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