William Nelson Black.

Ultimate finance : a true theory of co-operation online

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tration ? Men who, by courtesy,
are called statesmen are engaged in
feeding the j)assions which it is
their duty to allay. If they find
an uniustructed mob, numerous
enough to give promise of honors
and emoluments for all who secure
its applause, moving in the wrong
direction they are ready to place
themselves at its head and become
the champions of its eriors.

It would be idle to say that this
is not the spirit in which the mis-
conceptions of the age should be
met. If such a course can be pur-
sued without final disaster it will be
because Providence is a more pow-
erful factor in human government
than either the wisdom or honesty
of men. The object at this time
should be to discover and make
evident the true line of conduct to
be followed. It may be asked, and
the inquiry would be pertinent, if
it is the intention to charge the
prevalent evils against those who
think themselves peculiarly
oppressed by the unfortunate com-
plications that surround soci-
ety. No, this is not the intention.
It is the intention only to charge
these evils against an undeveloped
system; but the truth should be told
no matter how much it reflects on
men who think they have right to
go through the world without con-
tributing to the resources from
which they draw their subsistence,
and then a further right to com-



plain of the hardships which their
dependent condition entails. They
have the right to do neither the
one nor the other. They have
only the right to study economic
laws more closely, and to see if they
cannot find, through the seemingly
mysterious labyrinth of finance, a
road that will lead them to ground
of greater security. They are poor
not because they have been kept
poor by an oppressive social order.
They are poor to the point of help-
lessness because they have failed to
take advantage of laws that can be
made ample for their protection.
Granted that the world must have
its producers, and that all men can-
not enter the market to buy and to sell
and to become tradesmen, the only
field where great opulence can be
won. It does not follow, therefore,
that the men who are withdrawn
from the market, either from choice
or necessity, have no alternative but
dependence. We may lay this truth
to heart, and the sooner it is univer-
sally recognized the better. Were
society tq last as long as the innu-
merable cycles that have come and
gone since the beginning of the
Archaic age, and were nineteen-
twentieths of its members to de-
pend upon the resources of the
other twentieth for the means of
subsistence, the relative condition
of the different social grades would
not be materially changed. The
humbler grades might rise. They
might advance in education, in in-
telligence, and even in the posses-
sion of means for securing their
material comfort. But they would
rise at the same time to a clearer
perception of the immeasurable
distance that separated them from
their leaders. They would rise,
also, to a keener feeling of discon-
tent, always inflamed by the spec-
tacle of social contrasts. During
the last fifty years we have been
witnessing this kind of an advance,
followed by just these manifesta-
tions. It has been an advance in

which the rear has failed to close
up any part of the distance which
separated it from the van ; and the
improvement is neither appreciated
nor recognized. It only intensifies
the feeling of unrest. Hence the
prevalent disorder, and the neces-
sity for plain talk on questions of
cause and effect.



The question to follow will come
naturally. In deference to the
overwhelming testimony of statis-
tics, strengthened by observation
and experience, all that has been
claimed may be admitted. It may
be confessed that the evils from
which men suffer are not due to the
unequal distribution of wealth or
profits ; that the world is poor ;
that men are driven to innumera-
ble expedients to find the means for
making the improvements necessary
for their comfort and convenience,
and that the masses are content to
live withoutputting forth any strong
personal effort towards contribut-
ing to the total of either accumula-
ted resources or capital. But it
will be asked in what possible way
the situation is to be amended. If
it be true, after all these centuries
of effort, that society, in its material
environment, has only succeeded in
advancing beyond the lines of bar-
barism, how is it to receive an im-
pulse that Mill carry it rapidly for-
ward in the work of accumulation ?
If it be also true that the great
mass of men are satisfied to remain
inert and dependent how are we to
cause the leopard to change his
skin, and to put on some less tra-
ditional fashion of covering ? These
questions are pertinent; and at the
first blush the outlook is not encour-
aging. It seems as though we would
be compelled to allow men to go



blundering through quagnlires,
sometimes sinking into the oozing
slime until they are almost stran-
gled and lost, and anon finding a
foothold which suffers them to
stand temporarily erect and gather
breath for a new wrestle with their
obstructions. But the world is
growing. Even if it has not yet
become very rich and independent,
it is rapidly beginning to accept and
apply principles which will finallj'
prove strong enough to overcome
the evils caused by its inertia, and
the neglect of beneficent laws. It is
entering upon the right road, and
has even advanced further than
most persons in their blindness are
able to discover. Men are quick to
learn from their necessities, if not
from their innate sense of what is
theoretically sound.

The most phenomenal and signifi-
cant incident in the growth of mod-
ern civilization is the evolution of
institutions designed to promote the
efficiency of personal effort, to
strengthen the weakness of individ-
ual methods, to combine dispersed
and antagonistic forces under a
definite head, and even to give to
benevolence a material body and
vital functions. Since the institu-
tion of the Bank. of England, in
1694, probably the initial associa-
tion of bankers unless the Bank of
Venice may be called an exception,
the progress of financial organiza-
tion has been continuous and rapid.
The seed of a new system was
planted in rich soil, and, in England
and the United States most notice-
ably, it is proved to have been of
immense vitality. A vigorous trunk
of almost redundant growth has
been prolonged into branches and
groups of branches which have in
turn become strong and capable of
bearing most excellent fruit. Even
before the incoriDoratiou of the
Bank of England there was organi-
zation. There were the guilds, dat-
ing back to the reign of Edward :
IIL; and some writers trace the sys- '

tem of incorporation into Grecian
and Eoman history. The deter-
mined virtuoso of modern antiqui-
ties might even insist on finding
the chief stem from which grew the
prevailing system of co-operative
finance in the East India Company,
incorporated, in 1600, by Queen
Elizabeth. But this company was
a mere trading organization, and it
is to the banking system that ^^'e
must look when we wish to discover
what is most hopeful in the growth
of association. Industrial compa-
nies, trading companies, and com-
panies for the transportation and
distribution of merchandise have
been of incalculable service. They
are both strong and enterprising,
and working hand in hand with
each other they push out into new
fields, and cany the arts and ^vants
of civilization over comparatively
unexplored territory. It is chiefly
the work of these companies that
has compressed continents into
States, and robbed the ocean of that
illimitable surface which once
caused it to be held as a symbol of
eternity. But they displace aswell
as occupy in their domestic field of
operations, thus serving to diminish
the benefits that might be expected
to flow froni their great resources,
and, unlike the banks, they do not
enfold within the principles of their
being a germ which may be culti-
vated to cover the whole earth
with an abundant and general har-
vest. We must find in the banking
system and its auxiliary forces the
true impulse and key to material

This may be thought extravagant
praise for a system that seems to
have become thoroughly common-
place, and to be suggestive of only
sordid purposes and ideas. But it
will be found that the encomium is
mejited. The banks are tearChing
men the real significance of inter-
est, the final author, gauge, and
regulator of all wealth, though
once thought to have been the



wicked invention of the totally
depraved and despised Jew. In
this service they are rapidly becom-
ing recognized as the fountain of
all the streams that flow forth and
fructify the world ; and the dull
economic ritual that mistook the
substance for the soul, and found
wealth in perishable production,
must be recast at the feet of this
highly enlightened teacher. But
the banking system is great not
alone because it gives practical ax)-
plication to a true ecouoaiic princi-
ple, but because it makes the ap-
plication in conformity with a pop-
ular need. Before the advent of
banking associations there were
bankers ; and again the good germ
must be sought among the non-
electrical and uuilluininated an-
■eients. But when found it is seen
to have been only a germ. It could
shoot iipward and blossom into a
tree, with branches broad enough
and sturdy enough to offer almost
unlimited shelter, only in the form of
co-operative banking. In any other
form it would not have proved strong
■enough to illustrate its own possi-
feiiities, nor to sustain the canopy
which it has been appointed to up-
hold. The banking system has
matured, if not j)erfected, a new
science of linance; and herein lies
the chief element of progress. Men
are beginning to find that wealth
need not consist solely in objective
forms, in gold and silver, in lands,
castles, equipage, and cattle. They
are learning to see that an acknowl-
edged exchange of service may be
made to bring the substance of
wealth more imperishable even, and
more capable of transmission, than
fine gold. Our banking system,
though not yet upon the highest
plane of development, is already an
agency to double and quadruple
the resources of capital. As we
proceed it will be seen that, modi-
fied, it may be made to increase
those resources almost infinitively.
But the utility of the banking

systefli in the course of its future
development will not be found
so much in the main stem as in the
combination formed between the
main stem and its connecting
branches. Its first and ' strongest
branch is insurance. This was
an offset of wonderful vigor, finan-
cial in its features, but benevolent
in its functions and fruit, and full
of promise for the future of society.
Its merits as a protector have been
sufficiently extolled in circulars,
and it will not be worth while to
amplify on this feature of the sys-
tem. It will not be necessary to
engage in a superfluous effort at
illustrating what insurance can do
at the portals of the gi-ave. We
all know its beneficence, when it
offers to be only just. But we
must deal with insurance as an
economic force. It must be treated
here simijly as an agent, a benefi-
cent agent if you will, for the ac-
cumulation and transmission of
property. There is no wealth in
objective production. The dream
of riches from this source must be
dismissed like other suj)erstitions
that have led the world astray.
But there is wealth in the super-
structu]-es of finance that rest upon
a foundation of production ; and
among all that have been reared
there is no edifice so fair as the
temple erected by the architects
of insurance. The gleam of its
polished marble shines along the
future like emeralds and precious
stones, and the whole atmosphere
is made luminous in its glow.
Like the banking system, insur-
ance has not yet reached its full
development. It can never reach
the final measui'e of its utility until
certain j)erfected fonns of associa-
tion are prepared; but in its poten-
tial resources it is able to make
even the figure of charity, how-
ever highly exalted in our ethical
code, look pale and faded. K^ay, it
can finally convince her that she
was never more than a name signi-



fying nothing, a piece of sounding
brass or a tinkling cymbal. We
have no desire to disparage benevo-
lence. It has served, and is still
serving, a good purpose in the
world ; and our benevolent socie-
ties, offsets, also, from the banking
system only one branch removed,
have been adding materially to the
philosophy which is receiving an
institutional embodiment. They
are sometimes founded on a too
charitable idea, and are conducted
with au imperfect conception of the
resources of finance. They need
often a stronger or more liberal
transfusion of business with benev-
olence. But they have beezi help-
ing to pave the way for the advent
of a better system, and, in memo-
riam, will eventually be entitled
to a tablet in the temple to be
erected in celebration of some of
the apotheosized but retired cai'di-
nal virtues. These virtues have
served us well; but the reign of
■charity and benevolence approaches
its end. In the banking system
alone there is a golden hope of frui-
tion ; but when its resources are
combined with the resources of its
connecting limb the two together
may be made to seem almost like
the harbinger of that mystical
thousand years i^rojected into the
future of mankind from the Apoc-
alypse. The fulfillment of the
prophecy need not be long delayed.
Even the children of the ]3resent
generation, the parents of the next,
may step forth completely enfran-
chised from the shackles in which
poverty has so long bound the race,
and find the liberty which is now
thought the privilege of only the
fortunate few, but which in reality
is the boon of none. The anticipa-
tion may seem rose colored, but it
is justified. Men will have only
themselves to blame if they do not
so improve their opportunities that
charity, benevolence and all cor-

responding terms must lose their
material application, and give
Xalace to words of less humiliating

Is there not good reason to be
hopeful 1 All the favorable condi-
tions for an immense stride have
been developing around us for many
years ; and as a fresh ground for
hope we ma5'' point to the evidence
that the consuming masses, to whose
inactivity has been charged the
slow progress made, are awakening
from tlie lethargy in which they
have been so long bound. The
manifest growth of their discontent
is not a circumstance to be regret-
ted. On the contrary, it is a mani-
festation to be welcomed, and it is
only the duty of those who hold
the position of guides and leaders
to see that the spirit of discontent
does not lead to excesses that may
retard rather than advance the gen-
eral movement towards higher
ground. The masses still remain
impracticable in their plans. They
are always ready to follow leaders
who have no conception of social
evolution, and who stand ready to
remedjr all the evils that spring
from lack of development by a
treatment of either concentrated or
reduced dynamite. But they are
beginning to see the disadvantage
of living without capital or secu-
rity; and though their dissatisfac-
tion has not yet led to any more
practical action than combination
for the purpose of maintaining
wages it is drawing them over
ground which cannot be occupied
without causing their ideas to take
form in some more tangible concep-
tion than they have yet embodied.
When men co-operate for the main-
tenance of wages they are plaj'ing
with a toy of which they will
finally become weary. But they will
acquire habits of co-operation
which will eventually be turned
into more productive channels.





"Wherever possible the skillful
general advances to his attack under
cover. iSuch a course is prudent ;
and it helps to confound the enemy.
But if the line of advance up to
this point has seemed obscure the
obscurity must be charged to no
strategic purpose. Tliere were hills
to be captured, hollows to be occu-
pied, and points of vantage to be
surveyed. But the reader, it is to
be presumed, is becoming solicitous
to know more definitely the pur-
pose of all this preliminary skir-
mishing. He may not have quite
seen the objective j)oiut of the
maneuvers. That the world lacks
capital may be admitted ; tliat idle-
ness and distress may spring from
its want will be readily seen ; that
even financial depression, panics,
and bankruptcies are the direct
conseciuences of this lack, however
wisely men may reason on human
incapacity and frailties, is hardly
to be denied, and there is a great
deal that must be accepted for truth
in all that has been stated and
claimed. But how the general
stock of capital is to be increased
by depending on men who have no
capital, and not much expectation
of capital, except in the narrow
sense of mental or manual accom-
plishments, may not be so readily
comprehended. The dependence is
reasonable nevertheless; and it will
be the next object in the discussion
to show why it is reasonable.

It happens that the men who
have least capital, as capital is com-
prehended, receive, in the mass,
much the larger proportion of the
total of income. Potentially, there-
fore, they have incalculable power
to maintain capital. It would be
almost perilous to give the total in-
come of employees in the United

States. It cannot be accurately
given on any census data to be ob-
tained ; and even a reasonable esti-
mate, if offered without exact data,
might seem so extravagant that it
would almost weaken the argument.
We know that the amount rises
to many billions of dollars each
year, and forms nearly ninety per
cent, of the income of all the people
combined. But in offeriiig illustra-
tions on the resources of employees
it will not be necessary to consider
totals. It will be better, indeed, to
investigate the subject in its de-
tails, and make a local application
of evei y instance. Every employer
who employs a large number of
workmen is conscious of their capa-
bilities. Could he only retain ten
per cent, of their parnings on each.
Saturday night, and use it in ac-
cordance with his knowledge of fi-
nancial expedients, he knows that
he could soon duplicate hisfortune,
vastly enlarge his field of opera-
tions, and employ two workmen
where he now employs only one.

It may be objected that employ-
ees have not the means of turning
any portion of their income into
capital. It is commonly believedj
among workmen then)selves at
least, that the great body of em-
ployees are too poor to spare even
a trifle from their receipts for any
other purpose than to meet the
necessary expenditures for their
subsistence, and the subsistence of
their families. It might be ob-
jected, further, that, even were it
possible to save, employees have no
better place of deposit than savings
banks; and that, these banks,
though institutions of great utility
to small tradesmen who are only
holding their money until they can
find a good place for its investment,
fail of meeting the chief want of
the man who is not a tradesman,
and needs an opportunity to make
his savings fruitful. .The word
savings has little significance as an
economic" term except when made



to represent some form of capitali-
zation devised for the benefit of
the person from whose economies
it results. These are objections,
we say, which might be raised.
But the first objection will be con-
tradicted by the experience of al-
most every employee who will take
the trouble to watch his expendi-
tures closely, and observe the waste
that flows continually from his
hand. Even under prevailing con-
ditions, almost every man wastes
money. As for the second objec-
tion, the ground for its validity
could be easily removed. The only
reason why employees do not save
ji very considerable part 'of their
"income is to be found in the want
of a well organized system that
will enable them to carry the prin-
cipal which their economies can be
made to represent. Give them the
means of escaping the payment of
onerous expenses by diverting their
savings to the work of maintaining
personal resources and we will soon
find how quickly they will avail
themselves of the opportunity.
Only show them that the assump-
tion of obligations in one direction
can be made the measure, and more
than the measure, of relief obtained
in other directions, and that the
net results will be greater security
for themselves and families, and
we would soon find little occasion
to speak of their improvidence and
want of foresight.

Let us descend to particulars and
apply this reasoning where it will
be most readily understood. The
payment of rent is felt to be the
most onerous obligation that rests
upon the shoulders of the poor.
Next to a short supply of coal, the
playwright finds in the necessity
for rent paying the material for his
most i)athetic and melodramatic
situations. The novelist has ex-
hausted his invention in portray-
ing the wretchedness and sufferings
of the tenant ; and the orator of
Teform is never cxuite so felicitous

as when he can flavor his eloquence
from the sewers of the tenement
houses, and cause to float before
the vision of his audience the gaunt
spectres of misery which, from that
atmosphere, are readily invoked.
Even the political, economist, who,
if a true economist, is usually hard
headed and implacable, has been
known to shudder as he contem-
plated the la.w that seemed to make
n nt paying inevitable, and to find
in its barren, oppressive features
not only a justification, but a cause
of commendation, for the doctrine
of the survival of the fittest. It is
not wonderful that the subject
should be found so perplexing. It
seems exceedingly unjust that a
.man should be compelled, year
after year from youth to old age, to
pay lieavily for the mere space
which he occupies in the world,
and to finally die and be able to
transmit no title that can prevent
the dispossession of his family. But
it is not unjust. It is only exceed-
ingly foolish ; and if any man can
follow the illustration by which
the fatuity of rent paying can be ex-
posed without confessing that there
is still a great want of piactical
common sense in the administra-
tion of human affairs he must be a
slave to economic superstitions.

Every dollar paid for rent from
the hands of an employee is a dol-
lar wasted; and the withholding of
the dollar, through legitimate finan-
cial expedients, would cause no
loss to the landloid to whom the
payment is made. This may sound
like an incomprehensible declara-
tion ; but let us see if it be not
true. Here is a five-story double
flat house, built on one of the most
eligible and central streets of our
commercial metropolis, at a cost,
including the cost of land, of $20,-
000. In its interior decorations it
contains tiled corriders, marble, or
what means equal elegance, marbled
slate mantel^; and all the ornamen-
tation is tasteful, and suggestive of



refinement. It shelters ten fana-
ilies; and the heads of these fam-
ilies pay, annually, an average in
rental of $230. This makes the
cost for each family only about
$4.50 a week, and places the suites
of rooms within the reach of very
limited means. From the total of
his rental the landlord pays taxes,
fire insurance, and tlie cost of re-
pairs ; and after suffering the losses
caused by vacant premises and bad
tenants he tliinks himself fortunate
if he realizes six per cent, on his
propei'ty. He will not often realize
more than five per cent, on first
cost, for landlords are often com-
pelled to shai-e with tenants the
losses caused by sickness or want
of employment. The entire rental,
it will be seen, is $2300 a year, and
the amount seems pretty large.
But the interest on the projjerty at
six per cent., together with the fire
insurance, and, in any city not suf-
fering from extravagant adminis-
tration, the taxes, will not amount
to more than $1800 a year. Divide
the obligation for the payment of
this amount among the ten tenants,
then, and the total would only be
$180 due, from each person. This

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Online LibraryWilliam Nelson BlackUltimate finance : a true theory of co-operation → online text (page 3 of 19)