Chapter 8

"Public institutions and the laws," says Pope Leo, "have repudiated the ancient religion." But is not this repudiation in large part due to the refusal of the ministers of the ancient religion to accommodate themselves to new conditions in the world's history, so that with the growth of modern civilization the world has moved more rapidly than the Church, and the latter has become dissociated from the masses, chiefly owing to the ignorance and intense conservatism of her rulers and their entirely unnecessary distrust of the discoveries of science? Pope Leo admits that this is "an age of greater instruction, of different customs, and of more numerous requirements in daily life," but he cannot divest himself of the trammels of ecclesiasticism which seem to mould his thoughts and lead him to consider it "essential in these times of covetous greed to keep the multitude within the line of duty." With him it is "the multitude" who seem possessed of an insane desire to break out of the line of duty. His theory is like that of the man who accounted for the overcrowding in large cities on the ground that the poor and unfortunate had a strange and uncontrollable propensity for swarming in tenement-houses. He does not give sufficient force to the influence of conditions upon human acts, and apparently is chiefly anxious that "strife should cease," forgetting that until justice be done the worst thing that could happen would be the cessation of strife.

The flattering surroundings and aristocratic training of Pope Leo cannot, however, dull the generous sympathies of his heart, or blind his clear vision of "the misery and wretchedness which press so heavily at this moment on the large majority of the very poor." He says: "The condition of the working population is the question of the hour." This will be a rude awakening to those conservative Catholic churchmen who have in recent years been insisting that things as they are were altogether lovely, and that the talk about the misery of the poor was only the exaggeration of a few cunning agitators who wanted to excite the people so that in a general upheaval these agitators themselves might personally profit. Pope Leo's voice of sympathy is heard declaring that there is a social problem, and that "it is shameful and inhuman to treat men like chattels to make money by or to look upon them merely as so much muscle or physical power."

Charity, as Pope Leo frequently understands it, would indeed effect a wonderful amelioration in the world. But it is that charity "which is always ready to sacrifice itself for others' sake" and the chief characteristic of which is the love of justice. It has been degraded in these later years into the sense of alms-giving, so that the Christian pulpits of every denomination have too often thus been preaching charity while ignoring justice.

Is it any wonder the world rebelled? The victories of the Church were won when she possessed the sublime strength of weakness, and when her martyrs and saints in language only matched by that of the radicals of to-day were proclaiming the essential liberty, fraternity, and equality of all men, and denouncing the iniquities of imperial Rome. But when she took the fatuous step, and placed on her own brow the crown of the Cæsars, then she too became conservative, then the words of her popes began to be regulated by policy, then charity became alms-giving, and piety degenerated into ecclesiasticism. Authority was strained until it snapped, and a suffering world revolted from the outrageous assumptions of ecclesiastical power. A return to Christianity is, indeed, needed, but the Church will have quite as much of a journey to go as the world, so far as her methods are concerned.

With regard to the position of the family in the state, Pope Leo is the advocate of freedom as against the interference of public authority in domestic affairs. He admits, however, that the state should interfere in cases of family disturbance "to force each party to give the other what is due," herein differing from the philosophical anarchists. He discerns clearly that the interests of labor and of capital are not antagonistic, but what he does not see is that the interests of labor and capital may both be antagonistic to the interests of monopoly, and that until the latter is destroyed the two former will be continually forced into positions of seeming antagonism. He denounces "rapacious usury," and says that it was "more than once condemned by the Church," conveniently overlooking the fact that the _usuria_, which was condemned, was not only "rapacious" but was all taking of money for the use of money, all interest on loans--a condemnation which, if insisted upon by the Church to-day, would soon empty her sanctuaries. He refers to the "greed of unrestrained competition" but does not grasp the idea that under conditions of justice unrestrained competition would be an advantage, constantly leading men to emulate each other, and becoming a sure guarantee of progress. It is the competition of those who have nothing but their labor, or their brains, or their capital to sell with the owners of vast monopolies who exact from production an ever-increasing toll that needs to be restrained, and this not by abolishing "the custom of working by contract," or by state interference and legislative tinkering, to which the Pope leans in spite of his protests against socialism, but by the abolition of the monopolies or their absorption into the functions of the state.

The Pope is almost a Spencerian in his bias towards individualism, but he forgets that individualism can never be maintained in practice except through the assumption by the state of those monopolies which, if left in private hands, would benefit the few at the expense of the many. True individualism requires equality of opportunity. The instant the idea of monopoly enters, equality of opportunity becomes impossible, and individualism is destroyed. It is through want of seeing this fact that the Pope, in common with most political economists, goes floundering round in a sea of contradictions, now proclaiming principles almost like those of the anarchists, and again favoring extreme socialism, while all the time imagining himself an individualist. Their theories remind one of the labored attempts to explain the solar system by the old Ptolemaic method of epicycles and deferents, when the one simple law of centripetal and centrifugal force was enough to account for all the majestic movements of the universe. What other outcome can there be of this want of a regulator in economics--like a governor in machinery--than an endeavor to patch up the machine of humanity, adding a little here, taking off a little there, doing the best that occasion seems to allow, and all the while impressed with a profound and sad conviction that the machine is in a bad way, and certain to smash up, whatever is done? Consequently we have just such weak documents as this encyclical letter, emanating now from an eminent agnostic scientist, now from a millionnaire "philanthropist" and now from the Pope--all conflicting with each other, the first denying that man has any more rights than a rattlesnake, the second lauding a "triumphant democracy" which has not the courage to attack the monopolies through which he has acquired his millions, the third writing a long paper full of pious platitudes and injunctions to the rich to give to the poor, and to the poor to be contented, and then everything will be lovely.

The main portion of the encyclical letter is directed against "socialism," and the Pope's arguments are effective as against what he evidently means by socialism. They are sadly weakened, however, by his want of a logical conception of what constitutes private property. He shows in more than one place that he believes private property to be only the result of human labor, but when he comes to apply his ideas, he admits of its extension to land and other monopolies, without realizing that because such monopolies are not the creation of human labor they cannot therefore be rightfully considered as private property. He is like the man who would divide the human race into men, women, and poets, or in enumerating the New England States would include Boston after having mentioned Massachusetts. His arguments are still further weakened by his evident leaning towards compulsory Sunday rest, and an eight-hour day, trades-unionism, and regulation by church societies, all of which savor of the very socialism which he is combatting.

He argues well, however, against the theory which proposes that the state should administer individual property as common property for the benefit of all. This would be more correctly termed state socialism or, in its extreme form, communism. But the Pope fails to recognize that there is such a thing as public property, created by the mere presence of large communities, and which those communities have a perfect right to administer. While endeavoring to uphold the rights of private property, he impugns what Father William Barry called in a recent review article, "The Rights of Public Property." His Holiness' ignorance on this point can be best shown by a quotation:--

"If one man hires out to another his strength or his industry, he does this for the purpose of receiving in return what is necessary for food and living; he thereby expressly proposes to acquire a full and real right, not only to the remuneration, but also to the disposal of that remuneration as he pleases. Thus, if he lives sparingly, saves money, and invests his savings, for greater security, in land, the land in such a case is only his wages in another form; and, consequently, a workingman's little estate thus purchased should be as completely at his own disposal as the wages he receives for his labor."

It would be interesting to know what the Pope would say if the workingman invested his savings in a slave, and whether the Holy Father would consider the slave only the workingman's "wages in another form." Pope Leo certainly never could have intended to state that the mere purchase of a thing was sufficient to convey ownership. Yet that is just what the last sentence quoted amounts to. The justice of the ownership depends entirely upon whether the thing purchased be rightfully capable of ownership, in the first place, and whether it be obtained from the rightful owner, in the second.

"As effects follow their cause," Pope Leo says a little further on, "so it is just and right that the results of labor should belong to him who has labored."

There he strikes the key-note of the right of property upheld alike by the best churchmen and economists in all ages. That is the natural law of labor. It is opposed to the theory of State socialism, and to what many in this country understand by nationalism. If the Pope had adhered to that proposition, he would have been saved from his illogical position. It is undoubtedly true that a man is entitled to that of which he is the producing cause. And in some branches of labor which are more intimately associated with the earth than others, such as agricultural operations, it is true that the results of labor, and the improvements made upon land, become physically inseparable from the land itself, so that he who would own what his labor has produced must also have security of tenure, and exclusive possession of "that portion of nature's field which he cultivates."

It is for want of distinguishing carefully between possession and ownership that the Pope falls into his ludicrous economic blunders. This part of his encyclical is absolutely self-contradictory. He is arguing for the securing to the laborer of the fruits of his labor. The workman on land must have ownership of those things he has produced, and hence must have exclusive possession of that part of the earth which he tills. He must have such disposal of it as will enable him by the exertion of his labor to secure a proportionate reward. But this is not ownership. Ownership carries with it something more than this. Once "divide the earth among private owners," as the Pope puts it, and you have this condition of things: that those who do not happen to be among the private owners must compete for the privilege of living on the earth, they must pay a part of the results of their labor for permission to work, and on the other hand the fortunate owners receive something for which they themselves render no labor. It is strange that the Pope did not see the absurdities of his own propositions. He says:--

"Moreover the earth, though divided among private owners, ceases not thereby to minister to the needs of all; for there is no one who does not live on what the land brings forth. Those who do not possess the soil contribute their labor; so that it may be truly said that all human subsistence is derived either from labor on one's own land, or from some laborious industry which is paid for either in the produce of the land itself or in that which is exchanged for what the land brings forth."

Pope Leo is mistaken. All human subsistence is not derived either from labor on one's own land or from some laborious industry. Some human subsistence, as the Pope says, is derived from labor on one's own land. Some human subsistence is derived from laborious industry on the land of others. And--what the Pope seems to ignore--some human subsistence is derived by owning land and letting others work upon it, taking from them part of the fruits of their labor in exchange for the mere permission to labor. By no construction can such ownership be classed as a "laborious industry." Yet such owners generally enjoy the very best of "human subsistence."

Nevertheless, a few sentences further on, the Pope naïvely asks: "Is it just that the fruit of a man's sweat and labor should be enjoyed by another?" Had the Pope pondered over that question more profoundly, he might have come to far different conclusions from those which he seems to have reached.

It is unfortunate that the Pope through a desire to uphold the just rights of property should have been led to maintain the privileges of monopoly, and still more unfortunate that so many Catholics will consider his blunder an article of faith and feel it binding upon their consciences to oppose all further efforts to impair private ownership of land by taxation--the only way in which individual possession can be reconciled with the common right of all mankind to the earth.

In one place the Pope seems to doubt the extent to which the principle of private ownership is applicable to land, for he says: "The limits of private possession have been left to be fixed by man's own industry _and the laws of individual peoples_." But if the laws should tax the monopoly value out of land, then the holder of land would not be able to get any profit out of it except by his own labor. It would be no longer such ownership as exists to-day which allows private owners to confiscate the results of other's labor. The Pope here abandons the unqualified ownership which he elsewhere maintains. It might well be asked if he is prepared to excommunicate the legislators and assessors who, in nearly every civilized country to-day, do tax land, and thus to a certain extent impair ownership. And if the same principle were extended so that the tax would equal the entire rental value there would be no chance for the land monopolist to exploit the earnings of labor. Man's means should not be "drained and exhausted by excessive taxation," as the Pope seems to fear, showing that he has a vague idea of the method by which it is proposed to destroy ownership. But as the rental value to-day is already paid by labor, the proposed plan could not drain or exhaust labor any more than at present, while such a tax falling upon lands held for speculation would cause their abandonment, and thus open new fields for labor. Workingmen would then be really "encouraged to look forward to obtaining a share in the land," and that prosperity which the Pope hopes for would result. He seems to be ignorant of the fact that taxing land, unlike a tax upon any product of labor, makes it cheaper and easier to obtain for possession and use.

More than all does he forget that what labor needs is not the protecting arm of Church or State, but equal opportunity and the fullest possible freedom of access to Nature's bounties. He is untrue to himself and talks like the veriest socialist when he says: "Among the purposes of a society should be to try to arrange for a "continuous supply of work at all times and seasons." Bountiful nature in the great storehouse of the earth has provided a "continuous supply of work" for the whole human race for all future ages. Make monopoly, by taxation, loosen her grip upon the earth, and labor would have abundant opportunity for all time to come without the necessity for paternal, socialistic tinkering on the part of either State or Church.

THE AUSTRIAN POSTAL BANKING SYSTEM.

BY SYLVESTER BAXTER.

There is a possibility that the plan for the establishment of postal savings banks, so ably advocated by the postmaster-general, may result in a radical change in our entire banking system. The demand for postal savings-banks is so popular that it is not likely that there will be much further delay on the part of Congress in realizing the project. Now it happens that among the new political issues that have arisen, the question of the currency has assumed a most prominent place. There can be no doubt of the intensity of the feeling that has developed against the national banks, which have supplied a large proportion of the circulating medium since the war, and the demand for a currency issued directly by the government, without the intervention of the banks, is growing both in volume and in force.

The sense of the inadequacy of the national banks to the financial necessities of the country is by no means confined to those who, by theory or experience, have been made hostile to them, and regard them as detrimental to our institutions, and as dangerous instruments for the oppression of the common people. It extends to those who recognize that the national banks have been of invaluable service to the country, and are a vast improvement over the banking system that preceded them. Nevertheless they feel that grave defects are showing themselves, and that for the security of the community something better is needed. There is not the confidence on the part of the business community that there should be, and events like the recent occurrences in connection with the Keystone National Bank, in Philadelphia, are not likely to enhance that confidence. One of the most frequent of surmises is as to how many similar cases there may be, and a very commonly heard query is that as to the state of affairs that a general financial panic might reveal, with the banks loaded with collateral upon which it would be hardly possible to realize at such a time.

Then there is the moral aspect of the case, so well expressed in an essay[22] by one of the soundest philosophical and political thinkers whom America has known, the late David Atwood Wasson. Said he: "At present the government permits itself to become indirectly,--or, if we speak of the State governments, worse, sometimes, than indirectly,--confederate with those who amass fortunes by making credit precarious, and forcing the hazards of the gaming-table into all the legitimate operations of business. The comptroller of the currency has publicly said that about one half, on an average, of the means of the national banks, in one chief city--institutions, observe, created by government, and charged, in effect, with one of its most distinctive functions, that of supplying a medium of exchange--are loaned to speculators; that is, to men who subsist largely on artificial disturbances of credit, upon corners in the stock market and money market, upon alternations of inflation and stringency, the ups and downs of a disordered constitution. Without going into the matter closely, which is aside from my present purpose, I leave before the reader the main facts of the case: that the system of credit centred in the modern banking system plays a vast and increasing role in our civilization; that while of a utility not easily overstated, it affords peculiar opportunities of fraud and exaction; that aside from these, its unregulated condition is dangerous, resulting in alternations of inflation and depression, like the alternate extremes of fever and ague; that vast and growing combinations exist for producing artificially this disorder; that those institutions which credit has created under the express sanction of government, at once to supply its necessities and hold it healthily in check, are managed only as private property; that much oppression, alike of labor and capital, and also, I fear, much demoralization--which is an interior and worse oppression--are suffered in consequence; and that hitherto our statesmanship wants the studious leisure, and our method of government the stability and precision of operation, which these exigencies demand."

[22] "The New Type of Oppression," in "Essays: Religious, Social, Political." Lee & Shepard, Boston.

A truer statement of the case never was made, and these words should be well pondered by patriotic citizens.

Probably the reason why the feeling against our present banking system has not yet taken shape in legislation is because no sound constructive measures have been proposed. Faulty as the system is, what is there better that can take its place? is asked, and to this no satisfactory reply has been given. Even though the notes of the national banks should be retired, and currency issued directly from the national treasury should take their place, we must have banking facilities of some kind.

Absolute security of bank deposits is what is desired, and any measure that would secure that end could hardly fail to be joyfully welcomed by the business community, with the exception of the small minority either selfishly interested in present banking corporations, or whose prosperity is derived from operations based upon a state of insecurity. Powerful as these interests are, there is no reason why they should be permitted to stand in the way of the realization of a better condition of affairs, should that prove attainable.

The leading merit of the national banking system comes from the absolute security of its circulating medium, proceeding from the governmental guarantee. Meanwhile the interests of the depositors, in supplying whose convenience the bank derives its business, remain inadequately guarded. Is not some system possible whereby in place of this partial guarantee we may have a complete guarantee, covering both circulating medium and deposit?

Fortunately, with the experiences of other countries furnishing examples so available as they do nowadays, we are not left entirely to our own resources in devising solutions for problems that confront us. We have but to look to Austria for a most successful example of a truly national banking system, that completely meets the demand. When Austria established its postal savings bank, in 1882, a regular check and clearing system was made a feature thereof. This, offering substantially the same convenience as our ordinary private or national banks in this country, together with the additional advantages of absolute security of deposits, and checks good in all parts of the country, has become enormously popular with the mercantile public, so that the regular banking department has quite overshadowed the savings department, important as the latter is.