SRLF 



URL M^ 



EDITOR'S PREFACE. 



The payment of interest lias been opposed by great thinkers in all 

 ages. Philosophers have demonstrated that it has no reason for being. 

 Ethical writers have shown that justice does not countenance it. Econ- 

 omists have proved it an unnecessary evil. Among its greatest oppo- 

 nents we find Aristotle, Berkeley and Proudhon. These three mighty 

 thinkers, though living at different times and in different countries, 

 neither using the same methods of research, or making deductions from 

 the same data, yet, from their various standpoints, reached the conclu- 

 sion that interest is neither wise, just or necessary. Not all the argu- 

 ments which any one of these writers employs are used, or would be ac- 

 cepted by either of the others, but to a considerable extent the three 

 reason -identically, so that we find Berkeley, the Christian, agreeing 

 with the Pagan, Aristotle, and confirmed by Proudhon, the Rationalist. 

 Of this trio, however, Proudhon alone pointed out that interest could be 

 made to disappear, not by curtailing individual liberty, but only by ex- 

 tending it. 



In the main the author of this work follows in Proudhon's path, de- 

 parting from it in some important particulars, but in general only so 

 modifying his master's work in finance, both critical and constructive, 

 as to make it applicable to the monetary system and economic methods 

 prevailing in the United States. His assault is upon the system of state 

 banks that was in existence when he wrote (nearly half a century ago), 

 and the system of mutual banks by which he proposed to replace it is 

 an adjustment to American routine of the essential principles embodied 

 in Proudhon's "Bank of the People." The reader will have little diffi- 

 culty in readjusting the arguments to the new conditions resulting from 

 the displacement of the state batiks by the national banks. 



Analytical examination of Greene's work will show that it is written 

 in elucidation and illumination of the discovery that, considered as a 

 whole, interest payment, as it exists in modern times, is not wliat it is 

 professed to be, the price paid for the use of borrowed capital, Ijut the 

 premium paid for the insurance of credit. Paying interest is generally 

 accepted as equitable because it is looked upon as a reimbursement of 

 the holder of capital for foregoing the advantage of using his capital 

 himself. Though the so-called borrower really needs capital, and ulti- 

 uKitely gets it as a result of the transaction between himself and the 

 so-called lender, this tiansaction is really not one of borrowing and 

 lending, but simply a temporary exchange of well-known credit for 

 credit less well known, but equally good, and the interest paid is the 

 price of the insurance which the latter credit receives through the ex- 

 change. This, under a system of free competition in banking, would 

 fall to cost, or less than 1 per cent per annum. It is now maintained at 

 varying rates, averaging 5 or 6 per cent by giving a monopoly of this ex- 

 change of credits to banks, which, in addition to the perfectly sufficient 

 insurance afforded by the centralization of their customers' cnMlit, 

 furnish a supposed extra security by pledging, in a prescribed form. 



2V^^'^A^^ 



