BUSINESS AND POLITICS
In this discussion of the process of wealth-concentration, I have so far
purposely omitted all mention of the most important aspect of the
phenomenon—the seizing by the “constantly increasing mass of capital” of
the powers of the State, and their use for purpose of intensifying
exploitation. I have avoided that feature, partly because it is
conspicuous enough to deserve a chapter to itself, but mainly in order
to make clear my view-point, that the phenomenon, while important, is
secondary—an effect rather than a cause.
This is, of course, contrary to the view usually taken. In most
discussions of the problems of the time, it is taken for granted that
“government by special interests” is the source of all the evil. But
while recognising how enormously the process of wealth concentration has
been accelerated by the political alliance, it is my thesis that exactly
the same conditions would have developed had economic forces been left
to work out their own results. I maintain that economic competition is a
self-destroying stage in social development; and that to regard it as
permanent is simply not to realise what it is. For competition is a
struggle, and the purpose of every struggle is a victory; to conceive of
a struggle without the intention to end the struggle, is simply
impossible in the nature of things. In the industrial combat the end is
the victory of a class, and the reduction of all other classes to
servitude—with the ultimate extinction of all individuals not needed by
the victors.
Again, it is generally the custom to regard this phenomenon of
class-government with indignation and astonishment, as if it were
something abnormal and monstrous; but from the point of view of this
discussion, it is a perfectly natural and inevitable incident of the
intensification of competition. You are to picture Capital, seeking
profits; like a wild beast in a cage, pacing about, watching for an
opening, here and there; like water, caught behind a dam, creeping up,
crowding forward, feeling for a weak spot. And the one thing to be
determined is: _Is there any way in which profits can be made through
the powers of government?_ If so, it is quite certain that there will be
an attempt made by capital to get possession of those powers.
You can see the thing in its germ in any primitive community; I once
amused myself by studying it in a little village in Canada, where the
trusts had never been heard of. The storekeeper was a rich man, and he
had a “pull” with the squire and with the constable and with the
game-warden; he did little favours for them, and they for him—so that a
poor “Frenchman” who was suspected of stealing a pair of socks found
himself in jail before he knew why. And then there was a big “lumber
man” in the township; he owned all the jobs, and he traded with the
storekeeper, and the storekeeper in return ran the political machine.
That was the whole story of the politics of the district—except that
there were several fellows of independent temperament, who grumbled, and
who constituted the germ of the Socialist movement.
Political corruption first became epidemic in our country in 1861, when
the government had to go into business upon an enormous scale. There
were contractors—and competition. And then, of course, there was the
tariff, a shrewd scheme to compel the people to pay high prices without
knowing it. Later on someone discovered the brilliant idea of the
franchise, the selling for a nominal sum of the right to tax the public
without limit. And so capital went into politics.
At first it did a purely retail business, buying up the legislators as
it needed them; but soon the thing became systematised, and Capital got
wholesale prices—it financed the machines, and chose its own candidates.
The process culminated at the beginning of the present decade, when “big
business” was in practically undisputed possession of both the majority
parties, of Congress and the Presidency, and of the governments in every
town, city and state in America.
You see, it was as if our society was in unstable equilibrium. We had a
political democracy, and we were developing an industrial aristocracy;
and it was impossible for them to exist side by side. Innocent people
had taken it for granted that they could; but it is no more possible for
a democracy to be aristocratic in any of its aspects and remain a
democracy, than it is for a virtuous man to be vicious in one
particular, and remain a virtuous man. Democracy is not a code of laws,
nor is it a system of government—it is an attitude of soul. It has as
its basis a perception of the spiritual nature of man, from which
follows the corollary that all men either are equal, or must become so.
And so between aristocracy and democracy, wherever and under whatever
aspects they appear, there is, and forever must be, eternal and deadly
war. Here is the testimony and the warning of the greatest of American
democrats, Abraham Lincoln, who if he could rise from his grave to speak
to us in these times of our country’s trial could speak no more
pertinent words than these. He had declared that the Slavery question
was one between right and wrong. “Right and wrong,” he said—“that is the
issue that will continue in this country when these poor tongues of
Judge Douglas and myself shall be silent. It is the eternal struggle
between these two principles—right and wrong—throughout the world. They
are the principles which have stood face to face from the beginning of
time and will ever continue to struggle. The one is the common right of
humanity, and the other is the divine right of kings. It is the same
principle in whatever shape it develops itself. It is the same spirit
that says: ‘You work and toil and earn bread, and I’ll eat it.’ No
matter in what shape it comes, whether from the mouth of a king who
seeks to bestride the people of his own nation, and live by the fruit of
their labour, or from one race of men as an apology for enslaving
another race, it is the same tyrannical principle.”
It is worth while pointing out the utter hopelessness of the struggle.
On the one hand was the capitalist, with his millions, alert, aggressive
and resourceful; he had an army of experts to help him—shrewd attorneys,
skilful lobbyists, newspapers and publicity bureaus, political henchmen
trained all their lifetime to the trade; he was cold and unscrupulous—as
a rule he was not a man at all, but a corporation, a thing without a
soul, a monster “clamouring for dividends.” He had a thousand devices, a
thousand pretences, a thousand disguises. And opposed to him was the
Public—unorganised, uninformed, and sound asleep!
Recently, when Mr. H. G. Wells was in this country, I had a long talk
with him, and he asked me how I accounted for the saturnalia of
corruption in our political life; he said that our people did not seem
to him degraded or brutal, and he could not understand why things were
so much worse here than in England. I said that in England the economic
process had been modified by the existence of an hereditary aristocracy,
holding over from old times and having high traditions of public
service. By nature this aristocracy sympathised with capital, and to a
certain extent fraternised with it; but it would not abdicate to it, and
occasionally, to preserve its own power, it made concessions to the
public, and so served as a check upon the forces of commercialism. On
the other hand the American people had only themselves to rely upon and
until they had been goaded into revolt, there was no limit whatever to
the power of greed.
I suppose it is unnecessary to offer any proofs of the existence of
“government by special interests.” If there is anyone who has been out
of the country for the past three years and has not read any of the
magazines, it will be sufficient to refer him to the two books of Mr.
Lincoln Steffens—“The Shame of the Cities” and “The Struggle for Self
Government.”
Steffens himself is a proof of the evil conditions: a man who has spent
ten years studying our politics, who went to the task with no
preconceptions, and only a passion for honesty and fair dealing—and who
has been made into a thorough-going radical by the irresistible logic of
facts. It was his particular service to the Republic to trace the stream
of graft to its fountain-head, which is what he calls “big business”;
and the series of papers in which he proved that thesis to our people
will long be studied as models of the higher journalism—the journalism
which is to ordinary newspaper writing what statesmanship is to
politics.
As I say, there is no need of proof; but simply by way of illustration,
and to call the picture to the reader’s mind, let me quote a few
paragraphs from one of these papers—“Pittsburg, a City Ashamed”:
“The railroads began the corruption of this city. There always was some
dishonesty, as the oldest public men I talked with said, but it was
occasional and criminal till the first great corporation made it
business-like and respectable. The Pennsylvania Railroad was in the
system from the start, and as the other roads came in and found the city
government bought up by those before them, they purchased their rights
of way by outbribing the older roads, then joined the ring to acquire
more rights for themselves and to keep belated rivals out. As
corporations multiplied and capital branched out, corruption increased
naturally, but the notable characteristic of the ‘Pittsburg plan’ of
misgovernment was that it was not a haphazard growth, but a deliberate,
intelligent organisation.... The Pennsylvania Railroad is a power in
Pennsylvania politics, it is part of the State ring, and part also of
the Pittsburg ring. The city paid in all sorts of rights and privileges,
streets, bridges, etc., and in certain periods the business interests of
the city were sacrificed to leave the Pennsylvania road in exclusive
control of a freight traffic it could not handle alone.”
The “bosses” who ruled Pittsburg were Magee and Flynn, and Mr. Steffens
prints in full the agreement between them and Senator Quay, by which
they divided the boodle of the state. “Magee and Flynn were the
government and the law. How could they commit a crime? If they wanted
something from the city they passed an ordinance granting it, and if
some other ordinance was in conflict it was repealed or amended. If the
laws of the state stood in the way, so much the worse for the laws of
the state; they were amended. If the constitution of the state proved a
barrier, as it did to all special legislation, the Legislature enacted a
law for cities of the second class (which was Pittsburg alone) and the
courts upheld the Legislature. If there were opposition on the side of
public opinion, there was a use for that also.
“As I have said before, unlawful acts were exceptional and unnecessary
in Pittsburg. Magee did not steal franchises and sell them. His councils
gave them to him. He and the busy Flynn took them, and built railways,
which Magee sold and bought and financed and conducted, like any other
man whose successful career is held up as an example for young men. His
railways, combined into the Consolidated Traction Company, were
capitalised at thirty million dollars. There was scandal in Chicago over
the granting of charters for twenty-eight and fifty years. Magee’s read,
‘for nine hundred and fifty years,’ ‘for nine hundred and ninety-nine
years,’ ‘said Charter is to exist a thousand years,’ ‘said Charter is to
exist perpetually,’ and the Councils gave franchises for the ‘life of
the charter.’”
And all this was a regular profession, a custom of the country, which
its devotees studied. “Two of them told me repeatedly that they
travelled about the country looking up the business, and that a
fellowship had grown up among boodling aldermen of the leading cities in
the United States. Committees from Chicago would come to St. Louis to
find out what ‘new games’ the St. Louis boodlers had, and they gave the
St. Louisans hints as to how they ‘did the business’ in Chicago. So the
Chicago and St. Louis boodlers used to visit Cleveland and Pittsburg and
all the other cities, or, if the distance was too great, they got their
ideas by those mysterious channels which run all through the ‘World of
Graft.’ The meeting place in St. Louis was Decker’s stable, and ideas
unfolded there were developed into plans which the boodlers say to-day,
are only in abeyance. In Decker’s stable was born the plan to sell the
Union Market; and though the deal did not go through, the boodlers, when
they saw it failing, made the market-men pay ten thousand dollars for
killing it. This scheme is laid aside for the future. Another that
failed was to sell the court-house, and this was well under way when it
was discovered that the ground on which this public building stands was
given to the city on condition that it was to be used for a court-house
and nothing else.... The grandest idea of all came from Philadelphia. In
that city the gas-works were sold out to a private concern, and the
water-works were to be sold next. The St. Louis fellows have been trying
ever since to find a purchaser for their water-works. The plant is worth
at least forty million dollars. But the boodlers thought they could let
it go at fifteen million dollars, and get one million dollars or so
themselves for the bargain. ‘The scheme was to do it and skip,’ said one
of the boodlers who told me about it, ‘and if you could mix it all up
with some filtering scheme it could be done. Only some of us thought we
could make more than one million dollars out of it—a fortune apiece. It
will be done some day.’...
“Such, then, is the boodling system as we see it in St. Louis.
Everything the city owned was for sale by the officers elected by the
people. The purchasers might be willing or unwilling takers; they might
be citizens or outsiders; it was all one to the city government. So long
as the members of the combines got the proceeds they would sell out the
town. Would? They did and they will. If a city treasurer runs away with
fifty thousand dollars there is a great halloo about it. In St. Louis
the regularly organised thieves who rule have sold fifty million
dollars’ worth of franchises and other valuable municipal assets. This
is the estimate made for me by a banker, who said that the boodlers got
not one-tenth of the value of the things they sold.”
Two or three years ago, before I met Mr. Steffens, I thought that he
knew only as much as he “let on”; and so I wrote him an “open letter,”
to point out the consequences of this régime of “big business.” The
story of this manuscript is an amusing one, and worth telling for the
light it throws upon my argument. Mr. Steffens was so good as to say
that it was the best criticism of himself that he had ever read; and it
was scheduled for publication in one of our three or four largest
magazines. But alas—it was purchased by the enthusiastic young editor,
and then read by the elderly and unenthusiastic proprietor. When I
rebelled at the long wait which followed, the proprietor invited me to
dinner, and unbosomed his soul to me. He was the dearest old gentleman I
ever met, and he put his arm about me while he explained the situation.
“My boy,” he said, “you are a very clever chap, and you know a lot; but
why don’t you put it all into a book, where you can’t hurt anyone but
yourself? Why do you try to get it into my magazine, and scare away my
half million subscribers?”
So the letter was shelved. But the questions it asked are now the
questions which events are asking of the American people; and so I shall
take the advice of the elderly and unenthusiastic proprietor—and publish
some of the letter in a book! It ran as follows:
This is the question I have wished to ask you, Mr. Steffens. “A
revolution has happened,” you tell us; we have no longer “a government
of the people, by the people, for the people,”—we have “a government of
the people, by the rascals, for the rich.” And if we find that that
revolution, which has overthrown the law, and which defies the law,
cannot be put down and overcome by the means of the law—what are we
going to do then? Are we going to sit still, and content ourselves with
saying it is too bad? Are we going to bear it—to bear it forever? _Can_
we bear it forever? And if we cannot bear it forever what are we going
to do when we can bear it no longer?
A revolution is a serious thing, Mr. Steffens. A man should not talk
about a “revolution” except with a thorough realisation of what the word
implies. A revolution means that the social contract has been broken,
that rights have been violated and justice defied—that, in a word, the
game of life has not been fairly played, that those who have lost may
possibly have had the right to win. And the game of life is a pretty
stern game for many of us, Mr. Steffens.
You and your friends, I and my friends, belong to a class whom this
“system” touches only through our ideals. Editors and authors, clergymen
and lawyers, we are pained to know that corruption is eating out the
heart of our country—but still, if the problem be not solved to-day, we
can put it off till to-morrow, and not realise what a difference it
makes. But there are some in our country whom the System touches far
more intimately and directly than this—some to whom the difference
between to-day and to-morrow is simply a difference between life and
death. I happened only yesterday to be reading a letter from a man who,
I think, knows that “System,” which is our new government, in this
personal and intimate way. I will quote a few words from his letter:
“I have been arrested, put in jail, prosecuted and persecuted. I have
had my customers driven away; I have been boycotted to the extent that
men who dared to trade with me have lost their jobs; I have had my home
broken into at night; been beaten with guns and abused by vile and
foul-mouthed thugs; been torn, partly dressed and bleeding, from the
side of my wife, who was driven from her bedroom and roughly handled;
and finally I have been shipped out and told that if I returned to my
home I would be hung. Not satisfied with this they have twice deported
my brother, who was conducting the business in which we were both
earning our living, so that it became necessary for an adjuster to take
charge, of our store.” All this was, needless to say, in Colorado; the
writer is Mr. A. H. Floaten, a storekeeper of Telluride, but now of
Richmond County, Wisconsin, where he was working in a hayfield when he
wrote. He goes on to add that the charge upon which he was “deported”
was that of selling goods to members of the Western Federation of
Miners. “As for my brother and myself,” he states, “I defy any and all
persons to show a single instance where either of us have ever violated
any law or even been suspected of crime, or have ever wronged any
person.”
Here is your “revolution,” Mr. Steffens, in full swing. One of the
questions which I have for some months found myself longing to ask you
is, how clearly you recognised in the Colorado civil war the natural and
inevitable consequences of a continuation of your “government of the
people, by the rascals, for the rich?” Here is an unequivocal
declaration, by a vote of two to one, by the people in one of the states
of this free country, in favour of a constitutional amendment permitting
an eight-hour law; and here are representatives of both the majority
parties pledging themselves to enact it, and then openly and shamelessly
selling themselves out to the predatory corporations of the state. The
people then resort to a strike to secure their rights; and when they are
seen to be winning, the militia is summoned, criminals are hired to
commit a dynamite outrage and afford the necessary pretext, and then
every tradition of American liberty and every safeguard of free
institutions is overthrown, and the strike crushed and the striker’s
organisation exterminated with a ruthlessness and a recklessness which
no police official in Russia could have surpassed. And then the party of
“law and order”—that is the “System”—sat enthroned in Colorado, and the
guileless reader of newspaper despatches believed that an “election”
took place in that state last November! The “System” suspended the
_Habeas Corpus_ Act, censored newspapers and telegrams, opened mails,
entered houses without warrant and drove women from their beds at dead
of night, deported men, defied and threatened judges, shut down mines in
spite of their owners’ will—and finally haled a score or two of elected
officials before it and put ropes around their necks and compelled them
to resign. And then the “rebellion,” that is, the agitation for an
eight-hour law, attempted to reassert itself in the form of ballots; and
by means of a threat of deposition it compelled the newly elected
governor to accede in everything to its will—and in particular to retain
in office the infamous militia official who was its agent in these
crimes!
But we, as I said before, are touched by these things only through our
ideals. We are sorry to see American institutions overthrown in an
American state; but we do not live in Colorado, and we are quite sure
that there is no danger of our being turned out of our homes. And yet we
know that the system exists in our own city and state, and sits just as
surely intrenched there as in Colorado. And we know also that it exists
for a purpose—that it exists to rule. And are we to imagine that it
exists to rule the people of Patagonia, of Greenland and Afghanistan? Do
we not know that it exists to rule _us_?
How does it rule us? How does it rule the people of Colorado? Whatever
is it that is wanted of the people of Colorado? Why, simply that they
should go into the mines and factories and work, not eight hours a day,
as they wished to, but twelve hours a day, the time the “System” bade
them to. And what is it that it wants everywhere else—in California, in
Maine and in Texas? What, save that those who have labour to sell shall
sell it at the price the “System” is paying, and that those who have
goods to buy shall buy them at the price the “System” asks? If this be
so, is not the only difference between us and the people of Colorado
that they went on strike against the “System,” whereas we are not on
strike—we _pay_?
Let us deal with facts. Here is a corporation which runs a
street-railroad in a city. It gives an abominable service, its cars are
cold and filthy, its employees are underpaid wretches who work thirteen
and fifteen hours a day—and the fare is just double that of the splendid
government service of Berlin. And the public-spirited men of the city
have for ten or twenty years been trying to do something with that
corporation at the state capital; but the corporation has its lobby and
continues to pay pig dividends upon its watered stock year after year.
And then do the people of the city organise and go on strike against
that corporation? No indeed—they pay.
You know of the agitation for a parcels post; you know that under the
parcels-post system an Englishman can send a package to California for
one-third of what it costs us to send one from New York. In Germany a
ten-pound package may be sent anywhere in the Empire for twelve cents;
and our post office pays the railroads more for its service than all the
rest of the civilised world combined, though the quantity of mail matter
carried is less than that of Great Britain, France and Germany alone!
Yet we know that it is a waste of ink setting these facts forth. Is not
the president of the United States Express Company the United States
senator from your own state? The railroad systems of this country have,
of course, their lobby in every state capital, and in Washington as
well; and every single year the railroad systems of this country
slaughter and maim the equivalent of a Gettysburg campaign—there were as
many people killed in the last three years as the British lost in the
entire Boer war. Yet there is not the least reason for this; the
railroads could, if they chose, build cars which will not crumble up
like matchboxes—they have proven it by killing only six Pullman-car
passengers in the same three years. But of course you have to pay a
large sum extra to ride in a Pullman car. If you cannot pay with money,
you pay with your bones—in either case, of course, you pay.
And then there is the tariff. You, Mr. Steffens, are a man who has both
the ability and the honesty to think, and you know what the tariff is.
You know that it is a device to keep out foreign competition and thus
enable home manufacturers to charge higher prices. You know that in the
early days its effect was to make manufacturing possible by keeping
prices at a level where a fair profit was paid. Above this level they
could not go, because there was free domestic competition. The tariff
was thus a tax, self-imposed by every man in the country, for the
purpose of building up the country’s home industries; exactly as if the
owner of a sugar-plantation should conclude it would pay him to grind
his own cane, and should set aside his gains for a few years to buy the
machinery. Now I might stop to argue the socialistic implications of
such a procedure—involving as it does the doctrine that the manufactures
are the interest and concern of the whole people, to the advantages of
which, when completed, they all have a right. (No plantation master, I
take it, would expect to furnish himself with machinery out of the wages
of his hands.) Continuing, however, to discuss facts and not theories,
you see that these industries which we have “encouraged” have now become
the mightiest power in the land. It is they who have accomplished the
revolution and set up the “System”; it is they who use the money which
the people have turned over to them, to maintain and perpetuate the old
arrangement—an arrangement which now enables them, since they have
become monopolies, to charge for their products from thirty to fifty per
cent. more than a fair price, as is proven by what they charge abroad.
The workingman, you know, Mr. Steffens, has all this justified to him by
the fact that he gets his share of this “prosperity”; but of late the
workingman has been finding that he does _not_ get his share. He has
brought the industrial machinery of the country to such a pitch of
perfection that he produces more than the country needs; and so when
foreign markets fail he is out of work part of the time; and the mass of
unemployed labour operates by the “iron law” to beat down wages and to
break strikes, and to make his share less and less. And all the time, to
pay interest on the constantly increasing capital of the country, the
prices of trust products are being raised yet higher, and the cost of
living is rising, year by year.
In the cotton mills of Alabama and Georgia little children six and eight
years of age are working twelve hours for a wage of nine cents a day.
And how do you think they fare in this fearful race for profits—what do
you think is the effect upon them of the continued operation of the
“System”? You may remember that I said a little way back that there were
people in this country to whom the difference between to-day and
to-morrow is simply a difference between life and death. It was such
people as these I had in mind.
Look, Mr. Steffens; you go from town to city, and from city to state,
and everywhere you show us hordes of political parasites battening on
corruption; and you tell us that the fortunes that they make represent
but a small portion of what is made by the “big business men” who bribe
them. Magee and Quay, you tell us, made thirty millions out of the
street railroads of Pittsburg; and all over this land, year in and year
out, such sums are being “made.” And soon afterward came Mr. Lawson’s
story of how the Standard Oil group “made” forty-six million dollars in
a single deal without turning over their hands. Mr. Lawson expatiates
upon this way of “making” dollars—he makes reflections which I had often
wondered if you were making. I have wondered if you realised entirely
that these millions of dollars were _real_ dollars? Dollars that a man
might spend, just the same as any other dollars—with which he might
purchase food that men had toiled to raise, and houses that men had
toiled to build! I am writing these words in October, and the windows of
my room look out upon a cornfield. All the year long I have watched a
farmer and his son at work in this field—first plowing it, then
harrowing it back and forth and across, then planting the corn,
patiently, row by row. The field is ten acres in size, and it seemed to
me that not a week passed all summer that the farmer was not plowing and
weeding it; and now that the fall has come he has cut it stalk by stalk,
and stacked it; and now I can see him and his son sitting on the bare,
bleak hillside this morning, husking it, ear by ear. That will take them
all of two or three weeks, and when the whole thing has been done they
will gather up the ears to cart them to town, and the farmer will have
five hundred bushels of corn and will get for them two hundred and fifty
dollars. And then I read Mr. Lawson’s account of how the Rockefellers
“made” forty-six million dollars out of Amalgamated Copper—and strive to
realise that what they made was the equivalent of the labour of the
farmer and the farmer’s sons and the farmer’s horses in one hundred and
eighty-six thousand ten-acre cornfields such as the one I look out upon!
Is it not obvious that if I were to have the power to call a piece of
paper one dollar and to put it into circulation, exchanging it for two
bushels of corn, I could only do it by diminishing the value of every
other dollar in the country a certain small amount? Supposing that the
total wealth of the country was one billion dollars, I should diminish
every single dollar by one-billionth. Suppose that similarly I “made”
one million dollars—by any sort of “making” whatever save by producing
some useful thing and increasing the total wealth of the country—I
should then tax the holder of every dollar one mill. A man who owned ten
thousand dollars would be robbed by me of ten dollars—he would be robbed
of it just as literally and as actually as if I had broken into his
house and stolen his watch. He would not know that he was robbed,
perhaps—all that he would know would be that when he spent his ten
thousand dollars he would not get quite so much. In Dun’s and
Bradstreet’s the event would be recorded in the statement that the cost
of living had risen one-tenth of one per cent. since last week, and that
interest rates had similarly declined. And now here is the young girl
who works in the sweatshops of Chicago for a wage of forty cents a week,
as thousands of them do. The great Amalgamated Copper deal is
consummated, Mr. Rockefeller and his fellow-conspirators “make”
forty-six million dollars—and the young girl’s wage becomes thirty-nine
cents and a fraction. At forty cents she was hanging on for her life; at
thirty-nine cents and a fraction she enters the nearest brothel. Here is
the little child of eight years toiling from six at night till six in
the morning in the midst of throbbing cotton-looms for nine cents. Magee
and Quay of Pittsburg “make” thirty million dollars in street
railroads—and the little child’s wage becomes eight cents and a
fraction. At nine cents he was starving; at eight and a fraction he
faints, and the machinery seizes him, and his arm has been torn out of
him before anyone can answer his screams. So it is, Mr. Steffens, that
there are people in this country to whom the difference between to-day
and to-morrow is simply a difference between life and death.
That farmer about whose work I spoke will take his two hundred and fifty
dollars to the bank for deposit; and in the line before the window will
be a young spendthrift idler with a month’s income from his father’s
estate, and a politician with a bribe for a street railway franchise;
and to the banker all these deposits will stand upon equal terms, they
will all be equally “good,” and will claim and get interest at the same
rate. The farmer will have to content himself with a lower rate, because
of the competition of the others; and next week, when the activities of
some speculator in Wall Street bring about a failure of the bank, he
will get not a bit more out of the wreck than the other two. And then he
will go back and toil for another year, to raise a similar crop—and what
will he find then? Why this: the forty-six millions of the Standard Oil
gang will have survived all mischances, and having by their enormous
mass attracted profits, will have become fifty millions, or even sixty;
and the thirty millions of Magee and Quay will have become thirty-five.
All the untold millions of the capital of the country will have
increased similarly; and the investment field will have become more
crowded yet, and the prizes fewer yet, and the chances more hazardous
yet; and the cost of living will be a little higher yet; and the
interest rate a little lower yet, and wages a little lower yet; and the
whole of human society will be toiling a little harder yet to pay the
profits upon that heaped-up mass of wealth. More men will be taking to
drink, and more women will be taking to brothels—more to suicide,
madness, vagabondage and crime. The race for profits will be a little
more fierce, social ostentation will be a little more vulgar, political
corruption will be a little more shameless, strikes and riots will be a
little more common, the socialists will be a little more active—and you,
Mr. Lincoln Steffens, will be a little more saddened at the sight of
your country’s downward career.
I have noticed the very curious fact about your views, that all your
hope of betterment is in the future—it is always how we can prevent new
stealing, never how we can punish the past. And so those thirty million
dollars of Magee and Quay, the forty-six millions of the Amalgamated
deal—they are safe and beyond recall forever? Mr. Lawson talks about
“restitution”; do you think he will ever bring it about—do you see any
signs of it so far? And yet those forty-six million dollars, assuming
that they grow at ten per cent., a small earning for such a sum—year
after year they will be, roughly speaking, as follows: 46, 51, 56, 63,
69, 76, 84, 92, 101, 111, 122, 134, 147, 162, 178, 196, 216, 238, 262,
288, 318, and so on. In other words, the heirs of the “Amalgamated”
financiers will twenty years from now have multiplied that sum nearly
seven times, and be receiving nearly seven times as much tribute from
the sewing-girl in the Chicago slums and the children in the Georgia
cotton mill. I, Mr. Steffens, am one of those who look upon all profits,
rent, interest, and dividends as a survival of barbarism, the last but
not the least of the devices whereby the strong enslave the weak and
profit by their toil; but I assume that you are not one of these—that
you are one of the class I heard described by a speaker the other night,
“who think that the first dollar is a male dollar and the second a
female, and that when you put them in the bank together they bring forth
dimes and nickels, which in the course of the years grow up to be
dollars as big as their parents.” Yet even so, you can not but recognise
the distinction between legitimate and illegitimate children. You can
not—to drop an inconvenient metaphor—claim that society can by any
possibility whatever be required to go on paying tribute to that stolen
forty-six millions—the three hundred and eighteen millions of twenty
years from now. It is a maxim of law, Mr. Steffens, that there is no
wrong without its redress.
And if you grant this and begin to examine the millions in that
light—what perplexities you come upon! Only take the tariff, for
instance—is there a dollar invested in the business of this country
to-day which has not profited by that, and which is therefore not made
up out of the tiny contributions of thousands of persons who not only do
not own that dollar, but do not own any other dollar? And then consider
that the beginnings of most of our great fortunes were made in Civil War
times, when the nation in its extremity paid two dollars for every
dollar in value it received! And consider the chaos of political
corruption that followed, the twenty years of plundering of every
variety that American ingenuity could invent, from Black Friday to the
Western land grabs and railroad steals! Try to figure how many crimes
are represented by the Vanderbilt millions, how many by the Goulds’s;
think of the commercial assassinations represented by the word Standard
Oil—the secret rebates and discriminations, the wholesale buyings of
legislatures and elections; think of the whole institution of corruption
of the present day, of the “System,” intrenched in village and town,
city, and state, and nation, owning both parties, the executive, the
legislative, and the judicial branches of the Government, the schools,
the colleges, the pulpits, the press, literature, and art, and public
opinion—making it, not figuratively and hyperbolically, but literally,
simply, and indisputably the fact that there is not to-day in the land a
place where a man can take a dollar and invest it, and get back a copper
cent that is not tainted with corruption, polluted by violence, treason,
and crime, and stained with the blood and tears of uncounted thousands
of agonised women and children!
So much for the letter. If there is anyone who, after reading it, is
still of the opinion that the people should pay the tribute demanded
twenty years from now, there is nothing more that I can say to
him—except to give a few statistics by way of further elucidation,
showing him how many more millions of dollars there will be to enter
their claim. There will be, for instance, the four hundred and fifty
million dollars of the Astor family—all invested in New York City real
estate, and at the rate of growth of the city, certainly destined to be
a billion dollars in twenty years from date. There is the half billion
dollars of Mr. Rockefeller, increasing by a most conservative estimate
at the rate of ten per cent. per year, and therefore destined to be over
four billions at that time. And then there are the railroads of the
country. We are now being prepared for a decision to be some day
delivered by the Supreme Court, to the effect that any rate regulation
which interferes with dividends is confiscation, and therefore
unconstitutional. And yet we know that railroad capitalisation is simply
a function of earning-power; that what the financiers have uniformly
done was to charge all the traffic would bear, and then water their
stock until the rate of dividends came down to the market average. The
capitalisation of the railroads of the country, fixed upon this basis,
is thirteen billion dollars, whereas their actual cost was only six or
seven billions. To give one or two samples of this process, the Western
Maryland Railroad was bought up by the Goulds, and watered from nine
millions up to fifty-one millions. The Central Railroad of Georgia,
which cost less than seven millions, has now been watered up to
fifty-five millions. Assuming that the watering were to stop to-day, and
that the railroads simply re-invested their dividends at the present
rate of six per cent., in twenty years we should be paying interest upon
over forty billion dollars.
From a brokerage circular which recently came in my mail, I have clipped
a few more instances of the workings of trust finance. The argument of
the circular is that I need not be frightened at their offer to make my
money earn more than six per cent.—that over a hundred per cent. is
“being frequently earned by legitimate business.” Thus the Diamond Match
Company recently paid ten per cent. on a capitalisation of fifteen
million dollars, when its original capitalisation had been only six
million dollars. The Western Union Telegraph Company began in 1858 with
only three hundred and eighty-five thousand dollars, yet in 1874 it paid
one hundred and fourteen per cent. on seventeen million dollars. Anyone
who had invested one thousand dollars in this stock in 1858 would by
1890 have received fifty thousand dollars in stock dividends and one
hundred thousand dollars in cash dividends. The present capital is over
ninety-seven millions—“and the greater part of the equipment has been
created out of the earnings of the company!” In the case of the
Prudential Life Insurance Company (owing, though the circular does not
state it, to a little deal between United States Senator Dryden and the
New Jersey State Legislature) for every one thousand dollars originally
paid in, the stockholders now own twenty-two thousand dollars’ worth of
stock and received annual cash dividends of twenty-two hundred dollars,
or two hundred and twenty per cent. upon their original investment!
And then, to diversify the subject, let us consider the tariff, and its
variegated plunderings. In a letter to the New York _Evening Post_ of
Oct. 26th, 1904, Mr. J. R. Dunlap gave some figures showing the
“scandalous taxes imposed by trusts upon the people”:
“Now, to show how the Dingley duty of eight dollars per ton on steel
rails taxes American railroads and hence reaches deep into the pockets
of shippers and travellers on American railroads, I need only cite the
fact that, during the year 1903 our American railroads purchased from
the steel pool exactly three million forty-six thousand eight hundred
and thirty-six tons of new steel rails (see statistical abstract,
Department of Commerce and Labour). The price to _foreign_ railroads
being, say twenty dollars per ton—as we _now know_—and the pool price to
American railroads being twenty-eight dollars per ton, that means that
the American people, _during the single year last past_, contributed a
clean net profit of twenty-four million three hundred and seventy-four
thousand six hundred and eighty-eight dollars to the rail pool—by
reason, presumably, of their “patriotic” belief in the Dingley duties!
And during the past six years—since the Dingley Bill was enacted—these
same American railroads have been forced to contribute to the few
members of the rail pool exactly one hundred and two million six hundred
and twenty-one thousand two hundred and fifty-six dollars, or eight
dollars per ton on twelve million eight hundred and twenty-seven
thousand six hundred and fifty-seven tons of rails bought and used.
Dividing that stupendous sum of protection profit (one hundred and two
million six hundred and twenty-one thousand two hundred and fifty-six
dollars) by eighty million of population, we see that the rail pool
alone—to say nothing of other combinations “sheltered” by the Dingley
duties—has collected a tax of exactly one dollar and twenty-eight and
one-quarter cents ($1.28¼) for every man, woman, and child in America,
white and coloured.
“To further indicate the fabulous profits which the Dingley duties make
possible to our ‘infant’ iron and steel industries, I need only cite
recent and familiar records. In the spring of 1899, when the Steel Trust
was in process of formation, and when it became necessary for the
influential men in the steel industry to _prove_ what enormous profits
the steel manufacturers were making, and thus to induce the investing
public to put their money into Steel Trust stocks—then it was that Mr.
Charles M. Schwab, president, wrote to Mr. Henry C. Frick, chairman of
the Carnegie Steel Company, the famous letter of May 15, 1899, now
public property, in which Mr. Schwab used these words:’
“‘What is true of rails _is equally true of other steel products_....
_You know_ we can make rails for less than twelve dollars per ton,
leaving a nice margin on foreign business.’
“Mark you, that was in 1899, when the boom was at its zenith, when wages
were highest, and when all the costs of production were far above all
averages of recent boom years.
“To show how accurate Mr. Schwab was in these statements, and to show
how trustworthy was his confident forecast of future profits, I need
only cite the following speaking figures from the two annual statements
which have been made public by the United States Steel Corporation,
namely:
Total number of employees:
1902. 1903.
168,127 167,709
Total annual salaries and wages paid:
$120,528,343.00 $120,763,896.00
Net earnings:
$133,308,763.72 $109,171,152.35
“It will be observed that during these two years the average annual net
earnings of the Steel Trust _exceeded the total labour cost of their
entire product_!”
MEDICINAL PRODUCTS
“Turning from the iron and steel industry, we might take quinine, and
many other medicinal products; we might take chemicals, many of them
most essential in manufacturing industry; we might take borax, which
sells in America at seven and one-half cents per pound, and in Britain
at two and one-half cents per pound, because the Dingley duty is exactly
five cents per pound; we might take mica, a mining product largely used
in the electrical, wall-paper and stove-making industries, and which
enjoys a modest protection ranging from one hundred and fifty to four
thousand per cent. In short, we might take each and every staple product
now made in America, and needlessly sheltered by the Dingley duties, and
prove, by comparative prices at home and abroad, that the fabulous
profits which the gentlemen engaged in these industries are now
making—and which they have capitalised into watered “industrials”—are
due chiefly and directly to the fostering care of the Dingley Bill,
which was designed to protect our ‘infant’ industries.”
In the same issue, another correspondent, Mr. W. J. Gibson, shows how
the Government serves as a tool of the trusts in tariff exactions. He
gives several columns of facts about such outrages as the “Rupee Cases.”
For instance:
“There have been nine or ten decisions on this one question against the
Government, and still the secretary of the treasury refuses to refund
the money which the courts have decided so often he has exacted
illegally. The money he has directed to be wrongfully assessed and
collected, and is retaining in these cases, known as “the Rupee Cases,”
amounts to over a million dollars. The parties cannot get any interest
for their money so wrongfully withheld, and the customs officials are
still being directed to assess all merchandise coming from India on the
basis of the rupee at the value of thirty-two cents in our money. This
has gone on for more than six years, and against the decision of the
United States Circuit Court since January 7, 1899.”
And now, can we get any broad view of the results of this long process
of wealth-concentration? In 1850 the wealth of the United States was
estimated at nine billions; in 1870 it was thirty billions; in 1890 it
was sixty-five billions; and in 1900 it was ninety-five billions. How is
this wealth distributed? Writing in 1896, Dr. C. B. Spahr made his
famous calculation, embodied in the statement that one-eighth of the
population owned seven-eighths of the wealth, and that one per cent.
owned more than the remaining ninety-nine per cent. And at that time the
machinery of exploitation had hardly more than got under way. The best
attempt at an estimate since then is the one by Lucien Sanial, published
by the American Branch of the International Institute of Social Science.
This is the result of a careful analysis of the census of 1900; it shows
that of ninety-five billions of the country’s present wealth,
sixty-seven billions are owned by a capitalist-class of two hundred and
fifty thousand persons, twenty-four billions by a middle class of eight
million four hundred thousand persons, and four billions by a
working-class of over twenty million persons. And now, if the
sixty-seven billions owned by the capitalists be assumed to earn ten per
cent.—which is surely a reasonable average amount—our people will be
paying interest upon four hundred and fifty billion dollars at the end
of the twenty year period!
And that represents the centralisation of the actual ownership of
wealth; but one does not get a real understanding of the situation until
he begins to consider the centralisation of the _control_ of wealth. In
explaining the struggle over the surplus of the life-insurance
companies, one of our financial magnates remarked to me: “I would rather
have the power of manipulating four hundred million dollars, than the
actual ownership of fifty millions.” And with that crucial fact in mind,
let one consider the figures given by Mr. Sereno S. Pratt in _The
World’s Work_ for December, 1903, and summarised in Dr. Strong’s “Social
Progress,” as follows:
“One-twelfth of the estimated wealth of the United States is represented
at the meeting of the Board of Directors of the United States Steel
Corporation.
“They represent as influential directors more than two hundred other
companies. These companies operate nearly one-half of the railroad
mileage of the United States. They are the great miners and carriers of
coal. The leading telegraph system, the traction lines of New York, of
Philadelphia, of Pittsburg, of Buffalo, of Chicago, and of Milwaukee,
and one of the principal express companies, are represented in the
board. This group includes also directors of five insurance companies,
two of which have assets of seven hundred millions of dollars. In the
Steel Board are men who speak for five banks and ten trust companies in
New York City, including the First National, the National City, and the
Bank of Commerce, the three greatest banks in the country, and the heads
of important chains of financial institutions. Telephone, electric, real
estate, cable, and publishing companies are represented there, and our
greatest merchant sits at the board table.
“What the individual wealth of these men is, it would be impossible and
beside the point to estimate; but one of them, Mr. John D. Rockefeller,
is generally estimated to be the richest individual in the world. But it
is not the personal, but the representative, wealth of those men that
makes the group extraordinary. They control corporations whose
capitalisations aggregate more than nine billion dollars—an amount (if
the capitalisations are real values) equal to about the combined public
debts of Great Britain, France, and the United States. It is this
concentration of power which is significant. There were at the time of
the last statement sixty-nine thousand nine hundred and fifty-five
stockholders in the Steel Corporation. But the control of this
corporation is vested in twenty-four directors, and this board of
directors is guided by the executive and finance committees, which in
turn are largely directed by their chairmen, who are probably selected
by the great banker who organised the corporation and in a large part
sways its policy.
“Examinations show that the concentration of control of these great New
York City banks has gone so far that a comparatively small group of
capitalists possesses the power to regulate the flow of credit in this
country. In the last analysis it is found that there are actually only
two main influences, and that these are centred in Mr. Morgan and Mr.
Rockefeller. It is possible to express in approximate figures the extent
of the Morgan influence”—which the writer shows in a table to figure up
over six billion two hundred and sixty-eight million dollars. How very
conservative is Mr. Pratt’s estimate is shown by the fact that he gives
the number of holders of shares of the railroads of this country as nine
hundred and fifty thousand persons; with which the reader may contrast
the following editorial paragraph from a recent issue of the New York
_Times_:
“It would appear from evidence collected by the Interstate Commerce
Commission and communicated to the Senate, that the ownership of the
railroad system of this country is not as widely diffused as has been
supposed. On the 30th of June, 1904, the 1,220 railroads reporting to
the Commission had only 327,851 stockholders of record. This total
includes many duplications, as it was impossible to know in how many
instances one capitalist was represented in the stockholding interest of
several railroads. Assuming the population of the United States to be,
in round figures, eighty millions, the entire mileage of the railroads
doing an interstate business is owned by about four-tenths of 1 per
cent. of the people of this country.”
Such is the situation. It completes our view of the process of
Industrial Evolution, so far as it has progressed up to date. The
condition is like that of an oak tree planted in a jar, or a chick
developing within its shell; the indefinite continuance of the process
is inconceivable. What form the collapse will assume, and when it may be
expected to occur, is the problem next to be taken up.