Thursday, October 30, 2008

On interest

A couple of weeks ago, I wrote briefly about my views on interest -- that is, about the concept of making money with money. Wall Street news got me thinking about it again. I looked up an essay I read some time ago by one of my longtime sheroes, peace and civil rights activist and war tax resister, Juanita Nelson.

Juanita's ideas influenced my own. Here is what she wrote:

On Interest

By Juanita Nelson

I consider war tax refusal an essential step in the direction of a saner society, when a society is squandering its substance on war waging and preparation. But if I stop at that point I haven’t got the point. Another imperative for me is to look at economics, beyond the use and abuse of federal tax funds, and to take whatever faltering steps I can in the light of insights as I gain them.

An insight I gained many years ago concerns interest, or the ability of money to multiply, to grow, to reproduce itself. I examined the concept inside out, upside down, top to bottom, and concluded that money has no reproductive powers. A hundred pennies sealed in a jar for however many years remains a hundred pennies. It makes no difference if the jar rests on your desk or in the vault of a bank or is invested in the Sleight-of-Hand Corporation. (Experiment with the jar of pennies on your desk.)

Interest is a construct invented so that, as John Ruskin observes in Unto This Last, some can take advantage of other's distress. If I lend you a hundred dollars that I have no need of at the moment, or that I obviously can manage without, why would I demand a hundred and ten from you within a year instead of merely the original hundred? I would have done nothing to deserve the ten dollars. It would result from work you had performed and therefore, according to my calculations, I would be extracting ten dollars worth of your labor.

For a paragraph, I'd prefer to remove the discussion from the distraction of dollars or money, only a representation of the real thing. What I'm really dealing with is the product of labor applied to natural resources, the only combination I am aware of which yields wealth. (No matter how many dollar bills, of whatever denomination, are thrown to the ground, they cannot dig a hole, as one person can.) So I, having a surplus, let you use ten bushels of corn to supplement your poor crop, a supplement without which you must go hungry much of the winter. But I stipulate that the next year you must return to me not the ten bushels you had from me, but eleven. If we assume that it takes equal amounts of time to grow a bushel of corn, I would be usurping a bushel of corn's worth of your time, your labor. With what justification?

So, the first thing to ask about interest is, what is it? And the answer appears to be: appropriation of another’s labor - though the ultimate victims of that appropriation may be many times removed from our immediate view - maybe just a polite way of saying robbery. If this sounds harsh, listen to Cicero in De Officius, 44 B.C.E.: When Cato was asked what was most profitable in the way of property, he replied, "good pasture." And when the man who asked the question said, "And what about lending at interest?" Cato answered, "What about manslaughter?" I was pleased also to be backed up by economist Maynard Keynes: "At the base of today’s acquisitive society is legalized usury, or lending money at interest."

Pioneer Valley War Tax Resisters reluctantly keeps a small bank account to enable check processing. Some years ago we agreed that taking interest on the piddling sum was contrary to all we believed in. We approached the bank to ask that we not be credited with interest. We went from a surprised receptionist to a nonplussed teller to an adamant president, who told us their charter required them to give us the interest. It was only after I recounted an experience in Philadelphia where I had been allowed to forego the unwanted sum that the president decided he could honor our request. Not only that, he consented to what we’d mentioned only offhandedly because we thought it would be too much - we could return the interest we had previously collected! Which we did. We had won permission not to take money we didn’t want.

photo of Juanita and Wally Nelson, 1986

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