Sophisms of the Protectionists — 20 - Capital and Interest Part 2

THE SACK OF CORN.

Mathurin, in other respects as poor as Job, and obliged to earn his bread by day-labor, became, nevertheless, by some inheritance, the owner of a fine piece of uncultivated land.

He was exceedingly anxious to cultivate it.

"Alas!"

said he, "to make ditches, to raise fences, to break the soil, to clear away the brambles and stones, to plough it, to sow it, might bring me a living in a year or two; but certainly not to-day, or to-morrow.

It is impossible to set about farming it, without previously saving some provisions for my subsistence until the harvest;

and I know, by experience, that preparatory labor is indispensable, in order to render present labor productive."

The good Mathurin was not content with making these reflections.

He resolved to work by the day, and to save something from his wages to buy a spade and a sack of corn;

without which things, he must give up his fine agricultural projects.

He acted so well, was so active and steady, that he soon saw himself in possession of the wished-for sack of corn.

"I shall take it to the mill," said he, "and then I shall have enough to live upon till my field is covered with a rich harvest."

Just as he was starting, Jerome came to borrow his treasure of him.

"If you will lend me this sack of corn," said Jerome, "you will do me a great service; for I have some very lucrative work in view, which I cannot possibly undertake, for want of provisions to live upon until it is finished."

"I was in the same case," answered Mathurin, "and if I have now secured bread for several months, it is at the expense of my arms and my stomach.

Upon what principle of justice can it be devoted to the realization of _your_ enterprise instead of _mine_?"

You may well believe that the bargain was a long one.

However, it was finished at length, and on these conditions: First.

Jerome promised to give back, at the end of the year, a sack of corn of the same quality, and of the same weight, without missing a single grain.

"This first clause is perfectly just," said he, "for without it Mathurin would _give_, and not _lend_."

Secondly.

He engaged to deliver _five litres_ on _every hectolitre_.

"This clause is no less just than the other," thought he; "for without it Mathurin would do me a service without compensation; he would inflict upon himself a privation--he would renounce his cherished enterprise--he would enable me to accomplish mine--he would cause me to enjoy for a year the fruits of his savings, and all this gratuitously.

Since he delays the cultivation of his land, since he enables me to realize a lucrative labor, it is quite natural that I should let him partake, in a certain proportion, of the profits which I shall gain by the sacrifice he makes of his own."

On his side, Mathurin, who was something of a scholar, made this calculation: "Since, by virtue of the first clause, the sack of corn will return to me at the end of a year," he said to himself, "I shall be able to lend it again; it will return to me at the end of the second year; I may lend it again, and so on, to all eternity.

However, I cannot deny that it will have been eaten long ago.

It is singular that I should be perpetually the owner of a sack of corn, although the one I have lent has been consumed for ever.

But this is explained thus: It will be consumed in the service of Jerome.

It will put it into the power of Jerome to produce a superior value; and, consequently, Jerome will be able to restore me a sack of corn, or the value of it, without having suffered the slightest injury; but quite the contrary.

And as regards myself, this value ought to be my property, as long as I do not consume it myself; if I had used it to clear my land, I should have received it again in the form of a fine harvest.

Instead of that, I lend it, and shall recover it in the form of repayment.

"From the second clause, I gain another piece of information.

At the end of the year, I shall be in possession of five litres of corn, over the 100 that I have just lent.

If, then, I were to continue to work by the day, and to save a part of my wages, as I have been doing, in the course of time I should be able to lend two sacks of corn; then three; then four; and when I should have gained a sufficient number to enable me to live on these additions of five litres over and above each, I shall be at liberty to take a little repose in my old age.

But how is this?

In this case, shall I not be living at the expense of others?

No, certainly, for it has been proved that in lending I perform a service; I complete the labor of my borrowers; and only deduct a trifling part of the excess of production, due to my lendings and savings.

It is a marvellous thing, that a man may thus realize a leisure which injures no one, and for which he cannot be envied without injustice."

THE HOUSE.

Mondor had a house.

In building it, he had extorted nothing from any one whatever.

He owed it to his own personal labor, or, which is the same thing, to labor justly rewarded.

His first care was to make a bargain with an architect, in virtue of which, by means of a hundred crowns a year, the latter engaged to keep the house in constant good repair.

Mondor was already congratulating himself on the happy days which he hoped to spend in this retreat, declared sacred by our Constitution.

But Valerius wished to make it his residence.

"How can you think of such a thing?"

said Mondor; "it is I who have built it; it has cost me ten years of painful labor, and now you would enjoy it!"

They agreed to refer the matter to judges.

They chose no profound economists--there were none such in the country.

But they found some just and sensible men; it all comes to the same thing: political economy, justice, good sense, are all the same thing.

Now here is the decision made by the judges: If Valerius wishes to occupy Mondor's house for a year, he is bound to submit to three conditions.

The first is, to quit at the end of the year, and to restore the house in good repair, saving the inevitable decay resulting from mere duration.

The second, to refund to Mondor the 300 francs, which the latter pays annually to the architect to repair the injuries of time; for these injuries taking place whilst the house is in the service of Valerius, it is perfectly just that he should bear the consequences.

The third, that he should render to Mondor a service equivalent to that which he receives.

As to this equivalence of services, it must be freely discussed between Mondor and Valerius.

THE PLANE.

A very long time ago there lived, in a poor village, a joiner, who was a philosopher, as all my heroes are, in their way.

James worked from morning till night with his two strong arms, but his brain was not idle, for all that.

He was fond of reviewing his actions, their causes, and their effects.

He sometimes said to himself, "With my hatchet, my saw, and my hammer, I can make only coarse furniture, and can only get the pay for such.

If I only had a _plane_, I should please my customers more, and they would pay me more.

It is quite just; I can only expect services proportioned to those which I render myself.

Yes!

I am resolved, I will make myself a _plane_."

However, just as he was setting to work, James reflected further: "I work for my customers 300 days in the year.

If I give ten to making my plane, supposing it lasts me a year, only 290 days will remain for me to make my furniture.

Now, in order that I be not the loser in this matter, I must gain henceforth, with the help of the plane, as much in 290 days, as I now do in 300. I must even gain more; for unless I do so, it would not be worth my while to venture upon any innovations."

James began to calculate.

He satisfied himself that he should sell his finished furniture at a price which would amply compensate for the ten days devoted to the plane; and when no doubt remained on this point, he set to work.

I beg the reader to remark, that the power which exists in the tool to increase the productiveness of labor, is the basis of the solution which follows.

At the end of ten days, James had in his possession an admirable plane, which he valued all the more for having made it himself.

He danced for joy--for, like the girl with her basket of eggs, he reckoned all the profits which he expected to derive from the ingenious instrument; but more fortunate than she, he was not reduced to the necessity of saying good-bye to calf, cow, pig, and eggs, together.

He was building his fine castles in the air, when he was interrupted by his acquaintance William, a joiner in the neighboring village.

William having admired the plane, was struck with the advantages which might be gained from it.

He said to James: _W.

_ You must do me a service.

_J.

_ What service?

_W.

_ Lend me the plane for a year.

As might be expected, James at this proposal did not fail to cry out, "How can you think of such a thing, William?

Well, if I do you this service, what will you do for me in return?"

_W.

_ Nothing.

Don't you know that a loan ought to be gratuitous?

Don't you know that capital is naturally unproductive?

Don't you know fraternity has been proclaimed?

If you only do me a service for the sake of receiving one from me in return, what merit would you have?

_J.

_ William, my friend, fraternity does not mean that all the sacrifices are to be on one side; if so, I do not see why they should not be on yours.

Whether a loan should be gratuitous I don't know; but I do know that if I were to lend you my plane for a year, it would be giving it to you.

To tell you the truth, that is not what I made it for.

_W.

_ Well, we will say nothing about the modern maxims discovered by the Socialist gentlemen.

I ask you to do me a service; what service do you ask of me in return?

_J.

_ First, then, in a year, the plane will be done for, it will be good for nothing.

It is only just, that you should let me have another exactly like it; or that you should give me money enough to get it repaired; or that you should supply me the ten days which I must devote to replacing it.

_W.

_ This is perfectly just.

I submit to these conditions.

I engage to return it, or to let you have one like it, or the value of the same.

I

think you must be satisfied with this, and can require nothing further.

_J.

_ I think otherwise.

I made the plane for myself, and not for you.

I

expected to gain some advantage from it, by my work being better finished and better paid, by an improvement in my condition.

What reason is there that I should make the plane, and you should gain the profit?

I

might as well ask you to give me your saw and hatchet!

What a confusion!

Is it not natural that each should keep what he has made with his own hands, as well as his hands themselves?

To use without recompense the hands of another, I call slavery; to use without recompense the plane of another, can this be called fraternity?

_W.

_ But, then, I have agreed to return it to you at the end of a year, as well polished and as sharp as it is now.

_J.

_ We have nothing to do with next year; we are speaking of this year.

I have made the plane for the sake of improving my work and my condition; if you merely return it to me in a year, it is you who will gain the profit of it during the whole of that time.

I am not bound to do you such a service without receiving anything from you in return;

therefore, if you wish for my plane, independently of the entire restoration already bargained for, you must do me a service which we will now discuss; you must grant me remuneration.

And this was done thus: William granted a remuneration calculated in such a way that, at the end of the year, James received his plane quite new, and in addition, a compensation, consisting of a new plank, for the advantages of which he had deprived himself, and which he had yielded to his friend.

It was impossible for any one acquainted with the transaction to discover the slightest trace in it of oppression or injustice.

The singular part of it is, that, at the end of the year, the plane came into James' possession, and he lent it again; recovered it, and lent it a third and fourth time.

It has passed into the hands of his son, who still lends it.

Poor plane!

how many times has it changed, sometimes its blade, sometimes its handle.

It is no longer the same plane, but it has always the same value, at least for James' posterity.

Workmen!

let us examine into these little stories.

I maintain, first of all, that the _sack of corn_ and the _plane_ are here the type, the model, a faithful representation, the symbol, of all capital; as the five litres of corn and the plank are the type, the model, the representation, the symbol, of all interest.

This granted, the following are, it seems to me, a series of consequences, the justice of which it is impossible to dispute.

1st.

If the yielding of a plank by the borrower to the lender is a natural, equitable, lawful remuneration, the just price of a real service, we may conclude that, as a general rule, it is in the nature of capital to produce interest.

When this capital, as in the foregoing examples, takes the form of an _instrument of labor_, it is clear enough that it ought to bring an advantage to its possessor, to him who has devoted to it his time, his brains, and his strength.

Otherwise, why should he have made it?

No necessity of life can be immediately satisfied with instruments of labor; no one eats planes or drinks saws, except, indeed, he be a conjurer.

If a man determines to spend his time in the production of such things, he must have been led to it by the consideration of the power which these instruments add to his power; of the time which they save him; of the perfection and rapidity which they give to his labor; in a word, of the advantages which they procure for him.

Now, these advantages, which have been prepared by labor, by the sacrifice of time which might have been used in a more immediate manner, are we bound, as soon as they are ready to be enjoyed, to confer them gratuitously upon another?

Would it be an advance in social order, if the law decided thus, and citizens should pay officials for causing such a law to be executed by force?

I venture to say, that there is not one amongst you who would support it.

It would be to legalize, to organize, to systematize injustice itself, for it would be proclaiming that there are men born to render, and others born to receive, gratuitous services.

Granted, then, that interest is just, natural, and lawful.

2nd.

A second consequence, not less remarkable than the former, and, if possible, still more conclusive, to which I call your attention, is this: _interest is not injurious to the borrower_.

I mean to say, the obligation in which the borrower finds himself, to pay a remuneration for the use of capital, cannot do any harm to his condition.

Observe, in fact, that James and William are perfectly free, as regards the transaction to which the plane gave occasion.

The transaction cannot be accomplished without the consent of the one as well as of the other.

The worst which can happen is, that James may be too exacting; and in this case, William, refusing the loan, remains as he was before.

By the fact of his agreeing to borrow, he proves that he considers it an advantage to himself; he proves, that after every calculation, including the remuneration, whatever it may be, required of him, he still finds it more profitable to borrow than not to borrow.

He only determines to do so because he has compared the inconveniences with the advantages.

He has calculated that the day on which he returns the plane, accompanied by the remuneration agreed upon, he will have effected more work, with the same labor, thanks to this tool.

A profit will remain to him, otherwise he would not have borrowed.

The two services of which we are speaking are exchanged according to the law which governs all exchanges, the law of supply and demand.

The claims of James have a natural and impassable limit.

This is the point in which the remuneration demanded by him would absorb all the advantage which William might find in making use of a plane.

In this case, the borrowing would not take place.

William would be bound either to make a plane for himself, or to do without one, which would leave him in his original condition.

He borrows, because he gains by borrowing.

I know very well what will be told me.

You will say, William may be deceived, or, perhaps, he may be governed by necessity, and be obliged to submit to a harsh law.

It may be so.

As to errors in calculation, they belong to the infirmity of our nature, and to argue from this against the transaction in question, is objecting the possibility of loss in all imaginable transactions, in every human act.

Error is an accidental fact, which is incessantly remedied by experience.

In short, everybody must guard against it.

As far as those hard necessities are concerned, which force persons to burdensome borrowings, it is clear that these necessities exist previously to the borrowing.

If William is in a situation in which he cannot possibly do without a plane, and must borrow one at any price, does this situation result from James having taken the trouble to make the tool?

Does it not exist independently of this circumstance?

However harsh, however severe James may be, he will never render the supposed condition of William worse than it is.

Morally, it is true, the lender will be to blame; but, in an economical point of view, the loan itself can never be considered responsible for previous necessities, which it has not created, and which it relieves, to a certain extent.

But this proves something to which I shall return.

The evident interests of William, representing here the borrowers, there are many Jameses and planes.

In other words, lenders and capitals.

It is very evident, that if William can say to James--"Your demands are exorbitant; there is no lack of planes in the world;" he will be in a better situation than if James' plane was the only one to be borrowed.

Assuredly, there is no maxim more true than this--service for service.

But let us not forget, that no service has a fixed and absolute value, compared with others.

The contracting parties are free.

Each carries his requisitions to the farthest possible point; and the most favorable circumstance for these requisitions is the absence of rivalship.

Hence it follows, that if there is a class of men more interested than any other, in the formation, multiplication, and abundance of capitals, it is mainly that of the borrowers.

Now, since capitals can only be formed and increased by the stimulus and the prospect of remuneration, let this class understand the injury they are inflicting on themselves, when they deny the lawfulness of interest, when they proclaim that credit should be gratuitous, when they declaim against the pretended tyranny of capital, when they discourage saving, thus forcing capitals to become scarce, and consequently interests to rise.

3rd.

The anecdote I have just related enables you to explain this apparently singular phenomenon, which is termed the duration or perpetuity of interest.

Since, in lending his plane, James has been able, very lawfully, to make it a condition, that it should be returned to him, at the end of a year, in the same state in which it was when he lent it, is it not evident that he may, at the expiration of the term, lend it again on the same conditions.

If he resolves upon the latter plan, the plane will return to him at the end of every year, and that without end.

James will then be in a condition to lend it without end;

that is, he may derive from it a perpetual interest.

It will be said, that the plane will be worn out.

That is true; but it will be worn out by the hand and for the profit of the borrower.

The latter has taken into account this gradual wear, and taken upon himself, as he ought, the consequences.

He has reckoned that he shall derive from this tool an advantage, which will allow him to restore it in its original condition, after having realized a profit from it.

As long as James does not use this capital himself, or for his own advantage--as long as he renounces the advantages which allow it to be restored to its original condition--he will have an incontestable right to have it restored, and that independently of interest.

Observe, besides, that if, as I believe I have shown, James, far from doing any harm to William, has done him a _service_ in lending him his plane for a year; for the same reason, he will do no harm to a second, a third, a fourth borrower, in the subsequent periods.

Hence you may understand, that the interest of a capital is as natural, as lawful, as useful, in the thousandth year, as in the first.

We may go still further.

It may happen, that James lends more than a single plane.

It is possible, that by means of working, of saving, of privations, of order, of activity, he may come to lend a multitude of planes and saws; that is to say, to do a multitude of services.

I insist upon this point--that if the first loan has been a social good, it will be the same with all the others; for they are all similar, and based upon the same principle.

It may happen, then, that the amount of all the remunerations received by our honest operative, in exchange for services rendered by him, may suffice to maintain him.

In this case, there will be a man in the world who has a right to live without working.

I do not say that he would be doing right to give himself up to idleness--but I say, that he has a right to do so; and if he does so, it will be at nobody's expense, but quite the contrary.

If society at all understands the nature of things, it will acknowledge that this man subsists on services which he receives certainly (as we all do), but which he lawfully receives in exchange for other services, which he himself has rendered, that he continues to render, and which are quite real, inasmuch as they are freely and voluntarily accepted.