Taking Interest a Crime
Document Item Type Metadata
TAKING INTEREST A CRIME.
BOSTON, Jan. 5, 1873.
TO THE EDITOR OF THE INDEX:—
In the course of your leading article in THE INDEX, No. 158 you make the following statement: “Usury laws, in especial, which sometimes work great detriment to the business interests of whole communities, are in fact based upon the Bible conception that it is a crime to take interest for money loaned; although the common sense of mankind reject the notion in fact.” I sometimes think that you, in your eagerness to escape the idea that a thing is true because the Bible says so, rush into the equally absurd but opposite idea that a thing is false because the Bible teaches it.
But, be that as it may, passing over the question concerning the detriment worked by usury laws, I proceed to the more important proposition, that to take interest is a crime: which it seems to me is capable of the most logical and convincing demonstration. I lay it down as a fundamental proposition, recognized by Adam Smith and all succeeding political economists of note, that labor is the creator of all artificial wealth, and that the performers of the labor are entitled to all they create. Consequently the owning by one man of more than he creates necessitates the owning by some other man of less than he creates. Therefore any man, owning property not the product or reward of his own labor nor a gift from some person who has honestly earned it, is guilty of theft,—in most cases unconsciously so, but none the less guilty. In all exchanges, either of labor or its products, the thing given must be exactly equivalent to the thing received; in other words, cost must govern price. Cost includes labor performed, sacrifices made, and risks incurred. Now, apply this principle to the transaction of lending money. What is the cost to the lender? Evidently the labor performed in conveying and receiving back the money lent, together with (in some cases) sacrifice and risk. Clearly these are the only elements in the transaction which may be legitimately considered. But interest, as ordinarily viewed, namely, as a sum of money paid to the lender in return for the benefit conferred upon the borrower, is based upon the false principle that value, in distinction from cost, is the limit of price; and it is therefore extortion. This principle that “a thing is worth what it will bring,” which lies at the bottom of interest, dividends, rents, and profit, is the whole cause of the present unjust and inequitable (not unequal) distribution of wealth. Make cost the limit of price, and you have taken a long step—yes, in my opinion, the final step towards the long-sought solution of the social problem.
But you say “the common sense of mankind rejects the notion” that to take interest is a crime. So, a century since, it might have been said with equal truth that “the common sense of mankind rejects the notion” that chattel-slavery is anything but a just, wise, and beneficent institution. “The common sense of mankind,” Mr. Editor, is not always to be relied upon. I am aware that this subject is somewhat foreign to those usually discussed in your columns; but, inasmuch as you introduced it by stating that you were in favor of a practice which seems to me so utterly at variance with the principle of justice, perhaps you will pardon me for indulging in this bit of criticism.
Yours for equity (which no existing religion inculcates),
Benj. R. Tucker.
Benjamin R. Tucker, “Taking Interest a Crime,” The Index 4, no. 163 (February 8, 1873): 72.