Monday, February 13, 2006

Land-Banks as a substitute for Alchemy?!

Carl Wennerlind has a great article online, tracing connections between the alchemical tradition and the rise of credit-money, including land-banking. "Credit-Money as the Philosopher's Stone: Alchemy and the Coinage Problem in Seventeenth-Century England" starts with the "paper-money scene" from Goethe's Faust, traces the uses of alchemical metaphors in the early days of credit-money, and then goes on to show how various individuals who had searched for currency solutions through the transmutation of other substances into gold eventually came around to the plan of transmuting real property into credit-currency. The cast of characters is fascinating. Samuel Hartlib and his circle are at the center of the narrative, and we find that Hartlib himself wrote this text in 1653:
An essay upon Master W. Potters designe, concerning a bank of lands to be erected throughout this common-wealth: whereby lands may be improved in a new way to become the ground for increase of trading, and of publique and private revenues, and accomodations, represented thus briefly, by a person of singular zeal and integrity to all publike interest.

Needless to say, I've already requested a copy from my library.

Sunday, February 12, 2006

Susan Dimock and Bessie Greene

Ednah Dow Cheney's Memoir of Susan Dimock : resident physician of the New England Hospital for Women and Children is now online. There's some very nice material here, including accounts of the funeral for the two young women, after their deaths in the wreck of the Schiller in 1875. There's also a nice tribute to Bessie Greene.

You can see Susan Dimock's gravesite online as well. Presumably, this is very close to the graves of Bessie and William B. Greene in Forest Hills Cemetary, Boston.

Harvard's Women Working archive has some very nice items relating to Susan and Bessie, including the written report detailing the unsuccesful attempt of Dimock and Susan Jex-Blake to enter Harvard for medical training.

Committee on Admitting Women to the Medical School. Report, 1867 Mar. 23. A one page report, dated Mar. 23, 1867, from the Committee on Admitting Women to the Medical School. The Committee met in response to the petition of two women, Susan Dimock and Sophia Jex-Blake, seeking admittance to Harvard Medical School. The report is accompanied by a letter to Thomas Hill, president of Harvard College, from Edward H. Clarke, professor at the Medical School, dated Mar. 17, 1867, in which Clarke asks whether the Medical School should change its statutes to exclude women from admission explicitly.
Edward H. Clarke was later the author of Sex in Education, the subject of considerable debate and a pamphlet by William B. Greene. Despite his misgivings about women in higher education and medicine, Clarke was one of Dimock's pallbearers.

The same site hosts the reports of the Society for Helping Destitute Mothers and Infants, an organization started by Susan Dimock, Bessie Greene and Lilian Clarke. Anna Shaw Greene contributed to its continuation after Bessie's death.

Saturday, February 11, 2006

William B. Green and the LTV

Among the interesting questions that rise out of Greene's early mutual bank writings is this one: did Greene really believe in a "labor theory of value" in the same way as other socialists of his era? In the 1850 Mutual Banking he writes:

It is affirmed by some, that labor is the only true measure of value, that every thing is worth precisely what it costs in labor to produce it, and that the price of every thing ought always to be determined by the relative amount of labor expended in its production. We would remark, in answer to these affirmations, that there is such a thing as misdirected labor; and that a man may produce an article for which there is no demand, and which has, consequently, no exchangeable value. Again, Peter, working upon a poor soil, may, with an incredible expenditure of labor, produce a bushel of corn, while John, working on rich land, may raise a like quantity, in the same time, and with comparatively little labor: now we venture to affirm that the market value of these two bushels of corn, will (and ought to) depend, not on the relative quantities of labor expended in their production, but on the relative excellence of the grain: and if the bushel raised by Peter be of precisely the same quality as that raised by John, it is very probable that both bushels will sell in the market at precisely the same price. Price, or value, is therefore, determined by the law of supply and demand.

Here, as elsewhere, he seems content to let value be largely a subjective measure, although we would probably be naive to expect Greene to advance any theory so straightforward, without at once attempting to harmonize apparently conflicting approaches.
The utility of an article is one thing, its value is another, and the cost of its production is still another. But the amount of labor expended in production, though not the measure, is, in the long run, the regulator of value. For every new invention which abridges labor, and enables an individual or company to offer an increased supply of valuable articles in the market, brings with it an increase of competition; for if one man by a certain process can produce an article valued in the market at $1.00, in a half a day's labor, other men will take advantage of the same process, and undersell the first man, in order to get possession of the market: thus, by the effect of competition, the price of the article will probably be ultimately reduced to 0.50. Labor is the true regulator of value; for every laboring man who comes into competition with others, increases the supply of the products of labor, and thus diminishes their value, while at the same time, and because he is a living man, he increases the demand for those products to precisely the same extent, and thus restores the balance; for the laborer must be housed, clothed; and subsisted by the products of his labor. Thus the addition of a laboring man, or of any number of laboring men, to the mass of producers, ought to have no effect, either upon the price of labor, or upon that of commodities; since, if the laborer by his presence, increases the productive power, he, at the same time, increases the demand for consumption. We know that things do not always fall out thus in practise, but the irregularity is explained by the fact that the laborer, who ought himself to have the produce of his labor, or its equivalent in exchange, has, by the present false organisation of credit, his wages abstracted from him. Want and over production arise sometimes from mistakes in the direction of labor, but generally from that false organization of credit which now obtains throughout the civilized world. There is a market price of commodities, depending on supply and demand, and a natural price, depending on the cost of production; and the market price is in a state of continual oscillation, being sometimes above, and sometimes below, the natural price; but, in the long run, the average of a series of years being taken, it coincides with it. It is probable that under a true organization of credit, the natural price and the market price would coincide at every moment. Under the present system, there are no articles whose market and natural prices coincide so nearly and so constantly as those of the precious metals: and it is for this reason that they have been adopted by the various nations, as standards of value.

"Labor is the true regulator of value," but only because it is a major component of cost. If ultimately, cost and price converge in Greene's model, it is because of market forces. There is no sign here that Greene adhere's to anything like a "cost principle" akin to Warren's.

It may be a different matter in the writings on interest where, after all, Greene does propose a bank which takes no interest as such, charging only so much on the use of credit as it needed to keep the bank functioning. But, again, my reading of the material is that Greene proposes this interest-free anti-bank because he believes it can compete against banks ordered on principles that he finds "unscientific," principles which seem to reward to the wrong folks.
When Adam Smith and Malthus [1] say that labor is a measure of value, they speak, not of the labor which an article cost, or ought to have cost, in its production, but of the quantity of labor which the article may purchase or command. It is very well for those who write out the philosophy of speculation on human misfortune and necessities, to take for measure of value the amount of labor which different commodities can command. Considered from this point of view, the price of commodities is regulated not by the labor expended in their production, but by the distress and want of the laboring class. The greater the distress of the laborer, the more willing will he be to work for low wages, that is, the higher will be the price he is willing to give for the necessaries of life. When the wife and children of the laborer ask for bread, and he has none to give them, then, according to the political economists, is the community prosperous and happy; for then the rate of wages is low, and commodities command a high price in labor. There is no device of the political economists so infernal as the one which ranks labor as a commodity, varying in value according to supply and demand: neither is there any device so unphilosophical; since the ratio of the supply of labor to the demand for it, is unvarying; for every producer is also a consumer, and rightfully, to the precise extent of the amount of his products—the laborer who saves up his wages, being, so far as society is concerned, and in the long run, a consumer of those wages. The supply and demand for labor is unvarying, and its price ought therefore to be constant. Labor is said to be value, not because it is itself merchandise, but because of the values it contains as it were in solution, or, to use the correct metaphysical term, in potentia. The value of labor is a figurative expression, and a fiction like the productiveness of capital. Labor, like liberty, love, ambition, genius, is something vague and indeterminate in its nature, and is rendered definite by its object only: misdirected labor produces no value. Labor is said to be valuable, not because it can itself be valued, but because the products of labor may be truly valuable. When we say: John's labor is worth a dollar a day, it is as though we said: The daily product of John's labor is worth a dollar. To speak of labor as merchandise, is treason: for such speech denies the true dignity of man, who is the king of the earth. Where labor is merchandise in fact (not by a mere inaccuracy of language) there man is merchandise also, whether it be in England or South Carolina.

This appears to be a rejection of at least the language of the LTV, rooted in a concern for the "dignity of the laboring classes." I think the work of teasing out exactly what the various early mutualists really believed is still in its early phases. As great a service as James Martin and others have done in keeping the memory of these figures alive, I keep finding these figures genuinely strange and unfamiliar in the details, often very different from what I had been lead to believe I would find.

Thursday, February 09, 2006

Colonial Land Bank Literature

The major colonial land bank experiments seem to be these:

1681: The Fund at Boston, In New England
1686: "Blackwell's Bank" [proposed]
1732: Connecticut land bank
1714: Boston land bank [proposed]
1740: Land Bank, or Manufactory Scheme, Boston

The debates surrounding them, beginning with Potter's Key of Wealth, includes roughly 25-30 major pamphlets, prospectuses, decrees, etc. All of these were published by Andrew McFarland Davis, roughly one hundred years ago. The subject was already obscure by the time William B. Greene was made aware of it, in 1857. Subsequently, radicals and intellectual historians alike seem to have paid relatively little attention to the topic. But something like one-third of the documents have, one way or another, found their way into electronic archives. I'm happy to add four more to that number:

Eventually, it should be possible to get all 30 or so original documents, together with some of Davis' commentary, all in one place. But the real task is to place the debate in the context of mutualist history. Davis considered the land banks ill-advised and freakish, dispite the labor he put into unearthing their history. Greene saw them in a very different light, as do some of my contemporary readers.

Tuesday, February 07, 2006

Andrew McFarland Davis on the Land Banks

Here are some links to a small part of Andrew McFarland Davis' work on the colonial land banks. The first essay, on a Connecticut experiment of 1732, is interesting. The last essay provides a context for Severals relating to the FUND, which I recently posted on The Very Idea!

Thursday, February 02, 2006

William Cullen Bryant, "On Usury Laws" (1836)

While this essay was published in 1836, while William B. Greene was at West Point, similarities between it and the the section on "The Usury Laws" in Greene's Equality (1849) make it worth at least a look as a potential source.

On Usury Laws

The fact that the usury laws, arbitrary, unjust, and oppressive as they are, and unsupported by a single substantial reason, should have been suffered to exist to the present time can only be accounted for on the ground of the general and singular ignorance which has prevailed as to the true nature and character of money. If men would but learn to look upon the medium of exchange, not as a mere sign of value, but as value itself, as a commodity governed by precisely the same laws which affect other kinds of property, the absurdity and tyranny of legislative interference to regulate the extent of profit which, under any circumstances, may be charged for it would at once become apparent.

The laws do not pretend to dictate to a landlord how much rent he may charge for his house; or to a merchant what price he shall put upon his cloth; or to a mechanic at what rate he shall sell the products of his skill; or to a farmer the maximum he shall demand for his hay or grain. Yet money is but another form into which all these commodities are transmuted, and there is no reason why the owner of it shall be forbidden to ask exactly that rate of profit for the use of it which its abundance or scarcity makes it worth—no reason why the laws of supply and demand, which regulate the value of all other articles, should be suspended by legislative enactment in relation to this, and their place supplied by the clumsy substitute of feudal ignorance and worse than feudal tyranny.

The value of iron and copper and lead consists of exactly the same elements as the value of gold and silver. The labor employed in digging them, the quantity in which they are found, and the extent of their application in the useful arts, or, in other words, the relation of the demand to the supply, are the circumstances which fix their market price. Should some great manufacture be undertaken in which a vast additional amount of iron or copper or lead would be used, a sudden and considerable rise of price would be the inevitable consequence. Should this increased demand lead to any valuable improvement in the mining art, or to investigations which should discover new and prolific beds of ore, a corresponding fall of prices would occur. These fluctuations are continually taking place, and an attempt to prevent them by state legislation would be about as effectual as the command of the barbarian king that the ocean should not overpass a certain bound. Silver and gold, though in a less degree, are liable to precisely the same fluctuations of intrinsic value, and to seek to confine them to a fixed point is an attempt marked by equal folly.

If, then, the intrinsic value of money cannot be established by law, the value of its use is no less beyond the proper compass of legislation. Though a certain per centum is established as the rate which may be demanded for the use of money, we find, when the article is relatively abundant, that, notwithstanding the law, a much lower rate is received; and why, on the other hand, when money is scarce, should an attempt be made to prevent it from rising to its natural level?

Such attempts have always been, and always will be, worse than fruitless. They not only do not answer the ostensible object, but they accomplish the reverse. They operate, like all restrictions on trade, to the injury of the very class they are framed to protect; they oppress the borrower for the advantage of the lender; they take from t he poor to give to the rich. How is this result produced? Simply by diminishing the amount of capital, which, in the shape of money, would be lent to the community at its fair value, did no restriction exist, and placing what is left in the most extortionate hands. By attaching a stigma and a penalty to the innocent act of asking for money what money is worth, when that value rises above seven per cent, the scrupulous and reputable money lenders are driven from t he market and forced to employ their funds in other modes of investment. The supply, the inadequacy of which in the first place caused the increase in the rate of usance, is thus still further diminished, and the rate of usance necessarily rises still higher. The loanable funds, too, are held only by those who do not scruple to tax their loans with another grievous charge as security against the penalty imposed by an unwise law; and thus our Legislature, instead of assisting the poor man, but makes his necessities the occasion of sorely augmenting his burden.

But usury laws operate most hardly in many cases, even when the general rate of money is below their arbitrary standard. There is an intrinsic and obvious difference between borrowers, which not only justifies but absolutely demands, on the part of a prudent man disposed to relieve the wants of applicants, a very different rate of interest. Two persons can hardly present themselves in precisely equal circumstances to solicit a loan. One man is cautious; another is rash. One is a close calculator, sober in his views, and unexcitable in his temperament; another is visionary and enthusiastic. One has tangible security to offer; another nothing but the airy one of a promise. Who shall say that to lend money to these several persons is worth in each case an equal premium?

Should a person come to us with a project which, if successful, will yield an immense return, but, if unsuccessful, leave him wholly destitute, shall we not charge him for the risk we run in advancing his views? The advocates of usury laws may answer that we have it at our option either to take seven per cent or wholly refuse to grant the required aid. True; but suppose the project one which is calculated, if successful, to confer a vast benefit on mankind. Is it wise in the Legislature in such a case to bar the door against ingenuity, except the money lender turns philanthropist and jeopards his property, not for a fair equivalent, but out of mere love to his fellow man?

The community begin to answer these questions aright, and there is ground for hope that they will ere long insist upon their legislative agents repealing the entire code of barbarous laws by which the trade in money has hitherto been fettered.

from New York Evening Post, September 26, 1836