19 December 2011

—1874—
The Interest Money

#74

A Farmer & His Banker (note the difference in waistline girth between the two men)

My friends, I wish to give you my ideas of the interest money which so many of you are paying while you are spending time and money in many ways in foolishness, swapping horses, expensive living, and loafing. 

There is no blister draws sharper than interest. Of all industries none is comparable to that of interest. It works all day and night, in fair weather and foul. It has no sound in its footsteps but travels fast. It gnaws at a man’s substance with invisible teeth. It binds industry with its webs. Debts roll a man over and over, binding hand and foot and letting him hang upon the fatal mesh until the long-legged interest devours him. 

There is but one thing on a farm like it, and that is the Canada thistle, which swarms every time you break its roots, whose blossoms are prolific and every the father of a  million seeds. Every leaf is an awl, every bristle a spear, and every plant like a platoon of bayonets, and a field of them like an armed host. The whole plant is a torment and a vegetable curse. And yet a farmer had better make his bed on Canada thistles than attempt to be at ease upon interest.
[Maine Farmer's Almanac]

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Attitudes about "Interest money" were changing in the 1800's, when the Agrarian Nation was declining and the Industrial Nation was ascending. 

As the factories cranked out more and more new stuff that people never knew they needed before, these people (who became known as "consumers"), needed a way to afford what they could not really afford. So "easy" credit and personal debt increased. 

Today we have come to the point that debt, credit and interest money is the lifeblood of the industrial system.

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I think it is interesting to note that interest on money was once referred to as usury and it was not an acceptable practice, as explained in this excerpt from the 1913 edition of Webster's dictionary:

The practice of requiring in repayment of money lent anything more than the amount lent, was formerly thought to be a great moral wrong, and the greater, the more was taken. Now it is not deemed more wrong to take pay for the use of money than for the use of a house, or a horse, or any other property. But the lingering influence of the former opinion, together with the fact that the nature of money makes it easier for the lender to oppress the borrower, has caused nearly all Christian nations to fix by law the rate of compensation for the use of money.

So it was that the definition of usury changed to mean excessive interest or illegal interest. This change of meaning happened over the course of hundreds of years (long before 1874). If you have an interest in this subject of interest, read This Essay on Usury at the Economic History Association web site.

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For another historical perspective on "interest money" and usury, consider Dante's, The Inferno, written in the 1300's. Dante places usurers (understood at that time as anyone who loaned money at interest) in the third ring of the seventh circle of hell, which, in Dante's hierarchy, is below (worse than) violent murderers.


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2 comments:

farmer_liz said...

that is really interesting, and good advice, we paid off our house mortgage as soon as possible and have avoided any further debt, just buying things when we have saved enough money. We have a friend who "own" multiple properties, all "negatively geared", he told us that if he sold them all he would have $200000, we can't understand the logic as we would have twice that if we sold our house + our savings. He doesn't seem to be any further ahead, but owes the bank half a million! I much prefer our approach, at least we know, no matter what happens, we always have somewhere to live.

Tracy said...

I just wanted to say Congrats on the possible new home place (from your other blog). KEEP your current place - your kids are growing faster than you think, and it would be nice for one of them to be "right next door".