Edward Kellogg
A New Monetary System

Chapter III.
The Rates of Interest the Governing Power of Distribution
to Labor and Capital.
Section I.
The Power of Capital to Accumulate Property and Labor
According to the Rate of Interest.



In the introduction, labor was said to be the chief producer of wealth, and the preceding chapter has been devoted to the consideration of the nature and powers of money.  The present chapter will exhibit the laws which govern the distribution of the wealth, and will how the practical effects of certain rates of interest upon producers.

The Constitution of the United States, Art. I., Sec. VIII. 5, declares, "The Congress shall have power to coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures."  Money is the legal standard of value, by which the value of all articles for sale must be determined.  The rate of interest fixes the value of money.  Its value is no more fixed by the quantity or the quality of its material, than the size of the bushel is fixed by the quantity and quality of its wood.  The rate of interest maintained upon loans of money, determines what proportion of the earnings of labor shall be paid for the use of capital, and what proportion shall be paid to the laborers for their productions.  If interest on money be maintained at a high rate, rents on property will also be high.

There are but two purposes to which the yearly products of labor can be applied.  One is the payment of the yearly rent or interest on the capital employed, and the other is the payment of labor.  If laborers pay to capital, as use or interest for the year, their whole surplus products, the laborers, as a body, work for a mere subsistence, and the capital takes their whole surplus earnings.  The laborer receives for his year's toil, food, clothing and shelter only, and these perhaps of the poorest kind;  while the capitalist lives in luxury, increases the number of his bonds and mortgages, or with his income buys land or builds houses to let, which will, in succeeding years, take a still greater sum from the laborer.  The law of interest, or percentage on money, as much governs the rent or use of all property, and consequently the reward of labor, as the law of gravitation governs the descent of water.  If the interest on money be too high, a few owners of capital will inevitably accumulate the wealth or products of the many.  With the present accumulative power of interest, there is no more chance of the laboring classes gaining their rights by combining their labor to increase production, than there would be hope of success that by combining their labor they could reverse the course of the rivers, and make them run to the tops of the mountains, and pile up the waters on their summits.  The law of gravitation, in the latter case, would not be more sure to overpower all their labor, and frustrate all their plans, than the present governing power of the interest on money is sure to gather up the increased production and add it to the wealth of capitalists.  The fault is in the law which governs the distribution of property;  and combinations to increase production would no more effect any general change in the distribution, than combinations against the law of gravitation would effect a change in its general governing powers.  The evil is legislative, and the remedy must be legislative.

Money loaned on interest or invested in property, is doubled in a certain length of time, determined by the rate of interest.  When this rate is too high, it requires the principal to be doubled in so short a time, that the borrower is compelled to give all his surplus products as interest or rent;  whereas, justice requires that he should pay only a moderate percentage for the use of capital, and himself retain the chief surplus of his labor.

The following illustrations, calculating property to accumulate or double at certain rates of yearly percentage, in the same manner as money, will clearly exhibit the various results to laborers from various rates of interest. A., B., and C. are young men, who have just come of age. C. is heir to $10,000, while A. and B. are mechanics, without capital.  C. contracts with A. and B. to build a house which shall cost $5,000, on a lot for which he paid $5,000.  The house and lot together are worth $10,000;  C. leases this property to A. and B., and charges them seven percent upon its cost, clear of insurance, taxes and repairs.  The interest is payable once a quarter.  A rate of interest of seven percent per annum, paid quarterly, will accumulate a sum equal to the principal loaned or invested in property in ten years.  At this rate, in ten years A. and B. are compelled to buy another lot, build upon it another as good a house, and pay the lot and house to C. for the use of the house they occupy.  In twenty years, if A. and B. retain the use of the house and its accruing rents, they must pay C. three houses;  in thirty years they must pay him seven houses;  in forty years, fifteen houses;  in fifty years, thirty-one houses;  in sixty years, sixty-three houses;  and in seventy years, one hundred and twenty-seven houses.  In seventy years all these must be built by A. and B., and paid to C. as the accumulation on the one that he leased to them.  The one hundred and twenty-seven lots which A. and B. earn the money to buy, cost $635,000, and the buildings cost an equal amount, making together, $1,270,000;  which sum is paid to C. for seventy year's rent of one house and lot worth $10,000.  At the expiration of the lease, the original house must be returned to its owner, as well as the rent.  If, instead of being invested in the house and lot, the $10,000 were loaned on interest at seven percent, and the interest were collected and reloaned quarterly, the money would accumulate in a given period precisely the same amount as the property.

Now, suppose interest to be at three percent per annum, and A. and B. to build the house, and pay C. three percent annually on its cost of $10,000.  This is $300, instead of $700 a year;  and, at this rate, the interest on money, collected and reloaned quarterly, requires nearly twenty-four years to accumulate a sum equal to the principal.  Therefore, in twenty-four years A. and B. would give C. another house;  and, in seventy- two years, seven houses, instead of one hundred and twenty-seven, which they are compelled to do at seven percent interest.  The labor of building the houses is neither increased by a high rate, nor diminished by a low rate of interest.

If C. let his house to A. and B. at six percent, in about twelve years the income or rent will equal the principal;  therefore, at the expiration of that period, A. and B. must pay A. another house, and in twenty-four years, they must pay him three houses.  But if C. lease the house to them for twenty-four years at three percent, A. and B. return him his house, adding one to it as its rent, and retain two houses as their own surplus.  With interest at three percent, in twenty-four years A. and B. would each own a house and lot worth $10,000;   while, with the interest on money loaned or invested in property at six percent both would still be tenants, although they would have performed, in both cases, the same amount of labor.  With interest at three percent, in forty-eight years they would give C. three houses, instead of fifteen, as at six percent, and they would own twelve as the surplus product of their labor.  But at six percent, C.'s capital would compel A. and B. to continue his tenants, and to build for him sixteen houses more during the next twelve years.

Take another example of the accumulation of property at seven percent interest.  At the age of twenty-one, D. owns a well improved farm of one hundred acres.  He leases it to E. at an interest of seven percent, payable in land, as the interest on money is payable in money.  At the close of the year, E. pays D. seven acres of as good quality as the one hundred rented, and with a pro rata proportion of buildings upon them. D. continues to let the farm to E. requiring him to pay the rent in land half-yearly, as interest on money is paid half-yearly in money;  and to pay rent on the land so paid, as the borrower of money pays interest on the interest which he adds half yearly to the principal.  In ten years, E, must pay one farm;  in twenty years, three farms;  in thirty years, seven farms;  in forty years, fifteen farms;  in fifty years, thirty-one farms;  in sixty years, sixty- three farms;  and in seventy years, one hundred and twenty-seven farms;  all in as good a state of cultivation as the one originally leased.  At the age of ninety-one, D. can bequeath to his posterity one hundred and twenty-seven farms, from the mere rent on one.  These farms E. must earn by the labor of seventy years, and pay to D. for the use of one farm.  If it were possible for him to earn the one hundred and twenty-seven farms to pay to D., and the rate of interest were reduced to one percent, he need pay to D. only about one farm as rent for the seventy years, and could retain one hundred and twenty-six as the surplus of his labor.

Again, suppose John and Richard to be poor boys, each ten years old, who expect to be bound out at the proper age to learn the carpenter's trade.  But a rich uncle bequeaths to John a house worth ten thousand dollars.  It is worth so much, because it will rent for seven hundred dollars a year over and above taxes, insurance and repairs.  John's guardian is a lawyer, and will collect the rent, and loan it out for him at seven percent per annum, getting his fees from those who borrow the money.  John likes Richard, and learns his trade with him, and earns his living by his labor as Richard does. John instructs his lawyer to purchase another, house, whenever the rent of the one accumulates to enough to buy a second equal to the first.  If the interest be regularly collected and loaned at seven percent, and the interest be collected half yearly, it will equal the principal in ten years and one month;  when his lawyer can buy for John a second house, so that when he is twenty years and one month old, he will be the owner of two houses.  These two houses, rented for ten years and one month more, will buy for John two houses more;  so that at the age of thirty years and two months, he will own four houses: at forty years and three months, he will own eight houses: at fifty years and four months, sixteen houses;  at sixty years and five months, thirty-two houses;  at seventy years and six months, sixty-four houses;  and at eighty years and seven months of age, he will own one hundred and twenty-eight houses, each of which is rented at seven hundred dollars a year;  and all of them together are bringing in a clear yearly income of eighty-nine thousand six hundred dollars.  Now what has John, or his uncle, or his guardian, done, that the public should be obliged to give John one hundred and twenty-seven houses for seventy year's use of one house?  These one hundred and twenty-seven houses are all legally his;  and our laws maintain that John has as equitable a right to them as if he had bought the lots and built the houses by his own labor.  Yet, if we allow labor to be worth a dollar a day, it would take the entire earnings of sixty men for over seventy years to pay for the one hundred and twenty-seven houses, which the use of the one house has in seventy years legally acquired for John, without the performance of any labor on his part.

Let us see how different would be the results in this case if the interest on money, and consequently the rents on property, were at one percent per annum, instead of at seven percent.  John's uncle bequeaths to him the house worth ten thousand dollars;  but, instead of renting it at seven percent on its value, John can rent it at but one percent over and above taxes, insurance and repairs, and regularly collects and loans out the rent as in the former case.  It would be about seventy years before the rent and the accruing interest on the rent would equal the principal, and buy for John a second house as valuable as the first.  With interest legally fixed at one percent the use of one house for seventy years would accumulate for John, out of the earnings of others, one additional house of equal value, whereas, at seven percent it would accumulate for him one hundred and twenty-seven houses.  Whether the government fix the rate of interest at seven or at one percent the public must provide the same quantity of material and perform precisely the same amount of labor to build the one hundred and twenty-seven houses;  but with the interest at seven percent John would lawfully own them all, whereas with interest fixed at one percent he would lawfully Own but one house out of the one hundred and twenty-seven houses, and others would lawfully own the remaining one hundred and twenty-six houses.  To furnish the materials and build these houses, requires not only skill in the mechanical arts, but also the performance of an immense amount of manual labor.  But to give the one hundred and twenty-seven houses to John, who is fairly entitled to but one of them for the use of the one he rented, is the legitimate operation of the law fixing the interest at seven percent.  What chance have the producing classes by any combination of labor to contend successfully against such an accumulating and centralizing power?  They might as well venture into the sea, with the wind blowing a hurricane, and expect by their bodily strength to turn back the waves.  The sea would not be more certain to sweep over them, and pursue its onward course, than the accumulative power of money at seven percent interest yearly to gather up the surplus earnings of labor despite all combinations of labor against it.  If the producers ever gain their rights, it will be by legally controlling the power of money, and not by any combinations of labor.

If a hundred dollars can be lent at seven percent interest, the borrower pays seven parts of the whole for the use for one year.  The borrower must invest the money (for it is of no use to keep) in land or other property, and therefore must pay seven parts of the value of the property for the use of one hundred parts for a year.  But if money be borrowed at one percent, of course the borrower pays but one part for the use of;  one hundred parts either of money or property for a year, hence at this rate laborers would receive six parts of their net yearly earnings now paid to capital.  A man who labors on his own property gains for himself its whole product.  The rate percent interest determines what proportion others shall pay him for the use of capital, which he does not need for his own use.  Suppose seven percent to be the fixed rate of interest, and V. to be a farmer, who, at the age of twenty-one, inherits five farms, worth ten thousand dollars each.  He wishes to cultivate one himself, and to sell or rent the remaining four. A., B., C. and D. are farmers without property, and are obliged to hire their farms.  They cannot expect V. to rent them his for less than the interest on the money for which they would sell.  Suppose these men to rent V.'s four farms at seven hundred dollars a year each;  and V. to collect his rent yearly, and lend the money to others at seven percent, and yearly to collect and reloan this interest.  The rent and accruing interest upon the rent, in ten years and three months, would enable V. to buy four additional farms, worth ten thousand dollars apiece, which he could rent to four more tenants.  In ten years and three months, the rent and interest upon the rent of these eight farms would furnish V. with money to purchase eight farms more of equal value, which he could rent to eight other tenants;  in a third period of the same length, the rent and interest upon the rent of the sixteen farms would buy sixteen additional farms;  in a fourth period, the rent and interest upon the rent of the thirty-two farms, would purchase thirty-two more farms;  in a fifth period, the rent and interest upon the rent of the sixty-four farms, would buy sixty-four more;  in a sixth period, the rent and interest upon the rent of the one hundred and twenty-eight farms would buy one hundred and twenty-eight more;  and in a seventh ten years and three months, the rent and interest upon the rent of the two hundred and fifty-six farms then owned by V., would buy for him two hundred and fifty-six farms more, of equal value with the first farms which he rented to A., B., C. and D. Thus V., in seventy-one years and nine months, would become the owner of five hundred and twelve farms, worth ten thousand dollars each, and bringing in a yearly income of seven hundred dollars apiece.  Five hundred and eight of these farms would be added to V.'s wealth by the labor of his tenants, not to mention the improvement made on their original value by the labor;  and V. would have had besides, the entire produce of the one farm reserved for his own cultivation.

We will now see what would be the result to V. and his tenants from the simple change of the rate of interest from seven to one percent.  Suppose V, as before, to inherit five farms, each worth ten thousand dollars, one of which he cultivates himself.  If he should sell the remaining four for ten thousand dollars each, he could lend the money at one percent, that is for four hundred dollars;  but he rents the farms to A., B., C. and D., at one percent on their value, and thus receives the same income.  If V. should loan this yearly rent of one hundred dollars on each farm, yearly collecting and reloaning the interest, nearly seventy years would elapse before the rent paid him by A., B., C. and D., and its accruing interest, would buy four more farms of equal value with those rented;  whereas, in about the same period, at seven percent the rent and its accruing interest would buy five hundred and eight farms.  Whether the interest were at one or at seven percent, V. would equally receive the products of his labor on the farm that he kept for his own use;  but at seven percent, he would gain by the labor of his tenants five millions and eighty thousand dollars' worth of land;  while at one percent he would gain by their labor but forty thousand dollars' worth.  The agreements between V. and his tenants appear on the surface as fair where they pay the larger as where they pay the lower rent;  because, in each case, they conform to the groundwork or foundation established by law;  but, in the latter instance, V.'s tenants would as much pay to him the full yearly market rent of his farms by paying one hundred dollars apiece, as in the former by paying seven hundred dollars apiece.  If one acre of land would produce twenty-five bushels of wheat worth one dollar per bushel, each of V.'s tenants must yearly sow, gather and sell twenty-eight acres of wheat to pay seven hundred dollars rent.  Suppose wheat to continue worth one dollar per bushel, and the rent to be diminished to one percent;  with the same industry and economy, each tenant could pay the one hundred dollars rent, and retain for himself six hundred bushels of wheat as the surplus of his labor. If V.'s tenants, in about seventy years, could earn and pay to him five hundred and eight farms, in the same period, with the interest at one percent, they could earn for themselves five hundred and four, for the other four farms would pay all their rent to V. Having the entire produce of one farm for his own support, the low rent of the other four could do him neither injustice nor injury;  while compelling A., B., C. and D. to pay the larger rent would deprive them and others of the just reward of their labor;  and V. would not be really benefited by the hardships imposed upon them.

The interest on money at seven percent is as oppressive as the same rate percent rent on land.  Suppose V., instead of renting his four farms, should sell them for $10,000 each, and loan the money at the legal rate of seven percent, collecting and reloaning the interest yearly.  In ten years and three months, the principal and interest together would amount to $80,000;  in twenty years and six months, to $160,000: in thirty years and nine months, to $320,000;  in forty-one years, to $640,000;  in fifty-one years and three months, to $1,280,000;  in sixty-one years and six months, to $2,560,000;  and in seventy-one years and nine months, to $5,120,000. Multiply $10,000 by five hundred and twelve, the number of farms, and it will give the same sum.  If V. should sell the four farms for $40,000, and lend the money on bond and mortgage at seven percent, requiring, as is usual, double the value in land as security, he would have mortgages covering $10,240,000 worth of landed estate;  and the people occupying this land would be hard at work to pay him the interest;  thus rapidly concentrating wealth in his hands, instead of diffusing it to supply their own wants.  But with interest at one percent, $40,000 loaned for seventy years, would accumulate but $40,000 more;  whereas, at seven percent it would accumulate $5,080,000.  This difference in interest of $5,040,000 would be added to V.'s wealth from the earnings of others, while V.'s accumulation of money or increase of lands would not add either a dollar to the quantity of money, or an acre to the quantity of land.  It would only have monopolized it for V.'s benefit.  It would have caused the people to owe V. $5,080,000, and make them $5,040,000 poorer than if interest had been at one percent.  The contracts between V. and his tenants being made in conformity with the standard at seven percent, they must pay him the $5,040,000, or defraud him of what is legally his due;  and if he voluntarily take less than this from them, it is an act of charity.  Seven percent is not the standard for V. only;  it, is a public standard that favors other capitalists equally in the various branches of business, and imposes upon the producing classes generally obligations similar to those it imposes upon V.'s tenants.[1]

To give some idea to what extent the power of interest operates, it can only be necessary to say, that all the money lent on bonds and mortgages by individuals, by insurance and trust companies;  all the money lent for United States, State, County, City, Railroad, Canal and other bonds, made to raise money for public improvements, whether these improvements be made by corporations;  by the States or by individuals;  also all the money lent by banks, brokers and individuals on promissory notes — all these loans are operating with a like centralizing power against the producers and in favor of money-lenders.  This power also establishes a like rate percent rent to be paid for the use of all property, real and personal.  The rent of houses and lots in cities, and of farms and houses in the country, must conform to this standard.  All the goods, wares and merchandise on hand in the nation, and that are in process of being produced and manufactured, are governed in their value by money, and are under tribute to its centralizing power.  It is an unavoidable power, because it is instituted, upheld and enforced by the national laws, and is the basis upon which all market values are founded.  The following statement shows the effect upon producers of a rate of interest on capital of six percent per annum.  The yearly income of our most wealthy citizen from dividends on State, bank, and other stocks, money lent on bonds and mortgages, and rents of property, is said to amount to $2,000,000.  Take the farmers of the six New England States, include those of New York and New Jersey, and it is very doubtful whether, after paying necessary expenses, each makes a yearly gain of more than one, hundred dollars.  According to this calculation it would require the use of twenty thousand farms, and the surplus earnings of twenty thousand farmers and their families, to clear $2,000,000 a year.  However difficult it might be to trace the ways and means by which this income is gathered, it takes $2,000,000 worth of the surplus products of labor to pay the legal accumulation on the capital.  Suppose able-bodied men to earn one dollar per day, for an average of two hundred and seventy-five days in each year — i.e., $275.  Two millions of dollars would annually hire and pay for the labor of seven thousand two hundred and seventy-six men.  Allow the receiver of the income to expend yearly for his own support as much as seventy-three laborers earn, and he will still receive a clear gain of $1,980,000 yearly, the entire earnings of seven thousand two hundred and three men.  Calculate the interest on $1,980,000 at six percent, and the next year it will make an addition to his income of $118,800;  which sum would pay for the labor of four hundred and thirty-two men, in addition to the number employed in the preceding year.  What is the probable surplus that each of these laboring men would yearly retain, after deducting from the $275 their own expenses, and those of their families?  Can any laboring community be prosperous, and pay so great an amount of interest on capital?  The legal power of money to accumulate an undue rate of interest, compels these laborers to give all their surplus products to one man for the use of capital, while they and their families are deprived of a good subsistence, and are obliged continually to increase that capital, which yearly exercises a greater power over their labor.

In order that the power of the ordinary rates of interest to concentrate property in the hands of capitalists may be more clearly seen, in the following illustration the contracts shall be based upon wheat Instead of upon money.  Take the yearly income of Mr. A., say $2,000,000.  If his money be loaned, or his property be leased at six percent on its valuation, he must be worth thirty-three and a third millions of dollars.  Suppose Mr. A., instead, to own thirty-three and a third millions of bushels of wheat, let him lend the wheat instead of the money at six percent, and the interest will be precisely two millions of bushels.  The farmers who borrow the wheat, and give their bonds and mortgages upon their farms to secure the payment of the principal and interest, must sow, reap, and thrash out two millions of bushels, transport them to New York, and put them into Mr. A.'s storehouses, to pay the interest for one year.  What a pile of wheat is this for one man's use, gained too, without his sowing or harvesting a bushel of it.  But suppose the interest to be at one percent instead of at six percent and Mr. A. to lend these same farmers the thirty-three and a third millions of bushels of wheat at this percentage;  at the end of the year they will have to pay him only three hundred and thirty-three thousand three hundred and thirty-three and a third bushels of wheat, to satisfy the interest.  The farmers will then retain one million six hundred and sixty-six thousand six hundred and sixty-six and two-third bushels for their own use, or to sell to others, or to pay toward the principal of the debt.  With interest at one percent they will as much satisfy Mr. A.'s yearly claims, by paying him the smaller quantity of wheat, as they would at an interest of six percent by paying two millions of bushels.  If each acre of land produce fifteen bushels, and the farmers cultivate on an average ten acres each, it will take the labor of thirteen thousand three hundred and thirty-three farmers, and the use of one hundred and thirty-three thousand three hundred and thirty-three and a third acres of land to pay the yearly interest of six percent on the thirty-three and a third millions of bushels of wheat borrowed of Mr. A.  But if interest be at one percent and the farmers continue to Pay Mr. A. the two millions of bushels yearly, in eighteen years and four months they will pay off both the principal and the interest of the debt.

Suppose the farmers to pay six percent interest, i.e., two millions of bushels of wheat on the loan for twenty years, they will pay forty millions of bushels to satisfy the interest, and will still owe the thirty-three and a third millions principal.  If Mr. A., as he yearly receives the interest from the farmers, say two millions of bushels of wheat or $2,000,000, should lend it out to mechanics at six percent interest, and continue to do this for twenty years, adding yearly to the loan the interest so accrued, it would accumulate, in the twenty years, to $73,571,180.  The interest on this interest for a year amounts to $4,414,270, which would yearly be due from the mechanics.  If the mechanics, instead of paying the interest in wheat, should pay it in manufactured articles, they would pile up an enormous quantity of goods in Mr. A.'s storehouses for his yearly use.  With interest at six percent, at the end of twenty years, the farmers would owe Mr. A. $33,333,333, or the same number of bushels of wheat, and the mechanics would owe him $73,571,180;  together, $106,904,513;  which would annually require from the farmers and mechanics $6,414,270 worth of their products merely to pay the interest.

Now let interest be at one percent per annum, and let Mr. A. lend $33,333,333 at this rate, and in twenty years the interest compounded yearly would amount to but $7,339,666, instead of $73,571,180;  making by this simple alteration of the rate of interest for twenty years, a saving to the farmers and mechanics of $66,231,514.

These calculations of the centralizing power of money are not based upon any usurious rates of interest, but upon six and seven percent, and the latter rate is established by the State of New York as just and equitable;  and judgments in the courts of law are rendered and entered upon the records accordingly.  These rates of interest are certain to take the wealth from the producers and give it to the financiers.  It will be hereafter shown that the rate of interest may be easily reduced to one percent, or to any other percent that shall be deemed most conducive to the general welfare;  and if the people think it more just that the interest should cease to accumulate wealth so rapidly in a few hands, they will enact laws to prevent it.  If they will stop such accumulation by interest, they will live upon the products of their own labor, instead of living upon the charity of capitalists.  If in twenty years Mr. A. should bestow on the needy $66,231,514, or the same number of bushels of wheat, it would be an unheard of liberality.  But if the law of interest were such that he could not legally take this amount from the people, they would retain it in their own possession, as the natural product of their labor, instead of being compelled to receive it as a charity.

Mr. A. now uses the most of his capital by investing it in State and other stocks, buying business notes at large discounts, lending money on bond and mortgage, buying up mortgages bearing seven percent interest below their par value, purchasing property under foreclosure, etc.  Doubtless his object is to obtain the best possible percentage income for the use of his money or property.  All that he gains by these means above six percent interest, takes a still greater sum from the earnings of producers.

Now suppose from this time forward Mr. A. should determine to pursue a different course, and to layout his capital in such a manner as to conduce in the highest degree to the welfare of the people around him.  To support them in idleness would be a disadvantage;  but to employ them, and pay for their work such a price as would give them a good subsistence, and furnish them with the means of educating their children, and to provide for the aged and needy, would be a very benevolent disposition of his wealth.  To do this he invests all his property in the manufacture of cotton goods.  With thirty-three and a third millions of dollars he could carry on an extensive business.  He builds his manufactories, and purchases machinery.  He contracts with a number of planters to supply him for a certain number of years with a given quantity of cotton.  He also contracts with workmen to perform the labor in his mills, and agrees to give to all such prices as will afford them and their families a comfortable subsistence, make suitable provision for the education of their children, and support those who are unable to work and dependent upon them.  The cotton will, of course, be always furnished at a uniform price, and the price of labor will be about the same each year.  Mr. A. now fixes the prices of his goods so as to sustain the various people in his employment.  Let Mr. A. invest all his means in mills, in stock, and labor, on these terms, while the planters hire their plantations, and the mechanics, manufacturers and laborers employed by Mr. A. hire houses to live in, etc., from others at a rent of seven or eight percent per annum, and it will be impossible for him, with all his capital, to sustain himself.  In a very few years he will become bankrupt, for he must enable his workmen to pay their rents, and give them, besides, a comfortable support.  This obliges him to use his own property at a low rate of interest, while, through his workmen, he is compelled to pay a high rate of rent or interest for the use of the property of others.  The operation is, virtually, that the owner of thirty-three and a third millions of dollars borrows an equal or large amount at six, seven, or eight percent interest, and reloans the borrowed money, together with his own, at an interest of one, or one and a quarter percent.  By so doing, his fortune will soon pass into the hands of other capitalists.  The present monetary laws of all nations are opposed to the reward of labor;  and no individual or national attempts justly to reward it, except by changing these laws, can secure any permanent success.




Section II.
Cities, and the Means of its Accumulation.



The following illustration shows the capability of money, at an interest of six percent per annum, to centralize the wealth of nations in large cities.

Suppose an uncultivated island, ten miles square, and a few miles distant from the coast of the United States.  Ten thousand wealthy citizens of the States intend to build a city upon it.  These citizens are worth $150,000 each;  in the aggregate, $1,500,000,000.  The legal interest on money is fixed at six percent per annum.  For two years previous to their removal to the island, the people prepare upon it houses for themselves, and suitable accommodations for merchants and mechanics.  Each of these families expends $3,000 yearly for its support.  Each family being worth $150,000, the interest on which, at six percent would be $9,000, each has an income of $6,000 a year, over and above expenses.  They expend their surplus income for two years, i.e., $12,000 for each family, in the aggregate $120,000,000, in making improvements on the island.  They dispose of their property on the mainland on credit, securing it by bonds and mortgages, State stocks, or otherwise, so that they insure an interest payable half yearly of six percent per annum, on the whole amount of their property.  These obligations merely represent the value of the property they leave upon the main land, and must yield an income from the products of the land and labor of the purchasers.  The annual interest on $1,500,000,000, amounts to $90,000,000.  The paper obligations held by the creditors legally empower them to demand an interest of $90,000,000, in specie.  The mere giving of obligations is all that is required in the transfer of property.  The conversion of their property into bonds and mortgages and other securities, may not have required the use of a million of dollars of money.  But the payment of both principal and interest must be made in money.

The ten thousand families contain, on an average, five persons each, making, in the aggregate, a population of fifty thousand.  They employ, on an average, three domestics in each family, increasing the population to eighty thousand.  The yearly expenses of each family amount to $3,000;  or, for the whole, to $30,000,000.  Hatters, tailors, shoemakers, cabinet-makers, mechanics of every sort collect about them to supply their wants, and receive the sums which they expend in living.  More than fifty thousand laborers and artisans are needed to supply their wants.  In a few years the centralization of capital collects a city of three or four hundred thousand inhabitants.  The ten thousand families expend $30,000,000 yearly, and draw besides, from the people of the mainland, a clear income of $60,000,000 a year, which they can reloan.  The debtors cannot send the $60,000,000 in money, and are therefore obliged to send the products of the soil, manufactured articles, etc., to this city for sale, to procure money to meet their payments of interest.  The city soon becomes the market-place of the nation, and engrosses the principal business.  The people are astonished at its wealth and prosperity, and congratulate themselves on having so fine a market for their products.

In the course of a century or two, the ten thousand families and their descendants can, if they choose, without labor on their part, build a wall around their city as high and as broad as the walls of ancient Babylon.  Meanwhile, the people upon the mainland are obliged to supply all the wants, the food, clothing, etc., not only of the ten thousand families and their descendants who do no work, but also of the laborers employed in the erection of the wall, in the building of houses, and in all other improvements.  Producers and manufacturers from different parts of the country carry their goods to the city, and the citizens, after selecting the choicest for their own use, resell the remainder to laborers, who are only able to purchase the poorer kinds.  If an account were kept of those sold to the country, it would be found that they were minus nearly the whole support of the people of the city.  Now what compensation is received by the people of the mainland for the supplies which they furnish?  The citizens, indeed, pay money for the supplies, but this money is the interest on capital loaned to the people, without whose labor it would have been useless.  In a similar manner, under the present monetary laws of the United States, a few rich men in cities engross the wealth of the country.  It is as natural under these laws for the wealth to fall into a few hands as for water to find its level by its own gravitation;  and while our present rates of interest prevail, no combination or success in production, either by machinery or the muscular power of labor, will ever effect any important change for the better.  But when the laboring classes combine to have good national monetary laws in lieu of the present evil ones, their united efforts will effect a change in these laws, and thus accomplish the object they have so long and so anxiously sought after.  If the interest in the case supposed were limited to one percent, the income for each family would be only $1,500, or one-half of what they each year expend;  consequently, they must either labor for the other half, or take a portion of their principal each year for their support.  It would, therefore, be impossible for them to build or sustain such a city.

The ten thousand most wealthy men in the United States are probably worth, on an average, at least $300,000 — in the aggregate $3,000,000,000.  The annual interest on this sum at six percent. would be $180,000,000.  If these men should sell their property, and invest the proceeds in bonds and mortgages bearing six percent interest per annum, and remove from the country, they would impose a tribute on the productive industry of the nation which would impoverish it for ages.  It is doubtful whether the people would ever be able to pay and satisfy the interest and principal of the debt.  They would pay $180,000,000 of their products yearly, without receiving any equivalent.  And yet, without the labor of the buyers or borrowers, the property would be useless;  and if the owners received any benefit from it, they would be obliged to remain and cultivate it themselves.  Ought the laws to be such, that ten thousand wealthy men, on leaving their country, could impose such a burden upon the millions left behind?  If interest were reduced to one percent, and the ten thousand men should sell their property, leaving the proceeds on interest at one percent, this nation would pay them $30,000,000 interest annually.  And this would be quite enough for producers to pay for the mere use of capital.

To show conclusively that the present rates of interest are the cause of the accumulation of the wealth in our cities, we will enter at length into a calculation which each can test and examine for himself.  No one will dispute that in the city of New York there are several hundred families whose collective wealth is equal to $250,000 for each family.  For our illustration, however, we will take but one hundred families, and suppose each of them to be worth equal to $250,000 — in total, $25,000,000.  As five or six of our citizens might be pointed out who are, in the aggregate, worth at least double the sum total, this calculation is a moderate one.  Suppose these one hundred families to emigrate to some desirable section of the country, and settle upon two hundred acres of land, so that each family owns two acres.  They convert all their property into money, or into bonds and mortgages bearing six percent interest, the lowest legal rate of interest in any State of the Union.  Each family expends yearly for its support $3,000, or the interest at six percent on $50,000.  This sum would supply each family with the necessaries and luxuries of life without the performance of labor by any of its members.  Besides the $50,000 of which they expend the income, each family has $200,000 — in the aggregate, $20,000,000 — loaned at six percent, interest, the annual income of which would be $1,200,000.  The yearly expenditure of $300,000 (the interest on $50,000 for each family) soon collects near them merchants, mechanics, laborers, and others, to supply their wants;  and farmers find here a market for their produce.

These families and their posterity live without labor, being determined to incur no hazard of business.  They intermarry for five generations, thirty years being the average duration of each.  Upon marriage, each couple receives $50,000, the income on which, at six percent, amounting to $3,000 a year, is appropriated to their support.  They also receive their average proportion of the principal.  They are forbidden to exact a higher rate of interest than six percent per annum, payable half-yearly, and are not at liberty to call in the principal so long as the interest upon it is regularly paid.  The families consist of five persons each, exclusive of servants, amounting, in the aggregate, to five hundred individuals.  Suppose them to increase twenty-five percent every twelve and a half years.  Each family at the emigration had $200,000 loaned at six percent interest, amounting to $12,000 per annum;  and, in the aggregate, on the $20,000,000 owned by all, to $1,200,000 per annum.  This interest, collected and reloaned half-yearly, will double the principal, $20,000,000, in about eleven and three-quarter years;  but, to leave time for the collection and reinvestment of the interest, allow it twelve and a half years to double.  The following calculations exhibit the sum which would be owned by the families at the end of five generations of thirty years each, or at the end of one hundred and fifty years.  This calculation of the centralization of wealth by interest is no idle theory, but a mathematical demonstration of facts, based upon the lowest rate of interest established by law in any State — a much lower rate, too, than the average one at which money is actually loaned.

The following table exhibits the accumulation at the rate, and under the circumstances, as above :


Table
Of the increase at six percent.  Of the wealth of a hundred families worth $250,000 each, during a period of one hundred and fifty years, with a deduction of their annual expenses.


100 families worth $250,000 each.$ 25,000,000
Yearly expenses of each family, $3,000, or the income on $50,000 at six percent — total for 100 families.5,000,000
Deduct $5,000,000 for expenses, and there are left to accumulate.20,000,000
The interest at six percent paid half yearly, and re-loaned, will equal the principal in 11¾ years;  but allow 12½ years, and then add.20,000,000
  40,000,000
Add 25 percent increase to 100 families in 12½ years — i.e., 25 families, and deduct $50,000 for the support of each of the 25.1,250,000
Left to accumulate.38,750,000
Add 12½ years interest, at 6 percent.38,750,000
  77,500,000
Add 25 percent increase to 125 families — i.e., 31 families, and deduct $50,000 for each of the 31.1,550,000
Left to accumulate.75,950,000
Add 12½ year's interest at six percent.75,950,000
  151,900,000
Add 25 percent to 156 families — i.e., 39 families, and deduct $50,000 for each of the 39.1,950,000
Left to accumulate.149,950,000
Add 12 year's interest at six percent.149,950,000
  299,900,000
Add 25 percent to 195 families — i.e., 49 families, and deduct $50,000 for each of the 49.2,450,000
Left to accumulate.297,450,000
Add 12½ year's interest at six percent.297,450,000
  594,900,000
Add 25 percent to 244 families — i.e., 61 families, and deduct $50,000 for each of the 61.3,050,000
Left to accumulate.591,850,000
Add 12½ year's interest at six percent.591,850,000
  1,183,700,000
Add 25 percent to 305 families — i. e., 76 families, and deduct $50,000 for each of the 76.3,800,000
Left to accumulate.1,179,900,000
Add 12½ year's interest at six percent.1,179,900,000
  2,359,800,000
Add 25 percent to 381 families — i.e., 95 families, and deduct $50,000 for each of the 95.4,750,000
Left to accumulate.2,355,050,000
Add 12½ year's interest at six percent.2,355,050,000
  4,710,100,000
Add 25 percent to 476 families — i e., 119 families, and deduct $50,000 for each of the 119.5,950,000
Left to accumulate.4,704,150,000
Add 12½ year's interest at six percent.4,704,150,000
  9,408,800,000
Add 25 percent to 595 families — i.e., 149 families, and deduct $50,000 for each of the 149.7,450,000
Left to accumulate.9,400,850.000
Add 12½ year's interest at six percent.9,400,850,000
  18,801,100,000
Add 25 percent to 744 families — i.e., 186 families, and deduct $50,000 for each of the 186.9,300,000
Left to accumulate.18,792,400,000
Add 12½ year's interest at six percent.18,792,400,000
  31,584,800,000
Add 25 percent to 930 families — i.e., 233 families, and deduct $50,000 for each of the 233.11,650,000
Left to accumulate.37,573,150,000
Add 12½ year's interest at six percent.37,573,150,000
  75,146,300,000
Add 25 percent to 1,163 families — i.e., 291 families, and deduct $50,000 for each for the 291.14,550,000
Left to accumulate.$75,131,750,000

Add the two hundred and ninety-one families to the eleven hundred and sixty-three, and their sum is a thousand four hundred and fifty-four, which is the increase of the one hundred families, by the addition of twenty-five percent every twelve and a half years.  The calculation is continued for a hundred and fifty years, or for five generations of thirty years each.  The sum of $50,000 is assigned to each family, which, loaned at six percent, secures to each a yearly income of $3,000.  Each family has an income of ten dollars per day for three hundred days in the year.  If each family average five individuals, each man, woman and child receives an income of two dollars per day.  This is twice as much as a laborer can earn in a day, and the single dollar must support both himself and his family.  Besides this yearly income, the people of this nation would owe the fourteen hundred and fifty-four families $75,131,750,000.  Suppose this sum to be equally divided among the families, each would have $51,672,455.  The interest upon the sum total, at the rate of six percent would amount to more than $4,500,000,000 annually.  An immense amount of the products of labor must be yearly sold for money to pay this interest.  Is the law which thus accumulates interest or products, a power for actual production ?  No — the law which exacts this interest does not increase the quantity of money, nor of products;  it simply requires that the proceeds of $4,500,000,000 worth of products shall be given over to the fourteen hundred and fifty-four families to satisfy the interest.  More than half the present valuation of the whole property of the United States, both real and personal, would be required to pay the interest for one year.  And yet these families exact less than our laws permit, for they take but six percent interest, and in a number of our States, the legal rate is seven or eight percent.

Now let one percent be the legal rate of interest;  and suppose the families to loan the twenty millions for the same period of a hundred and fifty years at one percent, instead of at six percent, and to collect and reloan the interest half yearly.  The people have the same amount of money to use;  and at the expiration of the hundred and fifty years, the sum of the principal and interest does not exceed $90,000,000, while at six percent it amounts to $75,131,750,000.  At one percent, the principal and the interest do not amount to one eight-hundredth part as much as at six percent, nor does the sum require one eight-hundredth part as much labor to pay it.  If the people borrow the money at six percent, at the end of six months they give back a portion of the borrowed money to pay the interest.  The interest is reloaned to them, and thus continually increases their indebtedness.  With interest at one percent, the people would have the same quantity of money, and at the end of six months would give back a half percent to pay the interest, and the families would reloan the half percent to the people, instead of reloaning the three percent.  A high rate of interest cannot increase the quantity of money, but it increases the indebtedness of the people.

If interest were atone percent, each of the one hundred families would have but $2,500 income on its whole capital;  and if they should continue to expend $3,000 apiece yearly, each family, in order not to encroach on its original capital, would have to produce, by its labor, $500 worth of products yearly, for its own use or for sale, instead of being able to lay up $12,000 yearly, without labor.  The producing classes could never be oppressed by the capital of these families.  But with interest at six percent, in less than a century and a half, the whole nation would be subject to their control, besides being obliged to support them and their posterity in idleness during the hundred and fifty years.[2]




Section III.
Interest received by the citizens of the city of New
York on loans to the country.


Doubtless the city of New York has at this time more than $50,000,000, and probably more than $100,000,000 lent in various ways to the country at six or seven percent interest.  Some part of it is invested in State bonds, bank and railroad stocks, stocks of manufacturing companies, etc.;  and some lent on bond and mortgage, the dividends or interest on all of which must be paid in New York.  Estimate this sum at only $25,000,000, and allow it to draw seven percent interest.  Suppose the citizens to support themselves independently of the income from this loan, and allow it, by collecting and lending the interest half yearly, to accumulate for a century.  It matters not in what way the capital may be lent, producers are compelled to add all the interest from the proceeds of their products.  In ten years and one month, the $25,000,000, will increase to $50,000,000;  in twenty years and two months, to $100,000,000;  in thirty years and three months, to $200,000,000;  in forty years and four months, to $400,000,000;  in fifty years and five months, to $800,000,000;  in sixty years and six months;  to $1,600,000,000;  in seventy years and seven months, to $3,200,000,000;  in eighty, years and eight months, to $6,400,000,000;  in ninety years and nine months, to $12,800,000,000;  and, in one hundred years and ten months, to $25,600,000,000.  This is as certain as any other mathematical calculation, and nothing can prevent the accumulation of enormous sums in the hands of a few capitalists in this city, unless it be the inability of the inhabitants of the country to pay the interest on their loans.  This rate of interest compels farmers to give the value of one farm every ten years for the use of another;  the tenant of each manufactory to give the value of another manufactory, once in the same period, for the use of the one occupied;  and the passengers and transporters upon each railroad and canal, to pay a sufficient fare or freight to construct, at the expiration of that period, another railroad or canal.  It is manifest that the producing classes are unable to fulfil such requirements.  Each additional railroad and canal must be added to the original one by the producing classes, and is given to the capitalist without labor or production on his part.  He gains them by the legal power of money to accumulate, which is equally great, whether the money be lent on interest or invested in property.  If farmers, manufacturers, mechanics and merchants, were compelled to pay only a just rate of interest, they could devote the labor now expended in the payment of high rates to non-producers, to the supply of their own wants and of general comforts and conveniences.

Large cities accumulate the wealth of nations without earning it.  According to the State Register, in 1845, the city of New York contained a population of 371,233, and the State of New York contained a population of 2,604,495.  The population of the city was less than one-seventh part that of the State.  And yet the assessed valuation of the real and personal property of the city at that period was $239,995,517, while all the other property in the State was valued at only $365,650,574.  This estimate does not include Brooklyn and Williamsburgh, which are in fact parts of the city of New York, as they have grown up and are sustained by its business.  Taking the city of New York alone, it appears that it owns more than two-fifths of the assessed property in the State, while it contains less than one-seventh of the State population.  But it is doubtless true that its citizens are worth more than all the other inhabitants of the State.  They own large tracts of land in different parts of the State, and these lands are taxed in the counties in which they are located.  If these taxes were estimated as being paid in the city, where the property is owned, and were taken from the taxes of the country, the transfer of taxes on the amount of $62,827,530, would make the valuation of the property of the city equal one-half the property of the whole State.  The citizens of the city of New York own large tracts of land in other States, which are taxed in those States.  They have also a large amount of money lent to the country on bond and mortgage, and large amounts invested in United States, State, and bank stocks, and in stocks of manufacturing and railroad companies, etc., in various States, all of which property, if taxed, is estimated and taxed as belonging to the country.  There are doubtless many loans of money and much personal property, which, although lent and used in the city;  escape any taxation.  The people of other parts of the State own a considerable amount of property, stocks, etc., in the city;  but the amount owned by them in the city is very small compared with the amount owned by the citizens of the city in the country — probably not one-twentieth.  It is reasonable to conclude that the inhabitants of the city and county of New York own as much, or even more property, than all the people in all the other fifty-eight counties in the State.[3]  Does anyone suppose that the citizens of this city earn more by their labor than all the other inhabitants of the State ?  Do they do more toward supplying the people of the State with food, clothing, building materials, etc., than the people of the State do toward supplying them with these things? If they do not, why should they possess and continue to accumulate so great a proportion of the wealth ?  The means of arriving at the truth in relation to this, would be to take for a series of years an exact account of all the products which are sent out of the city, and see if the products that leave the city are increased above, or diminished below the products that are sent from the country into the city.  If the money be taken into account, the interest and dividends on both sides should be excluded.  Allowance should be made for the labor performed in exchanging goods, in shipments, etc., in the city, equal to the allowance for the same amount of labor on a farm, so that the population of the city should be fairly compensated for their labor.  If it be found that the 371,233 citizens of the city have not performed one-half the labor for the 2,604,495 inhabitants of the State, and yet have obtained more than one-half the whole property, it is evident the distribution has been unjust.  Our producers are continually endeavoring to overcome their poverty by their industry, but while our present rates of interest prevail, capital will continue to take their surplus earnings, and leave them poor.

It appears that, in 1845, these three counties owned 46½ percent of the wealth in the State, and, in 1859, they owned 49½ percent.  But, unquestionably, their actual proportion of the wealth was far greater than is shown in the statistics;  for their citizens own very large amounts of real estate and other property beyond the limits of these counties.  The property, too, of many persons whose wealth was acquired in the city, and who have removed their residences beyond the counties named, might properly be included in this calculation as belonging to the city. — [M.K.P.]




Section IV.
The percentage actual increase of the value of the property
of the states of New York and Massachusetts,
compared with the percentage legal
increase on the property of these states


The State of New York is deemed very prosperous, and thought to be rapidly increasing in wealth by its industry and enterprise.  The following table, taken from the New York State Register for 1846, will exhibit the actual gain of the people of the State for ten years, viz, from 1835 to 1845, according to the assessed value of the property :


Table
Of Real and Personal Estate in the State of New York,
as Taken From The State Register For 1846.


.............. Real estate. ..... Personal estate. Corrected aggregate valuation.
1835 ... $403,166,094 .. $128,526,103 .. $530,653,524
1836 .... 539,756,874 .... 132,615,613 . . . . . . . . . .
1837 .... 498,430,054 .... 122,021,033 . . . . . . . . . .
1838 .... 502,864,006 .... 124,680,778 . . . . . . . . . .
1839 .... 519,058,782 .... 131,602,988 . . . . . . . . . .
1840 .... 517,723,170 .... 121,447,830 . . . . . . . . . .
1841 .... 531,987,886 .... 123,311,644 . . . . . . . . . .
1842 .... 504,254,029 .... 116,695,233 . . . . . . . . . .
1843 .... 476,999,430 .... 118,602,064 . . . . . . . . . .
1844 .... 480,027,609 .... 119,612,343 . . . . . . . . . .
1845 .... 486,490,121 .... 115,988,895 ........605,646,095
....................................................$74,992,571

The table shows that in 1835, the whole valuation of the taxed real and personal estate in the State of New York, was $530,653,524;  and that in 1845, it had increased to $605,646,095.  In the ten years, the people of the State added to their wealth $74,992,571 — equal to $7,499,257 a year, or a fraction over one and four-tenths percent a year on the capital employed.  This calculation is made without any payment of interest until the expiration of the ten years.

Taking the above as a fair valuation of the property, the people of the State added only about one and four-tenths percent per annum to their capital, and the legal interest of the State is seven percent, and is usually paid oftener than yearly.  If we had rented the State of a foreign nation, and at the end of every six months had taken up our obligations and added in the six month's interest;  at the end of the ten years we should have added to the principal over $524,000,000.  We should have owed the foreign nation, in interest or rent, a sum seven times greater than all that we earned above our own support.  If we earned only $74,992,571 more than our own maintenance, how could we return the property to its owners, and pay them $524,000,000 of rent, or seven times more than our labor would have produced?  Yet the laws of the State, fixing the interest at seven percent, make a requisition equal to this upon laborers in favor of capital.


The average of the yearly loans of the banks in the State of New York, according to their own reports, amounts to   $70,000,000
According to the annual report, the debt of the State on the 30th September, 1846, was   24,734,080
Debts of the principal cities in the State in 1845, as taken from the State Register :    
City of New York . . . . . . . . . . . . . . . . . . . . . . . .
-- " -- Brooklyn . . . . . . . . . . . . . . . . . . . . . . . . .
-- " -- Albany . . . . . . . . . . . . . . . . . . . . . . . . . . .
-- " -- Troy . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-- " -- Rochester . . . . . . . . . . . . . . . . . . . . . . . .
-- " -- Buffalo . . . . . . . . . . . . . . . . . . . . . . . . . . .
$14,476,986
545,000
500,000
772,000
108,000
57,131
16,459,117
    $111,193,197
The interest on this sum at 7 percent per annum.   783,523
Yearly average of the surplus earnings of the people of the State, according to the assessed valuation of the property, from 1835 to 1845.   7,499,257
    $284,266

It appears that the interest on these debts alone, at seven percent would amount to $284,266 more than the surplus earnings of all the people in the State, and this too without compounding the interest.  It must be borne in mind, that this debt of $111,193,197 is contracted for money borrowed by the people, or by the State, and the interest paid upon it goes into the hands of a few capitalists, who furnish the capital for banking, and lend the money to the State and its incorporated cities.  All the debts contracted by the sale of lands, agricultural products, and merchandise — all the money lent by individuals on bond and mortgage, and all business debts, bearing interest, are additional to the reported debts.  The debts yearly contracted in the State by sales of land, merchandise etc., amount to several hundred millions of dollars, and two, three, or four hundred millions bear interest.  Must not the payment of so great an amount of interest by the producers, concentrate the wealth of the State in the hands of a few capitalists, and continue more and more to oppress the producers ?  We might as well expect by labor to dam up the mouths of our rivers, so that they could not empty into the ocean, as to expect by labor, to contend successfully against the power of capital, even at two and a half percent interest, and much less against six or seven percent.  An interest on capital of even two and a half percent per annum would as certainly break down productive industry, and accumulate the wealth in favor of capital, as the rivers would certainly break down the dams, and force their waters and the obstructing dams into the ocean.

According to the assessed valuation of the property of the State of New York, the increase of its wealth from 1835 to 1845 was about one and four-tenths percent per annum, without compounding the interest.  This was a period of only ten years.  It is probable that, in 1835, property was estimated higher in proportion to its actual worth than in 1845.  This statement, then, would not be an exactly fair criterion of the actual increase of wealth in the State.  During that period, according to it, we gained, beside our own support, only a fraction over one percent a year by all our labor.  If this was a correct estimate, the percentage we gained in wealth was only three-fourths as great as our percentage increase in population, for during the ten years, our population increased from 2,174,517 to 2,604,495, or a fraction less than two percent a year.  This calculation would make the aggregate wealth of the State in proportion to its population less in 1845 than it was in 1835;  and this, we presume, was not the fact.  Still there is little doubt that at least one-half the people of the State were poorer in 1845, and are now poorer, than they were in 1835.  The increased wealth is accumulated in fewer hands.  More and more of the earnings of the producing classes are required to pay the yearly rent, or interest, on the yearly increasing capital.  If the men who are now rich had in 1835 an income that abundantly supplied their wants, an increase of wealth has not added to their happiness;  and the increase has been taken from those who toil, and yet are suffering for the necessaries of life.  Without improving the condition of the rich, we are continually doing a wrong to a large class of industrious and worthy citizens.[4]

An estimate of the increase of wealth in the State of Massachusetts, for fifty years, is contained in an article in the May number, for 1847, of that deservedly celebrated periodical, Hunt's Merchants' Magazine.  A few extracts are made to show the difference between the amount of property produced by the labor of Massachusetts during fifty years, and the amount which would have accumulated upon the capital employed during that period at six percent interest.

"It is the object of this article to exhibit the progress of wealth in Massachusetts during the fifty years, from 1790 to 1840, as deduced from the six State valuations, taken at intervals of ten years each.  These valuations have the legislative sanction of the General Court, and are the bases of apportionment of all State taxation for the ten years following.  They are prepared from the returns furnished by the assessors of the several towns and districts, and are intended to embrace all the taxable property of the Commonwealth.  They may be relied upon as sufficiently correct for the purposes of comparison, or of showing the progress of wealth during these fifty years;  at least they furnish the nearest approximation we have to the true amount of wealth in the State."

The assessors' valuation of the property in the State of Massachusetts in 1790, was $44,024,349, and in 1840, it had increased to $299,880,338.  The increase of wealth in the State during fifty years was $255,855,989.  In Massachusetts the legal rate of interest is six percent per annum, and the value of property is commonly estimated by the percentage income for which it can be rented.  If a house and lot, or a store and lot, will rent for $600 per annum, besides the taxes and insurance, the property is valued at $10,000, for the income from it is equal to interest at six percent per annum on $10,000.

In Massachusetts, the banks are allowed to discount paper at six percent.  In making loans, they take the interest or discount from the notes for the time they have to run.  Take the value of the property in 1790, say $44,024,349, and suppose it to have been loaned at six percent per annum, on notes having six months to run.  In fifty years the interest on this sum would have amounted to $885,524,246.  Add the principal — i.e., $44,024,349, and we have a sum of $929,548,595.  The actual increase of wealth in the State during the fifty years was but $255,855,989.  Add to this the principal or property of the State in 1790 — i.e., $44,024,349, and the entire wealth of the State amounts to $299,880,388;  or not one-third as much as the accumulation on the same capital would have been in fifty years at six percent interest per annum.  If, in 1790, the people of Massachusetts had rented their property of a foreign nation, and agreed to pay interest on it half yearly at the rate of six percent per annum, they would have been bound to pay in the fifty years, about three and a half times more than they earned during that period over and above their living.  The results of the establishment of this rate of interest in the State, are manifest in the accumulation of wealth in the hands of the few, and in the proportionate destitution of the many.

According to a pamphlet containing a list of the wealthy men of Boston, and an estimate of the value of their property, there are 224 individuals who are worth in the aggregate, $71,855,000, and upon an average $321,781 each.  In this pamphlet no estimate is made of any individual's property that is supposed to amount to less than $100,000.  If we take the wealthy men in all the other towns and counties in the State, and suppose that there are 3,000 other individuals who are worth only $30,000 each, their aggregate wealth would amount to $90,000,000.  Add this sum to the $71,855,000 owned by the 224 men, and we have $161,855,000, or considerably more than half the value of all the property of the State.  Such estimates are liable to be more or less incorrect;  but anyone who will make an estimate of the wealth of the town or village in which he resides, will find that a very small proportion of the inhabitants are worth more than all the rest.  This is still more true of large cities than it is of towns and villages.

If the estimate of the wealth of the 3,224 wealthy men in the State of Massachusetts be correct, these men are worth more than all the other inhabitants of the State.  Allowing the families of the 3,224 men to average five persons each, they would constitute a population of 16,120 individuals.  In 1840, the State contained a population of 737,700.  The 16,120 individuals would not be two and one-fifth percent of the population, and yet they would own more than half the wealth of the State.  If this estimate even approach the truth, it shows an immense disproportion of wealth for the labor performed by its owners;  for it is impossible that they, or their ancestors, whatever may have been their skill or industry, can have performed the labor and made the improvements which constitute this wealth.  The interest on money loaned, and the rent on property leased, are the only. means by which they could have accumulated it. $44,024,349 loaned on six month's paper at six percent interest per annum, as interest is taken by banks, would increase in fifty years to twenty-one times its original amount.  This increase would accrue to the lenders of the money, by merely exchanging their money, or banknotes for the notes of individuals, and collecting the interest.

If the rate of interest on money in Massachusetts were at one percent per annum, instead of at six percent, and the $44,024,349 were loaned on six month's paper at one percent interest in advance, in fifty years the money would accumulate $28,879,973.  Add the principal — i.e., $44,024,349 — and the sum would be $72,904,322, instead of $929,548,595, the accumulation at six percent.




Section V.
Interest on National and State Debts.



Interest on money at six percent per annum, payable half-yearly, will double the principal in eleven years, eight months, and twenty days;  but, for convenience, we will call it twelve years. One thousand dollars lent at six percent, in twelve years, will accumulate to $2,000;  in twenty-four years, to $4,000;  in thirty-six years, to $8,000;  in forty-eight years, to $16,000;  in sixty years, to $32,000;  in seventy-two years, to $64,000;  in eighty-four years, to $128,000;  in ninety-six years, to $256,000;  in a hundred and eight years, to $512,000;  in one hundred and twenty years, to $1,024,000.  Multiply this sum by 1,024, and it will give the accumulation for one hundred and twenty years more;  $1,024,000 X 1,024 = $1,048,570,000.  Multiply this product by 1,024, and we shall have the accumulation during the next one hundred and twenty years, or for a period of three hundred and sixty years — $1,048,576 x 1,024 = $1,073,741,824,000.

A rate of interest on money at one percent, payable half-yearly, will double the principal in about sixty-nine and a half years;  but, for convenience, we will call it seventy years.  One thousand dollars lent at one percent, in seventy years will accumulate to $2,000;  in a hundred and forty years, to $4,000;  in two hundred and ten years, to $8,000;  in two hundred and eighty years, to $16,000;  in three hundred and fifty years, to $32,000;  or in three hundred and sixty years to, say, $37,574.

Deduct $37,574 from the accumulation on $1,000 at six percent, during the three hundred and sixty years — i.e., $37,574 from $1,073,741,824,000, and the remainder is $1,073,741,786,426; which sum, a rate of interest at six percent on $1,000 will accumulate over and above the sum accumulated by a rate of interest of one percent on $1000 during a period of three hundred and sixty years.  One dollar loaned at six percent per annum, the interest collected and reloaned half-yearly for a period of three hundred and sixty years, will accumulate the sum of $1,073,741,824; while the same dollar loaned at one percent, and the interest collected and reloaned in the same manner for the same period, will accumulate little more than $37.  One dollar loaned at six percent interest per annum for a period of three hundred and sixty years, would accumulate more than the assessed value of the whole State of New York.  The legal interest in the State of New York is seven percent, and one dollar loaned at this rate for three hundred and sixty years, would accumulate a greater sum than the valuation of the whole United States.

Suppose a foreign nation should lend to the government of the United States $100,000 at seven percent, on condition that our government should give her bonds, half yearly for the payment of the interest, and the sum should accumulate for a term of three hundred and sixty years.  However prosperous our people might be, at the expiration of the period the whole property of the nation would not pay the debt.  At seven percent interest, the debt would double in about ten years.  In three hundred and sixty years, $100,000 loaned at seven percent interest per annum would amount to $6,971,947,673,600,000; a much larger sum than the valuation of the property of the whole world.  These calculations make it evident that six and seven percent interest cannot and ought not to be paid by any nation.

We will make a calculation of interest at three percent per annum, paid and reloaned half-yearly, as in the former calculations.  If the United States should borrow from England $100,0010 at three percent interest, take up her bonds every six months, and give new bonds, adding in the interest, the debt would be doubled in about twenty-three and a half years.  But allow it to double in twenty-four years, and the $100,000 would accumulate in three hundred and sixty years, to $3,276,800,000.  The annual interest on this sum at three percent would be $98,304,000.  The yearly payment of this sum of interest would be caused by merely borrowing $100,000 for a period of three hundred and sixty years at three percent per annum, adding the interest every six months.  This enormous debt would be occasioned by the accumulative power of interest, which it requires the products of labor to satisfy and pay.

Suppose, when Virginia was settled in 1607, England had sold to the first settlers the whole of the United States for $1,000, and had taken a mortgage for this sum covering the whole property, but instead of paying the interest yearly at seven percent the settlers had agreed to take up their bonds at the end of every six months, and add in the interest.  Allow the $1,000 and the securing interest to remain outstanding until 1860, and then become due.  Although our prosperity has far surpassed that of any other nation, yet our property of every description would not pay the debt.  Interest at seven percent doubles the principal in ten years and one month.  In one hundred years and ten months the debt would have amounted to $1,024,000; and in two hundred and one years and eight months, to $1,048,576,000.  Add fifty years and five months to 1859, and the sum would amount to $33,554,432,000.  All the interest which would have accumulated upon the $1,000 would not have increased the quantity of money or the property of the nation.  All the increase of the value of the property would have been added by the labor of the people: but all their surplus earnings have not equalled the legal accumulation at seven percent interest on $1,000 during this period.

The southern and western States depend upon the yearly products of their labor for their wealth; they are greatly impoverished by the amount of interest that they are compelled to pay to our eastern and northern cities for the use of money.  A very large amount of the capital stocks of western and southern banks, and a large amount of western and southern State bonds, are owned by capitalists in the northern cities and by foreigners.  The interest on these is constantly transferring the earnings of the people of these States to a few capitalists in the large cities and in foreign nations.  All this would be avoided by the establishment of proper monetary laws by our own government.  The government ought to furnish money, by making a representative of the property of applicants in their own States, and no State should be compelled to pay to other States or nations millions of dollars worth of products yearly for the use of money to represent the value of its own property.  For if there be property in any State or country, there is a foundation on which to establish a plenty of good money to represent its value; but if there be no property there will be no inhabitants; and, of course, no use for money.

Money has been instituted with such overwhelming power, that it is almost universally understood to be the actual capital, and the property and labor of, a nation only representatives of the value of money.  The newspapers and periodicals of the day consider capital abundant when money is plenty, and lament the want of capital when money is scarce.  New States legalize high rates of interest to induce capital, that is, money, to come into them for investment.  But the money is not capital, for if the real capital did not first exist in these States in sufficient amount to secure the money it would never go into them.  There could be no use for money in any part of the world unless the capital first existed;  for there would be nothing to buy, and the money itself could afford no means of support, and would therefore be entirely useless.  But although a new State may have a large amount of capital and improvements, the inhabitants cannot exchange their property without money :  it is impossible for the people to make their exchanges by barter, and no States take the products of labor for taxes :  all debts are payable in money.  The people of every State must have money for the transaction of business, yet money is not their capital, it only represents the value of their capital.  Landed property in any new State that is competent to secure permanently a loan of $1,000, made by a citizen of another State, and to secure the payment of the interest yearly, is just as competent to secure permanently a like sum of paper money, if it were created by the Government on purpose to make this loan.  Where actual capital exists, it would be as easy, under true monetary laws, to make all the money necessary justly to represent and exchange its value, as it is to furnish measures to determine the quantity of products;  and there would be no more necessity for this nation to or depend upon England, or upon any other foreign country, to furnish us with money to represent the value of our own capital, than there is for sending to the Czar of Russia for some of his nobles to govern us.




Section VI.
No accumulation of property by labor equal to the accumulation by the
loan of money at seven percent interest.



Although the business of a nation be conducted in good faith, and all contracts be fulfilled according to law, and no scarcity of money be induced, yet a legal rate of interest of seven percent per annum, will inevitably concentrate the wealth in a few hands.  To show that interest at seven percent will accumulate property far more rapidly than it can be earned by labor, suppose a nation of one thousand individuals.  We will use this miniature nation in illustration, because the operation of the laws will be more readily seen upon so small a community; but the effects would be similar upon a great nation.  The thousand persons settle in a new country, and engage in various occupations, agricultural, manufacturing, mercantile, etc.  At the settlement of the colony, we will suppose the colonists to be worth an equal amount of property, so that one shall possess no superiority over another.  Each pursues some lawful and useful business, without entering into any speculation whereby a fortune may be gained without labor.  No one has any means of support besides actual production, except the legal interest of seven percent on money loaned, or rent at the same rate on money invested in property.  All are diligent in their several occupations, and thus each contributes to the general well-being.

Two mechanics, just come of age, are desirous of accumulating large fortunes.  They are good workmen, and each is able to earn a dollar a day over and above his expenses.  Every six months they loan the money thus earned at seven percent interest, the interest payable half yearly.  They set their affections upon being rich, and therefore do not burden themselves with a house and family.  These men earn an average of a dollar a day, beside their expenses, three hundred days in each year, during forty years and four months.  Their age is then, sixty-one years and four months.  Each earns by labor $300 per year for forty years, or, for the whole period, $12,100 — together, $24,200.  The interest on their earnings, loaned half yearly, for a period of forty years and four months, accumulates an amount which will be seen by reference to the following table.  Interest at seven percent per annum, paid and reloaned half yearly, accumulates a sum equal to the principal in ten years and one month.


Table
Interest at seven percent on $300.

 
1st half year they earn by their labor.$300.00Amount brought up$1,308.74
5th half year's labor.300.00
6 month's interest at 7 percent.10.501,608.74
310.506 month's interest56.30
2d half year's labor300.001,665.04
610.506th half year's labor300.00
6 month's interest21.371,965.04
631.876 month's interest68.78
3d half year's labor300.002,033.82
931.877th half year's labor300.00
6 month's interest32.612,333.82
964.486 month's interest81.68
4th half year's labor300.002,415.50
1,264.488th half year's labor300.00
6 month's interest44.262,715.50
1,308.74
Amount brought up  $ 2,715.50Amount brought up$5,488.69
6 month's interest95.0415th half year's labor300.00
2,810.545,788.69
9th half year's labor300.006 month's interest202.60
3,110.545,991.29
6 month's interest108.8716th half year's labor300.00
3,219.416,291.29
10th half year's labor300.006 month's interest220.20
3,519.416,511.49
6 month's interest123.1817th half year's labor300.00
3,642.596,811.49
11th half years labor300.006 month's interest238.40
3,942.597,049.89
6 month's interest137.9918th half year's labor300.00
4,080.587,349.89
12th half year's labor300.006 month's interest257.25
4,380.587,607.14
6 month's interest153.3219th half year's labor300.00
4,533.907,907.14
13th half year's labor300.006 month's interest276.75
4,833.908,183.89
6 month's interest169.1920th half year's labor300.00
5,003.088,483.89
14th half year's labor300.006 month's interest49.49
5,303.088,533.38
6 month's interest185.61Add one month's labor50.00
5,488.09  $ 5,583.38
   
In the first ten years and one month, the two men earn by their labor. $6,050.00
Interest thereon during this period.2,533.38
8,583.38
In the 2d ten years and one month, the interest on this sum equals the principal 8,583.38
17,166.76
Amount brought over17,166.76
2d 10 years and 1 month's labor, and interest thereon.8,583.38
25,750.14
3d -- " -- interest25,750.14
51,500.28
3d -- " -- labor and interest thereon8,583.38
60,083.86
4th -- " -- interest60,083.86
120,167.32
3d -- " -- labor and interest thereon8,583.38
128,750.70
In 40 years and 4 months the men earn by their labor.24,200.00
Remainder accumulated by interest.  $ 104,550.70

The interest on the sum, $24,200, earned by their labor is $104,550 70 — over four and a quarter times more than they have earned by their labor.  Suppose the two men to live twenty years and two months longer — that is, to the age of eighty-one years and six months and continue to loan their money.  During this period it would double twice.


Thus $128,750.70
10 years and one month's interest128,750.70
257,501.40
2d 10 years and one months interest257,501.40
Total accumulation in 60 years and 6 months.$515,002.80
The two men do not labor during the last 20 years and 2 months, and expend for their living during that period. 15,002.80
500,000.00
In 40 years and 4 months, they earn by their labor $24,000, and live twenty years and 2 months on their money without labor.
Subtract money earned by labor.24,200.00
Remainder accumulated by interest on $24,200. $ 475,800.00

Every dollar of the $475,800 is earned by the labor of others and given to the two men, as the legal interest upon $24,200.  These men live laboriously, and work for a very moderate compensation.  They take only the legal rate of interest, and do not demand the principal of the money as long as the interest is paid.  Neither do they enter into any speculations.  It is, therefore, said, that labor earns their large fortunes.  Cases similar to this are often brought to prove that an industrious man may, by his labor, accumulate a large property.  That this conclusion is erroneous, is manifest from the foregoing table, by which it appears, that more than nineteen out of twenty parts of the large fortunes of these men are earned by others, and paid to them to satisfy the legal interest on their loans of money.


to continue


 

1 [90/*]  We do not question the right of V. to inherit the five farms, and to enjoy all the produce of the one he cultivates;  nor do we object to his receiving a just rent for the use of any other farms which he may own;  but the rent of the latter should be only equivalent to a proper support of the money by which their value is represented;  and we claim that one, or one and one-tenth percent is ample to pay for the necessary material and labor to furnish a representative that shall be and remain perfectly secure and good. ... As labor in all useful departments should be fairly compensated, so also the necessary labor to furnish and issue the money of a nation should be justly remunerated;  and the percentage interest on the money should be equivalent to pay for the needful material and labor to furnish and lend it.  The interest ought not to exceed the expense of the institution and circulation of the money. (See Sec. XVII. and Part II., Chap. II.)

2 [106/*]  It is not reasonable to suppose that man's morals will be pure so long as we make laws which deprive him of his physical rights.  A standard that will deprive producers of what they justly earn, and bestow on non-producers what does not belong to them, cannot fail to corrupt the morals of both parties.  No ingenuity in the invention of machinery, and no physical force or combination of labor, has power to change this wrong;  because the evil is not in the production, but in the wrong distribution, which proceeds from the invisible power or law that governs it.  For all laws are spiritual or mental powers, which operate upon and affect visible things;  and their effects can only be altered by altering the spiritual or mental law.  This power of money is not the product of labor, nor even a visible thing, more than the attractive power of the magnet is visible.  Money, whether of gold, silver or paper, is visible, but the power of interest is invisible, and yet gathers to itself things visible as metals are attracted to a magnet.

3 [109/*]  If, to show the relative gain in wealth of the city and the State, from 1845 to 1859, we include with the county of New York the neighboring counties of Kings and Westchester — which are, in fact, suburbs of the city of New York — we have the following result :

Assessed value of real and personal property.
County ......... 1846. ........1859.
New York, ... $289,995,517 .... 552,008,742
Kings, .......... 30,750,472 .... 106,914,629
Westchester, 10,036,317 .. 40,487,671
............... 280,782,306 .. 699,411,042
Other Counties, 324,863,789 .. 716,879,795
Total State Valuation, $605,646,695 .. $1,416,290,837

4 [115/*]  In 1859, the valuation of the real and personal property in the State of New York had increased to $1,416,290,837, showing an increase in fourteen years of $810,644,742, or less than seven percent added annually.  But property was probably estimated lower in proportion to its value in 1845 than it was in 1835 or 1859, and a calculation embracing the twenty-four years, would give a truer criterion of the actual increase of wealth.  The property of the State in 1835 was valued at $530,653,524, and the increase in twenty- four years was $885,637,313, or for the whole period an average of not quite seven percent per annum;  and, added yearly, of about four percent per annum.  At seven percent, with the interest compounded yearly, the State would have added to its wealth during the twenty-four years, over $2,100,000,000, that is, over $1,200,000,000 more than was actually added to the wealth of the State by the labor of all its inhabitants.  The legal rate of interest demanded from laborers over $1,200,000,000 more than they actually earned.  Of course, as a body;  they could have had only a bare subsistence, and large numbers of them must have been reduced to the condition of paupers.  The following extracts are taken from the Report of the New York Association for improving the Condition of the Poor, for the year 1859.  James Brown, President;  James Boorman, James Lenox, Horatio Allen, A.R. Wetmore, John C. Green, Vice Presidents.
    "It was shown in the Thirteenth Annual Report of this Association, that, according to the ratios of population in the two countries there were about two paupers in the wealthy and prosperous State of New York, to one in Ireland, whose very name has long been a synonym for poverty and wretchedness.  The statement appeared so improbable, that it was received with a general expression of incredulity.  Since that period, pauperism appears to have augmented more rapidly in our own State than it has decreased in Ireland.  If any reliance, therefore, is to be placed in Governmental Reports, that unwelcome fact, so humiliating to our pride, having been confirmed by the statistics of each succeeding year, can, with no show of reason, be longer denied or evaded.  The Annual Report of the Secretary of the State of New York, to the Legislature, of the paupers relieved in the several counties, at the public expense, during the past year, affords a basis for a comparison of our own pauperism with that in Great Britain and Ireland, for the same period, of which the following is the result :

.................. Population. ... Paupers
England and Wales 19,045,000 .... 885,000
Scotland ......... 3,035,000 .... 115,213
Ireland .......... 6,500,000 .... 56,910
New York State ... 3,500,000 .... 261,155

    "In other words, the pauperism of England and Wales was in the ratio of four and six-tenths percent of the whole population;  in Scotland, three and nine-tenths percent;  in Ireland, about nine-tenths of one percent;  while in the great State of New York, which is foremost in population, enterprise and resources, the ratio is seven and four-tenths percent.  Making, therefore, every reasonable allowance for hypothetical inaccuracies in our State Statistics — for the figures assumed are less than the returns would justify — and we are confronted with the appalling fact, that the pauperism in this State is some five percent in advance of that in Ireland;  that is to say, there are, according to the ratios of population, five paupers in this State to one in that country.  It is unnecessary to extend the contrast, or it might be farther shown, that the legal provision for the relief of the New York paupers is greater per capita, than the governmental allowance in Ireland, but proportionately less than the poor rates both of England and Scotland.
    "Let it not be supposed that this dread phenomenon of pauperism has come suddenly upon us.  Statistics, on the contrary, show that it has reached its alarming prevalence by a steady, gradual growth.  The census of the State from 1831 to 1851, and the pauper statistics for the same period, exhibit the following results :

Increase of population in 20 years 61 percent.
Increase of pauperism from annual tables during the same period 706 percent.

    In 1831, there was one pauper to every 123 persons :  in 1841, there was one to every 39 persons;  in 1851, there was one to every 24 persons;  and this year (1856), there is one to every 17 persons.  Let the same ratio continue 15 years longer, and there will be one pauper to every five persons;  that is, every five persons in the State must support one pauper.  Twenty years, reaching from January, 1831, to 1851, furnish as just a scale as can be obtained, by which to gauge the succeeding 20 years.  Indeed, the five years since 1851 show a still larger increase in the ratio of pauperism, so that at the end of 15 years more, the 20 years from 1851 to 1871 would exhibit even a sadder result than the number of years between 1831 and 1851.  It is submitted, whether we should act from a blind confidence in the perpetuity of our institutions, or from statistics gathered from the steady action of a quarter of a century, on our history.
    "Since 1856, when the above statement in substance was first published, pauperism has increased in the State above the ratio then anticipated, so that the present proportion to the population is one pauper to about 13½ persons.  Is it not astonishing that such facts are unheeded ?  It is idle to reason against facts, for if there is any reliability in statistics, the facts themselves stand boldly in evidence.
    "Ireland and other foreign countries have doubtless been benefited at our expense, by the deportation of their poor, and to;  them we owe the bulk of our pauperism.
    " But, in conceding this, let not the momentous fact be overlooked, that pauperism, so long regarded as an exotic, is actually germinating in our own soil, with baneful luxuriance.  The humiliating proof of this is placed beyond dispute by official statistics.  Of the 130,150 paupers relieved in this city, in 1858, 50,251, or 38 percent, were natives;  and that this result was not attributable to the demoralizing influences of city life, is shown by the fact that, of the 261,155 State paupers, 104,744, or 41 percent, of the whole number, were natives of the United States.  It is evident, therefore, that exclusive of emigration, the ratio of our native-born paupers to the population of our city and State is far beyond that of England and more than double that of Ireland.
    "It is the certain tendency of every financial revulsion, to throw multitudes of the self-supporting, industrious classes down to a lower level than they before occupied.  Nay, in the ordinary annual operations of labor, as affected by the seasons, and by the fluctuations of supply and demand common in the most prosperous times, every winter is full of perils to thousands of the respectable poor.  Such being the laws of labor, what schemes of economical science will prevent their operation ?
    "But the subject presents itself in another aspect.  The times are always hard with large families, whose miserably insufficient wages just keep them above starvation.  By wonderful energy and management, they contrive to live on, unaided, the greater part of the year.  But let them be overtaken with sickness, or by the usual contractions of labor during the winter, which takes away their slender pittance, and what is there between them and starvation ?  They have no work, no savings to fall back upon, and their children and themselves are perishing with cold, and hunger, and nakedness.  It is not in human nature to endure such an ordeal, unharmed, especially when driven by stern necessity to consort with the outcast, and to be degraded by public relief.  Yet such, alas ! is often the condition of many of the deserving poor." — [M.K.P.]