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Page 30
This granted, what advantage is there in institutions of credit? It is,
that they facilitate, between borrowers and lenders, the means of
finding and treating with each other; but it is not in their power to
cause an instantaneous increase of the things to be borrowed and lent.
And yet they ought to be able to do so, if the aim of the reformers is
to be attained, since they aspire to nothing less than to place ploughs,
houses, tools, and provisions in the hands of all those who desire them.
And how do they intend to effect this?
By making the State security for the loan.
Let us try and fathom the subject, for it contains _something which is
seen_, and also _something which is not seen_. We must endeavour to look
at both.
We will suppose that there is but one plough in the world, and that two
farmers apply for it.
Peter is the possessor of the only plough which is to be had in France;
John and James wish to borrow it. John, by his honesty, his property,
and good reputation, offers security. He _inspires confidence_; he has
_credit_. James inspires little or no confidence. It naturally happens
that Peter lends his plough to John.
But now, according to the Socialist plan, the State interferes, and says
to Peter, "Lend your plough to James, I will be security for its
return, and this security will be better than that of John, for he has
no one to be responsible for him but himself; and I, although it is true
that I have nothing, dispose of the fortune of the tax-payers, and it is
with their money that, in case of need, I shall pay you the principal
and interest." Consequently, Peter lends his plough to James: _this is
what is seen_.
And the Socialists rub their hands, and say, "See how well our plan has
answered. Thanks to the intervention of the State, poor James has a
plough. He will no longer be obliged to dig the ground; he is on the
road to make a fortune. It is a good thing for him, and an advantage to
the nation as a whole."
Indeed, it is no such thing; it is no advantage to the nation, for there
is something behind _which is not seen_.
_It is not seen_, that the plough is in the hands of James, only because
it is not in those of John.
_It is not seen_, that if James farms instead of digging, John will be
reduced to the necessity of digging instead of farming.
That, consequently, what was considered an increase of loan, is nothing
but a displacement of loan. Besides, _it is not seen_ that this
displacement implies two acts of deep injustice.
It is an injustice to John, who, after having deserved and obtained
_credit_ by his honesty and activity, sees himself robbed of it.
It is an injustice to the tax-payers, who are made to pay a debt which
is no concern of theirs.
Will any one say, that Government offers the same facilities to John as
it does to James? But as there is only one plough to be had, two cannot
be lent. The argument always maintains that, thanks to the intervention
of the State, more will be borrowed than there are things to be lent;
for the plough represents here the bulk of available capitals.
It is true, I have reduced the operation to the most simple expression
of it, but if you submit the most complicated Government institutions of
credit to the same test, you will be convinced that they can have but
one result; viz., to displace credit, not to augment it. In one country,
and in a given time, there is only a certain amount of capital
available, and all are employed. In guaranteeing the non-payers, the
State may, indeed, increase the number of borrowers, and thus raise the
rate of interest (always to the prejudice of the tax-payer), but it has
no power to increase the number of lenders, and the importance of the
total of the loans.
There is one conclusion, however, which I would not for the world be
suspected of drawing. I say, that the law ought not to favour,
artificially, the power of borrowing, but I do not say that it ought not
to restrain them artificially. If, in our system of mortgage, or in any
other, there be obstacles to the diffusion of the application of credit,
let them be got rid of; nothing can be better or more just than this.
But this is all which is consistent with liberty, and it is all that any
who are worthy of the name of reformers will ask.
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