Usury Part 21

The yearning for a home of one's own is deeply imbedded in human nature. To be denied the privilege of living in one's own house is one of the greatest trials of a life. This tendency to tenantry is not because our people have come to care less for a home of their own, but the conditions are not such as to make a purchase of a home profitable; the interest on the purchase price is greater than the usury of the land or rental. The natural and desirable state is for every family to own and occupy their home, and those conditions should be encouraged which make it unprofitable for any one to own real property he does not himself occupy, and which make it easy and profitable for every family to own their own home.

When all lands are owned by those who occupy them, the prophet Micah's picture of the millennial dawn will be realized. Every man shall sit under his own vine and under his own fig tree and no one shall molest him or make him afraid, by demanding a rental or by serving a writ of ejectment.

CHAPTER x.x.xV.

PER CONTRA; POLITICAL ECONOMIST.

The students of political economy are not always reformers. It is not their purpose nor the object of their studies to transform society.

They only endeavor to explain why things are as they are. They find the taking of usury all but universal, and they endeavor to give the reasons for the prevailing custom. The subject is usually but slightly touched upon and dismissed with a few sentences.

Few economists claim that interest or rental is a part of the cost of production. They mostly affirm that it is no part of production; that it is merely the price paid for the opportunity to produce. The lender of money makes a loan to the borrower and thus gives him a better opportunity to produce than he had before. The landlord for the rental withdraws his hand from over his land and gives the renter the opportunity to produce a harvest.

In justification, or at least in explanation of this exaction for an opportunity, three reasons are usually given. These may be briefly stated as risk, time and abstinence.

1. There is some risk in every investment. There is a possibility that the most honest, industrious and careful debtor may by some misfortune not be able to return the loan and it would therefore be lost. To guard against this the usurer requires the rate of interest to be graded by the measure of risk.

This is claimed to be of the nature of insurance, the borrower paying the premium. The profits of insurance are secured by collecting a larger premium than necessary to pay all losses. On this theory, the gain of usury is in the excess that can be secured of increase over the amounts lost.

This is the reverse of insurance. Insurance is the payment by an owner of property to a company who guarantees its preservation. Usury is the payment by the company to the owner for the privilege of guaranteeing that he shall not suffer loss.

Business involves a risk usually covered by insurance, but no honest man expects to make a profit out of his insurance.

2. A loan is made for a more or less extended time. Time is therefore claimed to be a ground for usury charges.

This claim rests on the a.s.sumption that time will increase wealth. But time is the great destroyer; time does not make gardens and farms, but covers them with weeds and sends them back to a wilderness; time does not erect a house, but pulls it down; time does not build a city, but causes it to crumble and a few ages buries it under the dust; time does not "incubate eggs, but turns them putrid; it does not transform into fowls. If eggs are developed into chickens the difference between eggs and chickens is the reward of the incubator."

Aside from the spirit of benevolence and sympathy with the needy there are three selfish reasons why a time loan may be made. First, the owner has no present need of it and wishes to be rid of its care.

Second, the owner shall need it at a distant date and he wishes it preserved intact against that time. But these afford no ground for a charge of increase. He who stands and resists the ravages of time until the day it is needed does a positive service and deserves a reward. Third, the lender wishes to appropriate the earnings of another during the period of time given. This is the usurer's reason, and were it not for this time would lose its importance as an element; it is certain that long time loans would not be so attractive.

3. "The reward of abstinence" is a reward for refraining from consuming one's own wealth.

"You can not have your cake and eat it. If you do not eat it, you have your cake, but not a cake and a half. Not a cake and a quarter tomorrow, dunce, however abstinent you may be, only the cake you have, if the mice do not eat it in the night."--Ruskin.

The usual ill.u.s.tration is that of Jacob. He practiced abstinence in refraining from eating the bowl of pottage and giving it to his hungry brother. The reward of his abstinence was his brother's birthright.

If I do not take my soup now it is a great favor to have it preserved for me and served later, not cold and stale, but fresh and hot. If I deny myself now, for any cause, I can ask no more than that my meal shall be served, perfectly, later. This was all that Jacob could in justice demand of Esau.

It should be remembered, that because Jacob took Esau's birthright, as a reward of his abstinence, he was accounted a robber, was compelled to flee from his home, and not for twenty years see his father's face; that the consciousness of this sin and of the merited vengeance of the brother, whom he thereby defrauded and whom he thought was on his track, caused that night of struggle when he could not let the angel go, until he had his promise of deliverance.

Abstinence, to be benevolent, must be an act of personal loving self-sacrifice for another. Benevolent abstinence is its own reward and asks no more. Abstinence in hope of gain, denying himself while another is using his wealth, cannot be regarded as an act of benevolence, but of a selfish grovelling greed; more gratified to see his wealth increase than to himself enjoy its use. That is the spirit of the miser and receives the contempt of all right thinking people.

That the political economists are right in their a.n.a.lysis of the common thought of usury; that risk, time and abstinence are the elements of its basis in the popular mind, may not be denied, but if these are in fact the elements, then usury has no standing in equity and must be condemned by every enlightened conscience.

CHAPTER x.x.xVI.

USURY IN HISTORY.

It would require volumes to fully present the history of usury. A very brief summary must suffice in this place. Yet this synopsis may serve as a guide to those who may wish to pursue the investigation further and who have access to any considerable library of general and ecclesiastical history.

The exacting of usury has always been more or less practiced, and there has always been a contention against it as impolitic and wrong.

In heathendom the philosophers and economists and common people were usually arrayed against it, and the voice of christendom has been practically unanimous in its denunciation until the 17th century. (For History of Usury in the Church, see Chapter X.)

Greece: Greece had no laws forbidding usury. The trade in money was left, like the trade in every thing else, without legal restraint. The law declared that the usurer should not demand a higher rate than that fixed by the original contract; it also advised "Let the usury on money be moderate." One per cent. per month was the usual rate.

There were among the Greeks at various times thoughtful men, who violently opposed the taking of increase. Solon, of aristocratic blood, but with strong sympathies for the oppressed cla.s.ses, led a Nehemiah-like reformation. Solon was wise and patriotic. His name is a synonym for unselfish devotion to the public good. He was given authority in Greece in times of great financial distress. Debts were increasing. Mortgage stones were erected at the borders of each tract of land, giving the name of the creditor and the amount of his claim.

The interest could not be paid. Interest taking had concentrated the wealth and power of the state in a few hands. The farmer lost all hope and was only a laborer on the farm he once owned. The debtor who had no farm to work for his creditor was yet in a worse condition; he was the mere slave of his creditor and could be sold by him. The free farmers were fast disappearing. The most of them were struggling with miserable poverty. Solon at once came to the relief of this suffering cla.s.s. He released those who were enslaved and brought back those who had been sold abroad. The great work of Solon for this oppressed cla.s.s has caused his name to be revered by all who have studied the history of his times.

Plato opposed usury, but he does not give extended reasons. Also the philosopher, Aristotle. His name is yet ill.u.s.trious in the departments of natural and moral science and economics. With regard to usury he said: "Of all modes of acc.u.mulation, the worst and most unnatural is interest. This is the utmost corruption of artificial degeneracy; standing in the same relation to commerce that commerce does to economy. By commerce money is perverted from the purpose of exchange to that of gain; still this gain is occasioned by the mutual transfer of different objects; but interest, by transferring merely the same object from one hand to another generates money from money, and the product thus generated is called offspring (toxos) as being precisely the same nature as that from which it proceeds."

Rome: In the early ages of Rome there were no laws regulating the loans of money. The practice was common and was one of the most frequent subjects of popular complaint. In the celebrated secession of the lower cla.s.ses of the people to Mons Sacer, when civil strife and fraternal bloodshed was threatened, the loudest outcry was against the oppression of exhorbitant interest exacted by wealthy citizens of those who were obliged to borrow. The common rate was twelve per cent.

per annum. This is inferred from the fact that six per cent. was called half interest and three per cent. one-fourth interest.

The early records of Rome prove conclusively the odium attached to the business of money-lending for profit. In the codification of laws in the fifth century B.C. the rate of usury was fixed at one per cent.

per month. This limitation of usury was enacted after a long and bitter contest between the rich lenders and the poorer cla.s.ses.

A compromise seems to have been made in the a.s.signed punishments. The laws for the collection of debts and the punishment of exacting more than the law permitted were alike extremely cruel.

The creditors of an insolvent debtor were given the power of cutting his body in pieces and the power of selling his children into slavery.

The penalty of taking more than this legal interest was punished with more severity than theft. The thief must restore double, but the usurer must restore fourfold. This we learn from Cato's treatise on "Agriculture." Cato's own opinion of usury is shown in the answer which he made when he was asked what he thought of usury, his reply was, "What do you think of murder?"

Nearly a hundred years later the Licinian law forbade all increase. A little later we find the one-half of one per cent. permitted by law.

Then under Sylla the legal rate is made three per cent. In the time of Antony and Cleopatra it is four per cent. For a time there was utter confusion and intolerably oppressive rates prevailed. Horace, in his Satires, speaks of one lending at sixty per cent. In the reign of Tiberius Caesar, Rome was again shaken with another usury sedition, an uprising of the people against the usurers. The law was finally adjusted in the Justinian Code, by a compromise permitting six per cent. and severely restraining the exorbitant rates.

Three hundred and twenty-three years B.C., Livy speaks of a creditor who kept his debtor in irons, claiming, besides the debt, the interest which he exacted with greatest severity. It was soon after decreed that this cruelty should end and that no citizen should be placed in irons or sold into slavery for debt.

At the close of the republic the rate was twenty-four per cent.

England: In the earliest periods of which we have any records we find that the doctrine, that letting money to hire was sinful, prevailed universally over the island of Great Britain. It was the prevailing opinion that interest, or usury, as it was then called, was unjust gain, forbidden by divine law, and which a good Christian could neither receive nor pay. In common law the practice of taking increase was cla.s.sed among the lowest crimes against public morals. So odious was it among Christians that the practice was confined almost wholly to the Jews, who did not exact usury of Jews but of the Christians.

The laws of King Alfred, about 900 A.D., directed that the effects of money-lenders upon usury should be forfeited to the king, their lands to the lords under whom they were held, and they should not be buried in consecrated ground.

By the laws of Edward the Confessor, about 1050 A.D., the usurer forfeited all his property and was declared an outlaw and banished from England. In the reign of Henry II, about the close of the twelfth century, the estates of usurers were forfeited at their death and their children were disinherited.

His successor, Richard I, was yet more severe, forbidding the usurers attending his coronation, nor would he protect them from mob violence.

During the thirteenth century the severities against the usurers were not relaxed. King John confiscated their gathered wealth without scruple. It is recorded that he exacted an enormous fine of a Jew in Bristol for his usuries, and when the Jew refused to pay he ordered one of his teeth to be drawn daily until he should pay. The Jew is said to have endured the pulling of seven, but then weakened and paid the fine.

Henry III was equally harsh and severe in his measures. He exacted all he could and then turned them over to the Earl of Cornwall. "The one flayed and the other emboweled." It is written in the chronicles of England, 1251 A.D., "By such usurers and licentious liurs as belong to him, the realme had alreadie become sore corrupted."

In the fourteenth century, under the three Edwards, the taking of interest was an indictable offence and Edward III made it a capital crime.