Interest, even if unavoidable, tends to increase the inequalities of distribution, and beyond a certain point it becomes a social danger, and may even become a disease in the body politic. It is one of the least desirable consequences of the system of private property; but it is, I fear, an inherent part of it—to be got rid of only under a communal system where private property does not exist.
His new convictions did not take an absorbing hold on Ruskin’s mind for some years. In September, 1872, he writes in Fors, Letter XXI, §§ 18, 19, in reply to a remonstrance from Mr. Sillar: “I am very careless about such minor matters as the present conditions of ... banking. I hold bank stock simply because I suppose it to be safer than any other stock, and I take the interest of it because, though taking interest is, in the abstract, as wrong as war, the entire fabric of society is at present so connected with both usury and war, that it is not possible violently to withdraw, nor wisely to set example of withdrawing, from either evil.”
“Denunciations of interest are much beside the mark unless they are accompanied with some explanation of the manner in which borrowing and lending, when necessary, can be carried on without it.” There is a passage to the same effect in the notes to Fors, Letter XLIII, written in July, 1874.
It is easy to show why interest is both just and unavoidable, if we accept the justice of private property in general. By advancing capital we enable the borrower to carry on profitable operations which will pay him after he has given us somewhat for the advance. It pays him to borrow. He obtains an immediate order upon labour from the lender who postpones using it for his own pleasure. It is this element of Time which constitutes the whole reason for interest. Ready money, that is an immediate order upon labour for which nothing has yet been given, has a price depending upon the action of those who have it and those who want it, under the same law of Supply and Demand as governs the price of other commodities. The current rate of interest, after taking off the varying payment for risk, represents both the reward for which the capitalists will save the last portion of fluid capital which is saved, and the “final” utility of the last dose of money available to borrowers. The capitalist needs an investment as much as the borrower needs capital. The advantage is not all on one side. Bankers desire eagerly to grant overdrafts to safe people. The whole process is essential to production on a large scale, and to public activity, and there is not necessarily any oppression in it, in our present state of society, though it is, like everything else, liable to abuse.
But to a man who has enough already “abstinence” is no hardship. Time is his friend. Hence a measure of government interference to stop great fortunes is just and necessary, whether by a heavy income tax or a capital levy, or by death duties, all steeply graduated. Another drastic extension of these duties would be found in the limitation of the right of bequest, fixing a maximum amount which a man may receive, or may leave, by inheritance or bequest. Bequest is not a natural, it is a strictly legal, right; and the law may regulate it.[94] This would check the worst of the evil of vast fortunes, which are a curse to their owners, and the other side of the poverty shield. They are rarely made in one generation. Bacon says: “Usury bringeth the treasure of a realm into few hands; for the usurer trading on a certainty, and other men on uncertainties, at the end of the game all the money will be in the box.”
We will now put Ruskin’s argument, from the one place where he wrote it out at length. It is the well-known passage on “the position of William” in the first letter of Fors, January, 1871.
The following is there quoted from Mrs. Fawcett’s Political Economy for Beginners. She translated it from the French of Bastiat:
There was once in a village a poor carpenter, who worked hard from morning to night. One day James thought to himself, “With my hatchet, saw, and hammer, I can only make coarse furniture, and can only get the pay for such. If I had a plane, I should please my customers more, and they would pay me more. Yes, I am resolved, I will make myself a plane.” At the end of ten days James had in his possession an admirable plane, which he valued all the more for having made it himself. Whilst he was reckoning all the profits which he expected to derive from the use of it, he was interrupted by William, a carpenter in the neighbouring village. William, having admired the plane, was struck with the advantages which might be gained from it. He said to James:
“You must do me a service; lend me the plane for a year.” As might be expected, James cried out, “How can you think of such a thing, William? Well, if I do this service, what will you do for me in return?”
W. “Nothing. Don’t you know that a loan ought to be gratuitous?”