page 71

Chapter XIV.

Capital's Last Threat.

The influential deputation now withdrew somewhat abruptly and without ceremony. The Bishops were the first to leave; next followed the Lawyers, who, prior to their departure, intimated to their several clients their desire for a prompt settlement of their accounts. The Financiers had already withdrawn to one corner of the room, evidently awaiting an opportunity of speaking to me on their own separate business. The bond that had held nobles, bishops, lawyers, and financiers together was broken; each was now only solicitous for his own individual welfare, and the class interest of each group asserted itself.

It was almost piteous to see the once haughty and insolent members of "Our Old Nobility" slinking as unsuccessful suitors out of the hall in which they had once reigned supreme. Farmer John, as they filed past him, not daring to meet his eyes, seemed quite moved by their dejected demeanor; and as soon as the door had closed on the last of them, the kind, honest, simple-hearted man, forgetful of his own past sufferings, commenced to plead for them.

"Poor fellows!" he said; "they were great sinners, it is true. But, sir, were they not as much sinned against as sinning? I mean, Were they not as much the products of false institutions as were the rest of us? And what are they going to do now? They are not used to work, as I am; and my joy, and that of all my fellows, would be marred if we thought they were now to be condemned to undergo the pangs and sufferings from which we have just escaped. You should do something for them to reconcile them to their lot."

"My dear, good, honest John," I replied, much moved by this evidence of his noble nature; "your sympathy for them does you credit. But they really neither need nor deserve it. No hardship has been done them, and certainly no injustice. They have been deprived of nothing to which they have any right; on the contrary, they have been left in possession of much to which others—yourself, for instance—could show a much better claim."

"They are welcome to it, I am sure, for now I and men like me can soon acquire as much as we want."

"To be sure you can. Nor need you be troubled on their account. The majority of them have more than sufficient to enable them to live in ease and comfort; and as for their children—"

page 72

"It is of them that I was thinking."

"As for their children, they will grow up under new conditions, and learn to adapt themselves to the new order of things. They will enter into the new world—a world into which none need be afraid to enter; a world in which no one willing to work shall suffer from poverty, or be haunted by the fear of it; a world in which the struggle will be between man and Nature, and not between man and man; a world in which each will enjoy the fruits of his own toil, in which none will be secured privileges at the expense of his fellows, in which work will not be only the only passport to life, but also to true nobility."

"Nobility!" interrupted the Socialist. "We have hail more than enough of nobilities and aristocracies."

"Nay, we have heard too little of true nobility, too few real aristocrats. The better worker is always the better man, and the best worker the best citizen—the first, the foremost, the aristos or aristocrat in the true sense. The more self-made or Nature's aristocrats we have, the better for all. The Newtons, Shakespeares, and Nightingales; the Watts, Cartwrights, and Darwins, such are the real aristocrats, the leaders and torch-bearers of civilization. 'Our old nobility,' like your 'capital, was made up of sheepskins and paper. True nobles, like real, capital, can only benefit, and not injure, and should be encouraged instead of being feared or fought."

"I am ready to agree with you on the first point; but as to capital—"

"What!" I exclaimed in surprise. "Not yet cured of your madness? What harm has real capital ever done to anyone! Or, at any rate, what harm can it do to anyone where the opportunities of Nature are alike free to all? Across the street is a big plowshare maker. Is he not a laborer, and are not his plows—the type of real capital—accumulated labor? you say he may demand exorbitant prices. But you forget that the iron and coal mines are open, and the forests free. Have you ever known a trader sulking with his goods by demanding exorbitant prices unless he had a monopoly of some sort? Is not quite the contrary true? Were not your great and standing grievances keen competition and low prices?

"Yes, for manufactured articles, but not for capital."

"But now we have no other capital in the market except what is manufactured., and that is precisely real capital. Not, indeed, because there is any necessity for the term 'capital' at all, For a plow, a saw, or a plane might be just as well called a 'commodity' as a shirt or a loaf of bread. And anything which is not of the nature of an artificial commodity is no longer vendible

page 73

"Hold hard! Let me digest this fact. It is only that I begin to see your meaning, and—by Jove! Why capital is—"

Nothing but a name; an abstraction which sometimes means a plow or a mill, sometimes lands and slaves, rivers and houses; and sometimes—or, rather, mostly—parchments and [papers, the bonds on future production. Once let land, rivers, land mines be free, and then these bonds are gone. The only wealth, or 'capital'—I hate to hear the stupid word—a person can then own is that which he has created. Machinery? Yes; and, as you say, he could withhold it from use; and if he is a I fool would certainly do so. But if he is not he will, instead of withholding his machinery until the rust has eaten it up, send out travellers and circulars, and tempt the people to buy or to hire, by offering all manner of easy terms. Do you not think so?"

The Socialist sank back into his chair, elbows on the table, and rested his head in his two hands. He looked bewildered, as if a new light had suddenly broken in upon him.

"What need the people care now," I continued, "if any man likes to dress himself in velvet and ermine, and to call himself a lord, and the parchments in his pockets 'capital,' so long as the land with all that is in and on it—that is, with all its potentialities—is free. All that man requires comes from land; the 'capital' that was required for production was simply a permit to make use of the natural resources. The road to the land was through the bank, and that road was open but to few. The check that was necessary to make production possible was a permit, or the price of a permit, to use the forces of Nature. But now that the land is free—"

Here our conversation was interrupted by a short, stout, vulgar, self-satisfied-looking man; one of the fore-mentioned financiers, whose presence I had forgotten for the moment.

"I am sorry to interrupt you," he commenced, "but your time may not be wasted in listening to what I have to say. I am a practical man, and as such have been consulted on many questions of importance by those in almost as exalted positions I as yours. I have not come to discuss with you abstract theories about justice, morality, liberty, and all that kind of thing; that's not in my line; I don't deal in sentiment. Doubtless you want to do something for the poor. Now I don't object to that in moderation, and might even render you valuable assistance if I approve of the means. But I deem it right to warn you of what must inevitably follow if you should kill off all enterprise."

"Our object is to encourage enterprise, not to kill it; provided, of course, that the enterprise is not of a mischievous character."

"But your legislation, sir, will kill out all enterprise, and drive all the capital, upon which the workers are entirely dependent, out of the country."

page 74

I involuntarily burst out laughing. Here was a man—a capitalist, as my Socialist friend would call him—threatening to [unclear: run] away unless I taxed his capital rather than land; while the Socialist thought of driving him out of the country by a property tax. I exchanged glances with the Socialist, and said:

"Pray be a little more explicit. In the first place, how [unclear: will] it stifle enterprise?"

"Well, you see, it's like this: A man desirous of making provision for the future accumulates his money instead of spending it; but, in the hope of future gain, instead of letting it lie idle may start some useful enterprise. Such actions ought to receive every encouragement."

"Yes; industry, energy, and enterprise ought to be encouraged; and since now every citizen is secured the full possessive of all that is due to his industry and enterprise—"

That's just what you do not do, and I will prove it to Let me give you a typical case. Supposing I took up some useless waste land—say a plot on some out-of-the-way moor—and; built a hotel or hydropathic establishment, trying to make it into a health resort. You could not call that an illegitimate enterprise. Now, how would you tax me?"

"You would be taxed according to the unimproved value of your land. That is, you would not be taxed according to the use you were making of the land; nor according to the value of your buildings; nor the trade you may be doing; but according to the value of the bare land, irrespective of improvements. In the case you have supposed, you would at first be taxed according to its value as moor land. Surely that is more encouragement to enterprise than when, as in old times, which you seen to regret, you were threatened with property taxes, local rates on the value of the property you have built, in addition to a ground rent, and that whether your business paid or not."

"So far so good. But supposing my venture turned out a great success, and that people are attracted in large numbers, buildings springing up all around me, until my hotel forms the centre of a thriving town. This, of course, would send land values up, and my plot, I will presume, is the most valuable. Would you then still tax away all the 'unearned increment,' as you call it?"

"Certainly, and much to your own advantage. For in that case there would be required a local fund for roads, lighting drainage, etc., which would add to your comfort as well as improve your business prospects. You could not in common fairness, be exempt from contributing your quota of public expenditure."

"But to tax away all the value of my land under such circumstances would be unjust, since it is I who gave it the value."

"How so? You do not create land values by building hotels page 75 on it. So long as your hotel remains planted in the midst of a desolate moor you would pay a tax for moor lands. But when the moor passes into a city you will pay a tax for city land, and that because you have not made the city."

"And suppose I built a whole township on the spot on speculation, and people then came to live in my houses?"

"That would not alter the case. The principle is the same. Why should you be exempt from its operations?"

"Because I have risked my money. If my speculation failed would you compensate me?"

"If it failed? Will you please tell me what elements of failure and success you are thinking of?"

"Why, suppose I erected a thousand houses, and nobody came to live in them?"

"In that case there would be no increased value, and hence no increased tax. But if the people did come to live in your houses, then any increased value of the land would be due to their presence, and hence they are entitled to share in its benefits."

"And what reward have I for my enterprise?"

"A successful business; and, if your foresight was really a good one, the most envied position in the town."

Here followed a short pause, after which the enterprising spokesman of the financiers resumed:

"In that case you'll drive all the capital out of the country."

"But why?"

"Because there is no outlet for it. Nobody will care to invest his money on such terms You simply put an end to all legitimate means of investment."

"Not at all. Legitimate means of investment are now more plentiful than ever, since you may do with your 'capital' what you please without let or hindrance."

"That's just it. Now, if you don't know anything else about business, surely you will understand the law of supply and demand, and that this law regulates the money market as every other market. There was a time in this country when the money market was so brisk that it was thought necessary to limit by law the rate of interest to twenty per cent. That was, of course, because capital was scarce, and the demand for it great. Since then, however, as you know, the rate of interest came down, and at times was as low as two per cent. Do you know why?"

"I suppose because there was a greater proportion of lenders to borrowers."

"That is so. And now that you have made land free—that, in consequence thereof, people earn high wages, and the wealth is distributed throughout the community—nearly everybody is in a position to lend, but no one willing to borrow, and money page 76 is literally below par. You look surprised at that. Well, I have a few thousand pounds. So have my friends here. Wha[unclear: t] we to do with them? Will you have the money as a loa[unclear: n] behalf of the State?"

"We do not need it. Our revenue is not only sufficien[unclear: t] meet current expenses, but leaves us a balance wherewit[unclear: h] wipe off our national debt; so that future generations should not be saddled with burdens imposed by the folly and wickedness of their ancestors."

"There you are. This is the answer we meet with everywhere."

"In that case," I said, chiefly for the benefit of my Socialis[unclear: t] friend, "we evidently do not need any laws against usury; [unclear: b] such a 'glut of capital' should stimulate rather than stifl[unclear: e] enterprise. There are plenty of means for safe investments. For instance, by building more substantial homes for your children; by giving them a better education; by planting orchards and flower gardens. And if you think of creating more than you need in order to give your children a start in life, you could build hotels, warehouses, theatres or pleasure resorts, [unclear: th] revenue of which—while it lasts—"

"That's just it, while it lasts. If I put £10,000 into i[unclear: t], children might get perhaps £8,000 back. They certainly could get no profit on the money invested. Buildings want looking after, and so does every other form of wealth, and nobody [unclear: wi] look after it without pay. And so we have come to a pretty pass, that capital, instead of commanding interest, has to [unclear: pa] to people for accepting it."

"Not so. You would in that case pay for the conservation [unclear: p]reservation of wealth. And if a man looks after your good for you, it is only right that you should compensate him for the trouble."

"Then is capital to have nothing at all?" he asked, in an injured tone.

"Capital? Who is he, and what has he done?"

"Well, then, since you are so particular, I'll put it this ways Am I to have nothing for my capital? True capital, as you [unclear: c] it, is the reward of abstinence and industry; and am I to have no reward for my abstinence and industry?"

"You have your reward in the undisturbed possession of your savings. Is not that reward enough? Or do you, perhaps think that because you may have saved a little more than your neighbors, that this should entitle you to claim their savin in addition to your own?"

"We never claimed; the people who wanted accommodate from us, who wanted our money, were always glad to pay interests. But now, under your rule, nobody seems to want any loans."

"So you think, perhaps, that we should make paupers in page 77 order to keep up the ancient and noble institution of usury? I have heard similar talk in the old days, when people objected to general prosperity, on the grounds that then the masses would no longer work for a mere subsistence, or starvation wages, and hence leave no 'profit' or 'interest' for 'capital.'"

"That's just the case now, and the nation will be ruined."

"Ruined, forsooth! When, according to your own showing, nobody wants to borrow, and nearly everybody is in a position to lend. Ruined, because no one is now able to get the whip hand over his fellows, and because a few usurers cannot command interest on their money! The only interest of a nation is the well-being of its members; and the only reward, the only 'profit' of one's labor and capital, is the ability to support life in comparative ease and comfort."

"That's all very fine talk; but what good is my capital to me?"

"If you have no use for it yourself, offer it to your neighbors. And if they have no use for it either, then it is clear that that particular form of wealth is not wanted at all—that, in fact, there is an over-production. And this will demonstrate to you that over-production does not mean want, as you have been taught, but profusion."

"That may be all very well in theory, but, as I told you, we are practical men, and did not come here to theorize. We now know what to expect under your legislation, and we intend to leave this country at once, taking all our capital with us."

"Take what with you?"

"All our capital."

"Yes, yes; but what? The land?"

"N-o-o-o. Not the land."

"The mines, rivers, air, sunshine, or perhaps the rain?"

"N-o-o-o; but our capital."

"That's just what I am trying to get at. What are you going to take? Roads, harbors, docks, buildings, mills?"

"We own many of these."

"But will you take them with you, or pull them down, so as to take the material with you?"

"No! neither."

"Well, what will you take, then? Spades, plows, sewing land other machines, or the mining and manufacturing plants, which now, indeed, are as fully employed as they can be?"

"Well, they are ours."

"Not quite all of them; and even if all the existing machinery did belong to you and your friends; as our forest and mines are now open to the people, they would soon make as many more as may be required. But, as practical men, do you seriously propose taking such things with you?"

He hesitated, and I saw he was commencing to recognize the hollowness of his threats.

page 78

He then said: "If we withdrew all our machinery, have you considered what the consequences would be?"

"No; I have not thought much about it; but, [unclear: neverthe] I can imagine what would happen. America, Germany, [unclear: Fram] and other countries would probably be glad to learn that [unclear: the] is a country of over thirty million inhabitants in want of kinds of implements, and would glut our market—the seven nations competing with each other. Have you consider what effect that would have on the value of your old spades are plows?"

"But with what will you purchase these things if we tak[unclear: e] capital away?"

"With the grain and wool, and iron and coal, and al[unclear: l] kinds of produce, of which you and your ilk used to depriv[unclear: e] Talk about what thirty-five million workers in one of the [unclear: ric] countries on the face of the globe are going to buy wit[unclear: h]! you must have studied your Political Economy at Oxford Cambridge, else you could not possibly ask such [unclear: sta] questions."

"That's all very well, but by withdrawing our capita[unclear: l] could throw the people out of employment, and thus force then to come to our terms."

"No, no, my good sir, that you cannot do, and you know. The position is simply this: You possess certain houses, [unclear: m] and machinery. On leaving the country you can choose between taking with you so much old iron and timber as you may [unclear: f] convenient, or else sell it prior to your departure for what [unclear: y] can get for it. And having a rather high opinion of your [unclear: b-ness] abilities, I have no doubt in my mind as to which [unclear: cou] you will prefer. The only loss we shall sustain is that of [unclear: y] presence."

"You will then have to close the Stock Exchange, as [unclear: the] will not be an individual left to frequent it."

"Even in that you are mistaken. Instead of closin[unclear: g] building we shall make a true Exchange of it; a place [unclear: wh] people shall exchange their several products and conduct [unclear: leg] mate business; and then the inscription above its portal [unclear: w] have more meaning than at present. So if you think of leaving the country, all we can say to you is—"

"Good riddance," interposed the Socialist; and Farme[unclear: r] added, "Amen!"