Class. 1M. 
 
 Book 3AI 
 
 Copyright If 
 
 COPYRIGHT DEPOSIT. 
 
THE IMPENDING CRISIS 
 
 OR 
 
 PROSPERITY ANALYZED 
 
THE IMPENDING CRISIS 
 
 OR 
 
 PROSPERITY ANALYZED 
 
 BY 
 
 GEORGE WHICHELLO 
 
 NEW YORK AND WASHINGTON 
 THE NEALE PUBLISHING COMPANY 
 
 1904 
 
LIBRARY of CONGRESS 
 Two Conies Received 
 
 MAY 3 1904 
 
 CoDyrigrht Entry 
 
 huu/i 3 - "* v + 
 
 CLASS a- xXc. No. 
 8 £> o L, n 
 COPY B ' 
 
 
 COPYRIGHT, 1904 
 
 BY 
 
 THE NEALE PUBLISHING COMPANY 
 
CONTENTS 
 
 CHAPTER PAGE 
 
 Introduction 7 
 
 I. What Must Happen n 
 
 II. Employer and Employed 17 
 
 III. Who Pays the Taxes 23 
 
 IV. Governmental and Bank Currency 31 
 
 V. Panics— Their Causes and Cure 47 
 
 VI. The True Theory of Currency 59 
 
 VII. Wages and Price 73 
 
 VIII. The Theory of Interest 87 
 
 IX. The Rights of Man 9 6 
 
 X. Alien Landlordism and its Remedy 106 
 
 XI. Conclusion 120 
 

INTRODUCTION 
 
 The new century has begun and the Ameri- 
 can people find themselves first among the 
 family of nations— a land flowing with milk 
 and honey, a people born to genius and renown, 
 a system of government theoretically estab- 
 lished upon the brotherhood and equality of all 
 men. With these attributes of greatness the 
 student of history could, with no show of 
 vanity or boasting, predict a future even more 
 glorious than any period the past has ever 
 disclosed. 
 
 No period of the world's history can stand 
 comparison with the present. In material pro- 
 duction, in the arts, in science, literature and 
 invention we have outrun the most extravagant 
 predictions. With the increased inventions 
 which annihilate time and space, the world m 
 a certain sense has become smaller and smaller. 
 What was new yesterday is old today. Ideas 
 and traditions which had held for centuries 
 have been seen to vanish before the spirit o L 
 investigation and discovery. The torch of rea- 
 
5 INTRODUCTION 
 
 son has spread a light wherever it has appeared, 
 and yet it has scarcely begun to do its work. 
 In both the inorganic and organic sciences 
 wonders have been performed, and these, too, 
 in the face of ignorance and superstition. 
 
 We turn for a moment from the picture — 
 from a picture where science is steadily ad- 
 vancing to a picture where government still 
 wears the ancient garb of privilege, slightly 
 altered, to the modern style of expediency. 
 We have seen what has been done ; let us learn 
 what is yet to be done. 
 
 The political horizon looks dark and lower- 
 ing, charged with the electricity of coming 
 events. Much has been done in the halls of 
 legislation for monopoly and privilege, but 
 little for humanity. Beggars walk our streets, 
 tramps throng our highways and prisons and 
 almshouses are filled to overflowing. Already 
 there loom up in the distance the signs of 
 another social and industrial paralysis. The 
 efforts of politicians to give us a true system 
 of political philosophy have been futile, while 
 their slavish submission to organized wrong 
 is but hastening the day when the last straw 
 shall have been put upon the camel's back and 
 patience shall have ceased to endure. 
 
 The feeling of unrest which pervades all 
 classes of society is a potent suggestion that 
 something is wrong — something is lacking in 
 
INTRODUCTION 9 
 
 our national organization to make us a happy, 
 harmonious unit. Political freedom has gen- 
 erally been admitted, but those political som- 
 nambulists who think that this is the end and 
 aim of government have yet to learn that there 
 can be no permanent political rights until the 
 rights of man to his natural inheritance — the 
 earth — has been established. 
 
 If history teaches us anything, it teaches that 
 the concentration of wealth in the hands of the 
 few has invariably been the great cause of the 
 destruction of free government. We trace the 
 history of the great nations of the earth — of 
 Egypt, Babylon, Greece, Rome — their origin 
 existing only in fable and story. Communities 
 form, governments are instituted, they flourish 
 for a while, do their work, decay and die. The 
 story of one is the story of all. The thought- 
 ful man asks himself the question : Is this all 
 there is of life? Are we similarly to play our 
 part in the world's great drama? 
 
 Behold in France, a century ago, that awful 
 tragedy, the natural consequence of ignorance, 
 oppression and wrong, when the pent-up indig- 
 nation of hundreds of years broke forth and 
 spread such awful havoc as the modern world 
 had never seen. See in our own country, a 
 little more than a generation ago, the inevitable 
 result of one man attempting to own another; 
 when one million lives were sacrificed to abolish 
 
IO INTRODUCTION 
 
 that cursed institution — chattel slavery. But 
 slavery is not abolished. The form of our serf- 
 dom has merely undergone a change. Indus- 
 trial slavery is still here in all its horror, wreck- 
 ing the lives of thousands every day, enslaving 
 woman, robbing childhood of its joys, and 
 making beasts and liars of honest men. 
 
 This book is a protest against existing con- 
 ditions, and is written with the hope that it may 
 arouse the people from their lethargy and 
 awaken them to a knowledge of what awaits 
 them if something is not done soon. It will 
 offer them a prosperity which is easily within 
 their power to obtain, the author firmly believ- 
 ing that no prosperity is genuine unless it is 
 enjoyed by all. 
 
THE IMPENDING CRISIS 
 
 OR 
 
 PROSPERITY ANALYZED 
 
 CHAPTER I 
 
 i 
 
 WHAT MUST HAPPEN 
 
 A crisis is inevitable. The human mind is 
 so constituted that it remains in a state of 
 lethargy until it is nerved to action by force of 
 circumstances — by events. Men of ordinary 
 mental capacity do very little reasoning. Their 
 minds are swayed by events. It has never yet 
 been given to any man to exactly foretell the 
 future, yet we may know, if we can know any- 
 thing, that punishment is sure to follow every 
 violation of Nature's laws. 
 
 As it is with the individual, so it is with the 
 nation. We cannot on the one hand be telling 
 men that they are equal before the law, and 
 then deny them the equal opportunity to make 
 
12 THE IMPENDING CRISIS 
 
 an honest living. It would seem just if one 
 should propose that the workingman should be 
 the rich man, and yet in this great republic of 
 ours we have the sorry spectacle of the work- 
 ingman being the poor man. Surely there 
 must be something wrong. By the term 
 "workingman" is meant every one who by 
 brain or brawn gains his living by honest labor, 
 either in the producing of wealth or rendering 
 service for service. It may be contended that 
 the American workmen retain more of the 
 fruits of their labor than do those of any other 
 nation. Even if this were so, they will not be 
 content, and justice will not be done until they 
 retain all the fruits of their labor. As each 
 year passes by the worker finds that more and 
 more is being taken from him to meet the exac- 
 tions of class legislation, and that it will be but 
 a matter of a few more generations before he 
 will be in as sad a plight as the toilers of 
 Europe. He is not only burdened with the 
 support of an aristocracy at home, but he must 
 support one in Europe. It has been estimated 
 that fully two hundred millions of dollars are 
 paid each year to foreign landlords by Ameri- 
 can citizens merely for the privileges of living 
 and working in their own country, and this 
 does not include dividends and interest on 
 watered stocks held by European capitalists. 
 
WHAT MUST HAPPEN 13 
 
 But in a republic why should there be an 
 aristocracy ? This word was at one time hate- 
 ful to every American, but during the last 
 twenty-five years, by our close relations with 
 Europe and by the marriage of the daughters 
 of our millionaires to titled foreign fops, we 
 have come to regard the word with indiffer- 
 ence, even with respect. In a true republic 
 there should be no aristocracy but a working 
 aristocracy. All other aristocracies have their 
 basis in some special privilege, such as the 
 possession of the land, and the consequent 
 appropriation of ground rent. What does the 
 landlord, as landlord, do for the happiness of 
 mankind, for the furtherance of civilization? 
 Nothing whatever. He does not render serv- 
 ice for service. He creates no wealth. In 
 every instance he is an obstacle to progress and 
 to the production of wealth. He is an earthly 
 god, forming the habits and environments of 
 his fellow creatures. A system which allows 
 one man to levy tribute upon another man for 
 the privilege of living on God's earth is a sys- 
 tem born of evil. There is no good in it and 
 we can never have a science of government 
 until we get rid of this land monster. 
 
 There are those who, because they them- 
 selves are enjoying a little prosperity, imagine 
 that every one else is doing the same. They 
 seem to think that because they have a full 
 
14 THE IMPENDING CRISIS 
 
 stomach no one else ever feels the pangs of 
 hunger. They are generally of the "upper 
 ten" — the "upper crust" — and do not see the 
 writhing mass of humanity beneath, a great 
 part of whom scarcely know where the next 
 meal is coming from. There are girls and 
 young women in our large cities whose wages 
 amount to but forty or fifty cents per day. It 
 should be a cause of wonder that women can 
 maintain their honor upon such wages. Truly 
 our wage system is not very conducive or 
 encouraging to morality. If we could count 
 the thousands that are born into this world to 
 lead a life of vice and crime we would stand 
 aghast in horror. If we could feel the anguish 
 and despair which are the constant companions 
 of these poor souls, our hearts would melt with 
 pity. And yet what is pity without a remedy ? 
 Our social system is the manufactory of crime. 
 We must know that poverty is the greatest of 
 all the generators of crime. Involuntary pov- 
 erty, enforced idleness — these are the harbin- 
 gers of evil. We cannot hope to reform the 
 world by building jails, prisons and alms- 
 houses ; by establishing soup kitchens and char- 
 itable institutions. We cannot continue to run 
 the world on charity. Mankind wants no gifts. 
 It is not fair that we should insult him with an 
 offer of alms. Mankind wants justice. Man 
 wants an opportunity to employ himself freely 
 
WHAT MUST HAPPEN 15 
 
 in those bounties of nature which our Heavenly 
 Father has so abundantly bestowed upon him. 
 In our Bible we say, "The earth hath He given 
 to the children of men;" but in actual practice 
 we say, "The earth hath He given to some of 
 the children of men." There is room enough 
 for all, and there would be happiness for all 
 were it not that we, through foolish pride, 
 through lust for gain and self-aggrandizement, 
 cut each other's throats to gain a stepping-stone 
 to an ephemeral greatness. There is room 
 enough in these United States for the entire 
 population of the earth, and yet with the popu- 
 lation we have, hard times and starvation are 
 no strangers here. If the forces of nature were 
 not forestalled and monopolized by a few, if 
 the land were not held out of use by paper titles, 
 wealth would be created in abundance and there 
 would be no idle hands, no starving mouths. 
 
 The cry has been raised by some, that there 
 are too many people in the world. Just think 
 of the blasphemy of the idea that God sends 
 more mouths into the world than He can feed ! 
 The earth may be likened to a ship, upon which 
 we are all travelers and sojourners. Would 
 any sensible captain put to sea without thor- 
 oughly provisioning his vessel for the voyage? 
 This would be mere human wisdom. And yet 
 we are ever ready to accuse some one else, and 
 so, to ease our own shoulders, do not hesitate to 
 
1 6 THE IMPENDING CRISIS 
 
 accuse and blaspheme the Almighty. Can any- 
 sane man suppose that an all-wise Father has 
 placed us on this globe and set us adrift 
 through infinite space without providing for all 
 of his children ? It is not God's inhumanity to 
 man ; it is man's inhumanity to man. It is our 
 own niggardliness, not the niggardliness of 
 nature. It is our own injustice to each other, 
 and because we persist in violation of God's law 
 that these evils are upon us. A prophet of old 
 has summed up the whole matter by saying, 
 "Cease to do evil, learn to do good." 
 
 
CHAPTER II 
 
 EMPLOYER AND EMPLOYED 
 
 We hear a great deal about employer and 
 employed, of capital oppressing labor, and 
 much other vague and indefinite stuff. In the 
 actual scientific meaning and in a just and 
 equitable condition of society, we are all em- 
 ployers of each other, and land is the constant 
 and ultimate employer of us all. To say that 
 A employs B is only half the truth, because A 
 is directly or indirectly employed by B, other- 
 wise there could be no equation of exchange. 
 A merchant, for instance, in starting a store 
 employs clerks ; but is not the merchant, in the 
 broader sense of the term, an employee also? 
 Does he not perform a service for the com- 
 munity, and in so doing is he not an employee 
 of the community? To perform an exchange 
 two parties are necessary — two parties must 
 necessarily be employed; but when one is con- 
 tinually giving without receiving and the other 
 continually receiving without giving, it is self- 
 evident that this is not exchange, but simply 
 robbery. Exchange bears a natural relation- 
 
l8 THE IMPENDING CRISIS 
 
 ship to employment. It is the final act of 
 human labor to complete production, and any 
 restriction or interference with the working of 
 this vast piece of living machinery will react on 
 the market of employment so as to depress 
 wages, diminish production, make the rate of 
 interest fluctuate, and have a constant tendency 
 to produce panics and hard times. Instead of 
 obtaining the maximum of production with the 
 least expenditure of human effort, in nature's 
 way — that is, with the union of free capital and 
 free labor — we experience a condition of great 
 injustice, in which capital and labor are both 
 shorn of their productive power. 
 
 If capital is not free to be employed by labor, 
 then how can labor be free ? 
 
 Every dollar of tax which is put upon capital 
 diminishes the productive power of labor, for 
 the taxes, which are generally supposed to 
 be paid by the capitalist, are shifted to the 
 shoulders of labor and wages are made that 
 much less. 
 
 We speak of capital oppressing labor, but in 
 actual fact the statement is entirely erroneous, 
 being based upon a false conception of the ele- 
 ments that constitute political economy. Capi- 
 tal is not a primary element in production, such 
 as land or Tabor. Capital is a creation of man. 
 Now, how is it possible for the creature to 
 oppress its creator ? It is entirely unphilosoph- 
 
EMPLOYER AND EMPLOYED 1 9 
 
 ical to suppose that such could be the case. 
 When we speak of capital oppressing labor we 
 are "barking up the wrong tree" and assuming 
 the effect to be the cause. Capital under nat- 
 ural conditions is the hand-maid of labor — the 
 means to an end. 
 
 What in common acceptation is the employer 
 is, in the light of reason, the employed — for 
 capital does not employ labor, but on the con- 
 trary, it is labor which employs capital. To-day 
 capital is divorced from labor because labor 
 is divorced from the land. The difficulty lies 
 in the inability to distinguish the apparent from 
 the real. The real conflict is not between cap- 
 ital and labor, but between landlordism and 
 labor. Labor accuses capital of wrongs which 
 are the natural result of landlordism, and capi- 
 tal retaliates by accusing labor of wrongs which 
 are also the result of landlordism. We must 
 not forget the fact that labor and capital are 
 both alike oppressed by the land monopolist and 
 that the oppression itself is the natural expres- 
 sion of our vicious land policy. 
 
 That policy is private property in land. If 
 the earth, the mother of us all, can justly be 
 private property, then man must be private 
 property. But since man cannot in justice be 
 private property, then the earth cannot in jus- 
 tice be private property. 
 
20 THE IMPENDING CRISIS 
 
 Between landlord and capitalist there is a 
 vast difference. A man may be a land owner 
 and yet not possess a dollar of capital, or a man 
 may be a capitalist and yet not possess a foot of 
 land. 
 
 Every trust formed is in the last analysis 
 a species of land monopoly, and its power to 
 oppress is inherent in that fact alone, for no 
 monopoly can work any severe or lasting injury 
 which does not rest upon the private monopoly 
 of some natural opportunity. 
 
 In the strikes against the steel and coal trusts 
 the companies are not the losers, for they reim- 
 burse themselves by advancing the prices on 
 what the people must have, and the general 
 public pays the entire bill, the cost of the strike 
 included. The trust system is the natural 
 result of our system of taxing labor, and if the 
 system could be carried to its logical conclusion, 
 one man could own the whole earth and the rest 
 of the inhabitants would be his tenants. Thus 
 the question of employer and employed is re- 
 duced by the reason to its farthest possible 
 limits. Every question affecting the employ- 
 ment of labor, every question of tariff, every 
 question of finance or of public revenue in gen- 
 eral is in the last analysis a land question. 
 
 To-day, amidst all the strife and contention 
 in the industrial world, we see the hideous spec- 
 tacle on the one hand of landlords combining to 
 
EMPLOYER AND EMPLOYED 21 
 
 secure a monopoly of production and on the 
 other hand of trades unions combining to 
 secure a monopoly of employment. Neither 
 system belongs to the grand economy of 
 nature; both are subterfuges invented by man 
 to escape the wrong engendered by his deliber- 
 ate violation of the laws of the universe. With 
 freedom of opportunity for self -employment, 
 the evils associated with trusts and trades 
 unions would vanish. 
 
 Landlords and politicians are very shrewd in 
 rilling the press with all sorts of plans for recon- 
 ciling capital and labor, thus fostering the im- 
 pression that capital and labor really are in con- 
 flict. Their real purpose is to divert public 
 attention from the real cause and thus make 
 themselves secure in their present position. 
 Such men profess anxiety that capital and labor 
 shall be on more friendly terms; that strikes 
 and lockouts shall be made impossible. Take 
 the average corporation employee, who in most 
 cases is compelled to live a cramped and unde- 
 veloped life. Why is he forced to overwork 
 himself, to ruin his health and shorten his life, 
 and live in such conditions as to make his feel- 
 ings toward his employers that of hatred rather 
 than of friendship? Why do these pretended 
 peacemakers persist in all this hypocritical talk 
 when they themselves possess the power and 
 opportunity to bring about the conditions for 
 
22 THE IMPENDING CRISIS 
 
 which they profess such an ardent desire? The 
 employee cannot hold in esteem men, who in 
 their relation to him appear as one thing-, and 
 in their relation to the general public appear 
 as something entirely different. Organized 
 hypocrisy is everywhere breeding anarchy and 
 crime. The suggestions and methods of rich 
 men are wholly impotent to cure the corruption 
 of to-day. Their suggestions, summed up, 
 amount to saying: "Yes, I believe that steal- 
 ing is wrong, but please do not stop me from 
 stealing. I believe in the equality of all men, 
 but please do not make me equal with other men 
 by taking my special privileges from me." 
 
 Let us not be deceived into thinking that 
 capital oppresses labor and that labor must wait 
 for capital to employ it. Neither one has more 
 than land monopoly will give it. Remove this 
 great obstacle. Then labor and capital will 
 work in harmony and with renewed force. 
 The frequent dissensions that exist between 
 employees and their employers would cease, 
 and thus in peaceful security we would pave the 
 way for that permanent prosperity, "when they 
 shall sit every man under his vine and under 
 his fig tree and none shall make them afraid." 
 
CHAPTER III 
 
 WHO PAYS THE TAXES? 
 
 The American people must learn that the 
 price of labor is determined in the same way 
 that the price of any commodity or product of 
 labor is determined, namely, by the law of 
 supply and demand. When the supply is 
 abundant and there is no demand, then the 
 price falls. When the supply is small and the 
 demand is great, then the price is high. 
 
 Let us take the case of a clerk in any large 
 corporation, and let us, for illustration, call him 
 John. John is getting a salary of, say $50 per 
 month as bookkeeper, copyist, stenographer, or 
 for some similar work. As he grows older he 
 finds that he has new wants, new needs, and 
 has probably reached a marriageable age, and 
 has begun to think seriously upon the subject. 
 He goes to his employers and asks if he cannot 
 have an increase in his wages, saying that he 
 has been with the company a considerable 
 length of time and has done good work, and 
 winds up by saying that he is deserving of more 
 pay. His employers listen to him respectfully, 
 
24 THE IMPENDING CRISIS 
 
 but at the same time fully realize the disad- 
 vantage of John's position in the matter and 
 the advantage of their own position. They 
 may be men who, under certain circumstances 
 and conditions, would be actuated by the 
 noblest instincts. But what are these 
 when we are dealing with dollars and cents. 
 They may be charitable enough even to grant 
 the request of John and add a few dollars to 
 his pay. But they need not do this if they do 
 not choose to do so. They can plainly tell John 
 that they can get plenty of young men who 
 zvould be glad to do this vuork for $30 or even 
 less per month, and that if he is not satisfied 
 with his position he can step down and out. 
 John sees that further argument is wholly 
 unnecessary and walks away thoroughly dis- 
 couraged. Now, then, is it not clear to you 
 that you cannot hope to demand better wages 
 so long as there is another man waiting to take 
 your place at the same or even less wages than 
 you yourself now receive ? The principle to be 
 deduced from this is that it is the idle man who 
 determines the wages of the man that works. 
 Let us get that idle man employed, and then we 
 will be in a position to demand a just wage. 
 The idle man is the dangerous man to society. 
 But why are there idle men? Why should 
 there be any involuntary idleness ? The answer 
 to the above questions is found in our vicious 
 
WHO PAYS THE TAXES? 25 
 
 system of taxation, for by that system we make 
 employment scarce, and with the constant in- 
 crease of population men are forced to compete 
 with each other at starvation wages. 
 
 Let us take another illustration and show 
 how our present system of taxation works, and 
 how it is responsible for the condition that con- 
 fronted John. We have large manufacturers 
 in this country who say that they are heavy tax- 
 payers. The fact is that they are not at all. 
 They do not pay the tax ; they simply advance 
 it, and the tax which they have paid is added 
 to the cost of producing the article. The next 
 man who handles it adds his profit to the selling 
 price, and so on, each man adding his profit 
 until it reaches the consumer, who foots the bill. 
 
 Thus far we see that it is the consumer who 
 pays all the tax and not the manufacturer. But 
 let us carry the analysis still farther, and we 
 shall see that by the same operation the poor 
 man must not only pay the tax, but that his 
 wages, with which he must pay it, are made 
 smaller. When we tax an article we naturally 
 make it dearer; when we make it dearer the 
 demand for it slackens; when the demand 
 slackens the production slackens, and when 
 production slackens, those who were employed 
 in its production are thrown out of work. 
 
 It is frequently asserted that only those are 
 taxpayers who own real estate and pay a tax to 
 
26 THE IMPENDING CRISIS 
 
 the assessor. In actual fact every one who 
 buys anything is a taxpayer and an employer 
 of labor. When a person makes a purchase he 
 must be taxed if any portion of the product or 
 any agency in its production has been taxed. 
 This ought to be clear, even to the most untu- 
 tored. But there is a class of high-flown 
 economists who will not listen to a simple 
 explanation, but would rather insist upon the 
 dogmas and superstitions of an antiquated sys- 
 tem of political economy and who would have 
 us believe that the way to raise wages is to 
 impose a protective tariff upon the people. 
 This is not an age of miracles, but an age when 
 men are supposed to use their common sense 
 and their reason. We are taught that when 
 we levy a tax upon imported goods the for- 
 eigner pays the tax, when it is very plain that 
 he does not pay the tax, but that we ourselves 
 pay it. 
 
 A tax upon imports is virtually a tax upon 
 exports. We will take the case of a farmer 
 who is shipping his wheat to some European 
 port, Liverpool, for instance. We speak of 
 selling our goods when we really mean ex- 
 changing our goods. Very little money, com- 
 paratively, changes hands. It is an exchange 
 of commodities. The wheat arrives in Liver- 
 pool and is exchanged as soon as possible for 
 other goods of Europe. There has been no tax 
 
WHO PAYS THE TAXES? 27 
 
 upon the goods leaving America, but the 
 moment their equivalent arrives at the Custom 
 House in New York the farmer discovers that 
 twenty-five per cent of his goods is confiscated. 
 Imagine a robber who meets you on the street 
 and demands one-fourth of your daily wages 
 and the civil law should justify both his 
 demand and the execution of it. Would not 
 that be parallel to the present tariff system 
 which robs a man under the plea of protecting 
 him? Again, it is claimed that high tariff 
 means high wages, and low tariff means low 
 wages. I suppose that if they carried their 
 theory to its conclusion no tariff would mean 
 no wages at all. 
 
 Let us see if the notion of the high tariff 
 advocates holds good. Steel can be imported 
 from England for twenty dollars per ton, but 
 the law levies a tax upon it of eight dollars per 
 ton. This shuts out English steel and enables 
 the manufacturers in this country to charge 
 eight dollars more for their goods. Of course 
 our steel manufacturers are all in the business 
 for their health, and are men of such a chari- 
 table nature that they immediately convert this 
 extra eight dollars, which the law gives them, 
 into wages for their workmen. To call a fool 
 a Solomon would be irony, but to say that the 
 Steel Trust converts this eight dollars per ton 
 into wages for their employees is as black a 
 
28 THE IMPENDING CRISIS 
 
 lie as was ever propagated by any political 
 party. When the workman goes to demand 
 his share of the increase in the tariff he is told 
 by his employer that there are plenty of men 
 waiting to take his place, and if he doesn't like 
 his present wages he can step down and out. 
 The thought of a wife and little ones at home 
 causes the laborer to reflect. 
 
 Who pockets the eight dollars? Who is 
 protected ? 
 
 "Protection !" A tariff is an impediment, 
 a hindrance to exchange. That which hinders 
 exchange prevents the production of wealth; 
 that which prevents the production of wealth 
 diminishes the chances for employment and in 
 consequence depresses wages. When wages 
 are depressed the buying capacity of the people 
 is diminished, and the final outcome is "busi- 
 ness stagnation." If a tariff is a good thing, 
 then the higher the tariff the better it will be 
 for us, and its ultimate good would not be 
 realized until everything that is exchanged 
 between nations bore a tax to the highest possi- 
 ble limit. If a tariff is a good thing, then we 
 should have a tax upon everything that is taken 
 from one State of the Union into another State. 
 If, on the other hand, a tariff is a bad thing, 
 then the less we have of it the better it will be 
 for us. There is no half-way ground to take, 
 foi it must be either right or wrong. If the 
 
WHO PAYS THE TAXES? 29 
 
 hypothesis of protection as a political doctrine 
 be true, then it should be true in its entirety; 
 and if exceptions be found which show a falsity 
 in particular, then it is false in the whole. 
 
 The balance of trade is nominally always 
 against Europe, but actually against the United 
 States ; for if the United States sends two hun- 
 dred million dollars' worth of merchandise to 
 Europe, and Europe sends a hundred million 
 dollars' worth of merchandise to the United 
 States, then Europe is indebted to the United 
 States to the extent of one hundred million 
 dollars. Now, since the United States is not 
 in the habit of giving things away there are 
 only two conditions that could possibly hold — 
 either Europe sends us one hundred million 
 dollars in specie or else that amount is already 
 due her as dividend and interest on investments 
 in this country. As Europe does not send 
 money to us, but on the contrary it is we who 
 are always sending money to Europe, the sec- 
 ond condition is the only one that can be true. 
 It is astonishing that the average American 
 will boast of such a condition. There can be 
 no reason for such boasting except ignorance. 
 After a careful survey of the tariff question 
 how pre-eminently absurd does the balance of 
 trade fallacy appear. 
 
 The government bond system inaugurated 
 during the Civil War is one of the methods by 
 which millionaires and paupers are made, and 
 
30 THE IMPENDING CRISIS 
 
 a protective tariff is another. Government 
 bonds, bank currency, protective tariffs, special 
 privileges — these are kingly institutions and 
 are incompatible and destructive to a republi- 
 can form of government. Kings have never 
 lacked arguments to defend the existing order 
 of things, and politicians of to-day are of the 
 same breed and stamp. 
 
 Must we close our eyes to the downward 
 tendency which has already begun and which 
 will continue with an accelerated momentum 
 each year? I anticipate that I will be called 
 "pessimist" by those who are ever ready to 
 label others with the badge of their own con- 
 ceit. Is it pessimism for a physician to affirm 
 the presence of disease in the human organism, 
 and would it be pessimism for a sociologist to 
 affirm the existence of disease in the social 
 organism — society? Is it pessimism honestly 
 to admit the existence of evil and to take steps 
 towards its abolition? 
 
 The evils under which we suffer are entirely 
 of our own making, and will never be removed 
 so long as by our social system we reward 
 falsehood and put a penalty upon truth. Free- 
 dom — social, political and industrial — this 
 must be the basis for the new political economy. 
 Without it no democratic theory of govern- 
 ment can be constructed, and with it the civili- 
 zation that is will appear as the Dark Ages to 
 the civilization that shall be. 
 
CHAPTER IV 
 
 GOVERNMENTAL AND BANK CURRENCY 
 
 Various substances have served man as a 
 medium of exchange in his slow and painful 
 progress in civilization. Iron, bronze, leather, 
 wampum, copper, gold, silver and various 
 other things have at different times and among 
 different tribes and nations served as money. 
 Each may be said to represent a type of civili- 
 zation, commercially at least ; and as commerce 
 has advanced and improved, so the various 
 monetary systems have improved. 
 
 The utility of money has increased as the 
 means of production have improved. Money, 
 therefore, has been a very important factor in 
 the civilization of man. The idea of money is 
 associated exclusively with our material wants. 
 It has nothing to do with whatever may be our 
 ideas of religion or our systems of ethics, and 
 yet that monetary system is best which com- 
 mends itself the strongest to our sense of equity 
 and fairness. It is commonly understood that 
 in our present financial system we have two 
 kinds of money — specie, or metallic money, and 
 
32 THE IMPENDING CRISIS 
 
 paper money. The fact is, we have but one 
 kind of money, namely, "metal." Paper — or 
 token — money is not real money under our 
 present monetary system. It is an order for, 
 or a promise to pay, money. It is not here 
 contended that the greenback system of cur- 
 rency was an unsound medium of exchange — 
 indeed, it is the view of the writer that it was 
 the best we have ever had — but it is the pur- 
 pose here merely to show that metallic money 
 is the only money recognized in the financial 
 system, and that what is commonly termed 
 paper money is not money in the true sense at 
 all. By recent legislation gold has been made 
 our standard of monetary values. 
 
 If any ordinary person, unacquainted with 
 our financial history, were to attempt to un- 
 ravel the mysteries of the United States note, 
 coin note, the silver certificate, greenback, gold 
 certificate, etc., he would find that in many 
 cases their monetary value had been determined 
 by the arbitrary ruling of some Secretary of 
 the Treasury. Our note system is anything 
 but scientific; in fact, it is a depreciated cur- 
 rency from the very start. The United States 
 note has this exception clause on the back 
 which limits its utility and vitiates its true 
 character as money : "This note is a legal ten- 
 der at its face value for all debts public and 
 
GOVERNMENTAL AND BANK CURRENCY 33 
 
 private, except duties on imports and interest 
 on the public debt." 
 
 But how came this mischievous clause upon 
 the people's money? When the Government 
 borrowed funds to carry on the Civil War it 
 was induced by the lenders — or bondholders, 
 through their agents — to put the above quoted 
 clause upon each note in order to insure the 
 redemption of the bonds and the payment of 
 the interest thereon in gold. The mere pledge 
 of the good faith of the Government which the 
 people at large took was not deemed sufficient 
 by the bankers and the privileged classes who 
 purchased the bonds. They must have some 
 special security, some special favor, or the 
 American republic could go to pieces. Through 
 the operation of this "gold clause," as it is com- 
 monly termed, the available gold of the country 
 soon passed into the possession of the bankers. 
 This gave to the bankers a monopoly in the 
 handling of gold and gave to gold a preference 
 over all other forms of currency. This in turn 
 created an artificial demand for gold, placed 
 it at a constant premium, led to the demonetiza- 
 tion of silver in 1873, and was the entering 
 wedge in making gold the standard of values. 
 
 Now imagine, in the first place, the absurdity 
 of a government, possessing the unquestioned 
 power to tax the very shirt off a man's back, 
 being forced to borrow from private individ- 
 
34 THE IMPENDING CRISIS 
 
 uals. Why could it not first have raised as 
 much as was possible by a graduated tax upon 
 land values, and then, if that were found in- 
 sufficient, have resorted to other forms of tax- 
 ation ? By this method we would have avoided 
 the enormous national debt under which we 
 now groan, and the national bank system of 
 currency would never have been inaugurated. 
 In the second place our national-bank cur- 
 rency system is based, not upon credits, but 
 upon debits. It is upside down, wrong in its 
 major premise. The National Bank Act of 
 June 3, 1864, under which these banks now 
 operate, provides that a national bank may by 
 depositing United States bonds with the Treas- 
 urer of the United States receive ninety per 
 cent of their par value in notes from him, 
 which notes, when signed by its president and 
 cashier, pass as money as though issued directly 
 by the United States Treasury itself. The 
 bank lends these notes in the course of its busi- 
 ness at six per cent or more per annum, accord- 
 ing to the prevailing rate of interest in the 
 locality, and all the while also receives interest 
 on the bonds which it has deposited with the 
 United States Treasurer. It therefore receives 
 double interest. But this is not all. A bank 
 note is a promise to pay. It reads as follows : 
 •'The Blank National Bank of Blank will pay 
 to the bearer on demand blank dollars." 
 
GOVERNMENTAL AND BANK CURRENCY 35 
 
 Now, when a man in business makes a sim- 
 ilar promise to pay — gives a promissory note — 
 he pays interest, but a national bank makes a 
 promise to pay and it receives interest. Clearly, 
 then, a banker receives interest on his debts — 
 on what he ozves. 
 
 But let us carry the analysis a little farther. 
 He who gets for nothing something produced 
 by labor of another, must necessarily get it at 
 the expense of the producer, and to the extent 
 that the people of these United States must, 
 under this system, give something for nothing, 
 to that extent they are robbed. The bankers 
 may contend that they pay a tax on their circu- 
 lation. The fact is they do pay a small tax, a 
 very small one. But that is not the point 
 involved. The point is that the system would 
 not be right even if they paid ever so large a 
 tax. To pay a price for the privilege of doing 
 wrong is not justifiable, no matter the amount 
 of the price paid. A financial system that is 
 susceptible, yea, even invites the trickery and 
 manipulation of the so-called financiers, can 
 never be correct. 
 
 Our National Treasury has already been con- 
 verted into a mere bankers' agency. What the 
 bankers want for their own interest they get, 
 and the people have little or nothing to say 
 about it. The currency bill of the Fifty-sixth 
 Congress provides that any bank upon deposit 
 
36 THE IMPENDING CRISIS 
 
 of government bonds with the United States 
 Treasurer may issue notes to the extent of one 
 hundred per cent of the par value of the bonds. 
 This extra ten per cent over the ninety per cent 
 provided in the National Bank Act is one of 
 the great points for which the bankers of the 
 country have been working for twenty-five 
 years, and it has at last been gained. 
 
 If our present currency system is a fair and 
 just one, then why do the bankers make it a 
 point to get hold of all the gold, coin and legal 
 tender notes that they possibly can, in prefer- 
 ence to the United States silver certificates. If 
 the system is correct and one note is as good as 
 another, then why should there be that element 
 of fear or even of discrimination ? 
 
 What is it that gives the bank note its value ? 
 Why does it pass at par in every State in the 
 Union? Is it the stability of the bank which 
 issues the note that gives it its currency value ? 
 If that were so, why should it be necessary to 
 deposit government bonds for its security ? It 
 is the pledge, the bond, of the United States 
 Government behind it which makes it secure. 
 Now, if the United States Government must 
 issue a bond in order to make the note of some 
 banker good, why can it not issue the note itself 
 and save the expense of issuing interest-bearing 
 bonds? This would save the people millions 
 of dollars in interest every year which now go 
 
GOVERNMENTAL AND BANK CURRENCY 37 
 
 almost entirely into the coffers of a few rich 
 people. What moral right has one generation 
 to burden another with debts for its own sup- 
 posed benefit ? We should pay as we go along, 
 as any ordinary business man would do, and 
 not allow our debts to accumulate, and thus 
 mortgage posterity. 
 
 It will be readily seen that the ultimate object 
 of the bankers is to get complete control of our 
 financial system by substituting bills of their 
 own issue in place of a direct government issue, 
 and to use the National Treasury as a machine 
 to grind out notes and interest, the payment of 
 which must be guaranteed by the very people 
 whom they continually rob. 
 
 The intent and purpose of the bankers to 
 establish a system of currency based upon com- 
 mercial securities, by means of the Fowler and 
 Aldrich bills, or some other iniquitous measure, 
 is clearly evidenced by the following : 
 
 A circular sent to the bankers of the country 
 by the executive committee of the Indianapolis 
 Monetary Convention, January 30, 1901, 
 reveals a conspiracy which, if carried into 
 effect, would involve this nation in financial 
 ruin. The title of it is "Our Paper Currency — 
 the Need for Making It Responsive to the 
 Varying Needs of Business at All Seasons and 
 in All Sections." The writers of the circular 
 are very "cute" in endeavoring to get on the 
 
38 
 
 THE IMPENDING CRISIS 
 
 side of authoritative ignorance and hoodwink 
 the people by talking about "overproduction" 
 and an "eminent economist." 
 
 The following table will be of interest 
 as showing "how rapidly money has been 
 absorbed into national bank reserves in spite of 
 the large amount outstanding during the last 
 few years." By the term reserves is meant 
 large correspondent banks located in the 
 exchange centers — New York, Philadelphia, 
 Boston, San Francisco, etc. These banks are, 
 with the approval of the Comptroller of the 
 Currency, designated as depositaries or reserve 
 agencies of smaller banks throughout the 
 country : 
 
 June 30 
 
 Money in 
 Circulation 
 
 Money in 
 
 National 
 
 Banks 
 
 Net Money 
 Outside Banks 
 
 1879 
 
 $ 818,631,793 
 
 $134,552,439 
 
 $ 684,079,354 
 
 1884 
 
 1,243,925,696 
 
 196,448,894 
 
 1,047,437,075 
 
 1889 
 
 1,380,361,649 
 
 288,250,701 
 
 1,092,110,948 
 
 1891 
 
 1,497,440,707 
 
 310,014,348 
 
 1,187,426,359 
 
 1892 
 
 1,601,347,187 
 
 366,350,496 
 
 i,234,99 6 » 6 9i 
 
 1893 
 
 1,596,701,245 
 
 289,254,850 
 
 1,307,446,395 
 
 1894 
 
 1,660,808,708 
 
 438,93i,97o 
 
 1,221,866,738 
 
 1895 
 
 1,601,968,473 
 
 382,942,306 
 
 1,219,026,107 
 
 1896 
 
 1,506,343,066 
 
 344,213,739 
 
 1,162,220,227 
 
 1897 
 
 1,640,209,519 
 
 413,518,621 
 
 1,226,680,898 
 
 1898 
 
 1,837,859,895 
 
 470,977,127 
 
 1,366,852,768 
 
 1899 
 
 1,932,484,239 
 
 492,857,679 
 
 1,439,626,560 
 
 1900 
 
 2,062,425,496 
 
 504,194,652 
 
 1,558,228,844 
 
GOVERNMENTAL AND BANK CURRENCY 39 
 
 It will be clearly seen in the above table that 
 the increase in the volume of money outside of 
 national banks is not in proportion to the 
 increase in volume of money inside national 
 banks. In 1879 the total of money in national 
 banks was about one-sixth of the total volume 
 of currency, while in 1900 the total was nearly 
 one- fourth. On the other hand, the total vol- 
 ume of money outside of banks in 1879 was 
 nearly seven-eighths of the entire volume, but 
 in 1900 it was but little above three-fourths. 
 During these years the total of money in the 
 national banks has proportionately increased 
 one-twelfth, while the total of money in the 
 hands of the people has decreased proportion- 
 ately one-eighth. To state the case another 
 way, it is that in 1879 the volume of currency 
 outside of national bank reserves was more 
 than five times the total of the currency in 
 national bank reserves, while in 1900 the total 
 was only a little more than eight times as large. 
 Further than this, since population has in- 
 creased twenty-five million since 1879, the vol- 
 ume of currency outside of banks is relatively 
 much smaller than would at first be supposed. 
 
 The circular above mentioned boasts of the 
 bank notes being the "poor man's money." 
 What we have said will show very clearly 
 in what way it is the "poor man's money. 
 President McKinley is quoted as saying that 
 
40 THE IMPENDING CRISIS 
 
 ''the party in power is committed to such legis- 
 lation as will better make the currency respond 
 to the varying needs of business at all seasons 
 and in all sections." The circular continues: 
 "It remains to be considered how these desir- 
 able results shall be brought about. It may be 
 advisable that the first steps taken should be of 
 a moderate character in order that any defects 
 in the new legislation may be cured and that 
 any question as to its safety and efficiency in 
 the minds of the people may be settled before 
 it is adopted on a large scale." This modera- 
 tion is suggested at the starting point so as to 
 ward off opposition. 
 
 The circular states that "the fundamental 
 benefit of a sound, sufficient and flexible bank 
 note currency is its benefit to the borrower." 
 Now, right here it should be stated that a 
 "sound and sufficient" system of currency can- 
 not, in the very nature of things, favor one 
 class at the expense of another — the lender 
 rather than the borrower, or vice versa. Our 
 currency system, as well as every other national 
 institution, should reflect the purpose expressed 
 in our national constitution, "To establish jus- 
 tice" and give special privileges to none. 
 
 The plan proposed by the national banks 
 "provides for gradually meeting the need for 
 new currency by authorizing these banks to 
 issue notes, to be known as guaranteed bank 
 
GOVERNMENTAL AND BANK CURRENCY 4 1 
 
 notes, without depositing United States bonds 
 as security. The new circulation cannot be 
 issued at first, however, beyond the amount of 
 one-fifth .of the circulation secured by bonds, 
 nor beyond ten per cent of the capital of the 
 bank. This will prevent any tendency to 
 unload bonds upon the market and to depress 
 their price. It will indeed tend to increase the 
 value of the present form of bond-secured cur- 
 rency by making it a necessary prerequisite for 
 obtaining the new currency. If all the banks 
 in the United States having circulation secured 
 by bonds on November 30, 1900, should take 
 advantage of such a provision, they would be 
 able to issue about sixty-two million dollars in 
 additional circulating notes." This means that 
 the people would deliver to the banks sixty-two 
 million dollars in cash for nothing, and the 
 banks would lend it back to them at interest. 
 
 "It is proposed that this system may be 
 gradually expanded at intervals of three years, 
 until at the end of six years the new class of 
 circulation not secured by bonds may equal 
 four-fifths of the amount of bonds pledged to 
 secure the existing form of circulation, but 
 shall not exceed forty per cent of banking 
 capital. Thus opportunity will be afforded 
 during the first three years to test the principle 
 of the new circulation upon a limited scale ; but 
 it may be expanded at the end of that time to 
 
42 THE IMPENDING CRISIS 
 
 double the amount first allowed, and within 
 three years to four times the amount. This 
 increase is to remain, however, under the com- 
 plete control of the Secretary of the Treasury 
 and the Comptroller of the Currency." And 
 who will control the Secretary of the Treasury 
 and the Comptroller of the Currency? Mani- 
 festly, the bankers. 
 
 "They are not required to issue the guaran- 
 teed bank notes to any bank whose solvency 
 and the soundness of whose judgment they dis- 
 trust. The direct consent of the Secretary of 
 the Treasury is required to broaden the system 
 at the end of three years, and this consent may 
 be refused if he is not satisfied with the work- 
 ings of the system. " Fancy subjecting the 
 workings of a currency system to the will of 
 men owing their positions to the influence of 
 the bankers. 
 
 A recent writer on finance states the follow- 
 ing : "There is now but little currency in the 
 hands of the common people on which gold 
 can be drawn from the banks — what we have 
 is mostly bank notes and silver certificates. If 
 coin, to say nothing of gold alone, were 
 demanded for ordinary trade, it would at once 
 cause suspension of specie payments by the 
 banks ; that is, they would fail. The report of 
 the Comptroller of the Currency for September 
 5, 1900,* shows that 3,871 banks had an 
 
 ♦Note — Figures of 1900 inserted. 
 
GOVERNMENTAL AND BANK CURRENCY 43 
 
 authorized capital stock of $630,299,000, and 
 that on the same date these banks reported their 
 resources at $5,048,138,000, of which their 
 loans and discounts were $2,686,759,000, and 
 money of all kinds in bank, $491,379,000, mak- 
 ing a line of loans and discounts nearly six 
 times their cash on hand. Their deposits were 
 $2,508,248,000, being- over $51,000,000 more 
 than five times their cash on hand. Their 
 surplus and net undivided profits were 
 $389,468,000, being about four-fifths of all 
 their cash on hand. Had they distributed to 
 stockholders their surplus and profits they 
 would have had $102,000,000 with which to 
 pay $2,508,000,000 of deposits more than 
 twenty-five times their remaining cash." In 
 other words they would have been able to pay 
 one dollar in every twenty-five of their indebt- 
 edness. They have been distributing profits 
 for a generation, and they now warn us against 
 talking about their profits for fear we will 
 break that ' confidence' ' which is necessary to 
 sustain business. 
 
 "Our banking system has this inherent 
 defect, viz : If all creditors of these institutions 
 were to demand payment at once they must 
 necessarily fail. They are doing business on 
 one part money and four parts confidence, and 
 confidence games are becoming unpopular. 
 The remedy proposed by the money changers 
 
44 THE IMPENDING CRISIS 
 
 is to increase the bonded debt and give the 
 banks exclusive power to issue paper money, 
 backed by the Government." 
 
 The whole matter resolves itself into the 
 question, Can we afford to repress all discus- 
 sion of financial questions and imagine that 
 "confidence" is all that is necessary to sustain 
 business? A huge "confidence game" is an 
 excellent enterprise for a few if the many are 
 willing to be "taken in." 
 
 It may be answered that the banks are sub- 
 ject to examination by the Comptroller of the 
 Currency, and that this compensates for their 
 privilege, and further that the banks pay a tax 
 upon the currency which they have issued. 
 
 In the first place, no one who is sufficiently 
 acquainted with the workings of national banks 
 will suppose that a bank examiner can distin- 
 guish between the good loans and the bad loans 
 which a bank carries in its resources. How 
 can he possibly pass accurate judgment on the 
 names of men whose business and responsi- 
 bility he knows nothing at all about ? In how 
 many cases does the general public suppose that 
 he counts all the cash in a bank ? At best, out- 
 side of actual cash, he can only deal with 
 figures, but as to the nature and genuineness 
 of that which makes the figures he is almost 
 entirely ignorant. He may perform his part 
 well, and yet the process as a whole will 
 
GOVERNMENTAL AND BANK CURRENCY 45 
 
 amount to little more than a mere farce in 
 showing the true condition of a bank. 
 
 In the second place, upon what idea of jus- 
 tice is it that the Government levies a tax upon 
 national bank currency and that the internal 
 revenue law levied a tax upon the capital of 
 every banking institution? Is it not the most 
 absurd idea imaginable for a government to 
 tax its own money and to put a penalty upon 
 the employment of capital? To tax capital is 
 virtually to tax labor, because capital is wealth, 
 and wealth is a product of labor. Therefore, 
 when we tax the product we tax the producer 
 of the product, and wages are diminished pro- 
 portionately. 
 
 The foregoing analysis will explain how the 
 bankers of the nation have been encroaching 
 for thirty years, little by little, upon the rights 
 of the people, and how a few are made rich at 
 the expense of the many. They begin their 
 villainy in a quiet, unsuspecting way. When 
 they have a bill to lobby through they say it 
 is for the "business interests" of the country. 
 Of course it would not do to say that by the 
 term "business interests" they mean their own 
 interest. They are now getting so bold with 
 their currency bills and subsidy bills that they 
 do not hesitate to assault the goddess of the 
 republic in broad daylight. 
 
46 THE IMPENDING CRISIS 
 
 The business of a bank should be confined to 
 receiving money on deposit and to loaning and 
 discounting, and should have no connection 
 whatever with the issuing of currency. While 
 we are making our crusade against evil, why 
 not use our common sense and stop this legal- 
 ized robbery? A banker who by legal pro- 
 cesses steals from another man, whether that 
 man may know it or not, is just as much a thief 
 as a burglar who breaks into your house and 
 takes your property. We send the poor beggar 
 to jail whose hunger and necessities may force 
 him to take what does not belong to him, but 
 pay honor and respect to the man who, caring 
 nothing for the rights of others, seeks to sub- 
 vert their interests to his private ends. 
 
 It is high time we were doing something in 
 this matter. Labor will not stand forever to 
 be insulted and robbed. Mankind will endure 
 great hardships and submit to much injustice 
 before his patience is exhausted, but when that 
 point is reached a change must come. 
 
CHAPTER V 
 
 PANICS — THEIR CAUSES AND CURE 
 
 Having considered the question of finance, 
 we will now proceed to an examination of the 
 question of panics. 
 
 Panics seem to come and go with the regu- 
 larity of clock-work. They are as much nat- 
 ural phenomena and are subject as much to the 
 laws of cause and effect as contraction, expan- 
 sion, combustion or radiation. An effect re- 
 quires a cause and a cause presupposes an 
 effect, for until it produces an effect it cannot 
 exist as a cause. Panics are effects; they are 
 the natural expression of accumulated wrong. 
 Now, if an effect is evil and unjust, then the 
 cause itself, whatever it may be, must be evil 
 and unjust. Right begets right and wrong 
 begets wrong; and if we depart from this 
 axiom our examination will avail us nothing. 
 A scientific mind cannot believe that there is 
 any part or department of nature outside the 
 domain of law, and it is upon this basis that all 
 analysis rests, and after we have found the 
 principle or basis for our particular subject, 
 
48 THE IMPENDING CRISIS 
 
 then the constructive or synthetic work begins. 
 Nature knows no exceptions. 
 
 Panics, then, are due to human ignorance 
 of and to the perversion of natural law. They 
 are caused primarily by the appropriation of 
 ground rent by the landlord, and the conse- 
 quent speculation in land values; secondly, by 
 the fact that public functions (including the 
 issuing of currency, means of transportation, 
 communication, etc.) are owned and operated 
 by private individuals, resulting in speculation 
 in stocks and bonds. Other attendant causes, 
 such as tariff privileges, etc., contribute greatly 
 to the production of these much-dreaded de- 
 pressions ; yet the two great causes enumerated 
 above may be said to cover or contain in gen- 
 eral terms all that can produce a panic. 
 
 First, with regard to the appropriation of 
 ground rent. Ground rent is that value which 
 attaches to land by reason of population. In 
 New York, for instance, the value of land is 
 very great because of the tremendous pressure 
 of population around a given piece of territory. 
 If half of the population of New York city 
 were removed to Troy, Albany or some other 
 city, the land values of the place to which it 
 moved would go up by leaps and bounds, while 
 the land values of New York city would fall 
 to a third or a fourth of what they were before 
 the removal. Again, let us take the case of 
 
PANICS — THEIR CAUSE AND CURE 49 
 
 Washington and let us suppose the seat of 
 government to be transferred to St. Louis or 
 Chicago. What would happen in Chicago or 
 St. Louis, and what would happen in Wash- 
 ington? Simply that the land values in St. 
 Louis or Chicago, particularly in and around 
 the business portions, would be greatly in- 
 creased, while the value of land in Washington 
 would sink to a mere fraction of its former 
 value. The removal of the Capital would mean 
 that thirty odd thousand people would be 
 thrown out of employment, or else, retaining 
 their employment and removing with the 
 seat of government, the population would be 
 diminished by thirty odd thousand employees 
 and their families. The National Government 
 also puts in circulation in Washington every 
 month about $2,000,000 cash, which is no 
 small contribution toward the maintenance of 
 business in the nation's Capital. But with the 
 removal of the seat of government both the 
 people and the money would disappear, the 
 demand for land would diminish and in con- 
 sequence its value would fall. 
 
 Now if the value of land is great where the 
 number of people upon it is great, and small 
 where the number of people upon it is small, 
 then it is self-evident that population is the 
 cause of the value in land for business and 
 resident purposes. Ground rent, therefore, is 
 
50 THE IMPENDING CRISIS 
 
 the creation, not of a person, but of the com- 
 munity. It is a community value. Now if by 
 the natural law of property a thing or value 
 belongs to him who created it, then rent should 
 be taken by the community as its own legiti- 
 mate creation. If allowed to be appropriated 
 by private individuals, injustice is done at the 
 very beginning. 
 
 There are but two ways in which public 
 revenue can be raised — either by a tax on land 
 or by a tax on labor. If the community creates 
 the value of land, thereby making a tax on land 
 possible, and does not take this value, there is 
 only one way left by which revenue can be 
 raised to support government, and that is by 
 a tax upon labor. Labor is taxed whenever 
 the products of labor are taxed. If we tax 
 labor we hinder the production of wealth to 
 that extent, and in putting a penalty upon the 
 production of wealth, the chances for employ- 
 ment are diminished proportionately; produc- 
 tion is diminished, labor is held in idleness, 
 wages decline. Ground rent, on the contrary, 
 increases each year, and must be paid out of a 
 relatively decreased production. It is this 
 enormous drain of rent every year, this con- 
 tinually giving of something for nothing which 
 is the principal cause why the business world 
 about every ten years must put on a cloak of 
 mourning. 
 
PANICS — THEIR CAUSE AND CURE 5 1 
 
 Again, in land speculation. Men speculate 
 in land, hoping to get rich without working. 
 The speculator knows very well that if people 
 occupy the land and make improvements, it will 
 increase in value, though he himself may be at 
 the other end of the earth. Very little of the 
 land is sold for cash. On the contrary, it is 
 generally deeded to the buyer on condition of 
 a mortgage. Boom after boom in real estate 
 is started. Men are led on and on by the 
 demon of speculation, fictitious values are 
 traded in as though they were real values. 
 The bubble grows larger and larger. Presently 
 the day of settlement arrives and men are un- 
 able to pay off their mortgages. Foreclosures 
 result; the creditor class pounces upon the 
 debtor class; banks call in their loans; money 
 is withdrawn from circulation; banks have 
 runs made on them and topple over. The 
 bubble bursts ; values vanish into the air. Men 
 who fancied that they would soon be rich, find 
 themselves poor. Rent falls and business for 
 a while is at a standstill. 
 
 Take, for illustration, the case of almost any 
 land syndicate that is formed. It buys up 
 large tracts of land, particularly in the suburbs 
 of large cities or where there is likely to be a 
 demand in the near future. The land is sub- 
 divided, marked off into building lots, and held 
 at prices which such lots are expected to be 
 
52 THE IMPENDING CRISIS 
 
 worth five, ten, fifteen or more years hence. 
 The tax upon the unimproved land is so slight 
 that the speculators can well afford to hold it, 
 anticipating reimbursement and large profits 
 out of the price which they hope to receive 
 from the next buyer. But it must be remem- 
 bered that they (the speculators) do not add 
 one dollar's worth of value to the land them- 
 selves. Every one who buys the land and lives 
 on it adds a value to it, making it easier for 
 the speculator to charge a higher selling price 
 and at the same time making it harder for the 
 next comer to secure a home for himself. The 
 land increases in value, not because it is owned 
 by a speculator, but because the increase of 
 population is continually making it more valu- 
 able. The value which many people create one 
 man puts into his pocket. Then, too, the antic- 
 ipated or speculative value must be paid for 
 long before the real value is created, and since 
 there is no other fund but legitimate business 
 out of which this false value can be paid, then 
 the legitimate business world is made to suffer 
 just that much. The business world not only 
 supports itself, but is made to support the spec- 
 ulative as well. It is this continually trying 
 on our part to make one equal to two that 
 deranges legitimate business and makes the 
 good suffer with the bad. The increasing de- 
 mand for more trust companies indicates very 
 
PANICS — THEIR CAUSE AND CURE 53 
 
 clearly how the rent fund is increasing and how 
 incomes are made upon the basis of values 
 which do not yet exist, thereby diminishing the 
 fund of wages. 
 
 It is idle to say that rent has not increased in 
 the last five years. The apartment house fully 
 testifies to the fact of increase. Building lots 
 of twenty-foot front which up to five years ago 
 produced from twenty-five to fifty dollars per 
 month are now, with the two and three-story 
 flat buildings producing double and treble those 
 amounts. And this does not mean that rent in 
 other localities has gone down, but on the con- 
 trary it has increased too by land being made 
 artificially scarce. The large apartment house — 
 the modern pyramid of slavery — with its pre- 
 tended show of economy, is indubitable evi- 
 dence of the extent to which land speculation 
 has gone. And this pretended economy is sure 
 sooner or later to have its reactionary effect. 
 First, by diminishing the amount of land in 
 use, it will in consequence lessen the volume 
 of material production and thereby make the 
 opportunities for self -employment scarcer and 
 scarcer. Secondly, it will affect the morals of 
 the nation by robbing it of that individual and 
 social spirit which is the natural concomitant 
 of the family and the home. It can be truly 
 said that already in our large cities the home is 
 disappearing. 
 
54 THE IMPENDING CRISIS 
 
 Land we are accustomed to treat as an article 
 of merchandise. Can it be so treated in equity ? 
 What is merchandise? A product of labor. 
 Is land a product of labor? No. Then it 
 cannot in equity be considered merchandise. 
 Neither is land wealth; so that if we were to 
 tax the value of land, we would not be taxing 
 wealth. To solve this great difficulty we 
 should destroy speculation in land by appro- 
 priating ground rent for public purposes, and 
 then the first great cause in the production of 
 panics would be removed. 
 
 The operation of public functions by private 
 individuals is the second great cause of panics. 
 We define as a public function any enterprise 
 or business which requires the grant of gov- 
 ernment power to enable private individuals or 
 corporations to carry it on. The operation of 
 steam railways, street railways, telephone, tele- 
 graph, canal and pipe lines is a public function, 
 and yet in very few instances are any of these 
 great branches of industry owned and operated 
 by the public at large. If our army, our navy 
 and our postoffice are the business of the public, 
 so are the railways, telephones, telegraph, etc. 
 Whoever has control of the financial system 
 and the means of transportation and communi- 
 cation, necessarily has control of the reins of 
 government; and if, as at present, the people 
 do not control these institutions, then they do 
 
PANICS — THEIR CAUSE AND CURE 55 
 
 not control the government, and in not having 
 this control the first principle of republican 
 government is denied. 
 
 Let us take one of these subjects — the rail- 
 roads — for illustration. We will thus get a 
 better understanding of the matter, for the 
 deductions derived from the facts governing 
 one of these industries under the head of "pub- 
 lic functions" will apply by similar reasoning 
 to all. 
 
 The steam railways, according to the fif- 
 teenth annual report of the Interstate Com- 
 merce Commission, are bonded and capitalized 
 at $12,134,000,000. All, or nearly all, of the 
 roads are mortgaged up to their full value, 
 consequently the bonds represent the real or 
 actual values of the roads, and it is upon this 
 value alone that the railroads have the right to 
 pay any moneys in return for investment. The 
 stocks, we may say, are all water. They do 
 not represent any actual capital invested, so 
 that all dividends paid on them are robberies 
 pure and simple. 
 
 Marion Todd, in her work on "Railways of 
 Europe and America," illustrates the situation 
 by saying that, ''suppose a man buys a farm for 
 five thousand dollars and gives a mortgage for 
 the purchasing price, and at the end of the year, 
 after paying all expenses and conducting the 
 farm, has enough left to pay interest on mort- 
 
56 THE IMPENDING CRISIS 
 
 gage. The interest he pays is his income or 
 profit, because he had no capital of his own 
 invested. The railroads are in the same posi- 
 tion. If they have borrowed all the money 
 their roads are worth, then the interest paid on 
 the bonds are the dividends on the capital in- 
 vested, and if they pay a dividend on their 
 stock it means a double income." This is the 
 true situation. This is the way in which the 
 American people have been most unmercifully 
 plundered during the last thirty years. 
 
 The experience in Northern Pacific dur- 
 ing the week of May 6, 1901, is but a precursor 
 of what can happen and what will happen if 
 we do not squeeze all of the water out of the 
 railroad stocks, buy the railroads ourselves, 
 and operate them, not upon a profit basis, but 
 upon a self-paying basis. We give the railroad 
 companies the franchises, which are worth hun- 
 dreds of millions of dollars, and they give us in 
 return the perpetual right to pay such tax as 
 they choose to levy. When Northern Pacific 
 jumped to one thousand dollars per share, we 
 must not suppose that there was one thousand 
 dollars of actual value or wealth created then 
 and there. Allowing the stock to be legitimate 
 and further allowing a reasonable rate of divi- 
 dend, there was on the average nine hundred 
 dollars of false value attached to each share. 
 In other words, there was a nine-hundred- 
 
PANICS THEIR CAUSE AND CURE 57 
 
 dollar lie in each share. When men bought 
 and sold the stock there was little or no ex- 
 change of real wealth, for it was impossible for 
 the wealth to have been produced in so short a 
 time. The whole process was gambling, and 
 the people had to pay for the whole affair. But 
 further, if this nine-hundred-dollar value was 
 not inherent in the stock and yet had to be paid 
 for, who paid it, and from what fund was it 
 paid? It could not have been paid from the 
 speculative world, because the value did not 
 exist there. Speculative value and real value 
 are opposed to each other in principle. When 
 men have something, the value of which is one 
 hundred dollars, and attempt to trade it on the 
 basis of a thousand dollars, then there is nine 
 hundred dollars of false value attached to it. 
 But since this nine hundred dollars of false 
 value must be paid with a corresponding real 
 value, and since a real value cannot be drawn 
 from an unreal value, then there is no other 
 source or fund from which this nine hundred 
 dollars can be paid but legitimate trade. Here 
 is another case where legitimacy is forced to 
 assume the responsibility for the crimes of 
 illegitimacy. Honest production and trade are 
 forced to bear the ills wrought by the exploits 
 of the speculator and the caprice of the stock 
 market; and finally the entire loss is saddled 
 on the back of labor, for every dollar of the 
 
58 THE IMPENDING CRISIS 
 
 entire transaction is taken out of wages, and 
 the workingman, the producer, is made that 
 much poorer. 
 
 It will take but a few more experiences like 
 that of the Northern Pacific, mentioned above, 
 to throw the business of the country into con- 
 vulsions, and if present tendencies continue we 
 may expect something of this kind before many 
 months have passed. 
 
 There is but one solution of the railroad 
 question and that is that the Government 
 appraise the entire system at its true value 
 (which is the value which it would cost to 
 reproduce it) purchase the system by an issue 
 of bonds redeemable at the pleasure of the Gov- 
 ernment, provide a sinking fund, and each year 
 retire a portion of the amount of bonds issued. 
 In this way we will avert the calamities that 
 stare us in the face, and which will surely come 
 if we foolishly persist in our error. 
 
CHAPTER VI 
 
 THE TRUE THEORY OF CURRENCY 
 
 We have seen that our present financial sys- 
 tem is a system based upon debts and not upon 
 credit. To perpetuate its existence, therefore, 
 the great bulk of the people must be kept in 
 constant debt to the few. This evil, though 
 apparently small in the beginning, increases as 
 population and the demand for more currency 
 increase. It will be further seen by the history 
 of banking laws and facts as they exist to-day, 
 that all systems of currency existing in the 
 world to-day are founded upon a metallic basis. 
 In this chapter we shall endeavor to prove, 
 first, that all such systems are barbarous and 
 embody no scientific idea ; second, that the cur- 
 rency question can never be fixed until the tax- 
 ation question is settled ; third, we shall offer a 
 rational and equitable system to replace the 
 barbarous and worn-out idea of currency based 
 upon metal. 
 
 In the first place, gold and silver are com- 
 modities the same as any other product of 
 labor, and, being such, must necessarily have 
 
60 THE IMPENDING CRISIS 
 
 a fluctuating value. Now, how can we have 
 a fixed standard of values and a just system 
 of exchange if the thing by which we measure 
 has a fluctuating value itself? We know that 
 a yard is a yard and a foot is a foot, no matter 
 whether they be pieces of string or sticks of 
 wood. It is a fixed quantity. Can we say as 
 much for the dollar? If so, then why such 
 fluctuation in prices and interest, and why do 
 panics and financial depressions come with such 
 frequency ? 
 
 A legislature deceives itself when it thinks 
 that it can fix values by decreeing that a dollar 
 shall consist of so many grains of gold or 
 silver. Values are determined by competition, 
 by supply and demand, and not by the will of 
 any legislature. 
 
 If, as has been the case, the production of 
 gold outruns the proportionate increase in pop- 
 ulation and the demand for its use, then the 
 value of the yellow metal falls, and if the 
 reverse is the case its value rises. The same 
 is true of silver — in fact, of any product of 
 labor. All paper money, we say, is based upon 
 metallic money, or, to express it conversely, 
 every paper dollar is supposed to represent a 
 metallic dollar. Now, let us take every paper 
 dollar in the nation and place them alongside 
 of every metallic dollar. If our present theory 
 (the metallic) be correct, then there should be 
 
THE TRUE THEORY OF CURRENCY 6 1 
 
 on the average dollar for dollar, paper and 
 metal. If there is more paper than metal, then 
 there is something wrong. If this test were 
 tried it would be found that out of the entire 
 volume of currency about four-fifths dollars 
 would be paper and one-fifth would be metal. 
 And since, according to our theory of finance, 
 gold only is the measure of values, then there 
 is only one honest dollar in every five. The 
 other four are false dollars. This four-fifths 
 constitutes the bulk of bank currency, and 
 through it the bankers naturally hold the con- 
 trolling interest in public finance. According 
 to the theory generally held, therefore, the sys- 
 tem is indefensible, in that eighty per cent of 
 our currency is false or dishonest money. 
 Mind you, these are deductions according to 
 the present theory. 
 
 In considering the financial question we 
 must not only regard it as a separate part of 
 society, but must also bear in mind and view 
 it as an inseparable part of the great industrial 
 system itself. The various branches of indus- 
 try are in their development dependent upon 
 one another. The popular idea that gold 
 determines values becomes a mere superstition 
 when an attempt is made to reduce it to its final 
 elements. What is generally believed to be the 
 system of currency is merely nominally so, and 
 in fact almost obsolete, for were we to depend 
 
62 THE IMPENDING CRISIS 
 
 upon gold and silver to effect our exchanges 
 to-day, the industrial world would die of 
 strangulation. The falsity of the idea that 
 gold determines values may be illustrated by 
 the following: 
 
 The purchasing power of gold in America is 
 double and treble its purchasing power in the 
 Philippines. If the metallic theory be correct, 
 then ten gold dollars in the Philippines would 
 or should purchase as much as ten gold dollars 
 in America. But, on the contrary, it will pur- 
 chase one-half or one-third as much. Why this 
 difference? Simply because human life itself 
 is the real measurer of all values, and this basic 
 principle, together with the supply of and 
 demand for labor, and the facility with which 
 the products of labor can be exchanged, is the 
 real cause for the difference in the value of gold 
 in the two countries. The idea of the intrinsic 
 value or the magic power of gold disappears 
 when we refer the question to human necessity 
 and human desire. Comparatively few of the 
 articles which an American or European needs 
 in the Philippines are made there, but on the 
 contrary are made in Europe and America. If 
 an American or European could go to the Phil- 
 ippine Islands and live as the Filipinos live, his 
 cost of living would be no greater than theirs. 
 But this would be neither desirable nor natural. 
 He wants those things to which he has been 
 
THE TRUE THEORY OF CURRENCY 63 
 
 accustomed in his own country and which rep- 
 resent his own civilization. The standard of 
 living in the two countries is essentially differ- 
 ent. If we wish to transfer the American 
 standard of living to the Philippine Islands we 
 would immediately make the cost of living 
 there as much above the Philippine cost of 
 living as the American civilization is above the 
 Philippine civilization. The price of commodi- 
 ties sent to the Philippines is doubled ajnd 
 trebled when the cost of transfer and of tariff 
 is added to the original cost of manufacture in 
 their native countries. The price of labor must 
 increase in order to make the commodities 
 purchasable. 
 
 The utility of our present monetary system 
 is not due to the fact that it has a gold or silver 
 basis, but, on the contrary, it is due to our 
 improved methods of bookkeeping, accounting, 
 means of transfer and communication. Bank 
 checks, postal notes, drafts, etc., perform the 
 function of money to-day just as really as 
 gold or silver ever did, and with far greater 
 efficiency. Let it be always remembered by 
 legislators that the real and only function of 
 money is to effect an exchange, not of itself, 
 but of commodities of labor. One of the cry- 
 ing needs of to-day is "more currency, a more 
 expansive currency." Metallic money has 
 failed and always will fail to meet the demands 
 
64 THE IMPENDING CRISIS 
 
 of an ever-increasing population and of a civili- 
 zation which is becoming more complex and 
 more specialized. What a totally inadequate 
 and barbarous system of currency fails to do at 
 the present time must be done and is done by 
 the agencies to which we have just referred. 
 Remember always that metallic currency per- 
 forms but a small part of the function which 
 it is generally believed to perform. A very 
 small percentage of the debts of the world are 
 paid in actual coin. We can thus further see 
 that by the means above referred to, that which 
 formerly took weeks and months to do is now 
 done in a very few hours. Science and inven- 
 tion have entered into the march of civilization, 
 and in a great measure have neutralized the 
 shortcomings and backwardness of currency 
 based upon metal. 
 
 The backwardness which is inherent in our 
 present monetary system makes itself apparent 
 by the fact that whoever has control of the 
 medium of exchange, that is, whoever can con- 
 tract or expand its volume, must necessarily 
 have a powerful influence in the increase or 
 depression of both wages and price. This is 
 especially true of a highly-organized state of 
 society, because there very little is exchanged 
 by barter, but on the contrary through a mone- 
 tary or currency medium. Now since exchange 
 is part and parcel of production, any interfer- 
 
THE TRUE THEORY OF CURRENCY 65 
 
 ence with the exchangeable medium that will 
 limit or prevent exchanges will react on the 
 channels of production by limiting production, 
 and in consequence depress wages. 
 
 How does Nature determine wages? Sim- 
 ply by the supply of and demand for human 
 labor. How, then, does she determine the 
 value of material things ? In the same general 
 way — by the abundance or scarcity of the 
 product, the ability or opportunity of labor to 
 produce that product, and by the demand for 
 its use. If diamonds were as plentiful as cob- 
 blestones their value would be a mere nothing, 
 but since they are greatly desired, are very 
 scarce, and human life has to undergo great 
 risks in order to get them, their value is very 
 great. 
 
 When one man exchanges something with 
 his neighbor, he exchanges something vastly 
 more than that material thing; for he ex- 
 changes his labor, his intelligence, his very 
 life's energy expressed in matter. 
 
 Now in regard to the second point, that 
 natural taxation must be the basis for natural 
 currency. Taxation is the first economic prin- 
 ciple of organized government. Society exist- 
 ing in a crude, semi-barbarous condition has no 
 need of a regular collection and disbursement 
 of revenue. But with the advance of civiliza- 
 tion society becomes organized and govern- 
 
66 THE IMPENDING CRISIS 
 
 ment becomes a fact, a necessity. The institu- 
 tion must be supported, and therefore taxes 
 levied. Taxation, then, is to government what 
 wages are to the individual. It is the food 
 upon which organized society subsists. It is 
 wholesome and necessary, and if correctly ad- 
 ministered is the sound basis for a just govern- 
 ment. But if this primary function is allowed 
 to fall into private hands, landlords, corpora- 
 tions and syndicates, then the major premise 
 of government is destroyed, and society be- 
 comes a prey to a class organized for its own 
 private benefit. When we give away a fran- 
 chise we give away with it the sovereign right 
 of taxation, and immediately the functions of 
 government are deranged. What makes the 
 street railways of New York, Chicago, Phila- 
 delphia, or of any large city so valuable? Is 
 it because the roads represent so much actual 
 capital invested in them? Not at all. In 
 almost every case you will find that the actual 
 capital invested is only a fraction of the capital 
 as represented on paper. By far the greater 
 portion of the value is in the franchise, and the 
 franchise is the taxing privilege that has been 
 given to the corporation. But one may ask, 
 what has all this to do with currency ? It has 
 a great deal to do with it. First, to show how 
 government has been thrown out of gear by 
 giving away its primary function of taxation; 
 
THE TRUE THEORY OF CURRENCY 67 
 
 second, to show that no matter what system of 
 currency we may have, it will never serve as 
 a definite regulator of values until society 
 assumes the exclusive right to tax its members. 
 
 Returning for a moment to the subject of our 
 national bank currency, we will easily see that 
 that system itself is based upon taxation, for 
 the government bond is an instrument of taxa- 
 tion. The great wrong, however, consists in 
 the creation of the government bond, for by 
 that very act the taxing power is at once trans- 
 ferred to private individuals, the bondholders. 
 Government in this relation becomes a mere 
 collecting agent for a few wealthy people, who 
 grow richer and richer as population increases, 
 society is arrayed into a debtor and a creditor 
 class, and posterity is sold to the highest bidder. 
 
 Having disposed of the first two points we 
 will pass on to the third, which is a considera- 
 tion of a rational system of currency. We will 
 first assume that government alone has the 
 exclusive right to tax, which assumption has 
 been fully proved by the foregoing deduction. 
 We will next lay down the principle that scien- 
 tific money must represent labor performed, 
 and since labor is the real measurer of values, 
 any currency system which does not conform 
 to this law is a false and vicious system. A 
 promise to pay does not represent labor per- 
 formed, and therefore is not honest money. 
 
68 THE IMPENDING CRISIS 
 
 When the government issues its money the 
 very act of issuing it makes it money, and the 
 language printed upon it should be of such a 
 nature as to indicate clearly that it is money, 
 not that it is a promise to pay money. To say 
 that a promise to pay is money, is contradic- 
 tory; for if it is money, why does it say that 
 it is a promise to pay money? Clearly, then, 
 a promise to pay is false money. Scientific 
 money should be a promise to receive and not 
 a promise to pay. Money, we may say for a 
 practical definition, is a medium of exchange. 
 But this does not satisfy — it is only half a 
 definition. It does not say which is true and 
 which is false money. It is quite true that 
 money is a mere medium of exchange, and has 
 no more relationship to real wealth than a din- 
 ner ticket has to your dinner. But in giving 
 a scientific definition of money we must say 
 what constitutes a just medium of exchange, 
 and to do this we must say that money, in order 
 to be a medium of exchange, must be a repre- 
 sentative of wealth produced. And since all 
 wealth is produced by labor, scientific money 
 must be a certificate of labor performed. A 
 premise to pay does not represent labor per- 
 formed, and by scientific analysis is not honest 
 money. The quantitative theory of money 
 spoken of by a great many is but half the truth, 
 because if we deal with quantity alone and do 
 
THE TRUE THEORY OF CURRENCY 69 
 
 not say what the quantity shall be, how it shall 
 be regulated, and of what it shall be composed, 
 namely, the quality, then we have determined 
 nothing. If one were to ask what is the limit 
 of expenditures for the National Government, 
 some one else would probably say, "the needs of 
 the Government economically administered." 
 But who is to determine the meaning and ex- 
 tent of the term 'economically administered?" 
 Some may think that half a billion is quite 
 sufficient; others may think a billion is neces- 
 sary, others two billions. So that these terms 
 mean nothing. They are not scientific because 
 they do not determine anything. In other 
 words, it is not a fixed mathematical quantity. 
 We must, however, have a fixed known quan- 
 tity, for until then all reasoning is useless and 
 monetary science is impossible. 
 
 It may strike the reader as curious to say 
 that as yet we have no monetary science. And 
 why? Simply because we have had no scien- 
 tific terms, no fixed quantity upon which to 
 reason, and these are the first requisites for the 
 construction of a science. When we say that 
 the Government appropriates so many millions 
 or billions of dollars we infer that there must 
 be at least that much money in circulation with 
 which to meet the appropriations. Now 
 between levying taxes and collecting taxes 
 there is an exact ratio or relationship, which is 
 
JO THE IMPENDING CRISIS 
 
 that for every dollar of tax levied there should 
 be its equivalent in circulation. If there is 
 more money than taxes then the excess is spur- 
 ious, and if the excess is very great then the 
 value of the currency will depreciate propor- 
 tionately and the loss must be met by an in- 
 crease in rent, an increase in prices of com- 
 modities, or a decrease in wages. 
 
 Taxes, we have said, are to government what 
 wages are to the individual, and since an in- 
 dividual cannot justly expend more than the 
 sum total of his wages, then by analogy gov- 
 ernment cannot justly appropriate nor expend 
 any more than the sum total of its just taxing 
 power. Now, since the sum total of the taxes 
 and the sum total of currency outstanding with 
 which to pay them are at a balance, namely, 
 equal, then taxation and finance are inseparably 
 related, and are, as it were, the reciprocals of 
 each other. 
 
 Let us, therefore, reduce the taxes upon 
 products of labor each year five per cent and 
 add the equivalent to the tax upon land values 
 until it finally equals the annual rental value of 
 the land, and let a paper currency be issued by 
 the government with full legal-tender qualities 
 (not a promise to pay) based upon these taxes, 
 and retire all other forms of currency as fast as 
 the new currency is issued. This would be 
 making ground rent the basis of currency, 
 
THE TRUE THEORY OF CURRENCY 7 1 
 
 which of all forms of security is the most per- 
 manent and most valuable. As population in- 
 creased the rent would correspondingly in- 
 crease, and in consequence the volume of cur- 
 rency would be increased to meet the demands 
 of an increased population. The notes would 
 be receivable for all debts whatsoever with- 
 out any exception, but the volume of cur- 
 rency outstanding at all times would be equal 
 to the sum total of ground rent for that year, 
 a new estimate being made each year. This 
 would give us a currency based upon the entire 
 land value of the nation ; it would be self-regu- 
 lative; it would be free from all interference 
 from private sources, and would virtually be 
 placing a government bond into the hands of 
 every person. But the difference would be 
 that instead of a few being creditors and the 
 many being debtors, all would be creditors and 
 debtors alike. Its security would never fail, 
 for that is based on the governmental taxing 
 power on the land, and the value of land 
 depends upon and bears a mathematical rela- 
 tionship to population. We need not bother 
 ourselves about gold or silver security, for how 
 can the gold and silver locked up in the Treas- 
 ury be called money ? Money, we have said, is 
 a medium of exchange, and how can the mil- 
 lions that are locked in treasury vaults be a 
 medium of exchange? They do not perform 
 
J2 THE IMPENDING CRISIS 
 
 their function as money, and failing to do this 
 they cease to be money. The gold and silver 
 in the Treasury might as well be in the bottom 
 of the sea for all the use that it is in satisfying 
 human wants and facilitating exchange. It 
 has been readily seen that our present monetary 
 system is unjust at the very premise — a gigan- 
 tic trick, exploited in the interests of a few — 
 and will, if carried to its logical conclusion, 
 involve the nation in bankruptcy. 
 
CHAPTER VII 
 
 WAGES AND PRICE 
 
 Although the terms "wages" and "price" are 
 very closely related, and we might say almost 
 analogous, we will, for popular convenience 
 and clearness, keep them separate. 
 
 In this chapter we will, as nearly as possible, 
 restrict ourselves to the use of the terms in their 
 relative and practical sense, rather than in their 
 absolute and philosophic sense. 
 
 In a healthy condition of society price is de- 
 termined in the same manner as values — by a 
 free, unrestricted competition; and wages are 
 determined in the same way by the competition 
 of labor. Now it may be answered that such a 
 condition exists to-day. It does to a very lim- 
 ited extent ; but to say that competition to-day 
 determines wages and price is merely stating 
 only about one- fourth of the truth — the other 
 three-fourths being summed up in the word 
 "monopoly." It is monopoly which deprives 
 labor of fully three-fourths of its earnings. 
 Monopoly means, in effect, a depressed margin 
 of production. Now the margin of production 
 
74 THE IMPENDING CRISIS 
 
 is that portion of the earth's surface which is 
 either in use or under cultivation. Supposing, 
 for instance, that we represent the earth, — the 
 limit of cultivation — by the Figure i, and the 
 portion of it that is either in use or under cul- 
 tivation as i-ioo, then the margin of produc- 
 tion is i-ioo. The other 99-100 is idle land. 
 The proportion will remain constant if the sum 
 total of the earth's population does not change, 
 but if the population increases to any extent 
 then the margin of production falls, because 
 there is a larger number among whom the prod- 
 uct is to be divided. If land is withheld from 
 use (and we include city and suburban land) it 
 means idle men, and how can idle men produce 
 wealth? The practice of the landlords in all 
 ages has been to keep a large part of the popu- 
 lation in idleness and thus depress the wages of 
 all. The power of the land-owning class thus 
 to exact tribute from every producer is respon- 
 sible for that strange spectacle that has puzzled 
 the wise men in all ages — poverty and hard 
 times going hand in hand with material prog- 
 ress. 
 
 The great corporations throughout the coun- 
 try could not obtain labor at the small price 
 they now do were it not for the fact that our 
 taxing system prevents the laborer from em- 
 ploying himself and compels him to accept the 
 terms which the corporations are gracious 
 
WAGES AND PRICE 75 
 
 enough to offer. This narrowing of the mar- 
 gin of production, this limiting of the opportu- 
 nities for self -employment, depresses wages to 
 a mere living basis, raises rent, and increases 
 year by year that portion which the monopolis- 
 tic or privileged class now takes from wages 
 and appropriates under the name of dividends 
 and interest. 
 
 While treating of wages and price we should 
 also notice that there is a great deal of popu- 
 lar superstition in regard to wages and profits. 
 
 Let it be clearly understood at the outset that 
 what is commonly termed "profit" should prop- 
 erly be termed "wages," and that as a distinct 
 and separate term "profit" does not exist in 
 economic science. This term has become so 
 common in our business relations that any criti- 
 cism of its use may surprise the average reader. 
 In science we must discard all terms which can- 
 not be given a positive definition. The essen- 
 tial requirement of a definition is that it shall 
 have limitation, distinctiveness. In Political 
 Economy terms having a metaphysical origin 
 must be discarded as too vague and indefinite 
 a medium for the presentation of scientific 
 ideas, and this is especially true when such 
 terms are made the corner-stone upon which a 
 rational and positive system is to be construct- 
 ed. Such a term is "profit." 
 
?6 THE IMPENDING CRISIS 
 
 What we really mean when we speak of a 
 certain occupation being more profitable than 
 another is merely that such occupation yields 
 larger wages — larger results for the labor in- 
 volved. Since nothing can be obtained without 
 some labor being performed by somebody, and 
 the result of labor is wages, what use is there 
 for such a term as profit as something apart 
 from wages. In any illustration used it must 
 always be borne in mind that the labor must 
 be service rendered. Gambling and robbery 
 form no part in the economy of nature when 
 mankind is considered. In dealings of this 
 kind what one man receives for nothing an- 
 other man must give for nothing. For exam- 
 ple, a man speculating on horse races or on the 
 stock exchange may be the richer by a thousand 
 dollars at the end of the day. But this is not 
 wages, for although some labor may have been 
 involved, such labor was in no way connected 
 with service. 
 
 If a man goes into the country, picks black- 
 berries, brings them into the city and sells them, 
 the price received is his wages because it is the 
 result of his labor. A merchant in business 
 may at the end of a year have five thousand 
 dollars more than when he started. But this, 
 under normal conditions, is wages and interest. 
 Wages, because it is the result of an intelligent 
 and efficient management ; and interest, because 
 
WAGES AND PRICE 77 
 
 it is the result of capital in the process of ex- 
 change. No other factor enters into the propo- 
 sition. 
 
 So much for profit. 
 
 The numerous magazines teem with arti- 
 cles defending our present industrial system. 
 They are written mostly by those whom a 
 change of system to one based on justice would 
 deprive of lucrative employment. The purpose 
 of many of the writers seems to be to adminis- 
 ter a sort of hypnotic treatment to the working 
 classes by inducing them to believe that their 
 wages have been increased, their rents lowered, 
 and their cost of living diminished — in short, 
 that they are enjoying a period of prosperity 
 unparalleled in the history of the world. For 
 instance, one writer says that "Forty years ago 
 the time of human labor to produce one bushel 
 of corn was four hours and thirty-four min- 
 utes ; now it is forty-one minutes. The cost of 
 human labor to produce this bushel has declined 
 from thirty-five and three-fourths cents to ten 
 and one-half cents. It is one of the marvels of 
 the age that to-day the amount of human labor 
 required to produce a bushel of wheat from 
 beginning to end is, on the average, only ten 
 minutes, whereas in 1850, the time was three 
 hours. The cost of the human labor required 
 to produce this bushel of wheat has declined 
 from seventeen and three-fourths cents to three 
 
78 THE IMPENDING CRISIS 
 
 and one-third cents. Forty years ago, when 
 men mowed the grass with scythes, spread it 
 and turned it over for drying with pitchforks, 
 raked it into windrows with a hand-rake, cock- 
 ed it with a pitchfork, and baled it with a hand- 
 press, the time of human labor required per ton 
 of hay was thirty-five and one-half hours ; now 
 with horse-mowers, horse-rakes, and horse- 
 presses, the human labor required per ton is 
 eleven hours and thirty-five minutes ; the labor 
 cost has fallen from three dollars and six cents 
 to one dollar and twenty-nine cents per ton." 
 
 Now let us recapitulate a moment for exami- 
 nation. If, as the writer states, a certain amount 
 of goods can be produced to-day in one-seventh 
 of the time required to produce it forty years 
 ago, it is self-evient that the power or effec- 
 tiveness of a man's labor has been multiplied 
 seven times. And it is further evident that if 
 he can produce seven times the amount of 
 wealth in the same space of time that he did 
 forty years ago, his wages should be seven 
 times as great as they were then, minus the cost 
 and maintenance of machinery. Are they? If 
 it costs two-sevenths as much labor to produce 
 a bushel of wheat now as it did forty years ago, 
 then most of the difference should have gone 
 into the fund of wages. Has it? If it requires 
 only one-eighteenth the time to produce a 
 bushel that it did fifty years ago, then farm 
 
WAGES AND PRICE 79 
 
 labor is eighteen times as effective as it was 
 then. Has the wages of the laborer increased 
 in any similar proportion ? Even admitting the 
 cost and care of machinery, the phenomenon is 
 not explained, because under free and normal 
 conditions the cost of maintenance is so small 
 compared with the power generated, that 
 wages should be multiplied rather than de- 
 creased. And then, too, the very cost and care 
 of machinery would rather tend to increase 
 wages than decrease them, because it furnishes 
 an avenue for employment. 
 
 "It is one of the marvels of the age" that sta- 
 tisticians can go to great pains in collecting in- 
 formation, can pile up figures, and yet, after 
 all, overlook the whole pith and marrow of the 
 question. Since they call this prosperity, why 
 do they not tell where the benefit of this in- 
 creased power of production has gone. We 
 know by the present condition of the farm la- 
 borer that he does not receive it. The question 
 then is, "Where does it go ?" and the answer is, 
 "To the rent-roll of the landlord.'' 
 
 All the great inventions and improvements 
 of the past century have lessened but little the 
 burden of the laborer, and, on the other hand, 
 the disparity between his condition and that of 
 the land monopolist is much more marked. If 
 one would see where the profits of farming go, 
 let him study the dividends on watered stock 
 
80 THE IMPENDING CRISIS 
 
 of our transportation systems — the embodi- 
 ments all of special privilege. The writer of 
 the article, in speaking of the results of ma- 
 chinery, further says : "Now we know why so 
 many men can be spared to go from the farm 
 to the factory without interfering with na- 
 tional prosperity; here we discover how it is 
 that the cities of America can muliply by ten 
 in the same half century that the farming com- 
 munity is multiplying by two, and that without 
 any false proportions or insecure foundations 
 for the great industrial structure to stand 
 upon." 
 
 In the first place it is the grossest error to sup- 
 pose that men migrate to the cities because they 
 can be spared from the farms. The actual rea- 
 son for their migration is that by our system of 
 taxation and land speculation a large and in- 
 creasing percentage of our farms have become 
 mortgaged or else the occupiers have become 
 mere tenants. The farmer must also sell at a 
 natural price and buy at an average tariff rate 
 of sixty per cent, so that in every transaction 
 he is sixty per cent the loser. These processes, 
 involving the subtraction of rent from the 
 farmer's yearly production, have crippled him 
 to such an extent that he cannot afford to pay 
 the wages which an increased power of produc- 
 tion, resulting from the great inventions of the 
 age, would give him under a natural and just 
 
WAGES AND PRICE 8 1 
 
 system of taxation. Men naturally go where 
 they can get the best wages and the most com- 
 forts and happiness out of life. Now if the low 
 wages and unwholesome conditions of the 
 crowded factory and city are an improvement 
 upon farm life, then the condition of the farm 
 laborer must certainly be a deplorable one. The 
 reason why the cities of America have multi- 
 plied by ten in the same time that farming com- 
 munities have multiplied by two is, because land 
 speculation (the withholding of land from use) 
 and unjust taxation have forced men to look 
 for employment elsewhere. Thus the cities have 
 had a forced and unnatural growth while farm- 
 ing districts have remained almost in an unde- 
 veloped state. Men failing to find employment 
 for which they are suited in the crowded cities 
 attempt to live by their wits. All sorts of 
 methods are resorted to, and the result is the 
 criminal and the tramp. Society then tries to 
 protect itself against itself (for these are a part 
 of society), with the inevitable result of further 
 complications of social disorder. 
 
 One of our leading metropolitan newspapers 
 quotes Mr. Henry C. Payne, then vice-chairman 
 of the Republican National Committee, as say- 
 ing, on his return from Europe in 1901, that 
 "In Austria I asked a man why Americans, 
 paying higher wages, could send their goods to 
 Europe and undersell the Europeans on the 
 
82 THE IMPENDING CRISIS 
 
 products made in their own lands." The ques- 
 tion was prompted by seeing a shoe store in 
 Vienna where they sold only American-made 
 shoes. "In answer, he said that when in the oil 
 business he sent men to see how they produced 
 oil in the States, and found that five men in 
 America could, with improved machinery, ac- 
 complish what thirty did in Europe. That, he 
 thought, was the secret." 
 
 The point, and it is the vital point, although 
 the average reader will probably overlook it, is 
 that if one man in America can produce as 
 much as six men in Europe, then that man's 
 wages should, on the average, be six times as 
 much, but the actual fact is that the wages of 
 the American laborer are relatively less than 
 those of the European, for if he performs six 
 times the amount of labor and receives four 
 times as much pay, then it is clear that he re- 
 ceives only two-thirds as much for his day's 
 work as his European friend. 
 
 Numerous causes combine to produce this in- 
 defensible condition, the most important of 
 which is the fact that monopoly in some form 
 or other takes the result of nearly all the im- 
 provements, leaving the laborer no better off 
 than before. Monopoly, whatever its form, 
 must somewhere have a resting place upon the 
 earth's surface, and here it is the duty of gov- 
 ernment to require it to pay the full value of 
 
WAGES AND PRICE 83 
 
 the special privilege it enjoys. Franchises are 
 special privileges. 
 
 Now let us devote a few minutes to the fam- 
 ily market and get an illustration of this great 
 and unparalleled "prosperity" which has been 
 flooding the land for the last seven years. The 
 prices of the common articles of food have in- 
 creased 25, 50, and in some cases ioo per cent 
 over the prices of several years ago. Peas 
 which were 75 cents per bushel in August, 1900, 
 are this year $3.00. String beans have increas- 
 ed in price 50 per cent; cabbage per hundred 
 have increased 100 per cent ; carrots 33 per cent ; 
 tomatoes 20 per cent ; apples per barrel 50 per 
 cent ; oranges per box 80 per cent ; bananas per 
 bunch showed an increase in price in 1901 of 
 three hundred and sixteen per cent, despite the 
 fact that we now own a large portion of the 
 West India Islands. The price of potatoes 
 has doubled in the past three years.* 
 
 It would be a very dismal and gloomy pic- 
 ture indeed were we to imagine that this "pros- 
 perity" were always to be the lot of the poor. 
 Indeed, if present tendencies continue, "pros- 
 perity" may develop into a famine. Almost 
 everyone is working fully as hard and for as 
 long hours as he ever worked before "pros- 
 perity" came, but very few are able to save any 
 
 *These are the figures showing increase in price 
 from the summer of 1900 to the summer of 1901. 
 
84 THE IMPENDING CRISIS 
 
 of their earnings, because of the great increase 
 in the cost of living. The increase in the cost 
 of clothing and building material is much the 
 same as the increase in the cost of food. Pas- 
 senger and freight rates have not decreased in 
 the least. 
 
 Certain newspapers attempt to explain this 
 increase in the cost of living by attributing it 
 to purely local causes. But they do not take 
 into account those great general causes which 
 are constantly at work in the production and 
 distribution of wealth, and which govern the 
 condition of the nation at large. If the price of 
 labor remains the same, but the cost of living 
 increases, by what process of reasoning can one 
 make "prosperity" out of it? In order to im- 
 prove the condition of the people the increase in 
 wages must be greater than the increase in cost 
 of commodities, so that there be a balance over 
 and above the cost of living. Has this change 
 taken place ? 
 
 The millions of gold now lying in the Na- 
 tional Treasury, and which are so often spoken 
 of as being indubitable evidence of prosperity, 
 merely represent the extent to which labor has 
 been plundered by the enactment of internal 
 revenue and tariff laws. It is not the foreigner, 
 but the American workman, who has paid every 
 dollar of this immense sum ; and yet politicians 
 are wont to boast of it as being evidence of 
 
WAGES AND PRICE 85 
 
 national prosperity. The boom in stocks, the 
 opportunities for employment in the military 
 service, the stimulation given to certain lines 
 of industry by the Spanish-American war are 
 all pointed to as evidences of prosperity. How 
 absurd is the inference of politicians that specu- 
 lation, warfare, and unjust taxation can gener- 
 ate prosperity. If prosperity is everywhere, 
 why cannot one pick up the daily paper without 
 seeing notices of mills closing down, and men 
 quitting work by the thousands, demanding 
 more pay and shorter hours ? Would not con- 
 tentment, generally speaking, be the natural re- 
 sult of a healthy prosperity? Again, if we are 
 enjoying such great prosperity, why did Con- 
 gress maintain an Industrial Commission ? The 
 very creation of this commission gives the lie to 
 the statement that all is well, and is an admission 
 on the part of legislators that alarming symp- 
 toms of social disease have for some time been 
 developing. We do not contend that there has 
 been no greater production of wealth than here- 
 tofore, but we do contend that this industrial 
 activity is but temporary, and further that 
 those who created the wealth have not received 
 the benefit of it. The bulk of prosperity is all 
 going one way — into the hands of the privi- 
 leged and landed classes, and has put the politi- 
 cal parties of the nation more and more under 
 their domination and control. The concentra- 
 
86 THE IMPENDING CRISIS 
 
 tion of wealth into the hands of a few can never 
 be a healthful sign in the history of any nation. 
 The only possible way in which the wages of 
 the vast army of workers can be permanently 
 increased and a general circulation of wealth 
 maintained is by raising the margin of produc- 
 tion. Now the only way to raise the margin of 
 production is to remove all taxes on labor, or 
 the products of labor, and to substitute in place 
 thereof a uniform tax based upon the annual 
 rental value of the land, exempting all im- 
 provements. 
 
CHAPTER VIII 
 
 THE THEORY OF INTEREST 
 
 The question of interest is one which has 
 puzzled the mind of every thinker in political 
 and economic science, from the time of Adam 
 Smith to the present day. A great deal has 
 been written on the subject, but as yet no scien- 
 tific definition has been formulated, nor has^ its 
 nature and place in the science of political 
 economy been satisfactorily explained. There 
 has been no end of writers, mostly socialistic 
 enthusiasts, who have been eager to state that 
 interest is robbery, but whose writings in no in- 
 stance have proved or justified their statement. 
 The reason, however, for such an assumption 
 on their part I take to be that they have con- 
 fused interest with usury. The system which 
 they have attempted to construct is wholly em- 
 pirical in its nature and does not accord with our 
 fundamental ideas of justice, nor can its fair- 
 ness be demonstrated by abstract reasoning. The 
 fallacy of these writers consists first in assum- 
 ing that usury and interest are one and the 
 same thing; second, that because social condi- 
 
88 THE IMPENDING CRISIS 
 
 tions are largely unjust, interest, which is as- 
 sociated with these conditions, must be unjust 
 also. Now truth may be, and in many cases is, 
 associated with error, but that does not say that 
 truth is error. It is a common fact of experience 
 that so great is the adhesive power of truth 
 that a little can hold together a great amount 
 of error. Because our present conditions are 
 unjust it does not follow that interest is unjust. 
 
 Let us for a moment examine into the nature 
 of the terms or ideas and their association which 
 underlie political economy. Land, labor, capi- 
 tal, are the terms of causality (causal). Wages, 
 rent, and interest are the terms resultant. Labor 
 upon land produces wealth; population (num- 
 bers) upon land produces rent. Wealth in ex- 
 change produces interest. These terms or ideas 
 form the basis for the entire subject of political 
 economy, and any question affecting the pro- 
 duction and distribution of wealth can be re- 
 solved into one of these terms. 
 
 What Ricardo and George have done for 
 wages and rent yet remains to be done for in- 
 terest. The ground which I have chosen to 
 defend in opposition to the socialistic theory is, 
 that in a just order of society usury will not 
 exist, but interest will always exist ; and further 
 that it has a necessary and definite place in the 
 social organization. We must first understand 
 what we mean by usury and what by interest, 
 for between the two there is a vast difference. 
 
THE THEORY OF INTEREST 89 
 
 Usury is the price or extent to which one 
 man can appropriate another man's labor by rea- 
 son of the margin of production being constant- 
 ly pressed down; and employment in conse- 
 quence being made scarce, the second man is 
 of necessity forced to borrow from the first. 
 The generator of usury is injustice ; therefore, 
 to abolish injustice is to abolish usury. Some 
 will say that the same will hold good in regard 
 to interest. Let us see. 
 
 Interest has been defined as the price for the 
 use of capital. But since this is a very broad 
 generalization and does not show the origin and 
 nature of interest a more specific statement is 
 necessary. Interest is the cost of transfer or 
 price for delivering a present product for a fu- 
 ture promised product. The whole element in- 
 volved is time. Interest is to time what freight 
 is to distance, and, to capital what wages is to 
 labor. Capital of itself can create no increment. 
 It is only as an instrument in the hands of labor 
 that it has a value. Capital, then, is wealth in 
 exchange, and since interest is the natural off- 
 spring of capital, then interest arises wholly in 
 exchange and not in the production of raw ma- 
 terial. 
 
 When we admit that it is just for labor to 
 receive wages we must of necessity admit that 
 it is just for capital to receive interest, for since 
 capital is wealth in exchange and wealth is the 
 
90 THE IMPENDING CRISIS 
 
 result of labor, then borrowed wealth is bor- 
 rowed labor. Therefore, when we borrow 
 wealth we hire labor, and the price or interest 
 upon it is determined by the supply of available 
 capital and the demand for the same. It has 
 been established by modern writers in socio- 
 logical science that land, labor, and capital are 
 the three great factors in all production. Now 
 if each one is an essential factor or antecedent, 
 then each one must have an essential and sep- 
 arate consequent, otherwise the economic equa- 
 tion would be out of balance. 
 
 The primary or major factor in (all) pro- 
 duction is labor, but since exchange is part and 
 parcel of production, then interest which arises 
 wholly in exchange must be a natural and le- 
 gitimate result of production. Interest could 
 not exist with a Robinson Crusoe on an island, 
 for the entire result of his labor would be 
 wages. But if a number of people came to live 
 upon the island, capital would soon be created, 
 exchanges would begin, and immediately inter- 
 est would arise. The price or cost of transfer- 
 ring the future into the present is regulated by 
 the law of supply and demand, namely, the 
 value to the borrower of a future product made 
 use of to-day. 
 
 The contention that interest is high where 
 wages are high and low where wages are low, 
 will not stand the test of reason. It is easily 
 
THE THEORY OF INTEREST 91 
 
 possible for interest to be high where wages 
 are high, and low where wages are low, and 
 generally this is the case, but to state it as a gen- 
 eral proposition will not do, for interest may be 
 high where wages are low and low where 
 wages are high. For instance, in a new country 
 wages will be high because the chances for self- 
 employment are more numerous and the laborer 
 will retain all or nearly all of his product. In- 
 terest, on the contrary, may be low because the 
 free conditions for self-employment may occa- 
 sion a diminution in the demand for capital. 
 
 In order for interest to be very high the de- 
 mand for capital must be great and the supply 
 of available capital must be correspondingly 
 small. The two causes must operate simulta- 
 neously in order to produce the phenomenon 
 of high interest. 
 
 In new countries again there is generally a 
 great demand for an exchangeable medium, but 
 an exchangeable medium is not capital. In cer- 
 tain localities of new countries interest may be 
 high, because there is a demand for and a scar- 
 city of capital for the development of certain 
 enterprises. In course of time, however, interest 
 will fall, because by the increase in land values 
 and by the withholding of land from use, capi- 
 tal is driven out and the benefit which the capi- 
 talist could confer upon the country is prevent- 
 ed by the land owner (monopolist). The capital 
 
92 THE IMPENDING CRISIS 
 
 which does not remain employed is robbed of its 
 earning power because it cannot be employed 
 except by permission of the landlord. The 
 reason why the rate of interest is high in the 
 present state of society is because of the poor 
 distribution of wealth. Wealth being concen- 
 trated into the hands of a few makes a condi- 
 tion of few lenders and many borrowers ; and 
 as the chances for self-employment (margin of 
 production) are steadily diminished, then by 
 the very law of supply and demand interest will 
 continue to rise higher and higher along with 
 rent. In fact, it will assume the form of usury. 
 Some may say that the rate of interest to-day 
 is low, but when we take into account the bil- 
 lions of false capital and fictitious stock the rate 
 of interest is very high. For instance, a rail- 
 road corporation may be capitalized at twenty 
 millions of dollars and pay a fair rate of inter- 
 est, say six or eight per cent on that amount of 
 capital. But when the stock is watered twenty 
 millions and the rate of dividend paid remains 
 nominally the same, the rate of interest has 
 been actually doubled, because eight per cent on 
 forty millions of capital which is half water is 
 really sixteen per cent on the actual capital em- 
 ployed. In an oil company of which the writer, 
 has knowledge the amount of cash paid in by 
 its stockholders is only one-tenth of the capital 
 as represented on paper. If the company pays 
 
THE THEORY OF INTEREST 93 
 
 a dividend of five per cent on the five hundred 
 thousand capital it will in fact be paying fifty 
 per cent on the amount of money actually in- 
 vested. It is in this way that the corporations 
 all over this country pretend to defend them- 
 selves in attempting to conceal the truth and by 
 saying that the rate of dividend paid by them 
 is small. The fact is, that if we were to squeeze 
 out the water and compel every corporation to 
 stand upon a dollar for dollar basis, we would 
 find the rate of interest to be very high. 
 
 Monopoly and special privilege are the most 
 powerful factors (agents) in the production of 
 exorbitant interest and low wages. It is per- 
 fectly right and proper for a tenant to pay in- 
 terest for the use of a house which is not his 
 own, and this would be sufficient. But our 
 laws do not stop here. They further allow the 
 owner of the house to collect ground rent which 
 he did not create, and by so doing the right of 
 property is violated. A tenant speaks of pay- 
 ing so much rent, when, as a matter of fact, he 
 pays both rent and interest — rent for the occu- 
 pancy of the land and interest for the occu- 
 pancy of the house, which is capital. Capital 
 is essentially private property, and as such its 
 owners are entitled to the interest which ac- 
 crues from its use. Rent, on the contrary, is 
 associated entirely with land. It is a public 
 creation, and as such should be taken for the 
 
94 THE IMPENDING CRISIS 
 
 benefit of all. When land owners are permit- 
 ted to appropriate rent as though it were pri- 
 vate property, the general fund of production is 
 diminished just that much, wages decline, labor 
 is robbed of its just share of production and 
 loses its efficiency. Capital lies dormant and 
 becomes unproductive; in fact, the whole ma- 
 chinery of industry is thrown out of gear. In 
 most corporations the interest paid to stock- 
 holders and bondholders is far in excess of the 
 total of wages paid to the employees. The rea- 
 son for this is that the corporation takes advan- 
 tage of an artificially overstocked labor mar- 
 ket, forces its employees to work for bare liv- 
 ing wages, and appropriates for the stockhold- 
 ers the difference between what they do actually 
 pay their employees and what they would have 
 to pay them under just conditions. 
 
 We will state the same fact in another way 
 by saying that the enormous dividends paid by 
 corporations to stockholders are not properly 
 the earnings of capital. On the contrary, they 
 are almost entirely the result of labor, and as 
 such labor should receive them in wages. But 
 by the corporation having the power to force 
 one man to do two men's work it can appro- 
 priate the earnings of one man and pay it to 
 capital as interest. By making one man do two 
 men's work they are enabled in each and every 
 similar case to appropriate the earnings of one 
 
THE THEORY OF INTEREST 95 
 
 man. It is a case of the wages of the employees 
 being paid to capital under the assumed name 
 of interest. 
 
 This is the evil of special privilege, and the 
 whole process is maintained through ignorance 
 and bad laws. Under free conditions the pro- 
 ductive factors would adjust themselves auto- 
 matically, for then a man would not be com- 
 pelled to sell his labor for less than it was 
 worth. Under free conditions the productive 
 factors would each receive their just return, 
 but under conditions of to-day rent robs inter- 
 est, interest robs wages, and the landlord robs 
 both. 
 
CHAPTER IX 
 
 THE RIGHTS OF MAN 
 
 The collective natural rights of society may 
 be likened to a mathematical quantity. If we 
 give privileges to some which we deny to others 
 we at the same time diminish proportionately 
 the rights of the others. There is nothing so 
 incongruous in politics as a kingly republic, for 
 kingship and democracy cannot co-exist any 
 more than light and darkness. The forms and 
 methods of government that were popular and 
 efficient three hundred years ago will not and 
 cannot satisfy us to-day. As man changes, so 
 must his political organization change with him. 
 As the brute in him becomes tamed and his 
 higher qualities developed, so must government 
 by force give place to government by intelli- 
 gence and morality. If it be true that a few are 
 born to govern, if it be true that one man's 
 rights are or can be greater than those of an- 
 other, then how much greater are they? By 
 what standard can we determine? The great 
 warfare that is gonig on to-day is the clash of 
 modern ideas with the medeival ideas of kingly 
 
THE RIGHTS OF MAN 97 
 
 and arbitrary power. There can be no question 
 of the final victory of science over superstition, 
 of truth over error, of democracy over aristoc- 
 racy — but yet how slow the dragon of tyranny 
 is in dying. The progress which scientific ideas 
 have made during the last fifty years is disclos- 
 ing the superstition of all forms of government 
 based upon tradition and privilege. The spec- 
 tacle presented in Europe to-day is but the clos- 
 ing of an epoch in that great historical drama, 
 where royalty and privilege have unceasingly 
 assailed the rights of mankind. The millions 
 of English subjects groaning under the debt of 
 several billions, the result of unnecessary and 
 unjust wars ; the plodding subject of the Fath- 
 erland overburdened with the support of an 
 aristocracy, and of a military organization large 
 enough for the whole of Europe; the peasants 
 of Spain and Russia browbeaten and ground to 
 the earth by a cruel and rapacious aristocracy. 
 
 In our own country the trust magnate, the 
 railway king and the great manipulator of 
 finance working through the party boss are as 
 absolute in power as almost any monarch in 
 Europe. Half a dozen men can at any time, if 
 they choose to do so, stop the wheels of indus- 
 try and so cause a panic. 
 
 One might say that the people control the 
 railroads of the United States. As a matter 
 of fact a commission, known as the Inter-State 
 
98 THE IMPENDING CRISIS 
 
 Commerce Commission, was created sixteen 
 years ago, when it was feared that the railroads 
 were becoming stronger than the government, 
 to compel uniformity of freight rates and to 
 prevent pooling. The courts, however, have so 
 limited the powers of this Commission, and its 
 members, with a few exceptions, have been so 
 cowardly, that the Inter- State Commerce Com- 
 mission has come to be a synonym for im- 
 potency. In Congress the hired advocates of 
 injustice are ever ready to barter their con- 
 science and the people's rights in order to 
 secure the patronage of some rich and powerful 
 monopoly. It is this betrayal of trust, this 
 cringing hypocrisy which gives to politics 
 the stench of corruption and decay. How can 
 politics be pure when those who should be the 
 representatives of the people are actually the 
 agents of their oppressors — the railroads, the 
 corporations, and the trusts ? 
 
 When a representative of the people has the 
 courage to rise in a legislature to speak against 
 some pernicious railroad or other corporation 
 bill, he is invariably a marked man, and is al- 
 most sure of defeat at the next election. These 
 conditions must certainly have causes or their 
 existence would be an impossibility, and they 
 themselves in turn becoming causes will in the 
 near future produce effects anything but whole- 
 some to the welfare of our republic, for it is 
 
THE RIGHTS OF MAN 99 
 
 through ignorance and failure to assign proper 
 causes for social phenomena that so many ad- 
 vocate and occasionally resort to measures of 
 lawlessness and revenge. And then again the 
 very conditions in which many are forced to 
 live engender and stimulate in them the belief 
 that all government is wrong. 
 
 Justice is the beginning and the end of all so- 
 cial order and improvement. Without this as a 
 primary conception, no system of government 
 can have a permanent existence. Various sys- 
 tems of a disciplinary nature have been estab- 
 lished among men, but of no system which his- 
 tory discloses can it be said that it was estab- 
 lished upon that eternal and fundamental prin- 
 ciple. Expediency and empiricism have alter- 
 nately dominated man's reason and belief, and 
 even these have too frequently given way to 
 class legislation, martial despotism, and relig- 
 ious bigotry. 
 
 The anarchistic movement of to-day is the 
 natural reaction against the European system 
 of too much government, and the American 
 people are made to feel this reaction because 
 they have allowed the politics of Europe to in- 
 fluence the politics of America entirely too 
 much. Where it is superstitiously believed that 
 the business of government is to inquire into a 
 man's personal and family affairs, to order his 
 coming and going, to regulate values arbitra- 
 
 "L.ofC. 
 
IOO THE IMPENDING CRISIS 
 
 rily and to do ten thousand other absurd things, 
 the idea of individual liberty is lost, and it is 
 natural to expect sooner or later a reactionary 
 movement to set in and go to the other ex- 
 treme. Many of us do not seem to be aware 
 of the fact that man is largely what his gov- 
 ernment makes him. Every civilized country 
 to-day has among its citizens a certain number 
 of anarchists. Every effort is made to obliter- 
 ate them, but their numbers increase. Quite a 
 number of them are in our own country. What 
 is the reason for their existence and increase, 
 and why can they not be successfully suppress- 
 ed? When men make false oaths to the asses- 
 sor and thus cheat the city out of its revenue, do 
 they not show contempt for government? 
 When the well-dressed lobbyist secretly and 
 openly bribes legislators and seeks to subvert 
 public justice to the service of mammon, is he 
 not undermining faith in government? When 
 a coterie of men can by political intrigue and 
 wire-pulling rob a city or nation of franchises 
 worth millions of dollars, do they not contrib- 
 ute to the general corruption ? When the stock 
 gambler and lobbyist can go to church on Sun- 
 day, kneel on velvet cushions, and listen to ser- 
 mons with all criticism of their methods care- 
 fully excluded, is not this a condition of social 
 and religious anarchy? And then the trust 
 king, who can steal the wages of his employees 
 
THE RIGHTS OF MAN IOI 
 
 and devote a small portion to endow churches 
 and universities in order that his name may be 
 handed down to posterity as a philanthropist, 
 is not he much more a menace to government 
 than an insignificant number of men of unbal- 
 anced minds? Truly our social system makes 
 but a travesty of justice. 
 
 What chance in the world of business has the 
 young man of to-day but to become the em- 
 ployee of some large corporation and thus make 
 a first-class machine of himself? He is expect- 
 ed to study the interests, not of himself, but of 
 his employer, which also, only too often, are 
 opposed to the interests of the community. The 
 day is passed when the country boy can come 
 as of old into a large city and by honest indus- 
 try amass a competency. The opportunities 
 that may still exist are becoming scarcer and 
 scarcer each year. As opportunities for self- 
 employment have become fewer and fewer in 
 number we have seen the tramp become a rec- 
 ognized member of the body politic, crime has 
 increased, necessitating in all our large cities a 
 great police force and courts and jails maintain- 
 ed at an enormous expense. 
 
 We might truthfully say that each genera- 
 tion has its own difficulties to solve. The prob- 
 lem of the passing generation was the abolition 
 of chattel slaverv. The problem of the genera- 
 tion now living is the abolition of industrial 
 
102 THE IMPENDING CRISIS 
 
 slavery. There are but two ways in which a 
 man can get a living in this world — either he 
 must work for it himself or someone else must 
 work for it for him. Even if a person should 
 inherit wealth he is not exempt from this gen- 
 eral statement, because the natural forces of 
 decay, which are ever active in the world, must 
 be overcome by an equivalent force of repro- 
 duction, and that reproductive force is human 
 labor. Eliminating the very small percentage of 
 persons incapable of productive labor, it is evi- 
 dent if a man does not work, yet receives a liv- 
 ing, that the law gives him the power to appro- 
 priate the labor of others without rendering an 
 equivalent. The essence of slavery is, that one 
 man does the work and another receives the 
 product. Slavery can exist without laws per- 
 mitting the purchase and sale of human beings. 
 The slavery of to-day is only more subtle and 
 indirect. It is quite as actual and felt even 
 more keenly. The slavery of to-day, and, in 
 fact, of all times, has proceeded from that fun- 
 damental evil — private property in land. 
 
 Superficial thinkers have a great deal to say 
 on the sacred rights of property, and what 
 should be taxed and what should not be taxed. 
 They utterly fail to see that to tax private prop- 
 erty is to deny the right to private property ; yet 
 it is upon this false and vicious principle of de- 
 nial that our whole economy of government is 
 
THE RIGHTS OF MAN IO3 
 
 based. From the insane utterances of those 
 who boast of the sacred rights of property one 
 would suppose that property has rights but men 
 have not. A municipality puts a tax upon dogs 
 when they become too numerous and when the 
 desire is to diminish their number. We do not 
 say that a tax is put upon capital for the same 
 purpose, but we cannot deny a similar effect, 
 namely, a decrease in the production of wealth 
 and a depression in wages. In affirming the 
 rights of man and the rights of property, it can- 
 not be too often repeated that rent is not an in- 
 dividual creation. It is essentially a public crea- 
 tion, and as such should be taken by the public 
 for the benefit of all. In the protective tariff 
 theory we have one prominent instance how 
 human rights are denied and wages in conse- 
 quence depressed. We know that freedom of 
 exchange increases wages. From this we must 
 logically infer that restriction of exchange de- 
 creases wages. We challenge any one, however 
 great his abilities, to disprove the proposition ; 
 and if the proposition be true, then how can 
 men fix their faith in a protective tariff? It is 
 but a species of the black art in government: 
 the greatest deception in all political organi- 
 zation, save perhaps that monstrous blasphemy 
 — the Divine right of kings. 
 
 Liberty and privilege are an anomaly in all 
 government. Either one is hostile to the other. 
 
104 THE IMPENDING CRISIS 
 
 Liberty enlightens mankind, privilege en- 
 shrouds him in superstition. Liberty is the 
 source of good government, privilege is its de- 
 struction. Liberty awakens in mankind those 
 aspirations for a higher and nobler state, privi- 
 lege robs him of his morals and makes him a 
 slave to his baser nature. 
 
 Landlords, bankers, and self-seeking politi- 
 cians — these are the influences of organized 
 privilege that bribe our legislators, that corrupt 
 our politics, break our laws, subvert our rights, 
 and make society a prey to their selfish ambi- 
 tions. Why should it be difficult for bankers 
 to declare large dividends when their very debts 
 are made capital for them ? Why should it be 
 difficult for the lawyer class to become wealthy 
 when it makes itself the mouthpiece of vested 
 wrong and strives to perpetuate its existence by 
 framing laws in direct opposition to the self- 
 evident facts of human nature? Why should 
 not the landlord and trust magnate revel in 
 luxury when rent and special privilege are their 
 private property ? 
 
 Such is the condition of society under the 
 cruel domination of heartless aristocracies and 
 soulless corporations; of a society whose lead- 
 ers declare that a few are born to govern and 
 the many to be governed. We cannot forever 
 apply the balm of empty charity to the wounds 
 of poverty and wrong and imagine that we 
 
THE RIGHTS OF MAN IO5 
 
 have done justly. We cannot forever escape 
 the consequences of our wrong, nor should we 
 hope to do so. Let us press forward in the 
 conflict of human right with vested wrong, of 
 reason with superstition; and though the vic- 
 tory may be deferred for a while, yet in the end 
 must we surely win. 
 
CHAPTER X 
 
 ALIEN LANDLORDISM AND ITS REMEDY 
 
 The following articles, taken from represen- 
 tative metropolitan journals, will give an idea 
 of the way in which the American people are 
 laid under perpetual tribute to foreign land- 
 lords. In the Chicago Times of February i, 
 1895, the following appeared: 
 
 "That English aristocrats should own large 
 domains in the United States and rule them 
 from London is at first a difficult thing to 
 grasp. Not until it is borne in mind that peers 
 and peeresses of Great Britain are large landed 
 proprietors in our country (Viscount Scully 
 alone owns three million acres in Illinois, Iowa 
 and Nebraska), does the significance of absen- 
 teeism in landlords become apparent. But 
 now the matter will be brought home to Ameri- 
 cans more directly than it has ever been 
 brought home yet, for there is shortly to be a 
 union in London of the American land-owning 
 interests, and a series of drastic measures are 
 scheduled, which it is believed will not only 
 increase the annual rentals of the vast domain 
 
ALIEN LANDLORDISM AND ITS REMEDY 107 
 
 involved, but which will greatly affect the den- 
 sity of the hundreds of thousands who dwell 
 upon it. 
 
 "First of all, a list of the members of the 
 aristocracy who own the lands in question will 
 not be without interest. Such a list has never 
 before been given in full. The greatest of the 
 English holdings and the persons interested 
 are these: 
 
 "The Texas Land Union {Syndicate No. 3,) 
 3,000,000 acres. — Interested peers : Baroness 
 Burdette-Coutts, Earl Cadogan, H. C. Fitz- 
 roy-Somerset (this is the Duke of Beau- 
 fort), William Alexander Lochiel, Stephen- 
 son Douglas-Hamilton, Duke of Beaudon, 
 the Duke of Rutland, Ughtead J. Kay-Shut- 
 tleworth, Eand Ethel Cadogan (maid in 
 waiting to the Queen). This syndicate owns 
 whole counties in Texas, and tens of thou- 
 sands of persons pay it rentals. 
 "Sir Edward Reid, 2,000,000 acres. — This is a 
 syndicate which owns lands in Florida only. 
 It includes the present Duchess of Marlbor- 
 ough, Lady Randolph Churchill and Lady 
 Lister-Kaye. 
 "Viscount Scully, 3,000,000 acres. — His lord- 
 ship maintains an elaborate system of bail- 
 iffs. 
 "Syndicate No. 4, 1,800,000 acres. — This syn- 
 dicate has all its holdings in Mississippi. It 
 includes the Marquis of Dalhousie, George 
 
108 THE IMPENDING CRISIS 
 
 Henry Howard Cholmondeley (Viscount 
 Cholmondeley), Georgiana, Viscountess 
 Cross, the Hon. Lady Hamilton Gordon, and 
 the Hon. Lady Biddulph. 
 
 "Marquis of Tweedale, 750,000 acres. — The 
 Marquis is William Montagu Hay, famed 
 all over Scotland as the rack-rent lord. 
 
 "Phillips, Marshall & Co., London, 1,300,000 
 acres. — This firm has the whole peerage for 
 its clients. 
 
 "The Anglo-American Syndicate, London, 
 650,000 acres. — The funds of widowed peer- 
 esses are largely invested here. The lands 
 are in the South and West. 
 
 "Bryan H. Evans, 700,000 acres. — Mr. Evans 
 resides in London. His lands are in Mis- 
 sissippi. 
 
 "The Duke of Sutherland, 125,000 acres. — 
 This is the actress-loving, champagne-bibbing 
 and rack-rent nobleman of police court fame. 
 
 "William Whalley, 310,000 acres. — Mr. Whal- 
 ley is the squire of Peterboro, England. 
 
 "The Missouri Land Company, 300,000 acres. — 
 This operates a Missouri domain and has 
 headquarters at Edinburgh. 
 
 "Robert Tennant, 230,000 acres. — This is all 
 farming land. Mr. Tennant lives in London. 
 
 "Dundee Land Company, 247,000 acres. 
 
 "Lord Dunmore, 120,000 acres. 
 
 "Benjamin New gas, Liverpool, 100,000 acres. 
 
ALIEN LANDLORDISM AND ITS REMEDY IO9 
 
 "Lord Houghton, 60,000 acres in Florida. 
 "Lord Dunraven, 60,000 acres in Colorado. 
 "English Land Company, 50,000 acres in Cali- 
 fornia. 
 "Alexander Grant, London, 35,000 acres in 
 
 Kansas. 
 "Syndicate No. 6, 110,000 acres. — This syndi- 
 cate includes the Earl of Verulam and the 
 Earl of Lankeville. The land is in Wis- 
 consin. 
 "M. Elfenhauser, of Halifax, 600,000 acres. — 
 
 The land is in West Virginia. 
 "Syndicate No. 1, 50,000 acres. — This is a 
 Scotch concern, and its land is in Florida. 
 
 "Tzventy-seven million acres, the total. 
 "It is claimed that fully 20,000,000 acres of 
 American land are thus owned by great land- 
 lords in England and Scotland. This does not 
 include the Holland Syndicate, which owns 
 5,000,000 acres of grazing land in Western 
 States, nor the German Syndicate, owning 
 2,000,000 acres in various States. 
 
 "It is well known to those who have casually 
 looked into the matter that foreign land-own- 
 ing has much impeded the development of the 
 Western commonwealths. These great land 
 owners positively refuse to sell. They prefer 
 to establish a system of agencies and bailiffs, 
 with the result that serious complications have 
 resulted. The State legislatures have done 
 
110 THE IMPENDING CRISIS 
 
 their best to deal with the question, but hereto- 
 fore with only indifferent success. Viscount 
 Scully is, rightly or wrongly, made the scape- 
 goat of this whole business. He has for years 
 been a thorn in the path of one State adminis- 
 tration after another, and his shrewdness in 
 evading every provision of law directed against 
 him has extorted the admiration of thousands. 
 Thus Scully practically owns, in Illinois, the 
 best part of the counties of Logan, Livingston 
 and Tazewell. The State in 1887 passed an 
 alien land law, directed solely against Scully. 
 To evade it he insisted beforehand upon a 
 clause in all his leases stipulating that the lessee 
 should pay all taxes accruing against the prop- 
 erty leased. The result was the creation of a 
 large and solid body of voters in the 'Scully 
 Counties,' as they are called, opposed to propo- 
 sitions of public improvement by taxation." 
 
 The Pittsburgh Post of October 26, 1896, 
 contains the following: 
 
 "As announced in the Pittsburgh Post last 
 fall there is consternation among the leasehold- 
 ers of the Schenley estate in Allegheny, Pa. 
 Quit notices have been served to tenants pro- 
 viding that there must be improvement on the 
 property or there will be no renewal of leases. 
 As the leases expire April 1, this year, 1897, 
 and the notices affect over four thousand lease- 
 holders, the announcement of the Schenley 
 
ALIEN LANDLORDISM AND ITS REMEDY III 
 
 estate agent has caused a big-sized sensation. 
 The notices affect several thousand merchants 
 and business men of all descriptions. 
 
 "The Schenley estate in Allegheny embraces 
 about 150 acres, some of it being the most valu- 
 able business property on the north side, east of 
 Federal Street. 
 
 "The agent for the Schenley estate in Pitts- 
 burgh, when seen in regard to the matter, said 
 that Mrs. Schenley was carrying out her well 
 known policy in regard to her tenants. That 
 was that they must erect buildings in keeping 
 with the neighborhood. Mrs. Schenley always 
 exacted that buildings be put up that would be 
 a credit to Pittsburg and Allegheny, and for 
 this the two towns should feel grateful. If the 
 tenant will not guarantee to erect substantial 
 buildings there will be no renewal. Most of 
 the leases in Allegheny are twenty-year leases, 
 dating April 1, 1877. A few fifty-year leases, 
 dating April 1, 1847. At the time these leases 
 were drawn the city was very different from 
 what it is to-day. Parts that are now modern 
 business centers were then cornfields and 
 meadows. The localities demand newer and 
 more modern buildings. Alleghenians will 
 thus see before long the obliteration of many 
 familiar but ramshackle affairs that now pass 
 for houses or stores, and in their places will be 
 more modern buildings. 
 
112 THE IMPENDING CRISIS 
 
 "The rentals will also be increased. It is 
 said that all the leases from April i on will be 
 for twenty years and will contain a proviso that 
 if the leaseholders erect suitable buildings on 
 them within a certain time they will have the 
 privilege of renewing their leases in 191 7." 
 
 A writer thus comments on the foregoing in 
 one of our magazines :* 
 
 "The Schenley estate is a good illustration 
 of the process by which the American people 
 are laid under contribution to foreign land- 
 lords. Mrs. Schenley was born in Allegheny 
 county, Pa., in 1824, the youngest of four chil- 
 dren of John O'Hara, who had a six hundred 
 acre farm where Allegheny City now stands. 
 In 1840, at sixteen years of age, she married 
 Captain Schenley, of the British Army, and 
 took up her residence in England. Then, in 
 1840, Pittsburg, Pa., was a city of 30,000 in- 
 habitants and the United States had 17,000,000 
 souls. A few years after, on reaching her 
 majority, Mrs. Schenley got control of one- 
 fourth of her father's 600-acre farm in Alle- 
 gheny, which was growing into a city by the 
 overflow of population from Pittsburg across 
 the river. Captain Schenley leased the land, 
 in demand for building lots, on ground rent to 
 persons who put up houses at their own ex- 
 
 *"Why?" Magazine published monthly by Frank 
 Vierth, Cedar Rapids, Iowa, Sept. 1898, number. 
 
ALIEN LANDLORDISM AND ITS REMEDY 113 
 
 pense and were fined by a yearly tax on them. 
 Every fifteen or twenty years Schenley raised 
 the ground rent, which, of course, the tenants 
 had to pay ? Who made the ground rent rise ? 
 Clearly the people of Pennsylvania, Ohio and 
 West Virginia round about by their industry 
 and increase in numbers. What did Schenley 
 do toward it ? Nothing. But yet he recei > ed 
 the benefit in increased rents. The most super- 
 ficial mind understands that lots are in greater 
 demand in a populous city than in a village, 
 exactly in proportion to the population; and 
 that the owner of the ground may be thousands 
 of miles away without affecting the result. 
 
 "From 1840 to 1900 Pittsburg has grown 
 to a city of 321,000 inhabitants; Allegheny to 
 a city of 130,000, and the United States to a 
 nation of 76,000,000, and in consequence Mrs. 
 Schenley gets a pension of $200,000 a year 
 from the people of Allegheny City. 
 
 "The essence of the matter is that 4,000 
 Americans in Pittsburg and Allegheny pay to a 
 woman living in London, England, $200,000 
 a year for the privilege of building on ground 
 in a city of their own country. Does she do 
 any labor in return for what they send her? 
 Oh no. She does not make the land, she does 
 not build houses for them; she kindly permits 
 them to live in their own country, and gets her 
 lawyers to write them little receipts. On these 
 
114 THE IMPENDING CRISIS 
 
 paper indulgences they cannot get fat; they 
 cannot buy food and clothing and furniture 
 with them, and thus start up trade and ex- 
 changes. She is the master of 4,000 American 
 serfs, who may imagine themselves free, but 
 who, in fact, for two months in every year 
 work and toil without any return to keep her 
 in idle luxury in England." 
 
 Commenting on alien landlordism in general 
 in the United States this writer further says : 
 
 "William Scully, who was one of the most 
 notorious of the rack-renting and evicting Irish 
 landlords, owns about 90,000 acres of the rich- 
 est land in Illinois, besides large tracts in other 
 States, from which he draws an income of 
 $400,000 a year for kindly permitting several 
 thousand American farmers to till the soil in 
 their native country. He never builds a house 
 or puts up a fence; his tenants must do that. 
 He does not make the land either. The humble 
 example of Captain Schenley has been imitated 
 by hundreds, perhaps thousands, of foreign 
 noblemen. The investments of Scully have 
 been duplicated by such illustrious people as 
 Queen Victoria, Emperor William, and the 
 Czar of Russia. The result is that their ever- 
 increasing rent roll for our own land amounts 
 to over $200,000,000 per year. Some people 
 imagine it a great thing for America that we 
 export over $200,000,000 worth of products 
 
ALIEN LANDLORDISM AND ITS REMEDY 1 15 
 
 more every year than we import, but the fact is 
 that we have simply paid our ground rent, just 
 as a tenant who may imagine himself doing a 
 large business hauling off load after load of his 
 products to pay his rent, for which the landlord 
 renders him no service whatever." 
 
 What is the remedy? It can only be cured 
 by a change in our system of taxation. The 
 change we propose is to take by taxation this 
 rent that now goes into private pockets. As 
 is shown in the case of the Schenleys as well 
 as Scully and others, nothing is done by the 
 landlord to produce the value he appropriates 
 from those who labor upon and improve the 
 land. That this land has rental value is due 
 wholly to the fact that it is located in a popu- 
 lous community. We hold as the ethical basis 
 for property that to him who creates a thing or 
 value to him belongs that thing or value. The 
 Schenleys and Scullys did not create that 
 enormous value which they annually appropri- 
 ate to themselves. If, as is seen, the com- 
 munity created the value, is it not proper and 
 just that it should be taken by the community ? 
 Can a better way than taxation be devised for 
 taking this value ? In other words, would not 
 a tax upon land values accomplish the desired 
 result? We propose that all landlords pay to 
 the Government the annual rental value of the 
 land they hold. By taking this annual rent into 
 
Il6 THE IMPENDING CRISIS 
 
 the public treasury and expending it for public 
 purposes we make every one a sharer in that 
 which he has helped to produce. This would 
 stop the flow to foreign shores of $200,000,000 
 worth of products annually for which we re- 
 ceive no equivalent, and which comes out of the 
 pockets of the American laborer ; not only that, 
 but the hundreds of millions that now go into 
 the pockets of American landlords and monop- 
 olists would go for public benefit, and the mul- 
 titude of taxes which are now saddled upon 
 industry could be abolished. 
 
 "How can industry thrive, business flourish 
 and times be good, so long as we keep our tax- 
 ing system upside down. When a mechanic 
 builds himself a home, when a farmer builds a 
 barn or makes any other improvement, our 
 antiquated taxing system fines him for it year 
 after year by increasing his taxes. What 
 wrong has he done? He has employed the 
 masons, the lumbermen, the carpenters, the 
 hardware makers, the painters, etc. And for 
 that, by our antiquated taxing system, he must 
 be fined by an increase of tax; for he has em- 
 ployed laborers and that might raise wages. 
 
 "On the other hand, the speculator (who is 
 also often a non-resident) keeps everybody from 
 improving or working on his land ; he even lets 
 the buildings rot down ; does not work the land 
 himself, neither does he hire anybody, or permit 
 
ALIEN LANDLORDISM AND ITS REMEDY 117 
 
 anybody to work on it except for ground rent 
 or shares or its equivalent. What good has he 
 done? He keeps land vacant and men idle. 
 Is that right? No. But our same system 
 rewards him by making his tax low; and even 
 increases that reward by permitting him to sell 
 that land at an advanced price, when other 
 people at their own expense have brought up 
 children to increase the population, and thus 
 have increased the demand for that very land. 
 
 "A tax on products of labor is shifted upon 
 the consumer, and rolls up like a snowball, so 
 that for every dollar that goes into the treasury 
 the consumer pays three dollars as freight to 
 get it there. An article that costs one dollar 
 to make, when taxed fifty cents, is reckoned by 
 the maker to cost him $1.50, and he charges a 
 profit on that amount, not on the actual making 
 price. The next man who handles it is com- 
 pelled in turn to charge a profit on the entire 
 amount the article cost him, which, of course, 
 includes the tax. As most articles pass through 
 half a dozen hands, the price is run up more 
 and more, and the poor consumer, who is 
 obliged to spend all his earnings for the sup- 
 port of his family, pays from one-fourth to one- 
 half of his wages in taxes and their accumula- 
 tions through the increase of prices. 
 
 "But some one might object that the farmer 
 will pay all the taxes if the public funds are 
 
Il8 THE IMPENDING CRISIS 
 
 raised by taxation of land values. Let us 
 examine by the figures of the census of 1890. 
 Ten million farmers and their families (45,- 
 000,000 souls) occupy one-fifth of the land 
 values, for although the farmers occupy great 
 areas of land, that ground has comparatively 
 small value. Three million city people and 
 their families (15,000,000 souls) occupy four- 
 fifths of the land values; for the city lots are 
 worth more by the front foot than the farm 
 lands by the whole acre. Yet between occupy- 
 ing and owning there is a vast difference. The 
 census shows that eighty- four per cent of the 
 city people are tenants, and that thirty-two per 
 cent of the farmers are tenants, while nineteen 
 per cent more of the latter class are mortga- 
 gors, so that only half of the farmers really 
 ozvn their land, which is just one-tenth of the 
 land value. 
 
 "A quarter of a million of the city people and 
 foreigners own the other nine-tenths, and they 
 would have to pay as taxes that which they 
 now keep as rent and which attracts so many 
 foreign noblemen to marry American land- 
 lords' daughters, in order to live on the sweat 
 of the American farmer's brow. 
 
 "Pitt, the celebrated English statesman, said 
 that a large direct taxation would produce re- 
 bellion, but that the government may tax the 
 last bit of bread out of a poor man's mouth 
 
ALIEN LANDLORDISM AND ITS REMEDY 1 1 9 
 
 and the last shirt off his back by indirect taxa- 
 tion and he will only call it 'hard times.' Man 
 being- endowed with the faculty of reason 
 should use it. He gradually improves on the 
 crude processes of dawning civilization. In 
 the mechanical arts we have made improve- 
 ments that border on the miraculous. When 
 the American people see that want, misery and 
 resultant crime are the products of a taxing 
 system inherited from Europe, will they hesi- 
 tate to make an improvement in this?" 
 
CHAPTER XI 
 
 CONCLUSION 
 
 "Prosperity!" If the points which I have 
 tried to set forth be true, then by what author- 
 ity do you flaunt this high-sounding word, this 
 gilded lie, in the face of honest toil ? If to be 
 prosperous means high rent, low wages and 
 increased price of products, then our system of 
 logic is sadly out of repair and our abuse of the 
 king's English beyond forgiveness. If, on the 
 contrary, "prosperity" means all that a priv- 
 ileged few can take from the many without 
 being suspected, then your claim is justified. 
 
 This cry of "prosperity" is something like 
 the cry of "overproduction." "Overproduc- 
 tion !" What nonsense ! Have those who pro- 
 duced the wealth all that they need for their 
 happiness and comfort? If not, why not? So 
 long as the law gives to the few the monopoly 
 of the avenues of wealth, the inequality in its 
 distribution will be more glaring with each 
 successive generation. 
 
 It was blind stupidity on the part of Edmond 
 Burke when the French Revolution was in 
 
CONCLUSION 121 
 
 progress to expect millions of Frenchmen, 
 aroused to frenzy by centuries of misgovern- 
 ment, to proceed by legal methods. The com- 
 mon people had pleaded for justice for genera- 
 tions, but their appeals fell upon deaf ears. 
 The rights of the people had been violated; 
 their homes had been invaded and the sacred 
 traditions of their fathers thrown to the winds. 
 The time for discussion had passed and the 
 time for action had arrived. 
 
 We see a direct analogy between the peasant 
 of France and the toiler of America, between 
 the brutal aristocrat of Louis XVI and the 
 cold-blooded plutocrat of our own country. 
 Political adepts deceive themselves when they 
 think that the way to raise wages and make a 
 people prosperous is to levy heavy taxes upon 
 them. 
 
 When we think of the innumerable schemes 
 that are launched by those who are eager to 
 get rich without working; of the millions of 
 bogus stock that is annually thrown on the 
 market and which is expected to pay dividends ; 
 of the rattle-brain schemes of financiers to issue 
 currency on commercial paper; of the numer- 
 ous speculative associations that are springing 
 up everywhere, all to rob productive industry, 
 it is a source of the greatest wonder that the 
 system is maintained one day. Before I close 
 I will again say that we are on the verge of the 
 
122 THE IMPENDING CRISIS 
 
 greatest financial crisis the modern world has 
 ever seen, and its coming is being hastened by 
 the policies that the politicians have been fol- 
 lowing for the last generation. Why should 
 we turn our backs upon questions which stare 
 us in the face and which must be met and 
 answered sooner or later? 
 
 Our charitable instincts will not compensate 
 for a deliberate denial of a law of nature. 
 
 From a nation of home-owners we are 
 rapidly sinking into a nation of tenants ; from 
 a nation where individual honesty was the rule, 
 into a nation where corporate greed is the 
 power that makes the laws and determines pub- 
 lic morals; from a nation of citizens into a 
 nation of subjects; from a nation where hon- 
 esty was king to a nation where money is king ; 
 from a nation where religious conviction in- 
 spired men to noble deeds to a nation where the 
 priest is a hireling and his profession a trade ; 
 from a nation of saving souls to a nation of 
 saving money. These things almost stare us 
 out of countenance and will not be set aside. 
 It is not a true statement to say that because 
 productive power has been increased the con- 
 dition of the great mass of the people has in 
 any way been alleviated. The means of pro- 
 duction have undoubtedly been improved and 
 man's productive power multiplied ten, fifty, 
 one hundred, and in some cases perhaps a thou- 
 
CONCLUSION 123 
 
 sand-fold. But it must be remembered that 
 the demand upon the laborer has proportion- 
 ately increased. In former times, when a 
 man's productive power was, say five, the 
 demand upon him was correspondingly five, 
 and when his productive power was increased 
 to twenty, the demand or exaction from him 
 was likewise increased to twenty. So it has 
 been in every department of industry. The 
 demands made upon the laborer have increased 
 in proportion to his ability to satisfy the de- 
 mand. The enormous productive power which 
 has been put into his hands has not been for 
 him. He has not been allowed to retain the 
 fruit of his labor, but he has been robbed of it 
 by those who have done him the kindness to 
 "permit him to work." "Permitted to work!" 
 Just think of it! Here on God's earth, an 
 earth intended for all the children of men, an 
 earth of boundless resources, so large, so vast, 
 and yet made so small by the artifice, by the 
 caprice, and by the authority of men, millions 
 of his children wander with not a home to call 
 their own. 
 
 You may practice your deceptions, you may 
 endeavor to cram down the throat of labor such 
 debasing doctrines as the "full dinner pail," 
 but the fact nevertheless remains that the 
 workers, the producers, do not get the wealth 
 which they produce. The rich are getting 
 
124 THE IMPENDING CRISIS 
 
 richer and the poor are getting poorer. The 
 facts of existing conditions do not agree with 
 the prosperity theory so eloquently expounded 
 during the last Presidential campaign. Yet 
 what can we expect from a political organiza- 
 tion whose bosses are committed to the propa- 
 gation of false doctrine? The banks control 
 our finances and plunder the public treasury, 
 the corporations dictate our legislation, the 
 trusts have made a lobby of our National Con- 
 gress, and all this to the eternal shame of the 
 politicians. You have done no permanent 
 good, you have accomplished nothing by mak- 
 ing gold the standard of our currency. It mat- 
 ters little what is the standard, so long as the 
 law gives to a privileged few the monopoly of 
 the means of production. 
 
 In an age of despotism, superstition usurps 
 the throne of reason, and the high priests of 
 falsehood, ever ready with their "inspiration' ' 
 and superior knowledge, will hesitate at noth- 
 ing to maintain the existing order of things. 
 Some must be profiting by the maintenance of 
 injustice or it would not so long hold its 
 ground. Statisticians tell us that the average 
 daily production of wealth per person in the 
 United States is about ten dollars, but that the 
 average receipts of the working classes is about 
 two dollars. Someone must get the other eight 
 dollars. Who gets it? 
 
CONCLUSION 125 
 
 We do not believe that the American people 
 are such fools as the politicians believe. 
 Must we continue to send to Europe to ask the 
 crowned "know-nothings" how we should man- 
 age our own affairs? It is time that we told 
 the European banker to mind his own business, 
 for there is no question of the ability of the 
 American voter to work out his own destiny if 
 he is but given the chance. 
 
 There is no slavery like that of the mind. It 
 is often said that such and such a man possesses 
 great wealth, when it could be more truthfully 
 said that the wealth possesses the man. The 
 fear of poverty enslaves us all, and generates in 
 the minds of some the insatiable desire to get 
 more and more wealth. Between the millionaire 
 on the one hand and the tramp on the other there 
 is a difference which the reason refuses to ac- 
 cept as nature's provision; a difference which, 
 like a cloud, hovers over civilization to-day 
 threatening to engulf it in ruin. The grinding 
 process of industrial slavery, the cry of the 
 widow and the orphan, the groans of the 
 oppressed, all this, contrasted with the cruel 
 selfishness of the rich, makes society an incom- 
 prehensible anomaly of order and disorder. 
 
 We appeal to your sense of right; we appeal 
 to your sense of justice; we appeal to those 
 in whose brains the spark of reason yet burns 
 and needs but the breath of a little truth to fan 
 
126 THE IMPENDING CRISIS 
 
 it into a flame of fervor and enthusiasm. 
 Behind the mere semblance of things there is 
 the eternal reality. It is Deity itself, untram- 
 melled by sense, unknown except by the light 
 of truth. Man's chief business in this world 
 is to bear witness unto the truth, for therein 
 rests his only salvation. 
 
 "To thine own self be true, and it must follow, as the 
 night the day, thou canst not then be false to any 
 man." 
 
 We deceive ourselves when we think that we 
 can make a compromise between right and 
 wrong, for justice permits no such compromise. 
 
 A great deal has been said about the danger 
 of admitting these new ideas into our politics 
 and of the advisability of reorganizing along 
 the old lines. This "Old Line Democracy" — 
 what is it but the ghost, the phantom of politi- 
 cal freedom ? What has it done since the Civil 
 War toward the emancipation of American 
 labor ? Had it not been for the lack of faith in 
 government by the people on the part of these 
 antiquated political doctrinaires, we would not 
 have suffered defeat in two successive Presiden- 
 tial campaigns. Must we modify our princi- 
 ples and make them of little effect in order to 
 invite these traitors into fellowship again? 
 Let those so-called Democrats who think that 
 they can destroy the Temple of Democracy and 
 
CONCLUSION 127 
 
 rebuild it in three days think seriously upon the 
 question, and if no remorse of conscience strike 
 them, then confess Republicanism and call 
 themselves Republicans, which to all intents 
 and purposes they really are. We need hope 
 for nothing from the Old Democracy, for it is 
 dead, since the defeat of 1900, and its future 
 has been buried in the past. Let the slothful 
 element of the Bourbons go over to their right- 
 ful masters in the Republican Party, and then 
 they shall know themselves as others know 
 them. To label a man a Democrat does not 
 make him a Democrat any more than the put- 
 ting of a whisky label on a bottle of vinegar 
 will change the contents into whisky. We will 
 kill no fatted calf and will ask no favors of those 
 Nestors of the old Democracy, except to mind 
 their own business and let the growth of the 
 New Democracy go on — as we well know it 
 must go on. The Democratic Party must 
 stand united on some rational proposition for 
 social improvement and not allow itself to be 
 divorced from the great masses of the people 
 by a slavish submission to Plutocracy and 
 Bossism. 
 
 There comes a time in the history of every 
 nation when accumulated wrong must find its 
 expression in some form or other. The beg- 
 gar, the tramp, the sweat-shop, prison and 
 almshouse, which stand to-day as living monu- 
 
128 THE IMPENDING CRISIS 
 
 ments of industrial slavery and the accumu- 
 lated wrong of centuries, would disappear with 
 freedom of opportunity for labor to employ it- 
 self. Behold in society to-day the hideous 
 spectacle of vice paraded under the name of 
 virtue, and of an organized hypocrisy main- 
 tained by a system of bribery and fraud ; while 
 in high places sit those whose only claim to dis- 
 tinction is their utter subserviency to the 
 powers that be. 
 
 Free land, free trade, free men — this is the 
 trinity, the basis of all future political phil- 
 osophy. With it nations, like men, "may rise 
 on stepping stones of their dead selves to 
 higher things." The fatherhood of God and 
 the brotherhood of man may then reasonably 
 be hoped for. Without it, we will sink hope- 
 lessly into those conditions in which the effete 
 monarchies of the old world have struggled, 
 and struggled in vain. The arrogance of the 
 few possessing all; the division of the people 
 into classes; the contempt on the part of the 
 few for the rights of the many — these things 
 conspiring to produce social decay, will make 
 the perpetuation of a republic an impossibility. 
 
 "When political economy shall have done her 
 work on earth, and taught men how to evolve 
 the maximum of material good, and when 
 equity shall have taught men to construct 
 society in accordance with the principles of jus- 
 
CONCLUSION 129 
 
 tice, the reason of mankind will still go onward, 
 and the higher and nobler good, the aspiration 
 after immortality, will still beckon on human- 
 ity; and earth, transformed by truth harmon- 
 iously reverberating from nature to reason, and 
 frcm reason to revelation, shall at last rejoice 
 in the universal knowledge of Him whose king- 
 dom is everlasting." 
 
1904