S.M. Brice

Financial Catechism

CHAPTER III.

THE FUNCTIONS OF MONEY.



Question.  If money is essentially a creature of law, how does it obtain value ?

Answer.  It has no value within itself.  Its only value is imparted by law.  It is a certificate from the government that the party holding it is entitled to pay any debt, or exchange it for any of the products of labor or other valuable thing, for the amount of value specified on its face.

Q.  If it has no value within itself, how can it measure the value of commodities ?  Must we not have value to measure value ?

A.  No.  It is impossible to measure value with value as a uniform standard of measure ;  for there is no such a thing as a uniform value for anything unless that value is fixed by law.  The cost of production is the only true measure of value, and as that is constantly fluctuating, no commodity can be selected, the value of which could be a uniform measure of the value of any other commodity.  The legal measuring power of money is arbitrary—the amount of each piece a denomination, which represents so much value.  In changing these denominational pieces of money for commodities, the value of the commodities are measured by the mentality of the persons dealing, who agree upon such value, and the amount of these denominations, which corresponds with the mental measurement, constitutes the price paid for the article sold.  The dollar being established as the unit of value, and of the money of account in the United States, any piece of whatever denomination, is either a multiple or fraction of the unit, and act as vehicles through which property of all kinds is transferred from one person to another, just as the title deed transfers a tract of land from one person to another.  In this case the value of the land is not measured by the deed of conveyance.  It is mentally measured by its productive capacity, its convenience to market and other surroundings which contribute to its value.  In this mental measurement the parties agree upon a value which constitutes the price and is equal to a certain number of these denominational units—say one thousand.  The party transferring the lands makes out and delivers the title deed and the party purchasing delivers the one thousand units of value, which are also title deeds from the government to the holder to an interest to the extent of their denominational value, in all the wealth of the nation—just the same as the title deed from the government gives the holder thereof a title in fee simple to an interest to that amount of the land of the government.

Q.  Are we to understand that this denominational title to an interest in the wealth of the government is unconditional, and that it authorizes the holder thereof to appropriate to the amount of its legal value any of the property belonging to the United States ?

A.  No.  Being a medium of exchange, it gives no power to appropriate any property or available thing, only such as are offered for sale.  The government owns the public lands, on which it has established a price by law.  When it offers any of this land for sale, the holder of the denominational titles called money, can exchange them at their legal value for any such land as he finds unappropriated by any other person.  Having made a selection of a tract of land, he surrenders, or pays to the government, his title to an interest in the general wealth of the nation and receives in return a title in fee simple for his tract of land.  The only difference between these two titles is, the one given by the government to the individual for the tract of land, must be placed on record, and the land cannot be transferred from one person to another without a deed of conveyance to perfect the transfer, while the denominational title is issued by the government to the bearer and may be transferred from person to person without recording each transaction.  The land title is a specific title to property already located.  The denominational title is a general title giving the privilege to the holder to exchange it for any unoccupied property, labor or other valuable thing.  Both titles are equally secured ;  all by the wealth of the government.

Q.  If I buy a farm and pay five thousand dollars in gold eagles for it, do I not measure value with value ?

A.  No.  You mentally measure the farm by its productive capacity, and having determined in your mind that it is worth five thousand dollars, you transfer to the party of whom you purchase, two hundred and fifty gold eagles, upon which the government has stamped its certificate that the holder thereof is entitled to pay any debt or obligation with them to the amount of five thousand dollars.  The intrinsic value of the gold has nothing to do with measuring the value of the farm ;  it is the legal value of the eagles that enables you to pay for it.

Q.  If money does not measure value, how does it act as a medium or vehicle of exchange in commerce ?

A.  This is a very important question, and one that vitally effects the prosperity of a country.  The real value of all commodities that enter into commerce, is the actual cost of production and distribution.  The price is regulated ;  first, by demand and supply ;  and, second, by the facilities for production and distribution.  Money, then, being the vehicle for distribution, must be furnished in sufficient quantity to supply all the necessary implements for successful production, and also enough for uniform and speedy distribution of the products of labor to the markets of the world.

Q.  In what way does the quantity of money effect the products of labor or its distribution ?

A.  If there is a large amount of money in circulation it increases the value of the products of labor, thereby stimulating every industry and furnishing the most approved implements for cultivation and manufacturing, thus increasing the products of every industrial department, resulting in a large increase in the aggregate productions of the country.  This increased amount of production necessarily requires increased facilities for distribution, such as the building of railroads, improvement of water-ways, and the facilities for transportation on them.  If money is furnished in sufficient quantity for these purposes, every industry in the country will prosper.  Trade will be active and remunerative, civilization will advance and the whole community be prosperous and happy.  While, with a scarcity of money in circulation, the very reverse of this occurs ;  production is crippled, labor is poorly remunerated, the agricultural and manufacturing industries languish, fields run to waste because they will not produce enough to pay the cost of tillage, the hum of the spindles and the click of the loom cease to be heard in the factories, the fires in the forges go out, merchants are bankrupted and laborers turned out of employment, become tramps and their families left destitute.  This is not bare assumption, but is established by the most positive evidence obtained by the government by actual investigation of the subject for sixteen years—from 1864 to 1880.  In the report of the Commissioner of Agriculture for 1878, after showing the decline in the price of farm labor from 1864 to 1878, and the relative cost of living in this period in the different states and territories of the United States, the Commissioner sums up in the following words :

“ The table given below embraces the results of sixteen annual investigations of the corn crop, and shows our remarkable progress in this branch of production.  As in the case of wheat, the first three years included in the table were years of civil war, and a large portion of our corn area was involved in its disasters.  Hence the aggregate for those years were abnormally low.  The acreage of 1865 was nearly doubled in 1866, and nearly tripled in 1878.  During the year last named our cornfields were nearly equal in area to the State of Kansas.

“ The average product per acre was substantially the same throughout, amounting to 26.6 bushels during the latter eight years, against 26.8 bushels in the previous eight years.  Our four last crops each exceeded considerably a billion and a quarter of bushels.  As in the case of wheat, the supplies have grown faster than the population.  During the first eight years the out-turn averaged 21.40 bushels per capita, and during the latter eight years 24.07 ;  in 1875 it amounted to nearly 30 bushels.

“ Our surplus in later years has found an increasing outlet.  During the first eight years we sent abroad but 1.20 per cent.;  during the latter eight years 4.37 per cent.;  of the crop of 1877 we shipped abroad 6½ per cent., and the crop of 1878 is going out probably in about the same proportion.

The average price obtained by the farmer has fallen off two-thirds in fifteen years, being 99.7 cents per bushel in 1864, and 31.8 cents in 1878.  The last named crop, though greater by 46,000,000 bushels than its predecessor, fell short of it $39,000,000 in aggregate value.  The average value of each acre’s yield has fallen to the unprecedented low figure of 48.55 in 1878 ;  in 1864 it amounted to 30.64.  The last named year, however, was one of extreme money inflation.”  (pp.289-90.)

This testimony comes from a sworn officer of the government, having all the facilities at his command for ascertaining the facts, and is the more forcible from the fact that he was a member of the Republican party, which had legislated to reduce that inflated currency which made an acre of corn in 1864 worth $30.64 to the contracted volume which reduced the product of the same acre to $8.55 in 1878.

Q.  In what way does the difference of the amount of money in circulation produce this result ?

A.  Money being the vehicle by which the products of labor are transferred from one person to another ;  stands in the same relation to production that the railroad or waterway does in transferring the products of labor from one place to another.  If there is a large crop of corn or wheat produced in the West, it requires an additional number of cars to transfer it to the Eastern seaboard, the point of consumption.  If there is not a sufficient number of cars on the road to move the grain to the market in the proper season, the warehouses at the point of shipment become crowded with grain ;  extra bills for storage have to be paid ;  the grain is subject to damage and loss ;  and is prevented from reaching the Eastern market in time to meet the best demand, and heavy loss is sustained by the producers thereby.

Now, while the cars are the vehicles for removing the grain from Wichita to New York, the money is the vehicle for exchanging the ownership of the grain from the producer to the shipper.  If money is plenty, the shipper takes the advantage of the best time to secure the grain for transportation.  Having abundant means, he pays fair prices, which produces active sales, and enables the producer to realize a fair return for his labor and prepare for increased production the following year.

But a scarcity of money produces the very opposite of this.  Prices are low and sales only made by producers when compelled by dire necessity ;  the crop is kept on hand subject to damage and loss ;  debts contracted in the hope of realizing better prices to be followed by disappointment and forced sale at ruinously low prices.

Q.  If the scarcity of money reduces the price of wheat produced by the western farmer, does it not reduce the price of labor, and consequently the price of every commodity produced by labor, whether in the agricultural, mining or manufacturing departments ?

A.  It does have just that effect.

Q.  In the exchange of these commodities, what difference does it make to the producers whether prices are high or low ;  if wheat this year will sell for a dollar a bushel in cash, and a pair of boots will sell for five dollars, it requires five bushels of wheat to pay for a pair of boots.  If next year a bushel of wheat will sell for fifty cents, and the same kind of boots can be bought for two dollars and fifty cents, the five bushels of wheat still retains its purchasing power, for it will purchase a pair of boots of the same quality as sell this year for five dollars—are not the parties both just as rich as when the products of their labor commanded double the amount in cash ?

A.  As between the producers it makes no difference, so long as they can exchange commodities between themselves, whether the price in the exchange is set high or low, so they are uniform as compared with their cost of production.  But this is not the important point.  There are two classes in every nation or government ;  a class of producers and a class of non-producers.  The class of producers create all the wealth of the nation by labor.  The class of non-producers live upon this wealth without contributing anything toward its production.  It is between these two classes that the difference exists between high and low prices, or cheap and dear money.

In the first place, the expense of administering the affairs of a government is furnished by a tax collected from the people.

It is necessary to have legislators to enact laws for the government of both state and nation, and officers to administer those laws, running through all the ramifications of government, from president to road supervisor, and from chief justice to constable.

This class all have salaries fixed by law.  Whether wheat is worth a dollar a bushel or fifty cents a bushel, they draw the same number of dollars for their salary, and the government collects it off of the wealth created by labor ;  so that when wheat is a dollar a bushel, it requires one thousand bushels of wheat to pay the salary of an officer who gets one thousand dollars a year for his services ;  but when wheat is only fifty cents a bushel, it requires two thousand bushels of wheat to pay the salary of one thousand dollars to the same officer.  As it requires as much labor to produce a bushel of wheat when it is only worth fifty cents a bushel, as it does when it sells for a dollar, it requires just twice as many days labor to pay the thousand dollars as it did when wheat sold for a dollar a bushel.

When the price of wheat falls from a dollar to fifty cents per bushel, it doubles the purchasing power of the dollar, but does not reduce the salary of the officer ;  so that, while the fall in price reduces his expenses 100 per cent., and virtually raises his salary to two thousand dollars, it reduces the price of the products of labor 100 per cent., thereby compelling the producer to perform double the number of days’ labor in order to pay the salary.  In other words, if a bushel of wheat represents a day’s labor when wheat is a dollar a bushel, it requires the labor of one thousand men one day to pay one man for working three hundred days, or three and one-third days’ labor by the producer to pay for one day’s service of the nun-producer.  But when wheat falls to fifty cents a bushel it still represents a day of productive labor, and, consequently, it requires two thousand days’ labor on the farm to pay for three hundred days of official service, or six and two-thirds days of the former for one of the latter.  This illustration applies to all persons who receive fixed salaries or annuities ;  all the officers of the government in its various departments of national, state, county and municipal ;  the officers of all public institutions, both state and national, with all their clerks or subordinates whose salaries are fixed by law.  Besides these are the officers of all the great corporations who levy tribute upon the people independent of law, and fix their own salaries at such sums as will satisfy their own ambition or avarice without regard to the amount of money in circulation.

Thus it will be seen that all this class are interested in dear money and cheap labor, because it doubles their individual wealth, while it robs the producer of one-half of his earnings.

Money is a purchaseable article, just as much as wheat or beef, and the amount in market has just as much to do with its purchasing power or price as it does with any other commodity in the market.  We buy money with labor, either by selling our labor direct to another, or by laboring on our own account and exchanging the product for money.  In either case we buy money with labor.  If there is a full supply of money in the market to satisfy the demands of commerce we can buy it for a fair consideration, measured by labor ;  or in common parlance, money is cheap.  But if there is not a sufficient quantity to meet this demand the price goes up and we have dear money.  Scarce and dear money creates a very large amount of indebtedness in order to meet the demands of commerce in the distribution of the products of labor.  But few persons engaged in buying produce can furnish a sufficient amount of money to move the produce in the district in which they operate.  They are therefore compelled to hire money from the banks.  Whatever usury they pay the bank is deducted from the value of the produce so bought, and is a tax upon the labor of the country to that extent, and this tax runs through the whole system of credit imposed upon the people by keeping the volume of money in circulation below the amount demanded by the commerce of the country.

Money in its proper sphere in commerce is simply crystallized labor, just the same as pork or flour.  The farmer produces by his labor more pork than his household will consume ;  the blacksmith works in his shop and receives his pay for his labor in money ;  the money in itself will not feed or clothe his family—his labor has become crystallized.  He exchanges this crystallized labor for the farmer’s pork instead of paying him in blacksmith work ;  he has simply changed work with the farmer, and the crystallized labor in the form of money was the medium of exchange.

Q.  If money is crystallized labor, why can all debts and obligations be paid with it, when it cannot be done with labor itself, or any of its products when crystallized in other forms than that of money ?

A.  Because it is so stipulated by law.  The money being a title deed issued by the government, and paid out by it in consideration of labor done, or other valuable thing received, it is bound to make it receivable for all dues ;  and hence has enacted laws making a tender of money the end of the law in all contracts.

Q.  Is money anymore crystallized labor than land ?

A.  No.  The soldier enlists in the service of his country in time of war ;  he serves out his time faithfully and receives sixteen dollars per month in money, and in addition thereto, in consideration for his services, the government gives him a land warrant which authorizes him to locate it upon any of the unoccupied land in the United States.  He makes his selection of a quarter section and signifies it to the proper officers of the land office, the government takes in and cancels his warrant and issues to him letters patent for the land—thus his labor, while in the service of the government, was a part crystallized into money and a part into land.  There is three forms which crystallized labor assumes in one transaction :  the money is made by law a legal-tender for debt and the end of the law in all contracts ;  the land warrant is a legal-tender to the government for any of its unoccupied lands ;  while the land, when secured by the title of the government, is not a legal-tender for anything.  The object of the law in making money a legal-tender in preference to any other thing, is on account of its denominational character ;  it being of all denominations, from the unit to any multiple or fraction thereof ;  it is capable of expressing all values, in any or all the transactions of commerce.

Q.  Is money crystallized labor before it passes from the office of issue into the hands of individuals for labor performed or other valuable consideration ?

A.  Yes.  When it comes from the mint or the printing press, it is a product of labor, and its true value consists in the value of the labor required to produce it ;  but its legal, value is established by law.

Q.  If the function of money is to act as a denominational representative of value by the authority of the government issuing it, is it necessary that the material of which it is composed should possess a large commercial value ?

A.  No.  In a Republic, the people constitute the government ;  their representatives in Congress are clothed with power to create the money necessary for the demands of commerce.  It is the duty of Congress to obtain the labor and material necessary for this purpose at the smallest cost to the people, after allowing a fair compensation for the labor of those persons employed in this service.  The material should not be selected on account of its commercial value, but on account of its fitness and convenience for the purpose for which it is designed.

Q.  Why should not commercial value be taken into consideration ?

A.  From the fact, that in order for money to perform its proper function, it should always possess the same representative power as money, independent of all other contingencies.  This, a money, the material of which possesses a large commercial value on account of the demand for it for other purposes than for making money, cannot do.  It makes the cost of production unequal and uncertain from year to year, and in case of great demand for commercial use the money would be diverted from its legitimate use and applied to a use which gives a larger return of profit—thus withdrawing a portion of money from circulation and converting it to other uses, until the commercial demand should be so far satisfied as to make it less profitable than when used for making money.  This was the case with the American silver dollar.  It was worth from two to three per cent. premium from 1865 to 1872.  After 1873, when silver was demonetized by the United States and several of the European nations, it decreased 15 per cent. in the commercial market.  Gold, on the other hand, being made by law the only money receivable for customs dues and interest on national bonds rose in the market until 25 8-10 grains, 9-10 fine, which had formerly sold for a dollar, brought, in 1864, two dollars and eighty-five cents.  If the gold and silver dollar had had no commercial value for anything but money, and could have been steadily produced at small cost, and both made full legal-tender, there would have been no such fluctuation in their value.

Q.  If money is crystallized labor and belongs to him who exchanges labor, or the product of labor for it, has he not a right to hire it out to another as he would his horse or his wagon ?

A.  He has the right to hire it to another, but the law steps in and prescribes a limit beyond which he may not pass in his exactions for its use.

Q.  Why should the law set a limit to the price to be paid for the use of money any more than for the use of the horse ?

A.  Because the law makes the money, and makes it the only legal tender for the payment of debts—making it thus compulsory upon the people to procure money in order to pay debts, the law limits the amount which may be charged for its use in order to prevent those who get possession of more than they use in industrial pursuits from demanding of others an extortionate price for its use for a given time.  The horse is a species of property which the law does not create, nor does it compel a person to obtain a horse in order to liquidate a debt ;  hence it leaves the owner of the horse entirely free to obtain whatever he can for the use of his horse, while it limits him in his charge for the use of his money.

Q.  Is it not a fact that any consideration received by one person from another for the hire or use of money for a given time is usury ?

A.  It is usury in fact, just the same as the consideration received by one person from another for the use of a plow or horse—a consideration charged for the use of a thing.  In modern parlance, when applied to the use of a man or an implement, it is called hire.  When applied to a house or farm it is called rent ;  when to money, it is called interest.  The three terms all imply the same thing, and being a consideration received for use, the proper term is usury.

Q.  Does not the law prohibit usurious interest ?

A.  It does.  But in its prohibition it uses the word “usury” in a limited sense.  In the United States Courts everything above 6 per cent. per annum for the use of money is termed usury, while in the different state courts the limit ranges all the way from 7 to 12 per cent.

Q.  Is there not some method by which a uniform rate of usury for money could be established which would give both parties—the one hiring and the one letting—all equal portion of the advantages derived from the use of money when hired ?

A.  There never has been such a rule adopted by the financiers of the world ;  or, if there has, it is not to be found in financial history.  Usury is an old system, and its history reveals the fact that it has been the giant robber of the laborers of the world ;  that it has been the instrument in the hands of the avaricious of all nations to

“ Through dishonest means, with usury at their head,
Strip honest worth, the poor deprive of bread.”

It is a stubborn fact, attested by the history of nations and individuals, that the usual rates of usury, even at the lowest figure, 3 per cent., sooner or later swallows up all of the products of labor, and starves the producer for the benefit of the money lords.

Q.  How can a just rate of usury be established ?

A.  By reducing the rate of usury recognized by law, until money held for usury would increase no faster than the same amount invested in production.

Q.  How can we arrive at this result ?

A.  By finding the amount of wealth a man can produce by his labor in a given number of years, and calculating the interest on the same amount of money loaned at a certain rate per cent., the interest collected and loaned once in six months.

As an experimental effort we will suppose a man able to earn by his labor two dollars per day for three hundred days in each year, for forty years and four months, which would amount to three hundred dollars for each six months, and that he loan his earnings regularly every six months with the accruing usury for a term of forty years and four months ;  as illustrated in the following table :

.....................................

In the first ten years and four months this man earns by his labor $6,050.00 ;  the usury on the same for the same period is $2,538.33 ;  this added to the labor makes $8,583.38.  Now, as money loaned at 7 per cent. usury and compounded once in six months doubles itself in ten years and one month, add to the above product the usury for the second ten years and one month, $8,583.38, and it gives at the end of twenty years and two months $17,166.76 ;  now, add for the second ten years and one month, labor and the usury thereon, $8,583.38, gives at the end of twenty years and two months, $25,750.14 ;  at the end of the third ten years and one month this sum would double itself again, giving $51,500.28 ;  add to this the third ten years’ and one month’s labor and usury thereon, $8,583.38, and it gives at the end of thirty years and three months $60,083.66 ;  fourth ten years’ and one month’s usury doubles again, giving $120,167.32; add the fourth ten years and one month’s labor and usury thereon, $8,583.38, and it gives at the end of forty years and four months $128,750.70.  The amount earned by labor in this period was $24,200.00 :  the amount obtained by usury, $104,550.70.  If he commenced to labor when he was twenty years old his age is now sixty years and four months.  Suppose now he retires from active life as a loborer, and loans his money half yearly as before at 7 per cent.;  when he arrives at the age of seventy years and five months his money will double again, making $257,501.40.  In ten years more, when he arrives at the age of eighty years and six months, the usury equals the principal again, and amounts to $515,002.80.  Now deduct for his support for the last twenty years in which he does not earn anything by labor, $15,000, and it leaves $500,002.80 ;  deduct from this the amount earned by labor, $24,200.00, and it leaves $475,802.80 obtained by usury at 7 per cent. in sixty years, on an income from labor of $600 a year for a period of forty years and four months and accruing usury for twenty years more at 7 per cent.  This $475,802.80 was every dollar of it earned by the labor of others and paid to him for the use of money, and amounts to more than nineteen-twentieths of the whole accumulation.  In order to make the illustration more simple, let us suppose two men, when they arrive at the age of twenty years :  One commences to labor, for which he receives $300 every six months, and he continues to labor for forty years and four months and his wages amount to $24,200.00 ;  the other performs no labor, but has an income of $600 a year which he receives in installments of $300 every six months and puts it to usury at 7 per cent. per annum, compounding every six mouths for the same period of forty years and four months and his capital has increased by usury to $104,550.70, being more than four and one-fourth times more than the laborer earned in the same period of time.  Now, suppose these two men live to be eighty years and six months old, and both receive 7 per cent. usury for their money compounded every six months as before ;  their money would double itself once in ten years and one month ;  thus at the age of seventy years and five months the laborer has $48,400.00, at the age of eighty years and six months it would double again, making $95,800.00 ;  deduct for his support for the twenty years and six months $15,000.00, would leave him $81,800.00.  The one who has performed no labor and produced no wealth has obtained by putting his money to usury $104,555.70 ;  by the same method it doubles itself in ten years and one month, making $209,111.40, in another ten years and one month it doubles again, and amounts to $418,222.80 ;  deduct for his support for twenty years and six months $15,000.00, and it leaves him at the age of eighty years and six months with $403,222.80.  This sum has accumulated from usury in 18,150 working days, or sixty years and six months, in which time a laborer at two dollars per day would earn $36,300.00 ;  but in order to liquidate the amount accumulated by usury, it would require the labor of six thousand seven hundred and twenty men for one year of three hundred working days at two dollars per day.

Thus it will be seen that 7 per cent. as usury upon money accumulates at the rate of nearly 556 per cent. in sixty years and six months, over what labor can earn in the same length of time at two dollars per day.

Q.  It appears from this illustration, that 7 per cent. is entirely too much for the use of money, but why has it been so long considered just ?

A.  The accumulation in the first few years is so slight that it does not attract attention ;  and bankers and brokers, or money dealers only understand the magnitude of the accumulation which occurs in a series of years.  It will be seen by reference to the first ten years of our table that labor had earned $6,050.00, while usury had only accumulated $2,583.38.  As ordinary transactions seldom run over that period the dangerous accumulation is but little noticed.

Q.  If the difference is so slight in short transactions that it is hardly perceptible, does not the advantage derived from the use of the money more than compensate for the usury paid ?

A.  No.  It makes no difference whether a thousand dollars is hired by one man or ten men, the usury amounts to the same in the same length of time.  It is the constant, steady draught that accumulates the immense hoards in the hands of the few at the expense of the many, and all usury must be supported by labor.  Labor is a great fountain of wealth, bubbling up in little springs in every field, pasture, mine, manufactory and workshop in the world, which, if allowed to flow in proper channels, dispense benefits to all, just as the drops of dew and the gentle showers water the earth and give life, vigor and beauty to plant, flower and fruit.  But, unless properly directed, its blessings are just as certain to be appropriated by the few, as the drops of rain which fall upon the mountain side are to form rivulets and streams until they are finally locked up in the bosom of some lake or ocean.

Q.  As usury at the rate of 7 per cent. appears excessively high, would 2 per cent. be too low ?

A.  We will answer by another illustration.  Two men begin life at the age of twenty years ;  one engages to labor, for which he receives $600.00 per year ;  in forty years and four months he will earn $24,200.00.  The other has an income of $600.00 a year which he puts to usury every six months as in the former example, at 2 per cent. instead of 7 ;  in forty years and four months his money has accumulated by usury to $36,946.82 ;  deduct the amount earned by forty years’ and four months’ labor, $24,200.00, and it gives $12,746.82 accumulated by usury at 2 per cent., being over 50 per cent. more than the man earned by labor in the same period.

Q.  Is not this an unfair showing ?  Might not the laborer have put his three hundred dollars out to usury every six months as he received it, and at the end of the forty years and four months been worth just as much as the one who put his income to usury ?

A.  No.  The illustration is between the power of money and labor to accumulate, for labor has to produce all the wealth that furnishes the money to pay the usury ;  so that it makes no difference how many hands it passes through, labor pays it at last.  Nor is this all ;  money consumes nothing.  It may be made to increase by usury for a generation without requiring a cent for its support ;  while labor, when fairly remunerated, requires at least three-fourths of its earnings to supply the necessary force, and make up the constant losses from wear, decay and death.

Q.  Is it possible to show a nearer approximation to a just standard of the division of the benefits derived from money and labor in the production of wealth ;  or is it possible that the necessary amount of money for the purpose of building or sustaining civilization can be furnished for less than 2 per cent ?

A.  Yes.  Let us make another illustration, setting the usury at 1 per cent.  A man labors 300 days in each year for forty years and four months, and receives $600 a year, which he puts to usury every six months as in the former illustration, only he now receives but one per cent.  At the end of the period his labor and usury amount to $31,530.55 ;  deduct the amount earned by labor, $24,200.00, and it gives the amount earned by usury, $7,330.55.  This shows that money at 1 per cent., compounded once in six months, earns in forty years and four months nearly one-third as much as labor at two dollars per day for three hundred days in each year for the same period of time.

Now, considering the cost necessary to furnish the laboring force, 1 per cent. approximates very nearly the amount which money should receive as its share when combined with labor in the general production of wealth.

Q.  Do you not overlook one important fact ?  In your illustration you have shown that the labor of one man 300 days in each year, at two dollars per day for forty years and four months amount to $24,200.00 ;  three fourths of which you claim is required for support which would leave him $6,050.00.  If the man who puts the same amount of money to usury at one per cent. only increases the amount in the same time $7,330.55, would he not have to consume 180,819.45 of his principal in order for his support if allowed the same amount as the laborer, $18,150.00, so that at the end of the period of forty years and four months he would be poorer by $10,819.45;  while the laborer would be richer by $6,050.00 ?

A.  No.  We have not overlooked that point.  The usurer (if permitted by law to be such) should have pay at the same rate per day for the time necessarily consumed in letting and collecting his money.  This only occurring twice in each year, and allowing him one whole day for each transaction would be 80 days, at two dollars per day, $160.00 ;  and one additional day for final settlement $2.00 ;  amounting to $162.00 ;  deduct this $162.00 from the amount obtained by usury $7,330.55 ;  leaves him $7,168.55 ;  now deduct the amount saved by labor above support $6,050.00, and it leaves the usurer $1,118.55 more than the laborer, and all the remainder of the forty years and nineteen days to devote to labor from which to earn his support.

Now, if the usurer can, by spending 81 days of his time, accumulate as shown above, $7,168.55, on a half yearly income of $300.00, what would be his profits if he could occupy the remaining 12,019 days of his time at the same rate of one transaction each day ?

The following example will show.

Q.  If 81 days give $7,330.55 what will 12,019 days give ?

. . . . . . . . . . . . . .

In order to simplify the example we have omitted the fraction of 5-81, which would add still more to the result.  Now, let us deduct the whole amount earned by labor in forty years and four months, at $600 per year, from the whole amount accumulated by the usurer, allowing him one transaction each day for 300 days in each year for the same period.  Amount obtained by usury at one per cent. in forty years and four months, as above, $1,099,738.50, amount earned by labor in the same time $24,200.00, leaving to the usurer $1,075,538.50.  As the money would be re-let every six months, it would require one hundred and fifty days, allowing one day for each transaction, to occupy the first six months, when the re-letting would commence, and occupy the remaining one hundred and fifty days of the year.  One man could attend to the business of one hundred and fifty men who have incomes of $600 a year and wish to let it at one per cent.  Suppose they employ this man to transact their business and pay him a salary of $600 a year ;  the result is shown in the following example :  Net proceeds of an income of $600 a year, put to usury at one per cent. per annum and compounded once in six months for a term of forty years and four months, $1,075,538.50 ;  this multiplied by 150 gives $161,330,775.00 ;  deduct the amount of income of these 150 men for forty years and four months, without usury, $36,300,000.00, and it gives the amount of usury gained by 150 men, on an income of $600 a year each for forty years and four months, with the labor of one man, $125,030,775.00.  This is the result of usury at one per cent., compounded half yearly, after paying all expenses.

When we consider that bankers and brokers make many such transactions in a day, at rates of usury ranging all the way from 4 per cent. per annum to 1 per cent. per day, we should not be surprised that they become millionaires in a few years, or that, under the present system of legalized usury, labor receives so slight a recompense of reward.