VI.INTEREST AND USURY.

“It is against nature for money to breed money.”—Bacon.

THE great Napoleon said, after studying a set of compound interest tables: “There is one thing to my mind more wonderful than all the rest, and that is, that the deadly fact buried in these tables has not before this devoured the whole world.” The ethical sense of mankind saw at an early day the wrong of usury. The Mosaic law was very explicit on the subject. Cicero mentions that Cato, being asked what he thought of usury, made no other answer to the question than by asking the person who spoke to him what he thought of murder. The Christian Church, in its early days and until the end of the Middle Ages, utterly forbade the exaction of interest. In the reign of Edward VI. a prohibitory act was passed, for the stated reason that the charging of interest was “a vice most odious and detestable and contrary to the word of God.” It was not until the time of the Reformation that this interpretation of the divine law was ever questioned. Calvin was one of the first to contend that the sentiment against exacting interest arose from a mistaken view of the Mosaic law. A series of enactments, known as the Usury Laws, restricted the maximum rate to be charged in England. By Act 21 James I. this rate was fixed at 8 per cent. During the Commonwealth this rate was reduced to 6 per cent., and by Act 12 Anne to 5 per cent., at which rate it stood until 1839. In the United States the legal rate of interest varies, nearly all theStates having passed statutes fixing a maximum rate.

“Usury bringeth the treasures of a realm or state into a few hands; for the usurer being at certainties, and others at uncertainties, at the end of the game most of the money will be in the box; and ever a state flourisheth when wealth is more equally spread.”

This quotation is from the essay “Of Usury,” by that wisest of philosophers, Francis Bacon. The reader must bear in mind that while nowadays the term “usury” is applied generally only to excessive interest, in Bacon’s time the word was used for any rate of premium or interest for the use of money. The wordusance, now obsolete in that sense, conveyed the same meaning, and is used in Shakespeare’s “Merchant of Venice.” The provocation which Antonio first gave Shylock was that—

“He lends out money gratis and brings downThe rate of usance here with us in Venice.”

“He lends out money gratis and brings down

The rate of usance here with us in Venice.”

All are familiar with the conditions which Shylock exacted of Antonio:

Shylock.This kindness will I show.Go with me to a notary, seal me thereYour single bond; and, in a merry sport,If you repay me not on such a day,In such a place, such sum or sums as areExpress’d in the condition, let the forfeitBe nominated for an equal poundOf your fair flesh, to be cut off and takenIn what part of your body pleaseth me.Antonio.Content i’ faith: I’ll seal to such a bondAnd say there is much kindness in the Jew.Bassanio.You shall not seal to such a bond for me:I’ll rather dwell in my necessity.Antonio.Why, fear not, man; I will not forfeit it;Within these two months, that’s a month beforeThis bond expires, I do expect returnOf thrice three times the value of this bond....Come on; in this there can be no dismay;My ships come home a month before the day.

Shylock.This kindness will I show.

Go with me to a notary, seal me there

Your single bond; and, in a merry sport,

If you repay me not on such a day,

In such a place, such sum or sums as are

Express’d in the condition, let the forfeit

Be nominated for an equal pound

Of your fair flesh, to be cut off and taken

In what part of your body pleaseth me.

Antonio.Content i’ faith: I’ll seal to such a bondAnd say there is much kindness in the Jew.

Antonio.Content i’ faith: I’ll seal to such a bond

And say there is much kindness in the Jew.

Bassanio.You shall not seal to such a bond for me:I’ll rather dwell in my necessity.

Bassanio.You shall not seal to such a bond for me:

I’ll rather dwell in my necessity.

Antonio.Why, fear not, man; I will not forfeit it;Within these two months, that’s a month beforeThis bond expires, I do expect returnOf thrice three times the value of this bond....Come on; in this there can be no dismay;My ships come home a month before the day.

Antonio.Why, fear not, man; I will not forfeit it;

Within these two months, that’s a month before

This bond expires, I do expect return

Of thrice three times the value of this bond....

Come on; in this there can be no dismay;

My ships come home a month before the day.

But Antonio’s ships did not come in—just as the farmer’s crop often fails and the artisan’s employment gives out just when the mortgage is due—and Shylock claimed his pound of flesh. “The Merchant of Venice” is a comedy, and Shylock, Bassanio and Antonio are mere creatures of imagination; but there are thousands of tragedies enacted every day in real life in which real Shylocks play a part. The Shylocks of to-day are quite unlike the Shylocks of fiction, however. Banker Morgan, who negotiated with Grover Cleveland the star-chamber bond deal by which the American government sold to the Rothschilds at a premium of only 4½ per cent. $100,000,000 of interest-bearing gold bonds which were immediately after quoted at a premium of 21 per cent., is a philanthropist. As soon as possible after the deal was made his portrait appeared in many of the great dailies with a fulsome account of his many charities! It will take many a pound of human flesh, many a drop of life’s blood, to pay the interest on the bonds which he negotiated, and out of the sale of which he made a cool million in one day.

The Bible has much to say on the subject of usury. The writer has never heard a sermon preached on any of the following texts, however—perhaps because bankers and money-lenders rent the best pews. Remember that usury here means simply interest—not excessive interest:

Exodus 22:25: “If thou lend money to any of my people that is poor by thee, thou shalt not be to him as an usurer, neither shalt thou lay upon him usury.”

Deuteronomy 23:19-20: “Thou shalt not lend upon usury to thy brother; usury of money, usury of victuals, usury of anything that is lent upon usury. Unto a strangerthou mayest lend upon usury, but unto thy brother thou shalt not lend upon usury, that the Lord thy God may bless thee.”

Nehemiah 5:7: “Then I consulted with myself, and I rebuked the nobles, and the rulers, and said unto them: Ye exact usury every one of his brother. And I set a great assembly against them.”

Psalms 15:5 (David describes a citizen of Zion): “He that putteth not out his money to usury, nor taketh reward against the innocent.”

I cannot do better here than quote a significant chapter from Ignatius Donnelly’s powerful novel, “Cæsar’s Column,” which certainly did as much as any book ever printed to set people thinking:

“But what would you do, my good Gabriel,” said Maximilian, smiling, “if the reformation of the world were placed in your hands? Every man has a Utopia in his head. Give me some idea of yours.”“First,” I said, “I should do away with all interest on money. Interest on money is the root and ground of the world’s troubles. It puts one man in a position of safety, while another is in a condition of insecurity, and thereby it at once creates a radical distinction in human society.”“How do you make that out?” he asked.“The lender takes a mortgage on the borrower’s land, or house, or goods, for, we will say, one-half or one-third their value; the borrower then assumes all the chances of life to repay the loan. If he is a farmer, he has to run the risk of the fickle elements. Rains may drown, droughts may burn up his crops. If a merchant, he encounters all the hazards of trade: the bankruptcy of other tradesmen; the hostility of the elements sweeping away agriculture, and so affecting commerce; the tempests that smite his ships, etc. If a mechanic, he is still more dependent upon the success of all above him and the mutations of commercial prosperity. He may lose employment; he may sicken; he may die. But behind all these risks stands themoney-lender, in perfect security. The failure of his customers only enriches him; for he takes for his loan property worth twice or thrice the sum he has advanced upon it. Given a million of men and a hundred years of time, and the slightest advantage possessed by any one class among the million must result, in the long run, in the most startling discrepancies of condition. A little evil grows like a ferment—it never ceases to operate; it is always at work. Suppose I bring before you a handsome, rosy-cheeked young man, full of life and hope and health. I touch his lip with a singlebacillusofphthisis pulmonalis—consumption. It is invisible to the eye; it is too small to be weighed. Judged by all the tests of the senses, it is too insignificant to be thought of; but it has the capacity to multiply itself indefinitely. The youth goes off singing. Months, perhaps years, pass before the deadly disorder begins to manifest itself, but in time the step loses its elasticity; the eyes become dull; the roses fade from the cheeks; the strength departs, and eventually the joyous youth is but a shell—a cadaverous, shrunken form, inclosing a shocking mass of putridity; and death ends the dreadful scene. Give one set of men in a community a financial advantage over the rest, however slight—it may be almost invisible—and at the end of centuries that class so favored will own everything and wreck the country. A penny, they say, put out at interest the day Columbus sailed from Spain, and compounded ever since, would amount now [A. D.1890?1890?] to more than all the assessed value of all the property, real, personal and mixed, on the two continents of North and South America.”“But,” said Maximilian, “how would the men get along who wanted to borrow?”“The necessity to borrow is one of the results of borrowing. The disease produces the symptoms. The men who are enriched by borrowing are infinitely less in number than those who are ruined by it; and every disaster to the middle class swells the number and decreases the opportunities of the helpless poor. Money in itself is valueless. It becomes valuable only by use—by exchange for things needful for life or comfort. If money could not be loaned it would have to be put out by the owner of it in businessenterprises, which would employ labor; and as the enterprise would not then have to support a double burden—to-wit, the man engaged in it and the usurer who sits securely upon his back—but would have to support only the former usurer, that is, the present employer—its success would be more certain; the general prosperity of the community would be increased thereby, and there would be, therefore, more enterprises, more demand for labor, and consequently higher wages. Usury kills off the enterprising members of a community by bankrupting them, and leaves only the very rich and the very poor; but every dollar the employers of labor pay to the lenders of money has to come eventually out of the pockets of the laborers. Usury is therefore the cause of the first aristocracy, and out of this grow all the other aristocracies. Inquire where the money came from that now oppresses mankind, in the shape of great corporations, combinations, etc., and in nine cases out of ten you will trace it back to the fountain of interest on money loaned. The coral island is built up of the bodies of dead coral insects; large fortunes are usually the accumulations of wreckage, and every dollar represents disaster.”

“First,” I said, “I should do away with all interest on money. Interest on money is the root and ground of the world’s troubles. It puts one man in a position of safety, while another is in a condition of insecurity, and thereby it at once creates a radical distinction in human society.”

“How do you make that out?” he asked.

“The lender takes a mortgage on the borrower’s land, or house, or goods, for, we will say, one-half or one-third their value; the borrower then assumes all the chances of life to repay the loan. If he is a farmer, he has to run the risk of the fickle elements. Rains may drown, droughts may burn up his crops. If a merchant, he encounters all the hazards of trade: the bankruptcy of other tradesmen; the hostility of the elements sweeping away agriculture, and so affecting commerce; the tempests that smite his ships, etc. If a mechanic, he is still more dependent upon the success of all above him and the mutations of commercial prosperity. He may lose employment; he may sicken; he may die. But behind all these risks stands themoney-lender, in perfect security. The failure of his customers only enriches him; for he takes for his loan property worth twice or thrice the sum he has advanced upon it. Given a million of men and a hundred years of time, and the slightest advantage possessed by any one class among the million must result, in the long run, in the most startling discrepancies of condition. A little evil grows like a ferment—it never ceases to operate; it is always at work. Suppose I bring before you a handsome, rosy-cheeked young man, full of life and hope and health. I touch his lip with a singlebacillusofphthisis pulmonalis—consumption. It is invisible to the eye; it is too small to be weighed. Judged by all the tests of the senses, it is too insignificant to be thought of; but it has the capacity to multiply itself indefinitely. The youth goes off singing. Months, perhaps years, pass before the deadly disorder begins to manifest itself, but in time the step loses its elasticity; the eyes become dull; the roses fade from the cheeks; the strength departs, and eventually the joyous youth is but a shell—a cadaverous, shrunken form, inclosing a shocking mass of putridity; and death ends the dreadful scene. Give one set of men in a community a financial advantage over the rest, however slight—it may be almost invisible—and at the end of centuries that class so favored will own everything and wreck the country. A penny, they say, put out at interest the day Columbus sailed from Spain, and compounded ever since, would amount now [A. D.1890?1890?] to more than all the assessed value of all the property, real, personal and mixed, on the two continents of North and South America.”

“But,” said Maximilian, “how would the men get along who wanted to borrow?”

“The necessity to borrow is one of the results of borrowing. The disease produces the symptoms. The men who are enriched by borrowing are infinitely less in number than those who are ruined by it; and every disaster to the middle class swells the number and decreases the opportunities of the helpless poor. Money in itself is valueless. It becomes valuable only by use—by exchange for things needful for life or comfort. If money could not be loaned it would have to be put out by the owner of it in businessenterprises, which would employ labor; and as the enterprise would not then have to support a double burden—to-wit, the man engaged in it and the usurer who sits securely upon his back—but would have to support only the former usurer, that is, the present employer—its success would be more certain; the general prosperity of the community would be increased thereby, and there would be, therefore, more enterprises, more demand for labor, and consequently higher wages. Usury kills off the enterprising members of a community by bankrupting them, and leaves only the very rich and the very poor; but every dollar the employers of labor pay to the lenders of money has to come eventually out of the pockets of the laborers. Usury is therefore the cause of the first aristocracy, and out of this grow all the other aristocracies. Inquire where the money came from that now oppresses mankind, in the shape of great corporations, combinations, etc., and in nine cases out of ten you will trace it back to the fountain of interest on money loaned. The coral island is built up of the bodies of dead coral insects; large fortunes are usually the accumulations of wreckage, and every dollar represents disaster.”

As proof of the fact that it is a mighty fortunate thing for humanity that the Rothschilds did not conduct a bank in the year 1 A. D., I reprint from theTwentieth Centurythe following article by H. C. Whitaker, which shows the beauties of interest-drawing:

“Had one cent been loaned on the 14th day of March, A. D. 1, interest being allowed at the rate of 6 per cent., compounded yearly, then, 1894 years later—that is, on March 14, 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, each the size of the earth, it would take 610,070,000,000,000,000 of them to pay for that cent. Placing these spheres in a straight row, their combined length would be 4,826,870,000,000,000,000,000 miles, a distancewhich 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 of solid gold, would not nearly pay the amount. A single sphere to pay the whole amount, if placed with its center 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.”

“The planets and stars of the entire solar and stellar universe, as seen by the great Lick telescope, if they were all of solid gold, would not nearly pay the amount. A single sphere to pay the whole amount, if placed with its center 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.”

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