Chapter 27
USURY OPPRESSES THE POOR--Continued.
The influence of any act is not limited to the person acting. The righteous act of a righteous man blesses himself and his generation and generations yet unborn. So the influence of a wrong act is not limited to the wrong-doer, but extends to others and is harmful to those who had no voluntary part in the act. Though the wrong be a personal habit and the sinner be himself the greatest sufferer, yet it is impossible to avoid causing distress to others who are themselves innocent.
Equity between those who participate in a wrong does not make a wrong act righteous. Thieves may be just among themselves, in the division of the spoils secured from others, but that does not make them upright men, nor does it make their business honest. If it were possible to preserve equity between the borrower and the lender upon usury, yet that would not justify the act nor remove the evil. The collection of their profits, which they divide equitably among themselves, imposes a burden upon others who have no part in the transaction. Their satisfactory agreement does not make the transaction less detrimental to the general good. It may the rather partake of the nature of a conspiracy against the public welfare.
The promoter of an enterprise on borrowed capital is practically but the agent of the lender. He may be the director and manager but he so conducts his undertaking as to gather the usury from others. When the opportunities for profitable investments become rare, and money accumulates and is lying idle, such promoters with their schemes are encouraged in order to gain a profit on the investment, though others suffer by it.
There lies upon this table a booklet, written in 1841, which charges and proves complicity between the bankers and brokers of New York at that time. The bankers loaned the brokers the money which they reloaned at very high rates. The banks refused accommodations to those in pressing need, compelling them to go to the brokers and to submit to their extortionate demands.
Though there may be an equitable arrangement between the owner of property and his broker and between the broker and his promoter, yet in the last analysis it will be found that this equitable arrangement, in its ultimate result, is of the nature of a conspiracy to compel the innocent poor to pay the profits of both; their consent is not first secured nor do they gain a single advantage and they are helpless to resist.
Though the transaction may have been between the rich, a rich lender and a rich borrower, yet the final result is that the interest is paid by the poor. In Calvin's letter of apology he supposes a case of equity between a rich land owner who is in need of ready money and the man who has money to buy a farm, but instead lends to his rich landlord and takes a mortgage. In this case the tenants of the borrower must pay the interest and finally the principal also. This increases the hardness of their hard lot. Though Calvin seems to appreciate the severe conditions of the ordinary tenant in his day, yet he fails to recognize that the very illustration he gives would result in greater oppression.
When one entrusts his money to a broker for investment he does not come in contact with those who earn the interest. It may pass through a number of agents and the source from which the interest is drawn is not regarded. When one entrusts his money to the "Security Co." in their great building, surrounded by all appearances of unlimited wealth, it is not realized that the interest returned is wrung from the poor. Money does not lie in the vaults. It is loaned to others who as agents do collect or gather from the poor. A loan is made to a milling company and the interest is gathered from all who buy their flour. A loan is made to a landlord and he collects the usury from his tenants. A loan is made to a street car company and increase is collected from the employes and from every rider. A loan is made to a merchant and he collects from his customers.
It is easy to see who pay the interest when we make a common pawnbroker our agent and see in his dingy rooms the evident distress and needs of his callers. Many shrink from his oppressions who are deceived by the splendid surroundings of the "Security Co." But the interest is exacted from the same class as truly by one as by the other.
Usury oppresses the poor by raising the price of all that he consumes. Without being consulted and without the power of resistance he must pay tribute to property for the very necessities of life.
He lives in a rented house. The owner has placed a mortgage on this house and the tenant must pay the interest and more in his rental or be ejected. The bread he must have is from wheat raised on mortgaged land and the interest must be met in the price of wheat. The mill is mortgaged in which it is ground and the interest must be paid in the increased price of flour. The railroad is bonded and the interest on the bonds must be paid in the price of its transportation, and the merchant has a loan to enable him to do business and the interest on this loan must be met in the increase of the profits on flour and all other goods he handles. By usury a tribute is levied on his bread from the wheat in the field until it reaches his tables.
In the same way he pays interest in the price of his meat, which is raised on a mortgaged farm, transported over a bonded railroad, dressed in a mortgaged abattoir and sold by a dealer doing business on borrowed capital.
The same is true of his clothes; a first tribute must be paid to property by the raw cotton or wool, then the transportation and the factory and the merchant, in addition to the compensation for their services, must meet also the interest upon their loans, and the whole is summed up in the price the poor man must pay. He has no option in the matter; he has no alternative, no method by which he can escape. The same is true with regard to his fuel and his light.
The same is true with regard to car fares. In every ride he pays an enormous tribute to invested wealth. The writer made a careful estimate of the accounts of a car line in a small city where the number of riders bore small comparison with the crowded cars of any metropolis. When the cost of maintenance of the plant, including the wear and tear and all repairs, and the cost of operation, covering all current expenses, including taxes, were compared with the receipts from the patrons of the road, it was found that less than two cents per passenger was necessary to pay these charges and that three cents had gone to pay the interest on the enormous bonded indebtedness and dividends on the inflated stock.
The wage-earner, the pensioner and every person living upon an annuity or fixed income from any source, must thus pay usury or interest on obligations they never incurred. A large portion of their living is thus taken from them, and under a system of general usury they have no way of avoiding it. They must pay an enormous tribute to property in providing the common necessaries of life.
Usury lowers the poor man's wages. The owners of property forbid its use until such a concession is made by the laborer as they may demand for the material and tools of production. Those who will use them and give the owner the highest return for their use secure the work, _i.e._, those who will bid the labor the lowest, who will use the tools and work up the material the cheapest.
The demand of capital has come to absorb a large portion of the produce of labor. In 1890 the wage-earners created a value of $3,579,168,172 and received out of it wages amounting to $1,981,228,321, leaving in the hands of the employers $1,687,939,851. Labor thus received a little less than 53 per cent. of its product. In 1900 the wage-earners created a value of $4,640,784,931 and received out of it wages amounting to $2,323,407,257, leaving in the hands of employers $2,317,377,674. The employers and employes divided labor's product so evenly that the difference does not amount to one-eighth of one per cent.
The decade 1890 to 1900 has been of unprecedented prosperity to capital, but the advantages to labor have not appeared. When the number of laborers at the beginning and the close of the decade are considered the annual income of the wage-earner at the close of the decade is actually $7 per year less than ten years ago.
The tribute to property must first be gained, the wages are secondary. If the tribute is not paid the enterprise is regarded as not successful and the industry closes.
There is no protection for the laborer except the selfishness of capitalists themselves in competition to secure the services of labor. But the selfish strife has rather resulted in the combination of their capital to dispense with labor or to cause the same labor to produce more by the employment of more capital. The effect is to give employment to capital rather than to labor. If labor can be dispensed with by borrowing more capital, then a loan is secured and the laborer is dismissed. Thus capital is made to crowd out the laborer and gains for itself his reward. This diminishes the call for labor and increases the number of the unemployed and they become competitors for the privilege of working. The opportunities for labor becoming fewer, the strife for work becomes fiercer. The laborer is helpless to resist, as his wants do not stop; his family must be fed and clothed and housed. The struggle is unequal between "flesh and blood" and a material thing that, by a false economy, is given not only the power of self-support but also continuous increase. For this reason combinations of laborers never have been and never can be successful in a conflict with capital. So long as the false principle is admitted, all efforts must fail. So long as it is granted that property has earning power, the effort will be made by the owners of property, and always successfully made, to have property receive the larger portion of the reward. The true order will be reversed; the laborer will be given a mere subsistence while the increase will be claimed for the capital; the very opposite of the true order, the mere preservation or subsistence of the capital, while all the increase belongs to the laborers.