Property Is Theft!

by Pierre-Joseph Proudhon

Your Credit resembles that which the pirate gives to his captive, when he gives him his liberty in return for a ransom. I protest against your credit at five percent, because society is able and ought to give it to me at zero percent; and, if it refuses to do so, I accuse it, as well as you, of robbery; I say that it is an accomplice, an abettor, an organiser of robbery.

  Comparing a loan to a sale, you say: Your argument is as valid against the latter as against the former, for the hatter who sells hats does not deprive himself.

  No, for he receives for his hats—at least he is reputed to receive for them—their exact value immediately, neither more nor less. But the Capitalist lender not only is not deprived, since he recovers his Capital intact, but he receives more than his Capital, more than he contributes to the exchange; he receives in addition to his Capital an Interest which represents no positive product on his part. Now, a service which costs no Labour to him who renders it is a service which may become gratuitous: this you have already told us yourself.

  After having recognised the non-privation attendant upon a loan, you admit further “that it is not theoretically impossible that Interest, which today constitutes an integral part of the price of commodities, may become the same for all, and thereby be abolished.” “But,” you add, “for this other things are needed than a new bank. Let Socialism endow all men with equal activity, skill, honesty, economy, foresight, needs, desires, virtues, vices, and chances even, and then it will have succeeded.”

  So that you enter upon the question only to immediately avoid it. Socialism, at the point which it has now reached, justly claims that it is by means of a reform in banking and taxation that we can arrive at this balance of interests. Instead of passing over, as you do, this claim of Socialism, stop here and refute it: you will thereby demolish all the utopias of the world.

  For Socialism affirms—and without this affirmation Socialism could not exist, it would be a nonentity—that it is not by endowing all men with equal “activity, skill, honesty, economy, foresight, needs, desires, virtues, vices, and chances even” that we shall succeed in balancing interest and equalising incomes; it maintains that we must, on the contrary, begin by centralising Credit and abolishing Interest, in order to equalise faculties, needs, and chances. Let there be no more robbers among us, and we shall be all virtuous, all happy! That is Socialism’s creed. I feel the keenest regret in telling you of it, but really your acquaintance with Socialism is so slight that you run against it without seeing it.

  You persist in attributing to Capital all social progress in the domain of wealth, while I, for my part, attribute it to Circulation; and you say that here I mistake the cause for the effect.

  […]

  I repeat: The problem of Socialism is to make […] Interest on Capital […] equal for all producers, and consequently nugatory. We maintain that this is possible; that, if this is possible, it is society’s duty to procure Gratuitous Credit for all; that, failing to do this, it will not be a society, but a conspiracy of capitalists against workers, a pact of plunder and murder.

  […]

  We say: The economic system based on the fiction of the productivity of Capital, justifiable once, is henceforth illegitimate. Its inefficacy and malfeasance have been exposed; it is the cause of all existing misery, the present mainstay of that old fiction of representative government which is the last form of tyranny among men.

  I will not detain myself with the purely religious considerations with which your letter closes. Religion, allow me to say, has nothing to do with Political Economy. A real science is sufficient unto itself; otherwise, it cannot exist. If Political Economy needs the sanction of Religion to make up for the inadequacy of its theories, and if, in its turn, Religion, as an excuse for the barrenness of its dogmas, pleads the exigencies of Political Economy, the result will be that Political Economy and Religion, instead of mutually sustaining each other, will accuse each other, and both will perish.

  Begin, then, by doing justice, and liberty, fraternity, and wealth will increase; even the happiness of another life will be only the surer. Is the inequality of Capitalist Income, yes or no, the primary cause of the physical, moral, and intellectual misery which today afflicts society? Is it necessary to equalise the income of all men, to make the circulation of Capital gratuitous by assimilating it to the exchange of Products, and to destroy Interest? That is what Socialism asks, and it must have an answer.

  Socialism, in its most positive conclusions, furnishes the solution in the democratic centralisation and gratuity of Credit, combined with a single tax, to replace all other taxes, and to be levied on Capital.

  Let this solution be verified; let its application be tried. That is the only way to refute Socialism; except that is done, we shall shout louder than ever our war-cry: Property is Theft!

  P-J PROUDHON

  THIRD LETTER

  17TH DECEMBER 1849

  SIR, WE DO not advance in our discussion, and the fault lies entirely with you. By your persistent refusal to place yourself upon the ground to which I summon you, and your determination to draw me upon yours, you deny me that right to an examination which belongs to every innovator; you fail in the duty which the appearance of new ideas imposes on all economists, the natural defenders of tradition and established customs; in fact, you violate ordinary charity by compelling me to attack what I recognised, in a certain sense, as irreproachable and legitimate.

  […]

  Is it possible, yes or no, to abolish Interest on Money, Rent of Land and Houses, the Product of Capital, by simplifying Taxation, on the one hand, and, on the other, by organising a Bank of Circulation and Credit in the name and on the account of the people? This, in my opinion, is the way in which the question before us should be stated. Love of Humanity, Truth, and Harmony is a law to us both. What has the nation been doing since February, what has the Constituent Assembly been doing, what is the Legislature doing today, if not seeking means to improve the condition of the worker without alarming legitimate interests and invalidating the right of the proprietors? Let us see, then, if the Gratuity of Credit might, perchance, be one of these means.

  Such were my words; I ventured to believe that they would be understood. Instead of replying to them, as I hoped, you retrench yourself behind your old evasion. To this question: To prove that the Gratuity of Credit is a possible, easy, and practical thing—is that not to prove that that Interest on Credit is henceforth an illegitimate thing? you reply, reversing the phrase: “To prove that Interest has been, legitimate, just, useful, beneficent, indestructible—is that not to prove that Gratuity of Credit is an illusion?” You reason precisely as the stage-lines did in regard to rail-ways.

  See them, indeed, parading their grievances before the public, which is forsaking them for their competitors: Are not the wagon and the malbrouck 561 useful, legitimate, beneficent, and indestructible institutions? Do we not, in transporting your persons and products, render you a service? Has not this service a value? Ought not every value to be paid for? In transporting products at twenty-five centimes per ton and kilometre, though the locomotive does the same work, it is true, for ten centimes, are we robbers? Is not Commerce perpetually and universally extended by wagons, beasts of burden, and navigation by sail or oar? Of what importance, then, to us are steam, and atmospheric pressure, and electricity? To prove the reality and legitimacy of the four-wheeled vehicle,—is that not to prove that the invention of railways is a chimera?

  This, sir, is where your argument leads to. Your last letter, like the preceding ones, from beginning to end means nothing else. To preserve for Capital the interest, which I refuse it, you reply by the previous question; you oppose to my novel idea your old routine; you protest against railroads and steamengines. I should be sorry to say anything to wound you; but truly, sir, it seems to me that I should be justified, at this moment, in stopping here and turning my back upon you.

  But I will not do it: I wish to give you satisfaction to the last, by showing you how, to use
your own words, the remuneration of Capital passes from legitimacy to illegitimacy, and how Gratuity of Credit is the final result of the practice of Usury. This discussion, in itself, is not an unimportant one; I will try to make it a peaceful one.

  The reason why Interest of Capital, excusable and even just in the infancy of social economy, becomes, as industrial institutions develop, real spoliation and robbery, is because it has no other principle, no other raison d’être, than those of necessity and force. Necessity explains the unreasonableness of the lender; force causes the resignation of the borrower. But, in proportion as in human relationships, necessity gives way to liberty, and force is succeeded by right, the Capitalist loses his excuse, and the worker’s claim against the proprietor becomes good.

  In the beginning the land is undivided; each family lives by hunting, fishing, gathering or grazing; industry is entirely domestic, and agriculture, so to speak, nomadic. There is no commerce, neither is there property.

  Later, tribes consolidating, the formation of nations commences; caste appears, the child of war and patriarchism. Property establishes itself little by little; but, by heroic law, the master, though he does not cultivate his land himself, makes use of his slaves for that purpose, as at a later period the nobleman does his serfs. Farm-rent does not yet exist; revenue, which indicates this relation, is unknown.

  At this period Commerce consists mainly in barter. If Gold and Silver appear in transactions, it is rather as Merchandise than as a Circulating Medium and Unit of Value: they are weighed, not counted. Exchange, the consequent Profit, lending at Interest, sleeping-partnership, all the operations of a welldeveloped Commerce which are performed by means of Money, are unknown. These primitive customs are retained for a long time in agricultural districts. My mother, a simple peasant, told me that, previous to ’89, she was employed in the winter at spinning hemp, receiving, as wages for six weeks’ work, besides her board, a pair of wooden shoes and a loaf of rye bread.

  We must look to Foreign Commerce to find the origin of lending at Interest. The contrat a la grosse, a variety, or rather a separate part, of the contrat de pacotille, was its original form, just as the farm-lease or cattle-lease was the counterpart of sleeping-partnership.

  What is the contrat de pacotille? A contract by which a manufacturer and ship-master agree to put into a common fund, for purposes of Foreign Commerce, the former a certain quantity of merchandise which he undertakes to procure, the latter his labour as a navigator, the Profit resulting from the sale to be divided equally between them, or according to a proportion to be agreed upon, and the risks and damages to be charged to the firm.

  Is the profit thus anticipated, however large it may be, legitimate?

  We cannot call it into question.

  Profit, at this early period of commercial relations, represents only the uncertainty which prevails among exchanging parties concerning the value of their respective products; it is an advantage which exists more in the imagination than in reality, and which is not uncommonly claimed with equal reason by both parties to a transaction. How many pounds of tin is an ounce of gold worth? What is the relation between the price of Tyrian purple and that of sable fur? No one knows; no one can tell. The Phoenician who, for a pack of furs, gives ten palms of his cloth, congratulates himself upon his bargain; so also, on his side, does the Northern hunter, proud of his red cloak. And such is still the practice of Europeans in dealing with Australian savages, who are happy to give a pig for an axe, a hen for a nail or a piece of glass.

  The incommensurability of values, such is the original source of commercial profits. Gold and Silver then enter into traffic, first as merchandise, and then, soon after, by virtue of the facility with which they can be exchanged, as terms of comparison, as money. In both cases the Gold and Silver bear profit in exchange, in the first place by the very fact of exchange, next for the risk incurred. Insurance appears here as the twin brother of the contrat a la grosse; the premium stipulated for the first being the correlative of and identical with the share of the profit agreed upon in the second.

  This share of the profit, which expresses the participation of the Capitalist or manufacturer who invests his products or his Capital (the same thing) in commerce, has received the Latin name of inter-esse, that is, participation, Interest.

  At this time, then, and under the conditions which I have just stated, who could brand Interest as fraudulent? Interest is the alea, the gain obtained in operations of chance; it is the speculative profit of commerce, a profit which is irreproachable until the comparison of values furnishes the correlative ideas of dearness, cheapness, proportion, PRICE. The same analogy, the same identity, which Political Economy has always and rightly pointed out between Interest on money and Rent of Land, exists at the beginning of commercial relations between this same Interest and commercial profit: at bottom, exchange is the common form, the starting-point of all these transactions.

  You see, sir, that the energy with which I oppose Capital does not prevent me from doing justice to the original good faith of its operations. I never trifle with the truth. I told you that there was a true, honest, legitimate side to Lending at Interest; I have just shown it in a way which seems to me a better one than yours, in that it sacrifices nothing to selfishness and detracts nothing from charity. It was the impossibility of appraising commodities with any degree of exactness that made Interest legitimate in the beginning, just as, later, it is the passion for the precious metals which sustains it. Lending at Interest must have had a positive and necessary basis in order to develop and spread as it has; if not, we must condemn, with the theologians, all humanity, which, for my part, I profess to consider infallible and holy.

  But who does not see already that the merchant’s profit ought to decrease as fast as the risks incurred and the arbitrary method of estimating values disappear, so that finally it may be only the just price of the service rendered by him, the wages of his labour? Who does not see with equal clearness that Interest ought to disappear with the risks which Capital runs and the privation which Capital endures: so that if repayment is guaranteed by the debtor, and the labour of the creditor is zero, Interest must become zero?

  […]

  I said before that in ancient times the Landed Proprietor, when neither he nor his family farmed his land, as was the case among the Romans in the early days of the Republic, cultivated it through his slaves: such was the general practice of Patrician families. Then slavery and the soil were chained together; the farmer was called adscrpitus glebæ, joined to the land; property in men and things was undivided. The price of a farm depended (1) upon its area and quality of its soil, (2) upon the quantity of stock, and (3) upon the number of slaves.

  When the Emancipation of the Slave was proclaimed, the proprietor lost the man and kept the land; just as today, in freeing the blacks, we leave the master his property in land and stock. Nevertheless, from the standpoint of ancient law as well as of natural and Christian right, man, born to labour, cannot dispense with the implements of Labour; the principle of Emancipation involved an agrarian law which guarantees them to him and protects him in their use: otherwise, this pretended Emancipation was only an act of hateful cruelty, an infamous deception, and if, as Moses said, interest, or the yearly income from Capital, reimburses Capital, might it not be said that Servitude reimburses Property? The theologians and the law-givers of the time did not understand this, and by an irreconcilable contradiction, which still exists, they continued to rail at Usury, but gave absolution to Rent.

  The result was that the emancipated slave, and, a few centuries later, the enfranchised serf, without means of existence, was obliged to become a tenant and pay tribute. The master grew still richer. I will furnish you, he says, with land; you shall furnish the labour; and we will divide the products. It was a reproduction on the farm of the ways and customs of business. I will lend you ten talents, said the moneyed man to the worker; you shall use them; and then either we will divide the profits, or else
, as long as you keep my money, you shall pay me a twentieth; or, if you prefer, at the expiration of the loan, you shall return double the amount originally received. From this sprang Ground-Rent, unknown to the Russians and the Arabs. The exploitation of man by man, thanks to this transformation, passed into the form of law: Usury, condemned in the form of lending at interest, tolerated in the contrat a la grosse, was extolled in the form of Farm-Rent. From that moment commercial and industrial progress served to make it only more and more customary. This was necessary in order to exhibit all the varieties of Slavery and Robbery, and to establish the true law of Human Liberty.

  Once engaged in this practice of inter-esse, so strangely understood, so improperly applied, Society began to revolve in the circle of its miseries. Then it was that inequality of conditions seemed a law of civilisation, and evil a necessity of our nature.

  […]

  Again: The productivity of Capital being the immediate and sole cause of the inequality of wealth, and the continual accumulation of Capital in a few hands, it must be admitted, in spite of the progress of knowledge, in spite of Christian revelation and the extension of public liberty, that society is naturally and necessarily divided into two classes—a class of exploiting capitalists and a class of exploited workers.

  Again: the aforesaid class of Capitalists, having all tools and products at its absolute disposal through lending capital at Interest, has the right, when, it sees fit, to bring Labour and Circulation to a stand-still, as was done two years ago, at the risk of people’s lives; to change the natural course of things, as is the case in the Papal States, where the arable land has been used, from time immemorial, for the convenience of proprietors, as common pasture land, and where the people live upon the charity and curiosity of foreigners; to say to a body of citizens: There are too many of you on the earth; at the banquet of life there is no place for you, as did the Countess of Strafford, when she expelled from her estate seventeen thousand peasants at once, and as the French Government did last year, when it transported to Algeria four thousand families of useless mouths.