After Nestor: Between Communism & Monopoly

(first published in Liberty, October 18. 1890)

Auberon Herbert, in his paper, Free Life, asks me how I “justify a campaign against the right of men to lend and to borrow.” I answer that I do not justify such a campaign, have never attempted to justify such a campaign, do not advocate such a campaign, in fact am ardently opposed to such a campaign. In turn, I ask Mr. Herbert how he justifies his apparent attribution to me of a wish to see such a campaign instituted.

It is true that I expect lending and borrowing to disappear, but not by any denial of the right to lend and borrow. On the contrary, I expect them to disappear by virtue of the affirmation and exercise of a right that is now denied,—namely, the right to use one’s own credit, or to exchange it freely for another’s, in such a way that one or the other of these credits may perform the function of a circulating medium, without the payment of any tax for the privilege. It has been repeatedly demonstrated in these columns that the exercise of such a right would accomplish the gradual extinction of interest without the aid of force, and the nature of this economic process has been described over and over again. This demonstration Mr. Herbert steadily ignores, and the position itself he never meets save by a sweeping denial, or by characterizing it as unphilosophical, or by substituting for it a man of straw of his own creation and then knocking it down.

The Anarchists assert that interest, however it may have originated, exists to-​day only by virtue of the legal monopoly of the use of credit for currency purposes, and they trace the process, step by step, by which an abolition of that monopoly would gradually reduce interest to zero. Mr. Herbert never stops to analyze this process that he may find the weak spot in it and point it out; he simply declares that interest, instead of restin[g] on monopoly, is the natural, inevitable outcome of human convenience and the open market, and then wants to know how the Anarchists justify their attempt to abolish interest by force.

It is as if Mr. Herbert were to maintain (as I suppose he does maintain) that freedom in the domestic relation would gradually lessen and perhaps abolish licentiousness, and I were to answer him thus: “Oh, no, Mr. Herbert, you are unphilosophical; prostitution does not rest on the compulsory marriage system, but is the natural, inevitable outcome of human convenience and desire; how do you justify, I should like to know, a campaign against the right of men and women to traffic in the gratifications of the flesh?” In such a case Mr. Herbert, I imagine, would say that I had studied his teaching very carelessly. And this is what I am forced to say to him, much against my will.

If it be true that interest will exist in the absence of monopoly, then there is some flaw in the reasoning by which the Anarchists argue from the abolition of monopoly to the disappearance of interest, and it is incumbent on Mr. Herbert to point this flaw out, or else admit his own error. It is almost incredible that an argument so often reiterated can have escaped the attention of so old a reader of Liberty as Mr. Herbert, but, lest he should plead this excuse, I will state that it is most elaborately and conclusively set forth in the pamphlet, Mutual Banking, by Col. Wm. B. Greene. If, after mastering the position, he thinks he can overthrow it, I shall be glad to meet him on that issue.

(first published in Liberty, November 29, 1890)

Mr. Herbert’s disclaimer is of course sufficient to establish the fact that he did not mean to charge me with an attempt to prohibit lending and borrowing. But I must remind him that the charge which he made against me he made also at the same time against his correspondent, Mr. J. Armsden; that Mr. Armsden interpreted it as I did and protested against its application to himself (though gratuitously allowing that it was justly applicable to me); and that Mr. Herbert made rejoinder, if my memory serves me, that he had misunderstood Mr. Armsden. Now, I cannot see why Mr. Herbert should not admit in the same unqualified way that he misunderstood me, instead of suggesting that I misunderstood him. But this is of little consequence; I am satisfied to call it a case of mutual misunderstanding.

To avoid such misunderstandings in future, however, is of real importance; and to that end I must further remind Mr. Herbert that, when I use the word right, I do so in one of two senses, which the context generally determines,—either in the moral sense of irresponsible prerogative, or in the social sense of accorded guarantee. Mr. Herbert, knowing that I am an Egoist, must be perfectly aware that it would be impossible for me to enter upon a moral campaign against any special right in the sense of irresponsible prerogative, for it is the Egoistic position either that no one has any rights whatever or—what amounts to the same thing—that every one has all rights. But it would be equally impossible for me to enter upon a moral campaign against a right in the sense of accorded guarantee, unless it were a case where I should consider myself justified, if it seemed expedient, in turning that moral campaign into a force campaign. For I could have no objection to any accorded guarantee save on the ground that the thing guaranteed was a privilege of invasion, and against invasion I am willing to use any weapons that will accomplish its destruction, preferring moral weapons in all cases where they are effective, but willing to resort to those of physical force whenever necessary. So Mr. Herbert is now duly cautioned not to charge me with maintaining, against any right whatever, a campaign which anything but expediency makes exclusively moral.

To go now from the general to the particular. I could not engage in any sort of campaign against the right to lend and borrow, because I do not consider that right a privilege of invasion. If, however, lending and borrowing should disappear in consequence of the overthrow of that form of invasion which consists of the monopoly of the right to issue notes as currency, that is not my affair.

It is the contention of the Anarchists that lending and borrowing, and consequently interest, will virtually disappear when banking is made free. Mr. Herbert’s only answer to this is that he considers interest moral and useful. Does he mean by this that that is moral and useful which will disappear under free competition? Then why does he favor free competition? Or does he deny that interest will so disappear? Then let him disprove the Anarchists’ definite and succinct argument that it will. In my last article, I strongly invited him to do this, but as usual he ignores the invitation. Nevertheless he and all his Individualistic friends will have to meet us on that issue sooner or later, and he may as well face the music at once.

Now, a word about rent. It is true that Anarchists, including sober-​minded Liberty, do, in a sense, propose to get rid of ground-​rent by force. That is to say, if landlords should try to evict occupants, the Anarchists advise the occupants to combine to maintain their ground by force whenever they see that they can do so successfully. But it is also true that the Individualists, including sober-​minded Mr. Herbert, propose to get rid of theft by force. “Even if it suits certain persons to sell me” Mr. Herbert’s overcoat, “and it suits me to buy it, and it suits other people to rent it from me—as I understand,” Mr. Herbert “would not sanction the proceeding. We are all of us, in fact, to be treated as children, who don’t know our own interests, and for whom somebody else is to judge.” The Anarchists justify the use of machinery (local juries, etc.) to adjust the property question involved in rent just as the Individualists justify similar machinery to adjust the property question involved in theft. And when the Individualists so adjust the property question involved in theft, this “means to say that a certain body of men have settled for others a form in which they may hold property and a form in which they may not,” regardless of “the desires and conveniences of the persons themselves.”

Yes, this is Anarchy, and this is Individualism. The trouble with Mr. Herbert is that he begs the question of property altogether, and insists on treating the land problem as if it were simply a question of buying and selling and lending and borrowing, to be settled simply by the open market. Here I meet him with the words of his more conservative brother in Individualism, Mr. J. H. Levy, editor of the Personal Rights Journal, who is trying to show Mr. Herbert that he ought to call himself an Anarchist instead of an Individualist. Mr. Levy says, and I say after him: “When we come to the question of the ethical basis of property, Mr. Herbert refers us to ‘the open market.’ But this is an evasion. The question is not whether we should be able to sell or acquire in ‘the open market’ anything which we rightfully possess, but how we come into rightful possession. And, if men differ on this, as they do most emphatically, how is this to be settled?”

(published in Liberty May 16, 1891)

In a letter to the London Herald of Anarchy, Mr. J. Greevz Fisher asserts that “government does not, and never can, fix the value of gold or any other commodity,” and cannot even affect such value except by the slight additional demand which it creates as a consumer. It is true that government cannot fix the value of a commodity, because its influence is but one of several factors that combine to govern value. But its power to affect value is out of all proportion to the extent of its consumption. Government’s consumption of commodities is an almost infinitesimal influence upon value in comparison with its prohibitory power. One of the chief factors in the constitution of value is, as Mr. Fisher himself states, utility; and as long as governments exist, utility is largely dependent upon their arbitrary decrees. When government prohibits the manufacture and sale of liquor, does it not thereby reduce the value of everything that is used in such manufacture and sale? If government were to allow theatrical performances on Sundays, would not the value of every building that contains a theatre rise? Have not we, here in America, just seen the McKinley bill change the value of nearly every article that the people use? If government were to decree that all plates shall be made of tin, would not the value of tin rise and the value of china fall? Unquestionably. Well, a precisely parallel thing occurs when government decrees that all money shall be made of or issued against gold or silver; these metals immediately take on an artificial, government-​created value, because of the new use which arbitrary power enables them to monopolize, and all other commodities, which are at the same time forbidden to be put to this use, correspondingly lose value. How absurd, then, in view of these indisputable facts, to assert that government can affect values only in the ratio of its consumption! And yet Mr. Fisher makes this assertion the starting-​point of a lecture to the editor of the Herald of Anarchy delivered in that dogmatic, know-​it-​all style which only those are justified in assuming who can sustain their statements by facts and logic.

(published in Liberty on February 26, 1887)

I must refer once more to the Winsted Press and its editor. It is lamentable to see so bright as Mr. Pinney wasting his nervous force in assaults on windmills. But it is his habit, whenever he finds it necessary or thinks it timely to say something in answer to free-​money advocates, to set up a windmill, label it free money, and attack that. An instance of this occurs in a scolding article on the subject in his issue of February 17, as the following sentence shows: “We had a little taste of this free currency in the days of State wildcat banking, when every little community had its State bank issues.” The italics are mine,—used to emphasize the substitution of the windmill State for the giant Freedom. How could State bank issues be free money? Monopoly is monopoly, whether granted by the United States or by a single State, and the old State banking system was a thoroughly monopolistic system. The unfairness and absurdity of Mr. Pinney’s remark becomes apparent with the reflection that the principal English work relied upon by the friends of free money, Colonel Greene’s Mutual Banking, was written expressly in opposition to the then existing State banking system, years before the adoption of the national banking system. Mr. Pinney would not fall back upon this idiotic argument if he had a better one. That he has none is indicated by his saying of free money, as he says of free trade: “In theory the scheme is plausible. In practice it would probably be an abomination.” Mr. Pinney’s old conservative, cowardly, Calvinistic refuge! When driven into a corner on a question which turns on the principle of Liberty, he has but one resort, which amounts practically to this: “Liberty is right in theory everywhere and always, but in certain cases it is not practical. In all cases where I want men to have it, it is practical; but in those cases where I do not want men to have it, it is not practical.” What Mr. Pinney wants and does not want depends upon mental habits and opinions acquired prior to that theoretical assent to the principle of liberty which the arguments of the Anarchists have wrung from him.

(published in Liberty on March 26, 1887)

Pinney of the Winsted Press grows worse and worse. It will be remembered that, in attacking the free-​money theory, he said we had a taste of it in the day of State wildcat banking, when every little community had its State bank issues; to which I made this answer: “How could State bank issues be free money? Monopoly is monopoly, whether granted by the United States or by a single State, and the old State banking system was a thoroughly monopolistic system.” This language clearly showed that the free money objection to the old State banks as well as to the present national banks is not founded on any mistaken idea that in either case the government actually issues the money, but that in both cases alike the money is issued by a monopoly granted by the government. But Pinney, not daring to meet this, affects to ignore the real meaning of my words by assuming to interpret them as follows (thus giving new proof of my assertion that he wastes his strength in attacking windmills).

It is apparently Mr. Tucker’s notion that State banks were an institution of the State. They were no more a government institution than is a railroad company that receives its charter from the State and conducts its business as a private corporation under State laws …. For purposes of illustration, they answer well, and Mr. Tucker’s effort to lessen the force of the illustration by answering that they were institutions of the State, because they are called for convenience State banks, is very near a resort to wilful falsehood.

What refreshing audacity! Pinney knows perfectly well that the advocates of free money are opposed to the national banks as a monopoly enjoying a privilege granted by the government; yet these, like the old State banks, are no more a government institution than such a railroad company as he describes. Both national and State banks are law-​created and law-​protected monopolies, and therefore not free. Anybody, it is true, could establish a State bank, and can establish a national bank, who can observe the prescribed conditions. But the monopoly inheres in these compulsory conditions. The fact that national bank-​notes can be issued only by those who have government bonds and that State bank-​notes could be issued only by those who had specie makes both vitally and equally objectionable from the standpoint of free and mutual banking, the chief aim of which is to secure the right of all wealth to monetization without prior conversion into some particular form of wealth limited in amount and without being subjected to ruinous discounts. If Mr. Pinney does not know this, he is not competent to discuss finance; if he does know it, it was a quibble and “very near a resort to wilful falsehood” for him to identify the old State banking system with free banking.

But he has another objection to free money,—that it would enable the man who has capital to monetize it, and so double his advantages over the laborer who has none. Therefore he would have the general government, which he calls the whole people, “monetize their combined wealth and use it in the form of currency, while at the same time the wealth remains in the owner’s hands for business purposes.” This is Mr. Pinney’s polite and covert way of saying that he would have those without property confiscate the goods of those who have property. For no governmental mask, no fiction of the “whole people,” can disguise the plain fact that to compel one man to put his property under pawn to secure money issued by or to another man who has no property is robbery and nothing else. Though you leave the property in the owner’s hands, there is a “grab” mortgage upon it in the hands of the government, which can foreclose when it sees fit. Mr. Pinney is on the rankest Communistic ground, and ought to declare himself a State Socialist at once.

Certainly no one wishes more heartily than I that every industrious man was the owner of capital, and it is precisely to secure this result that I desire free money. I thought Mr. Pinney was a good enough Greenbacker to know (for the Greenbackers know some valuable truths, despite their fiat-​money delusion) that the economic benefits of an abundance of good money in circulation are shared by all, and not reaped exclusively by the issuers. He has often clearly shown that the effect of such abundance is to raise the laborer’s wages to an equivalence to his product, after which every laborer who wishes to possess capital will be able to accumulate it by his work. All that is wanted is a means of issuing such an abundance of money free of usury. Now, if they only had the liberty to do so, there are already enough large and small property-​holders willing and anxious to issue money, to provide a far greater amount than is needed, and there would be sufficient competition among them to bring the price of issue down to cost,—that is, to abolish interest. Liberty avoids both forms of robbery,—monopoly on the one side and Communism on the other,—and secures all the beneficent results that are (falsely) claimed for either.