The workingman's advocate. [volume] (Chicago [Ill.]) 1864-1877, 1869-08-07

SECTION Atl-CONCLUDkDs
The Rise Of the Rate Of InteTesf Iaevease,
the Liabilities Of Az DsbsOsa
All obligations for the payment OF money
ske based upon money, and hold the same
rOsi ton, with respect to labor and proper.
n, that money does. They are private rep
Ttsentatives Of their amount Of money, and,
gsing secured on property, call for the pay
Ibent of definite rate Of interest. When
9he interest on money rises, property falls I'm
Rrice, so that the value Of the bonds, notes,
Mortgages, etc.. payable in money, 10 in
Creased with respect to property, For they
@ill purchase more, bot their vaIue 10 d.
| Ainished, compared with money, for the In
tsrest on money 10 greater than the interest
d. the obligations. Hence the obligations
AAll below, and will not sell for their par
'alue, although they eonunae to bear she
same rate of Interest, end 30 call for the
Dame amount OF money 40 at the former pc
god. The value Of money has Increased
4bove its former value, instead OF the value
q the obligations being diminished, except
relatively. The obligations still demand
khe same amount Of money, which will now
Draw higher rate Of interest, and command
greater amount Of property. But the
kmount Of interest which the obligations at
present draw, is not increased, and is less
3han that on money.
{ For example, If interest rise from six to
kwelve per cent, a State bond, bearing the
former rate, will fall below its par value,
Gut will continue to bear the same rate OF
Interest that il did previously TO the rifo Of
interest on money yet the bond can be ex-
changed for more property than before the
Ase of interest. Hence the liabilities Of all
febtors whose means Of payment are In their
property, or in their ability to labor, are In
Creased in proportion to the increase Of in
ferest upon money, because the foil amount
all debts must be paid in money, OF which
Sae power to purchase property has thus
fuch increased-or, in other words, the
Use Of intereet has decreased the market
Ealue of property and labor, so that tao,
three, four, or five times the quantity form
&rly required, must be sold to procure mon
~ to cancel debts. Labor, however low ils
Price, Is no tender for debts, and must be
disposed Of for money before it can be le-
gal equivalent in payment for anything.
When goods are scld on time, the property
If the purchaser, both real sGd personal, is
legally bound for the payment Of the debt ;
end although the purchase Of the goods
caused the debt to exist, NO kind Of proper
~ is legally competent to pay it. The debt
VI must convert his property into money for
this purpose, or the creditor can legally en-
force the sale of sufficient amount Of the
Eebtor's property to satisfy his claim and
pay the costs of suit. The debtors proper
81 is collateral security to the money, and
made subject to Its power, but the prop
Erty has no legal authority over the money.
! The injustice done to debtors BY increas-
ing the value Of the measure by which their
pebts were contracted, 10 evident. It haa
kalready been shown that the dollar ID the
measure of more or less property according
20 the rate Of interest. Therefore, debts
contracted when int rest was low, and fall
ing due when interest is high, will require Q
kmuch larger quantity Of property TO pay them
Ehan was understood In the contract. The
FOLLOWING is familiar illustration OF tbit
tprinciple. A man agrees to make and de-
Hlver to another nine yards OF Cloth. He
tbrings the usual amount Of cloth to ful6
Sthe contract, but in the meantime, the length
tEof the yard-stiek is increased to four and 9
Ehalf feet, and the cloth falls third sbort
aof the required length. TIE debsor weave.
ia third more on the end Of the piece. apd
presents it. The length Of the ward stick 4
8aeAin increased to six feet, and the cloth
bagain falls short. The construction of ths
fyard-stick may allow its length TO be m
gcreased without additional labor, but thu
koebtor is obliRed to add both I@he- and
Ematerial to produce the required length d
Hcloth. The additional cloth is fraud aieutly
ftaken from hmm by the increase Of the length
eof the measure
( To exemplify the principle with respec'
to money, the measure Of value. The fiss
Of interest on money increases the liabilities
OF all debtors. A man lends on mortgage
{ of house and three vacant lots, 81 900 O
six per cent interest. The interest on the
f money for year is $50, and the house Of
l the borrower rents for go q year. The
rate OF interest increases TO nine per cent.
| consequently the interest on the 81 900 in.
4 creases to 500. To make the loan safe al
l the advanced interest, the borrower Is re-
CURED to erect another house on one Of the
lots covered BY the mortgage. He build.
| one costing $500, and lets il for $50. The
two houses now bring $50 year, Just the
isterest on $1,000. Interest rises to twelve
/ per cent, and the holder Of the mortgage re-
equires the borrower to erect second house,
costing $500, on another vacant lot covered
4 by the mortgage. This house 10 likewise
elet for $40. The three houses rent for $l20,
Eand the mortgage for 81 900 draws IL per
cent. The mortgage now brings IN as much
finccme as the three houses. The 81, 900 as
much balance the value Of the three houses
1now, as they did that of the one house when
Ehe money was loaned for is now takes the
rent Of three houses, az 1t then did that Of
lone house, to pay the interest on the mort
1gage. Two houses are added BY material
and labor, and no material or labor 10 added
70 the mortgage or money; Jet the mortgage
or money at twelve per cent. interest, Is
" orth as much TO the holder az the VII ole
property. SRI
As the value Of money increases, the mar.
ket value Of the things to be measured BY
il decreases, go that it works in q double
ratio against producers, for rents Of proper
| y diminish as interest on money increases.
But in the foregoing example, this feature
has not been exhibited, no diminutiOn Of
rent being supposed to take plAe. in conse-
quence OF the rise Of interest,", although ex-
PerienOe proves that this is me inyariable re-
suit