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Home Office, NEWARK, N. J.

JOHN F. DRYDEN, President.

LESLIE D. WARD, Vice-President.

EDGAR B. WARD, 2d Vice-Pres. and Council.

FORREST F. DRYDEN, Secretary.

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We owe allegiance to the state; but deeper, truer, more
To the sympathies that God hath set within our spirit's core-
Our country claims our fealty; we grant it so, but then
Before man made us citizens, great Nature made us men.
-James Russell Lowell.

Descensus Averni: A Study in Debts.

BY ELTWEED POMEROY.

A Roman poet, who had had a wide experience, wrote: "Facile est descensus averni "-the descent

into hell is easy. There is no hell to an honest man like the hell of debt. A man who has energy, ability and youth may, at times, profitably go into debt, but if he stays in debt, and that debt increases, it is not profitable, and his "descent into hell is easy." The occasional profitable contraction of debt is true of an individual, but it is not true of a nation, because those who pay off old debts should balance, and, if the nation is prospering, more than balance those who contract new debts.

The wealth of the United States is increasing rapidly, more rapidly than in any country in the world, both in the aggregate and per capita. It is concentrating, too, more rapidly than in any country in the world, in my opinion. One prominent feature of this concentration is the great and rapid increase in debt by the middle and lower classes.

This paper attempts to show: First, the wonderful increase in population and wealth of this country; Second, accompanying, and a part of, this increase of wealth, the rapid decrease of national, state, municipal and all kinds of governmental debts, although there has been a great increase in government properties; Third, the tremendous increase in private indebtedness, and to what classes these debtors belong. The time taken is the decade from 1880 to 1890, and the facts are culled from the official United States census bulletins, probably the most accurate and admirably arranged body of statistics ever gathered.

The facts given abundantly justify the statement that the problem of our civilization to-day is not production but just distribution. If the causes which have and are producing the conditions shown are not soon changed, it will produce, as Dr. Herron says, "the most atheistic and, in some respects, the worst des

No. 7.

potism-the worst to overcome because of the compresiveness as well as the indirection of its rule."

*In the decade from 1880 to 1890, the population of the United States increased from 50,000,000 to over 62,500,000, or nearly 25 per cent. The assessed valuation of property increased from nearly $17,000,000,000 to over $24,500,000,000, or nearly 45 per cent. The estimated true valuation of property increased from a trifle over $43,500,000,000 to a trifle over $63,500,000,000, or the same, nearly 45 per cent. The amount of wealth per capita has increased from $514 in 1860 to $780 in 1870, to $870 in 1880 and to $1,016 in 1890. It has, therefore, increased nearly 17 per cent in the last decade.

During this decade the debt of the civilized world, outside of the United States, has increased from $23,500,000,000 to nearly $26,000,000,000, or over 9 per cent. The debt of our country has decreased in the same period from $1,923,000,000 to $916,000,000, or over 50 per cent. It was $38.33 per capita in 1880 and $14.63 in 1890, or a decrease of nearly 62 per cent per capita. In 1890, France owed $116.03 per capita; Netherlands, $95.56; Great Britain, $87.79; Italy, $76.06; Austria-Hungary, $70.84; Belgium, $63.10; Prussia, $37.03, and Russia $30.79.

The state and territorial debt has decreased, from ISSO to 1890, from $290,000,000 to $223,000,000, or 23 per cent, but the per capita indebtedness decreased from $5.79 to $3.56, or 38.5 per cent. Most of this decrease is in the North Atlantic division, embracing New England, New York, New Jersey and Pennsylvania.

The county debt increased a trifle during this decade -from $124,000,000 to $142,000,000, or 14.5 per cent increase, but the per capita decreased from $2.47 to $2.27, or 8 per cent decrease. The North Atlantic division decreased this kind of debt, and the rest of the country increased it a little.

The municipal and school district indebtedness increased from $703,000,000 to $878,000,000, which is 25

*NOTE-In the figures, the round millions are given; where the figure is more than a half an extra million is added, where less it is not regarded. The same rule applies to the percentages, and more than one-quarter per cent is called an extra one-half per cent and less is not regarded.

per cent increase, but the per capita increase is only from $14.01 to $14.02.

Thus the grand total of national, state and territorial, county, municipal and school district debt decreased from $3,150,000,000 to $2,159,000,000, or 31.5 per cent, and the total per capita indebtedness decreased from $60.60 to $34.48, or 43 per cent decrease.

During this decade the national government has been building postoffices, custom houses, and many other buildings, making river, harbor and many other improvements, besides paying a large part of the cost of the civil war in pensions; the states, counties and school districts have built roads, bridges, schools, court houses, etc., and stored fixed capital in many ways, and the municipalities have established or improved waterworks, and, in many cases, lighting and other works, paved, builded, and spent much money which will never need to be spent in the same way again, and a certain part of which will soon produce revenue.

During this decade the amount of the bonded national debt and the combined state and local bonded debt has decreased from $2,827,000,000 to $1,955,000,000. In ISSO the average rate of interest on this debt was 5.24 per cent, and in 1890 it was 4.85 per cent, despite the fact that many of the bonds could not be refunded at lower rates of interest, because they could not be called in, though the money could have been obtained at less. This shows a decrease of nearly 7.5 per cent of the rate of interest. The decrease in the amount of the debt and in the rate paid on it, and the increase in the population, have decreased the amount paid per capita from $2.95 to $1.51, or a decrease of 49 per cent in the amount of interest paid. The interest charge on every $1,000 of assessed valuation has decreased from $8.76 to $3.84, or 56 per cent.

This is a magnificent showing. Mr. Porter says, in Census Bulletin No. 206: "It is gratifying to know that through the reduction of principal, the lessening of the interest rate and the increase of population and wealth, the burden of debt has been rapidly growing less, much more rapidly than the reduction of principal alone would indicate." As a nation, we can be proud of the showing.

And now the other side: How is it with the individuals composing the nation? Are they getting out of debt also? There is one mortgage to every twelve persons in this country, but as there are five persous in a family, we can say say there is one mortgage to every 2.4 families. As out of this 62,000,000 only a trifle over twelve million are of voting age and qualification, we can say there is one mortgage to every 2.4 voters. This mortgage debt is 18.5 of the true valuation of all taxed real estate, whether mortgaged or not. Thirty-two per cent in number of all the acres in this broad land and 23 per cent of all the city lots are incumbered with a mortgage. This real estate mortgage debt was, in 1880, $2,343,000,000, and in 1890 it had risen to $6,000,000,000, or an increase of 156 per cent. This is an increase per capita from $46.72 to $118, or 152.5 per cent. There has been a singular

progressiveness about the increase of this debt. It was larger in round millions in 1881 than in 1882 by $120, in 1882 by $133, in 1883 by $35, in 1884 by $30, in 1885 by $32, in 1886 by $151, in 1887 by $233, in 1888 it decreased $60 only to increase in 1889 by $169.

During this decade, the average rate of interest paid on these mortgages decreased from 6.75 per cent to 6.52 per cent, which is a decrease of only 3.4 per cent of the rate of interest. Hence, the rate of interest has decreased half as rapidly on private bonded debts as it has on the government bonded debts.

By whom are these mortgages owed and to whom? That is the important question. What light do statistics shed on it? The average mortgage is $1,363. This shows at once that most mortgages are not put on property of very high value. The average of the country mortgages (those on acres) is $1,064, and the average value of the property mortgaged is $1,839, supposing it to be equal in value per acre to the unmortgaged, so that the mortgage covers 58 per cent of its value. The average of the city mortgages (those on lots) is $1,643, and the value of the property is $2,429, supposing it to be equal in value per lot to the unmortgaged, so that the mortgage covers 68 per cent of its value. (It should be said here that the valuaation is estimated, and is doubtless low, while the amount of the mortgage is exactly known, and, hence, these per cents may be a little high, but it is the best basis we have to go on.) This shows that city property, where incumbered, is mortgaged to nearer its true value than country property. It shows that not many rich people have mortgaged their property, when its average value is $1,839 in the country and $2,429 in the city. It is the middle class which is getting into debt, and deeply, too, when they pledge their property up to 58 per cent in the country and 68 per cent in the city. These conclusions are strengthened by the fact that the average mortgage in the country covers 108. acres, which is not a large farm, and in the city it covers 1.72 lots, which is not a large holding.

In

It is reinforced by the fact that 46 per cent of the number, though not quite 10 per cent of the value of the mortgages, are under $500 each, and 70 per cent of the number, though but 24 per cent of the value, are under $1,000 each, and 97 per cent of the number, and So per cent of the value, are under $5,000 each. 102 counties, carefully examined, 28 per cent of the number of mortgages, and 24 per cent of their original value, were given to mortgagees who held over twentyfive mortgages each, and another 10 per cent in number, and 11 per cent in original value, were given to those who held between ten and twenty-five mortgages each. This shows how certain classes are concentrating wealth in their hands.

If we reckon two-thirds of the true value of real estate as the total amount that can be incumbered, then 28 per cent of the greatest possible incumbrance has been reached on all the real estate in the country, whether mortgaged or not. Of course, the percentage is much higher on the unincumbered property alone.

We can readily see that it is the owners of property ranging from $500 to $2,500 in value who bear this indebtedness, but is it confined to any one class in the community? We have heard a great deal about the bad condition of the farmers during the last few years; is it true? In 1880 there were 842,000 owned farms, in 1890, 850,000, or an increase of less than 1 per cent in the decade. In 1880 there were 271,000 hired farms, and in 1890, 406,000, or an increase of nearly 70 per cent. This comparison is not absolutely accurate, as the census of 1880 showed owned and hired farms, and that of 1890 showed farm-owning and farm-hiring families, but it is substantially true. The figures are frightful. Almost all of the increase in farms during the last decade, either from the natural growth of the west or from the division of farms caused by death, has passed into alien hands. The tillers of the soil are being dispossessed at a more rapid rate than probably ever before in the world's history. A little study of the table shows that this movement is not confined to any one section, but is progressing with uniformity all over the union.

Of this 350,000 families owning farms, 257,000, or 30 out of every 100, own mortgages on their farms also, so that 53 per cent of the farmers in this country either do not own their farms or only partially own the land they till. These incumbered farms average $3,190 in value, (see note*), and the debt on them averages $1,130, or 35.5 per cent. Fifty-three per cent of these incumbered farms are valued at less than $2,500 each.

"Yes, this is true," you say; we have heard that the farmers are going to the dogs, but the cities hold many flourishing middle-class people." Do they? Are these people flourishing? In 161 medium-sized cities, ranging from 8,000 to 100,000 in population, there are 717,000 families, and of this number 487,000, or 68 per cent, hire their homes. Of the remaining thirty-two out of the hundred, twenty own without and twelve with a mortgage. One family out of five lives in a home it wholly owns. This is worse than the farmers. Each one of these twelve mortgaged homes is valued at $3,837, and its mortgage amounts to $1,607, or 42 per cent, and 46 per cent of these pledged properties are worth less than $2,500 each.

In the larger cities, over 100,000 in population, the percentage hiring is larger, being 74 per cent, and of the twenty-six out of the hundred who own, sixteen hold free and ten with a debt. The property of these ten is worth on an average $4,883, and the mortgage is $1,967, or 40 per cent of the value. Thirty-nine per cent of these pledged properties is worth less than $2,500. In fact, not only is the owning concentrating in large cities, but also the owing. The counties embracing the cities of New York, Brooklyn, Buffalo, Rochester and Syracuse owe So per cent of the mort*The discrepancy in the value of the farms and lots now mentioned, with the previous figures, is due to the fact that the previous amount is figured from the returns for ten years from thirty-two states in Bulletin No. 64, and the later figures are taken from the mortgages actually in force in twenty-two states as recorded in Bulletin No. 63.

The per capita debt

gages in force in New York state. in these counties is $392, and outside of them $117. In these counties the debt averages 34 per cent of the true value of the real estate, and outside it is 21 per cent. The counties embracing Boston and its suburbs, Lawrence, Lynn, Lowell and Worcester owe 74 per cent of the mortgage debt of Massachusetts. The per capita debt is $160 inside and $112 outside, and the ratio to the true value about the same. Cook county, Illinois, holding the city of Chicago, owes half of that state's mortgages. Its per capita debt is $161, and in the rest of the state it is $73. Seventy-two counties, embracing the larger cities, owe 56 per cent of the mortgages, which, in these counties, average $221 per capita, and outside only $74. In these counties the mortgages are 23 per cent of the true value of all taxed real estate, outside of these counties, they are 15 per cent. The great cities owe more, either per capita or per valuation, than the smaller places. The concentration of wealth means the concentration of debt also.

The big cities do not show up as well as the mediumsized ones, and both are worse than the country. In fact, while the mortgage debt has increased 156 per cent in the last decade, the mortgages on city property increased 170 per cent in number and 236 per cent in value from 1880 to 1889. Startling as are the figures about farm property, we have been somewhat prepared for them by the press of the last few years, but we have not been prepared to believe that the condition of the cities is worse than that of the country. But such is the fact.

Is it due to extravagance? Eighty-two and one-half per cent of the original amount of these debts was given as part of the purchase money, or for improvements, and 94 per cent represents purchase money, improvements, business, and the more durable kinds of personal property. It cannot be that.

It is not a local result, and, hence, cannot be caused by local conditions. New York owes more per capita than any other state-$268, then follow the District of Columbia, $226; Colorado, $206; California, $200; Kansas, $170. The south, as a rule, owes much less per capita than any other section, but it is less wealthy. It has also not reached as high a percentage in the table of the greatest possible incumbrance. The District of Columbia heads that bad list with 54 per cent, New York is next with 46 per cent, then follow Kansas with 40 per cent, thrifty Vermont with 33 per cent, Nebraska with 30, Massachusetts with 29 per cent, and so on, skipping back and forth across the country.

The absentee ownership also is very large. In a careful examination of 102 widely scattered counties, it was found that 28 per cent of the number, and 31 per cent of the original amount, was owned outside of the state in which the county is situated. This percentage is larger, as might be expected, in the western states, which have no large city. In one county in Nebraska 98.5 per cent, both in number and amount, is owned outside of the state. A remote creditor will not have the consideration for a debtor whom he does

population. Enough facts and figures have been given to convince. More might be cited till the reader wearied. It means that the great middle class, the farm owners and home owners, the people worth from $1,000 to $5,000, the backbone and sinew of this country, the class which furnishes the great men of the country and from which the armies of the revolution and the rebellion were drawn, is rapidly getting into debt. This means that it is decreasing in numbersthose most heavily weighted become bankrupt and drop down to the day-laboring class. It is losing its independence and influence. A man who is in debt can never speak his mind with perfect independence. It is losing its manhood and gaining anxiety and in all the evils that debt creates. It is like a great iceberg floating into warm waters, whose edges fray off, and the warmth penetrates its mass, rendering it easily broken and rotten. It gradually sinks lower and lower into the water and becomes more and more water-logged. The descent into this hell of debt is easy. It is going on at an accelerating rate. What are its causes? Can they be removed? How can the movement be reversed? Can the republic exist without this middle class-with only the millionaire and the day laborer or pauper? It cannot exist nine-tenths slave and one-tenth free, was said half a century ago, and it is true to-day. As Prof. Herron says: 66 There is but one deliverance from the rule of the people by property and that is the rule of property by the people. . . . The only hope of the people for either industrial or political freedom lies in their taking lawful possession of the machinery, forces and production of the great industrial monopolies. Through the instrumentality of the state, the people, constituted in the realized democracy of a social commonwealth, could organize their social economy in justice that would insure work and bread for all who would work, as well as make common to all many social benefits now exclusively enjoyed by the privileged few.”

The Ruling Power.

BY AUG. MCCRAITH.

The practice of ruling, at best, is an evil, and was it not necessary in some cases would not be confessed by an enlightened community. But when so enlightened! To rule is not so much a desire as it is a tendency, a means to an end. True, there are, unfortunately, some characters who are dominated with the idea that they are born to rule. Their mark in history is a river of tears. To exert power over others, begetting, as it does, enmity and opposition, can afford but a petty satisfaction to the perpetrator, excepting in that it serves his selfish ends. Progress is along the line of least resistance, and turns, in all things, from obstruction to the most available outlet. The water bursting forth flows into the easiest channels, and, meeting obstacles, goes to the right or left, marking its course with coves, inlets and bays. But let the stream possess the power of a Niagara, it sweeps down all in its pathway, leaving a straight and narrow course, con