Property Is Theft!

You are sincere, Monsieur Bastiat; on that you leave no room for doubt; I have acknowledged it before, and have no desire to retract my words. But it is very necessary for me to tell you that your intellect slumbers, or rather that it has never seen the light: I shall have the honour to demonstrate this fact to you by summing up our controversy. I hope that the sort of psychological consultation at which you are to be present, and of which your own mind is to be the subject, may be to you the beginning of that intellectual education without which a man, whatever dignity of character may distinguish him and whatever talents he may display, is not, and never will be, anything but a speaking animal, to use Aristotle’s words.

But I was dealing with a man whose intellect is hermetically sealed, and to whom logic is as nought. It is in vain that I exclaim to you: Interest is legitimate under certain conditions independent of the will of the Capitalist; not under certain others, the establishment of which depends today upon society: and is for this reason that Interest, excusable in the Lender, is, from the standpoint of Society, a spoliation. You hear nothing, you comprehend nothing, you do not even listen to my reply. You lack the first faculty of intelligence—perception.

It is proved, indeed, by comparing the capital of the Bank with its metallic reserve, that while paying to its stockholders interest on the said capital at four percent., it can give credit and discount at one percent., and still realise fine profits. It can, it ought; until it does, it robs. By refusing to do so, it keeps the interest, rent, and farm-rent, which ought to come down everywhere to one percent at most, up to three, four, five, six, seven, eight, ten, twelve, and fifteen percent. It causes the people to pay annually to the unproductive classes more than six thousand million in gratuities and extras, and, where they might produce annually a value of twenty thousand million, it prevents them from producing more than ten thousand. Then, either you must justify the Bank of France, or, if you cannot, if you dare not, you must admit that the institution of interest is only a transitional institution, which must disappear in a higher state of society.

That, sir, is what I said to you, and in terms sufficiently sharp, one would think, to provoke on your part, in the absence of perception, comparison, and memory concerning the wholly historical question which up to that time I had submitted to you, that simple and purely intuitive act of the mind which it performs when it find itself in the presence of a fact, and required to answer yes or no,—I mean a judgement. You had only to reply in a word, it is, or it is not, and the operation was finished.

It is: that is to say, yes, the Bank of France can without wronging its stockholders or injuring itself, reduce its rate of discount to one percent; it can then, through the competition which this decrease would create, lower the rent of all Capital, including its own, to less than one percent. And since this movement of reduction, once commenced, would never stop, it can, if it will, make Interest disappear entirely. Then paid Credit, if it takes only what belongs to it, leads directly to Gratuitous Credit; then Interest is only a relic of ignorance and barbarism; then Usury and Rent, in an organised democracy, are illegitimate.

It is not: that is to say, no, it is not true that the Bank of France, its weekly balance-sheet to the contrary notwithstanding, has a capital of ninety million and a metallic reserve of four hundred and sixty million; it is not true that this enormous reserve is the result of the substitution of bank paper for specie in commercial circulation, etc., etc. In that case I should have referred you to M. d’Argout, who is suited for such a discussion.

Should we ever have believed it, if you had not caused us to see it? To this categorical, palpable fact of the Bank of France, you replied neither yes nor no. You did not even question the identity which exists between the fact submitted to your judgement and your theory of interest. You did not perceive the synonymy of these two propositions: Yes, the Bank of France can give Credit at one percent., then my theory is false;—no, the Bank of France cannot give Credit at one percent., then my theory is true.

Your reply, indubitable monument of an intellect which the Holy Word never illuminated, was this: that you were not dealing with the Bank of France, but with capital; that you did not defend the privilege of the Bank, but only the legitimacy of Interest; that you were in favour of the liberty of banks, as well as the liberty of lending; that if it were possible for the Bank of France to give Credit and Discount for nothing, you would not try to prevent it; that you confined yourself to the one assertion that the idea of Capital supposes and necessarily implies that of Interest; that the first never exists without the second, though the second sometimes exists without the first, etc.

So, you are as powerless to judge as to perceive, compare, and remember. You are lacking in that judicial conscience which, in the presence of two facts, either identical or incompatible, decides: Yes, they are identical; no, they are not identical. Undoubtedly, since you are a thinking being, you have intuitions, illuminations, revelations; I do not undertake to say, for my part, what does go on within your brain. But surely you do not reason, you do not reflect. What sort of a man are you, Monsieur Bastiat? Are you a man at all?

However, without examining it closely, you accept my definition of Capital as a good one; you say that it is all that the discussion requires. You thereby tacitly admit that Capital and Product are, in Society, synonymous terms; that, consequently, every transaction involving credit resolves itself, in the absence of fraud, into an exchange: two things which you at first denied, and which I would congratulate you on having understood at last, could I by any possibility believe that you attach the same meaning to my words that I do. What, indeed, could be more productive of good results than this analysis: Since value is only a proportion, and since all products are necessarily proportional to each other, it follows that from the social standpoint products are always values and settled values: as far as society is concerned, there is no difference between Capital and Product. The difference is wholly confined to individuals: it arises from their inability to express in exact numbers the relative value of products, and their efforts to arrive at an approximation. For—do not forget it—the mysterious law of exchange, the absolute rule which governs transactions,—a law not written but intuitively recognised, a rule not conventional but natural,—is to make our private acts conform as far as possible to social laws.

Now,—and this is what causes my doubts,—this definition of Capital, so profound and so clear, which you see fit to accept; this identity of Capital and Product, of Credit and Exchange,—totally destroys, sir, your theory of Interest, though you do not suspect it in the least! Indeed, from the moment you admit that the formula of J-B Say, products exchange for products, is synonymous with this one, Capital exchanges for Capital; that the definition of Capital accepted by you is only an expression of this synonymy; that everything tends, in society, to bring commercial transactions more and more into conformity with this law,—from that moment it is evident, a priori, that the day must come when transactions involving loans, rent, farm-rent, Interest, and the like, will be abolished and converted into exchanges; and that thus the lending of Capital becoming simply an exchange of Capital, and all business being conducted on a cash basis, Interest will disappear. Defining Capital thus, the idea of Usury involves a contradiction.

MYSELF.—There would never be such a sacrifice. I have already told you, and I repeat it, that, in the matter of credit, the case of the need of time is the difficulty of procuring money; that this difficulty is chiefly due to the Interest demanded by the hikers of money; so that if Interest were zero, the duration of credit would also be zero. Now, the Bank of France, under the conditions laid upon it by the public since the February Revolution, can reduce its Interest nearly to zero: is it you or I that reasons in a circle?

M. BASTIAT.—“Ah! yes .... it seems to me .... I think I understand at last what you mean. The public has renounced, in the bank’s favour, its claim to the Interest on the three hundred and eighty-two million in notes which circulate on its sole guaranty. You ask whether there is no way of enabling the public to reap the benefit of this Interest, or, which amounts to the same thing, of organising a National Bank which shall receive no Interest. If I am not mistaken, it was the observation of this phenomenon that suggested to you your scheme. Ricardo devised a plan less radical, but similar, and I find in Say these remarkable lines:

“‘This ingenious idea leaves only one question unanswered. Who shall get the interest on this large sum placed in circulation? Shall the Government? In its hands it would be only a means of increasing abuses, such as sinecures, Parliamentary corruption, police spies, and standing armies. Shall a financial company, like the Bank of England or the Bank of France? But why make a present to a financial company already rich of the Interest paid by the public individually? ...... Such are the questions which this subject involves. Perhaps they can be answered. Perhaps there is some way to render highly profitable to the public the economy which would result; but I am not called upon here to develop this new order of ideas.’”

MYSELF.—Sir, your J-B Say, with all his genius, is a fool. The question is already answered: the people, who own the funds; the people, who are here the sole Capitalists, the sole furnishers of security, the true proprietors; the people, who alone should profit by the Interest,—the people, I say, ought not to pay Interest. Is there anything in the world simpler and fairer than that?

M. BASTIAT.—No, not that; God forbid! I admit, it is true, that the Bank ought not to profit by the interest paid by the public on capital belonging to the public; I confess further that there is a way of enabling the public to profit by said interest. But I deny that this way is the one which you recommend, —namely, the organisation of a National Bank; I say and affirm that this way is the liberty of banks!

I spare the reader your peroration, in which you deplore my obduracy and adjure me, with a comical gravity, to substitute for my formula, Gratuity of Credit, yours, Liberty of Credit, as if Credit could be freer than when it costs nothing! Not a drop of blood in my body—mark it well!—rebels against the liberty of Credit: in the matter of banking, as in the matter of education, Liberty is my supreme law. But I say that, until the liberty of banks and the competition of bankers allows the public to reap the benefit of the Interest which it pays them, it would be well, useful, constitutional, and quite in accordance with republican economy, to establish, in the midst of the other banks and in competition with them, a National Bank giving credit temporarily at one or one-half of one percent, at the risk of what might happen. Do you object to changing the Bank of France, by reimbursing its stockholders, into this National Bank that I propose? Then, let the bank of France make restitution of the three hundred and eighty-two million specie which belong to the public, and of which it is the only holder. With three hundred and eighty-two million we might very easily organise a bank (what think you?), and the largest in the world. In what respect, then, would this bank, formed by the association of the whole people, not be free? Do that alone, and when you have belled this revolutionary act, when you have thus decreed the first act of the Democratic and Social Republic, I will undertake to deduce for you the consequences of this grand innovation. You shall then know what my system is.