Interest and Principal: The Origin of Ground Rent
(1809 - 1865) ~ Father of Anarcho-Mutualism : ...he turned his talents instead to the printer's trade, a profession which gave birth to many anarchists, but the first to call himself an anarchist was Proudhon. By mid-century, Proudhon was the leading left intellectual in France or for that matter, all of Europe, far surpassing Marx's notoriety or Bakunin's. Proudhon... (From : Dana Ward Bio.)
• "What is your flag? Association! And your motto? Equality before fortune! Where are you taking us? To Brotherhood!" (From : "Toast to the Revolution," by Pierre-Joseph Proudh....)
• "Revolutions are the successive manifestation of justice in human history. — It is for this reason that all revolutions have their origins in a previous revolution." (From : "Toast to the Revolution," by Pierre-Joseph Proudh....)
• "The revolution, in that epoch, without abandoning its first given, took another name, which was already celebrated. It called itself philosophy." (From : "Toast to the Revolution," by Pierre-Joseph Proudh....)
Interest and Principal: The Origin of Ground Rent
I said before that in ancient times the landed proprietor, when neither he nor his family farmed his land, as was the case among the Romans in the early days of the Republic, cultivated it through his slaves: such was the general practice of patrician families. Then slavery and the soil were chained together; the farmer was called adscrpitus gleboe, joined to the land; property in men and things was undivided. The price of a farm depended (1) upon its area and quality of its soil, (2) upon the quantity of stock, and (3) upon the number of slaves.
When the emancipation of the slave was proclaimed, the proprietor lost the man and kept the land; just as today, in freeing the blacks, we leave the master his property in land and stock. Nevertheless, from the standpoint of ancient law as well as of natural and Christian right, man, born to labor, cannot dispense with the implements of labor; the principles of emancipation involved an agrarian law which guarantees them to him and protects him in their use: otherwise, this pretended emancipation was only an act of hateful cruelty, an infamous deception, and if, as Moses said, interest, or the yearly income from capital, reimburses capital, might it not be said that servitude reimburses property? The theologians and the law-givers of the time did not understand this, and by an irreconcilable contradiction, which still exists, they continued to rail at usury, but gave absolution to rent.
The result was that the emancipated slave, and, a few centuries later, the enfranchised serf, without means of existence, was obliged to become a tenant and pay tribute. The master grew still richer. I will furnish you, he says, with land; you shall furnish the labor; and we will divide the products. It was a reproduction on the farm of the ways and customs of business. I will lend you ten talents, said the moneyed man to the workingman; you shall use them; and then either we will divide the profits, or else, as long as you keep my money, you shall pay me a twentieth; or, if you prefer, at the expiration of the loan, you shall return double the amount originally received. From this sprang ground-rent, unknown to the Russians and the Arabs. The exploitation of man by man, thanks to this transformation, passed into the form of law: Usury, condemned in the form of lending at interest, tolerated in the contrat a la grosse, was extolled in the form of farm-rent. From that moment commercial and industrial progress served to make it only more and more customary. This was necessary in order to exhibit all the varieties of slavery and robbery, and to establish the true law of human liberty.
Once engaged in this practice of interesse, so strangely understood, so improperly applied, society began to revolve in the circle of its miseries. Then it was that inequality of conditions seemed a law of civilization, and evil a necessity of our nature.
Two ways, however, seemed open to laborers to free themselves from exploitation by the capitalist: one was, as we said above, the gradual balancing of values and consequently a decrease in the price of capital; the other was the reciprocity of interest.
But it is evident that the income from capital, represented mainly by money, cannot be totally destroyed by decreasing it; for, as you well say, sir, if my capital brought me nothing, instead of lending it I should keep it, and the laborer, in consequence of having refused to pay the tithe, would be out of work. As for the reciprocity of usury, it is certainly possible between contractor and contractor, capitalist and capitalist, proprietor and proprietor; but between proprietor, capitalist, or contractor, and the common laborer, it is utterly impossible. It is impossible, I say, as long as in commerce interest on capital is added to the workingman's wages as a part of the price of merchandise, for the workingman to repurchase what he has himself produced. To live by working is a principle which, as long as interest exists, involves a contradiction.
Society once driven into this corner, the absurdity of the capitalistic theory is shown by the absurdity of its consequences; the inherent iniquity of interest results from its homicidal effects, and while property begins and ends in rent and usury, its affinity with robbery will be established. Can it exist under other conditions? For my own part, I say no: but this is an inquiry entirely foreign to the question now under discussion, and I will not enter upon it.
Look now at the situation of both capitalist and laborer, resulting from the invention of money, the power of specie, and the established similarity between the lending of money and the renting of land and houses.
The first,--for it is necessary to justify him, even in your eyes,--controlled by the prejudice in favor of money, cannot gratuitously dispossess himself of his capital in favor of the laborer. Not that such dispossession is a sacrifice, for, in his hands, capital is unproductive; not that he incurs any risk of loss, for, by taking a mortgage as security, he is sure of repayment; not that this loaning costs him the slightest trouble, unless you consider as such counting the money and verifying the security; but because, by dispossessing himself for ever so short a time of his money,--of this money which, by its prerogative, is, as has been so justly said, power,--the capitalist lessens his strength and his safety.
This would be otherwise, if, gold and silver were only ordinary merchandise; if the possession of coin was regarded as no more desirable than the possession of wheat, wine, oil, or leather; if the simple ability to labor gave a man the same security as the possession of money. While this monopoly of circulation and exchange exists, usury is necessary to the capitalist. His motives, in the light of justice, are not reprehensible: when his money leaves his own vault, his safety goes with it.
Now, this necessity, which is laid upon the capitalist by an involuntary and widespread prejudice, is, as respects the laborer, the most shameful of robberies, as well as the most hateful of tyrannies, the tyranny of force.
What are, indeed, the theoretical and practical consequences to the working-class, to this vital, productive, and moral portion of society, of lending at interest and its counterpart, farm-rent? I today confine myself to the enumeration of some of them, to which I call your attention, and which hereafter, if agreeable to you, shall be the subject of our discussion.
And first, it is the principle of interest, or of net product, that enables an individual really and legitimately to live without working: that is the conclusion of your last letter but one, and such, in fact, is the condition to which every one today aspires.
Again: If the principle of net product is true of the individual, it must be true also of the nation; for example, the capital of France, both real and personal, being valued at one hundred and thirty-two billions, which yields, at five percent, an annual income of sixty-six hundred millions, at least half of the French nation might, if it pleased, live without working; in England, where the amount of accumulated capital is much larger than in France, and the population much smaller, the entire nation, from Queen Victoria down to the lowest hanger-on of the son of Liverpool, might live on the product of its capital, promenading with cane in hand, or groaning in public meetings. Which leads to this conclusion, evidently an absurd one, that, thanks to its capital, such a nation has more income than its labor can produce.
Again: The total amount of wages paid annually in France being in the neighborhood of six thousand millions, and the total amount of revenue yielded by capital being also six thousand millions, making the market value of the annual product of the nation twelve thousand millions, the producers, who are also consumers, can and must pay, with the six thousand millions of wages allowed them, the twelve thousand millions which commerce demands of them as the price of its merchandise, and without which the capitalists would find themselves minus an income.
Again: Interest being perpetual in its nature, and never being regarded, as Moses wished, as a repayment of the original capital, and further, it being possible to place each year's income at interest in its turn, thus forming a new loan, and consequently giving rise to a new income, the smallest amount of capital may, in time, yield sums so enormous as to exceed in value a mass of gold as large as the globe on which we live. Price demonstrated this in his theory of liquidation.
Again: The productivity of capital being the immediate and sole cause of the inequality of wealth, and the continual accumulation of capital in a few hands, it must be admitted, in spite of the progress of knowledge, in spite of Christian revelation and the extension of public liberty, that society is naturally and necessarily divided into two classes--a class of exploiting capitalists and a class of exploited laborers.
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