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 http://www.archive.org/details/cu31 92401 3851 633 
 
THE SCIENCE OF VALUE 
 
 OUE CITY CIVILIZATION 
 
 BY 
 
 HENRY RAWIE 
 
 INDIANAPOLIS, INDIANA 
 803 Lemcke Buildinq 
 
 BALTIMORE 
 
 WILLIAMS & WILKINS COMPANY 
 
 1913 
 
R3 
 
 Copyright, 1913 
 
 BY 
 
 Henry Rawie 
 
TABLE OF CONTENTS 
 
 Chaptek I 
 The Universal Muddle 5 
 
 Chaptbb II 
 The City 19 
 
 Chapter III 
 Political Administration 31 
 
 Chapter IV 
 Progress and Trespass 42 
 
 Chapteb V 
 Suspended Accounts 55 
 
 Chapter VI 
 Primary Credit 69 
 
 Chapter VII 
 Secondary Credit 82 
 
 Chapter VIII 
 The Standard Price 90 
 
 Chapter IX 
 The Rate of Interest and Profit 107 
 
 Chapter X 
 
 Debt and the Stringency of Credit 118 
 
 3 
 
4 Contents 
 
 Chapter XI 
 The Cash Market 139 
 
 Chapter XII 
 The Value of Land 153 
 
 Chapter XIII 
 High Wages 163 
 
 Chapter XIV 
 Commerce 183 
 
 Chapter XV 
 The Failure in Banking 199 
 
 Chapter XVI 
 Economic Freedom 215 
 
 Chapter XVII 
 The Remedy 232 
 
OUR CITY CIVILIZATION 
 
 Chapter I 
 THE UNIVERSAL MUDDLE 
 
 When the families of Noah came upon a plain, 
 in the land of Shinar, and began building a city, 
 they thought to build a tower to reach unto heaven 
 and the Lord scattered them abroad by confound- 
 ing their language, so they could not understand 
 one another's speech. 
 
 Even since the time man first began building 
 cities and a few of the people became ambitious 
 to acquire wealth "to tower unto heaven" they 
 were suddenly confounded by a muddle in their 
 speech, which we call the labor question, and 
 which gives rise to a dispute concerning the 
 increase in wealth that fails to minister to the 
 happiness of all the people. 
 
 When nations are composed of builders and 
 are intent on working out their destiny a few of 
 the people soon become the owners of the wealth 
 leaving the multitude of workers destitute at the 
 very time when their contentment should have 
 been insured by the accumulation of wealth. 
 
 In the modem world the same law of achieving 
 5 
 
6 OuB City Civilization 
 
 success during the building period is again dem- 
 onstrated, on a scale of increasing splendor, and 
 millions have been lifted to a higher social scale 
 than was ever before experienced in the history 
 of the world. 
 
 But the modern world is facing the same prob- 
 lems by which older civilizations have been de- 
 stroyed, the same failure of accumulated wealth to 
 minister to the happiness of the people. The 
 misery experienced by the class we call unfortu- 
 nate and unfit may become the general condition 
 of the entire laboring population. 
 
 The development of the arts and sciences has 
 multiplied the appetites and desires of the mul- 
 titude as rapidly as new means of satisfying 
 them brought new varieties in supplies to our 
 wonderful markets, but this increase in production 
 and trade has not lessened the care and anxiety 
 of the tens of millions who fail to share in the 
 accumulation of wealth. 
 
 If this world old problem still continues to dis- 
 tress mankind, and no change has been made by 
 science in its solution what is the reader to expect 
 from a new writing on a subject that is two thou- 
 sand years old, and which the greatest men in 
 the world have labored in vain to solve? 
 
 This greatest of world problems must some day 
 be solved and science that is solving all other 
 problems of industry must at last solve the prob- 
 lem upon which industry itself depends. The more 
 
The Universal Muddle 7 
 
 difficult the undertaking the more inspiring is the 
 field of endeavor to a lover of science. 
 
 Nothing new or important is to be expected 
 from a writer who follows the old paths of in- 
 vestigation, the paths worn into gullies and ruts 
 before the systems of modern science were dis- 
 covered, but a new discovery in science may open 
 new fields never before investigated, and pro- 
 pose new solutions differing radically from any 
 now being offered in thousands of thick books 
 on the subject. 
 
 Every theory of labor and finance so far pro- 
 posed in every work on the subject has, without 
 exception, been built on a false premise, a pre- 
 mise that accepted the effect for the cause and 
 failed to discover the relation between cause and 
 effect. 
 
 The muddle over any question must increase 
 as the theories built upon a false premise mul- 
 tiply. The correct statement of the labor question 
 is not possible until the truth at the foundation 
 has been laid bare and until a correct premise has 
 been established. 
 
 The false premise every writer on the subject 
 accepted was that, Labor is the Cause of Value; 
 while the true premise is exactly the reverse of 
 this and is self evident, namely. Value is the 
 Cause of Labor. 
 
 Having a new and correct premise with which 
 to work out new solutions for world old prob- 
 
8 Our City Civilization 
 
 lems the reader is offered a work having an 
 original truth at the foundation; a work holding 
 a promise, at least, of arriving at correct con- 
 clusions. 
 
 The mistake in treating labor as the cause of 
 value, confines value to the activity of present 
 labor, and neglects to take past labor, with the 
 enormous quantity of credit money it supplies, into 
 consideration, thus the theory of labor as a cause 
 fails to account for most of the wealth with 
 which it deals. 
 
 The wealth we inherit from the past repre- 
 sents an enormous saving in money, that present 
 labor should have without work, and is designed 
 to relieve labor from saving money and being 
 denied the comforts of our civilization. 
 
 The money saved for us by the labor of the 
 past can only be conveyed to us by prices of 
 labor products seUing above cost, the cost price 
 representing the cash paid to living labor by pro- 
 duction and the price above cost coming from 
 the credit added by past labor and depending 
 upon distribution to get into circulation. 
 
 The failure in present theories to solve the 
 problems that distress us came from the failure 
 to understand the part the labor of the past plays 
 by the introduction of credit money. 
 
 The discussion of money has usually been con- 
 fined to the cash buying goods, and the fact that 
 cash must exchange, on even terms, with a five- 
 
The Univebsal Muddle 9 
 
 fold greater quantity of credit is a fact that has 
 not received the consideration it deserves. 
 
 Living labor should not only receive the money 
 value of the present product but it should re- 
 ceive money from past labor as a gift, and this 
 money can only be distributed to them after it 
 has increased the price of their product above its 
 cost. 
 
 Living labor failing to receive the credit money 
 coming from past labor as gift, by an increase in 
 wages, is compelled to earn this money the second 
 time as it buys unearned wealth for the classes 
 who are concentrating wealth. 
 
 The owners of wealth have a power of inflat- 
 ing the currency with bank checks which laborers 
 are compelled to redeem in cash, and when labor 
 fails to receive its proportion of bank checks as a 
 gift in wages, it is compelled to earn this past 
 labor money the second time in paying high prices 
 for the goods it consumes. 
 
 Two independent volumes of money are re- 
 quired in the general circulation, a volume of 
 cash distributing the value of living labor and 
 a five time greater quantity of bank checks 
 distributing the value of past labor. 
 
 The accumulated wealth of the country ought 
 to have the same kind of a cash market among 
 laborers as has the commodities, and the fail- 
 ure of labor in buying wealth arises from its not 
 sharing in the money supplied by such wealth. 
 
10 OuK City Civilization 
 
 Buyers without money are legion, and it would 
 be easy to create an army of buyers, and an in- 
 satiable demand for labor products if moderate 
 sums of money were being distributed to millions 
 of laborers supplied as gift money from the bank 
 check circulation. 
 
 There is a natural process, which is expected to 
 bring about the distribution of bank checks among 
 millions of laborers and give them an increase in 
 wages from this source as a gift, to buy the share 
 of labor in the wealth accumulated from the past. 
 
 The circulation of money must include both 
 cash and credit and is a double process. The two 
 volumes must unite into one to make the selling 
 price above cost, and after goods are sold they 
 must be separated by taking profits from prices 
 in the form of an inflated credit currency. 
 
 The claim of capital upon labor is based upon 
 capital supplying property from past labor which 
 is now being used and need not be produced, and 
 saves all the time of its production and all the 
 money represented by its cost. 
 
 Capital may issue this past labor money by ob- 
 taining a credit from a bank, which credit is based 
 upon the value of its property, and when it pays 
 this money for labor and material it must be 
 made equal in value to the money buying goods. 
 
 If capital, for example, puts two dollars of 
 bank checks in circulation as a part of every four 
 dollars paid in wages, labor may use one of 
 
The Universal Muddle 11 
 
 these bank dollars in buying goods at prices above 
 cost, and thus make them circulate equal to cash, 
 and have the other as a bonus with which it buys 
 its share of past labor property. 
 
 The power of capital in issuing money, and the 
 power it has over labor comes from its ownership 
 of railways, factories, buildings, and machinery of 
 every description, that present labor uses in the 
 production of goods but need not produce. 
 
 There is no escape from this dependence upon 
 the wealth we inherit from the past, and to assume 
 we may now escape this power of capital by build- 
 ing competing structures, is to assume we have 
 all the years of the past at our command, to 
 build other farms, factories, towns, cities, and 
 railways on new locations, and without using the 
 wealth we now possess. 
 
 We may compete a little at a time, as we some- 
 times do, only to find the cost prohibitive, for 
 it is idle to expect labor to build new and costly 
 structures in opposition to, and in useless com- 
 petition with the ones we have without cost as 
 an inheritance. 
 
 Competition with past labor is not desirable if 
 it were possible, on account of the waste, but we 
 want the money from past labor to compete for 
 the services of labor in raising wages without 
 increasing the amount of work called for. 
 
 The foolish legislation that would force labor 
 to compete with capital is like the action of the 
 
12 OuK City Civilization 
 
 country school trustees, who determined to build 
 a new school house, and resolved as follows: 
 
 1. To build a new building to replace the old 
 one no longer suitable to the demands upon it. 
 
 2. To use the foundation of the old building for 
 the new one. 
 
 3. To use the material taken from the old house 
 as far as it would go in building the new one. 
 
 4. To continue school in the old building until 
 the new one was built and ready to receive the 
 pupils. 
 
 We cannot compete, simply because we have 
 other land, as the new locations are not suitable, 
 and if we must compete, we will be forced, like 
 the country school trustees to use the old founda- 
 tions for the new building, to use the material 
 the present capital supplies in the new, and to use 
 the present structures until the new are ready to 
 receive the entire population of laborers. 
 
 Our only hope to regulate the inequality grow- 
 ing out of rising prices of goods, is to have a 
 similar rise in wages, and to regulate the inequal- 
 ity of wealth by a sytem of taxation that begins 
 to operate upon prices, as soon as they begin to 
 pay profits above the general standard rate. 
 
 Capital has a claim upon labor because it 
 furnishes the wealth labor may use without hav- 
 ing to produce, as when, for example, a house is 
 furnished a laborer and his family, or he will be 
 without a house until he builds one himself. 
 
The Univebsal Muddle 13 
 
 But a dwelling supplied to a laborer is not ex- 
 pected to be charged up to him as though he had 
 to build it, because in such case he would get no 
 benefit from civilization, and would be expected 
 to begin at the bottom, getting no advantage 
 from the past, except an ability to do more work. 
 
 Laborers are expected to get houses, factories, 
 store buildings and railways as accumulated 
 wealth, and get them without cost, the dwelling 
 for a laborer is expected to be his without cost 
 by its circulating an inflation of money that will 
 increase his wages so as to cover the rent he is 
 expected to pay. 
 
 In putting an inflation of credit money in gen- 
 eral circulation, labor and capital are expected to 
 split even, labor getting two dollars from the in- 
 flation, one of which it redeems for the benefit of 
 capital in buying goods at twice the cost, and the 
 other it keeps as its share in the money past labor 
 contributes. 
 
 Credit money cannot get into circulation unless 
 it does so by inflating the prices of goods to twice 
 their cost, allowing the owner of wealth to get 
 one dollar for himself out of every two dollars 
 of credit paid to labor and spent for goods. 
 
 But this inflation in money gets into the hands 
 of the merchant and the manufacturer before it 
 can be used to increase wages, and it may be 
 turned aside before it will add a gain in wages 
 equal to the rise in price of goods above cost. 
 
14 OuH City Civilization 
 
 This inflation in the price of goods must be 
 communicated to the price of capital, and to the 
 entire accumulation of wealth, and create a new- 
 circulation of money outside the goods market 
 before the required increase in wages may be 
 obtained. 
 
 When capital fails to sell at twice its cost, the 
 volume of credit in active circulation will con- 
 tract, and will destroy the equal division between 
 capital and labor, by taking from circulation the 
 credit money from which the increase in wages 
 above the cost of living must be secured. 
 
 To get a picture in the mind of the relation the 
 production of goods sustains to the total wealth, 
 an illustration is required of the wonderful sys- 
 tem of cooperation which the circulation of money 
 has introduced, without the help of mankind, or 
 help from legislation. 
 
 Suppose the entire industry of the country in 
 inclosed between the walls of a factory, extending 
 across the entire land, and including its farms, its 
 towns and cities, its telephones, telegraphs and 
 railroads. 
 
 In this factory inclosing all the industry of the 
 country more than thirty million men, women and 
 children are employed, and the people are massed 
 in cities or widely scattered in the country yet 
 the circulation of money binds them as closely 
 as a telephone circuit may exchange the intelli- 
 gence of every community. 
 
The Universal Muddle 15 
 
 The tasks of all the milllions of workers are 
 those that machines now impose upon labor be- 
 cause every kind of work is connected with some 
 other kind by machinery, and each worker may 
 be looked upon as operating a keyboard, setting 
 machinery in motion. 
 
 These keyboards are more or less complicated, 
 according to the skill and experience, or strength 
 demanded from the operator. 
 
 The item of human labor, is but a small frac- 
 tion of the power put forth by the machines, but 
 as great as may be the machine power, or as 
 simple as may be its operation, no other than 
 human intelligence can do the work. 
 
 Children, for example, may be seen walking 
 back and forth, pulling out a stop at one place, 
 and pushing in a stop at another place, and a 
 stream of goods coming from a powerful machine 
 will depend upon the care and intelligence of a 
 child. 
 
 Other machines increase the movements of 
 their keyboards, and increase the demand for 
 skill and experience from the operator; some 
 are as difficult as playing the piano, others are 
 like winding a spring, or changing the records 
 of a phonograph. 
 
 At one place the work will consist in grasping 
 the handles and guiding a riding plow, and at 
 another the handles of a seeding machine. One 
 man will sit at the throttles of engines, and others 
 
16 Our City Civilization 
 
 will pound at their tasks with heavy sledges, many 
 will be engaged in writing, which is done with a 
 stylus on a metal plate, and we call it printing. 
 Each machine in the great factory that includes 
 the entire country is connected with another by 
 a system of wires conveying the power generated 
 by each machine to every other one, and this sys- 
 tem of wires is again connected with a greater 
 system leading from the walls of the factory, 
 from where the greater supply of power is ob- 
 tained. 
 
 The walls of the factory are great dynamos of 
 power, that become storage batteries when con- 
 nected with the machines, and while supplying 
 power they will also, store all surplus for future use. 
 
 The primary system of wires connecting each 
 machine to every other one represents the lines 
 through which cash circulates and depend upon 
 the direct connection between the operator and 
 the machine, and this power is directly propor- 
 tioned to the human labor required in the plant. 
 
 In this complicated system of industry there 
 are unlimited causes for interferences, on account 
 of the thousands of different machines in opera- 
 tion, on account of the difference in skill and 
 experience demanded from laborers, and more 
 particularly from the wires connecting the indus- 
 try of the plant with the circulation of cash. 
 
 But for the fact that there are millions of con- 
 nections between the machines, and the seoond' 
 
The Universal Muddle 17 
 
 ary connections leading from the walls of the 
 factory, a single failure in the connection between 
 two or more machines might put all of them out 
 of commission. 
 
 The frequent connections between the machines 
 and the wire leading from the walls of the fac- 
 tory, allows the individual machines that fail to 
 work to be cut out, and not interfere with the 
 system of industry because new circuits may be 
 formed with the wires leading from the walls. 
 
 The walls of the factory are intended to rep- 
 resent the accumulation of wealth derived from 
 the past, and the lines of wire leading from the 
 walls to every machine are intended to represent 
 the lines of credit extending from banks to every 
 industry in the land. 
 
 Without these lines of credit depending upon 
 the accumulation of wealth, our complicated sys- 
 tem of production and distribution could not be 
 carried on. The walls of wealth are the stores of 
 past energy the living generation is expected to 
 draw upon to increase the capacity of its labor. 
 
 The walls of this factory are the cities of the 
 coxmtry which become d3Tiamos of power, and 
 storage reservoirs only because they have become 
 cities, where the magnetic field is created from 
 the density of population. 
 
 Wealth has grown great because it has 
 accumulated in cities, where past labor could 
 accumulate and be saved in such forms as to 
 
18 OuE City Civilization 
 
 best contribute to the welfare of succeeding gen- 
 erations. 
 
 Our civilization grows great because it is a 
 city built civilization, and the civilization of the 
 world has ever been a city building development, 
 a progress depending upon the wealth accumulat- 
 ing in cities. 
 
Chapter II 
 THE CITY 
 
 In traveling over the Manhattan Terminal of 
 the Pennsylvania Railway into New York City, 
 you are spared the long ride through the poverty 
 stricken subm-bs of a great city, spared the dirt 
 and squalor, the pens for habitations and the 
 views of back yards where hiunan and animal 
 life are hard to separate and distinguish. 
 
 Speeding across the Hackensack Meadows in 
 New Jersey, you will see the low line of Bergen 
 Hills ahead of the approaching train, cutting out 
 the view of river and city, and a slight curve in 
 the road gives a view of the mouth of a tunnel 
 just before your train plunges into it and speeds 
 away under the bed of the river. 
 
 The cars change instantly from brilliant day- 
 light into almost equal electric light and in less 
 than five minutes you seem to awaken in a station 
 of marvelous architecture from a dream of Ara- 
 bian Nights, and to be entering a city of wonder- 
 ful enchantment. 
 
 The great work of creating this marvelous rail- 
 way terminal disappears in the wonder of it, and 
 human workmen fail utterly as an explanation of 
 the changes that have taken place in your imagi- 
 19 
 
20 Our City Civilization 
 
 nation, during the rapid transit from the mead- 
 ows in New Jersey to the center of the great city. 
 
 In the city the people seem as plentiful as flies, 
 and to move about their business as flies move, 
 each intent upon its own concerns, and no one 
 taking thought about strangers who suddenly, and 
 so mysteriously, are injected into the heart of 
 their city. 
 
 You feel the amazing difference between the 
 country and the city, the wonderful achievement 
 of the city, and you recognize that some mighty 
 hand has guided these human flies in building for 
 the future while they were crawling about seek- 
 ing their present satisfaction. 
 
 This transformation in the twinkling of an 
 eye from the almost deserted country into the 
 heart of the greatest of cities becomes, in reality, 
 more amazing than the fairy tales of our child- 
 hood, and you are impressed with an idea of 
 some mighty City God that must inhabit here, as 
 fairies inhabited the glens in the deep woods that 
 our childhood never could discover, but we knew 
 must be there, or the beautiful woods, which had 
 no other reason for existence, must disappear. 
 
 Here a Spirit must have worked in constructing 
 this bewildering array of towering and beautiful 
 buildings, a Spirit like a fairy unconscious of the 
 money grubbing meanness of the times, which 
 seems to have called men and women into a hate- 
 ful industrial existence. 
 
Thb City 21 
 
 As fabled mountains were thrown together in 
 the sport of the great Titan Gods, so also must 
 we imagine this great construction was the sport 
 of Gods making a game of the work of man. 
 
 Great bridges span rivers a mile wide as if they 
 were carelessly thrown there by super-human 
 power for some great future purpose, which is 
 alien to the crawling mass of people who seem 
 unconscious of the City Spirit as they go about 
 their daily tasks. It seems as though a hand 
 from the future reaches into the present to fash- 
 ion this future into our cities and to demonstrate 
 the super-human power of control over the weak 
 selfishness of human beings. 
 
 The poet of the modern world will win immor- 
 tality by singing the praises of the city, because 
 in the city the poet will discover the abode of 
 gods and will sing the praises of a City Temple 
 where the love of mankind was born and this 
 love has the city for its monument. 
 
 The poet of the future will sing of the city as 
 the parent of culture, of knowledge, of ambition, 
 of pride, of the gentle graces of humanity and of 
 that liberty which respects the rights of others. 
 
 The growth of cities has provided mankind with 
 the wealth upon which culture depends, and with- 
 out which human beings must have remained 
 savage; and from the city the influence of riches 
 spreads across all the territory from which a 
 city draws support. 
 
22 OuE City Civilization 
 
 When the loneliness and isolation of country 
 life was forced to slowly give way to the benefi- 
 cent association of life developed by the city, 
 then a brutal and savage egotism was forced 
 to submit to the advance of justice and hu- 
 manity. 
 
 Sparsely settled districts can not avoid recur- 
 ring famine; they are weak and poor because sep- 
 arate families depend upon a few products closely 
 connected with the soil that feebly supports the 
 life of the growing population, and threatens 
 to exterminate life when growing seasons are 
 unfavorable. 
 
 When tribes of families cease wandering about 
 in search of pasture for their flocks and herds, and 
 find fixed locations and cultivate the soil, then 
 culture makes its faint beginning from closer as- 
 sociation and develops that tribal consciousness of 
 others which opposes savage egoism, and which 
 compels the savage to consider what the tribe 
 may praise or condemn. 
 
 Cities arise because a surplus will develop from 
 the earliest and most simple cultivation of the 
 soil, and trade makes its appearance among people 
 who are separated and whose surplus products 
 differ from each other. 
 
 Tasks, which were far too great for the joint 
 action of laborers in thinly settled districts are 
 simple in the development of a city; they become 
 easy when each may take upon himself such 
 
The City 23 
 
 small portion of a great undertaking as he is 
 most competent to perform. 
 
 In the development of cities the human race 
 passed the period of its animal struggle for exist- 
 ence when men ruled as wild beasts who would 
 allow no other upon their hunting territory. In 
 cities the period is passed when the safety of one 
 class may be insured by the injury of another, or 
 by measures which retard the prosperity of other 
 classes. 
 
 Cities enforce lessons of common brotherhood 
 and generate that spirit of fraternity by which 
 laborers engage in common to subdue the earth 
 and to replenish it. 
 
 Cities are centers of social gravity that attract 
 humanity because the human being may grow in 
 culture, in pride, in ambition and in self respect. 
 
 Cities develop new occupations from which 
 knowledge springs, and upon which progress and 
 civilization depends, noble ambitions are inspired 
 by difficult attainments, attractive pursuits arise 
 for the most efficient among men, and create en- 
 thusiasm in work by the cooperation it intro- 
 duces. 
 
 The increase of individual knowledge and hap- 
 piness upon which civilized life depends can only 
 be brought into existence when the separate and 
 lonely life of the country changes into the associ- 
 ate life of a city, where a man acquires happiness 
 as he needs mutual help, and where close associ- 
 
24 Otjk City Civilization 
 
 ation teaches him to respect the knowledge and 
 ability of others. 
 
 The tinion and cooperation of a people in a 
 city is based upon the delight obtained from 
 spending money, a delight the city multiplies, 
 which becomes a common force uniting all the 
 inhabitants by the necessity of each to acquire 
 the spending money upon which a life of enjoy- 
 ment and of achievement depends. 
 
 Money commands every material pleasure the 
 modern world spreads before humanity in its 
 tempting markets, and as the desires of men mul- 
 tiply they acquire new appetities and obtain a 
 new knowledge of life, and the pursuit of knowl- 
 edge and happiness is made a pursuit of money 
 by the dominating influence of the city. 
 
 The delight in spending money is the central 
 power that moves each man, woman and child in 
 the complex life of the whole people, and this 
 delight secures the development of civilization by 
 forcing the people to work out a super-human 
 plan of which they are unconscious. 
 
 A dismal mistake in political economy bases 
 the advance of mankind upon self denial and 
 sacrifice, claiming that wealth is achieved from 
 hardship and with cruelty, when the truth is 
 everywhere apparent that advances are gained by 
 ministering to man's happiness, by increasing 
 the number of his appetites, and by the delight 
 obtained in satisfying them. 
 
The City 26 
 
 Pain and distress never secured a single advance 
 in organic evolution from the monad to man, and 
 the magnificent miracle presented to the world 
 by the progress of civilization has been secured 
 by increasing pleasure and happiness among 
 mankind; each step was gained because it was a 
 step toward the greater knowledge upon which 
 enduring happiness is built. 
 
 Pain is a guide post in the flower embroidered 
 line of ascent by which thorns are set to protect 
 the blooming roses and to teach us what to avoid. 
 
 The joy each man, woman and child receives 
 from spending money is the motor force of civili- 
 zation. Only as millions are given greater ac- 
 cess to money and to the joy of spending it, may 
 humanity hope to achieve its destiny. 
 
 To allow tens of millions of people the money 
 which enables them only to win a savage exist- 
 ence amid surpassing wealth, is to force upon 
 them the brutal pleasures of barbarism, and to 
 cut them away from all the higher influences of 
 civilization. 
 
 When spending-money is distributed to each 
 person as each contributes a service to the whole 
 society, then money will circulate as the vital 
 force of society and as money should circulate 
 according to its natural laws. 
 
 While it is true that wealth may only arise 
 from the growth of cities, it is also true that the 
 city is responsible for its vmequal distribution, and 
 
26 OtJB City Civilization 
 
 for the worst forms of suffering and injustice that 
 have ever afflicted the human race. 
 
 A city grows in wealth and commercial power 
 according to a law of density among its consum- 
 ers which allows one-half the total population to 
 be set free from supplying their own wants and 
 to work for the general welfare. 
 
 The density of consumers in a city compels a 
 corresponding density in production, and the time 
 saved by distribution in one case is again saved 
 in producing the enormous increase of products 
 which the markets of a city demand. A cer- 
 tain density among consumers for example must 
 arise before water may be brought from a bet- 
 ter and purer supply and be served night and 
 day in unlimited quantities without waste or 
 labor. 
 
 The power to consume water grows with the 
 convenience in the supply and with the reduction 
 in the cost; a family in a city will consume daily a 
 hundred gallons of water for each person, whereas, 
 the same family in the country would con- 
 sume but a gallon for each person. The supply 
 and demand increases a hundred-fold by the ease 
 with which an enormous quantity is secured. 
 
 The same rule applies in every direction where 
 production is aided by machinery, and where 
 cities promote distribution. The few yards of 
 cloth that satisfy the demands of a family when 
 manufactured by a hand loom are multiplied a 
 
The Citt 27 
 
 hundredfold when machinery produces cloth at 
 a cost of less than a cent a yard. 
 
 The riches of a city springs from the enormous 
 surplus which consumers are able to buy, which 
 creates profit and furnishes money to build its 
 industrial organization. 
 
 Riches depends upon an inflation of money 
 coming into existence when surplus products con- 
 centrate in a city where consumers and buyers of 
 them are independent and separate from the 
 producers. 
 
 The chief distress which holds back the 
 progress of sparsely settled countries is found 
 in narrow markets, and in the persistence with 
 which a very limited variety of supplies holds 
 down the increase in trade, thereby preventing 
 the development of fixed improvements upon 
 which wealth is based. 
 
 In sparsely settled districts the isolated family 
 goes into the adjacent forest and cuts the logs to 
 build the house it inhabits, which will remain its 
 home for two or more generations, but the inhab- 
 itants of a city are somehow compelled to pay 
 for cutting more logs consumed as railway ties 
 each year than would build all the log houses in 
 the thinly settled parts of the entire country. 
 
 Iron, for example, is now so rapidly consumed 
 by railways and other industries that each family 
 in a city is somehow compelled to pay for, to dig 
 and smelt a hundred times as much iron each 
 
28 OuH City Civilization 
 
 year as a family in the country required in its life 
 time. 
 
 The writers, who seek to explain our markets, 
 and the influence of prices upon them, usually 
 confine themselves to the market for goods that 
 are directly consumed in the daily life of the 
 people, but neglect to take into calculation the 
 enormous consumption upon which this primary 
 supply depends for its transportation and dis- 
 tribution, and upon which all our fixed wealth 
 depends for its maintenance. 
 
 The great wealth of cities owes its existence to 
 strange power of association resulting from in- 
 creased consumption, by which the whole peo- 
 ple save more than was formerly consumed. A 
 family in the city is getting the wealth that comes 
 into existence with no increase in labor, and 
 which is distributed with less labor than would 
 be required to gather the wild berries that grow 
 freely along the roadside in the country. 
 
 Ten thousand families, for example, living in 
 the country are each required to have a well 
 from which to secure a water supply and must 
 make millions of trips for the water supply of 
 ten thousand families. 
 
 The same ten thousand families concentrated 
 within a city will have a water supply at hand, 
 have it without labor in unlimited quantities and 
 will consume a hundred times as much as when 
 living in the country. 
 
The City 29 
 
 The increase in water supply a city family en- 
 joys, would have taken too much time from other 
 work in the country. The city supply arises from 
 the actual trips that are saved in the country, 
 and the increase of supply represents the gain 
 from cooperation and from machinery using no 
 more labor than was formerly used in secm-ing 
 the country supply. 
 
 The time taken by a family in the country to 
 supply it with the lumber it needs may be set 
 down as the limit in time any family can devote 
 to procuring lumber, and the increase in sup- 
 plies which accompany city development is a 
 gain from machinery that does not encroach 
 upon human labor. 
 
 The time taken to weave a few yards of cloth 
 is the limit in time each family may devote to 
 the clothing industry, and the tremendous increase 
 in output must arise without adding any burdens 
 to human labor. 
 
 In traveling over the entire market we dis- 
 cover how marvelously the laws of natural de- 
 velopment have conserved the human element in 
 society; how much more abundantly each mo- 
 ment of hiunan labor is rewarded with an increase 
 of consumable goods. 
 
 The quantity and variety of goods could not 
 increase for each family imless some power makes 
 the units of human labor the basis of the advance 
 in industry, and the basis of cooperation. 
 
30 Our City Civilization 
 
 The labor unit is magnified, and multiplied by 
 every increase in the output of goods, and as units 
 of labor are being followed by the greater out- 
 put, the money units must likewise increase, so 
 that the greater wealth may be more equally 
 distributed. 
 
 This distribution of wealth depends upon a 
 supply of money dividing a very limited quan- 
 tity of labor into minute fractions by combining 
 them with unlimited yards of cloth, gallons of 
 water, or pounds of materials. Each dollar of 
 value is based upon a unit of labor combined 
 with a unit of time. The total supply of con- 
 sumable goods is divided by the supply of money 
 into prices, and as the quantity of goods multi- 
 plies the quantity of money should keep pace 
 with it by increasing the supply of dollars paid 
 in wages. 
 
 Surplus money arises in great abundance with- 
 in a city where it governs the wealth that accumu- 
 lates there, and when wages fail to increase, the 
 gains in money concentrate wealth to a favored 
 class, who secure surplus money by borrowing it 
 and by pledging future labor to return the money 
 buying unearned wealth. 
 
Chapter III 
 POLITICAL ADMINISTRATION 
 
 There is no greater poetic illusion than the one, 
 that describes the country as the birthplace of 
 liberty and independence and the city as the 
 parent of tyranny. 
 
 The families who make up the rural communi- 
 ties of the world are given credit for the growth 
 of liberty, and for nursing independence to strength 
 and maturity. 
 
 The fact seems to be forgotten that the loneli- 
 ness, and isolation of life in the country is fatal 
 to all the higher qualities of the soul upon which 
 the existence of civilization must depend. 
 
 But country life was responsible for one of the 
 most powerful of human desires, it was instru- 
 mental in securing liberty by bringing about the 
 struggle to establish private property for the 
 common people. 
 
 The historic battles for liberty were, in fact, 
 battles to maintain rights in private property, to 
 gain the right to that spot of earth upon which 
 the security of life in the country depends. 
 
 But when this institution of private property 
 is extended from the country where it properly 
 belongs to the city where it has no right to exist, 
 it creates the most appalling injustice. 
 31 
 
32 Our City Civilization 
 
 When ten thousand families, with homes in 
 the country, are suddenly transplanted to become 
 families with the same homes in a city, the sur- 
 roundings of field and forest and bright skies are 
 completely changed to surroimdings of closely 
 built walls, fronting a street, and backing into 
 an alley. 
 
 City life profoundly changes all the rights 
 upon which private property is based. Instead 
 of a city family requiring the absolute right to 
 a particular spot of earth, from which all others 
 are excluded, such absolute control over property 
 would result in the speedy death of the family in 
 the city if it was exercised. The city family 
 cannot get a cup of water unless neighbors are 
 called upon to assist in carrying it, nor can the 
 most simple daily wants be supplied without 
 constant help from others. 
 
 There is, in truth no strictly private property 
 within the boundaries of a city. The homes of the 
 people have become a collection of cells that are 
 intimately associated with the corporate body, 
 not only loosely threaded on lines of streets and 
 alleys, but most vitally joined together by under- 
 ground connections for water, light, heat and 
 power. 
 
 The mass of legislation, upon which society is 
 supposed to rely for its peaceful existence, has 
 been but slightly changed in five thousand years 
 of history. 
 
Political Administration 33 
 
 Legislation was everywhere founded upon the 
 theory that the rights of property were superior 
 to the rights of persons. The rights of persons 
 granted by law, — as the abolition of slavery, for 
 example, — have been careful not to interfere with 
 the previously established rights of private prop- 
 erty, and freeing slaves as a consequence has been 
 of questionable benefit to them. 
 
 Property laws are founded on the theory that 
 each family has its spot of earth secure, and 
 therefore has its freedom guaranteed, and the 
 law in protecting this mythical spot of earth 
 extends private property everywhere without 
 regard to human rights. 
 
 The law protects the rural owner of the earth 
 in his savage right to a hunting range from which 
 he may exclude all other persons, protects him 
 with a savage jealousy born of the times when 
 the defence of the hunting ground made a warrior 
 the chief of his tribe, and the times when fighting 
 to acquire more territory was the only occupation 
 deemed noble. 
 
 For many hundred years and until quite recent 
 times, the streets of cities were treated as rural 
 roads, over which the abutting owner exercised a 
 control that was only relaxed to allow the public 
 to go and come. Such roads could not be im- 
 proved for the benefit of the public without 
 first obtaining the consents of the abutting owners. 
 
 This rural control over streets has thousands 
 
34 Our City Civilization 
 
 of monuments in every city, when instead of 
 encroaching on the country road with his fences, 
 the city owner takes half the pubUc walk-way 
 for a private entrance to his dwelling or cellar, 
 so he may use the space taken from the public 
 to enlarge his back yard. 
 
 The so called sacredness of private property, 
 and the hallowed judicial procedure relating 
 thereto, is a relic of barbarism, by which one 
 ignorant and greedy savage is invited to attack 
 another by a law suit that will damage both of 
 them. 
 
 A system of private property, necessary to 
 hold a savage and isolated people together, should 
 not now be defended and excused in our times, 
 when it has no present good to its credit, because 
 it was of great benefit in times past. 
 
 Slavery was as essential in the early history of 
 struggling humanity as was private property in 
 land, and the one was the parent of the other, 
 and as slavery declined the rights of private 
 property were extended, when they should have 
 declined as civilization advanced. 
 
 Transplanting a system of private property by 
 which families are isolated, from the country, 
 where it is native to a city where an isolated exist- 
 ence is impossible, is to create the most violent 
 antagonisms by law between the low order of 
 society the system protects, and the higher civ- 
 ilization seeldng to displace it. 
 
Political Administbation 35 
 
 Science and invention make new demands upon 
 the earth by creating new uses for its mineral, 
 and other resources, demanding new means of 
 transportation in railways and new communica- 
 tion in telegraphs and telephones. 
 
 These new demands were quick to meet the 
 brutal opposition of private property, which be- 
 came the deadly foe to that closer union among 
 the people, which an expanding civilization was 
 seeking to bring about. 
 
 Private property would have utterly destroyed 
 the benefits of science, of new discoveries, of ex- 
 panding knowledge and culture, by its power to 
 deny the use of the earth to labor, but for the 
 fact that the owner of the earth was willing to 
 sell his precious rights. 
 
 Himting and fishing are supreme by law in their 
 control over the earth. The owner may keep the 
 railway from his hunting range, and the steam- 
 ship from his fishing grounds, except in the rare 
 instances, where the sovereign power of eminent 
 domain is exercised. 
 
 Anyone, who has been connected with modem 
 development in the building of railways and fac- 
 tories, has been made painfully aware of the laws 
 of feudal tenure protecting the hunting range 
 for the savage. 
 
 Each separate private owner of territory is a 
 legal lord whose property is protected for him by 
 the wealth and power of the nation, protected by 
 
36 OuH City Civilization 
 
 laws inherited from Roman times, that resist in 
 our own times the changes in industry that 
 would move the mass of mankind from a bar- 
 barous to an enlightened civilization. 
 
 The benefits from science and from invention 
 have been at the mercy of private property. We 
 are unable to grant the common people a measure 
 of progress because we allow the private owners 
 of the earth to rake off all the gains from labor 
 as an imearned rise in the price of landowners 
 land. 
 
 The profit in selling land at continually higher 
 price gave a mighty impulse to greed by making 
 thousands of men eager to profit by charging 
 labor higher costs for the land furnished for them 
 by nature free of cost. 
 
 If private property was limited by law to the 
 property that has a shadow of a claim for being 
 private, for the protection of the home and the 
 family no objection need rise against it, for in 
 such case only a small area of the surface of the 
 earth would be required for purely private pur- 
 poses. 
 
 The rights to private property need not then 
 conflict with the rights of the public, and the 
 property in cities, in railways, in factories, in 
 great stores, and public utilities would be recog- 
 nized as public. The owner of private property 
 is now between two forces, one of which will 
 increase wealth from public use, and the other 
 
Political Administration 37 
 
 depends upon private use. A gain in one direction 
 may become a loss in the other. 
 
 Thus, for example, the right to dig a ditch 
 among farmers to drain land becomes a public 
 right when the lands of many private owners are 
 affected, and ditching was for a long time vio- 
 lently opposed upon the theory that the single 
 owner near the outlet possessed the private right 
 to obstruct the ditch on his own domain, and 
 could refuse to allow the fanners above him 
 to widen and deepen a ditch across his private 
 territory. 
 
 Tens of thousands of the most absurd legal 
 battles are constantly being waged to establish 
 the superior right of one private owner over an- 
 other similar private owner, because some pub- 
 lic necessity demands a public improvement for 
 the common good. ' 
 
 It was centuries before one private owner of 
 land obtained a legal right to enter upon his 
 land when he was cut off from a highway by an 
 intervening owner, and when this right to an out- 
 let was secured, it was carefully restricted to the 
 surface. In many states in the United States 
 land having mineral under the surface, and cut 
 off from a highway, cannot secure an outlet for 
 the mineral product over the land of an obstruct- 
 ing owner. 
 
 The owner of a few acres of barren land in 
 West Virginia, for example, that cuts off a rail- 
 
38 Our City Civilization 
 
 way at the mouth of a creek, may prevent thou- 
 sands of acres of coal, or other mineral from 
 getting to market on account of the superior right 
 of one private land owner over the other. 
 
 When cities sprang into existence, at favorable 
 locations, a remarkable increase in manufactur- 
 ing was developed calling for an enormous in- 
 crease in supplies of raw material. On account of 
 private property, the demand for labor was cut 
 in half by the increase in the demand for land, 
 because the money labor had to earn was spent 
 for the land labor should have been permitted to 
 improve without cost. 
 
 The confusion increased between private and 
 public rights to property as the demand for in- 
 creasing supplies of raw material called for higher 
 uses of the earth and for higher prices of land. 
 
 But for the fact that this demand for land had 
 a vast expanse of country over which to spread, 
 new industries could not have developed. When 
 one owner refused to sell land to be improved 
 another was found who needed the money. 
 
 The evil that develops in a city from asserting 
 private right to property that is not private, and 
 where no such rights exist, may be more easily 
 imagined than described, because the limited ter- 
 ritory of a city makes the field of congestion a 
 narrow one and multiplies the injustice the pub- 
 lic is compelled to suffer when they are denied 
 their property rights. 
 
Political Administration 39 
 
 From remote times, when pirates claimed the 
 right of private robbery on the high seas, when 
 brigands regarded merchant caravans as their 
 rightful prey, when feudal barons spread chains 
 across rivers to plunder peaceful commerce, until 
 today, robbery by private right to plunder the 
 public was never more firmly entrenched in 
 law. 
 
 The right of private property has become an ex- 
 tension of the ancient right to rob the public on 
 every highway of commerce, and new methods of 
 theft develop as new forces of production open 
 up new avenues and as new streams of goods 
 flow to millions of consumers. 
 
 The so-called sacredness of law, and the up- 
 rightness of the judiciary, has reference, alto- 
 gether, to maintaining the present system of legal 
 wrongs relating to private property. 
 
 The modern pirates on the high seas of com- 
 merce may well sing the praises of the courts that 
 spread legal chains across every channel where 
 tribute may be laid by the right of private rob- 
 bery upon public property. 
 
 The laws, forcing private ownership upon prop- 
 erty that is not private, but public, are laws 
 that outlaw the public from the wealth they 
 create, and take away their property and their 
 rights; are laws that put sovereignty under private 
 control, and prevent the people from helping 
 themselves, by denying their natural rights and. 
 
40 OuB City Civilization 
 
 will force a revolution upon society to secure 
 them. 
 
 The great industrial systems of the country, 
 the railways, telephones, and other utilities, pile 
 great totals of wealth upon insignificant areas of 
 land the owners of which are given sovereign 
 power to levy tribute upon the public, by having 
 the absolute control over the wealth the land 
 supports. 
 
 If every family in the entire country was given 
 the land they each required for purely private 
 purposes, so as not to conflict with the land re- 
 quired for public use, the difference between 
 private and public property of all kinds would 
 then stand out clearly, and the wealth that was 
 purely private would be seen to be an insignificant 
 part of the total. 
 
 As the character of our wealth has changed, 
 as each family was being required to buy the 
 goods it consumed, instead of producing them, 
 so also did the right of property change by a 
 decline in the private right, and by the increase in 
 the rights of the public. 
 
 The right of each person to himself is a right 
 conferred by nature, and is not a right the law 
 originates. The right of each person to himself is 
 instinctive in every human being, who is expected 
 to maintain it at all times, and defend it with his 
 fife when it becomes necessary. 
 
 The right of private property is intended to 
 
Political Administration 41 
 
 widen the right of each person to himself, and 
 not curtailing it by giving to some persons the 
 rights over the property of all the people. 
 
 When the law extends the domain of private 
 property over the property of the public it may 
 only do so by giving the private owner the right 
 to trespass upon the public, instead of protecting 
 the public property from trespass. 
 
 The line dividing the natural right to private 
 and public property is the same now as it ever 
 has been, it is the line dividing the private in- 
 terests of each family from the private interests 
 of every other family, but there is no right that 
 calls for an extension of this private family in- 
 terest to be extended over the property that is 
 essentially public in its nature. 
 
Chapter IV 
 PROGRESS AND TRESPASS 
 
 A long road stretches across a wide country, 
 at one end of which wheat is a surplus crop, be- 
 cause it is cheaply produced, and at the other 
 end hardware is the favored product. 
 
 On account of the high cost of wheat at the 
 hardware end of the road, and the high cost of 
 hardware at the other end, they will seek to ex- 
 change with each other along this road. 
 
 A load of wheat will travel to the hardware 
 terminal and trade, while a load of hardware is 
 seeking the same trade in the opposite direction, 
 and when thus handicapped by the long road the 
 small trade could never become important. 
 
 At right angles to this main road, and crossing 
 it midway, another road stretches across the 
 same wide territory. At one end of the cross road, 
 drygoods and groceries are cheaply produced, while 
 meat and corn are the surplus products at the 
 other end, and a load of any kind must travel 
 the entire distance in making an exchange. 
 
 As population increases in this territory the 
 
 volume of products and the demand for them will 
 
 grow, and trade will expand with the variety 
 
 of goods offered to all the people in the whole 
 
 territory. 
 
 42 
 
Progress and Trespass 43 
 
 A load of wheat going East for hardware will 
 be accompanied by load of wheat going North — 
 from the cross road — to trade for drygoods, and 
 each returnmg, one with hardware the other with 
 drygoods. 
 
 The crossing of the two main roads will soon 
 become the meeting place of teams from every 
 direction, a social and business center will develop 
 there, friendships will be formed, news from all 
 over the territory will be exchanged, and carried 
 in free delivery to all the people, creating that 
 common territorial knowledge upon which the 
 rights of the public depend. 
 
 At the cross road a farm house will change into 
 a tavern where traders will meet to discuss the 
 news, the crops and the weather. 
 
 It will be but a slight step in advance for a 
 teamster with a load of wheat, going a long dis- 
 tance for groceries and drygoods, to discover the 
 things he wants from another teamster seeking a 
 load of wheat, and an exchange at the cross road 
 will permit each to return and save one-half the 
 time and expense of the trip. 
 
 As soon as this advantage becomes apparent 
 the cross roads will become a place of great activ- 
 ity, and will be congested with wagons seeking to 
 exchange loads, blocking the main roads for a 
 mile or more, threateniag a greater loss from 
 delay than may be gained by the distance saved. 
 
 If there were no private rights of land to in- 
 
44 Our City Civilization 
 
 terfere,the territory on all sides of the cross roads 
 will be invaded for room for the wagons in making 
 trades, which will arrange themselves so as to go 
 and come with the least delay, thus marking out 
 the first faint lines of streets and alleys in the 
 coming city. 
 
 The next step in advance will be the discovery 
 that a good living profit is to be made from small 
 stores for the benefit of the traders, and wagon 
 shops, leather, blacksmith and other small in- 
 dustries will appear. 
 
 Building will then make a beginning in a vil- 
 lage that is to become a great city, and ware- 
 houses will allow the teams to discharge and sell 
 without the haggling of barter, and a standard 
 price will allow system to be introduced in making 
 exchanges. 
 
 The first great step in the early history of this 
 cross roads city will be the one that introduces 
 a permanent building industry, upon which man- 
 ufacturing will be found to depend. 
 
 When the activity in building establishes its 
 advantage at the trade center, it will force the 
 manufacturing from the surrounding territory, 
 selling goods in the city, to locate there on ac- 
 count of the advantage in securing supplies of 
 labor and raw material. 
 
 Building of every kind is greatly handicapped 
 when it must be carried on where its material is 
 diflScult to assemble, and where its labor must 
 
Progress and Trespass 45 
 
 be imported, and temporarily provided with 
 houses and provisions. 
 
 When a permanent building industry is es- 
 tablished at the city location it will become the 
 chief consumer of labor and material, and on 
 this account will aid in the success of every 
 other undertaking. 
 
 When a great consuming population gathers 
 within a city boundary, the gains from associa- 
 tion will not all arise from the saving in the cost 
 of delivery, but equal gains will arise from savings 
 in the density of production from the closely 
 connected population. 
 
 The entire country will be blocked into great 
 city districts, each of which will be governed, by 
 the size and importance of the central city, and 
 as the city increases in population and wealth, 
 the surrounding country will gain a like advance, 
 and take on a prosperity the city will generate. 
 
 The few square miles, within the charmed cir- 
 cle of the central city will represent the public 
 demand for territory, a demand that comes from 
 the country where the city draws its support. 
 
 A land owner in the city will discover to his 
 surprise that he may sell city land for a price 
 out of all proportion to its use for any private 
 purpose, and having sold he makes the ad- 
 ditional discovery that the price of land contin- 
 ues to advance with the increase in wealth and 
 population. 
 
46 OuH City Civilization 
 
 The owners who sell land as the city is spread- 
 ing over more territory, see the price advance 
 after they have sold and rise beyond any price 
 their fondest dreams of wealth could have antici- 
 pated, and, for this reason, many refuse to sell, 
 and thereby prevent building. 
 
 At the main cross roads, where wagons meet 
 to exchange loads and return, the ones meeting at 
 the exact center of exchange will save the most 
 time, and each step away from this center will 
 be a loss of two steps, one step out of the way, 
 and another in returning to it. 
 
 The balancing of steps in seeking the trade 
 center, where the greatest volume is to be sold, 
 by millions of trades made daily confines the 
 trade in a city to a very small area of land near 
 the center of population. 
 
 The steps saved by the consumers of goods are 
 responsible for the great buildings in a city, and 
 the wealth accumulated there, and for the in- 
 crease in height of buildings instead of spreading 
 them over wider territory. 
 
 Each and every building in a city bears a 
 fixed relation to its trade center, where the great- 
 est savings in time may be made by the consum- 
 ers, and as a city spreads over more territory in 
 every direction from this center, the number of 
 favorable locations will be greatly increased, and 
 profits will be more widely distributed. 
 
Progress and Trespass 47 
 
 This central territory in a city, in common 
 with all other territory, is made private property 
 by human law, and a city cannot spread in all 
 directions in obedience to the laws of its own 
 development but will spread on lines of least 
 resistance determined by the private owners of 
 the public territory. 
 
 This trespass of a private owner upon public 
 territory is the first, and fundamental interfer- 
 ence to the normal growth of our cities, crowd- 
 ing population together where it should spread 
 and creating large stretches of vacant land to be 
 kept vacant that would otherwise have allowed 
 an even and healthy growth. 
 
 When human law extends the right of private 
 property over the domain of the public, it may 
 only do so by permitting the private owner to 
 trespass upon the public. 
 
 When a city is increasing in wealth and popu- 
 lation, and when the entire country is developing 
 its civilization, the natural relations between 
 mankind and the world it inhabits are reversed 
 by private property in land. 
 
 Instead of nature being allowed to assist man 
 by the easy access to natural resources, from 
 railroads, and other means of transportation, the 
 landowner is interposed between nature and man, 
 who looks upon the improver of the earth as 
 a trespasser, and whom the law has made a 
 trespasser. 
 
48 Otjr City Civilization 
 
 There is no twilight zone in natural law, as 
 there is in human law, where property rights are 
 confused and indistinct. The line dividing the 
 private from the public is as clear in natural 
 right as the shore line dividing the continents 
 from the oceans. 
 
 Limiting private property by law to private 
 uses only, does not mean the government owner- 
 ship of all property not strictly private, but it 
 does mean that the public must be protected 
 in its property rights when such rights are in 
 private hands. 
 
 When a city is growing, the activity in build- 
 ing calls for great supplies of labor and material, 
 which building consumes, and the money paid 
 for this labor and material must be advanced 
 from the commodity fund, which must be re- 
 imbursed after the buildings are sold, just as the 
 employer is reimbursed after goods are sold. 
 
 The sale of buildings demands a money of its 
 own distinct from the money bujdng goods, and 
 this money must arise from the buildings selling 
 for more than they cost. 
 
 Buildings represent past labor, and the money 
 they supply must increase prices with a money 
 that has no cost in present labor, so that the no- 
 cost-money and the no-cost-prices will balance 
 the demand and supply of money with the 
 demand and supply of products. 
 
 During the building period this rise in price 
 
Progress and Trespass 49 
 
 above cost is plainly the cause of the advancing 
 prosperity in a new country 
 
 The history of every building period will show 
 that the rise in the price of property above its 
 cost is the mainspring of all the activity in the 
 employment of labor in this field, and in the 
 circulation of money. 
 
 Our progress and our wealth depends upon our 
 ability to inflate the volume of cash paid out in 
 the commodity market with an inflation derived 
 from the property market, and to take off this 
 inflation as a money profit, and our distress and 
 failure comes from a loss in the margin of this 
 profit. 
 
 There are two prices for every building, a cost 
 price and a selling price, the same as for goods, 
 and the entire circulation of money will finally 
 depend upon the selling price in the building 
 market, where labor is finally paid its share of 
 inflated money. 
 
 The gain in money price above the labor cost 
 comes from an inflation of bank checks being 
 added to the cash in the commodity market after 
 buildings are completed and are for sale; and un- 
 less this inflation will give the building industry 
 its margin of money profit the circulation of 
 money will be destroyed for building. 
 
 The banks are able to add an inflation of 
 credit to the cash circulation because they are 
 able to keep ten dollars of credit currency pay- 
 
50 OuB City Civilization 
 
 able in cash by having but one dollar in cash 
 on hand to redeem bank checks on demand. 
 But labor may be called upon to redeem this 
 bank money in the actual cash it earns, and 
 when labor is called upon to redeem inflated 
 money in cash a crisis of some kind falls upon 
 the country. 
 
 The ability of banks to keep ten dollars of 
 credit payable in cash is based upon the value of 
 property taken as security for its loans, which 
 means that bank currency is based upon the 
 wealth of the country and not directly upon its 
 labor. 
 
 If bank currency is based upon the value of 
 property why must it be made payable in cash 
 which is limited to the price of goods, and to 
 the wages paid to the producer of goods, why 
 not circulate an enormous quantity of bank 
 money payable in the property taken by banks 
 as security for loans? 
 
 The property of the country has no intrinsic 
 value, as it appears to have, but like the value 
 of goods it is directly based upon living labor, 
 with past labor as a security, and if living labor 
 is called upon to pay for money put into circulation 
 by property it is expected to get the property 
 for the money it is called upon to redeem. 
 
 The value of property is a labor value, and 
 there is a vast difference between the value of 
 living labor, and the money value that may be 
 
Pbogress and Trespass 51 
 
 given to property by the labor of the past. This 
 credit or past labor money is not expected to 
 be paid in cash from the money living labor 
 earns. 
 
 Credit is expected to circulate merely as a 
 monetary price, as an inflation of money having 
 no cost in present labor, so it may get a value in 
 present labor, it is allowed to inflate the prices of 
 present products so that one dollar of cash and 
 one dollar of credit will circulate equally in buying 
 every two dollars worth of goods or property. 
 
 When prices rise above cost the gain is wholly 
 one of inflated money put into use by some prop- 
 erty owner, and this inflation of money is what 
 every man in business is seeking to get, and 
 gives rise to what we call "making money" as 
 distinct from "earning money." 
 
 The quantity of credit that banks might add 
 to the circulation appears to have no other limit 
 than the value of property, and every scheme to 
 inflate the currency seeks to coin this value of 
 property into money, upon the theory that prop- 
 erty has an intrinsic value independent from 
 labor, and money is a mere counter in an exchange 
 of intrinsic values. 
 
 But no more inflated money will circulate than 
 living labor can redeem in wages and in prices 
 above cost, and the quantity living labor can 
 redeem, when paid its share of inflation, is regu- 
 lated by natural law. 
 
52 OuE City Civilization 
 
 The cash paid to labor in the commodity mar- 
 ket and the credit inflation which property may 
 add to this cash must join in prices above cost, 
 and for this reason every credit dollar is limited 
 to a cash dollar that must redeem it, and no 
 more credit dollars may be added than the cash 
 which represents the selling price of commodities. 
 
 The inflation having no present cost in labor 
 must circulate in common with cash, and for this 
 reason it must be paid as a bonus in paying an 
 increase in wages that does not call for more 
 work. The property owner who puts inflated 
 money in circulation has but one chance to make 
 money from it, and that chance comes from em- 
 ploying labor in building and selling the build- 
 ing for twice its cost, which fact limits the total 
 inflation that may circulate to the selling price 
 of buildings labor is able to produce each year. 
 
 It needs to be clearly understood that living 
 labor is called upon to redeem every dollar of 
 inflated money in wages although such money is 
 based on the value of property, and although it 
 has been once earned by past labor. The limit 
 to the inflation of credit in the general circula- 
 tion is fixed by the limit in cash, and every cash 
 dollar may be accompanied by a credit dollar in 
 prices of twice the cost, and taken as a monetary 
 profit, and this profit is expected to be spent as 
 an investment in accumulated wealth. 
 
 In every two dollars of the selling price one 
 
Peogeess and Teespass 53 
 
 dollar is a profit, and one dollar is cost of labor, 
 but this cost of labor must also carry one dollar 
 in profit to labor for every dollar it spends for 
 goods, allowing wages to advance to twice the 
 cost of living. 
 
 The gains from the monetary price above cost 
 should divide equally between all laborers and 
 all business, the limit in gains being fixed by the 
 number of laborers employed, by the number of 
 dollars paid in wages when each dollar carries 
 another dollar of inflated money. 
 
 There are two distinct fields in which to cir- 
 culate two quantities of money, the commodity 
 market and the capital market. These fields are 
 connected by the profit from the sale of goods, 
 to be recovered when capital sells for twice its 
 cost, thus transferring the inflation to the prop- 
 erty market after it has been cancelled by labor 
 paying twice the cost of goods. 
 
 The quantity of capital labor is expected to pro- 
 duce every year should equal the value of goods 
 in the same year so as to keep the demand and 
 supply of money equal, and return the inflation 
 to labor from the capital market that was taken 
 from it in higher prices of goods. 
 
 Capital cannot sell for twice its cost, unless a 
 location is secured where the profit from the sale 
 of goods will pay twice the profit where there is 
 no advantage of location but the price of land 
 will advance at each good location and use this 
 
54 OuB City Civilization 
 
 profit above cost as a basis for the selling price 
 of land. 
 
 This seUing price of land has a most disas- 
 trous effect upon the circulation of money, be- 
 cause it takes the difference between the labor 
 cost and the money price, upon which the entire 
 circulation of money depends for the employment 
 of labor. The price of land takes the profit once 
 as a rise in price of land when it should be taken 
 as often as a dollar of cash may combuie with a 
 dollar of credit in selling new goods and new 
 capital. 
 
 When land reaches the limit of the rise in its 
 price, the inflated dollars that should circulate 
 in the building market will have been cancelled, 
 and debts will take their place, and instead of 
 having a currency based upon the value of prop- 
 erty we will have debts taking all the profit as 
 interest on borrowed money. 
 
 The effort is being constantly made to restore 
 the credit money destroyed by the rise in price 
 of land by new inflations of cash that will carry 
 new inflations of credit and allow profits to be 
 paid in employing labor. 
 
 But the rise in price of land follows every cash 
 inflation as it followed the credit inflation and 
 destroys it — leaving more debts than before and 
 a greater burden upon labor and upon the con- 
 tracted circulation. 
 
Chapter V 
 SUSPENDED ACCOUNTS 
 
 A man of leisure living in a city goes where he 
 pleases, he rides or walks, takes in the theaters, and 
 stops at the best hotels, uses cabs or automobiles 
 at his pleasure, entertains friends, has a yacht and 
 private car, and does not count the cost of his 
 most luxurious living. 
 
 Labor must fiu-nish all the services daily for 
 the idle rich and the exact process by which labor 
 may be drawn upon for this purpose is veiled in 
 the deepest mystery or it would have long since 
 come to an end. 
 
 The rich man pays in money for every service 
 as he gets it and there is no direct cause of com- 
 plaint, but on the contrary, his spending is sup- 
 posed to be for the general benefit on account of 
 the increased demand for labor never dreaming 
 that this may be the reason for the lack in em- 
 ployment and the low wages. 
 
 When the rich man pays as he spends, he is 
 supposed to settle his account with labor in full, 
 and such should be the case, for it would be im- 
 possible to call upon every man to account for 
 every dollar he spends, and answer how and where 
 he obtains his spending money. 
 55 
 
56 OuH City Civilization 
 
 The man of leisure obtains his spending money 
 from a bank where he keeps an account. A 
 bank is not a place where a man keeps his money, 
 as we are so often told, it is a place where a man 
 of wealth may have his wealth coined into money 
 for him and where the wealth that cannot be 
 consumed may be exchanged for the cash that 
 labor must accept for its services. 
 
 The rich man who spends cash and who earns 
 none of it, is exchanging wealth in its fixed form 
 for the cash that pays for the daily services of 
 labor, and the bank makes a profit from the coin- 
 age of credit into cash. 
 
 When it appears, to the outside world, that a 
 man of leisure is spending cash in his extravagant 
 living, the fact is clear to the banker that credit 
 is being spent, and is being as rapidly reduced as 
 it is being spent. 
 
 The exact process by which a part of the peo- 
 ple live upon other people while they appear to 
 be assisting labor with the money they spend, 
 will be found in the process by which a bank 
 keeps ten dollars of credit money redeemable in 
 labor for every two dollars labor receives in 
 wages. 
 
 The credit money of the country is money fur- 
 nished by past labor, and is intended to distribute 
 wealth by increasing wages from this volume and 
 when labor fails to get it as a bonus, it goes as a 
 bonus to the men who do not work. 
 
Suspended Accounts 57 
 
 This addition of money, having no cost in pres- 
 ent labor, gets into circulation by increasing prices 
 above their cost and makes room for itself by 
 first increasing the prices of consumable goods, 
 which is expected to be followed by a rise in 
 wages. 
 
 Getting money into circulation, and keeping 
 it there after it is in, is a different proposition, 
 and labor loses by the failure in keeping this 
 money in a permanent volume after the banks 
 have added it to the supply on hand. 
 
 The rise in prices putting credit money into 
 circulation must be followed by a corresponding 
 rise in wages if it is to remain, and the diffi- 
 culty will be found in the fact that prices will 
 rise from this inflation while wages may remain 
 stationary. 
 
 When an inflation gets into the general system, 
 it is carried by the rise in prices, and if higher 
 prices are not followed by the required rise in 
 wages the inflation must then be taken out of 
 circulation, and the door by which it entered is 
 left open so it may retire, if it is not allowed to 
 circulate by increasing wages. 
 
 The rise in the price of conamodities is the 
 open door by which an inflation of past labor 
 money is added to the present cash circulation, 
 and this rise in price is used to retire the inflated 
 volume if it is not followed by the required rise 
 in wages. 
 
58 Our City Civilization 
 
 The credit inflation introduced by the owners 
 of wealth has been once earned by past labor, 
 and our financial sins are a result of demanding 
 this money be earned the second time by living 
 labor paying twice the cost of goods without a 
 corresponding increase in wages from bank check 
 money. 
 
 When prices of goods rise to twice the cost 
 and wages fail to meet the higher price by rising 
 to twice the cost of living, the inflation is can- 
 celled by taking two dollars from low wages to 
 buy goods that cost but one dollar, and thus 
 compel! labor to earn and cancel a dollar for 
 which it gets nothing. 
 
 There is a limit to the credit money labor may 
 be called upon to cancel, and when wages are 
 not increased by the inflation, the limit in the 
 circulation of credit is fixed by prices of goods 
 above cost. 
 
 How great a quantity of money may property 
 owners add to the supply and circulate outside 
 of wages by laborers redeeming a part of it as 
 they pay for goods at prices above cost? 
 
 The answer is that wealth may keep a volume 
 of counterfeit money in circulation that will buy 
 all the capital labor may produce, and will con- 
 centrate all wealth to the men who control the 
 issue of counterfeit credit money. 
 
 The "Quantity Theory" of money has been a 
 bone of contention during hundreds of years of 
 
Suspended Accounts 59 
 
 discussion, and its simple statement is found in 
 the equal relation between capital and labor. 
 
 The quantity of money the market demands is 
 a quantity that will balance the sums spent for 
 all purposes in a year with the sums paid to labor 
 for services of every description. 
 
 Labor cannot be defrauded by capital as long 
 as the demand and supply of money balance, in 
 other words, as long as the money spent each 
 year for all labor products is balanced by the 
 money paid to labor of every description the same 
 year. 
 
 To merely assert that labor only needs a balance 
 in the demand and supply of money, is not as 
 simple a matter as it may seem, and as the state- 
 ment of it will appear. 
 
 Time plays an important part in this equal 
 demand and supply of money, and when a year's 
 time is being allowed to strike a balance many 
 interferences may occur on account of this lag 
 in time. 
 
 If there was but one quantity of money its 
 time of circulation would not be so important, 
 and the balance could not be so easily disturbed, 
 but there are two distinct quantities each having 
 its own time of circulation, a conflict arises in 
 the relation between the times of the two different 
 quantities. 
 
 Before an equal demand and supply in the 
 quantity of money can be secured the difference 
 
60 Our City Civilization 
 
 in time must be harmonized by equal differences 
 in quantity, so that equal sums of each kind of 
 money will be included in the sums paid in wages 
 every day. 
 
 The time given the quantity of cash to make a 
 complete turn-over, is about sixty days, and for 
 this reason the quantity of cash and the cash 
 paid in wages for a sixty day period must be 
 equal and balance. 
 
 The time given the quantity of credit to make 
 one complete turn-over is a year, and a dollar 
 of credit is expected to be paid to labor for every 
 dollar paid in cash, the slower circulation of credit 
 demands a corresponding increase in quantity so 
 that the credit paid in wages daily will balance 
 the sum paid from the cash volume every day. 
 
 Thus it follows that the rate of wages depends 
 not only upon the time of circulation but also 
 upon the quantity of money, and as the wages 
 for sixty days determine the quantity of cash, 
 the wages for a year will be expected to fix the 
 quantity of credit. 
 
 The loss in wages from the contraction of 
 money will be found in the circulation of credit, 
 the cash quantity can not be reduced because 
 commodities demand a cash market and this cash 
 market prevents any delay in time by which a 
 smaller quantity of money could be used to pay 
 labor. 
 
 The total quantity of cash turning once in 
 
Suspended Accounts 61 
 
 sixty days will turn six times in a year, and will 
 fix the quantity of goods sold in a year for cash, 
 and will fix the minimum wages by the minimum 
 quantity of money that must be kept in circula- 
 tion to allow the people to live. 
 
 If the total cash in circulation is three billion 
 dollars and if it turns six times a year, the annual 
 sales of goods will be six times three billion dol- 
 lars, or eighteen billion, and the minimum wages 
 should equal a like amount. 
 
 Credit money is given a year's time, because 
 the value of capital is fixed by a rate of interest, 
 and not by the wages of labor, and this slower 
 circulation of credit demands a volume of it in 
 circulation six times as great as the volume of 
 cash, so as to pay dollar for dollar in credit money 
 along with the cash paid in wages. 
 
 When the accounts between these two quan- 
 tities on money are out of balance, the quantity 
 of credit will fail, by arrears in account due to 
 labor for some wealth sent to market and sold 
 that has not been settled for in wages. This 
 delay in settlement must be charged as a debt on 
 account of an interference with the time of cir- 
 culating credit, the time being extended so as to 
 allow a smaller quantity to postpone cash pay- 
 ments to future payments. 
 
 There is no good reason for a contraction in 
 credit money, as this money in the form of bank 
 checks is much superior to cash in many respects 
 
62 OuB City Civilization 
 
 and has no cost in labor, and the banker and 
 property owner expect to profit from the issue, 
 and on this account to keep as much of it in cir- 
 culation as labor can redeem. 
 
 The difficulty is not found in any deficiency the 
 property owner or banker would issue, but in the 
 quantity labor is able to redeem by not having 
 a part of the bank checks included in its wages. 
 
 How to keep credit in circulation comes con- 
 tinually to disturb the banker. It is easy to put 
 out but hard to recover from the payment of 
 loans; the failure in credit to stay in circulation 
 is based upon the fact that wages are too low to 
 redeem the quantity the business of the country 
 demands. 
 
 To the superficial observer the circulation of 
 bank checks may not seem important to labor, 
 seeming to be the money peculiar to the rich, 
 and the fact escapes that because bank checks 
 have become the money peculiar to the rich we 
 have all our labor troubles. 
 
 The total bank check currency that should 
 circulate as cash in this country is about fifteen 
 billion dollars, and the failure in circulating bank 
 deposits as cash is responsible for ten billion dol- 
 lars worth of them becoming dormant and being 
 invested as capital. 
 
 The rise of prices from cost to twice cost de- 
 pends upon an inflation of bank checks doing the 
 work of cash for the price above cost, and since 
 
Suspended Accounts 63 
 
 money will not circulate unless goods will sell 
 for more than they cost, the entire circulation 
 of both cash and credit will depend upon the 
 quantity of credit that advances prices above 
 cost. 
 
 Capital has no way of getting money to buy 
 material and pay labor in building except by 
 having a bank convert credit into cash, and banks 
 keep a large volume of credit payable in cash 
 on demand by holding a cash reserve for that 
 purpose. 
 
 When capital spends credit in buying material 
 and employing labor to build the inflation of 
 credit increases the prices of consumable goods 
 so as to carry the credit money, and the price 
 of goods above cost is made to carry the cost of 
 capital. 
 
 The money paid to labor in one day cannot be 
 recovered the same day to be used the following 
 day to pay labor with the same money. 
 
 It takes time for a given quantity of money 
 paid in wages to flow from millions of hands of 
 consumers back to the employer to be used over 
 again, and this time demands a quantity of 
 money being suppUed to pay labor from day to 
 day until the sums paid are exactly balanced by 
 the sums spent in the consmners market. 
 
 When the time balance between the demand 
 and supply of money has been reached, there 
 will be a store of goods on hand balanced by a 
 
64 Our City Civilization 
 
 store or quantity of money, the balance being 
 maintained by a cash market where the quantity 
 of goods and the quantity of money will buy 
 each other on demand. 
 
 Cash being paid to thirty million laborers every 
 day, is like pouring water on a dry sponge until 
 it is saturated, the mass of laborers will absorb 
 a large part of the total quantity, which remains 
 continually in consumers hands, until some pres- 
 sure caused by a desire for something in the mar- 
 ket will release it. 
 
 If labor in all occupations is paid a total of 
 fifty million dollars a day, and this sum must 
 be paid for sixty days before fifty million dollars 
 is released every day, the quantity of cash is 
 fixed automatically at three thousand million dol- 
 lars, or sixty days wages. 
 
 When labor sends goods to market and accepts 
 money in wages the money paid to labor becomes a 
 claim upon the goods in market, a claim however, 
 at the market price and not at the cost price. 
 
 In this way the quantity of money becomes a 
 suspense account in which the claims of money 
 upon goods are being carried until such claims 
 are paid and cancelled by the consumer. Modern 
 production is a process of creating a store of 
 goods, and creating equal claims in money upon 
 them at the same time, and distribution is a pro- 
 cess by which the claims of money upon goods 
 are being liquidated. 
 
Suspended Accounts 65 
 
 If the exact balance between claims upon 
 money and the quantity of money is disturbed 
 it is immediately restored by corresponding 
 changes in prices, or by debts postponing cash 
 payment. 
 
 Suppose the quantity of money to insure a 
 cash market is suddenly reduced from a sixty day 
 supply to a supply for one day only, and a con- 
 traction in cash occurs from three billion to fifty 
 million dollars. 
 
 After the fifty million has been spent for one 
 day's wages it would demand sixty days in making 
 settlements with all labor contributing services, 
 and the following days must be without money 
 to pay wages, and wait upon the return of the 
 contracted supply. 
 
 At the end of the sixty day period the market 
 would be fifty-nine days in arrears of settlement 
 by cash, and in the next period of sixty days an 
 additional fifty-nine days of arrears in accounts 
 would accumulate as permanent debts. 
 
 The natural law regulating the cash circulation 
 protects the consumers market from debts of 
 this kind, and arrears in accounts with labor can- 
 not pile up from a contraction in the cash circu- 
 lation, and a balance between the quantity of 
 cash, and the claims of labor upon it is always 
 adjusted by rapid changes in prices. 
 
 In the capital market where there is no cash 
 market the claims of labor upon capital are not 
 
66 Our City Civilization 
 
 balanced by the required quantity of money and 
 the sums out of balance cannot be adjusted by 
 changes of price, but are balanced by debts and 
 by the unequal distribution of wealth. 
 
 When labor is being paid to produce capital 
 the money put into circulation, on this account 
 as cost of capital becomes a price of goods above 
 cost, and the credit money which may carry the 
 claims of labor in a price above cost must get 
 into circulation when capital sells at twice its 
 cost, or fail to circulate. 
 
 When goods acquire a standard price of twice 
 the cost, the value of labor will demand the same 
 standard selling price for capital, so that the 
 profit taken from the price of goods above cost 
 will be returned to labor by the sale of capital 
 at the same standard. 
 
 The owner of capital seems to have an almost 
 unlimited power of expanding the currency by 
 the value of accumulated wealth, and by the fact 
 that he can borrow to half its value, with wealth 
 having a market price of more than a hundred 
 billion dollars. 
 
 The quantity of credit the property owner may 
 keep in circulation is not determined by the 
 value of his property, but by the quantity labor 
 can redeem in wages, and only a fixed volume 
 may thus circulate, but what labor fails to get as 
 an increase in wages, the property owner may 
 issue as a debt as fast as labor can produce the 
 wealth the debt will buy. 
 
Suspended Accounts 67 
 
 The quantity of credit that may enter the 
 permanent circulation and not be cancelled in the 
 commodity market, will be determined by the 
 selling price of the capital labor may produce in 
 a year. 
 
 The quantity of money in this secondary mar- 
 ket is given a year to turn over, and it should 
 be balanced by wages paid in the same market 
 during the year. 
 
 The balance between paying wages and spend- 
 ing money to buy the new wealth means that 
 the buying is carried on in a cash market, and 
 when the quantity of money fails to circulate as 
 wages, cash cannot be paid and the smaller quan- 
 tity must have more time than a cash market 
 gives, and debts are created to allow a contracted 
 wage circidation to distribute wealth unequally. 
 
 If labor is to have its claim upon capital paid 
 in wages above the cost of living, such claims 
 can only be settled when a cash market is main- 
 tained for capital, for it is only by a cash market 
 that the quantity of money sufficient for this 
 purpose can be held in circulation. 
 
 It is when the annual production of capital 
 sells for twice its cost as fast as labor may send 
 it to market, that the turn over in money is 
 established upon which the payment of wages 
 must depend. 
 
 The continual sales of the annual production 
 of wealth at twice its cost, gives rise to a con- 
 
68 OuH City Civilization 
 
 tinual inflation of credit from the gain in price 
 above cost, an inflatioti that has no other outlet 
 but to be paid in higher wages, and spent for 
 the distribution of wealth. 
 
 This continual inflation from prices of capital 
 above cost is expected to first supply the market 
 with all its need for money, and then to supply 
 the investment money to buy new wealth for 
 new owners, and when capital will not sell at a 
 profit no new money can come into circulation 
 for investment. 
 
Chapter VI 
 PRIMARY CREDIT 
 
 "Pardon me, "says John Ruskin, "men of bus- 
 iness do not know how they make money, or 
 how on occasion they lost it. 
 
 "Playing a long practiced game they are famil- 
 iar with the chances of its cards and can rightly 
 explain their losses and gains. But, they neither 
 know who keeps the bank of the gambling house 
 nor what other games are played with the same 
 cards, not what other losses and gains, far away 
 among the dark streets are insensibly connected 
 with theirs in the lighted rooms. They have 
 learned a few of the laws of mercantile economy, 
 but not one of those of political economy. 
 
 "An accumulation of real property is of little 
 use to its owner unless together with it he has 
 commercial power over labor. Thus suppose any 
 person be put in possession of a large estate of 
 fruitful land, with rich beds of gold in its gravel, 
 countless herds of cattle in its pastures, houses 
 and gardens, a store house full of useful stores, 
 but, suppose, after all, he can get no servants, 
 some one in his neighborhood must be in want 
 of his gold or his corn. 
 
 "Assume that no one is in want of either, and 
 69 
 
70 OuB City Civilization 
 
 that no servants are to be had. He must there- 
 fore, bake his own bread, plough his own land, 
 shepard his own flocks. His gold will be as use- 
 ful to him as any yellow pebbles on his estate, his 
 stores will rot for he cannot consume them. 
 
 "He can eat no more than another man can 
 eat, wear no more than another man could wear. 
 He must lead a live of severe and common labor 
 to procure even ordinary comforts. He will be 
 ultimately unable to keep either house in repair 
 or fields in cultivation, and forced to content him- 
 self with a poor man's portion of cottage and 
 garden, in the midst of a desert of waste land, 
 trampled by wild cattle he will hardly mock him- 
 self by calling 'his own.' 
 
 "What is desired, under the name of riches, 
 is essentially power over men; in its simplest 
 sense, the power of obtaining, for our own ad- 
 vantage, the labor of servant, tradesman or artist, 
 in a wider sense, authority of directing large 
 masses of the nation to various ends (good, hurt- 
 ful or trivial) according to the mind of the rich 
 man. 
 
 "And this power of wealth of course is greater 
 in direct proportion to the poverty of the man 
 over whom it is exercised." 
 
 Let us inquire why Mr. Ruskin thinks, as a 
 matter of course, that the "power of wealth is 
 greater in direct proportion to the poverty of 
 the men over whom it is exercised." 
 
Primaky Credit 71 
 
 This is assuming a condition to be a natural 
 one because it seems to be universal, without 
 questioning whether or not wealth has the power 
 ascribed to it, or whether this power may not 
 have another source. 
 
 If the increase in wealth could not keep pace 
 with the population, and the power of money 
 increased as its volume declined on account of 
 stationary wealth, it would be true as Mr. Rus- 
 kin assumes that the power of wealth was depend- 
 ent upon the poverty of the people over whom it 
 was exercised. 
 
 The power of wealth depends upon servants, 
 that is true, but not necessarily upon the poverty 
 of servants, that may be disputed. Wealth may 
 increase as population increases which it does, and 
 it may accumulate from past labor which it also 
 does, both facts having considerable influence on 
 its power. 
 
 The power of wealth ought to diminish as its 
 quantity grows faster than the population, and 
 as population may exist in tolerable comfort be- 
 fore wealth accumulates, too much credit need not 
 be given wealth for the power it is supposed to 
 convey. 
 
 It is true that a man in possession of a great 
 estate must have servants, and to get them some 
 one must be in need of his corn and his gold, but 
 it is not true that his own servants be in need of 
 either. 
 
72 Our City Civilization 
 
 The possession of a great estate should carry 
 with it the ability to pay servants a higher wage 
 than if there was no such estate, and based upon 
 this advantage the owner should secure the ser- 
 vants he may need, and not depend upon the 
 poverty of the ones in his neighborhod over whom 
 he exercises the power of wealth. 
 
 If the need for corn or gold was the only incen- 
 tive that inspired men to work, and was all man- 
 kind had to depend upon for the advances it 
 may make, the human animal would never have 
 come into existence; birds, for instance, were per- 
 fectly equipped by nature, to supply themselves, a 
 million years before man appeared. 
 
 The relation of master and servant is assumed 
 by Mr. Ruskin to be a necessary relation for the 
 production of wealth, and more especially for 
 its maintenance and to be the base of the pyramid 
 upon which the social structure has been built. 
 
 When servants are not to be had, the owner 
 of a vast estate cannot keep his houses in repair, 
 or his fields in cultivation, and his gold will be 
 as useful to him as any yellow pebbles on the 
 estate. 
 
 But the power of wealth is not a power the 
 owner of an estate may exercise over servants, 
 who are in need of corn or gold, however it may 
 appear on the surface. 
 
 The field over which Mr. Ruskin spreads his 
 illustration is much too narrow to carry the 
 
Pbimakt Credit 73 
 
 lesson he would teach, because it omits the world 
 wide market, where commerce supercedes the 
 master and the servant, and makes them equally 
 dependent upon the circulation of money. 
 
 The single estate falling in ruin "a desert of 
 waste land trampled by wild cattle, encumbered 
 by ruins of palaces" might be used as a picture 
 of Europe during the Dark Ages, when for six 
 hundred years, an old and rich civilization became 
 a desert of waste land, encumbered by ruins of 
 palaces, and overrun by Barbarians. 
 
 The ruin of the greatest empire in the world 
 was not brought about by the need of servants 
 to work on vast estates of patrician families, or 
 by any scarcity in the supply of corn or gold, 
 but came from the failure to circulate the money 
 the civilization of the time required. 
 
 The Roman Empire failed because it could not 
 keep the money in circulation to employ slaves, 
 and keep them from becoming bands of thieves, 
 money to keep fields in cultivation and palaces 
 in repair. 
 
 The same problem confronts modern civiliza- 
 tion, not a lack of useful servants but how to 
 keep them employed, to keep down poverty, 
 vice and crime. There is some defect in socal insti- 
 tutions infecting the body politic with the deadly 
 disease of the unemployed by which millions 
 are unable to find the most desirable work. 
 
 The questions at issue do not deal with the 
 
74 OuB City Civilization 
 
 fortunes of any man, or with the care of any 
 estate, but deal with the employment of labor that 
 seems ever to become more diflGlcult as wealth 
 becomes more abundant. 
 
 The accumulated wealth of the Roman Empire, 
 its great cities, its world wide commerce, its 
 abundant supplies of gold, its resplendent armies, 
 great public buildings, roads and aqueducts, were 
 unable to save it from the disease of the unem- 
 ployed by which it was ultimately unable to keep 
 its slaves alive and its palaces in repair. 
 
 The greatest nation the world had produced 
 found wealth lose its power when it was most 
 abundant; and a civilization was destroyed by 
 Barbarians who had no use for wealth. 
 
 The development of wealth demands an inter- 
 change between the wealth that commerce devel- 
 ops and the goods that develop commerce. Civ- 
 ilization is an action of goods upon wealth and 
 the reaction of wealth upon goods. 
 
 The greater wealth should always be followed 
 by a correspondingly greater market for goods, 
 and while wealth is growing in quantity, the 
 demand of wealth and for the labor and material 
 of construction brings about the greater com- 
 merce. 
 
 When wealth accumulates this demand begins 
 to fail and its effect is to restrict commerce after 
 a nation has reached the apex of its wealth. 
 
 Commerce is destroyed by the failure of wealth 
 
Pbimaht Cbedit 75 
 
 to keep the required volume of credit money in 
 circulation, to keep the same quantity in circula- 
 tion after a nation has developed as was being 
 used while wealth was acciunulating. 
 
 While a nation is adding to its wealth there is 
 a growing demand for labor and material to 
 create new wealth for the expanding civihzation, 
 but as wealth reaches its full development or 
 reaches the limits of commerce, a failure will arise 
 in the demand for labor and material for new 
 buildings. In the beginning of a nation's history 
 the development of its resources will call all its 
 labor and material into use, and commerce reaches 
 its limit of supply on this account. 
 
 But when new wealth is not being produced in 
 the same quantities, the reason will be found in 
 the fact that the wealth on hand can not keep 
 itself in existence because it cannot keep the same 
 volume of money in circulation to maintain wealth 
 as was used to produce it. 
 
 The total wealth of any nation reaches its 
 limit in quantity when the labor and material 
 for its maintenance consumes the labor and mate- 
 rial required to produce the annual supply of new 
 wealth. 
 
 The quantity of money that has no difficulty in 
 keeping in circulation while a nation is creating 
 new wealth has the utmost difficulty after all the 
 wealth has been created the labor of a people can 
 maintain, and a failure to maintain its wealth 
 
76 OuH City Civilization 
 
 and employ its labor in building, is the cause of 
 the decline and fall of nations. 
 
 The continued existence of wealth depends 
 upon the circulation of the same volume of money 
 after wealth has been produced as was used when 
 it was being created, or the commerce which the 
 growth of wealth developed will be lost, and with 
 the loss of commerce the national power declines. 
 
 Every civilization fails when its wealth is most 
 abundant and when employment should have 
 grown easier, and contrary to this rule of natural 
 law, every nation finds the difficulty in employ- 
 ing labor grow with the increase in its wealth. 
 
 Employment in creating wealth is based upon 
 the circulation of credit money, and during the 
 developing period the accumulator of wealth keeps 
 this credit money in circulation because the gain 
 in wealth is the profit of commerce, and when 
 wealth reaches its maximum and when the power 
 to share in wealth fails and the incentive of 
 wealth ends. 
 
 Past labor supplies a vast fund of profit money 
 and its failure to circulate arises from the fact 
 that it will not sell at a profit, but when wealth 
 will sell for twice its cost labor may gain from 
 the inflation as well as the ones who may become 
 owners on account of the same inflation. 
 
 The enormous volume of credit money sup- 
 plied by past labor must circulate as gift money, 
 and in doing so it will first become a gift in com- 
 
Phimaey Cbedit 77 
 
 merce as a profit in goods above cost, and this 
 gift must be followed by the same increase in 
 wages above the cost of living. 
 
 The conflict to obtain this gift money introduces 
 the abuse of power in governments, the corrup- 
 tion that destroys civilization, and is responsible 
 for poverty, vice and crime. 
 
 Gift money can only increase wages from prices 
 of capital above cost, and prices of capital above 
 cost depend upon the constant emplojTnent of 
 labor in building, and buildings must sell at twice 
 their cost to keep gift money in permanent 
 circulation. 
 
 In its past analysis, the power of wealth con- 
 sists in taking more money from circulation than 
 it adds by its cost of production, and when labor 
 fails to get this money in higher wages wealth 
 will lose its power to take even its cost money 
 from the general supply, unless it does so by 
 creating debts. 
 
 Wealth is handicapped in favor of labor, in as 
 much, as the money buying it in the open mar- 
 ket, will not be allowed to circulate unless this 
 money is included in the sum paid as wages. 
 
 Every dollar of past labor money must come 
 into circulation as a twin of a cash dollar in buy- 
 ing goods or wealth, and the number of such 
 credit dollars will be limited by the number of 
 cash dollars spent by consumers of goods. 
 
 Every two dollars in the selling price must 
 
78 OuB City Ciwlization 
 
 carry a credit and a cash dollar combined, and 
 the quantity of money in active circulation is 
 expected to be half cash and half credit paying 
 labor a sum in cash that will buy all the goods 
 it needs and an equal sum in credit money to 
 buy its share in wealth. 
 
 The quantity of cash is made a permanent 
 quantity by being limited by the sums spent for 
 goods, and when wages fall the cash quantity is 
 not only contracted, but the volume of credit may 
 lose five dollars for each dollar in the loss of cash. 
 
 Money cannot circulate unless cash carries at 
 least one dollar of primary credit with each 
 dollar spent for goods, and this primary credit 
 acts like a governor of an engine in regulating 
 the credit circulation. 
 
 This primary credit is combined with cash in 
 wages that buy goods, and is separated again 
 by profits and again combined by the production 
 of wealth in paying profits out in wages, and it is 
 this compound process that is being interfered 
 with by the failure of building. 
 
 The volume of cash should turn over once in 
 sixty days in buying all the goods labor is able 
 to produce at twice the cost, the price above cost 
 carries the cost of building, and the money spent 
 for building can not be returned unless the build- 
 ings sell for more than they cost to create an 
 increase in credit in th's market. 
 
 The industrial activity in every country de- 
 
Primary Credit 79 
 
 pends upon the continuous production and sale of 
 commodities, and only as a surplus in commodi- 
 ties may be used to build capital can wealth be 
 produced and accumulate. 
 
 This consumers market must be as certain as 
 the seasons, and is as important to the industrial 
 world as the sunshine and the weather. 
 
 As soon as a surplus of goods will release labor 
 to build, and will furnish the material for build- 
 ing, a volume of credit must circulate in com- 
 pany with cash to pay for this labor and material 
 by increasing prices of goods sold to laborers to 
 carry this inflation as a cost of capital. 
 
 This primary credit will then be able to keep 
 bujang material for building and employing labor 
 as long as the profits from goods are not destroyed 
 by the failure in building to take up its supply 
 of labor and material. 
 
 But this wealth itself must be able to sell for 
 its value in money if building is to continue, and 
 money will not be exchanged for wealth unless 
 it will produce the same profit as when it is used 
 to buy goods, and for this reason buildings must 
 secure a secondary inflation that will buy all the 
 wealth labor can produce at twice its cost. 
 
 This money must get into circulation by the 
 owner of wealth changing the value of his prop- 
 erty into a credit, issued by a bank, that will cir- 
 culate as money. 
 
 It would appear from this fact that the owners 
 
80 Ottr City Civilization 
 
 of property have the power to issue credit money 
 to the full value of all the wealth accumulated 
 from the past, and thereby return to circulation 
 all the money spent to create wealth. 
 
 But experience has demonstrated by many dis- 
 astrous inflations of currency that property has 
 no such power to issue money, and the difficulty 
 with modern banking arises from the same idea 
 that property may be given a money credit 
 equal to its cost. 
 
 Property should command its value in money, 
 but this money has a value in past labor and the 
 difficulty with the money property demands is 
 that it must be a money redeemable in living 
 labor on demand. 
 
 This demand upon money by capital requires 
 credit money to have two functions while cash 
 has but one, and prices must be inflated to allow 
 credit to acquire the function of being redeemed 
 in both living labor and past labor. This func- 
 tion of credit by which it is redeemed in living 
 labor is secured by its being redeemed in cash. 
 
 The cash labor must supply to keep past labor 
 money payable in cash on demand, gives labor 
 its claim upon the property belonging to the cap- 
 italist class, for without this credit being payable 
 in cash on demand, such property would have 
 no value in money. 
 
 In order to establish an equal division in the 
 claims of labor and capital upon the quantity of 
 
Primary Credit 81 
 
 credit, the property owner has his claim carried 
 in half the price of twice the cost and the claim 
 of labor is carried in a suspense account repre- 
 sented by the other half of the money that pays 
 the price of twice the cost. 
 
 The owner of property has the advantage as 
 he can merely write his claim on a bank check 
 and compel labor to honor it for him, and have 
 it paid in the price of goods above cost, but 
 labor will lose its entire claim unless a new quan- 
 tity of money is kept in permanent circulation 
 by the capital selling above cost and paying 
 wages above the cost of living. 
 
 The double circulation of primary and second- 
 ary quantities of credit, allows room for labor to 
 miss its credit money, for the primary must get 
 in by the higher prices of goods which labor must 
 buy, and the property owner can issue it, but 
 labor has no defense when the price of land de- 
 stroys the price of capital above cost from which 
 it is repaid the extra money spent for goods ia 
 higher wages. 
 
Chapter VII 
 SECONDARY CREDIT 
 
 There are a hundred separate reform move- 
 ments in modern society seeking in vain to cor- 
 rect each particular brood of wrongs without 
 understanding there is a single cause of all of 
 them responsible for the secondary cause of any 
 particular brand of sin. 
 
 The hope for the redemption of mankind, is 
 based upon the removal of some primary evil, 
 some soul-corrupting sin, that all religions strug- 
 gle in vain to suppress, the removal of which 
 will allow the natural good to restore the natural 
 order. 
 
 The sins and inequality in modern society will 
 be found to center upon a single failure to keep 
 a great quantity of secondary credit money in 
 active circulation, which would so advance wages 
 as to remove all temptation to a corrupt life. 
 
 This failure in the circulation of secondary 
 money is temporarily relieved by the creation of 
 debts, impossible to pay, by which the body pol- 
 itic is inoculated with the fatal disease of the 
 unemployed, and underpaid labor of the world. 
 
 Each dollar of debt has become a disease breed- 
 ing germ in the social organism, which destroys 
 82 
 
Secondary Credit 83 
 
 the vital dollars that would increase wages and 
 create an insatiable demand for useful labor. 
 
 Back of the disease dollars is the fundamental 
 cause, which is ever changing the healthy cir- 
 culation of money into a circulation spreading 
 inequality and injustice in every organ and tissue 
 of the body politic. 
 
 This fundamental cause of social misery and 
 poverty is the sale of land, given by nature to 
 all mankind without cost, which takes all the 
 new wealth from labor as fast as it appears by 
 taking the gain in money with which this wealth 
 must be distributed. 
 
 Selling land for money earned by past labor 
 when it is seeking to increase the wages of the 
 present generation, makes property in land the 
 cardinal sin of our civilization, from which no 
 people have so far been able to escape. 
 
 The sin property in land inflicts upon man- 
 kind is like the sin of Judah, written in our laws 
 with a pen of iron, and cut into our institutions 
 with the point of a diamond. 
 
 It is graven on the tables of our hearts, and 
 upon the horns of our altars. 
 
 "The earth is defiled under the inhabitants 
 thereof, because they have transgressed the laws, 
 changed the ordinances, broken the overlasting 
 covenants." 
 
 Money cannot be taken from circulation by 
 the sale of land until after wealth has accumu- 
 
84 OuK City Civilization 
 
 lated, and until secondary credit appears as a 
 saving from past labor. 
 
 Secondary credit is taken from circulation in 
 buying land because this motiey is only used in 
 distributing the wealth derived from the past, 
 and labor may be charged with a cost for land 
 and be denied its share in the distribution of 
 wealth. 
 
 The circulation of secondary money is purely 
 local, and must be derived from the value of an 
 improvement at a particular location, and the 
 value of this improvement will depend upon the 
 use labor makes of the wealth it is not called 
 upon to produce, but inherits from past labor. 
 
 Thus, for example, if a property is paying a 
 million dollars a year income at the rate of six 
 per cent on its value, it will sell for sixteen million 
 dollars, and it must call upon a local circulation 
 to supply the million dollars a year it pays in 
 dividends, distinct from the circulation paying for 
 goods, or building. 
 
 If the cost price of this property, and its selling 
 price are the same, the six per cent dividends 
 will allow sixteen years to return the money spent 
 as cost, and will replace the old building with a 
 new one but will provide no money to buy the 
 new one, or pay labor for producing it. 
 
 If on, the other hand, the building cost eight 
 milUon dollars and pays six per cent on twice its 
 cost, then at the end of sixteen years the building 
 
Secondary Cbedit 85 
 
 will not only pay for its reproduction but will 
 have provided the money to buy the new one. 
 
 The circulation of secondary credit depends 
 upon the difference between the cost and seUing 
 price of capital, and this price above cost de- 
 pends upon the particular location the capital 
 improves. 
 
 The advantage in location, and raw material 
 will allow capital to earn more than the rate of 
 interest, which rate is based upon the reproduction 
 of wealth without regard to any particular loca- 
 tion — and as capital is thus tied to particular 
 locations the secondary money it circulates will 
 move in local circles around a bank. 
 
 Although buildings earn twice, and sometimes 
 twenty times the rate of interest on their cost, 
 the building cannot sell above cost because all 
 the profit above the rate of interest is taken by 
 property in land to support its capitahzed value. 
 
 Land values may arise only after buildings dem- 
 onstrate their ability to earn more than the rate 
 of interest at special locations, and every boom 
 in real estate must be accompanied by an activity 
 in building. 
 
 When a city has grown rapidly in population 
 and wealtL, its central locations will coromand 
 enormous land values, and after each location has 
 been improved with a suitable building, the law 
 regulating the value of land will be discovered 
 to be a law that allows capital to sell at twice 
 
86 Our City Civilization 
 
 its cost, and property in land rakes off a profit 
 belonging to capital as a price above cost. 
 
 Adjoining a building costing a half million dol- 
 lars, which has a selling price of a million, may 
 be foimd an old building of a former time, renting 
 for a sum that pays ten or twenty times the in- 
 terest on the cost of the small structure, the rent 
 of which advertises the public demand for a bet- 
 ter building at that location. 
 
 This location being in all respect equal to the 
 one supporting a building costing half a million 
 dollars and selling for a million, it will support a 
 like building but the builder discovers he must 
 pay a half miUion dollars for the land. 
 
 Property in land will take off all the profit in 
 the selling price of a building before it can be 
 built, and will destroy the opportunity to create 
 new money of a half million dollars for a new 
 building and for a corresponding advance in 
 wages. 
 
 As a city increases in population and wealth 
 the development of trade and industry will be 
 shown by the increasing rents which the growing 
 trade will be able to pay at the most favorable 
 locations. 
 
 This increase in rents is falsely assumed, by 
 land reformers to represent an increased demand 
 for land from the crowded population, the higher 
 rent to be a natural result of a greater need for 
 land by a greater population. 
 
Secondary Credit 87 
 
 But the fact is self evident that this rise in 
 rents represents a demand for buildings at par- 
 ticular locations, and is, in no respect a demand 
 for land, as the land reformer assumes. 
 
 Private property in land is a denial of the right 
 of the public to the buildings it is paying rent 
 for, a denial of profit to capital in building and 
 selling above cost, a denial of the right of labor 
 to have the increase in wages which the freedom 
 of building would secure for it. 
 
 If the advance in rents was free to invite 
 capital to build and gather this harvest of profit 
 by increasing the number and size of new build- 
 ings, such a thing as unemployed labor could not 
 be found anywhere in the civilized world. 
 
 If every location was improved, according to 
 the rent it commands, and wages were advanced 
 so as to pay the rents that should be paid for 
 suitable buildings, all difference in location would 
 disappear by differences in the capital required to 
 improve each location. 
 
 If the present rents were free to create a supply 
 of new buildings by the activity of capital seek- 
 ing a greater return than the rate of interest, the 
 selling price of buildings above cost would supply 
 a volume of money to buy all buildings on demand 
 and wages would be high enough to create the 
 required demand. 
 
 If the rise in rents above the rate of interest 
 was permitted to attract capital to building, with 
 
88 Our City Civilization 
 
 no cost of land, the old ramshacks in every town 
 and city would disappear as rapidly as labor and 
 material could be supplied to replace them with 
 new buildings suitable to the rents the locations 
 would command. 
 
 The continuous selling of all new buildings at 
 twice the cost would create a continuous expansion 
 of secondary credit money, that could not be can- 
 celled in buying land, or by investing in debts, 
 and a quantity of money would be supplied to buy 
 all property, except land for its value in money 
 on demand by increasing the wages of labor to 
 four times the present level for common laborers. 
 
 The profit money accumulating from selling 
 new building at twice the cost, will first supply 
 all market demands for money to buy capital for 
 cash and to employ labor at the highest possible 
 wage, and all excess of profit will be invested by 
 the distribution of wealth. Secondary money has 
 the same foundation as cash, it is intended to 
 remain in permanent circulation and not to be 
 reduced, or contracted by investment, or cancelled 
 by higher prices, but it has one important excep- 
 tion, it may be entirely destroyed by debts. 
 
 Secondary credit can only circulate by inflating 
 prices of capital above cost, just as primary credit 
 must inflate prices of goods above cost, and when 
 the cost of land destroys the price of capital 
 above cost no money can originate in the capital 
 market to replace the money invested in land 
 
Secondary Credit 89 
 
 and debts must supply the circulation destroyed 
 by the price of land. 
 
 In our total of fifteen billion dollars of bank 
 deposits payable in cash on demand there will be 
 found no less than ten billion of what are known 
 as dormant deposits, becoming dormant because 
 there is no margin of profit in building. 
 
 The building industry, failing to produce new 
 funds for investment causes an intense competi- 
 tion among banks for dormant deposits to supply 
 this lack of credit by loans. 
 
 Because dormant deposits do not circulate they 
 are eagerly sought by bankers on accoimt of the 
 small cash reserve they need to keep them pay- 
 able in cash. Bankers pay as much as four per 
 cent interest on such accoimts and loan them 
 again at higher rates, and thereby endanger the 
 solvency of every bank in the country by tying 
 up all hquid credit. 
 
Chapter VIII 
 THE STANDARD PRICE 
 
 It has been the accepted doctrine of the market 
 ever since the time Aristotle lived, more than two 
 thousand years ago, that the selling price of 
 goods was but another name for the cost price and 
 was obtained by adding the costs of production 
 together. 
 
 The failure in this theory will be found in not 
 separating a monetary price from the labor cost, 
 in not discovering that the cost of goods must 
 include twice as much money as was paid to 
 labor, so as to include the credit represented by 
 past labor, and by the accumulation of inherited 
 wealth. 
 
 The cost price theory accounts for capital 
 money by attributing it to the savings of laborers 
 who are expected to deny themselves the com- 
 forts of civilization, so as to furnish capital 
 with the money it needs. 
 
 This theory of saving is a comfortable one for 
 the rich, and it is very popular with them, ac- 
 cording to its teaching the rich are the survival 
 of the fittest, while the poor are poor because 
 they are too lazy to work or too extravagant to 
 save. 
 
 90 
 
The Standard Pbice 91 
 
 The theory that the selUng price of any com- 
 modity is made up by adding its costs of produc- 
 tion together has not a single fact to sustain it 
 in the commercial world. There is not a single 
 selling price that bears any definite relation to 
 its own cost of production, but every selling 
 price seeks to rise to the level of the market 
 which is twice the cost of all production. 
 
 The selling price is a market price, made by 
 the consumers, and depends upon a quantity of 
 money in the hands of consumers twice as great 
 as the quantity paid out to producers. 
 
 The difficulty in separating the cost from the 
 selling price comes from the diflBculty in separat- 
 ing the cash coming from production from the 
 credit added by distribution, and intended to dis- 
 tribute the benefits from past labor without cost 
 to the present laborers. 
 
 Consumers insist that low prices enable them 
 to get more goods for a stated simi of money, the 
 lower the level of prices the better they will fare. 
 
 According to this theory the only advance to 
 be expected in wages must come from a fall in 
 prices that will increase the purchasing power 
 of stationary, or declining wages. 
 
 This argument for low prices would be of some 
 force in a society composed of hunters and fisher- 
 men, but it is of no effect among a civilized people, 
 who must spend money for other things than 
 consumable goods, and who require a surplus in 
 
92 OxTR City Civilization 
 
 money for expenses every day after all demands 
 for goods are supplied. 
 
 It is true, that when the price of any single ar- 
 ticle is considered by itself, a reduction in its 
 price, from the introduction of machinery, will 
 be of general benefit because, in this case, the 
 lower price allows the gain to be spent for some- 
 thing else. 
 
 But when the general level of prices falls over 
 the entire market there will be no gain to transfer 
 from one price to another, and the market will 
 have lost a quantity of money from circulation 
 that becomes a total loss in the demand for goods. 
 
 The repeating circulation of a given quantity 
 of money has been lost when there has been a 
 general decline of prices covering the commodity 
 market. The money represented by the fall in 
 commodity prices cannot repeat its turnover in 
 the sale of goods, and the market suffers from 
 this loss of demand. 
 
 When a loss in demand occurs from a general 
 decline in prices the contraction of money is 
 called upon to do a double duty, and a counter- 
 feit circulation is introduced for the benefit of 
 capital, by which borrowed money buys wealth 
 and creates debts that cannot be paid. 
 
 A standard price means a price that will sup- 
 ply a repeating quantity of money able to buy 
 all the goods that labor can produce for cash on 
 demand, and will buy all the wealth labor is 
 
The Standard Pbice 03 
 
 constantly producing for its value in money and 
 supply a surplus credit that will buy any part 
 of accumulated wealth, offered for sale. 
 
 The standard price is not an arbitrary price of 
 twice the cost for any particular commodity, but 
 is an arbitrary standard for the price level of all 
 labor products offered for sale in the general 
 market. 
 
 When the assertion is made, for example, that 
 the standard price of cotton is twice its cost, it 
 may be said in dispute that there is no such stand- 
 ard, the price of cotton being determined by laws 
 of demand and supply. 
 
 Cotton, we will be told, commands a high 
 price when the crop has been a failure, and this 
 price will fall in direct proportion to the increase 
 in the supply, but the demand and supply of 
 money gets no consideration from this theory. 
 
 If a rigid supply of money was the rule of the 
 market, acting against a fluctuating supply of 
 goods, in making prices, it must be admitted in 
 such case the price would rise and fall with the 
 supply, and a standard price would be impossi- 
 ble, and prices would be the most unstable phe- 
 nomena in the world. 
 
 But, if the supply of money is itself governed 
 by a standard price, and if this quantity of money 
 will increase with the supply of goods, the price 
 will remain stable because the money follows the 
 price in the supply. 
 
94 Our City Civilization 
 
 Every family living in a city must have a 
 surplus in wages above the lowest sum upon 
 which it may live, because each family must have 
 money to pay rent, car fare, doctor, dentist, and 
 for other purposes. 
 
 After each family has been supplied with all 
 the goods it can afford to buy, a surplus in cash 
 must remain, although wages are low and prices 
 are high. 
 
 When millions of families, are each required to 
 have a daily surplus of cash, the source of this 
 money becomes one of the most important ques- 
 tions in the affairs of mankind, a question which, 
 so far, has escaped the writers on the subject. 
 
 This surplus is expected to allow laborers to 
 buy leisure, without having to save and deny 
 themselves the comforts of life, to get wages that 
 will buy all the goods they may need, and an 
 equal surplus to buy other things. 
 
 Surplus wages must come into existance from 
 an infiation of credit money, which is based upon 
 the value of past labor, and is issued by capital- 
 ists, or money lenders. 
 
 This credit money based on the value of past 
 labor has no cost in present labor and on this 
 accoimt it is used to increase the price of goods 
 above cost, and is expected to permit the wages 
 of labor to rise and secure a surplus above the 
 cost of living. 
 
 The surplus to be paid to labor depends upon 
 
The Standard Price 95 
 
 a fixed quantity of money in the credit circula- 
 tion, the same as the cost of living depends upon 
 a fixed circulation of cash, and this quantity of 
 money in each circulation is fixed by a natural 
 law which creates a standard price of twice the 
 cost price. 
 
 To supply money, increasing the price of goods 
 to twice the cost, may appear to be a wonderful 
 way of providing a surplus in wages by charging 
 double prices for goods, but many of the ways of 
 nature are wonderful. 
 
 Capital takes half the goods labor produces, 
 and takes half the labor in the market, and in do- 
 ing so it sets a limit to the supply of goods the 
 people may have and a limit to the number of 
 laborers who may be employed to produce goods. 
 
 This limit in the supply of goods after capital 
 has taken half of the total, allows the labor that 
 produces all the goods to buy only one-fourth of 
 them, and it must pay twice the cost of one-fourth 
 its product, but if it can sell three-fourths for the 
 same price of twice the cost, then it follows that 
 the higher the price the more it has on account 
 of the greater surplus it may sell than it must 
 buy. 
 
 When this fact is taken into consideration, — 
 that labor is expected to sell three times as much 
 as it buys at twice the cost, — ^it is easy to see how 
 wages may rise as prices rise, and how a surplus 
 will accimiulate on this account. 
 
96 Our City Civilization 
 
 Capital gets credit for this surplus because it 
 adds the past labor money to circulation by 
 which the standard price is secured, for capital- 
 ists control the railroads, factories, towns and 
 cities that present labor uses in the production 
 of goods without having to produce. 
 
 When the development of capital divides labor 
 into two equal parts, and when it takes one-half 
 of the total commodity product in construction, 
 it will divide this commodity product into four 
 parts, one-fourth going to the primary laborers who 
 produce all of it, one-fourth going to the second- 
 ary laborers who produce none of it, and two- 
 fourths being consumed by the construction and 
 maintenance of capital. 
 
 The laborers who produce all the commodities 
 may only buy one-fourth of their product, and 
 other laborers buy the other fourth not taken by 
 capital. This demand gives the market two buy- 
 ers for each producer, and two dollars acting as 
 a demand for goods for each dollar in the cost 
 of supply. This excess in the money creating a 
 demand over the money paid as cost of the sup- 
 ply will establish a standard price in the general 
 market of twice the cost for all the goods con- 
 sumed by labor and capital. 
 
 If labor for example is paid, four dollars for a 
 imit of its product which sells at retail for eight 
 dollars, and may only buy one-fourth of it, the 
 sum it spends will be two dollars from four dol- 
 
The Standard Price 97 
 
 lars in wages, and it will have half its wages as 
 surplus. 
 
 If wages rise, and the same unit of goods 
 cost eight dollars, and sells for sixteen dollars, 
 the labor buying one-fourth of sixteen will only 
 spend four dollars from an eight dollar wage 
 fund and have a surplus of half its wages. 
 
 If wages fall, and the same unit of goods cost 
 two dollars, and sells for four dollars, the labor 
 buying one-fourth will only spend one dollar from 
 two dollars and have half its wages as surplus. 
 
 Actual wages may be shown to increase from 
 two sources, from the increase in the supply which 
 lowers prices while wages are stationary, and from 
 an increase in prices when the rise in wages is 
 in harmony with the rise in prices, and there has 
 been no increase in the supply. 
 
 This entire process of securing a rise in wages 
 depends upon a natural law which establishes the 
 standard price in two markets. The price in the 
 commodity market is used in getting the money 
 into circulation, and the standard price in the 
 capital market being required to get this money 
 into the wage fimd. 
 
 The law establishing a standard price in both 
 the commodity and capital markets does so in 
 order to divide the gift money from past labor 
 equally between labor and capital. 
 
 Capital gets its share of gift money by circulat- 
 ing credit in the goods market by an iaOTeaae 
 
98 Our Citt Civilization 
 
 in price above cost, when labor makes credit 
 money equal to cash by paying twice the cost 
 for the goods it consumes, but at this point labor 
 loses half its wages. 
 
 The standard price in the capital market is 
 intended to supply a quantity of credit money 
 that cannot be cancelled by higher prices of goods 
 but which will add as much to wages as the total 
 sum labor receives from the goods market. 
 
 The natural law demands that for every two 
 dollars of inflated money added to the quantity 
 on hand, labor must cancel one dollar in buying 
 goods at twice the cost, and thus make all the 
 credit dollars equal to cash. The other dollar of 
 inflated currency is expected to remain in the 
 hands of labor as a surplus with which to buy its 
 share of accumulated wealth. 
 
 When goods sell at the standard price, capital 
 succeeds in getting its one dollar cancelled, and in 
 getting the other dollar made equal to cash, but 
 labor must wait until the money spent to create 
 capital returns from the sale of it at twice its 
 cost, and when capital fails to sell at its standard 
 price labor loses its opportimity to share in the 
 labor of the past. 
 
 The failiu-e of capital to sell at its standard 
 price destroys the circulation of the permanent 
 volimie of credit money which is intended to 
 increase wages to twice the cost of living. ~ 
 
 When labor cancels one dollar out of every 
 
The Standard Pbice 99 
 
 two added as an inflation, all the credit dollars 
 are thus made equal to cash and getting none 
 of them as an increase in wages labor is thus 
 compelled to accept counterfeit money for half its 
 commodity product, and allow the circulation of 
 another volume of counterfeit that buys all the 
 wealth it produces. 
 
 The loss to labor, in capital failing to sell at 
 its standard price, is very easy to estimate, be- 
 cause one dollar of cash is subtracted from every 
 two dollars paid in wages and instead of labor 
 getting four dollars and using one of the past 
 labor dollars to make credit equal to cash, it gets 
 but two dollars in cash and has but one dollar 
 for its own benefit. 
 
 The standard price will explain the rise in 
 wages that accompanies the rise in prices, and 
 explain why wages are easier to pay the higher 
 the level of prices, and explain why a greater 
 quantity of goods is sold when prices of them 
 are rising than when prices are falling. 
 
 The standard price will explain the compara- 
 tively high wages of organized labor as against 
 common labor, as being an appropriation by 
 skilled labor of the bonus, or surplus in cash, that 
 common labor is constantly losing. 
 
 It has long been evident to students of the 
 labor question that the wages of organized labor 
 could not advance at the expense of capital, and 
 it was difficult to determine just where the gain 
 
100 Our City Civilization 
 
 came from, other than the convenient reply that 
 the consumer pays for every thing. 
 
 The standard price declares that every in- 
 crease of one cent in cost of labor must be fol- 
 lowed by a two cent advance in the selling price, 
 and when the consumer refuses to take the sup- 
 ply at the price, capital may be made to suffer a 
 temporary loss. But capital will repair this loss 
 as soon as possible either by reducing the supply, 
 or by diminishing the number of high priced 
 laborers, and adding to the number of common 
 laborers. 
 
 Organized labor instead of being a menace to 
 organized capital is one of its strongest supports, 
 by giving it a two cent increase in the selling 
 price for an increase of one cent in the cost of 
 labor. 
 
 At present as the wages of skilled labor rise and 
 costs increase each advance of one cent in costs 
 must be balanced by two cents gain in the selling 
 price. The stationary wages of common labor 
 compells them to suffer the most of the loss 
 falling on the consumers, by wiping out all the 
 money surplus they should have from the com- 
 modity market. 
 
 When, for example, wages advance one dollar for 
 skilled labor and certain prices advance two dollars, 
 one-fourth of two dollars may be taken from the 
 entire body of laborers on account of the higher 
 prioee, but common labc* has had oo advance in 
 
The Standabd Price 101 
 
 wages and it finds its former surplus has been 
 wiped out by the rise in the wages of organized 
 labor, who can afford to pay the increase. 
 
 But there is an enormous fund from which a 
 great surplus may be added to the wages of the 
 imder millions of workers, a fund that so far, 
 has never been called upon to pay a dollar in 
 wages, but which will advance the level to three 
 or fom: times the present average, but such an 
 advance cannot be obtained by reducing profits, 
 nor can it be obtained from capital. 
 
 Wages are paid out of two distinct funds, one 
 is a cash fund, and the other is a credit fund, and 
 higher wages require a volimie of credit to circu- 
 late as wages five times as great as the volume 
 of cash. 
 
 The cash from which wages are now drawn can- 
 not circulate in sufficient quantity to allow all 
 the goods to be sold labor is able to produce, not 
 taking capital into the account. 
 
 The increase in wages above the sum required 
 to buy all the goods labor can produce must 
 come from a volume of credit money that bal- 
 ances the selling price of capital, and this 
 credit money can only be kept in general cir- 
 culation by the annual production of capital sell- 
 ing at twice its cost, the same as the volume of 
 cash is held in circulation by the production and 
 sale of goods at twice the cost. 
 
 An illustration may make the line clear divid- 
 
102 Our City Civilization 
 
 ing the circulation of cash in the goods market 
 from the circulation of credit in the property- 
 market. 
 
 An isolated community finds employment for 
 all its labor by sending half the goods produced 
 to other markets to exchange for goods they can- 
 not make, but only half the total labor is engaged 
 in making commodities, and building material. 
 The other half is working at building, seUing, 
 transporting, and other secondary occupations. 
 
 The minimum wages for this community, if 
 work is to be had, must pay out enough money 
 to buy all the goods the people consume, and 
 all that labor can produce, but as only half the 
 total labor makes all the goods, the other half 
 cannot get any part of them unless the price 
 rises above cost so as to include the wages of 
 all the labor buying goods. 
 
 Suppose a single merchant controls all the retail 
 trade and half the selling price is a merchant's 
 profit. If so the merchant must spend this profit 
 by employing half the labor so as to have buyers 
 for all his goods, in which case the goods sell at 
 twice the cost and allow all the labor to be em- 
 ployed at a minimum wage, and give a market 
 for the commodity product. 
 
 The merchant must build to employ the sur- 
 plus labor, and use the surplus material, and if 
 the building burns at the end of each year and 
 is rebuilt the next year, all the labor may be 
 
The Standard Price 103 
 
 continuously employed, and all goods may be sold 
 at twice the cost. 
 
 Burning up capital as rapidly as it is produced 
 will prevent the growth of a capitalist class, and 
 labor may be fully employed in restoring it, the 
 market for goods suffering no loss, but the illus- 
 tration only goes to prove the folly and waste of 
 the present system that finds it more difficult to 
 employ its labor after wealth accumulates than if 
 it was being destroyed by fire. 
 
 The standard price is a standard operating upon 
 total prices by doubling the volume of money 
 paid out to labor as cost, and each price is free 
 to gather as much of this money from the general 
 circulation as it may attract by demand. 
 
 It is true, for example, that a great crop of 
 cotton would have a lower price than a scant 
 crop, but the difference arises from the supply of 
 money put into circulation, as cost of cotton 
 which doubles, and more money per bale of cot- 
 ton gets into circulation as cost when the crop 
 is a partial failure than when the munber of 
 bales per acre have been increased by a bountiful 
 crop. 
 
 In the years when the price of cotton is high 
 the cultivation of it will be stimulated, and the 
 acreage extended. The profit from the high price 
 will furnish liberal supplies of money to employ 
 labor in building and other occupations in the 
 cotton territory. 
 
104 Our City Civilization 
 
 There is no reason for any but a nominal decline 
 in price when a great crop is produced if the 
 money put in circulation by the sales of the former 
 crop is available to buy the succeeding one. 
 
 The natural law that doubles the cost price in 
 the selling price secures quick action in regulat- 
 ing the supply of money to the standard, and is 
 like the law regulating the waves above sea level. 
 When costs rise one cent, the selling price must 
 gain two cents, thus giving a double pull of the 
 standard to secure a return to the prescribed 
 level of the market, the same as the wave rises 
 half above and half below the true level and the 
 pull of the water to restore the level is much 
 greater on this account. The same is true of the 
 pull of all prices upon the price rising above the 
 standard of twice the cost. 
 
 The highest efficiency in the use of machinery 
 is secured by the standard price because it allows 
 an increase of two cents in selling price as a gain 
 for each cent of lower cost and will promote the 
 widest introduction of machinery to secure this 
 additional profit. 
 
 The standard price is governed by the labor 
 cost of the product of all labor. The standard is 
 secured by doubling the money paid in wages 
 of every description, giving to each laborer a 
 share in a vast co-operative product. 
 
 But as there is a vast accumulation of wealth 
 inherited from the past, and as the standard price 
 
The Standard Price 105 
 
 doubles the cost of all labor it must communicate 
 this increase to the labor of the past and double 
 the selling price of all wealth, greatly to the ad- 
 vantage of its owners. 
 
 This brings up the very important question of 
 how this body of wealth may be held to this 
 standard of twice its cost, without an enormous 
 loss to labor, who must redeem the money in 
 present goods. 
 
 The price of wealth above cost will create a 
 secondary profit in this market, and this profit 
 will be limited to the wealth labor is producing 
 each year, and capital caimot collect any faster 
 from labor than it sells the present product, and 
 is limited by the volmne of money that labor 
 can circulate as wages buying its own annual 
 production. 
 
 The secondary profit obtained from selling cap- 
 ital above cost, is independent from the profit 
 received from the sale of goods, and for that reason 
 is not cancelled by higher prices but remains un- 
 til it accumulates a quantity of money to buy 
 all capital at twice its cost, and labor is expected 
 to get the benefit of this great quantity of money 
 from the capital market. 
 
 The quantity of secondary credit money that 
 will accumulate in banks from the sale of capital 
 at twice its cost will be governed by the rate 
 of interest, which will determine how many 
 hundred dollars of units capital may sell by the 
 
106 Our Citt Civilization 
 
 number of unibs of interest dollars collected from 
 the selling price of goods. 
 
 The accumulation of secondary credit that can- 
 not be cancelled by high prices of goods will call 
 new credit in circulation all the time, a continual 
 inflation that cannot affect prices of goods. 
 
 This continuous inflation will first supply all 
 demands for money from property or labor, and 
 then the surplus will create funds for invest- 
 ment by which wealth is, and will be distributed. 
 
 The ability of all property, except land, to sell 
 for its value in money on demand, will depend 
 upon this permanent supply of secondary credit 
 pa}ang wages above the cost of living with which 
 the annual production of wealth may be sold at 
 twice its cost as goods are bought and sold. 
 
Chapter IX 
 THE RATE OF INTEREST AND PROFIT 
 
 In the early history of a rapidly growing city, 
 like Chicago, a merchant will find a location where 
 the rapid growth in population and wealth will call 
 for an enormous consumption of goods the few 
 business houses must supply, allowing him to col- 
 lect a very high rate of profit on the small cap- 
 ital invested. 
 
 Thus, for example, gross sales of one hundred 
 thousand dollars a year will return a net profit 
 of fifty thousand dollars, which the merchant will 
 credit to a stock of goods costing thirty thousand 
 dollars, and a building having cost twenty, allow- 
 ing him a profit of fifty thousand dollars on an 
 investment of fifty thousand, or one hundred per 
 cent. 
 
 The owner will then begin to calculate the 
 wonderful possibilities of cent, per cent profit, 
 and his estimate will prove to him that if he 
 continues to invest all his gains at cent per cent 
 he will become the richest man in the world in 
 less than twenty years. 
 
 This dream of a boundless empire of money 
 leads him to rapidly increase the capital in his 
 business, but -with the gain in capital and expenses 
 107 
 
108 Our City Civilization 
 
 he soon discovers that something was radically 
 wrong with his calculation of the rate of profit. 
 
 As soon as the merchant increases his stock of 
 goods the more valuable merchandise will call for 
 a more valuable and fire proof building, and he 
 borrows money fearlessly, for he reasons what is 
 ten or twelve per cent interest on money to a 
 man who will make a hundred per cent in his 
 business? 
 
 With the expansion in his business and its ex- 
 penses he soon becomes painfully aware of the nat- 
 ural law reducing the rate of profit as the quan- 
 tity of invested capital grows, a law protecting 
 the world from cent per cent profits that would, in 
 a few years, concentrate all wealth to the owners 
 of a small quantity of money. 
 
 The natural law will demonstrate to the Chicago 
 merchant that the fifty thousand dollars a year 
 he is receiving in profit is all the profit he can 
 collect at the location he occupies. 
 
 The increase in his investment from fifty to 
 five hundred thousand dollars will be followed by 
 a decline in the rate of profit from one hundred 
 to ten per cent. Fifty thousand dollars in profit 
 will continue to be all the profit his location will 
 allow him to collect from the stream of goods. 
 
 Suppose the merchant had been content with his 
 small stock and mean building, would the profit 
 have remained at fifty thousand dollars a year? 
 It would not. His trade would have been taken 
 
The Rate of Interest and Profit 109 
 
 from him by the greater stocks carried on sim- 
 ilar locations, his location would have declined 
 from the loss in trade, and the general fall in 
 the rate would have reduced his rate td the same 
 level. 
 
 What is the natural law governing the invest- 
 ment of money in all lines of business, and for 
 all capital by the simple determination of a rate 
 of interest and profit? 
 
 The law is one that regulates the quantity of 
 secondary money by the rate of interest, allowing 
 the quantity to increase as the rate declines, and 
 keeps each unit of one hundred dollars of money 
 invested equal to each unit taken as interest as 
 the rate declines. If the rate of interest, for ex- 
 ample, was twenty-five per cent, the secondary 
 quantity will be inflated so as to divide the entire 
 collections of interest taken from one volume of 
 cash into four volumes to cover the introductions 
 of three volumes of secondary money to one of 
 cash. 
 
 As the rate declines from twenty-five to twelve 
 per cent it will do so to cover an additional vol- 
 ume of credit which is paid by the interest 
 money collected from cash. The money paying 
 interest and profit is primary credit, which was 
 combined with cash in the price of goods above 
 cost, and limits the quantity of profits to one 
 volume of credit equal to one volume of cash. 
 
no Our City Civilization 
 
 The money taken from the price of goods as 
 profit was money paid to labor for building and 
 other secondary services, and as this credit money 
 is paid in wages it becomes a part of the cash 
 circulation, and is separated from it as profits, 
 rent, and interest. 
 
 When the claim is made that one-half the re- 
 tail price of goods may be taken in profit, the 
 meaning to be conveyed is that employers and 
 merchants will retain twice their pay roll from 
 the selling price of goods, that profits and pay- 
 rolls balance, giving one dollar in profit for one 
 dollar in wages. 
 
 Take railway transportation, as an illustration; 
 railway labor must be paid by its cost being 
 added to the selling price of goods and all other 
 railway expenses and railway dividends must also 
 be added. 
 
 But a railway may be so poorly located and 
 managed that it cannot collect the cost of its 
 service from its charges for transportation, and 
 what law, therefore, determines how much money 
 a railway may collect in charges for its services? 
 
 The answer is, the law limits charges to twice 
 the pay roll. 
 
 The money paid to labor is the only money on 
 which charges may be based, because it furnishes 
 the only sum from which they may be collected, 
 and although trades may be made by selling 
 one property to buy another such trades are like 
 
The Rate of Interest and Profit 111 
 
 trading jackknives and do not effect the quan- 
 tity of money in distribution. 
 
 There is a buffer provided to receive the in- 
 equalities in prices from the market. This buffer 
 is the wages of common labor, because common 
 labor is last to be paid from the distribution of 
 money after the sale of goods in the retail market. 
 
 The rule regulating the charges and profits of 
 a railway does not differ in any essential from 
 the rule illustrated by the merchant in Chicago. 
 
 Before the merchant could secure a profit he 
 had to have a favorable location for his stock of 
 goods, where the required volume of business 
 could be obtained, at prices determined for him 
 by the consumers. 
 
 A railway system cannot seciu'e a profitable 
 business imless it first secures a favorable loca- 
 tion, and then its business will be governed by 
 the standard price in the commodity market the 
 same as the business of the merchant. 
 
 A railway system must adjust its charges for 
 transportation to its territory, so as to develop 
 the greatest volume of business, and this will be 
 discovered to be the volume that will give it the 
 greatest aggregate profit, and it will reach the 
 highest point of efficiency when its gross receipts 
 divide into two equal parts one half pay roll 
 account and the other half profit account. 
 
 The production of capital does not differ in 
 any essential from the production of goods. The 
 
112 Our City Civilization 
 
 inducement to build and create more capital is 
 the same as the inducement to create greater 
 supplies of commodities, namely, the profit de- 
 rived from the sale of capital at prices above 
 cost. 
 
 If the same relation between the cost and sell- 
 ing price of capital is maintained for each one 
 himdred dollars of it, when the rate of profit is 
 fifty per cent as when the rate is ten per cent, 
 then there will be the same inducement to in- 
 crease the quantity of it at the lower rate as at 
 the higher. 
 
 The stability in the value of capital must be 
 based upon a standard of value for labor that 
 does not change as the rate of profit changes, 
 and for that reason profit money comes from 
 an inflation that does not take increasing sums 
 of cash to pay dividends on greater accumula- 
 tions of wealth, while it is providing greater 
 quantities of credit money to buy the wealth. 
 
 The rate of interest and profit is not expected 
 to influence the rate of wages except as it in- 
 creases the demand for labor by the increase in 
 new building, and by supplying more money for 
 the building market. 
 
 The quantity of cash in circulation which sets 
 a limit to the gross sum that may be collected in 
 profit, determines the rate of profit by the quan- 
 tity of capital over which the gross cash profit 
 must spread its dividends, and interest. 
 
The Rate of Interest and Profit 113 
 
 Thus, for example, when the rate of profit is 
 fifty per cent in a new country, this rate means 
 that a quantity of primary credit equal to two 
 volumes of cash is in circulation over which one 
 quantity of profit equal to one volume of cash 
 must be spread. 
 
 When the rate falls from fifty to twenty-five 
 per cent it means that four volumes of credit 
 must divide a profit equal to but one volume of 
 cash. As the quantity of wealth accumulates it 
 gets its dividends and interest by spreading a 
 fixed quantity of profit in thinner layers by a 
 decline in the rate. 
 
 Before capital develops, the market for con- 
 simiable goods is the only market commanding 
 profits, and as goods sell for twice the cost half 
 the money will be used in paying profits at a 
 rate of one hundred per cent before credit money 
 appears in circulation. 
 
 But as capital grows into an accumulation of 
 wealth, and as banking is introduced, the profit 
 collected from the sale of goods continues to be 
 the only profit money upon which dividends and 
 interest are based, and new volumes of money 
 must be added to the circulation to buy the ac- 
 cumulated wealth and these new volimies of credit 
 collect interest by the simple process of dividing 
 a fixed sum of profit by the number of volumes 
 of credit added to the single volume of cash. 
 
 The interest rate of banks, for example, is made 
 
114 Our City Civilization 
 
 by collecting a very high rate of profit on a very 
 small quantity of cash, and by dividing this high 
 rate over four or five times as much credit. 
 
 Banks are able to reduce the rate of interest 
 because they loan a cash dollar over and over 
 again, and by collecting thirty per cent in profits 
 from cash are able to divide it into five, six per cent 
 rates of interest on the "no cost" credit money. 
 
 Business is held between very narrow lines 
 when no money is to be had, but the cash required 
 in the retail market, and when no capital is in 
 existence, there is no place for credit to enter 
 and be sustained by the value of wealth. The 
 high rate of interest on the cash volume when it 
 circulates alone, will confine development to the 
 few locations where retail trade will pay the rates 
 demanded, and private property in land will give 
 the land owners the first control over the expan- 
 sion of credit money, and loans upon real es- 
 tate security will be the favored loans in a new 
 country. 
 
 But when the few most favorable locations 
 have been taken, the only outlet for the invest- 
 ment of profit must be found in using poorer 
 locations and do so by a decline in the rate of 
 profit. 
 
 The area of new locations will be greatly ex- 
 tended and improved as the rate declines, and 
 many new locations will call for great increases of 
 capital for building, and the decline in the rate 
 
The Rate of Interest and Profit 115 
 
 not only extends the area of profitable building 
 but it also expands the credit currency to meet 
 these new demands. 
 
 The decline in the rate is expected to provide 
 the expansion of credit money to buy the new 
 capital created by the new margin of profitable 
 cultivation, but otherwise it is not expected to 
 exert any influence on the cash circulation, because 
 the decline in the rate takes the same amount 
 of cash in interest or dividends for each one 
 hundred dollars of capital. 
 
 The difference between a low and a high rate 
 of profit is not a difference in the earnings of 
 capital, as we are told, but is a question of a greater 
 range in distributing the increasing wealth to a 
 wider circle of new owners, on account of the 
 increase in the quantity of secondary money the 
 lower rate makes possible. 
 
 The decline in the rate of profit has a two-fold 
 effect, its first effect is to bring new lands into 
 profitable use that were out of the margin of 
 profitable production when the rate was higher. 
 
 The second effect is to increase the capital that 
 may be spent on better improvements on the best 
 locations, and allow the first cheap improvements 
 to be superseded by more costly ones because 
 the lower rate will support a higher capital 
 value. 
 
 Not only may the capital for the good loca- 
 tions be doubled when the rate of profit is cut 
 
116 Our City Civilization 
 
 in half but the number of profitable locations is 
 multiplied by the lower rate extending the radius 
 of the circle of profitable production, which al- 
 lows the area to grow with astonishing rapidity. 
 
 In the early development of a new country, 
 the rate of profit will be fifty per cent, and the 
 rate of interest half the rate of profit, and this 
 high rate of interest will confine the capital to 
 be invested in any improvement to the one story 
 wooden structures so notable in new towns. 
 
 When the rate of profit declines the best loca- 
 tions retain the advantage in collecting the high 
 rate on the small investment, and as the rate 
 declines the quantity of capital devoted to better 
 improvements on the best locations will increase — 
 and will allow the first one story wooden town 
 to change into two and three story buildings of 
 brick, and later to be again superseded by the 
 modern city of steel and concrete as the rate 
 continues to fall. 
 
 The opening of all lands to cultivation is 
 brought about when the decline in the rate 
 reaches its minimum, which is determined by 
 wealth reaching the limit in quantity, and taking 
 up all surplus labor, at which time the rate will 
 be determined by the time taken to reproduce 
 the wealth at the rate of wages being paid. 
 
 When all lands are within the profitable mar- 
 gin of cultivation on account of the decline in 
 the rate, the rate of wages should be high enough 
 
The Eate of Interest and Profit 117 
 
 to secure the perpetual change in building by 
 creating better buildings for the mass of man- 
 kind, and thus to make building as active as the 
 production of commodities. 
 
Chapteb X 
 
 DEBT AND THE STRINGENCY OF 
 CREDIT 
 
 The subject about which the great men of the 
 world have most to say and about which they 
 have the least information is the subject of great- 
 est interest to mankind, the supply of money. 
 
 When the demand for money makes a strin- 
 gency most acute it creates what is called a panic 
 in the money market, and the effect is only to 
 be compared to a great fire spreading over the 
 whole country destroying the property of the mid- 
 dle classes. 
 
 While the fire is in progress the people are 
 frantic in their haste to save what may be saved, 
 and on account of the general excitement as much 
 is lost and wasted as would otherwise have been 
 saved. 
 
 When the fire has become a smoking ruin, and 
 when millions contemplate their losses, they in- 
 quire of each other how the fire started and gained 
 such headway before it was checked, and then 
 they observe that certain members of the com- 
 munity have been able to profit from the general 
 loss. 
 
 The people first suspect, and finally accuse the 
 118 
 
Debt and the Stringency of Ceedit 119 
 
 men who profit from their loss, of having been 
 the cause of it, of having set the fire that was so 
 disastrous to the entire coimtry. 
 
 The Wall Street Banks, and banks everyTvhere, 
 are not only under suspicion at this time, but 
 circumstantial evidence points at that particular 
 spot with damnable proof of motive and profit. 
 
 Bankers of Wall Street, and bankers every- 
 where, are horrified at the accusation, and de- 
 mand proof before they are to be accused and 
 held responsible for a condition they claim to 
 have been first in putting under control. 
 
 The people reply, however, that the help of 
 the bankers was like the help of the avaricious 
 Crassus in Eome who kept a private fire company 
 to protect his own property because there was 
 no pubUc fire department. 
 
 They say, when a fire started Crassus was first 
 on the ground with his slaves to watch the ruin in 
 its progress, to buy the endangered property, and 
 set his slaves to fight the fire when the property 
 became his own. 
 
 It is related of Crassus that he never built a 
 house, although he owned thousands of them, and 
 owned thousands of slaves that were architects 
 and builders, because his fire fighting system gave 
 him houses much cheaper than he could build 
 them. 
 
 Was it not to the interest of Crassus, the people 
 ask, to have his slaves start fires when the mas- 
 
120 Our City Civilization 
 
 ter had money to invest in Rome? Had not 
 Crassus risen from being a poor man to become 
 the richest man in the world, to own almost the 
 entire city of Rome, by saving it from the fires 
 he was accused of bringing about? 
 
 Did not Crassus also acquire vast domains in 
 lands, in mines and in other property as a result 
 of his Roman system of saving property from 
 destruction? 
 
 Were the suspicions of the Roman citizens un- 
 just when they charged the slaves of Crassus 
 with setting the fires that made their master the 
 wealthiest man in the world? 
 
 If this Roman suspicion is thought to be unjust 
 because Crassus was a rich man who should not 
 be lightly accused of crime, it had much evidence 
 to sustain it, less evidence than has hanged many 
 a man accused of lighter crimes. 
 
 The modern suspicion against the bankers who 
 are accused of getting profits when the country 
 is suffering from a stringency of money and from 
 a consequent panic, has other damning evidence 
 that was lacking in the case of Crassus. 
 
 The bankers who keep a panic extinguishing 
 system on hand are to be found in every money 
 crisis trying to buy the endangered property, and 
 to save it after it has become their own, eager to 
 stop the spread of the conflagration to their own 
 territory. 
 
 After the panic fire the bankers are to be foimd 
 
Debt and the Stringency of Credit 121 
 
 in every legislative assembly seeking to prevent 
 any competition with their private panic extin- 
 guishing monopoly, and to resist all efforts on the 
 part of the people to secm-e a public system to 
 save the property of the middle classes. 
 
 They not only oppose public insurance against 
 loss, but they demand greater privileges for their 
 private system, and want more money placed in 
 their hands so as to save more property for 
 themselves in saving it during a panic, and they 
 threaten the people with disaster in the next 
 panic if their demands are refused. 
 
 A man with cash at his disposal finds favorable 
 opportunities to buy property at less than its 
 value, because all the multiplied demands for 
 money will finally become demands for cash, and 
 at times cash cannot be obtained except at a 
 great sacrifice in the value of property. 
 
 When a man must have money, he discovers 
 the market for his property has been mysteriously 
 undermined, and his business threatens to fall 
 in ruins imless he can save the situation by get- 
 ting a supply of cash immediately. 
 
 The volume of cash is absolutely limited by the 
 selling price of goods in the retail market, and no 
 scheme of finance has ever been able to increase 
 this limit because it was never intended to use 
 cash for any other purpose than to buy goods at 
 retail. 
 
 Although all pajnnents call for payment in 
 
122 Our City Civilization 
 
 cash they do so to keep the volume of wealth in 
 the property market to the standard of value 
 established by competition in the commodity mar- 
 ket. 
 
 When the credit currency of the country fails 
 in performing its proper functions in doing the 
 wholesale bujdng in the commodity market and 
 all the buyhig in the capital market, cash is called 
 upon to do a double duty. 
 
 A stringency in credit is a failure in the circu- 
 lation of bank deposits to do all the buying ex- 
 cept the retail buying in the goods market. At 
 no time in the history of the world has credit 
 ever been permitted to circulate in the required 
 quantity to do the business of the world. 
 
 When a property owner needs to build, he is 
 compelled to use credit, and when he borrows 
 money it is credit he must be satisfied with. 
 
 All the governments of the world have at- 
 tempted to relieve the stringency in credit by an 
 expansion in cash, and have always failed. The 
 stringency grows more acute as the cash is being 
 inflated and is like adding fuel to a fire that con- 
 sumes cash by an increase in new debts as fast 
 as cash can be added to the supply. 
 
 Every inflation of cash in attempting to relieve 
 a stringency of credit is taken up and consumed 
 by new debts that can never be paid, and for 
 that reason debts gain on the quantity of money 
 
Debt and the Stringency of Credit 123 
 
 faster than cash can be added to relieve the sit- 
 uation. 
 
 The theory of a government money supply 
 seems to call for a system that will make it easy 
 for the property owner to borrow and to expect 
 when borrowing has been made easy that debts 
 will also be as easy to pay. 
 
 Here is where the system fails; there is a law 
 of economics that holds the entire quantity of 
 money to the sum that may be used by a cash 
 market, and this law compels the circulation of 
 money to repudiate debts by refusing the cash 
 that may pay them. 
 
 The stringency of money is always the result 
 of demands upon money to pay debts, and to 
 pay interest upon them, demands repudiated by 
 the laws that govern the circulation of money and 
 refuse money for any and all debt purposes. 
 
 We are ever seeking a debt-creating currency 
 when the laws of nature decree we may only be 
 successful when we confine all business to a cash 
 basis and make all business conform to cash values. 
 
 The currency system of a country is a natural 
 system of keeping accounts between all the people 
 and all the wealth. The quantity of money carries 
 all the claims upon wealth until such claims are 
 paid by distribution of goods or wealth without 
 debts. 
 
 To discuss the currency question is to talk 
 about millions of doUars, and the mind cannot 
 
124 OuK City Civilization 
 
 conceive of units of millions, hence the trouble 
 in explaining to the reader what we mean by 
 quantities that mount to billions of dollars. 
 
 But we approach the subject by inquiring about 
 debt, does the reader know what debt means? It 
 seems a simple matter yet the true explanation of 
 debt has never been given. 
 
 What does the reader understand, for example, 
 by debts that are not his own, but are more im- 
 portant to him than the cost of living because 
 they may create a panic from which the country 
 recovers with difficulty, after billions of dollars 
 worth of property has been lost to the middle 
 classes. 
 
 To know the meaning of debt, is to know 
 whether or not the world may do all its business 
 on a cash basis, is to know that no more money 
 will be permittted to circulate than a cash busi- 
 ness will use; to know that any attempt to supply 
 money by creating debts must defeat itself, be- 
 cause the money the debt introduces goes out of 
 circulation as fast as the debt comes in. 
 
 Debts arise in the property market, and we 
 get along without an accumulation of them in 
 the retail commodity market, then why do we 
 suffer them in the five-fold greater market for 
 wealth. 
 
 We do a cash business in the goods market be- 
 cause we keep a quantity of cash on hand that 
 will always exchange for the store of goods on 
 
Debt and the Stringency of Credit 125 , 
 
 hand, the cash buying all the goods, and the 
 store of goods returning all the cash; the money 
 spent by the consiuner each day releases the 
 money to pay the producer on the following day, 
 to replenish the store of goods. 
 
 The quantity of money on hand is an automatic 
 process of keeping books, between the laborers 
 who work and the products they send to market; 
 all the claims are expected to be carried by the 
 quantity of money until they are settled by the 
 distribution of goods and of wealth, to be settled 
 in a cash market leaving no remainder to be car- 
 ried as a debt. 
 
 The quantity of cash in the commodity market 
 cannot be contracted by debt and it establishes 
 the foundation for the quantity of credit which 
 a cash capital market will demand, and any failure 
 in the quantity of credit means a failure to settle 
 the accounts due to labor in wages, and they are 
 carried as a debt charged to labor of the future. 
 
 In the commodity market the rapid consump- 
 tion and production of goods allows a small quan- 
 tity of cash to be used over and over again, on 
 account of its rapid circulation. 
 
 The quantity of cash turns over once in sixty 
 days, or six times a year, and the annual sales of 
 goods are therefore limited to six times the cash in 
 circulation, or if cash is three billion the annual 
 business will be six times three or eighteen billion 
 dollars a year. 
 
126 OuK City Civilization 
 
 The annual business in the capital market must 
 equal the business in the goods market if the 
 profits taken from goods are to be returned by 
 the price of capital above cost, and it becomes 
 a very simple matter to estimate the quantity 
 of credit a cash market for capital demands in 
 active circulation. 
 
 Capital is not produced or consumed as rapidly 
 as goods, and for this reason, the turn over in 
 credit is given longer time, and this extension in 
 time must be balanced by a corresponding in- 
 crease in the quantity, and credit is thus fixed 
 at six times the quantity of cash, except that the 
 volume of cash counts once in the quantity of 
 credit, making it five times the cash. 
 
 This credit currency is being continually con- 
 tracted by investment in land, and cannot be 
 replaced by capital selling at a profit of twice its 
 cost, and for this reason the money market suffers 
 from a continual stringency in credit. 
 
 This five time greater quantity of credit than 
 cash calls for fifteen billion dollars of bank de- 
 posits to be in active circulation performing the 
 functions of cash in the labor and capital mar- 
 kets, and twenty-five thousand banks over the 
 country are supposed to supply this demand. 
 
 That banks may be able to meet this enormous 
 demand for credit they are permitted to contract 
 the quantity of cash in circulation to half its re- 
 quired volume so as to make the ten time greater 
 
Debt and the Stringency of Credit 127 
 
 volume of credit payable in cash, so it may do 
 the work of cash. 
 
 When we fail to circulate our bank deposits as 
 cash, and fail to use them to furnish a cash market 
 for all property except land, we not only suffer a 
 loss of the credit we fail to use, but we lose the 
 circulation of half the quantity of cash. 
 
 The quantity of cash is determined by our 
 needs for goods that cannot be postponed, and 
 we cannot diminish this cash quantity by invest- 
 ing it; the quantity remains fixed, and prices fluc- 
 tuate to meet changes in the market. 
 
 The quantity of credit, on the other hand, is 
 not subject to the insistarit demands of consump- 
 tion in order to Uve, and as a result our needs 
 for money in the capital market may be post- 
 poned, and the quantity may be contracted by 
 investment. 
 
 The failure in the continual replacement of 
 bank deposits, by the sale of capital at twice its 
 cost, throws the burden of supplying capital 
 upon banks when demands from new capital are 
 not equalized by new profits from the sales of 
 capital. 
 
 Contracting the supply of credit by investment, 
 and failing to increase the supply from the sale 
 of capital at its standard price, creates a con- 
 tinual stringency that keeps credit at its lowest 
 possible limit. 
 
 The burden of supplying capital with currency 
 
128 Our City Civilization 
 
 and with credit must be lifted from the banks 
 where it is now being carried and placed upon 
 corporation treasuries where it properly belongs, 
 and when this is done, the value of land will 
 change into a price of capital above cost because 
 land cannot supply the market with the money 
 its own price demands. 
 
 Every security of capital, has, or should have 
 a money value. A bond or mortgage for a thou- 
 sand dollars is supposed to be worth a thousand 
 dollars in actual money, and the only relief the 
 money market requires is one that will make the 
 supposed value of securities their actual value in 
 money. 
 
 Securities of capital may be given an actual 
 value in money by making them payable in money 
 on demand and do so by setting aside the required 
 bank reserves for this purpose, the same as banks 
 make deposits have an actual cash value by set- 
 ting aside the required cash reserve. 
 
 It may seem a great hardship, at this late day, 
 to make securities and debts of more than a hun- 
 dred biUion dollars in value support their value 
 by creating deposit reserves for that purpose, but 
 it may prove a blessing in disguise. 
 
 The plan to abolish the stringency of credit by 
 abolishing debt — by changing debts into liquid 
 credits, is not an untried plan or visionary scheme 
 but is now in successful operation for more than 
 forty-five billion dollars worth of securities in 
 this country. 
 
Debt and the Stringency op Credit 129 
 
 We have more than fifteen billion dollars in 
 bank deposits payable in cash on demand because 
 a reserve of one dollar in ten is provided for this 
 purpose, and is rarely called upon. 
 
 We have more than thirty billion dollars of 
 life insiu'ance kept at a uniform standard of value, 
 and made payable on death demands by keep- 
 ing the required reserves for that purpose, and 
 it is much more important that capital securities 
 be given an equal standard of cash value. 
 
 Our laws favor corporations at the expense of 
 the banking and currency system, by permitting 
 them to take deposits from banks as investments, 
 and to change bank accounts that were payable in 
 cash on demand, into securities carrying no obli- 
 gation to return the investment. 
 
 The failure of corporation securities to sell for 
 a standard price on demand makes it impossible 
 for banks to circulate credit by having old loans 
 paid and allow the credit to be used by a new 
 borrower. The old loans cannot be paid because 
 the security has no market from which it may 
 secure money, no other money is available except 
 the money carried by banks to protect deposits. 
 
 The stringency in credit is not the result of any 
 failure on the part of nature in supplying a nat- 
 lU'al quantity of money suitable to all the demands 
 upon it, but the stringency results from a con- 
 traction of credits by debts, and a failure to pay 
 debts because we do not sell the capital we pro- 
 duce at twice its cost. 
 
130 OuH City Civilization 
 
 The failure to keep up the supply of new credit 
 to buy new wealth, makes the building of all new 
 structures, and the replacement of all existing 
 capital soon reach the debt limit and then de- 
 pend upon accidental inflations of cash, coming 
 from new gold being added to the coinage, and 
 new national bank notes. 
 
 This inflation of new money, and the activity 
 in business and in new construction based wholly 
 upon it, is well illustrated by currency statistics 
 for the years from 1893 until 1913. 
 
 The years from 1893 until 1896, were years of 
 stationary money supply, when the limit set by 
 debt held the country in a death like grip that 
 prevented all advance in business or wealth. 
 
 This period of stationary supply in the funda- 
 mental cash made its influence felt by stationary 
 wealth, by millions of laborers unable to find work 
 and by constantly falling prices, until the lowest 
 price level in our history was reached in 1896. 
 
 In 1891, for example, the volume of cash was 
 slightly contracted, in 1893, it was again con- 
 tracted fourteen million dollars, which produced 
 the panic of that year; in 1894 it was slightly 
 expanded, in 1895 another slight expansion fol- 
 lowed, and in 1896 it was again contracted. 
 
 This failure in the quantity of money to keep 
 pace with the increase in production and wealth 
 made its influence felt by prices declining, because 
 the new lands under cultivation did not get the 
 
Debt and the Stringency of Ceedit 131 
 
 supply of money to keep prices profitable as the 
 quantity of goods increased. 
 
 Following the year 1896 there was an almost con- 
 tinual expansion, and to understand the effect of 
 an expansion in the primary cash, or the effect of 
 a contraction, it is necessary to remember that 
 every dollar of new cash is followed by ten dol- 
 lars of new credit money, and for this reason the 
 expansion has had a wonderful effect upon the 
 business of this country. 
 
 The following table will give the reader a clear 
 view of the increase in new money and credit, 
 from 1896 until 1913. 
 
 TEAS 
 
 CASH EXPANSION 
 
 CREDIT EXPANSION 
 
 1897 
 
 S136,000,000 
 196,000,000 
 
 67,000,000 
 118,000,000 
 120,000,000 
 
 74,000,000 
 118,000,000 
 150,000,000 
 
 68,000,000 
 148,000,000 
 
 37,000,000 
 265,000,000 
 
 68,000,000 
 4,000,000* 
 212,000,000 
 
 70,000,000 
 
 $1,360,000,000 
 
 1898 
 
 1,960,000,000 
 
 1899 
 
 670,000,000 
 
 1900 
 
 1,180,000,000 
 
 1901 
 
 1,200,000,000 
 
 1902 
 
 740,000,000 
 
 1903 
 
 1,180,000,000 
 
 1904 
 
 1,160,000,000 
 
 1905 
 
 680,000,000 
 
 1906 
 
 1,480,000,000 
 
 1907.. 
 
 370,000,000 
 
 1908 
 
 2,650,000,000 
 
 1909 
 
 680,000,000 
 
 1910 . 
 
 40,000,000t 
 
 1911 
 
 2,120,000,000 
 
 1912 
 
 700,000,000 
 
 
 
 Grand total 
 
 1,800,000,000 
 
 18,000,000,000 
 
 *Minus 
 
 t Contraction. 
 
132 OuH CiTT Civilization 
 
 As a rule, tables of statistics are not good read- 
 ing, but in this case an exception is being offered, 
 and a table is presented that contains a history 
 more interesting and more important than the 
 history of any empire. 
 
 The history of more than fifteen thousand new 
 banks is contained in this record of expansion 
 not a dozen of which could have come into exist- 
 ence without it, and together with the history of 
 fifteen thousand new banks, is the history of nine 
 thousand million dollars in new deposits upon 
 which the banks now live, and the history of 
 nine thousand million dollars of credit invested in 
 new wealth. 
 
 To understand just what this table of cash ex- 
 pansion means to our country, the reader must 
 realize, that we have had nothing but this expan- 
 sion to depend upon for the progress we made 
 during these years, that debts had entirely tied 
 up all the money to the existing property, and 
 as debts could not be paid there was no money 
 to be had to pay for new development of any 
 kind. 
 
 In 1897 the total cash was eighteen hundred 
 million dollars, and this cash was most effect- 
 ually tied up by bank loans, and without new 
 additions of primary money added to the cir- 
 culation this country would have discovered its 
 wealth and employment remaining stationary at 
 the eighteen hundred million dollar cash level. 
 
Debt and the Sthingency of Credit 133 
 
 Had this 1897 quantity of money remained 
 stationary, it could not have assisted in the 
 development that followed, and new production, 
 with a stationary cash supply, must have resulted 
 in lower prices or in the failure of labor to be 
 employed. 
 
 When we consider the price level of 1897, we 
 discover that the short money supply had al- 
 ready established prices as low as production and 
 wages would admit, the index number being 100, 
 the lowest in the history of the country, as 
 against an index figure of nearly 160 for 1912. 
 
 Had there been no expansion of the cash, after 
 1897, or the little expansion of the six years before, 
 could not have increased the total wealth, be- 
 cause profits taken from prices were at the lowest 
 possible level, and all wages, incomes and rents 
 were at the points where no more income for 
 new wealth could be paid. 
 
 Had there been no accidental expansion after 
 1897, the millions out of work in 1896 would have 
 been increased every year, and the distress would 
 have grown greater each year with the inevi- 
 table revolution between capital and labor. 
 
 This expansion has given us a breathing spell 
 and has but postponed the inevitable struggle 
 with the evils of our currency and land system. 
 The problem has only become more acute by be- 
 ing postponed, and the gravity of it has grown 
 with the increase in wealth based upon inflated 
 
134 OuH City Civilization 
 
 money, and with the expanded prices of wealth 
 and of consumable goods. 
 
 In fourteen years, from 1896 to 1912 the vol- 
 ume of primary money was increased eighteen 
 hundred million dollars, and bank deposits gained 
 five times this sum or nine billion dollars, the 
 new credit invested on accoimt of expansion 
 was equal to the gain in bank deposits, and 
 nine billion dollars was invested as new capital. 
 
 The retail business of the country was increased 
 by nine billion dollars a year, and the total wealth 
 gained by the profit taken from the increase in 
 business. 
 
 In 1897 the total wealth was less than sixty 
 billion dollars and it increased to more than a 
 hundred and twenty billion in 1912. 
 
 Consider what these statistics mean, that every 
 dollar gained by the purse proud captains of 
 high finance, by thousands of merchants and by 
 thousands of self-advertised self-made rich men, 
 was but the accidental sport of an accidental infla- 
 tion of the cirrrency, and without it we would 
 now be under a different form of government. 
 
 If the reader doubts these statements, the 
 doubt concerns the power of an expansion of 
 cash to control the growth of wealth. 
 
 Notice the panic year of 1903, which occurred 
 after six years of expansion added six hundred 
 and seventy million in cash and ten times as 
 much new credit. 
 
Debt and the Stringency of Credit 135 
 
 The failure, in a single year, 1903, to keep up 
 the inflation — at the same rate — caused a violent 
 decline in prices of all securities and a loss in all 
 markets. 
 
 During the following three years the rate in 
 expanding cash was again resumed, and the in- 
 crease in business and wealth followed, but an- 
 other panic occurred in 1907 more disastrous 
 than the one in 1903, and why? 
 
 The rate of expansion following the panic of 
 1903 was one hundred and thirty-three million 
 dollars a year, and this rate was changed only to 
 an average of one hundred and eight, for the years 
 1905-06, but dropped suddenly to thirty-seven 
 milUon dollars for the year 1907, and but for the 
 enormous gain of two hundred and sixty-five mil- 
 hon in 1908, the loss from the 1907 panic would 
 have been greatly extended. 
 
 In 1909 and 1910 the rate of expansion again 
 declined to a panic point, sixty-four million dol- 
 lars being the addition for the two years, but the 
 surplus from an expansion of two hundred and 
 sixty-five million in 1908, and the jump in 1911 to 
 two hundred and twelve million allowed the busi- 
 i^ess world to escape a most serious panic in 1911. 
 
 What is the answer to this table of statistics? 
 If the coimtry can inflate its currency by an aver- 
 age of a hundred and fifty million dollars a 
 year, why not adopt a poUcy of that kind, and 
 settle the currency question? 
 
136 OuB City Civilization 
 
 It is doubtful if this country contains any con- 
 siderable number of people who do not instinc- 
 tively realize that such an inflation policy would 
 be committing commercial suicide, and force upon 
 this country the worst revolution between capital 
 and labor in the history of the world. 
 
 It is self evident, this country cannot permit all 
 its wealth to concentrate to a diminishing number 
 of its people year by year, and then accelerate 
 this concentration by a process of expanding the 
 cash, and adding an expansion of ten dollars of 
 bonus money for each dollar of cash for the bene- 
 fit of the wealthy classes. 
 
 When our system of private property in land 
 destroys the regular circulation of credit money 
 upon which the regular distribution of wealth de- 
 pends, we cannot go on indefinitely adding new 
 cash so to allow labor to work merely to add to the 
 accumulations of the rich, and add to the burdens 
 of labor by the constant rise in prices of the goods 
 it consumes. 
 
 This expansion of cash is stretching the skin 
 of the body politic, making it dropsical while it 
 is adding water to its vital flow of blood from the 
 rise in prices not balanced by a corresponding 
 gain in wages and wealth. 
 
 The inflation of cash seeking to replace the 
 evils of property in land which destroy credit 
 circulation, only add to the burden of each new 
 dollar instead of lightening the burden as it was 
 expected to do. 
 
Debt and the Stringency of Credit 137 
 
 In the year 1897, for example, the total cash in 
 use was eighteen hundred million dollars, and 
 seven hundred million of this sum was held in 
 bank reserves, leaving eleven hundred millions to 
 carry the burdens of cash. 
 
 In 1897 the annual retail business, depending 
 on this quantity of cash was, about nine billion 
 dollars, and each cash dollar had to buy eight 
 dollars worth of goods at low prices. 
 
 The annual increase in profits, at that time may 
 be estimated as one fourth of the annual sales, 
 and each dollar in cash had two dollars of interest 
 and dividends to pay. 
 
 In 1897 the total wealth was in round numbers 
 sixty billion dollars, and the total debt may be 
 safely estimated at half the total wealth or thirty 
 biUion, and each dollar in cash was burdened with 
 no less than twenty-five dollars of debt. It was 
 for this reason that an expansion in cash gave 
 us an increase in business until the new cash 
 acquired its own burdens of new debts from new 
 wealth. 
 
 In 1912, the cash had been increased to thirty- 
 four hundred million and fifteen hundred million 
 of this sum was held as bank reserves, leaving 
 nineteen hundred million outstanding, but the 
 increase in commodity prices on account of this 
 inflation of cash changed the index figure of 100, 
 for 1897, to an index of 150, for 1912. 
 
 This increase in commodity prices discounted 
 
138 Our City Civilization 
 
 much of the gain in cash, and made the nineteen 
 hundred milhon only as effective in the retail mar- 
 ket as thirteen hundred at the lower range of 
 prices of 1897, and thus the effective gain in 
 cash was two hundred million dollars from a 
 cash expansion of eighteen himdred million. 
 
 Retail business increased from nine to about 
 twenty billion dollars a year, and each dollar 
 was loaded with ten dollars in buying goods, as 
 against eight dollars in 1897, the dividends cash 
 had to distribute were three dollars for each dol- 
 lar in 1912, as against two dollars in 1897, and 
 the load of debt had increased from twenty-five 
 dollars for each dollar of cash to thirty dollars. 
 
 Thus, the load upon cash increasing with its ex- 
 pansion, points to the disastrous end of a remedy 
 so artificial as expanding cash to escape the evils 
 of property in land; new expansions of cash may 
 only increase prices without increasing business, 
 and then the lower wages and heavier burdens 
 will force our people to solve the problems that 
 now threaten their civilized existence. 
 
Chapter XI 
 
 THE CASH MARKET 
 
 However complicated the problems of poverty- 
 may appear to be because a small class of enor- 
 mously rich men are in possession of all produc- 
 tive wealth, yet, if justice is desired without 
 regard to the possessions of the rich, the puzzle 
 that now seems impossible may become remark- 
 ably simple. 
 
 The abject fear at the door of every evil con- 
 dition is the fear that some owner of wealth will 
 be disturbed in the security of his possessions, and 
 attempts to relieve the poor of some of their bur- 
 dens wiU not be considered unless some guaranty 
 is given that this security of possession will not 
 be disturbed. 
 
 Ruskin said the crudest man alive must be 
 blind to sit at his own feast. Suppose the evils of 
 our civilization become so acute as to become un- 
 bearable, and the rich were to efface themselves 
 when the pubUc welfare was being considered 
 would not the problems that now paralyze the 
 strong arm of justice become ridiculously simple 
 in their solution? 
 
 Inquire diligently into the problem of posses- 
 sion, and you will discover how Httle it has to do 
 139 
 
140 Our City Civilization 
 
 with the real distress of this world, you will dis- 
 cover that private property has become a dreadful 
 superstition that holds the world in slavery. 
 
 The so-called sacred rights of private property, 
 will be found to have no sacredness. The right 
 of possession is not a private but is a public 
 right, and the fear of disturbing the right of pri- 
 vate property is born of the fear of ignorance and 
 credulity. 
 
 The ownership of slaves is a case in point from 
 which a moral may be drawn. Such ownership led 
 to the superstitious beUef that slavery was the 
 natural and necessary condition of the laboring 
 population, to the belief that slavery was only 
 held in check by allowing some of the people to 
 own other people, that if this ownership of slaves 
 was abolished slavery would spread everywhere, 
 and the master and his family must become 
 slaves. 
 
 But contrary to this belief, slavery was not 
 found to be the natural condition of the laboring 
 classes, it did not spread to the families of the 
 masters when the ownership of men was abol- 
 ished. It will also be discovered that poverty, 
 insanity, vice and and crime are not natural to 
 mankind, as the defenders of inequality would 
 have the world believe, but we endure and suffer 
 them to support our faith in the ownership of 
 private property. 
 
 We cling to our superstitious fear concerning 
 
The Cash Maeket 141 
 
 property for the same reason the slave owners 
 defended salvery, the fear that if this institution 
 is ever invaded the class whom private property 
 seems now to protect from poverty and crime 
 will also be engulfed by the increase in the evils 
 we seek to abolish, and the mass of mankind will 
 have gained no relief. 
 
 What does private ownership imply that it 
 should stand at the door of opportunity, and 
 prevent the examination of any of its claims to 
 be the guardian of civiUzation? 
 
 Should the mere fact that one man is owner, 
 prevent all the people from obtaining the bene- 
 fits of property that has long since ceased to be 
 private? 
 
 Need a man own a theater to enjoy a play? 
 Own a palace when he may secure greater luxury 
 in a modern hotel. Must a man buy works of art 
 at fabulous prices to enjoy the inspirations of art? 
 Must a man possess a yacht, an automobile, and 
 a private railroad car? Cannot one enjoy the 
 beauties of nature without owning a vast estate 
 of gardens and parks? 
 
 Need a man own a department store to grat- 
 ify his appetites, and own a railway system to 
 minister to his ambition? 
 
 Shall all questions of the public welfare be 
 made subordinate to the ambitions of a few men 
 to own all the wealth in existence? Dare no man 
 discuss a question of public importance unless he 
 
142 Our City Ciyilization 
 
 first admits that the private ownership of property- 
 is too sacred an institution to be questioned, and 
 no change in it is desirable or possible? 
 
 We need not own any part of this world to 
 enjoy its every blessing. We have the bounty of 
 nature at every door, the delight and advantage 
 of literature, and art in public galleries, palaces 
 in great hotels for the multitude; any one may 
 buy an infinitesimal part of a theater for two 
 hours to enjoy the best that art and genius may 
 offer. 
 
 That man is happiest and most contented who 
 finds an infinite variety in his enjoyment of life, 
 and the private ownership of property is the first 
 greedy blot on the fair page of universal welfare. 
 
 Although we need not own any part of the 
 world to enjoy its every blessing, we must be 
 supplied with a sum of money every day to secure 
 om: share in its infinite variety of delights. The 
 supply of spending money is what counts, not the 
 private ownership of property, and a man may 
 spend all he earns and keep on spending, get 
 all this life affords and never own a rod of soil 
 or a roof over his head. 
 
 Men do not suffer because they fail in owner- 
 ship, but because they fail in securing the small 
 sum by which they may buy their share in all the 
 material pleasures of our wonderful civilzation. 
 
 The man of greatest liberty, — who is removed 
 the greatest distance from slavery — is the man 
 
The Cash Maeket 143 
 
 of common sense, of broad learning and a liberal 
 mind, who earns the money he spends at congenial 
 employment, the money that gives him the key 
 to the treasuries of the civilized world. 
 
 In every prophecy and forecast of the mil- 
 lenium, from the time of Plato until today, one 
 fact is past dispute, the only plan which will suc- 
 ceed is the one which will furnish the mass of man- 
 kind with the daily enjojonent of all the blessing 
 their labor supplies. 
 
 Any plan that fails to distribute the required 
 sums of spending money to millions of mankind 
 will fail to do justice to the mass in direct ratio 
 as it fails in supplying people with the money 
 they earn, and the money society inherits for 
 their benefit. 
 
 There is an utmost sum that may be distrib- 
 uted to the millions of laborers, it is a sum which 
 must be collected daily as they spend it; the more 
 they spend in obedience to the laws of nature the 
 more they will receive to continue the spending. 
 
 Property is not able to provide a penny of this 
 spending money, property cannot be converted 
 into the daily supplies of money the people need 
 to spend, and when it is sold to be converted into 
 money it merely takes money from one pocket 
 of the people to change it to another. 
 
 The money that is spent each day is the money 
 that was earned the preceding day, and what 
 fails to be spent cannot even be saved by all the 
 
144 Ottb City Civilization 
 
 people although it may be saved for any one of 
 them. 
 
 If every property owner was required to relin- 
 quish his ownership, no money could thereby be 
 added to the sum the people need, but if prop- 
 erty is required to supply the money to circu- 
 lation that it takes when it sells for its value 
 in money, it would then supply all the money 
 laborers could ever receive from this source, 
 regardless of ownership. 
 
 The slave owner injured society because he 
 destroyed the greater market the slave should 
 have created in buying as much wealth as the 
 slaves were able to produce, allowing the master 
 to gain from this market and not from the 
 institution of slavery. 
 
 The slave owner was at a disadvantage, be- 
 cause he had to buy the men he employed, and 
 had no advantage in the market for the slave 
 products he sold in competition with free labor, 
 his gains being limited by the difference between 
 the cost price and the selling price of the labor 
 product. 
 
 When the ownership of slaves was abolished, 
 the opportunity to buy the identical product of 
 labor was in no way diminished but was increased, 
 and profits advanced as wages were higher and 
 as the market widened. 
 
 When all markets are set free, by the return 
 of the money now kept from circulation by debt, 
 
The Cash Market 145 
 
 the property owner will gain by the release from 
 debt as the slave owner should have gained by 
 the release of slaves, and would have gained had 
 not debt created a wider form of slavery than the 
 system aboUshed. 
 
 The quantity of money to be added to the cir- 
 culation by the abolition of debt, is the greatest 
 quantity the people have power to use, a quan- 
 tity that will buy all labor and every labor prod- 
 uct at a standard price for its value in money 
 on demand. 
 
 Edward Bellamy, in his novel Looking Back- 
 ward proposed a system to supply the market with 
 all the money it could use, by giving to each 
 member of society a credit in money that would 
 buy all the services labor could supply, and in this 
 way discover the ultimate consuming power of the 
 people. 
 
 This plan of supplying the required quantity 
 of money was practically the same as the one we 
 have in our bank check currency, whereby a 
 man with credit in the bank may call upon the 
 bank to convert his credit into cash as fast as 
 the services of labor can redeem the money. 
 
 Bellamy's plan made credit universal, any mem- 
 ber of society was permitted to draw an allow- 
 ance of spending money, and put as much money 
 in circulation as the market could use, but the 
 money proposed by this plan, was not equal to the 
 currency we have in our bank deposits, could we 
 
146 OtTB City Civilization 
 
 but distribute it among thirty million laborers, 
 by pajang them four times the present wages of 
 common labor. 
 
 The reader will be willing to admit the ideal 
 character of bank deposit currency, provided it 
 may be widely distributed but may deny the plan 
 by which a cash market will do this work auto- 
 matically, and will increase the wages of thirty 
 million of common laborers by the general circu- 
 lation of bank currency. 
 
 The rise in wages from a cash market will first 
 secure the money to pay them by changing debts 
 into credits, and property will not be permitted to 
 contract this money by making new debts. The 
 money paid out each year for all piurposes and 
 the money paid in wages for all labor must bal- 
 ance because a cash market leaves no remainder. 
 
 A stock of goods on a merchant's shelves, or 
 in a warehouse must be given a standard price, 
 and given a circulation of money so it will sell 
 for its price in money on demand, and all other 
 wealth must be upon the same money basis of 
 value. 
 
 Because we have never been favored with a 
 market of this kind, where no balances remain 
 to be carried by debts, or to be wiped out by a 
 sacrifice in price, we are led to regard poor busi- 
 ness as the rule and good business as the excep- 
 tion, when, in truth, good business should be the 
 rule without exception. 
 
The Cash Market 147 
 
 It will appear to be quite impossible for any 
 stock of goods to be liquidated for its value in 
 money on demand for the reason that consumers 
 require but a certain part of any stock within 
 a given time, and if a great supply is suddenly 
 thrown upon the market there must be a fall in 
 price to absorb it. This is quite true, but it begs 
 the question instead of answering it, for, if goods 
 were convertible into money on demand, the emer- 
 gency would never arise by which goods were 
 thrown upon the market faster than they could 
 be taken care of at the standard price. 
 
 But many men pursue business and fail, and 
 no system can insure the market from the failure 
 of men in many kinds of business. 
 
 The incapacity of any man need not inflict 
 losses upon others who are in no way responsible 
 for individual weakness and the fact that property 
 has no surrender value does now pass the loss 
 upon the innocent public. 
 
 Stability in prices and in values does not call 
 for the "impossible that never happens." No 
 system of insurance will permit great volumes of 
 goods to sell at a standard price if they may be 
 thrown suddeidy on the market, but when values 
 are stable there is no occasion to throw property 
 on the market. 
 
 A national bank, for example, is not allowed 
 to throw its deposit accounts and its assets on the 
 open market when it is being liquidated, and lose 
 
148 Ot7H City Civilization 
 
 the property of its creditors but it is forced to 
 pay its liabilities by the careful handling of its 
 assets. 
 
 It is true that an arbitrary value cannot be 
 given to property, or to a stock of goods, so that 
 a third person may step in and relieve the respon- 
 sible owner of his duty to pay his just debts, but 
 debts may be so limited that the responsibility for 
 them will be provided in time, and the fund to 
 liquidate them will be set aside when the debt 
 is made. 
 
 The introduction of a cash system replacing the 
 present one may seem to be impossible without 
 paying debts, and to pay debts is equally impos- 
 sible. When property is made to sell for its 
 value in money, we need not look to some out- 
 side power to come into the market with money 
 to relieve the property owner from debt, but the 
 property will be forced to reUeve itself. 
 
 Having a cash market, the evils of private prop- 
 erty that now corrupt our social life and our 
 politics may be safely ignored because the cash 
 market will impose obhgations upon property, 
 which will take away its power of harm. 
 
 Practically all the special privilege the law may 
 confer upon property is the privilege of contract- 
 ing debts for the owners benefit which labor now 
 pays in its cash market, but which are carried 
 over to the capital market as a contraction of 
 currency, in becoming a debt upon property. 
 
The Cash Market 149 
 
 When a railroad has been built, for example, 
 labor has paid for everything, a balance in all 
 accounts between all the laborers and all the 
 material was paid for in cash by charging labor 
 twice the cost of goods which included this cost 
 of capital. 
 
 The debt created, was caused by not allowing 
 labor to become the owner of the railroad and 
 as our laws require someone to be the owner, 
 debts arise to make some capitalist a present of it. 
 
 When ten billion dollars of bank deposits have 
 been invested by banks and are retired from cir- 
 culation the burden upon cash is enormously in- 
 creased. This extraordinary demand upon cash 
 is made by promises to pay cash in the future on 
 account of the failure in credit to do the work 
 of cash in the present market. 
 
 The stringency of credit does not arise from 
 any deficiency in the quantity of cash, as promises 
 to pay cash in the future seem to indicate, but 
 is a result of a deficiency in the circulation of a 
 quantity of credit to perform the functions of 
 cash the property market requires. 
 
 A banker, or merchant finds each dollar of cash 
 in demand to pay ten dollars in bank loans, not 
 because cash is lacking but because credit fails to 
 perform its functions, and debts would impose 
 the duties of a credit circulation upon the vol- 
 mne of cash. 
 
 The only reUef, so far promised by cmrency 
 
150 Our City Civilization 
 
 reform, is to expand the cash quantity, by an 
 inflation that makes new debts and intensifies 
 the evil, or give relief by a system giving banks 
 the power to inflate bank credit in times of 
 emergency. 
 
 There is a limit to the number of times a cash 
 dollar may be loaned, and this limit is reached 
 by the banker loaning the cash dollar every time 
 he gets a surplus above his cash reserve. 
 
 If the reader will follow the daily routine of 
 banking he will learn that in prosperous seasons, 
 when prices are rising every business man will be 
 making credit money, and banks are taking in 
 more credit every day than they may loan to 
 advantage. 
 
 When this excess in the daily deposits of banks 
 is derived from a rise in the selling price of land, 
 the profit taken from selling land may be used 
 but once in the business of the country. It may 
 employ labor and buy material in building, but 
 when labor must pay twice the cost for goods, 
 each two dollars spent for goods must cancel one 
 dollar of profit made in selling land. 
 
 The growth of the deposit account in prosper- 
 ous periods forces a continual contraction of out- 
 side cash to the bank reserves, and when deposits 
 have all been loaned, and when profits have been 
 cancelled by high prices of goods, the stringency 
 of money suddenly becomes acute, and a panic 
 may result. 
 
The Cash Mabket 151 
 
 Starting with money abundant, and with the 
 currency being inflated by the credit obtained 
 from profits, large gains will be made in every 
 line of business, the volume of business will grow 
 with the inflation of credit it feeds upon. 
 
 After five or six years of prosperous times, the 
 country is suddenly prostrated by a stringency 
 of money, and the money everyone had been mak- 
 ing disappears from circulation. 
 
 When the period of good times comes to a sud- 
 den end, the people anxiously inquire the cause 
 and want to know what has become of the money 
 everybody was making? Why was the situa- 
 tion so suddenly changed from one in which all 
 were anxiously to buy and gain a profit to one 
 where all are anxious to sell and avoid a loss. 
 
 What happened is that the opportunity to 
 make money has disappeared, and is replaced by 
 the certainty that many must lose money who 
 fail to meet the increased demands upon them 
 for cash in paying the increase of debts. 
 
 If we would sell the entire product of labor 
 each year at profitable prices we must have a 
 volume of money in circulation not only sufficient 
 for the commodity market, but a volume of credit 
 doing the work of cash five times as great as the 
 cash quantity. 
 
 The market for both goods and capital demands 
 that the selling price must be twice the cost 
 price so as to distribute past labor to the living 
 
152 Our City Civilization 
 
 generation, and this quantity of money is not left 
 to chance but is self-determined by automatic 
 demands from a cash market and is now to be 
 found in ten billion dollars of dormant bank 
 deposits. 
 
 When goods are selling at twice the cost, the 
 price above cost not only becomes the induce- 
 ment to employ labor, and keep cash in circula- 
 tion, but the profits supply an inflation of credit 
 money that pays the cost of the capital we build 
 and renew. 
 
 When buildings and improvements sell at twice 
 the cost the gain above cost is not only a motive 
 power to keep a quantity of credit money in 
 action five times as great as cash, but the profits 
 upon capital inflate the currency with the only 
 money labor cannot be forced to cancel by the 
 high prices of goods it buys, and on this account 
 becomes the only money from which wages may 
 advance above the cost of living. 
 
Chapter XII 
 THE VALUE OF LAND 
 
 A number of years ago, I expressed the opin- 
 ion that the value of land represented a loss in 
 the demand for labor, the selling price of land a 
 loss in the selling price of labor. 
 
 It was clear to the writer that demand was 
 intimately connected with the circulation of 
 money, that demand was but another name for 
 cash payment, and a loss in demand was but the 
 postponing of payment in cash by creating debts. 
 
 If land was a labor product, and if land put 
 money in circulation by employing labor it would 
 not differ from the other things in the market, 
 and no objection could be made to such prop- 
 erty. 
 
 But land is not produced by labor, it has no 
 cost in labor by which it is entitled to demand 
 money from circulation, and when land imposes 
 its price upon the quantity of money, it may only 
 do so by taking the money belonging to the price 
 of something else. 
 
 The money which represents a demand for land 
 subtracts from the money creating the total de- 
 mand, and as the price of land reduces the money 
 in use, the difficulty in acquiring money to buy 
 153 
 
154 OuB City Civilization 
 
 land must increase as the price of all land ad- 
 vances. 
 
 The contraction in the quantity of money by 
 the demand for land extends the loss in demand 
 to the market for wealth, and the difficulty in 
 acquiring wealth also increases as money con- 
 tracts, as wealth accumulates because wages fail 
 to keep pace with the increase in wealth. 
 
 Any reduction in the circulation of money 
 must either destroy as much money as is paid for 
 land or allow it to come from some other source 
 than the wages of labor, and this other source is 
 found in borrowing money furnished by past 
 labor and charging it up to future labor as a 
 debt. 
 
 As clear and as logical as these propositions 
 appeared to the writer, the explanation of just 
 how the demand for labor is destroyed by the 
 price of land was found most difficult to explain, 
 on account of the connection between the value 
 of land and the circulation of money. 
 
 Money is spent for land, that otherwise would 
 have advanced wages above the cost of living, 
 but it is a different money than that spent by 
 labor for the cost of living, and this fact was 
 where the difficulty in explanation lay. 
 
 When the claim is made that the money spent 
 for land reduces the volume that may become a 
 demand for labor, the question is at once in the 
 mind asking why may not enough money be sup- 
 
The Value of Land 155 
 
 plied for both land and labor, without one supply 
 conflicting with the other. 
 
 The money in circulation cannot be based upon 
 the value of land because money may circulate 
 only when it is based upon the value of labor, and 
 there are two distinct quantities of money based 
 upon labor, a quantity of cash based upon living 
 labor and a quantity of credit based upon the 
 labor of the past. 
 
 The quantity of money based upon the labor of 
 the past is a quantity living labor is not expected 
 to earn, but is to get as a bonus by an increase in 
 wages above the cost of living. It is this quan- 
 tity of gift money the value of land takes from 
 labor by charging labor with a cost of land and 
 taking pay for land in the money that past labor 
 supplies for the benefit of living laborers. 
 
 The inflation of credit money coming into cir- 
 culation from past labor is first used to advance 
 the price of goods, and wages are not allowed 
 to increase above the cost of living from this 
 inflation. 
 
 The increase in price of goods to twice the cost 
 compels labor to supply the cost of capital from 
 the extra charge for consumable goods by which 
 process this inflation is cancelled and retired from 
 the market. 
 
 After a property owner has put credit in cir- 
 culation and it has advanced the prices of goods 
 to twice the cost, the profit in goods will be paid 
 
156 Our City Civilization 
 
 for labor and material in building and this infla- 
 tion comes to its natural end, but if the location 
 is a favorable one the building will sell for more 
 than it cost and on this account it should advance 
 to its standard price of twice its cost but the price 
 of land arises from this fact. 
 
 The circulation of money is not the mere spend- 
 ing of a given sum in employing labor and buying 
 material, but is the repeated spending of a given 
 quantity over and over again which makes up 
 the circulation, and a contraction may occur 
 from using money once to buy land and then 
 using the money the second time in paying for 
 labor and material before it is retired. 
 
 It seems absurd to claim that if A buys a thou- 
 sand dollars of worth land from B, a thousand dol- 
 lars in demand for labor has been destroyed. 
 
 The simple buying of a thousand dollars worth 
 of land, has no effect on demand, as labor does 
 not produce land, the cause of the loss in demand 
 is back of the simple sale. 
 
 In buying land, if A takes money he has made 
 in business and has on deposit in a bank, and 
 buys land from B, who then employs labor with 
 the money, in building, or for any other purpose, 
 this bank deposit will be cancelled, and retired 
 from circulation. The wages of labor must be 
 high enough above the cost of living so as to re- 
 store all the sums cancelled by higher prices of 
 goods and thus keep the quantity of bank depos- 
 
The Value of Land 157 
 
 its restored and equal to the full demands for 
 money. 
 
 When bank deposit money is used in buying 
 land, this money having been cancelled, can only 
 be restored from the profit in selling buildings 
 above cost, and the price of land prevents build- 
 ings from selling above cost. 
 
 If capital sold at its standard price on account 
 of location, the constant reproduction of new and 
 better buildings, selling at twice the cost, would 
 restore all the credit money cancelled by higher 
 prices of goods, for the market would require the 
 price of new building above cost to meet the defi- 
 ciency of labor in paying twice the cost of goods. 
 
 The selling price of buildings is not directly 
 determined by the cost of production but by the 
 rate of interest on money, but this rate is deter- 
 mined by the cost of all production in the general 
 market, without regard to the cost of any par- 
 ticular building. 
 
 The rate of interest on money indicates the 
 time labor must work, at the wages it is paid, to 
 reproduce all accumulated wealth at its price in 
 money, the number of years in other words, one 
 dollar at interest would reproduce a dollar. 
 
 If the rate of interest, for example, is ten per cent 
 and if the total wealth is a hundred and twenty 
 billion dollars, the rate of ten per cent would 
 make the time of reproduction ten years, and 
 the wages this reproduction would demand each 
 
158 OuB CiTT Civilization 
 
 year would be one-tenth of a hundred and twenty 
 billion dollars, or twelve billion dollars a year, at 
 which rate labor in ten years could buy the total 
 wealth. 
 
 There is but one source of profits, and it is the 
 inflation which past labor contributes to the pres- 
 ent circulation, and which present labor is again 
 compelled to earn by being charged with a cost 
 for land. 
 
 This inflation is intended to keep the accumu- 
 lated wealth in existence by paying for its repro- 
 duction from profits, and to keep wages above the 
 cost of living. To keep wealth in existence by 
 making it sell for money wages must advance to 
 the point where labor will be able to buy the 
 annual production at twice its cost. 
 
 The value of land appears on the surface to be 
 due to location, or to favorable supplies of raw 
 material. The income of the owner, appears to be 
 independent from the earnings of labor. But 
 every income in money must come from the wages 
 of labor, for if it is taken as profit, the wages of 
 labor will be called upon to pay for it in higher 
 price of goods. 
 
 The source of income is not difficult to dis- 
 cover, be it interest, rent, or profit, there is no 
 other source than the money received from prices 
 above cost, and without prices above cost all in- 
 come and all wages paid in money would cease, 
 because money would not circulate. 
 
The Value of Land 159 
 
 The selling price of a building cannot rise to 
 twice its cost, unless it has a favorable location 
 where it will pay a higher rate on its cost than 
 the rate of interest on money, and property in 
 land takes advantage of this fact to capitalize 
 all the profit above the rate of interest as a value 
 of the land. 
 
 The ownership of land makes no material differ- 
 ence to the public so long as there is no public 
 demand for the particular land in question, and 
 the cost of land only becomes a damage when 
 it invades the money market and demands a 
 part of the circulation of money by its selling 
 price. 
 
 A mountain of coal, for example, may remain 
 private property, without loss to the pubUc, as long 
 as it is so remote from the market, that its coal 
 cannot compete with the supplies more favorably 
 located, and for this reason it becomes difficult to 
 explain why property in land should undergo so 
 important a change after its useless product has 
 become a useful one. 
 
 A coal mine, as a rule, demands one dollar spent 
 for development for each ton of coal mined in a 
 year, and this rule varies in favor of the best 
 locations where a large annual output will reduce 
 the cost per ton. 
 
 A mine of the better class, producing a half 
 milUon tons of coal a year, for example, will 
 have spent a half miUion dollars on its plant, not 
 
160 OuH City Civilization 
 
 including any cost of land, and the success of 
 the mine will depend upon the market price of 
 coal in relation to the cost of production. 
 
 Suppose the profit, derived from the selling 
 price is twenty cents a ton, and having a pro- 
 duction of half million tons a year, the profit 
 of twenty cents a ton will be twenty per cent on 
 each dollar of cost of capital. 
 
 If the interest on money in the coal territory 
 is ten per cent, every dollar paid as cost on this 
 mine will earn as much interest as two dollars 
 in other investments, and will allow the selling 
 price to advance to twice the cost. 
 
 But favorably located coal lands of this descrip- 
 tion are not plentiful, so the owners of the best 
 locations for coal mines will find people with 
 money to invest bidding up the price of such land, 
 as the only way open to secure a gain above the 
 ordinary rate of interest on money, and the price 
 of land will rise until it takes all the margin in 
 the price of capital above its cost. 
 
 The dividends paid upon the capital of this 
 coal mine come from the sale of coal, and come 
 from the price of coal above cost and therefore 
 cannot be taken from the wages of labor that are 
 represented by the cost. 
 
 When the dividends upon capital come from 
 selling prices above cost, what difference will it 
 make whether such dividends are paid upon the 
 capitalized value of land, or upon the price of 
 
The Value of Land 161 
 
 capital above cost, either of which is called an 
 unearned increment? 
 
 The difference will be discovered in the law 
 regulating the quantity of money by a standard 
 price of the labor product. If the gain above cost 
 is taken by a rise in price of land the quantity 
 of money will be reduced, but if the gain is taken 
 by a rise in price of labor above cost the quan- 
 tity of money will always balance the rise in 
 wages. 
 
 When it appears to make no difference if a 
 ten per cent dividend is paid on a price of land 
 or upon a price of capital above cost, the opinion 
 is based upon the theory that the money paid 
 as cost of capital is returned in paying dividends. 
 
 The investor seems to be getting a return of 
 his money from dividends, but as a matter of 
 fact, the original sum of capital is never reduced 
 by paying dividends, and a return of the invest- 
 ment demands a sale of the capital, and it is with 
 this return of capital the price of land interferes. 
 
 The relation the price of coal bears to the value 
 of capital is to determine the rate of profit upon 
 which its value is based, and upon which the vol- 
 ume of capital money depends. 
 
 The rate of profit above the rate of interest, 
 is a device of nature to secure the inflation of 
 money by which wealth will be distributed as 
 fast as it accumulates. 
 
 When the price of land abaorba ihe price of 
 
162 Our City Civilization 
 
 capital above cost it destroys this inflation of 
 money by taking the profit once in the rise in 
 price of land, and then it is cancelled by higher 
 prices of goods, and cannot return by selling such 
 capital at twice its cost. 
 
 If capital was allowed to sell at its standard 
 price of twice the cost, the profit from the sale of 
 capital, would continually reproduce the quantity 
 of money to distribute wealth as fast as it was 
 reproduced, and the demand and supply of money 
 would be equal to the demand and supply of goods 
 and wealth. 
 
 The continual reproduction of capital would 
 have the same effect in keeping a quantity of 
 secondary money in active use as the continual 
 production and sale of goods keeps a supply of 
 cash in active use. 
 
 A short supply of secondary money is tempor- 
 arily offset by borrowing the credit money past 
 labor may supply, and compelling living labor to 
 earn this credit the second time by the high prices 
 it pays for goods instead of labor receiving it as 
 an increase in wages above the cost of living. 
 
 The greater the accumulation of wealth labor 
 is compelled to maintain, the greater becomes its 
 burdens, and accounts for the increase in poverty 
 with the increase in progress, because labor is not 
 paid for the reproduction of wealth. 
 
Chapter XIII 
 
 HIGH WAGES 
 
 Recent investigation, in seeking the cause of the 
 social evil, has uncovered the most appalling low 
 wage conditions among the women workers of the 
 country, and in every state a demand is being 
 made to compel employers to pay a minimum 
 wage, estimated at the least sum upon which 
 labor may live. 
 
 This minimum is said to vary in different parts 
 of the country where investigations have been 
 made, but has never been estimated as less than 
 eight dollars a week. 
 
 In a total of about thirty million laborers, 
 there are five million who receive more than one 
 thousand dollars a year, and another five mil- 
 lion, more skilled than common labor who are 
 paid above the average, leaving a great army of 
 the underpaid numbering about twenty million. 
 
 Twenty million laborers are now being paid 
 less than the minimum asked for. The total wages 
 paid to all labor will be found to be not more 
 than ten dollars a week. 
 
 In the demand for a minimum wage an unex- 
 pected difficulty will be found in employers not 
 
 163 
 
164 Our City Civilization 
 
 being able to get the money, because the market 
 will refuse to take the goods at the prices the 
 increase in wages will demand. 
 
 The minimum wage situation results from the 
 fact that the natural law establishes two wage 
 funds, from two circulations of money, cash and 
 credit, and the human law limits wages to the 
 money circulating only in the cash commodity 
 market. 
 
 With nature supplying money to pay a max- 
 imum wage four times, the present wages of com- 
 mon labor, we allow private property in land to 
 take all the credit from the wage circulation, and 
 propose to restore a part of it by legislation fall- 
 ing upon the employer. 
 
 Employers are now paying all the wages the 
 cash circulation will allow them to pay, and the 
 real situation is the pitiful one of having a wage 
 fund three times as great as the one we use, and 
 stand idly by while property in land is permitted 
 to drive it from circulation, and replace it by an 
 increase in debts that cannot be paid. 
 
 The minimum wage according to natural law, 
 will balance the selling price of goods, and when 
 we refuse to allow credit money to be included 
 in wages we will find there is no escape from the 
 Iron Law of a minimum wage. 
 
 We now pay to labor all the money spent in 
 the commodity market, but we fail to pay the 
 money saved by the accumulation of wealth and 
 
High Wages 165 
 
 deny labor all advantage from two thousand 
 years of civilization. 
 
 We have our labor problem because we will 
 only allow the minimum wage fund to remain in 
 circulation, and permit the price of land to take 
 every dollar of increase from the market as fast 
 as wealth would add it to wages. 
 
 Having only the money in circulation that will 
 pay minimum wages there is reason in the oppo- 
 sition by the employer to a law that would es- 
 tablish wages he cannot collect from the selling 
 price of goods. 
 
 The hiunan law will be found to be powerless 
 in its effort to make black appear to be white 
 in paying wages, in its efforts to enforce a min- 
 imum wage rate regardless of justice demanding 
 that labor should receive all the money provided 
 by laws of natin-e for its benefit. 
 
 The difficulty we will encounter with the min- 
 immn wage will be, that the natural law has 
 already cut this wage into two parts, by the rise 
 in price of goods above cost before the employer 
 is called upon to distribute it, and inequality is 
 multiplied on every side by our failure to allow 
 a corresponding rise in price of capital above cost 
 which will supply the money to make up this 
 loss to labor. 
 
 The employer must pay the higher wages which 
 fierce competition demands from skilled and or- 
 ganized labor, and thus pay an army of ten mil- 
 
166 Our City dviLiZATiou 
 
 lion a rate almost double the average the natural 
 minimum grants for all the workers. 
 
 The attempt to regulate wages by law is based 
 upon the theory that an employer determines the 
 wages of the employe, at least within certain lim- 
 its, and a law may compel the employer to pay 
 a minimum wage as long as it keeps within this 
 limit. 
 
 The profit the employer takes from the price 
 of goods is supposed to give an elastic limit in 
 paying wages, by which he may at least advance 
 them to the minimum. No one asks how the 
 army may be employed that every one will refuse 
 to pay any wages. 
 
 The profit collected from the selling price of 
 goods is now paid in wages to other labor, and 
 it will be discovered that two bodies cannot 
 occupy the same space at the same time if an 
 attempt is made to pay this profit elsewhere. 
 
 This minimum wage fund is not one dealing 
 with sundry employes in certain stores and fac- 
 tories, but will be found to include millions, and 
 the difficulty of finding work at any wages will 
 become an increasing one. 
 
 Where is the money to be found to pay the 
 wages the law demands as a minumum, and if 
 the money may be found belonging to the wage 
 fund every one admits belongs there, why stop at 
 a minimum wage? Wages may go to the maximum, 
 for after the money belonging to labor has been 
 
High Wages 167 
 
 once discovered, the employer will be only too 
 glad to pay it in wages and collect the profits 
 which higher wages will distribute over the entire 
 market. 
 
 Find the money? That is the question for leg- 
 islation to solve. Find the money: and no one 
 will then refuse to pay it in higher wages, but 
 finding the money is just where the statesman 
 backs out of the controversy and insists that find- 
 ing the money is the employer's business, and is 
 not the business of legislators. 
 
 But when legislation decides to make a min- 
 imum wage its business, the employer may well 
 demand that some new source of money must be 
 uncovered before it is possible to obey the law, 
 and the law maker cannot evade this responsibil- 
 ity by merely passing a law saying the wages of 
 twenty million laborers must be increased to a 
 living standard. 
 
 The employer has been finding the money, it 
 is true, to pay the increasing wages of organized 
 labor, but this money was found by passing the 
 increase along and charging it up to the consumer 
 in higher prices of goods, with the result that the 
 law makers are now seeking to protect this same 
 consumer who has had no defence. 
 
 We have come to the end of the chain of pass- 
 ing it along to the consmner by reducing the 
 wages of the lower millions, and by increasing 
 the prices of goods they buy, and the problem 
 
168 Our City Civilization 
 
 of finding the money upon which the pajonent of 
 all wages depend must at least be faced, and 
 solved. 
 
 What we must understand is, that the employer 
 cannot fix the wages he pays, except within very 
 narrow limits, and he does not supply the money 
 paying wages. 
 
 All the money paying present wages is money 
 that was paid in wages the day before, and is 
 expected to be paid the day after, and this sum 
 is carried in prices of goods between one payment 
 of wages and the next payment, and if there is 
 a loss in demand for goods over the entire market 
 there will follow an absolute loss in the present 
 wage fund. 
 
 If it is assumed, for instance, that the employer 
 could pay the minimum the law demands by re- 
 ducing the wages of ten miUion laborers who get 
 more, and if organized labor consented to the 
 change the result would be an increase in the 
 price of land and a lower wage scale for all labor 
 
 There is an outside force taking up every dol- 
 lar that should increase wages above the cost of 
 living, and taking it as fast as credit from new 
 wealth can add it to the supply, and taking it 
 for no advantage to any one, because the increase 
 in the price of land that contracts the circulation 
 of money may be taken by the same increase in 
 the price of buildings above cost, and add it to 
 the money paid in wages. 
 
High Wages 169 
 
 An illustration will explain how the employer is 
 compelled to distribute the money he receives 
 from the selling price of goods and how impossi- 
 ble it is for any employer to fix the rates of wages. 
 
 A retail merchant sells one thousand articles 
 to consumers every day at one dollar each, and 
 the laws of distribution require him to return 
 most of his money back along the line from which 
 the goods were received. 
 
 If the merchant employs ten clerks, and his 
 labor cost is twenty dollars a day, the natural 
 law expects him to retain twice his pay roll from 
 the selling price. 
 
 City delivery will have the next call upon the 
 distribution of the one thousand dollars, and if 
 five laborers at ten dollars a day may be charged 
 for delivering the goods, twenty dollars will be 
 taken on this account. 
 
 Railways may take their part and if they are 
 to be credited with five laborers at two dollars a 
 day, may take ten dollars and ten more for profit. 
 
 The finished manufacturer will come in for a 
 claim based on emplojang a hundred laborers at 
 two hundred dollars a day, and will be paid four 
 hundred dollars, at which point four hundred and 
 eighty dollars will have been distributed from 
 the one thousand dollars collected, leaving a bal- 
 ance of five hundred and twenty. 
 
 The manufacturer who takes up the raw mate- 
 rial, will have a claim based upon a hundred lab- 
 
170 OuE City Civilization 
 
 orers, with a payroll of two hundred dollars a 
 day, and will get four hundred leaving one hundred 
 and twenty for the man who supplies the raw 
 material and who employs thirty laborers, and 
 has a pay roll of sixty dollars a day and takes 
 the remaining one hundred and twenty dollars. 
 
 When the retail price at the top of this pyramid 
 of buying falls below this standard, the common 
 labor employed all along the line will suffer most 
 from the decline in price, on account of the abil- 
 ity of the better paid to shift the loss down the 
 labor line where it is divided into smaller fractions 
 as it is distributed among twenty million com- 
 mon laborers. 
 
 When twice the pay-roll is being taken from 
 retail prices it seems that labor is being defrauded 
 by this profit, but the facts are that the wages of 
 two sets of laborers are included in this money, 
 labor in the capital market as well as labor in the 
 commodity market. 
 
 The investigator may go all around the money 
 collected from the selling price of goods, and he 
 will find it will always balance with the total 
 wages paid, and not a dollar has been collected 
 but is included in the sums paid in wages. 
 
 Shifting this primary wage fund in any manner 
 that may seem pleasing will not increase it, and 
 will not supply the missing funds that disappear 
 from circulation as the price of land is advancing. 
 
 The minimum wage fund cannot exceed the 
 
High Wages 171 
 
 selling price of goods and when prices fall and 
 the market level declines this minimum wage sum 
 will diminish, and a lower minimum will take its 
 place, and many laborers fail to find work at any 
 price. 
 
 The fact to impress on the mind is that the 
 wage fund should not be limited by the selling 
 price of goods, but must be made to include the 
 selling price of the capital labor produces each 
 year selling at twice its cost. 
 
 The price of goods above cost now carries the 
 cost of capital, and one half the minimum wage 
 fund is taken from labor in higher prices of the 
 goods it buys, and money taken by higher prices 
 can never be restored unless it gives three times 
 as much as it takes. Now one dollar in cash is 
 being taken from each two dollars spent for 
 goods, whereas two dollars of credit should be 
 added from which the dollar in higher prices 
 should be taken. 
 
 The minimum wage fund is tied to the maxi- 
 mum fund by building being tied to the labor and 
 material it consumes, and unless the money rep- 
 resented by the selling price of buildings above 
 cost is paid in wages above the cost of living, no 
 money will get into circulation to buy buildings 
 in a cash market and all the money spent for 
 land must come from an increase in debts that 
 cannot be paid. 
 
 Before buildings accumulate there is of course 
 
172 OuB City Civilization 
 
 no building fund by which wages above the min- 
 imum may be paid, and when economists would 
 reduce the labor question to its simplest terms 
 by confining production to the primitive occupa- 
 tions of hunters and fishermen, they lose all the 
 money represented by the accumulation of wealth 
 from which alone wages may advance above the 
 living of a savage. 
 
 The money in the building fund belongs to the 
 wages fund, follows the accumulation of build- 
 ings, and can only be added to wages as buildings 
 are being created and must be reproduced, but 
 this building value is distinct from the value of 
 goods, and is distinct from the value of the labor 
 and material consumed by construction. 
 
 It is only after buildings represent a saving in 
 time to present labor who use them, — saving 
 the time they would have to take to produce 
 them, — -that buildings gain a value in present 
 money. This money which past labor confers 
 on the living is a gift, and as a gift it repre- 
 sents prices above cost, as a gift it represents 
 profits, and as a gift it must increase wages above 
 the cost of living. 
 
 Building money from past labor may only be- 
 come a part of the present circulation by becoming 
 a price above cobt, and on this account it will 
 only appear in buildings so favorably located that 
 the rents or profits from them will pay a rate of 
 profit twice the rate of interest on money. 
 
High Wages 173 
 
 The maximum wage fund will thus be found to 
 depend upon natural resources, by which the gain 
 in injflation from the price of goods will be re- 
 newed and held in circulation by a similar price 
 of buildings, after commodities have been con- 
 sumed, and after the inflation advancing the price 
 of them has been cancelled. 
 
 The selling price of buildings above cost com- 
 pels the building industry to concentrate in 
 towns and cities where the sale of goods at the 
 standard price will provide the great body of 
 consumers who create the density of sales and 
 production which allows the price above cost to 
 become a profit on the capital invested by the 
 dealer or manufacturer. 
 
 When a city is being built labor should find its 
 wages increasing as wealth piles up in buildings 
 and is saved, and the opportunity for employ- 
 ment should expand as more people have the use 
 of this enormous saving, from past labor, which 
 may be spent over and over again as often as it 
 can be paid in higher wages. 
 
 Building is the chief consumer of labor and 
 material, and the building demand should be one 
 of the greatest demands to increase wages with- 
 out adding to prices of goods. 
 
 The money that should circulate in creating a 
 demand for building is a quantity of credit equal 
 to the selling price of buildings in a year, and 
 the annual wages of labor should gain this siun, 
 
174 OuB City Civilization 
 
 just as wages must balance a sum of cash buying 
 commodities every sixty days. 
 
 The annual production of buildings and other 
 capital calls for land upon which to build them, 
 and the land must be so favorably located as to 
 make the capital invested in new building equal 
 in earnings the capital already invested. 
 
 These new buildings are demanded to keep up 
 the demand for labor and material in the build- 
 ing industry, and to have the annual sale of 
 buildings at twice the cost return to labor the 
 money they are compelled to pay for goods above 
 cost. 
 
 The question is, have we the locations upon 
 which to build as continuously as we produce com- 
 modities and material continuously, and are we 
 able to sell the annual building at twice the cost, 
 as we sell the annual production of goods? 
 
 There is practically no limit to the number of 
 building locations calling for changes and new 
 construction every year, the decline in the rate 
 of interest to its lowest point from increase in 
 wealth, has made all building land favorable in 
 location, and has brought every building site 
 within the margin of profitable production. 
 
 It is true that there are great differences in 
 locations for building, but such differences are 
 equalized by the different kind of a building each 
 site will demand and support. One location will 
 demand, and pay rent for a building costing ten 
 
High Wages 175 
 
 million dollars, and selling for twenty million, 
 while thousands of locations will call for buildings 
 costing but ten thousand dollars and selling for 
 twenty thousand. 
 
 The difficulty in building has never been one 
 of finding a profitable location, where the rents 
 will pay twice the cost on a new structure, but 
 it is the cost of land to be paid in advance of 
 building that destroys all the profit in the new 
 building. 
 
 The cost of land takes money the new building 
 should put in circulation and takes it before the 
 building may be commenced, and thus, in taking 
 money in advance of construction it compels the 
 deficiency to be met by a debt. 
 
 When the cost of land takes up the gain from 
 selling buildings at twice the cost before the build- 
 ing has been added to the total wealth, it holds 
 the price of building to cost, and the builder can- 
 not make the same profit as the merchant, and 
 cannot retain the inflation put in circulation by 
 higher prices of goods. 
 
 The entire credit circulation from the labor of 
 the past is thus being cancelled as fast as land 
 is being improved with buildings that permit the 
 price of land to take the price above cost, and 
 where the land allows no more profit in building, 
 the building period ends for that location. 
 
 Every authority on the circulation of money 
 agrees that cash can only circulate by being paid 
 
176 OuH City Civilization 
 
 in wages and as the wages spent for goods, and 
 again paid in wages, but the same authority 
 seems to believe that credit money does not de- 
 pend upon wages for its circulation, but has some 
 mysterious and unexplained way of entering the 
 circulation independent of wages and different 
 from cash. 
 
 The truth is that credit money has a similar 
 law governing it. Credit should come into circu- 
 lation in paying wages for building at a rate twice 
 the cost of living, and the buildings should be 
 sold for this wage money the same as goods are 
 sold for wage money. The circulation of build- 
 ing money depends upon the continual produc- 
 tion and sale of buildings at a standard price for 
 both labor and buildings, the same as the circu- 
 lation of commodity money depends upon the 
 continual production and sale of goods at a stand- 
 ard price for both labor and goods. 
 
 The important fact that five hundred million 
 dollars of bank checks circulate daily; — ^thatthis 
 enormous inflation of money is newly issued and 
 cancelled each day to carry on the business of 
 the country, should make the reader think, for 
 some day this five hundred million dollars may not 
 repeat its buying of the day before, especially if 
 its present circulation is largely a spurious and 
 counterfeit one. 
 
 Every panic and stringency in credit are but 
 the preliminary symptoms of the greater shock 
 
High Wages 177 
 
 preparing under the surface by the pent up forces 
 of civilization. 
 
 When we consider that five hundred million 
 dollars of bank currency is circulating daily in 
 the business of the country we should realize that 
 this money is entirely beyond the control of gov- 
 ernments or banks and is subject to a natural 
 law that may bring on a calamity as disastrous 
 as an earthquake. 
 
 By confining the money paid in wages to the 
 cash circulation, and by allowing debts to accumu- 
 late for all the arrears in money due to labor the 
 civilized world is being charged with some kind 
 of a fearful settlement of its accounts that the 
 bravest man may well hesitate to express. 
 
 Labor is being confined to a small circulation 
 of cash of fifty million dollars a day when the 
 true circulation would allow one hundred mil- 
 lion dollars in bank checks in addition to the 
 fifty million cash. 
 
 How labor may acquire this additional hundred 
 milhon dollars a day should become an interest- 
 ing question for organized labor to discuss. 
 
 Must wages advance first and draw this money 
 into the wage fund, or must property in land 
 release the profit in building first before this 
 money can get into the wage fund? 
 
 The solution of the labor question will work 
 backwards and for this reason the most conserva- 
 tive employer need not be alarmed at the pro- 
 
178 Our City Civilization 
 
 posed increase in wages to four times the present 
 minimum. 
 
 The money to pay the maximum wages allowed 
 by natural law, will force the price of land to 
 become a price of buildings above cost before the 
 employer will be called upon to pay it, and unless 
 he does so pay it, he will lose the profits the 
 higher prices of buildings will distribute over the 
 entire market. 
 
 Fifty billion dollars worth of buildings will have 
 their selling price inflated by the addition of fifty 
 billion dollars of money circulating as cash, and 
 this must be provided for by bank reserves set 
 aside to pay this price on demand. 
 
 With the accumulations of buildings insured at 
 twice the cost, and thousands of locations on the 
 market seeking buildings that cost from ten mil- 
 lion to one thousand dollars the building demand 
 will include the circulation of the building profit, 
 and wages will naturally advance to the maxi- 
 mum where they now belong. 
 
 The total quantity of money will then circulate 
 in a cash labor market, and the land owner will 
 be in the position of a beggar who can no longer 
 live on credit by creating new debts. The land 
 owner will be seeking some builder to convert 
 what is now a land value into the price of a new 
 building above cost, and thus save the value of 
 his land. 
 
 A cash market for all capital as well as for goods 
 
High Wages 179 
 
 will create the following situation in the land 
 market. Where good locations are now improved 
 with suitable building the rents being paid will 
 support a price of twice the cost of the build- 
 ing and allow the same selling price to be ob- 
 tained. 
 
 The only demand to be made upon the owner 
 of a good location fully improved will be to set 
 aside a reserve from the income which will insure 
 the surrender value of the property and to make 
 it worth its price in money on demand. 
 
 Where good locations are not improved with 
 suitable buildings, and where the rents now paid 
 represent a high value for land the owner will like- 
 wise be called upon to set aside a reserve to insure 
 the land value, which he will find he cannot do 
 unless the location is improved with a suitable 
 building. 
 
 This demand from land owners to improve lo- 
 cations and save twenty billion dollars worth of 
 land value will be the first great increase in de- 
 mand for labor coming from the building industry, 
 and its first effect will be to bring up the wages 
 of common labor to the minimum established by 
 natural law. 
 
 Where good locations are now encumbered with 
 old and dilapidated buildings in every town and 
 city, and are held for the value of the land, the 
 change to a cash market will entirely destroy the 
 land market, for no one would then pay the profit 
 
180 OuK City Civilization 
 
 to be obtained from a new building as a cost of 
 land. 
 
 The cash market will destroy the power of land 
 as a preferred creditor in creating debts, and it 
 could give no security for borrowed money. The 
 only security the market will recognize will be the 
 reserve protected ones that insure payment in 
 cash on demand and all future debt payment will 
 be abolished. 
 
 Under the stimulation of a cash market the 
 building industry will take on a new and wonder- 
 ful prosperity, unlike any other in the history of 
 the world, because billions of dollars will be made 
 available for investment that are now tied up in 
 the value of land. 
 
 The limit in the power of labor to build and 
 the limit in the supply of building material will 
 be quicldy reached, with the inevitable result of 
 increasing wages. 
 
 No more buildings may be built in any one 
 year that the surplus labor, not required in the 
 commodity market will create, and the increase in 
 the demand for building over any possible supply 
 will send the price at once to the standard of 
 twice the cost, and the profit in new building will 
 keep up the supply of wage money. 
 
 The present market for twenty billion dollars 
 worth of commodities will then be reinforced by 
 an equal market for twenty billion dollars worth 
 of buildings, and this will so increase the demand 
 
High Wages 181 
 
 for labor, and supply so much more credit money 
 to the cash circulation as to double the present 
 wage fimd. 
 
 Doubling the present wage fund will make labor 
 scarce by taking away from the market many of 
 the women, children and the aged, and will greatly 
 reduce the pressure for employment among com- 
 mon laborers. The total number will fall about 
 five miUion judging from the number of children 
 now at work who are under fifteen years. 
 
 When twenty million common laborers find 
 their wages have advanced from less than five 
 hundred dollars a year to a new minimum of a 
 thousand, the market for consumable goods will 
 gain most of this advance, and a new total in 
 the annual sale of goods will push up the market 
 from twenty to thirty billion dollars a year. 
 
 This rise in demand in the retail market will 
 then be followed by a corresponding increase in 
 demand in the building market, and in this case 
 the increase will be wholly an increase in wages, 
 without a corresponding increase in prices of goods. 
 
 The first rise in wages to the new minimum of 
 a thousand dollars a year for twenty million com- 
 mon laborers will make enormous new demands 
 for building of every imaginal description, in- 
 cluding hotels, stores, theaters, railroads, steam- 
 ships, and everything that millions of people with 
 higher wages will increase the demand for. 
 
 This advance in the retail goods market to 
 
182 Our City Civilization 
 
 thirty billion dollars a year will therefore be fol- 
 lowed by a similar advance in the building mar- 
 ket to an equal sum of thirty billion dollars a 
 year. 
 
 This increase in the demand for building will 
 again double wages, and the natural minimum of 
 one thousand a year will be increased by the max- 
 imum taking its place and average wages will 
 advance to the standard of twice the cost of 
 living and laborers will be paid an average of 
 two thousand dollars a year each. 
 
Chaptbb XIV 
 COMMERCE 
 
 If the reader will call upon his imagination to 
 picture the commerce of the whole world he will 
 be astonished at the changes that have been tak- 
 ing place in a few years without help from legis- 
 lation, and while the people were unconscious of 
 change. 
 
 Agriculture will appear in a new light; all the 
 fields in the world, in every latitude, are merging 
 into a single field which is being cultivated by all 
 classes of people ia all seasons. The products of 
 every climate are coming into all markets with 
 the regularity of manufactured goods, and all 
 changes of seasons in one country are giving way 
 to a stability of crop and of season in fields that 
 covers the whole world. 
 
 Times of recurring famine are being succeeded 
 by times of plenty, and over the whole world 
 there is no such thing as a failure in production. 
 
 The crowding of seasonable crops upon an 
 overstocked market is rapidly becoming a thing 
 of the past, short seasons are disappearing, per- 
 ishable goods are ceasing to become perishable, all 
 fields are imiting into a single field, over the 
 
 183 
 
184 OuE City Civilization 
 
 whole world, and all diiference in season is com- 
 bining into a single season. 
 
 As this uniformity in agriculture is making 
 headway, manufacture is following, and trade is 
 fast becoming world wide and the people are 
 being blessed by a stability in life, by protection 
 from want, and by a universal plenty intended 
 to embrace all mankind. 
 
 Hundreds of millions of the world's population 
 are rapidly sharing in an ever expanding joyful- 
 ness, commerce is spreading everywhere, uniting 
 all nations in one universal brotherhood, by unit- 
 ing all markets in one universal market. 
 
 As this wonderful panorama of the commerce 
 of the world unfolds before our astonished eyes 
 we may well inquire : What wonderful machinery 
 has brought it into existence, while each weak 
 human being has been selfishly busy with his own 
 small affairs? 
 
 The imagination fails when it would picture the 
 cause of this wonderful change brought about by 
 commerce. It is easier for the mind to picture the 
 world in the imagination than to outline a simple 
 machine, and we realize that machinery of some 
 kind is beuig required to carry on the commerce 
 of the civilized world. 
 
 This machinery of commerce is not only be- 
 yond our comprehension, but is as much beyond 
 human control as the weather. 
 
 There seems to be some such natural law over 
 
Commerce 185 
 
 commerce as the law of the weather, on account 
 of the close connection between trade and the 
 seasons. 
 
 Commerce seems to develop a certain stability 
 in order to escape the seasonable changes in trade, 
 and escape the changes of prices depending upon 
 changes in consmnable goods. 
 
 The first protection of commerce develops from 
 manufacture under roofs, where there are no 
 changes of seasons, and no interference by tmfav- 
 orable weather; when manufacture demands cap- 
 ital the value of which again demands a greater 
 stabiUty in commerce. 
 
 Wealth grows in cities in some such manner 
 as forests grow, and buildings are like trees which 
 are protected from the changes of seasons that 
 make growth perennial instead of annual. 
 
 The convenient locations, favoring the growth 
 of forests, where they are protected from the ele- 
 ments, and have been allowed to develop a ma- 
 chinery of structure to immeasurably prolong 
 life, is like the growth of buildings in favorable 
 city locations where the life of the city may only 
 be measured by the life of the nation. 
 
 There are seasons in commerce, like the fitful 
 changes of weather, but there is a machinery in 
 the growth of fixed wealth in cities which is able 
 to resist the unfavorable commercial seasons. 
 
 Commerce created money and in doing so it 
 developed the machinery by which its life was 
 
186 Our City CiAaLizATioN 
 
 prolonged by protecting it against the fluctuat- 
 ing prices of commodities. 
 
 Commerce depends upon the commodities it 
 distributes, and these commodities come to de- 
 pend more and more upon the money wealth 
 supplies by a constant interchange between the 
 money from wealth to the commodity market, 
 and the money from commodities to the market 
 for wealth. 
 
 The life of a tree, like other plant life, depends 
 upon the constant circulation of sap carried to 
 the remote branches and tips of leaves, and re- 
 turning to be renewed at the roots of the plant, 
 and all fixed wealth depends upon a like circula- 
 tion of primary supplies that must return to its 
 roots by creating wealth, upon which all markets 
 are based. 
 
 The stability in the circulation of money is pro- 
 vided by machinery separating profits from prices, 
 and promoting the interchange that carries money 
 from goods to property, and back again from 
 property to goods. 
 
 Commerce is distinct from trade because it 
 includes both processes, including the money sup- 
 plied by production and the money added by dis- 
 tribution, and for this reason commerce should 
 be studied from the standpoint of the value of 
 wealth rather than from the prices of goods. 
 
 Commerce has a money of its own, a money 
 labor is not called upon to earn, and a money 
 
Commerce 187 
 
 outside the forces of production, a credit money 
 based upon accumulated wealth, but it can only 
 circulate as it is included with the money labor 
 is called upon to earn by production. 
 
 The value of capital being based upon credit 
 money is made proof against the changes of 
 prices that are of daily occiurence in the goods 
 market, and this protection is obtained by basing 
 the standard of value upon a rate of interest, and 
 not directly upon the sums paid in wages and 
 spent for goods. 
 
 The rate of interest upon which a hundred dol- 
 lars of value in wealth is based calls for only about 
 six cents from each dollar in the price of goods, 
 and this six cents is half the rate of profit. This 
 gives double protection, once from the decline in 
 price, and again from the decline in profit. 
 
 The fact that money has its origin in commerce 
 may be questioned in favor of the more pleasing 
 theory that trade made its start among a free 
 people, and spread slowly as freedom spread and 
 as the domestic products of a pastoral people 
 were forced to seek exchanges with other products 
 from like people. 
 
 As a matter of fact, however, slavery was the 
 universal form by which labor was first compel- 
 led to produce goods to trade, and shipping 
 with slave labor opened up the first channels of 
 easy communication by which commerce made a 
 beginning. 
 
188 Our City Civilization 
 
 The slavery upon which commerce developed 
 continues to this day, and changes in the form 
 of slavery were brought about by some necessity 
 in the growth of trade, and further advances to 
 freedom will depend upon some necessity of com- 
 merce, and not upon some theory of politics or 
 of humanity. 
 
 In seeking the beginning of civilization we 
 must discover the machinery that created a 
 standard of value upon which commerce had to 
 depend and without which it could not continue. 
 
 People in different countries, although they 
 may be entirely savage, or but slightly civilized, 
 adopt a system of local exchange, or barter suit- 
 able to their condition, and merchants desiring 
 to trade with them are obliged to conform to this 
 domestic standard, and in doing so have created 
 a world wide standard by which the various local 
 systems are computed. 
 
 Each nation has its own money system, and 
 different standards of value would greatly ham- 
 per commerce, had not this difiiculty been over- 
 come by the development of an international 
 merchant currency, into which all separate 
 money systems are convertible. 
 
 In early days when a sailing ship made its ex- 
 change of cargoes by stopping at many ports, 
 and taking a year's time in making a voyage, the 
 danger from loss of ship, from pirates, or mutiny, 
 made it unsafe to trupt any of the precious metals 
 
Commerce 189 
 
 with the ship, and payments were early made in 
 merchants' bills, by firms whose world credit had 
 been firmly established. 
 
 The fact that merchant bills of exchange came 
 into existence before coined money, and the fact 
 that trade created a standard of value before there 
 was a coined standard, are facts commonly over- 
 looked in discussing the money question. 
 
 Credit dates back beyond the introduction of 
 a coined money, and was the cause, and not the 
 effect, of the development of all the coinage sys- 
 tems in the different countries of the world. 
 
 The agents of great mercantile firms buy and 
 sell tens of millions of dollars worth of goods, in 
 markets scattered all over the world without us- 
 ing a dollar of coined money for this purpose. 
 
 Goods bought in every market for shipment to 
 other parts of the world are paid for with letters 
 of credit, or bills of exchange, made equal to 
 cash, or gold by being made payable at some 
 particular time and place. 
 
 Bills of exchange were early made payable at 
 certain maritime cities, in gold and silver of a 
 definite weight and fineness, and when a city hke 
 Venice had established its world credit its mer- 
 chant bills circulated on their own account in 
 enormous volume, and were rarely called for spe- 
 cific payment in gold, because new bills replaced 
 the ones cancelled. 
 
 Precious metals were confined to the duty of 
 
190 Our Citt Civilization 
 
 keeping the volume of credit within proper chan- 
 nels which were determined by the volume of 
 trade, and only such bills as sought to overflow 
 the credit channels were made to return by being 
 paid in gold or silver. 
 
 Entirely too much prestige has been given to 
 the theory that redeeming credit by gold pay- 
 ment limits the quantity of credit by the quan- 
 tity of gold. There is no truth in the theory. 
 
 Credit must have another medium than gold, 
 a medium more desirable than gold. Commerce 
 could never have grown great had it had no other 
 inducement than an accumulation of gold. 
 
 The power behind gold, the power that builds 
 the wealth and commerce of the world, is the 
 commercial power of credit money, a power giving 
 it control over labor by its control over wealth, 
 a power over money that compells labor to work 
 for money instead of working merely to live out 
 an animal existence. 
 
 The introduction of gold did not, and could 
 not, satisfy the commercial demands for a cur- 
 rency. The money of commerce has never con- 
 sisted, to an appreciable extent, of gold coins nor 
 has there been a time when any nation could 
 have conducted its trade with gold payments. 
 
 The introduction of credit currency is the fact 
 of greatest importance in the history of the world, 
 and the next fact of importance to understand 
 is that gold was introduced to assist the circula- 
 
COMMEKCE 191 
 
 tion of credit among the nations more or less 
 uncivilized. 
 
 As the modern world introduced steam and 
 electricity an expansion in trade became neces- 
 sary to take care of the great expansion in pro- 
 duction, and as goods in transit grew in volume 
 and in value a corresponding growth in volume 
 and value in bills of exchange has to accompany 
 them. 
 
 This enormous inflation of credit could not be 
 permitted to go into circulation without limit, 
 and be issued without cargoes of goods to back 
 them, and since bankers cannot become familiar 
 with shipping and with millions of bills for goods 
 in transit, such bills required some insurance that 
 they will be paid and cancelled as each trade is 
 completed. 
 
 To insure the payment of merchant bills, and 
 to prevent the fraudulent issue of them; to have 
 old bills paid before new ones were issued upon 
 the same security, they were made payable in 
 gold, because this metal is universally desirable 
 by every goverrmient in contracting debts, and 
 in insiu-ing the payment of debt. 
 
 The money of any country depends upon two 
 forces, its labor and its commerce, and commerce 
 depends upon a force representing past labor. 
 The fact regarding any currency system is this 
 fact, that it is based upon labor present, repre- 
 senting the circulation of cash, and labor past 
 
192 OuE City Civilization 
 
 representing wealth and the circulation of credit 
 currency. 
 
 The failure in the commerce of any country 
 may be traced to some failure in the relation be- 
 tween past and present labor growing out of 
 profits. To secure profits debts have been intro- 
 duced based upon past labor, and the gain in 
 time represented by past labor has been used to 
 secure a similar gain in time in paying present 
 labor for the production of capital. 
 
 When time payments were extended from the 
 conmodity market where they were used to in- 
 flate the currency, to the capital market to post- 
 pone the payment for labor and material, debts 
 were introduced that began to supplant credit 
 and to entirely destroy its circulation. 
 
 Credit, coins the value of goods, or property, 
 in money to allow time for distribution. Having 
 credit in circulation there is a double value out- 
 standing, one in the property and another in the 
 quantity of money, and this situation demands a 
 standard price of double the cost to make room 
 for the value of the credit circulation. 
 
 The value in present labor must be measured 
 in the cost, and as all money must be paid in 
 present labor, prices and wages must be advanced 
 when it becomes necessary to double the quantity 
 of money measured in the cost of production. 
 
 When debts are introduced, room must be 
 made for the value of the debt, and something 
 
Commerce 193 
 
 must give way in this perfect balance of the com- 
 mercial market, credit gives way to make room 
 for debt, and debts increase imtil they entirely 
 supplant credit, or until they supplant as much 
 of it as industry can stand. 
 
 The introduction of credit is for the benefit of 
 present labor, and it must raise price and wages. 
 The introduction of debt is a contraction of the 
 same money that changes the distribution of 
 wealth to its concentration. 
 
 When markets are embarrassed with a surplus 
 of low cost goods that cannot find buyers at 
 home, it becomes necessary to seek buyers in 
 other markets, to call upon commerce to take a 
 surplus from one point and replace it with goods 
 from other points. 
 
 To a market situation glutted with goods that 
 cannot be sold an inflation of money from com- 
 merce comes like a special providence to relieve 
 poverty by an embarrassment of riches, for not 
 only is the siu3)lus taken away, but a new mar- 
 ket for goods is opened with like new markets 
 at the other end of the trade, and money is pro- 
 vided by selling one surplus to buy another. 
 
 But one surplus cannot be sold to buy the 
 other unless the two dollars representing the 
 goods and money are balanced by prices of twice 
 the cost, and this money circulates because goods 
 are sold for half credit and half cash, at twice 
 the cost in each market. 
 
194 Our City Civilization 
 
 This inflation seems to be of doubtful benefit 
 to labor since its chief effect is to provide work 
 at each end, to make a market for goods by 
 allowing commerce to continually take up half 
 the money in circulation as a profit. 
 
 Thus when goods are sold at twice the cost, 
 the merchant gets the inflated credit he puts in 
 circulation in profits which will only allow labor 
 to buy half as much as they sell, or the difference 
 must be made up in some other way. 
 
 If the laborers at the two ends of the trade are 
 each to buy all the goods, produced and each to 
 sell for only half enough money when they sell 
 at cost, and then to buy at twice the cost, how 
 will money circulate to buy both products? 
 
 The time pa5Tnents introduced allow capital 
 to employ labor in building, and as money is 
 taken from the selling price above cost it is spent 
 for labor and material in building, and thus the 
 money to pay twice the cost gets into circulation 
 by having the cost of capital included in the sell- 
 ing price of goods above cost. 
 
 At this point, the situation in the commercial 
 market, has been balanced, laborers have a mar- 
 ket for all the goods they can produce at twice 
 the cost from an inflation added by commerce, 
 which is redeemed by labor in building capital and 
 includes the cost of capital as a cost of goods. 
 
 Thus the circulation of money is completely 
 balanced in this primary market, but capital in 
 
Commerce 195 
 
 its many forms has been added to commerce, and 
 miless this capital has a value in money and will 
 sell for more than it cost commerce will lose all 
 the profit obtained from the sale of goods. 
 
 The value of this capital will be based upon its 
 cost price and commerce has a basis of value for 
 a new inflation of credit money, and this infla- 
 tion must put twice as much money oub as the 
 cost represents. 
 
 Commerce must have a market for all the 
 capital labor is able to produce for two reasons, 
 first to allow labor to cancel the surplus money 
 buying goods in excess of the money paid to 
 produce them, and second to save the profit by 
 having a market in which capital can be sold. 
 
 Capital cannot get a value imtil after it is 
 being used in production, and imtil it will save 
 as much time for present labor, as its value 
 represents. 
 
 This time is saved by the fact that capital in 
 railways, factories, houses, stores, is being used in 
 getting goods to consumers, and in producing 
 a greater quantity than could be otherwise 
 produced. 
 
 But this time saved is past labor time, and 
 when a quantity of credit money is put in cir- 
 culation it must represent working time by past 
 labor, and the credit money must be redeemed 
 in living labor by the distribution of wealth. 
 
 When a quantity of secondary credit gets in 
 
196 OxJH City Civilization 
 
 circulation buying capital it will only circulate 
 by being redeemed in present labor, and it is 
 essential that no more of this secondary credit 
 be paid for capital than can be so redeemed. 
 
 In the primary commercial market gold pay- 
 ments are reUed upon to take up any excess of 
 credit failing to be redeemed by labor in buying 
 goods, but in the property market gold cannot 
 be used for this purpose. 
 
 In the commodity market settlements are made 
 every sixty days and are made in cash, hence it 
 follows that any excess in credit circulation must 
 be cancelled at once or prices fall, but in the prop- 
 erty market the distribution of wealth makes the 
 settlements by a fixed price that is not expected 
 to fluctuate and which depends upon a rate of 
 interest. 
 
 This rate of interest gives a year's time to 
 make settlements, and any failure in settlement 
 is balanced by an extension of time by introduc- 
 ing debt, and not by a change in the selling price 
 of capital. 
 
 The balance in the demand and supply of money 
 is a balance by which all money in circulation 
 is redeemed in present labor, and when past labor 
 adds a volume of credit to the supply, this money 
 can only be redeemed by increasing wages so as 
 to include it. 
 
 This increase in wages from past labor must be 
 an excess in wages above the money to buy goods 
 
Commerce 197 
 
 at twice the cost, and unless capital sells for twice 
 its cost no money in excess of the sums buying 
 goods can get into circulation in the labor mar- 
 ket. 
 
 Capital secures its value of twice its cost by 
 saving time to present labor, and to do so it 
 must secure locations where the low cost in pro- 
 ducing or seUing a great voliune of goods will 
 allow the profit taken from the price of goods 
 to become a value of capital equal to twice its 
 cost. 
 
 When capital seeks such locations it finds pri- 
 vate property in land demanding a price for the 
 land that will take a part of the price above cost 
 secured from the higher rate of profit, and this 
 money mxist be redeemed by labor in the annual 
 settlements in the capital market. 
 
 This price for land prevents the annual pro- 
 duction of capital from selling at twice its cost, 
 and stops the inflation of money where the com- 
 modity left it, with the cost of capital settled by 
 prices of goods above cost. 
 
 This being true the entire cost of land, has no 
 money that may be settled for in labor, and the 
 settlement must be postponed by extending the 
 time of money saved by past labor and by 
 promising that future labor will redeem the 
 money paid for land. 
 
 When wealth has been encumbered with all 
 the future payment it will support, no money 
 
198 OuK City Civilization 
 
 can come into the market buying capital, and as 
 capital will not be produced imless it can sell 
 for more than it cost the entire commerce of the 
 country will be destroyed when the limit in debt 
 had been reached. 
 
Chapter XV 
 
 THE FAILURE IN BANKING 
 
 Scattered over the United States, in its towns 
 and cities, are twenty-five thousand banJcs and 
 trust companies that are expected to become the 
 local mint to supply every commxmity with all 
 the money it can use. 
 
 Tens of thousands of banking institutions have 
 the power of suppljdng the coimtry with fifteen 
 bilUon dollars or bank deposit currency to re- 
 place the half of the cash they have taken to 
 insure the payment of deposits. 
 
 There are no facts in the coimtry, so awful to 
 contemplate as the facts relating to the failiu'e 
 of twenty-five thousand banks to do the work 
 they are designed to do, failing to perform their 
 proper functions they are driven to support a 
 monstroxis system of gambling and of speculation. 
 
 Bankers will assert they have httle or no power 
 over deposits, and are not responsible for the wide 
 spread stringency in credit that is fast destroy- 
 ing the market for wealth, that when they invest 
 deposits in permanent loans they do so because 
 they have no other outlet for them. 
 
 The market in which the individual should in- 
 vest his savings is one in which he can recover 
 199 
 
200 Our City Civilization 
 
 his money as easily as when it is in a bank, but 
 this very market is destroyed for him by the 
 banker when he invests the depositors' money in 
 permanent loans, and thereby takes from circu- 
 lation the credit cm-rency that would otherwise 
 have created a cash market for capital, at a stand- 
 ard price. 
 
 The banker destroys the opportunity of the 
 depositor to make investments for himself by 
 taking away the circulation of credit, and con- 
 verting it into an increase of debt which vainly 
 promises to restore the missing currency in the 
 future. 
 
 Substituting debts payable in the future for 
 bank credit that is payable on demand, is to cre- 
 ate an enormous stringency in the circulation of 
 credit which brings about a corresponding con- 
 centration of banking power by the control it 
 gives to a few banks over a limited volume of cash. 
 
 With twenty-five thousand banks in the United 
 States one-half the banking power has been con- 
 centrated to the banks of two cities, New York 
 City and Chicago, and to about two hundred 
 banks, less than one per cent of the total number. 
 
 If Boston and Philadelphia are added to the 
 half New York and Chicago control, the arid 
 waste of country from which credit has been 
 drained will make its woeful appearance in the 
 loss of markets for wealth outside the cities in 
 question. 
 
The Failure in Banking 201 
 
 The banks in New York and Chicago control 
 eight hundred miUion dollars out of a total of 
 sixteen hundred million of cash — for only half the 
 total cash is available for banking purposes — and 
 two cities have secured for a few of their banks 
 one-half the banking power of the entire country. 
 
 While the banks in New York and Chicago 
 control one-half the bank cash of the country, 
 they do not control one-half the deposits but 
 have the most profitable part of them, and are 
 only limited in this direction by the greater pro- 
 portion of cash reserve they are compelled to 
 retain on account of their more profitable business. 
 
 To keep their enormous deposit accounts liq- 
 uid and have their loan accounts payable on 
 demand the banks of the two cities use deposits 
 from all over the country to buy the securities 
 upon which they loan deposits. 
 
 The pretense of having a cash market for se- 
 curities, on the New York Stock Exchange is 
 false on its face, for the banks furnish the only 
 market by supplying money to buy stocks in the 
 form of loans. 
 
 The stock broker is the agent of the bank, and 
 has his customer protect the bank by a ten per 
 cent margin on all loans to buy stock, and this 
 margin becomes the four hundred million doUars 
 of cash deposits that other banks maintain as a 
 part of their reserve with the banks in the two 
 central reserve cities. 
 
202 Our City Civilization 
 
 The banks in the Stock Exchange business play 
 with the cash reserve of outside banks a if they 
 were chips in a game of stud poker, as though the 
 central bank held all the concealed cards, and 
 by creating a fever of speculation over the coun- 
 try by advancing the prices of favorite stocks 
 they are able to gather in the stakes deposited 
 with them as fast as the country can make good 
 the loss. 
 
 When a customer outside the city of New 
 York buys a security on the Exchange, he must 
 buy a draft on New York to pay his margin, and 
 the draft is but a check by his own bank upon 
 its deposit with the bank in New York, and as 
 the deposits of banks are thus cut into by spec- 
 ulation they must be restored as fast as the finan- 
 ciers may gather in the stakes by manipulating 
 prices on the Exchange. 
 
 The news sent broadcast over the country that 
 the pubhc is buying stocks on an advancing mar- 
 ket or that the public is selling them when the 
 market is falling is fake gambling news. 
 
 When the public is tempted into the market 
 by rising prices "insiders" feed the public with 
 all the stock it can find money to buy, know- 
 ing that prices are booked, for a ten or twenty 
 point advance as they sell them to the public. 
 
 The same shares are sold over and over again by 
 a system of loans, but never parting from the 
 securities, and they sell the market cold when 
 
The Failuee m Banking 203 
 
 they have exhaiisted the cash in the reserve from 
 outside banks. 
 
 When the market finds its top in this manner, 
 the customers who bought on the rise may have 
 hundreds of milhon dollars to their credit on the 
 books of the banks, provided they may " cash in" 
 at the high prices and discharge their loan to the 
 bank. 
 
 The paper profits carry an eighty or ninety per 
 cent loan at six per cent, which the bank allows 
 the broker to carry at three per cent, and when 
 the outsider attempts to mdoad, he finds prices 
 begin to crumble, because all the men heavily in 
 debt to banks are forced to unload on one another 
 to pay their debts, there being no actual cash 
 market for the securities they are forced to sell. 
 
 If the unloading does not proceed fast enough 
 to satisfy .the financiers in charge of prices, and 
 margins are not being wiped out as fast as is 
 deemed necessary, the speed of imloading is facili- 
 tated by a device that is very effective. 
 
 When the speculative accoimts hang fire, the 
 call loan rate advances. The first effect is to hurt 
 the broker and induce him to sell out his customer 
 because his profit in carrying his customer by 
 charging him a higher rate than he pays to the 
 bank is destroyed by the advance in the call 
 loan rate. 
 
 As the call loan rate advances prices fall, and 
 the fall can be regulated to a nicety by an ad- 
 
204 OuK City Civilization 
 
 vance — -without notice — in a rate of interest that is 
 being collected from a billion dollars in loans. 
 
 As the price falls, it halts at every point where 
 it wipes out the profit of some customer who 
 bought at that level and who may not be able to 
 supply additional margin before the fall in price 
 is aUowed to continue. 
 
 After the hquidation is complete, the same 
 people will be found to retain the stock that had 
 been sold many times on margin, and the finan- 
 ciers recover their stocks as they secure the mil- 
 lions of dollars that have been tempted to gamble 
 on a "sure thing game." 
 
 Bankers loan a billion dollars on stock exchange 
 collateral in New York, and for this purpose brok- 
 ers are given credits at banks that stagger the 
 imagination. 
 
 Perhaps the greatest commercial credit in the 
 world is that of a firm of merchants in Paris who 
 keep fifty miUion dollars on deposit to take care 
 of an enormous business extended all over the 
 world, but this firm would be a mere "piker" 
 when compared to the wonderful credits that the 
 banks of our great cities extend to stock brokers 
 for purely gambling purposes. 
 
 When commercial credits are being restricted it 
 would be well to inquire why a few firms of brok- 
 ers are given more gambling credit than all the 
 merchants of the country require for legitimate 
 business. 
 
The Failure in Banking 205 
 
 When stocks are forced on the market to be 
 sold the real stock market is disclosed, for one 
 loan may be paid only by a new loan that forces 
 the man seeking the loan to buy the stock again 
 at the lower price to get one loan to pay another. 
 
 The market on the New York Stock Exchange 
 is a pawn broker's market, its great firms of stock 
 brokers are mere pawn brokers who are in the 
 game to cheat their own customers. 
 
 The treasury supplying money to buy stock on 
 margin is the deposit accoimt supplying loanable 
 funds, and no market could be more treacherous 
 than one so maintained. 
 
 When business slows down, when depositors of 
 banks fall back upon their accumulations as they 
 need them, bank deposits begin to decline and 
 the effect upon the stock exchange is most dis- 
 astrous, and tremendous volumes of securities 
 held on margin are thrown upon the market to 
 allow bank depositors to draw, and use a very 
 small part of their own money in banks. 
 
 In ordinary times when securities must be actu- 
 ally sold for cash, a sale of a few hundred shares 
 will result in a heavy decline in the quoted price. 
 If the market must furnish the money to actu- 
 ally pay for securities, the banks can supply no 
 other money than from their cash reserves, which 
 they dare not lose, and thereby expose their deposit 
 account by leaving it unprotected. 
 
 When half the banking resources of the entire 
 
206 OuB City Civilization 
 
 country is held by the banks of two of its prin- 
 cipal cities, the corporations gaining the favor of 
 the great banks, have an enormous advantage, not 
 only in the ease with which they secure funds, but 
 in the high price maintaiaed for their securities in 
 all the speculative markets, to which the banks 
 are therefore, committed. 
 
 Go where you will over this broad land, inves- 
 tigate the markets for property of every descrip- 
 tion, for billions of dollars worth of wealth 
 seeking buyers in vain, and you will discover 
 that the markets for a very great part of the 
 fixed wealth of the country have already been 
 destroyed. 
 
 The profits derived from operations on the New 
 York Stock Exchange cannot be fully appreciated 
 unless the fact is made plain that bank connection 
 with the Stock Exchange makes security factories 
 out of favored banks, and they not only control 
 vast supplies of credit, gathered from over the 
 country, but they dictate the terms upon which 
 new capital may be issued, and the price at which 
 it may be sold. 
 
 Bankers, and their associates can combine many 
 companies into one, and can manufacture enor- 
 mous quantities of new securities as they cancel 
 old ones by combining small corporations into 
 great systems of industry, and separate railway 
 systems into railway kingdoms. 
 
 No new capital is required from the banks for 
 
The Failure in Banking 207 
 
 this purpose, the stock exchange system being 
 sufficient for it allows banks and financiers to use 
 other people's money for this manipulation with- 
 out obtaining their consent. 
 
 In any exchange of securities they simply buy 
 the old ones on margin at stock exchange prices 
 they dictate, and which fall as they withdraw 
 support from them, and sell the new ones on mar- 
 gin, at the higher level they also dictate and 
 support until they are unloaded on the public. 
 
 The difference between the so-called cash mar- 
 ket on the stock exchange, and a natural cash mar- 
 ket for capital, is precisely the difference between 
 a cash market in legitimate lines of business and 
 the shops of pawn brokers, where goods are 
 pledged the second time for money that cannot 
 be secured in any other way. 
 
 The basis of the stock exchange is a pawn- 
 broker basis, and the exchange is maintained as 
 a pawnbroker's clearing house, where second hand 
 goods are pledged to brokers to secure money 
 with which to gamble on speculative prices the 
 business itself creates. 
 
 A genuine market, in which securities are sold 
 for cash on demand, would not require banking 
 support, but on the contrary, would restore bank- 
 ing to its proper functions, and would allow banks 
 to devote their funds to supplying the business 
 of the country with its required volume of money. 
 The burden of supporting the price of capital 
 
208 Our City Civilization 
 
 should fall upon each corporation having securi- 
 ties to sell and place the responsibility for values 
 upon the corporation issuing the security, and 
 not upon a bank it may hire for that purpose. 
 
 Bankers as a class have the most mistaken 
 notion concerning credit. They look upon it as 
 having come into existence for their benefit in 
 making loans, instead of understanding that 
 credit must supply the country with its required 
 expansion of currency. 
 
 The banker looks wholly upon the profit side 
 of his business in making loans, and it is im- 
 material to him whether his loan account inflates 
 the currency by giving business access to credit, 
 or whether it will contract the circulation by an 
 increase in debts that cannot be paid. 
 
 When one-half the banking power of the United 
 States concentrates in New York and Chicago, 
 it does so because one-half the market for wealth 
 from over the entire country has been concen- 
 trated there. 
 
 The control over credit exercised by banks in 
 two principal cities enables them to dictate the 
 selling price of all wealth by holding the limited 
 volume of loanable funds in their own hands, and 
 they determine, on the stock exchange what 
 property may be valuable and what may become 
 worthless by taking away its market. 
 
 This fact is being more and more conclusively 
 demonstrated all over the country by the increas- 
 
The Failtjke in Banking 209 
 
 ing difl&culty found in selling any property but 
 that quoted on the New York Exchange. 
 
 Wealth in forms that should confer commercial 
 power on its owner by giving him credit is fast 
 losing all its power, and price is ceasing to have 
 any other meaning than that quoted on the New 
 York Exchange. 
 
 Every business man who must borrow money 
 is being forced to buy securities having a stock 
 exchange value, because such property is rapidly 
 becoming the only property that can be sold for 
 money, or used as collateral. 
 
 Visit the ten thousand towns and cities of the 
 country, and note the increasing business dis- 
 tress that follows the failure to convert the prop- 
 erty of the average citizen into money, and the 
 consequent loss of credit from this source. 
 
 If the banking institutions of New York and 
 Chicago did actually provide a cash market for 
 the billions of dollars in securities quoted on the 
 exchanges of the country, they might offer such 
 an exceptional service as an offset to the exten- 
 sive gambling they introduce and encourage. 
 
 But the claim of supplying a cash market for 
 billions of dollars worth of securities is in itself 
 most contemptible fraud in a long catalogue of 
 frauds which the stock exchanges impose upon a 
 suffering public. 
 
 A capital market in which there is no standard 
 price, one where prices fluctuate wildly at every 
 
210 OuB City Civilization 
 
 slight demand for actual money, is a fraud on its 
 face, and the pretense of cash payment is intended 
 to protect banks from the gambling in securities 
 and was never intended to supply a market for 
 them. 
 
 Outside the special stocks, in which the public 
 is encouraged to gamble, the banks take no inter- 
 est in stock exchange prices, and the fact that a 
 billion of dollars of the liquid capital of the coun- 
 try is being tied up by a few gambling specialties, 
 practically destroys the market on the exchange 
 itself for the greater part of the securities quoted 
 there. 
 
 Banks cannot from the very nature of banking 
 furnish a market for any thing, but must depend 
 upon money furnished them from the business of 
 the country, and they cannot sustain the prices 
 of quoted securities without destroying their use- 
 fulness in all other directions. 
 
 When the owner of securities is actually re- 
 quired to sell them for money to be used in the 
 business of the country, he is confronted by a 
 violent drop in the quoted price, because the 
 money he would take away is money that must 
 be held by the bank at any cost for, its taking 
 away, would leave the deposits without money to 
 pay them, and the bank would be bankrupt. 
 
 Bankers are unable to liquidate their deposit 
 accounts in cash, because banking is not expected 
 to do so, and deposits are naturally liquidated by 
 
The Failure in Banking 211 
 
 the circulation of bank checks, and by the dis- 
 tribution of labor products. 
 
 Bankers in New York and Chicago would, 
 perhaps, dispute the proposition that they could 
 not liquidate fifteen per cent of their deposit lia- 
 bilities without causing the failure of most of 
 the banks of the country, and as evidence of the 
 liquid character of their assets they will point 
 to their stock exchange collateral which they 
 claim may be sold at its quoted price on demand. 
 
 Selhng for money on demand is a very impor- 
 tant consideration, but in this case it is an empty 
 phrase. The cash market on the exchange, works 
 like a charm when there is no cash demand and 
 when sales are all margin sales. 
 
 Selling securities for cash on the New York 
 Exchange is like requiring the blue sky over the 
 Hudson River to bring in the supply of cash, 
 for there is no money available from any discov- 
 erable source. 
 
 Banks may point to their twenty-five per cent 
 cash reserve as a guaranty of liquidating the 
 loans based on exchange collateral. 
 
 But when this collateral is offered for sale it 
 will be found that the only treasury of money 
 upon which it may draw is the reserve cash for 
 all other cash is in the hands of the masses of 
 the people in small sums. 
 
 One-half of the cash reserve of the banks in 
 New York and Chicago is also the cash reserve 
 
212 OuE City Civilization 
 
 of other banks, scattered all over the country, and 
 the moment any real demand for cash makes 
 its appearance the outside banks, feeUng the 
 same denland will call upon the reserve banks to 
 return the cash intrusted to them for just such an 
 emergency. 
 
 When a real market for securities is needed it 
 cannot be found because the money that should 
 have made a market has been driven from general 
 circulation, and all the remainder of the spare 
 credit is tied up by speculation. 
 
 An actual cash market for all property, except 
 land, is the first great step in reform this country 
 must take if it is to be saved from the fate of 
 other civilizations. 
 
 A genuine cash market demands as its first 
 consideration that every bank be confined to the 
 business for which it was intended, and its cash 
 resources be used for the benefit of its depositors 
 and customers in legitimate business enterprises. 
 
 Corporations must be required to protect the 
 value of their own securities, as banks are required 
 to do with their deposits. 
 
 Every corporation must keep on hand a reserve 
 to meet the demands upon the market by its secur- 
 ities, so that any of them may be converted into 
 their value on demand at a price fixed by a 
 standard rate of interest. 
 
 When a corporation sells its securities to the 
 public it draws upon the bank deposits of the 
 
The Failure in Banking 213 
 
 country, and converts them into capital of the 
 corporation. 
 
 The question need be asked, upon what theory 
 of finance is a corporation allowed to issue secur- 
 ities having an uncertain value? Why are they 
 permitted to take bank deposits payable in cash 
 on demand and convert them into securities that 
 give no guaranty of returning the investors' 
 money? 
 
 Why are corporations permitted to do with 
 impunity, a thing that would send a banker to 
 the penitentiary for attempting to do, allowed to 
 rob their depositors, and security holders, in 
 broad daylight, fully protected by law in so doing? 
 
 Is a bank deposit sacred in law only in a 
 bank, and is it entitled to no protection when the 
 same deposit has been taken to the treasury of a 
 corporation. Is the obligation to pay a depositor 
 on demand to become no obligation when the 
 deposit gets into the treasury of a corporation? 
 
 The prevailing cause of the unequal distribu- 
 tion of wealth is so plan that a blind man may 
 see it. The law is to blame that permits corpora- 
 tions to take bank deposits, payable in cash on 
 demand, and convert them into securities having 
 no obligation to be paid, and having an uncer- 
 tain value. 
 
 Thousands of millions of dollars have been 
 changed from banks and become the property of 
 the most prominent of oiu- financiers more immor- 
 
214 OuK City Civilization 
 
 ally than if they had been taken by a thief who 
 ran some risk of the law. 
 
 Corporation securities are permitted to find their 
 value in the open market — upon what theory? 
 Is the theory based upon the false opinion that 
 supply and demand fix the selling price of capital 
 as it does the selling price of butter and eggs? 
 
 There is no variety in the demand for capital 
 as there is for commodities, no difference in cap- 
 ital of different kinds as in goods of different 
 kinds. Capital of every description has a standard 
 price determined by a standard rate of interest 
 on money. 
 
 When a corporation sells its securities and ex- 
 changes them for bank deposits, it taps the only 
 supply of credit in the country upon which the 
 business of the country depends for nine tenths 
 of its currency. The obligation to pay such de- 
 posits in cash on demand is more imperatively 
 needed when they accumulate as securities of cor- 
 porations by billions of dollars, than was the case 
 when the deposits were in the custody of banks. 
 
 If corporations were required to keep the de- 
 posits they accept for investment as sacred as 
 banks are required to keep them, ten billion of 
 now dormant bank deposits would be in circula- 
 tion making a hundred billion dollars worth of 
 corporation securities payable in cash on demand, 
 and the world would have escaped all the evils of 
 unequal wealth, its poverty, vice and crime. 
 
Chapter XVI 
 ECONOMIC FREEDOM 
 
 The historian of the future will record the age 
 we live in as an age distinguished by a new birth 
 of freedom, and a new enthusiasm for liberty. 
 
 History will describe a new crusade for econ- 
 omic freedom following the discovery that polit- 
 ical freedom proved a failure, except as it was a 
 necessary step in the upward march toward the 
 economic liberty of the worker. 
 
 The people of the United States, more so than 
 in other countries, are firm in the belief that social 
 and pohtical problems were forever solved when 
 negro slavery was abolished, and they do not sus- 
 pect that a more debasing slavery may have taken 
 the place of black slavery. 
 
 When slavery was abolished the behef in polit- 
 ical freedom became a creed to be worshipped. The 
 poor were looked upon as being hopelessly lazy 
 or ineflBicient, and this creed stimulated the pride 
 of the successful as poverty increased among 
 millions of our people. 
 
 The rapid increase in wealth in a decade dem- 
 onstrated that some men, at least, were not as 
 great as they were believed to be, and were not 
 as efficient as they were lucky. 
 215 
 
216 OuE City Civilization 
 
 Great fortunes of unearned wealth springing 
 up over night in every community made the 
 people ask one another "where did he get it" and 
 when the source of "getting it" was inquired 
 into it was followed by the most astonishing 
 discoveries. 
 
 A doubt then began to favor the unfortunate, 
 who, it was discovered, may not have had the 
 opportunity that political freedom was supposed 
 to guarantee them. 
 
 A horror began to grow in the souls of men as 
 they began to realize that the increasing vice and 
 crime might be traced to unjust property laws 
 by which a small class of the people were being 
 favored with increasing fortunes of unearned 
 wealth and other people were made to suffer on 
 this account from poverty, vice and crime. 
 
 No one can study the history of the bloody 
 struggle carried on against the ruling property 
 classes to secure political freedom without real- 
 ising the danger confronting the people of our 
 own times from more deadly warfare against the 
 same property classes in the effort to secure the 
 rights of labor to the wealth of the world. 
 
 Looking backward to the civil war that abol- 
 ished black slavery, no sensible person may now 
 doubt the fact that it was wholly uncalled for, 
 by the slavery issue it involved. 
 
 In the South a few great planters owned most 
 of the slaves and owned the property depending 
 
Economic Freedom 217 
 
 upon slave labor, and they were a small part 
 of the total population, and slave labor was a 
 business failure before the war to abolish it was 
 undertaken. 
 
 It should now be clear, to every student of 
 om- history that even the great planters and slave 
 owners would have been greatly benefited, had 
 the slaves been peaceably emancipated. 
 
 But as few as were owners of slaves, they were 
 entrenched in social and political power, and 
 they used this power most brutally and tjTannic- 
 ally to force an unwilling majority of the people 
 into a civil war for what a few of the people be- 
 lieved to be their particular and peculiar personal 
 rights. 
 
 Slavery is doomed to perish all over the civi- 
 lized world by the development of scientific 
 methods, by invention and discovery, and by the 
 growth in trade. 
 
 Trade and production was fast becoming world 
 wide, and free labor was developing in cities 
 where business conditions made slave labor im- 
 possible.. Free labor and slave labor could not 
 compete, and the struggle for economic liberty 
 beginning with black slavery remains to be 
 fought out. 
 
 The war to free the slaves was a crime against 
 humanity waged in the interest of an insignifi- 
 cant class of property owners and it should now 
 be clearly understood that it was corrupt politics 
 
218 Our City Civilization 
 
 North and South that made the civil war inevi- 
 table and made it a shameful conflict. 
 
 Slavery was called a peculiar Southern insti- 
 tution, and was sacred in the law of the land, a 
 law that embraced all other property, and all 
 other people, who were not slave owners. 
 
 The institution of slavery required particular 
 defense from its owners, and as a result concen- 
 trated political power in their hands because 
 other property did not call for particular defense. 
 
 A man who sought public office of any kind in 
 the slave territory, or who aspired to any posi- 
 tion of trust, or sought to be prominent in its 
 social or business affairs, dared not raise the ques- 
 tion of liberty for slaves, or have an opinion that 
 could be construed to be hostile to the interests 
 of the slave owners. 
 
 In the coming struggle for the economic freedom 
 of the workers of the world a few great property 
 owners will likewise seek to throttle all opinion 
 that they believe to be hostile to their peculiar 
 right, however unjustly the property may be 
 held, and however wrongfully it may have been 
 acquired. 
 
 If the class that now controls the main part 
 of our great wealth finally secure a like propor- 
 tion of political power as was secured by the 
 slave owners they will again plunge the country 
 in a civil war between capital and labor, a war in 
 which the freedom of the negro cost but a stain 
 
Economic Freedom 219 
 
 of blood compared to the streams that will flow 
 in the murderous hate of the coming struggle. 
 
 Today the same ostracism follows any leader 
 who would raise the banner of economic liberty 
 for the working man, and in legislative halls any 
 reform is discussed, except the sacred right of 
 the private owner to levy tribute upon labor. 
 
 Trusts have been abolished in law, but the 
 power over labor the owner of the trust enjoys 
 has not been interfered with, but, on the con- 
 trary, becomes more firmly entrenched as the 
 law defines the trust territory, and the value of 
 trust property is increased as the trust is com- 
 mitted to legal and judicial control. 
 
 The slave power of the South was entrenched 
 behind the sacred constitution of the United 
 States, and it was in support of this sacrosanct 
 law that a civil war was required before a line of 
 it could be changed, or a line be added to it that 
 might abohsh slavery. 
 
 Today a monstrous system of unjust and un- 
 earned wealth has its refuge behind the sacred 
 constitution, and the defenders of iniquity hide 
 in its entrenchments, and the champions of legal 
 wrongs mount the walls of legislative assemblies, 
 and are advertised as the champions of liberty 
 and the defenders of our sacred constitution. 
 
 The modern industrial system is more firmly 
 entrenched by law and by court decisions than 
 was the slave power, and the men who seek polit- 
 
220 Our City Civilization 
 
 ical, or judicial preferment must be careful to 
 have it understood that they stand for "The 
 preservation of American institutions within con- 
 stitutional limitations." 
 
 Had the slave owners of the South claimed for 
 themselves all the benefits the world derived from 
 the cotton crop, and had they ignored the work 
 of the slave, they would have been less arrogant, 
 and less ignorant than the modern millionaire 
 who so claims all credit for our industrial ad- 
 vancement, and who is of the opinion that the 
 masses would starve unless millionaires provided 
 work for them. 
 
 The assertion is being everywhere made, and 
 spreads imchallenged, that we have our men of 
 great riches to thank for the political hberty we 
 now enjoy, and the rights of property under our 
 laws, not only for the development of wealth, 
 but also for the application of law to human 
 affairs. The claim is made that such men are 
 only taking a small part of the vast sums their 
 superior wisdom confers upon the human race. 
 
 Southern planters who owned three million 
 slaves refused to entertain the idea of free labor, 
 to discuss, or permit anyone over whom they had 
 power, to discuss slavery, although the entire 
 South was enormously benefited by the abolition 
 of slavery. 
 
 Today the owners of enormous fortunes are blind 
 to the impending conflict for economic freedom 
 
Economic Fkeedom 221 
 
 that will reduce their personal and political 
 power to the status and power enjoyed by every 
 man under the laws of God. 
 
 Outside the poUtical state, and independent 
 from it, the economic state is developing according 
 to natural laws, and the changes which have 
 been forced upon the body politic by the wars 
 of the world, and by the development of civil- 
 ization have been changes made necessary by the 
 growth of the economic state, as it forces the 
 political state to give way to it. 
 
 Few men, so far, have been able to realize 
 this growth of the economic state, whereby nat- 
 ural laws of trade and of distribution rise supe- 
 rior to political institutions, and compels them to 
 give way to business institutions. 
 
 Few men realize that the organization of so- 
 ciety is a natural one, and not political. Herbert 
 Spencer has pointed out to us "The whole of 
 our industrial organization, from its main out- 
 lines down to its minutest detail has become what 
 it is, not simply without legislative guidance, 
 but in spite of legislative hindrance. 
 
 "While each citizen has been pmrsuing his in- 
 dividual welfare and none taking thought about 
 the division of labor, or indeed " conscious of the 
 need for it, the division of labor has yet been 
 ever becoming more complete. It has been doing 
 this slowly and silently scarcely anyone having 
 observed it until quite modern times. 
 
222 OuK City Civilization 
 
 "By steps so small that year after year the in- 
 dustrial arrangements have seemed to men just 
 what they were before, by changes so insensible 
 as those through which a seed passes into a 
 tree— society has become the complex body of 
 multidependent parts we now see, and this eco- 
 nomic organization,, mark it, is the all essential 
 organization. If these most conspicuous and 
 vital arrangements of the social structure have 
 arisen without the devising of any one, we may 
 be tolerably certain that the less important 
 arrangements have similarly arisen." 
 
 Few men understand that modern degeneration 
 expressed by poverty, vice, crime and insanity is 
 a result of the difficulties we impose upon labor 
 when the opportunity to gain unearned wealth 
 allows men to be driven to merciless tasks, and 
 to be insufficiently nourished. 
 
 Max Nordau on this point has the following 
 to say: "In the last fifty years, the population of 
 Europe has not doubled, whereas the sum of its 
 labors has increased ten fold, in part even fifty 
 fold. Every civilized man furnishes, at the pres- 
 ent time from five to twenty-five times as much 
 work as was demanded of him half a century ago. 
 
 "This enormous increase of organic expendi- 
 ture has not, and cannot have, a corresponding 
 increase in supply. 
 
 "Europeans now eat a little more and a little 
 better than they did fifty years ago, but by no 
 
Economic Freedom 223 
 
 means in proportion to the increase of effort 
 which today is required of them, and even if they 
 had choice food, in the greatest abxmdance, it 
 would do nothing toward helping them for they 
 would be unable to digest it. Our stomach could 
 not keep pace with the brain and the nervous sys- 
 tem, the latter demands more than the former are 
 able to perform. And so there follows what al- 
 ways happens when great expenses are met by 
 small income — first the savings are consumed and 
 then comes bankruptcy." 
 
 What may be said, in the light of modern sci- 
 ence of the reformers, newly awakened to a knowl- 
 edge of social wrong, who go about the world 
 inciting punishment, and new torture for the vic- 
 tims of our injustice who now bear all the 
 torments unequal wealth imposes. 
 
 Will not the well meaning, but blind milk and 
 water reformers learn that nature is now offering 
 relief to its patient sufferers by drimkenness, vice, 
 suicide and crime, that death is held off by laws 
 of nature as long as life may be made endm-able 
 and that to add to poignant torture by crusades 
 against so-called vices is but to goad the victims 
 of social injustice to madness. 
 
 What can be more illogical and degrading than 
 to join innocent amusements with the same amuse- 
 ments that become brutal, and to class all of 
 them as crimes so as to secure laws to punish 
 vice in particular instances. 
 
224 OuB City Civilization 
 
 Vice is personal, and it can only be punished 
 by the laws of nature that visit the vicious with 
 swift and unalterable distress when the human 
 organism has been outraged, and law has been 
 found to be powerless in checking the inroads of 
 vice upon a nation. 
 
 This age is becoming more tyrannical from 
 laws— which seek to regulate personal conduct — 
 than any age in the history of the world, and 
 it may soon become unbearable in this par- 
 ticular and the masses may go to the other 
 extreme. 
 
 Religion is no longer designed to comfort man- 
 kind but has become an instrument to reform 
 him, and to do so by the most insistant detec- 
 tiveism that ignorance has ever invented to 
 annoy and pester humanity. 
 
 What defense may Lord's Day Alliance re- 
 formers, social vice detectives, gambling inquis- 
 itors, betting and boxing prohibitors, and a host 
 of other seekers after notoriety make for them- 
 selves, as they go about looking into every nook 
 and corner of a city, seeking to enforce their own 
 peculiar cult they call virtue, and to make crim- 
 inals in law out of nine-tenths of the people so 
 as to employ the other one-tenth to spy upon 
 them through keyholes and listen behind doors to 
 surprise them in illegal conduct. 
 
 Cannot these well-meaning, but misguided peo- 
 ple, be made to understand that underlying all 
 
Economic Freedom 225 
 
 the sins they complain of is the crime of unearned 
 wealth which they do not condemn. Can not 
 they learn that there are forms of personal slav- 
 ery that meet their approval in industry more 
 degrading than many vices and crimes? 
 
 Will this class of reformers never learn that 
 drink may be a blessed reUef nature offers to 
 escape a condition that would be more injiu-ious 
 to the race, that prostitution may be an open 
 road by which a tortured womankind escapes 
 something even more degrading. 
 
 When the body and stomach, heart and nerves 
 are called upon to endure superhuman trials the 
 individual will seek relief in his only time for 
 rest, in Sunday amusements, in more or less in- 
 nocent indulgences, in beer and tobacco, or hu- 
 manity will go down step by step from amuse- 
 ments naturally innocent and harmless to those 
 increasingly vicious and criminal. 
 
 It was Ruskin, who said, one hundred men 
 talk for every man who thinks, and one hundred 
 men think for every one who sees. 
 
 It is this lamentable failure in seeing the fun- 
 damental evils of our civilization that threatens to 
 destroy society in the coming conflict for eco- 
 nomic freedom. 
 
 The world is being deceived by a class doctrine 
 of the successful, by a shallow, depraved and 
 debasing theory oi human sin. 
 
 Pulpit and press, judge aad jury, uphold the 
 
226 Our City Civilization 
 
 teaching that millions are depraved because they 
 belong to a corrupt and vicious class of mankind, 
 are criminals because they are born brutes, un- 
 fortunate women become public prostitutes be- 
 cause they love and cherish iniquity. 
 
 Unearned wealth is responsible for the base- 
 ness of our ideas of life and our idea of God, and 
 for the contemptible class who band themselves 
 together to glorify themselves as paragons of ex- 
 cellence and to defame the rest of the human fam- 
 ily as being basely inefficient and vicious. 
 
 Why has John Ruskin, with his keen artistic 
 insight placed so great a stress upon seeing by 
 asserting it is a thousand times more difficult 
 than talking only one in a thousand talkers is 
 able to see the most simple truth lying at his 
 feet? 
 
 Ruskin may have had in mind the modern 
 army of talkers that is busy night and day in 
 reforming the conduct of other people, and which 
 is as persistant and as ineffective for good as 
 flies or mosquitoes and is equally insufferable and 
 annoying. 
 
 Suppose, when black slavery became an issue 
 in this county, a host of Lord's Day Alliance 
 advocates, social purity promotors, tobacco and 
 drink reformers, vice, gambling and boxing in- 
 quisitors had invaded the South, like a plague 
 of grasshoppers, to help the slaves by reforming 
 them, so they would be more content with their 
 
Economic Freedom 227 
 
 condition, and so their conduct would be more 
 pleasing to this better, purer and holier class. 
 
 Imagine this army of peep-hole reformers sup- 
 pressing Simday amusements among the slaves, 
 cards and craps, singing and dancing, smoking 
 and drinking, spying to discover illegal cohabita- 
 tion in every cabin, and sending slaves to prison, 
 tell us what good the world would have received 
 from their hands? 
 
 Had the South conceded slavery to have been 
 the one vital issue, had it admitted that virtue, 
 and moraUty was not possible among an en- 
 slaved people, and that exceptions to this rule 
 could not be used as a defense of the system, then 
 slavery and all the evils it was responsible for 
 would have been speedily abolished. 
 
 The reformers could then have combined to 
 first abolish the fundamental wrong from which 
 vice, poverty and crime proceeds instead of try- 
 ing to salve the wounds and hide the sickening 
 sores of civilization. 
 
 The struggle between capital and labor in oin* 
 own time presents the vital slavery issue over 
 again, and the real issue must be brought into 
 the white light of public discussion, or it will 
 have a bloody issue in a civil war. 
 
 The slave owner could see nothing in liberty 
 but his own personal comfort. Freeing the slaves 
 was to him but the extension of slavery to include 
 his own family without any benefit to the slave, 
 
228 OuB City Civilization 
 
 and his family was to be required to do for them- 
 selves what before was done for them by the labor 
 of others. 
 
 The capitalist, likewise can see nothing in the 
 liberty the workman demands but an extension 
 of the wage system so as to include his own fam- 
 ily, when they will be required to earn the money 
 by their own labor that is now earned by the 
 labor of others. 
 
 Herbert Spencer has wisely observed that hu- 
 manity has never chosen the right way until 
 after it had exhausted all possible ways of going 
 wrong, and so modern reform trifles with every 
 palliative for fear the true solution may require 
 a surgical operation. 
 
 Capital and labor is fast forcing upon this 
 country a dispute that may end in civil war un- 
 less free discussion may avoid that dreadful re- 
 sult, and let us ask what may prevent this much 
 to be desired free discussion? 
 
 When the slavery issue was raised it was the 
 fear of the planter that he would have no labor, 
 and slaves would desert his fields; that seemed so 
 self evident there was no real discussion of the 
 question most vital to the slave owner and the 
 idea seems to have never been entertained that 
 free labor would work for the planter to better 
 advantage than slave labor. 
 
 In the dispute between capital and labor, cap- 
 ital is possessed with precisely the same fear as 
 
Economic Freedom 229 
 
 had the slave owner, while the laborer does not 
 understand how liberty can mean anything to 
 him unless it takes the employers property for 
 his benefit. 
 
 The issue needs to be stated clearly so it may 
 be as clearly discussed, and it is this statement of 
 the issue that so far has never been brought be- 
 fore the public. 
 
 The labor leader, on his side, is imable to dem- 
 onstrate to his followers how they are to secure 
 the economic liberty the development of civil- 
 ization is forcing them to fight for, and he tells 
 them they must take over the property of the 
 employer. 
 
 The capitalist, learning from experience that his 
 labor is being paid all the market will admit 
 agrees with the laborer that the issue is one that 
 demands the surrender of his control over capital, 
 and being certain of the inefficiency of labor in 
 this particular, will resist the new demands as the 
 southern planter resisted the liberty of the slaves. 
 
 The real issue if properly discussed, would be 
 reduced to a question of profits, which the capital- 
 ist is supposed to take from the wages of labor, 
 and arovmd this slender sum, like the former value 
 of slaves, a disastrous civil war may result. 
 
 If a simple discussion could reduce profits to 
 where they belong, it would disclose the fact that, 
 whatever profits may have to do with the prob- 
 lem, as profits from slave labor had to do with 
 
230 Our Citt Civilization 
 
 slavery, the issue in itself cannot concern this 
 insignificant factor. 
 
 Profits are at the bottom of the controversy- 
 it is true, but not according to the fears of the 
 capitalist for their property, nor according to the 
 hope of labor to secure the property from them. 
 
 What labor demands is not property itself, but 
 the increase in wages that property should secure 
 for them, as wealth increases wages should ad- 
 vance, and if this advance is secured the mere 
 question of who owns, or who does not own prop- 
 erty is not a material issue in the case. 
 
 Let us suppose the issue has been fought out 
 by a civil war, and we look back upon the issue, 
 as we now may look back upon slavery, and we 
 discover that profits will have increased as wages 
 advanced, any other conclusion would be contrary 
 to common sense. 
 
 What is the real issue, then, between capital 
 and labor? It is that capital shall relinquish its 
 exclusive claim to all the wealth derived from 
 past labor, and in doing so open wide the doors 
 of opportunity so the living generation may be 
 able to share in the wealth derived from the past, 
 so that the wages of the living may be increased 
 by the money past labor contributes to the pres- 
 ent supply. 
 
 The issue between labor and capital does not 
 mean that every one must become a laborer, as 
 slave owners feared becoming slaves, and it does 
 
Economic Fbeedom 231 
 
 not mean that profit is to be destroyed and that 
 property is to be rendered valueless. 
 
 But it does mean that the entire domain of 
 more than a hundred million dollars worth of 
 wealth, that is now a closed shop to labor shall be- 
 come an open shop and shall increase wages — 
 the issue is not that owners must become laborers 
 but that laborers must have the opportunity to 
 become owners. 
 
 Profit is the key to the door through which the 
 wealth derived from the past is distributed to 
 the living, and this key of profit has been used by 
 law to lock the door from the past in the face of 
 miUions of living workers, and the true reform must 
 open the door and allow wages to be increased by 
 the money past labor contributes to living labor 
 for its benefit, and which was not contributed 
 for the exclusive use and benefit of the privileged 
 class that now controUs it. 
 
Chapter XVII 
 THE REMEDY 
 
 More than twenty years ago, when in despair 
 at not finding a scientific solution for the most 
 simple fact in the social world, I suddenly made 
 a discovery that opened a new world of inquiry. 
 
 I had, at that time vainly been trying to imravel 
 the truth about competition, and was everywhere 
 defeated by my failm-e to analyze that apparently 
 simple thing called Value. 
 
 Whichever way I turned in seeking an expla- 
 nation of the most simple fact, Value interposed 
 a stone wall past which it was impossible to 
 proceed, and Value seemed to say "Discover me I 
 hold the key to the solution of every public question 
 and of every social fact, however insignificant." 
 
 I had asked repeatedly what is the cause of 
 my everlasting failure to find any real solution 
 of the most simple fact in the social world, facts 
 that surrounded me on every side, and one day 
 the answer came back to my mind "Value is the 
 Cause." 
 
 Value the Cause? What a revelation. Value 
 the Social cause, then Value must be the cause 
 of this street light, just now appearing above my 
 
 232 
 
The Remedy 233 
 
 head, let me think, value the cause of this elec- 
 tric light — not electricity, but value. 
 
 What is this electric light that its cause should 
 just then be discovered? It is an electric light, 
 yes, but it is more it is also a social light, a light 
 placed at a particular place of a certain candle- 
 power, to burn for a stated time, and for a 
 definite purpose. 
 
 Electricity answers for the physical cause, it is 
 true, but this physical cause stops answering my 
 questions at the very point where the things I 
 want to know about social light begin to assert 
 themselves. 
 
 Will value explain the social facts connected 
 with this street light? Why it is placed over the 
 intersection of the street, instead of being placed 
 at some other place? Why it burns so many 
 hours and then is allowed to go out? Why it is 
 of such exceptional brilliancy? 
 
 The answer is simple, direct and unmistakeable, 
 for value explains all these social facts, and to 
 make assurance doubly sure, if value the cause is 
 removed the light will disappear, if the value sup- 
 plying this arc light fails, and it cannot be paid 
 for it will not be allowed to continue. 
 
 That moment was an important one to me, and 
 could I have looked into the future, and have 
 known the power an idea possesses to enslave a 
 man I would not have been as elated as I remem- 
 ber to have been. 
 
234 OuE City Civilization 
 
 From that day I had a new companion, that 
 kept closer to me than my wife and children — 
 a companion whose name was Task, and who 
 never allowed me a moment's relief. 
 
 Task was always at my side, night and day, at 
 work or at play, to wake me from a deep sleep and 
 offer a suggestion, to hm'ry me over some work 
 it regarded as inferior, to engage in its more 
 insistant demands. 
 
 Task seemed to begrudge the time required to 
 get support for my family, and how I hated Task 
 at times and feared him, but 'how I was always 
 compelled to work. 
 
 The long inquiry imposed by Task, extending 
 over more than twenty years is now about com- 
 plete, in its main outlines. I feel I will now escape, 
 and with the publication of this book will be 
 released. 
 
 The solution imposed upon me by my task- 
 master was as much a surprise to me, as it may 
 be to the reader, and so simple as to almost appear 
 ridiculous — a cash market — a proposition that 
 it now appears should have been self-evident. 
 
 When I discovered Value to be the economic 
 cause I began a search for truth that was hid- 
 ing in a crystal maze, where facts reflected thou- 
 sands of faces for every angle, and for every wind- 
 ing in the tortuous path. 
 
 I knew, only that Value was the Primary Eco- 
 nomic Cause, and the relation between this cause, 
 
The Remedy 235 
 
 and a world full of its effects had to be worked 
 out before the most simple social fact could be 
 correctly explained. 
 
 This new truth, that Value was the Social 
 Cause, made the new theory disagree on the few 
 points the old theories had accepted as fundamen- 
 tal, and made the new differ in every particular 
 from all other writings on the subject. 
 
 There was no guide in the new investigation, 
 the new task implied working in the dark, push- 
 ing slowly toward the light as one principle was 
 discovered at a time. 
 
 So deeply was the Remedy, and final solution 
 buried in the maze of conflicting facts, that I did 
 not suspect the true solution of social problems, 
 until two years ago, as when coming closer and 
 closer to it year by year I finally stvunbled upon 
 it. 
 
 The true remedy was difficult to discover be- 
 cause commodity producers are limited by nat- 
 ural laws to buying back but one-fourth of the 
 commodity product, and this limit, without re- 
 gard to the rate of wages creates the surplus upon 
 which all progress depends for its accumulation of 
 wealth. 
 
 The required quantity of money that allows all 
 the people to share in the benefits of civilization 
 depends upon the surplus money derived from 
 seHing three-foiu-ths of the commodity product 
 at twice the cost, and this selling demands a cash 
 
236 Our City Civilization 
 
 market for all property, except land, to hold the 
 money in circulation, and pay it in wages. 
 
 The quantity of credit money that now fails to 
 circulate, is the volume that should be buying 
 capital in a cash market where it would increase 
 wages without increasing the prices of goods, and 
 would thus supply money for investment by sup- 
 plying money that was not consumed. 
 
 The cost price by which money is being con- 
 stantly consumed must become the basis of the 
 price above cost by which money that is not con- 
 sumed will represent the wealth that is not 
 consumed but must be distributed. 
 
 By making the selling price double the cost 
 price the bonus money added to the circulation 
 by prices above cost can only be paid to the 
 people who work, and paid to them in proportion 
 to the cost of the work they do, and this protects 
 labor in its claim upon the money earned by the 
 labor of the past which is controlled by the owner 
 of property. 
 
 How simple is the final solution, that all wealth 
 shall sell for its value in money on demand, all 
 wealth except land, and sell at a standard price 
 that regulates the quantity of money required in a 
 cash market. 
 
 This discovery has not only made the problem 
 a simple one, but also made it easy to solve, in 
 spite of centuries of injustice and oppression. 
 
 This solution will at once reUeve the business 
 
The Remedy 237 
 
 world, now harrassed by debts that threaten to 
 overwhelm it with universal ruin and bankruptcy, 
 and as debts disappear the flood of money that 
 has been driven from circulation will be restored 
 and create a new world for business greater than 
 the mind can now imagine. 
 
 Think of the torments to be abolished by a cash 
 market, first the rehef from debt, and the needs 
 of money that debt alone is now able to supply; 
 then the relief from organized labor with its 
 demands for constantly higher wages, while the 
 distress of the common laborers at low wages is 
 forcing drastic laws upon the employer. 
 
 From this Pandora's Box, of multiplied evils 
 threatening to destroy capital, it must soon beg 
 for mercy and appeal for relief from debts that 
 cannot be paid and must increase, and from 
 wages that cannot be paid and must likewise in- 
 crease. This rehef demanded and the way out 
 is something to pray for. 
 
 There is a way out for both capital and labor, 
 a broad and open road leading to peace and 
 plenty, to good will and mutual imderstanding, 
 a way of the natural law in the circulation of 
 money. 
 
 The intimate connection between property in 
 land and the circulation of money has never been 
 brought to the attention of reformers, and a 
 change in this relation will solve all our social prob- 
 lems by giving us a cash market where all property 
 
238 Our City Civilization 
 
 except land will sell for its value in money on 
 demand. 
 
 The interference of property in land with the 
 circulation of money and with the distribution 
 of wealth has made it appear that there are three 
 fundamental reforms instead of but one. 
 
 The three world wide reform movements are, 
 Socialist, or capital reform. Single Tax, or land 
 reform, and Inflation, or money reform. 
 
 The sociahst holds that labor is enslaved be- 
 cause it has lost control of the tools of produc- 
 tion it is now required to use, that the introduc- 
 tion of machinery, and the factory system has 
 been the direct cause of the helplessness of labor. 
 
 The laborer seeking to better his condition by 
 higher wages is confronted by the capitalist who 
 owns the machines without which the socialist 
 claims labor is helpless, and for this reason the 
 laborer must accept wages that will only support 
 hfe, or strike and organize. 
 
 The remedy the sociahst proposes is to take 
 away the control of capital from the present 
 owners and lodge it with the government; their 
 reform demands that the private ownership of all 
 the tools of production, transportation and ex- 
 change be abolished. 
 
 The land reformer basis his claim for a solution 
 of the labor problem, upon the fundamental nat- 
 ure and the common need for land, denying the 
 right of any one to own land as private property, 
 
The Remedy 239 
 
 insisting that land differs fundamentally from the 
 things that may be rightfully owned. 
 
 The land reformer will not agree with the 
 sociaUst that the private ownership of capital 
 has anything to do with the main problem, and be- 
 lieves that competition will settle the capital ques- 
 tion when the land question has been disposed of. 
 
 Money reform is based upon a remarkable 
 generalization by Proudhon, who held if labor 
 could always be sold for its value in money on de- 
 mand, and if property could be sold for its value 
 in money on demand, the tyranny of government, 
 arising from property would end; natural rela- 
 tions would establish themselves among men, the 
 liberty of each would be secured by respecting 
 the liberty of others. 
 
 According to Proudhon all government by 
 force would disappear imder the influence of a 
 market where values of property were convertible 
 into money, that government by force would be 
 replaced by government of consent, public opin- 
 ion would replace the written law, and become 
 the most effectual punishment for wrong. 
 
 Because this theory of Proudhon advocated the 
 utmost personal hberty, and because he proposed 
 to secure hberty by a system of free banking, the 
 movement for money reform has been identified 
 with philosophical anarchism. 
 
 Each of the three great reform movements have 
 a foimdation of truth, but each of them ignore 
 
240 Our City Civilization 
 
 the truth in the other, laying the claims of each 
 open to the attacks of the others, and the world 
 suffers while reformers abuse each other in de- 
 fending their respective theories, and denoxmcing 
 the theories of the opponents. 
 
 Socialism rightfully claims that capital owes its 
 continued existence to the laborers of the country, 
 who are wrongfully being deprived from any of 
 the greater wealth it allows them to produce. 
 
 But the money reformer wants the socialist to 
 explain what the ownership of capital has to do 
 with labor receiving its share of wealth and how 
 public ownership is to secure labor in its rights to 
 the accumulation of capital. 
 
 The money reformer asks the socialist to ex- 
 plain what is now preventing labor from receiv- 
 ing its claim upon capital and wealth in higher 
 wages without regard to who owns, or who does 
 not own property. 
 
 The money reformer is right, when he says the 
 wage question is fundamental, and unless the pro- 
 posed reform will increase wages, so as to give 
 labor all it is entitled to from this civilization, 
 there is no basis to it. 
 
 The money reformer is right when he claims 
 the proper circulation of a natural quantity of 
 money will bring about all the adjustments in 
 oiu- social affairs the progress of the world requires, 
 and any scheme failing to advance wages to this 
 point is doomed to fail. 
 
The Remedy 241 
 
 The socialist insists however we now have a 
 quantity of money that enables a small class to 
 take wealth from labor, and this money should 
 be sufficient to distribute wealth to labor, and 
 the capitalist system prevents this circulation. 
 
 The land reformer disputes both, by declaring 
 that if a few men own all the land, they may 
 compel the landless to move off the landlord's 
 earth, or pay all gains above a living for the priv- 
 ilege of not being pushed off the earth. 
 
 The others reply that the public ownership of 
 land' will not restore the rights of labor to the 
 privately owned railroads, factories and the great 
 wealth in cities, that the land supporting the 
 powerful wealth is an insignificant part of the 
 total area, and the need for this wealth cannot 
 be satisfied by any possible supply of land. 
 
 Land reform bases its theory upon the mistaken 
 claim that land is a factor in production, and has 
 an intrinsic value which is the basis for the value 
 of commodities, but land on the contrary has no 
 intrinsic value, nor any value but that it obtains 
 from labor by destroying a part of the circulation 
 of money. There are no two factors in produc- 
 tion but only one and that one is labor, and the 
 value of labor. 
 
 The inflationist insists that both the socialist 
 and the land reformer deal only with problems 
 of production, the socialist claiming that the 
 capitalist system prevents the increase of produc- 
 
242 OuB City Civilization 
 
 tion by the adverse ownership of its tools, and 
 the land reformer that production is prevented 
 by the adverse ownership of land. 
 
 The money reformer rightfully contends that 
 there is no issue of production before society, 
 that more goods are being constantly produced 
 than can be sold; that when all markets are glutted 
 with unsold goods it is fatal to argue for reforms 
 that will increase the supply without first making 
 a market for the goods now seeking markets in 
 vain. 
 
 Money is what everybody needs, and money 
 is what everyone must have at any cost if they 
 are to share in the overflowing production of the 
 world says the inflationist, and the want of mar- 
 kets is but the visible evidence of some failure 
 in the supply and the circulation of money. 
 
 The other side hold that money has not the 
 importance the inflationist would give it, saying 
 we have now a volume in circulation sufficient 
 for the present owners of wealth, a quantity that 
 permits the unequal distribution, and should be 
 able to distribute the same wealth equally. 
 
 Pity the poor politician, as he seeks to discover 
 the reform the people want, the people who are 
 thus divided into three main and hostile armies, 
 each wanting something, the others dispute. 
 
 Into this aagry contention comes a motley 
 assortment of other dissenters, having various 
 organizations behind them, multiplying the de- 
 
The Remedy 243 
 
 mands for legislation only to increase the gen- 
 eral confusion, while each day the distress of the 
 people becomes more acute. 
 
 True reform must imite the single truth in a 
 single movement separating the truth from the 
 error which is now dividing the reform armies 
 into hostile camps, and achieve the true reform 
 that will secure industrial freedom for the mass 
 of mankind. 
 
 To the socialist may be promised relief from 
 the oppression of capital by securing the claims 
 of labor to accumulated wealth by the required 
 increase in wages. 
 
 To the land reformer may be promised freedom 
 from the evils of private property in hand by de- 
 nying to land its power to command money from 
 the cash circulation and by abolishing debt. 
 
 To the inflationist may be promised an iufla- 
 tion of credit currency that will realize the 
 dream of Proudhon, by putting ten billion of 
 bank deposits into general circulation and allow 
 labor to sell at greatly increased prices for its 
 true value in money on demand, and allow all 
 property, except land, to seU at a standard price 
 for its value in money on demand. 
 
 A single reform will revolutionize banking and 
 will correct the evils of stringent money by re- 
 storing banking to its proper function, correcting 
 the evils of capitalism, and when money and cap- 
 ital have been reformed it will have been accom- 
 
244 OuE City Civilization 
 
 plished by denying power to the owner of land 
 to capitalize and sell it for money at any price. 
 
 The problem of distributing wealth is a simple 
 one, and may be simply solved, by having the 
 money buying and selling wealth become the 
 money paid in wages, to have the demand and 
 supply of money made equal by abolishing debt, 
 by which the present inequaUty in wealth is car- 
 ried from one generation to another. 
 
 Selling land has been at work driving money 
 out of circulation for centuries and substituting 
 debts to replace the stringency in money, and 
 the problem resolves itself into the simple one of 
 compelling the money to return that debt holds 
 from circulation. 
 
 How may the billions of dollars in debt be 
 hquidated now that have been accumulating for 
 years, and are promised to be paid in years of 
 the future? 
 
 The answer is a simple one: Every property 
 encumbered by debt has a value based upon the 
 dividends it earns that exceeds the money prom- 
 ised by the debt. If this value is insured by the 
 required volume of money being added to the 
 circulation for that purpose we will get a quan- 
 tity of money which will not only allow property 
 to pay debts but at the same time will allow it 
 to be sold for its true value in money. 
 
 The cash market will equalize the distribution 
 of wealth, will enormously expand the circulation 
 
The Remedy 245 
 
 of credit money, will advance wages to equal the 
 selling price of capital and commodities each 
 year, will change the price of land to higher 
 prices of improvements, and correct the evils that 
 now inflict society with its multitude of sins. 
 
 Banking will become simple and safe, and be 
 of uniform help to every line of business, all dis- 
 crimination in making loans and all imdue pres- 
 sure in paying them will end, every loan will be 
 payable on demand, and its payment will be reg- 
 iilated by a rate of discount that will rise as fimds 
 become scarce. 
 
 The rate for bank loans will be uniform in 
 every market because they will be protected by 
 securities of uniform value and as the rate rises, 
 when credit is loaned, the borrower has the option 
 to continue his loan at the higher rate or get the 
 money he needs by converting his security into 
 money, being independent of the money the bank 
 controls. 
 

 
 
 
 
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