Sent: Saturday, September 04, 2004 6:56
AM
Subject: [socialcredit] Belloc on
Usury
I thank Mark Monson for this excerpt from Belloc's
"Economics for
Helen," originally published in 1924,
which has recently become available
in reprint
edition. I have placed it into our introductory
compendium
http://www.geocities.com/socredus/compendiumThose
who are familiar with the work of C. H. Douglas
will remember that he
frequently quoted Belloc, and
often used similar metaphor, such as the
"Servile
State."
In this essay Belloc differentiates interest per se
from "usury,"
which is rightly condemned, and uses
the terms "interest" and "profit"
interchangeably,
which is correct usage. You might remember that
Douglas said that interest is profit "on an
intangible." The
term interest is therefore merely
colloquial usage for a particular
classification of
profit.
-
F A I R U S E C L A I M E D
From Economics for Helen, by Hilaire Belloc:
USURY is a topic which modern people have almost
entirely forgotten,
and which you will not find
mentioned in any book on Economics that I
know. Yet
its vital importance was recognised throughout all
history
until quite lately, and it is already forcing
itself upon modern people's
notice whether they like
it or not. So it is as well to understand it, for
it
is going to be discussed widely in the near future.
All codes of law and all writers on morals from the
beginning of
anything we know about human society
have denounced as wrong the practice
of Usury.
They have recognised that this practice does grave
harm to the State
and to society as a whole, and
must, therefore, as far as possible, be
forbidden.
Now what is Usury, and why does it thus do harm?
Modem people have so far forgotten this exceedingly
important matter
that they have come to use the word
"usury" loosely for "the taking of
high interest upon
a loan." That is very muddled thinking indeed, as you
will see in a moment. The character of Usury has
nothing to do with
the taking of high or low
interest. It is concerned with something quite
different.
Usury is the taking of any interest whatever upon an
UNPRODUCTIVE
loan.
A man comes to you and says: "Lend me this piece of
capital which you
possess" (for instance, a ship, and
stores of food with which to feed the
sailors during
the voyage of the ship). "Using this piece of capital
to transport the surplus goods from this country over
the sea and to
bring back foreign goods which we need
here I shall make a profit so large
that I can
exchange it for at least one hundred tons of wheat.
The
voyage there and back will take a year."
You naturally answer: "It is all very well for you to
make a profit
of one hundred tons of wheat in one
year by the use of my ship and of my
stores of food
for sailors who work the ship, but what about me ? I
grant you ought to have part of this profit for
yourself, as you are
taking all the trouble. But I
ought to have some, because the ship and
stores of
food are mine; and unless I lent them to you (since
you have
none of your own) you would not be able to
make that profit by trading of
which you speak. Let
us go half shares. You shall have fifty tons of wheat
and I will take fifty, out of the total profit of one
hundred
tons.
The man who proposed to borrow our ship agrees. The
bargain is
struck, and when the year is over you make
a fifty tons profit of wheat on
your capital.
That is the earning of interest on a productive loan.
There is nothing morally wrong about that transaction
at all. It does
no one any harm. It does not weaken
the State or society, or even hurt any
individual.
There is a sheer gain due to wise exchange (which is
equivalent to production); everybody is benefited -
you that own the
capital, the man who uses it, and
all society, which benefits by the
foreign exchange.
Supposing your ship and stores of food were worth a
hundred tons of wheat, then your profit of fifty tons
of wheat is a
profit of fifty per cent, which is very
high indeed. But you have a
perfect right to it: your
capital has produced a real increase of wealth to
that extent. If your capital be worth ten times as
much, then your
profit is only five per cent instead
of fifty. But your moral right to the
fifty per cent
is just as great as your moral right to the five per
cent. No one can blame you, and you are doing no
harm.
Now supposing that, instead of coming to ask you for
the loan of your
ship, the man came and asked you for
the loan of a sum of money which you
happened to have
by you and which would be sufficient to buy and stock
the ship. It is clear that the transaction remains
exactly the same.
The loan is productive. He makes a
true profit, that is, there is a real
increase of
wealth for the community, and you and he have a right
to
take your shares out of it you because you are the
owner of the capital,
and he because he took the
trouble of organising and overlooking
the
expedition.
These are examples of profit on a productive loan.
Now suppose a man to come to you if you were a baker
and say: "Lend
me half a dozen loaves. My family have
no bread and I cannot see my way to
earning anything
for a day or two. But when I begin to earn I will get
another half dozen loaves and see that you are not
out of pocket. "
Then if you were to reply: 'I will
not let you have half a dozen loaves on
those terms.
I will let you owe me the bread for a month if you
like,
but at the end of the month you must give me
back seven loaves": that
would be usury.
The man is not using the loan productively: he is
consuming the
loaves immediately. No more wealth is
created by the act. The world is not
the richer, nor
are you the richer, nor is society in general the
richer. No more wealth at all has appeared through
the transaction.
Therefore the extra loaf that you
are claiming is claimed out of nothing.
It has to
come out of the wealth of the community - in this
particular
case out of the wealth of the man who
borrowed the loaves - instead of
coming out of an
increment or excess or new wealth. That is why usury
is called "usury" - which means: "wearing down",
"gradually
dilapidating.
It is clear that if the whole world practised usury
and nothing but
usury, if wealth were never lent to
be used productively, but only to be
consumed
unproductively, and yet were to demand interest on
the
unproductive transaction, then the wealth that
was lent would soon eat up
all the other wealth in
the community until you came to a situation in
which
there was no more to take. Everyone would be ruined
except those
who lent; then these, having no more
blood to suck, would die themselves,
and society
would end.
As in the case of the ship, it matters not in the
least whether the
actual thing, the loaves of bread,
are lent, or money is lent with which
to buy them.
The test is whether the loan is productive or not.
The
intention of Usury is present when the money is
lent at interest on what
the lender KNOWS will be an
unproductive purpose, and the actual practice
of
usury is present when the loan, having as a fact been
used
unproductively, interest is none the less
demanded.
As in every other case of right and wrong whatsoever,
there is, of
course, a broad margin in which it is
very difficult to draw the line. A
man guilty of
usury and trying to excuse himself might say, even in
the case of food lent to a starving man: "The loan
may not look
directly productive, but indirectly it
was productive, for it saved the
man's life and thus
later on he was able to work and produce
wealth."
The other way about (though there is not much danger
of that
nowadays), a man trying to get out of
interest on a productive loan might
say in many
cases: "The loan was not really productive. It is
true I
made a profit on it, but that profit was not
additional wealth for the
Community. It only
represented what I got out of somebody else on a
bargain.
In this margin. of uncertainty we have only common
sense to guide us,
as in every other similar case. We
know pretty well in each particular
example we come
across whether a loan is productive of not; whether
we
are borrowing or lending for a productive purpose,
or for a charitable or
luxurious one, or for one in
every way unproductive.
The proof that this feeling about usury is right is
to be found in
the private conduct of individuals in
their social relations. If a poor
man in distress
goes to a rich friend and borrows ten pounds, he pays
it back when he can; and the rich man would think it
dishonourable to
charge interest. But if a man
borrowed ten pounds of one for the purpose
of doing
something which was likely to increase its value, and
we knew
that this was his purpose, we should have a
perfect right to share the
results with him, and no
one would think the claim dishonorable.
Usury, then, is essentially a claim to increment, or
extra wealth,
which is not there to be claimed. It is
a practice which diminishes the
capital wealth of the
needy and eats it up to the profit of the lender -
so
that, if Usury go unchecked, it must end in the
absorption of all
private property into the hands of
a few money brokers.
-
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