold is true of iron.

The illusion comes from the fact that one thing is not seen. That is, that foreign superiority prevents national labor, only under some certain form, and makes it superfluous under this form, but by putting at our disposal the very result of the labor thus annihilated. If men lived in diving-bells, under the water, and had to provide themselves with air by the use of pumps, there would be an immense source of labor. To destroy this labor, leaving men in this condition, would be to do them a terrible injury. But if labor ceases, because the necessity for it has gone; because men are placed in another position, where air reaches their lungs without an effort, then the loss of this labor is not to be regretted, except in the eyes of those who appreciate in labor, only the labor itself.

It is exactly this sort of labor which machines, commercial freedom, and progress of all sorts, gradually annihilate; not useful labor, but labor which has become superfluous, supernumerary, objectless, and without result. On the other hand, protection restores it to activity; it replaces us under the water, so as to give us an opportunity of pumping; it forces us to ask for gold from the inaccessible national mine, rather than from our national manufactories. All its effect is summed up in this phrase—loss of power.

It must be understood that I speak here of general effects, and not of the temporary disturbances occasioned by the transition from a bad to a good system. A momentary disarrangement necessarily accompanies all progress. This may be a reason for making the transition a gentle one, but not for systematically interdicting all progress, and still less for misunderstanding it.

They represent industry to us as a conflict. This is not true; or is true only when you confine yourself to considering each branch of industry in its effects on some similar branch—in isolating both, in the mind, from the rest of humanity. But there is something else; there are its effects on consumption, and the general well-being.

This is the reason why it is not allowable to assimilate labor to war as they do.

In war, the strongest overwhelms the weakest.

In labor, the strongest gives strength to the weakest. This radically destroys the analogy.

Though the English are strong and skilled; possess immense invested capital, and have at their disposal the two great powers of production, iron and fire, all this is converted into the cheapness of the product; and who gains by the cheapness of the product?—he who buys it.

It is not in their power to absolutely annihilate any portion of our labor. All that they can do is to make it superfluous through some result acquired—to give air at the same time that they suppress the pump; to increase thus the force at our disposal, and, which is a remarkable thing, to render their pretended supremacy more impossible, as their superiority becomes more undeniable.

Thus, by a rigorous and consoling demonstration, we reach this conclusion: That labor and violence, so opposed in their nature, are, whatever socialists and protectionists may say, no less so in their effects.

All we required, to do that, was to distinguish between annihilated labor and economized labor.

Having less iron because one works less, or having more iron although one works less, are things which are more than different,—they are opposites. The protectionists confound them; we do not. That is all.

Be convinced of one thing. If the English bring into play much activity, labor, capital, intelligence, and natural force, it is not for the love of us. It is to give themselves many comforts in exchange for their products. They certainly desire to receive at least as much as they give, and they make at home the payment for that which they buy elsewhere. If then, they inundate us with their products, it is because they expect to be inundated with ours. In this case, the best way to have much for ourselves is to be free to choose between these two methods of production: direct production or indirect production. All the British Machiavelism cannot lead us to make a bad choice.

Let us then stop assimilating industrial competition with war; a false assimilation, which is specious only when two rival branches of industry are isolated, in order to judge of the effects of competition. As soon as the effect produced on the general well-being is taken into consideration, the analogy disappears.

In a battle, he who is killed is thoroughly killed, and the army is weakened just that much. In manufactures, one manufactory succumbs only so far as the total of national labor replaces what it produced, with an excess. Imagine a state of affairs where for one man, stretched on the plain, two spring up full of force and vigor. If there is a planet where such things happen, it must be admitted that war is carried on there under conditions so different from those which obtain here below, that it does not even deserve that name.

Now, this is the distinguishing character of what they have so inappropriately called an industrial war.

Let the Belgians and English reduce the price of their iron, if they can, and keep on reducing it, until they bring it down to nothing. They may thereby put out one of our furnaces—kill one of our soldiers; but I defy them to hinder a thousand other industries, more profitable than the disabled one, immediately, and, as a necessary consequence of this very cheapness, resuscitating and developing themselves.

Let us decide that supremacy by labor is impossible and contradictory, since all superiority which manifests itself among a people is converted into cheapness, and results only in giving force to all others. Let us, then, banish from political economy all these expressions borrowed from the vocabulary of battles: to struggle with equal arms, to conquer, to crush out, to stifle, to be beaten, invasion, tribute. What do these words mean? Squeeze them, and nothing comes out of them. We are mistaken; there come from them absurd errors and fatal prejudices. These are the words which stop the blending of peoples, their peaceful, universal, indissoluble alliance, and the progress of humanity.



PART III.

SPOLIATION AND LAW.[16]

[Footnote 16: On the 27th of April, 1850, after a very curious discussion, which was reproduced in the Moniteur, the General Council of Agriculture, Manufactures and Commerce issued the following order:

"Political economy shall be taught by the government professors, not merely from the theoretical point of view of free trade, but also with special regard to the facts and legislation which control French industry."

It was in reply to this decree that Bastiat wrote the pamphlet Spoliation and Law, which first appeared in the Journal des Economistes, May 15, 1850.]

To the Protectionists of the General Council of Manufactures:

GENTLEMEN—Let us for a few moments interchange moderate and friendly opinions.

You are not willing that political economy should believe and teach free trade.

This is as though you were to say, "We are not willing that political economy should occupy itself with society, exchange, value, law, justice, property. We recognize only two principles—oppression and spoliation."

Can you possibly conceive of political economy without society? Or of society without exchange? Or of exchange without a relative value between the two articles, or the two services, exchanged? Can you possibly conceive the idea of value, except as the result of the free consent of the exchangers? Can you conceive of one product being worth another, if, in the barter, one of the parties is not free? Is it possible for you to conceive of the free consent of two parties without liberty? Can you possibly conceive that one of the contracting parties is deprived of his liberty unless he is oppressed by the other? Can you possibly conceive of an exchange between an oppressor and one oppressed, unless the equivalence of the services is altered, or unless, as a consequence, law, justice, and the rights of property have been violated?

What do you really want? Answer frankly.

You are not willing that trade should be free!

You desire, then, that it shall not be free? You desire, then, that trade shall be carried on under the influence of oppression? For if it is not carried on under the influence of oppression, it will be carried on under the influence of liberty, and that is what you do not desire.

Admit, then, that it is law and justice which embarrass you; that that which troubles you is property—not your own, to be sure, but another's. You are altogether unwilling to allow others to freely dispose of their own property (the essential condition of ownership); but you well understand how to dispose of your own—and of theirs.

And, accordingly, you ask the political economists to arrange this mass of absurdities and monstrosities in a definite and well-ordered system; to establish, in accordance with your practice, the theory of spoliation.

But they will never do it; for, in their eyes, spoliation is a principle of hatred and disorder, and the most particularly odious form which it can assume is the legal form.

And here, Mr. Benoit d' Azy, I take you to task. You are moderate, impartial, and generous. You are willing to sacrifice your interests and your fortune. This you constantly declare. Recently, in the General Council, you said: "If the rich had only to abandon their wealth to make the people rich we should all be ready to do it." [Hear, hear. It is true.] And yesterday, in the National Assembly, you said: "If I believed that it was in my power to give to the workingmen all the work they need, I would give all I possess to realize this blessing. Unfortunately, it is impossible."

Although it pains you that the sacrifice is so useless that it should not be made, and you exclaim, with Basile, "Money! money! I detest it—but I will keep it," assuredly no one will question a generosity so retentive, however barren. It is a virtue which loves to envelop itself in a veil of modesty, especially when it is purely latent and negative. As for you, you will lose no opportunity to proclaim it in the ears of all France from the tribune of the Luxembourg and the Palais Legislatif.

But no one desires you to abandon your fortune, and I admit that it would not solve the social problem.

You wish to be generous, but cannot. I only venture to ask that you will be just. Keep your fortune, but permit me also to keep mine. Respect my property as I respect yours. Is this too bold a request on my part?

Suppose we lived in a country under a free trade regime, where every one could dispose of his property and his labor at pleasure. Does this make your hair stand? Reassure yourself, this is only an hypothesis.

One would then be as free as the other. There would, indeed, be a law in the code, but this law, impartial and just, would not infringe our liberty, but would guarantee it, and it would take effect only when we sought to oppress each other. There would be officers of the law, magistrates and police; but they would only execute the law. Under such a state of affairs, suppose that you owned an iron foundry, and that I was a hatter. I should need iron for my business. Naturally I should seek to solve this problem: "How shall I best procure the iron necessary for my business with the least possible amount of labor?" Considering my situation, and my means of knowledge, I should discover that the best thing for me to do would be to make hats, and sell them to a Belgian who would give me iron in exchange.

But you, being the owner of an iron foundry, and considering my case, would say to yourself: "I shall be obliged to compel that fellow to come to my shop."

You, accordingly, take your sword and pistols, and, arming your numerous retinue, proceed to the frontier, and, at the moment I am engaged in making my trade, you cry out to me: "Stop that, or I will blow your brains out!" "But, my lord, I am in need of iron." "I have it to sell." "But, sir, you ask too much for it." "I have my reasons for that." "But, my good sir, I also have my reasons for preferring cheaper iron." "Well, we shall see who shall decide between your reasons and mine! Soldiers, advance!"

In short, you forbid the entry of the Belgian iron, and prevent the export of my hats.

Under the condition of things which we have supposed (that is, under a regime of liberty), you cannot deny that that would be, on your part, manifestly an act of oppression and spoliation.

Accordingly, I should resort to the law, the magistrate, and the power of the government. They would intervene. You would be tried, condemned, and justly punished.

But this circumstance would suggest to you a bright idea. You would say to yourself: "I have been very simple to give myself so much trouble. What! place myself in a position where I must kill some one, or be killed! degrade myself! put my domestics under arms! incur heavy expenses! give myself the character of a robber, and render myself liable to the laws of the country! And all this in order to compel a miserable hatter to come to my foundry to buy iron at my price! What if I should make the interest of the law, of the magistrate, of the public authorities, my interests? What if I could get them to perform the odious act on the frontier which I was about to do myself?"

Enchanted by this pleasing prospect, you secure a nomination to the Chambers, and obtain the passage of a law conceived in the following terms:

SECTION 1. There shall be a tax levied upon everybody (but especially upon that cursed hat-maker).

SEC. 2. The proceeds of this tax shall be applied to the payment of men to guard the frontier in the interest of iron-founders.

SEC. 3. It shall be their duty to prevent the exchange of hats or other articles of merchandise with the Belgians for iron.

SEC. 4. The ministers of the government, the prosecuting attorneys, jailers, customs officers, and all officials, are entrusted with the execution of this law.

I admit, sir, that in this form robbery would be far more lucrative, more agreeable, and less perilous than under the arrangements which you had at first determined upon. I admit that for you it would offer a very pleasant prospect. You could most assuredly laugh in your sleeve, for you would then have saddled all the expenses upon me.

But I affirm that you would have introduced into society a vicious principle, a principle of immorality, of disorder, of hatred, and of incessant revolutions; that you would have prepared the way for all the various schemes of socialism and communism.

You, doubtless, find my hypothesis a very bold one. Well, then, let us reverse the case. I consent for the sake of the demonstration.

Suppose that I am a laborer and you an iron-founder.

It would be a great advantage to me to buy hatchets cheap, and even to get them for nothing. And I know that there are hatchets and saws in your establishment. Accordingly, without any ceremony, I enter your warehouse and seize everything that I can lay my hands upon.

But, in the exercise of your legitimate right of self-defense, you at first resist force with force; afterwards, invoking the power of the law, the magistrate, and the constables, you throw me into prison—and you do well.

Oh! ho! the thought suggests itself to me that I have been very awkward in this business. When a person wishes to enjoy the property of other people, he will, unless he is a fool, act in accordance with the law, and not in violation of it. Consequently, just as you have made yourself a protectionist, I will make myself a socialist. Since you have laid claim to the right to profit, I claim the right to labor, or to the instruments of labor.

For the rest, I read my Louis Blanc in prison, and I know by heart this doctrine: "In order to disenthrall themselves, the common people have need of tools to work with; it is the function of the government to provide them." And again: "If one admits that, in order to be really free, a man requires the ability to exercise and to develop his faculties, the result is that society owes each of its members instruction, without which the human mind is incapable of development, and the instruments of labor, without which human activities have no field for their exercise. But by what means can society give to each one of its members the necessary instruction and the necessary instruments of labor, except by the intervention of the State?" So that if it becomes necessary to revolutionize the country, I also will force my way into the halls of legislation. I also will pervert the law, and make it perform in my behalf and at your expense the very act for which it just now punished me.

My decree is modeled after yours:

SECTION 1. There shall be taxes levied upon every citizen, and especially upon iron founders.

SEC. 2. The proceeds of this tax shall be applied to the creation of armed corps, to which the title of the fraternal constabulary shall be given.

SEC. 3. It shall be the duty of the fraternal constabulary to make their way into the warehouses of hatchets, saws, etc., to take possession of these tools, and to distribute them to such workingmen as may desire them.

Thanks to this ingenious device, you see, my lord, that I shall no longer be obliged to bear the risks, the costs, the odium, or the scruples of robbery. The State will rob for me as it has for you. We shall both be playing the same game.

It remains to be seen what would be the condition of French society on the realization of my second hypothesis, or what, at least, is the condition of it after the almost complete realization of the first hypothesis. I do not desire to discuss here the economy of the question. It is generally believed that in advocating free trade we are exclusively influenced by the desire to allow capital and labor to take the direction most advantageous to them. This is an error. This consideration is merely secondary. That which wounds, afflicts, and is revolting to us in the protective system, is the denial of right, of justice, of property; it is the fact that the system turns the law against justice and against property, when it ought to protect them; it is that it undermines and perverts the very conditions of society. And to the question in this aspect I invite your most serious consideration.

What is law, or at least what ought it to be? What is its rational and moral mission? Is it not to hold the balance even between all rights, all liberties, and all property? Is it not to cause justice to rule among all? Is it not to prevent and to repress oppression and robbery wherever they are found?

And are you not shocked at the immense, radical, and deplorable innovation introduced into the world by compelling the law itself to commit the very crimes to punish which is its especial mission—by turning the law in principle and in fact against liberty and property?

You deplore the condition of modern society. You groan over the disorder which prevails in institutions and ideas. But is it not your system which has perverted everything, both institutions and ideas?

What! the law is no longer the refuge of the oppressed, but the arm of the oppressor! The law is no longer a shield, but a sword! The law no longer holds in her august hands a scale, but false weights and measures! And you wish to have society well regulated!

Your system has written over the entrance of the legislative halls these words: "Whoever acquires any influence here can obtain his share of the legalized pillage."

And what has been the result? All classes of society have become demoralized by shouting around the gates of the palace: "Give me a share of the spoils."

After the revolution of February, when universal suffrage was proclaimed, I had for a moment hoped to have heard this sentiment: "No more pillage for any one, justice for all." And that would have been the real solution of the social problem. Such was not the case. The doctrine of protection had for generations too profoundly corrupted the age, public sentiments and ideas. No. In making inroads upon the National Assembly, each class, in accordance with your system, has endeavored to make the law an instrument of rapine. There have been demanded heavier imposts, gratuitous credit, the right to employment, the right to assistance, the guaranty of incomes and of minimum wages, gratuitous instruction, loans to industry, etc., etc.; in short, every one has endeavored to live and thrive at the expense of others. And upon what have these pretensions been based? Upon the authority of your precedents. What sophisms have been invoked? Those that you have propagated for two centuries. With you they have talked about equalizing the conditions of labor. With you they have declaimed against ruinous competition. With you they have ridiculed the let alone principle, that is to say, liberty. With you they have said that the law should not confine itself to being just, but should come to the aid of suffering industries, protect the feeble against the strong, secure profits to individuals at the expense of the community, etc., etc. In short, according to the expression of Mr. Charles Dupin, socialism has come to establish the theory of robbery. It has done what you have done, and that which you desire the professors of political economy to do for you.

Your cleverness is in vain, Messieurs Protectionists, it is useless to lower your tone, to boast of your latent generosity, or to deceive your opponents by sentiment. You cannot prevent logic from being logic.

You cannot prevent Mr. Billault from telling the legislators, "You have granted favors to one, you must grant them to all."

You cannot prevent Mr. Cremieux from telling the legislators: "You have enriched the manufacturers, you must enrich the common people."

You cannot prevent Mr. Nadeau from saying to the legislators: "You cannot refuse to do for the suffering classes that which you have done for the privileged classes."

You cannot even prevent the leader of your orchestra, Mr. Mimerel, from saying to the legislators: "I demand twenty-five thousand subsidies for the workingmen's savings banks;" and supporting his motion in this manner:

"Is this the first example of the kind that our legislation offers? Would you establish the system that the State should encourage everything, open at its expense courses of scientific lectures, subsidize the fine arts, pension the theatre, give to the classes already favored by fortune the benefits of superior education, the most varied amusements, the enjoyment of the arts, and repose for old age; give all this to those who know nothing of privations, and compel those who have no share in these benefits to bear their part of the burden, while refusing them everything, even the necessaries of life?

"Gentlemen, our French society, our customs, our laws, are so made that the intervention of the State, however much it may be regretted, is seen everywhere, and nothing seems to be stable or durable if the hand of the State is not manifest in it. It is the State that makes the Sevres porcelain, and the Gobelin tapestry. It is the State that periodically gives expositions of the works of our artists, and of the products of our manufacturers; it is the State which recompenses those who raise its cattle and breed its fish. All this costs a great deal. It is a tax to which every one is obliged to contribute. Everybody, do you understand? And what direct benefit do the people derive from it? Of what direct benefit to the people are your porcelains and tapestries, and your expositions? This general principle of resisting what you call a state of enthusiasm we can understand, although you yesterday voted a bounty for linens; we can understand it on the condition of consulting the present crisis, and especially on the condition of your proving your impartiality. If it is true that, by the means I have indicated, the State thus far seems to have more directly benefited the well-to-do classes than those who are poorer, it is necessary that this appearance should be removed. Shall it be done by closing the manufactories of tapestry and stopping the exhibitions? Assuredly not; but by giving the poor a direct share in this distribution of benefits."

In this long catalogue of favors granted to some at the expense of all, one will remark the extreme prudence with which Mr. Mimerel has left the tariff favors out of sight, although they are the most explicit manifestations of legal spoliation. All the orators who supported or opposed him have taken upon themselves the same reserve. It is very shrewd! Possibly they hope, by giving the poor a direct participation in this distribution of benefits, to save this great iniquity by which they profit, but of which they do not whisper.

They deceive themselves. Do they suppose that after having realized a partial spoliation by the establishment of customs duties, other classes, by the establishment of other institutions, will not attempt to realize universal spoliation?

I know very well you always have a sophism ready. You say: "The favors which the law grants us are not given to the manufacturer, but to manufactures. The profits which it enables us to receive at the expense of the consumers are merely a trust placed in our hands. They enrich us, it is true, but our wealth places us in a position to expend more, to extend our establishments, and falls like refreshing dew upon the laboring classes."

Such is your language, and what I most lament is the circumstance that your miserable sophisms have so perverted public opinion that they are appealed to in support of all forms of legalized spoliation. The suffering classes also say. "Let us by act of the Legislature help ourselves to the goods of others. We shall be in easier circumstances as the result of it; we shall buy more wheat, more meat, more cloth, and more iron; and that which we receive from the public taxes will return in a beneficent shower to the capitalists and landed proprietors."

But, as I have already said, I will not to-day discuss the economical effects of legal spoliation. Whenever the protectionists desire, they will find me ready to examine the sophisms of the ricochets, which, indeed, may be invoked in support of all species of robbery and fraud.

We will confine ourselves to the political and moral effects of exchange legally deprived of liberty.

I have said: The time has come to know what the law is, and what it ought to be.

If you make the law for all citizens a palladium of liberty and of property; if it is only the organization of the individual law of self-defense, you will establish, upon the foundation of justice, a government rational, simple, economical, comprehended by all, loved by all, useful to all, supported by all, entrusted with a responsibility perfectly defined and carefully restricted, and endowed with imperishable strength. If, on the other hand, in the interests of individuals or of classes, you make the law an instrument of robbery, every one will wish to make laws, and to make them to his own advantage. There will be a riotous crowd at the doors of the legislative halls, there will be a bitter conflict within; minds will be in anarchy, morals will be shipwrecked; there will be violence in party organs, heated elections, accusations, recriminations, jealousies, inextinguishable hates, the public forces placed at the service of rapacity instead of repressing it, the ability to distinguish the true from the false effaced from all minds, as the notion of justice and injustice will be obliterated from all consciences, the government responsible for everything and bending under the burden of its responsibilities, political convulsions, revolutions without end, ruins over which all forms of socialism and communism attempt to establish themselves; these are the evils which must necessarily flow from the perversion of law.

Such, consequently, gentlemen, are the evils for which you have prepared the way by making use of the law to destroy freedom of exchange; that is to say, to abolish the right of property. Do not declaim against socialism; you establish it. Do not cry out against communism; you create it. And now you ask us Economists to make you a theory which will justify you! Morbleu! make it yourselves.



PART IV.

CAPITAL AND INTEREST.

My object in this treatise is to examine into the real nature of the Interest of Capital, for the purpose of proving that it is lawful, and explaining why it should be perpetual. This may appear singular, and yet, I confess, I am more afraid of being too plain than too obscure. I am afraid I may weary the reader by a series of mere truisms. But it is no easy matter to avoid this danger, when the facts, with which we have to deal, are known to every one by personal, familiar, and daily experience.

But, then, you will say, "What is the use of this treatise? Why explain what everybody knows?"

But, although this problem appears at first sight so very simple, there is more in it than you might suppose. I shall endeavor to prove this by an example. Mondor lends an instrument of labor to-day, which will be entirely destroyed in a week, yet the capital will not produce the less interest to Mondor or his heirs, through all eternity. Reader, can you honestly say that you understand the reason of this?

It would be a waste of time to seek any satisfactory explanation from the writings of economists. They have not thrown much light upon the reasons of the existence of interest. For this they are not to be blamed; for at the time they wrote, its lawfulness was not called in question. Now, however, times are altered; the case is different. Men, who consider themselves to be in advance of their age, have organized an active crusade against capital and interest; it is the productiveness of capital which they are attacking; not certain abuses in the administration of it, but the principle itself.

A journal has been established to serve as a vehicle for this crusade. It is conducted by M. Proudhon, and has, it is said, an immense circulation. The first number of this periodical contains the electoral manifesto of the people. Here we read, "The productiveness of capital, which is condemned by Christianity under the name of usury, is the true cause of misery, the true principle of destitution, the eternal obstacle to the establishment of the Republic."

Another journal, La Ruche Populaire, after having said some excellent things on labor, adds, "But, above all, labor ought to be free; that is, it ought to be organized in such a manner, that money lenders and patrons, or masters, should not be paid for this liberty of labor, this right of labor, which is raised to so high a price by the trafficers of men." The only thought that I notice here, is that expressed by the words in italics, which imply a denial of the right to interest. The remainder of the article explains it.

It is thus that the democratic Socialist, Thore, expresses himself:

"The revolution will always have to be recommenced, so long as we occupy ourselves with consequences only, without having the logic or the courage to attack the principle itself. This principle is capital, false property, interest, and usury, which by the old regime, is made to weigh upon labor.

"Ever since the aristocrats invented the incredible fiction, that capital possesses the power of reproducing itself, the workers have been at the mercy of the idle.

"At the end of a year, will you find an additional crown in a bag of one hundred shillings? At the end of fourteen years, will your shillings have doubled in your bag?

"Will a work of industry or of skill produce another, at the end of fourteen years?

"Let us begin, then, by demolishing this fatal fiction."

I have quoted the above, merely for the sake of establishing the fact, that many persons consider the productiveness of capital a false, a fatal, and an iniquitous principle. But quotations are superfluous; it is well known that the people attribute their sufferings to what they call the trafficing in man by man. In fact, the phrase tyranny of capital has become proverbial.

I believe there is not a man in the world, who is aware of the whole importance of this question:

"Is the interest of capital natural, just, and lawful, and as useful to the payer as to the receiver?"

You answer, no; I answer, yes. Then we differ entirely; but it is of the utmost importance to discover which of us is in the right; otherwise we shall incur the danger of making a false solution of the question, a matter of opinion. If the error is on my side, however, the evil would not be so great. It must be inferred that I know nothing about the true interests of the masses, or the march of human progress; and that all my arguments are but as so many grains of sand, by which the car of the revolution will certainly not be arrested.

But if, on the contrary, MM. Proudhon and Thore are deceiving themselves, it follows, that they are leading the people astray—that they are showing them the evil where it does not exist; and thus giving a false direction to their ideas, to their antipathies, to their dislikes, and to their attacks. It follows, that the misguided people are rushing into a horrible and absurd struggle, in which victory would be more fatal than defeat, since, according to this supposition, the result would be the realization of universal evils, the destruction of every means of emancipation, the consummation of its own misery.

This is just what M. Proudhon has acknowledged, with perfect good faith. "The foundation stone," he told me, "of my system is the gratuitousness of credit. If I am mistaken in this, Socialism is a vain dream." I add, it is a dream, in which the people are tearing themselves to pieces. Will it, therefore, be a cause for surprise, if, when they awake, they find themselves mangled and bleeding? Such a danger as this is enough to justify me fully, if, in the course of the discussion, I allow myself to be led into some trivialities and some prolixity.

CAPITAL AND INTEREST.

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

1st. Is it consistent with the nature of things, and with justice, that capital should produce interest?

2nd. Is it consistent with the nature of things, and with justice, that the interest of capital should be perpetual?

The working men of Paris will certainly acknowledge that a more important subject could not be discussed.

Since the world began, it has been allowed, at least in part, that capital ought to produce interest. But latterly it has been affirmed, that herein lies the very social error which is the cause of pauperism and inequality. It is, therefore, very essential to know now on what ground we stand.

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

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

Productiveness of capital—perpetuity of interest. These are difficult questions. I must endeavor to make myself clear. And for that purpose I shall have recourse to example rather than to demonstration; or rather, I shall place the demonstration in the example. I begin by acknowledging, that, at first sight, it may appear strange that capital should pretend to a remuneration; and, above all, to a perpetual remuneration. You will say, "Here are two men. One of them works from morning till night, from one year's end to another; and if he consumes all which he has gained, even by superior energy, he remains poor. When Christmas comes, he is no forwarder than he was at the beginning of the year, and has no other prospect but to begin again. The other man does nothing, either with his hands or his head; or, at least, if he makes use of them at all, it is only for his own pleasure; it is allowable for him to do nothing, for he has an income. He does not work, yet he lives well; he has everything in abundance, delicate dishes, sumptuous furniture, elegant equipages; nay, he even consumes, daily, things which the workers have been obliged to produce by the sweat of their brow; for these things do not make themselves; and, as far as he is concerned, he has had no hand in their production. It is the workmen who have caused this corn to grow, polished this furniture, woven these carpets; it is our wives and daughters who have spun, cut out, sewed, and embroidered these stuffs. We work, then, for him and ourselves; for him first, and then for ourselves, if there is anything left. But here is something more striking still. If the former of these two men, the worker, consumes within the year any profit which may have been left him in that year, he is always at the point from which he started, and his destiny condemns him to move incessantly in a perpetual circle, and a monotony of exertion. Labor, then, is rewarded only once. But if the other, the 'gentleman,' consumes his yearly income in the year, he has, the year after, in those which follow, and through all eternity, an income always equal, inexhaustible, perpetual. Capital, then, is remunerated, not only once or twice, but an indefinite number of times! So that, at the end of a hundred years, a family, which has placed 20,000 francs, at five per cent., will have had 100,000 francs; and this will not prevent it from having 100,000 more, in the following century. In other words, for 20,000 francs, which represent its labor, it will have levied, in two centuries, a ten-fold value on the labor of others. In this social arrangement, is there not a monstrous evil to be reformed? And this is not all. If it should please this family to curtail its enjoyments a little—to spend, for example, only 900 francs, instead of 1,000—it may, without any labor, without any other trouble beyond that of investing 100 francs a year, increase its capital and its income in such rapid progression, that it will soon be in a position to consume as much as a hundred families of industrious workmen. Does not all this go to prove, that society itself has in its bosom a hideous cancer, which ought to be eradicated at the risk of some temporary suffering?"

These are, it appears to me, the sad and irritating reflections which must be excited in your minds by the active and superficial crusade which is being carried on against capital and interest. On the other hand, there are moments in which, I am convinced, doubts are awakened in your minds, and scruples in your conscience. You say to yourselves sometimes, "But to assert that capital ought not to produce interest, is to say that he who has created instruments of labor, or materials, or provisions of any kind, ought to yield them up without compensation. Is that just? And then, if it is so, who would lend these instruments, these materials, these provisions? who would take care of them? who even would create them? Every one would consume his proportion, and the human race would never advance a step. Capital would be no longer formed, since there would be no interest in forming it. It will become exceedingly scarce. A singular step toward gratuitous loans! A singular means of improving the condition of borrowers, to make it impossible for them to borrow at any price! What would become of labor itself? for there will be no money advanced, and not one single kind of labor can be mentioned, not even the chase, which can be pursued without money in hand. And, as for ourselves, what would become of us? What! we are not to be allowed to borrow, in order to work in the prime of life, nor to lend, that we may enjoy repose in its decline? The law will rob us of the prospect of laying by a little property, because it will prevent us from gaining any advantage from it. It will deprive us of all stimulus to save at the present time, and of all hope of repose for the future. It is useless to exhaust ourselves with fatigue; we must abandon the idea of leaving our sons and daughters a little property, since modern science renders it useless, for we should become trafficers in men if we were to lend it on interest. Alas! the world which these persons would open before us as an imaginary good, is still more dreary and desolate than that which they condemn, for hope, at any rate, is not banished from the latter." Thus in all respects, and in every point of view, the question is a serious one. Let us hasten to arrive at a solution.

Our civil code has a chapter entitled, "On the manner of transmitting property." I do not think it gives a very complete nomenclature on this point. When a man by his labor has made some useful things—in other words, when he has created a value—it can only pass into the hands of another by one of the following modes: as a gift, by the right of inheritance, by exchange, loan, or theft. One word upon each of these, except the last, although it plays a greater part in the world than we may think.

A gift, needs no definition. It is essentially voluntary and spontaneous. It depends exclusively upon the giver, and the receiver cannot be said to have any right to it. Without a doubt, morality and religion make it a duty for men, especially the rich, to deprive themselves voluntarily of that which they possess, in favor of their less fortunate brethren. But this is an entirely moral obligation. If it were to be asserted on principle, admitted in practice, or sanctioned by law, that every man has a right to the property of another, the gift would have no merit, charity and gratitude would be no longer virtues. Besides, such a doctrine would suddenly and universally arrest labor and production, as severe cold congeals water and suspends animation, for who would work if there was no longer to be any connection between labor and the satisfying of our wants? Political economy has not treated of gifts. It has hence been concluded that it disowns them, and that it is therefore a science devoid of heart. This is a ridiculous accusation. That science which treats of the laws resulting from the reciprocity of services, had no business to inquire into the consequences of generosity with respect to him who receives, nor into its effects, perhaps still more precious, on him who gives; such considerations belong evidently to the science of morals. We must allow the sciences to have limits; above all, we must not accuse them of denying or undervaluing what they look upon as foreign to their department.

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

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

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

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

We must remark, also, that the constant appearance of money in every exchange has overturned and misled all our ideas; men have ended in thinking that money was true riches, and that to multiply it was to multiply services and products. Hence the prohibitory system; hence paper money; hence the celebrated aphorism, "What one gains the other loses;" and all the errors which have ruined the earth, and imbrued it with blood.[17] After much research it has been found, that in order to make the two services exchanged of equivalent value, and in order to render the exchange equitable, the best means was to allow it to be free. However plausible, at first sight, the intervention of the State might be, it was soon perceived that it is always oppressive to one or other of the contracting parties. When we look into these subjects, we are always compelled to reason upon this maxim, that equal value results from liberty. We have, in fact, no other means of knowing whether, at a given moment, two services are of the same value, but that of examining whether they can be readily and freely exchanged. Allow the State, which is the same thing as force, to interfere on one side or the other, and from that moment all the means of appreciation will be complicated and entangled, instead of becoming clear. It ought to be the part of the State to prevent, and, above all, to repress artifice and fraud; that is, to secure liberty, and not to violate it. I have enlarged a little upon exchange, although loan is my principal object: my excuse is, that I conceive that there is in a loan an actual exchange, an actual service rendered by the lender, and which makes the borrower liable to an equivalent service,—two services, whose comparative value can only be appreciated, like that of all possible services, by freedom. Now, if it is so, the perfect lawfulness of what is called house-rent, farm-rent, interest, will be explained and justified. Let us consider the case of loan.

[Footnote 17: This error will be combated in a pamphlet, entitled "Cursed Money."]

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

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

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

There are some persons who imagine that capital is money, and this is precisely the reason why they deny its productiveness; for, as M. Thore says, crowns are not endowed with the power of reproducing themselves. But it is not true that capital and money are the same thing. Before the discovery of the precious metals, there were capitalists in the world; and I venture to say that at that time, as now, everybody was a capitalist, to a certain extent.

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

1st. Of the materials upon which men operate, when these materials have already a value communicated by some human effort, which has bestowed upon them the principle of remuneration—wool, flax, leather, silk, wood, etc.

2nd. Instruments which are used for working—tools, machines, ships, carriages, etc.

3rd. Provisions which are consumed during labor—victuals, stuffs, houses, etc.

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

Now for my anecdotes.

THE SACK OF CORN.

Mathurin, in other respects as poor as Job, and obliged to earn his bread by day-labor, became, nevertheless, by some inheritance, the owner of a fine piece of uncultivated land. He was exceedingly anxious to cultivate it. "Alas!" said he, "to make ditches, to raise fences, to break the soil, to clear away the brambles and stones, to plough it, to sow it, might bring me a living in a year or two; but certainly not to-day, or to-morrow. It is impossible to set about farming it, without previously saving some provisions for my subsistence until the harvest; and I know, by experience, that preparatory labor is indispensable, in order to render present labor productive." The good Mathurin was not content with making these reflections. He resolved to work by the day, and to save something from his wages to buy a spade and a sack of corn; without which things, he must give up his fine agricultural projects. He acted so well, was so active and steady, that he soon saw himself in possession of the wished-for sack of corn. "I shall take it to the mill," said he, "and then I shall have enough to live upon till my field is covered with a rich harvest." Just as he was starting, Jerome came to borrow his treasure of him. "If you will lend me this sack of corn," said Jerome, "you will do me a great service; for I have some very lucrative work in view, which I cannot possibly undertake, for want of provisions to live upon until it is finished." "I was in the same case," answered Mathurin, "and if I have now secured bread for several months, it is at the expense of my arms and my stomach. Upon what principle of justice can it be devoted to the realization of your enterprise instead of mine?"

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

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

Secondly. He engaged to deliver five litres on every hectolitre. "This clause is no less just than the other," thought he; "for without it Mathurin would do me a service without compensation; he would inflict upon himself a privation—he would renounce his cherished enterprise—he would enable me to accomplish mine—he would cause me to enjoy for a year the fruits of his savings, and all this gratuitously. Since he delays the cultivation of his land, since he enables me to realize a lucrative labor, it is quite natural that I should let him partake, in a certain proportion, of the profits which I shall gain by the sacrifice he makes of his own."

On his side, Mathurin, who was something of a scholar, made this calculation: "Since, by virtue of the first clause, the sack of corn will return to me at the end of a year," he said to himself, "I shall be able to lend it again; it will return to me at the end of the second year; I may lend it again, and so on, to all eternity. However, I cannot deny that it will have been eaten long ago. It is singular that I should be perpetually the owner of a sack of corn, although the one I have lent has been consumed for ever. But this is explained thus: It will be consumed in the service of Jerome. It will put it into the power of Jerome to produce a superior value; and, consequently, Jerome will be able to restore me a sack of corn, or the value of it, without having suffered the slightest injury; but quite the contrary. And as regards myself, this value ought to be my property, as long as I do not consume it myself; if I had used it to clear my land, I should have received it again in the form of a fine harvest. Instead of that, I lend it, and shall recover it in the form of repayment.

"From the second clause, I gain another piece of information. At the end of the year, I shall be in possession of five litres of corn, over the 100 that I have just lent. If, then, I were to continue to work by the day, and to save a part of my wages, as I have been doing, in the course of time I should be able to lend two sacks of corn; then three; then four; and when I should have gained a sufficient number to enable me to live on these additions of five litres over and above each, I shall be at liberty to take a little repose in my old age. But how is this? In this case, shall I not be living at the expense of others? No, certainly, for it has been proved that in lending I perform a service; I complete the labor of my borrowers; and only deduct a trifling part of the excess of production, due to my lendings and savings. It is a marvellous thing, that a man may thus realize a leisure which injures no one, and for which he cannot be envied without injustice."

THE HOUSE.

Mondor had a house. In building it, he had extorted nothing from any one whatever. He owed it to his own personal labor, or, which is the same thing, to labor justly rewarded. His first care was to make a bargain with an architect, in virtue of which, by means of a hundred crowns a year, the latter engaged to keep the house in constant good repair. Mondor was already congratulating himself on the happy days which he hoped to spend in this retreat, declared sacred by our Constitution. But Valerius wished to make it his residence. "How can you think of such a thing?" said Mondor; "it is I who have built it; it has cost me ten years of painful labor, and now you would enjoy it!" They agreed to refer the matter to judges. They chose no profound economists—there were none such in the country. But they found some just and sensible men; it all comes to the same thing: political economy, justice, good sense, are all the same thing. Now here is the decision made by the judges: If Valerius wishes to occupy Mondor's house for a year, he is bound to submit to three conditions. The first is, to quit at the end of the year, and to restore the house in good repair, saving the inevitable decay resulting from mere duration. The second, to refund to Mondor the 300 francs, which the latter pays annually to the architect to repair the injuries of time; for these injuries taking place whilst the house is in the service of Valerius, it is perfectly just that he should bear the consequences. The third, that he should render to Mondor a service equivalent to that which he receives. As to this equivalence of services, it must be freely discussed between Mondor and Valerius.

THE PLANE.

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

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

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

W. You must do me a service.

J. What service?

W. Lend me the plane for a year.

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

W. Nothing. Don't you know that a loan ought to be gratuitous? Don't you know that capital is naturally unproductive? Don't you know fraternity has been proclaimed? If you only do me a service for the sake of receiving one from me in return, what merit would you have?

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

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

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

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

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

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

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

And this was done thus: William granted a remuneration calculated in such a way that, at the end of the year, James received his plane quite new, and in addition, a compensation, consisting of a new plank, for the advantages of which he had deprived himself, and which he had yielded to his friend.

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

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

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

1st. If the yielding of a plank by the borrower to the lender is a natural, equitable, lawful remuneration, the just price of a real service, we may conclude that, as a general rule, it is in the nature of capital to produce interest. When this capital, as in the foregoing examples, takes the form of an instrument of labor, it is clear enough that it ought to bring an advantage to its possessor, to him who has devoted to it his time, his brains, and his strength. Otherwise, why should he have made it? No necessity of life can be immediately satisfied with instruments of labor; no one eats planes or drinks saws, except, indeed, he be a conjurer. If a man determines to spend his time in the production of such things, he must have been led to it by the consideration of the power which these instruments add to his power; of the time which they save him; of the perfection and rapidity which they give to his labor; in a word, of the advantages which they procure for him. Now, these advantages, which have been prepared by labor, by the sacrifice of time which might have been used in a more immediate manner, are we bound, as soon as they are ready to be enjoyed, to confer them gratuitously upon another? Would it be an advance in social order, if the law decided thus, and citizens should pay officials for causing such a law to be executed by force? I venture to say, that there is not one amongst you who would support it. It would be to legalize, to organize, to systematize injustice itself, for it would be proclaiming that there are men born to render, and others born to receive, gratuitous services. Granted, then, that interest is just, natural, and lawful.

2nd. A second consequence, not less remarkable than the former, and, if possible, still more conclusive, to which I call your attention, is this: interest is not injurious to the borrower. I mean to say, the obligation in which the borrower finds himself, to pay a remuneration for the use of capital, cannot do any harm to his condition. Observe, in fact, that James and William are perfectly free, as regards the transaction to which the plane gave occasion. The transaction cannot be accomplished without the consent of the one as well as of the other. The worst which can happen is, that James may be too exacting; and in this case, William, refusing the loan, remains as he was before. By the fact of his agreeing to borrow, he proves that he considers it an advantage to himself; he proves, that after every calculation, including the remuneration, whatever it may be, required of him, he still finds it more profitable to borrow than not to borrow. He only determines to do so because he has compared the inconveniences with the advantages. He has calculated that the day on which he returns the plane, accompanied by the remuneration agreed upon, he will have effected more work, with the same labor, thanks to this tool. A profit will remain to him, otherwise he would not have borrowed. The two services of which we are speaking are exchanged according to the law which governs all exchanges, the law of supply and demand. The claims of James have a natural and impassable limit. This is the point in which the remuneration demanded by him would absorb all the advantage which William might find in making use of a plane. In this case, the borrowing would not take place. William would be bound either to make a plane for himself, or to do without one, which would leave him in his original condition. He borrows, because he gains by borrowing. I know very well what will be told me. You will say, William may be deceived, or, perhaps, he may be governed by necessity, and be obliged to submit to a harsh law.

It may be so. As to errors in calculation, they belong to the infirmity of our nature, and to argue from this against the transaction in question, is objecting the possibility of loss in all imaginable transactions, in every human act. Error is an accidental fact, which is incessantly remedied by experience. In short, everybody must guard against it. As far as those hard necessities are concerned, which force persons to burdensome borrowings, it is clear that these necessities exist previously to the borrowing. If William is in a situation in which he cannot possibly do without a plane, and must borrow one at any price, does this situation result from James having taken the trouble to make the tool? Does it not exist independently of this circumstance? However harsh, however severe James may be, he will never render the supposed condition of William worse than it is. Morally, it is true, the lender will be to blame; but, in an economical point of view, the loan itself can never be considered responsible for previous necessities, which it has not created, and which it relieves, to a certain extent.

But this proves something to which I shall return. The evident interests of William, representing here the borrowers, there are many Jameses and planes. In other words, lenders and capitals. It is very evident, that if William can say to James—"Your demands are exorbitant; there is no lack of planes in the world;" he will be in a better situation than if James' plane was the only one to be borrowed. Assuredly, there is no maxim more true than this—service for service. But let us not forget, that no service has a fixed and absolute value, compared with others. The contracting parties are free. Each carries his requisitions to the farthest possible point; and the most favorable circumstance for these requisitions is the absence of rivalship. Hence it follows, that if there is a class of men more interested than any other, in the formation, multiplication, and abundance of capitals, it is mainly that of the borrowers. Now, since capitals can only be formed and increased by the stimulus and the prospect of remuneration, let this class understand the injury they are inflicting on themselves, when they deny the lawfulness of interest, when they proclaim that credit should be gratuitous, when they declaim against the pretended tyranny of capital, when they discourage saving, thus forcing capitals to become scarce, and consequently interests to rise.

3rd. The anecdote I have just related enables you to explain this apparently singular phenomenon, which is termed the duration or perpetuity of interest. Since, in lending his plane, James has been able, very lawfully, to make it a condition, that it should be returned to him, at the end of a year, in the same state in which it was when he lent it, is it not evident that he may, at the expiration of the term, lend it again on the same conditions. If he resolves upon the latter plan, the plane will return to him at the end of every year, and that without end. James will then be in a condition to lend it without end; that is, he may derive from it a perpetual interest. It will be said, that the plane will be worn out. That is true; but it will be worn out by the hand and for the profit of the borrower. The latter has taken into account this gradual wear, and taken upon himself, as he ought, the consequences. He has reckoned that he shall derive from this tool an advantage, which will allow him to restore it in its original condition, after having realized a profit from it. As long as James does not use this capital himself, or for his own advantage—as long as he renounces the advantages which allow it to be restored to its original condition—he will have an incontestable right to have it restored, and that independently of interest.

Observe, besides, that if, as I believe I have shown, James, far from doing any harm to William, has done him a service in lending him his plane for a year; for the same reason, he will do no harm to a second, a third, a fourth borrower, in the subsequent periods. Hence you may understand, that the interest of a capital is as natural, as lawful, as useful, in the thousandth year, as in the first. We may go still further. It may happen, that James lends more than a single plane. It is possible, that by means of working, of saving, of privations, of order, of activity, he may come to lend a multitude of planes and saws; that is to say, to do a multitude of services. I insist upon this point—that if the first loan has been a social good, it will be the same with all the others; for they are all similar, and based upon the same principle. It may happen, then, that the amount of all the remunerations received by our honest operative, in exchange for services rendered by him, may suffice to maintain him. In this case, there will be a man in the world who has a right to live without working. I do not say that he would be doing right to give himself up to idleness—but I say, that he has a right to do so; and if he does so, it will be at nobody's expense, but quite the contrary. If society at all understands the nature of things, it will acknowledge that this man subsists on services which he receives certainly (as we all do), but which he lawfully receives in exchange for other services, which he himself has rendered, that he continues to render, and which are quite real, inasmuch as they are freely and voluntarily accepted.

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

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

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

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

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

At the end of a year, says M. Thore, will you find an additional crown in a bag of a hundred pounds?

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

Ignorance of the true part which cash plays in human transactions, is the source of the most fatal errors. I intend devoting an entire pamphlet to this subject. From what we may infer from the writings of M. Proudhon, that which has led him to think that gratuitous credit was a logical and definite consequence of social progress, is the observation of the phenomenon which shows a decreasing interest, almost in direct proportion to the rate of civilization. In barbarous times it is, in fact, cent. per cent., and more. Then it descends to eighty, sixty, fifty, forty, twenty, ten, eight, five, four, and three per cent. In Holland, it has even been as low as two per cent. Hence it is concluded, that "in proportion as society comes to perfection, it will descend to zero by the time civilization is complete. In other words, that which characterizes social perfection is the gratuitousness of credit. When, therefore, we shall have abolished interest, we shall have reached the last step of progress." This is mere sophistry, and as such false arguing may contribute to render popular the unjust, dangerous, and destructive dogma, that credit should be gratuitous, by representing it as coincident with social perfection, with the reader's permission I will examine in a few words this new view of the question.

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

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

It is not surprising, therefore, that the more abundant capitals are, the lower is the interest.

Is this saying that it will ever reach zero? No; because, I repeat it, the principle of a remuneration is in the loan. To say that interest will be annihilated, is to say that there will never be any motive for saving, for denying ourselves, in order to form new capitals, nor even to preserve the old ones. In this case, the waste would immediately bring a void, and interest would directly reappear.