cially if it consists of money, to a more secure place, of withdrawing it, at whatever loss, from enterprises which afford employment by giving the means out of which to pay wages, or, in the final resort, of living upon it without seeking any return for its use. In any of these cases the laborers for hire suffer first and most severely. This you may see in every great panic and business crisis in our country, when those who possess a surplus or capital at once begin to hoard it, and to withdraw it from enterprises; and it is seen upon a large scale in such a country as Mexico, where long-continued civil disorders have caused both the hoarding and removal of capital, and where, consequently, though the wealthy live well enough, and even increase their capital, the mass of the people remain in indigence, and find it extremely difficult to achieve more than a hand-to-mouth existence, and this though their country has great natural wealth and a fine climate.

178. Consequently those who assert that capital is the enemy of labor, or who favor unjust laws, arbitrary interference with the course of industry or the uses of capital, or a corrupt and wasteful administration of the government—all which are attacks upon capital and its owners-are the worst enemies of the laborers for wages, and injure these precisely in the degree in which the unjust law or wasteful administration discourages or hinders the accumulation of capital.

179. Hence trades-unions and international societies, when they teach that capital is the foe of labor, and that the laborer for wages ought or must always remain a hireling; when, in carrying these doctrines into practice, they endeavor to limit the number of hours a laborer shall work, and the number of persons who shall learn a trade; or when they support usury laws, an irredeemable paper currency, and extravagant appropriations by the government for public works-really strike a blow at the comfort and prosperity of the class which labors for wages.

180. In several following subdivisions I shall try to make plain to you how interference with the free use, circulation, and increase of capital is, aside from its injustice, specially in

jurious to the non-capitalist class-to those who labor for wages and to whose advantage it is to be able to accumulate a surplus, and to become, by their honest labor, capitalists themselves. For I remind you again that a "capitalist" is not necessarily a man of great wealth. The carpenter who owns his chest of tools is to that extent a capitalist: he has a surplus, which he can sell or rent out. The Liverpool matchboy, who called himself a timber-merchant on a small scale," was not so far wrong: he had goods to sell; and if he owned the matches, he was also a capitalist-to that extent.

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XXII.

OF USURY LAWS.

181. If you have any kind of surplus property or capital, you may hide it, like a miser; or you may use it yourself in enterprises where it enables you to employ the labor of others, for which you pay them wages; or you may let some one else use it.

182. If you part with your property permanently, or sell it, you expect to get for it an equivalent, in money or some other kind of property. If you part with it temporarily, or lend it to another, you reasonably demand an equivalent to repay you for the temporary deprivation of its use or enjoyment. Thus, if you lend or let your house or farm or money, you require and receive rent-the rent of money being called interest. 183. The rent which you would be willing to pay for a two-story frame house depends on its situation, the purpose for which you can use it, and the number of persons who would like to occupy it. For if it were even very valuable, but to you only, and valueless to every one else, it is clear that I, the owner, could not demand a high rental, because you would refuse to give it. Nor would it be unjust in you to offer only a low rental, because, in such a case, if the house is valuable to you alone, that proves that it is your skill, your in

dustry, your labor and talent, or your self-denial, and not the intrinsic value of the house, which are under the circumstances to give it value.

184. Not only does the rental value of the house depend on its situation, but it is likely to vary from year to year, as similar houses are more or less abundant, or as there are more or fewer purposes for which they can be used.

185. If, now, Congress or a state Legislature should enact a law prescribing that all two-story frame houses throughout a state or the United States should be rented for no more than fifty dollars per annum, this would evidently be a ridiculous, and moreover an unjust regulation, for such a house may be five times as desirable in one situation as in another-that is to say, five times as valuable to you, who want to hire its use of me.

186. But take notice that while such a law might temporarily and in the first instance benefit a part of the poorer people-for whose advantage demagogues would cry out for its adoption it would presently and permanently injure them; for, first, it would at once put a stop to the building of such houses, whereby mechanics would be thrown out of employment; second, it would incommode the poorer people, by lessening the number of houses in proportion to occupants, and confining them therefore to narrower quarters; and, third, capital, thus menaced and oppressed, would take alarm, and be rapidly removed to countries where the people were not silly enough, and demagogues not powerful enough, to enforce such arbitrary regulations. And while not merely the capital which was originally intended to be invested in two-story frame houses, but much other capital, would thus disappear, and all enterprises supporting labor would be checked, the owners of two-story frame houses, who would actually lose, would in their turn be so much less able to employ labor. Thus, for the temporary gain of a small part of the people-the occupiers of two-story frame houses already built-the whole laboring population, the mass of the people, would be seriously injured.

187. It is therefore clearly to the general advantage that the house-owner shall be allowed to make such arrangements with his tenants as to rent as shall be mutually agreeable to them.

188. But a two-story frame house is the equivalent of money; money was expended to build it; and what is true of the house is equally true of the money. If you borrow my house, it is to use it, and I exact payment for this use, and graduate payment according to the demand for it, just as you agree to pay according to its value to you. If you borrow of me a thousand dollars, it is equally to use it: you may want to build with this sum a two-story frame house. Clearly the law ought not to interfere either to compel you to pay more or me to receive less than we can mutually agree shall be a fair rental or interest for the money.

189. Obviously no Legislature can tell beforehand what I ought to pay or you to receive as rent for your money any more than for your house, because it can not take into account all the various and varying circumstances of each case. It is just as ridiculous, unjust, and injurious to the mass of the people to prohibit men from paying more than seven per cent. for money as to declare that they shall pay no more than fifty dollars a year rent for a two-story frame house.

190. For in the one case, as in the other, capital, arbitrarily interfered with, seeks other uses, and flies away to freer regions, in each case to the injury of the non-capitalist class, because the wages fund is lessened if capital is diminished.

191. In practical effect, as money is a form of capital easily concealed, a usury law works in this way: Some capital is sent away to places where no such law prevails, as from New York to our Western States; some remains, the owners preferring to keep it near at hand, and of this a part is invested in securities, such as railway bonds, and thus also substantially goes to enterprises in other states; and for that which is actually lent out at home, the borrower is obliged to pay a premium, or sum down on receiving the loan, which really raises the rate he pays, and raises it in a manner unprofitable to him, be

cause it obliges him to pay a considerable sum down, of which he entirely loses the use, and on which he gets no interest. Moreover, where usury laws prevail and are enforced, borrowers have generally to fee an agent or middle-man, who receives the premium, in order to save the lender harmless against the law. Thus not only do usury laws make capital less abundant—and of course enterprises and wages less in the same measure—but the borrower himself is usually injured by having to pay premiums graduated upon his individual necessities, and not upon the general demand for money.

192. On the other hand, many of the Western States will show you the advantage, not merely to a country, but to the individual laboring man, of letting borrower and lender arrange their own terms. These states were rapidly built up on borrowed capital, which they drew from the East by the offer of high rates of interest. Cultivating a rich soil, and settled on cheap lands, the Western farmers could afford to pay high rates of interest, because their returns were very great. An Indiana farmer twenty years ago could well afford to give twenty per cent. for money, because if he used it to buy Congress land and plant corn, his first crop often paid for his whole investment. "If I can make thirty per cent., why should I hesitate to pay fifteen?" said a sensible Western farmer to me only a few years ago. Obviously he was right; and a law prohibiting him from paying more than seven would have been an injury to him and to hundreds of others like him -namely, laboring men without capital, but able to make extraordinary gains by their labor if only they could borrow a little capital. It would have injured them, because they could have borrowed no money at a low rate. Take, for instance, a laboring man who, by saving his wages, was able to buy one hundred and sixty acres of Congress land, but must borrow the means to plant his crop and harvest it. He could afford to pay a high rate of interest; he could not afford to let his land lie idle. It was the poor man who was benefited by the power to borrow, of which a usury law would have deprived him by keeping money out of the state.