The Widespread Capital Ownership and the Rich

The widespread capital ownership model was not based on gifts of the rich or redistribution by the State.

In the mid-nineteenth century, Giacomo Pecci, Cardinal-Archbishop of Perugia, one of the Papal States in Italy, instituted economic reforms intended to make the Perugians economically — and thus politically — independent.

This was essential, because in the mid-nineteenth century other countries were trying to take over the Papal States and eliminate not merely the Catholic Church, but all organized religion except for the worship of the State, what the totalitarian philosopher Thomas Hobbes called the “Mortal God.”

But how can people take care of themselves without massive State intrusion and control? Cardinal Pecci’s answer was widespread capital ownership. Nor did he just talk. He instituted programs to make people economically independent without relying on State-supported wages or welfare. As related in his biography (albeit in somewhat flowery nineteenth century language).

How can people take care of themselves without massive State intrusion and control? The answer is widespread capital ownership.

So that no sex or age or class, or pressing need of mind, of heart, of soul or body, was left uncared for, unprovided for by this good shepherd of Christ’s flock.

No, not even the industrial and commercial wants of the struggling, laborious, and thrifty classes. Cardinal Pecci founded, revived, improved, or developed the Monti di Pietà, the poor man’s blessed resource in the Catholic Italy that was, where for the money loaned to those who wished to rise from poverty to independence, or to increase their thrift, no interest, or nothing approaching to modern interest for money, was ever asked.

It was he who inspired the Perugians to found their savings-bank, furnishing himself a good part of the capital.
Thus, capital for the poor was not a gift of the rich or redistribution by the State. The means to acquire ownership was a gift to the extent that no interest was demanded, but the capital itself was purchased in the usual way and paid for by the new owners exercising “thrift.”

The problem is that Pecci’s program can only work at a low level of technology since it is based on past savings. Technology tends to get more expensive as it advances, and most people can’t afford to save enough.

The basic principle, however, is sound: anyone can be an owner if all new capital can pay for itself out of its own future profits that the owner “thriftily” applies to the purchase price, and then enjoys as consumption income once the debt is repaid.

If the money can be found for the purchase of self-liquidating capital, everything falls into place.

The rich don’t use their own money to finance new capital

This is where the breakthrough of Louis Kelso comes in. Kelso knew that the rich don’t use their own money to finance new capital. Nor do they use other people’s money. Instead, they create new money themselves, which is redeemed and cancelled once the new capital pays for itself out of its own future profits.
How? By understanding what “money” really is! Money is anything that can be accepted in settlement of a debt. All money is a contract, and all contracts are — in a sense — money.

Anybody who can enter into a contract can create money. If people can produce, they can enter into contracts for what they produce, and if they can enter into contracts, they can create money . . . and with money they can buy what other people produce. And that’s the whole idea behind Capital Homesteading.

And whatever happened to Giacomo Pecci? In 1878 he was elected to the papacy and became better known as Pope Leo XIII.


Michael D. Greaney is Director of Research at the Centre for Economic and Social Justice