improvements, which are made by human labor, and put it on the land,
which is the gift of Nature. He points to the rise of land values in
cities, the so-called “unearned increment”; values go up, because
people crowd into the city, and private owners get a colossal increase,
which they have done nothing whatever to earn; their gains make a
heavy burden on production, which the whole community must pay. That
sounded reasonable, and so for a while I was a single taxer; you’ll be
interested to know, Judd, that the reason I gave it up was you!
We had a big single tax campaign here in California in 1916, and I
put in some hard work at it; among other things I spent a day arguing
with my friend Judd. We were sitting on the roof of the garage, laying
shingles, and all the time I tried to make you “see” the single tax.
But you had read in the Los Angeles “Times” that it would increase
the taxes on your two lots, and that had made you mad; also, you had
read that it would take the taxes off the rich man’s bonds, and off
his wife’s jewels, and that had made you madder. I tried to get you to
see the absurdity of believing that the “Times” could be interested in
keeping any taxes on the rich; I tried to show the actual reason, that
the tax collector couldn’t find the rich man’s bonds, nor his wife’s
jewels. But you didn’t get it, Judd, and when I saw the votes of all
the other Judds in that election, I decided that the single tax is a
tactical blunder. Never again will I be caught proposing to take any
taxes off the rich; from that day forth I have been a multiple taxer--I
want to put just as many kinds of taxes on the rich as the imagination
can invent.
Joking aside, Judd, I changed my whole strategy as result of that day
on the roof with you. For twelve or thirteen years I had been expecting
to see Socialism brought about by some sort of tax on wealth; but you
made me realize how passionately every human creature hates taxes.
Could one not find some easier way? I realized that all men like money,
the more the merrier; and then came the war, and I saw our government
making money by the billions, just by acts of Congress and the waving
of a presidential pen. Then came the panic, and I saw our wonderful
Federal Reserve System making more billions for the use of the big
bankers and the trusts; so a great light dawned upon me, a heavenly
light! I see now, Judd, that we shall forget taxes altogether, and take
a leaf out of Wall Street’s new book; we shall make as many billions of
new money as the emergency requires, and instead of having Wall Street
put that new money off on us, we shall put it off on Wall Street!
I know some young workers in our country who call themselves social
revolutionists, and are impatient when they hear me talk about
compensation for the capitalists. These young people feel ugly towards
the capitalists, and for this I do not blame them, seeing how they
have been treated. But the point of my criticism is that these young
enthusiasts want to be ugly to the capitalists in an old-fashioned, out
of date way, with guns and barricades, while I want to be ugly in the
modern way of high finance.
What is it we really want? Is it to kill the capitalists? No, but
merely to take from them their power to exploit labor. And how do
they get this power? By guns and barricades? They hold it that way,
of course; but inside each modern country they have devised the new
and infinitely more effective scheme of financial manipulation, the
creation of imaginary money with which to buy everything in sight.
And it is this weapon I want to turn against them. Why, for heaven’s
sake, do we want to have insurrections and riots, when by means of this
modern Aladdin’s magic we can walk peaceably into every factory and
take charge? The capitalists have created the magic lamp for us--this
wonderful new Federal Reserve System; all we have to do is to turn
out the present board of bankers’ bankers, and put in a new board of
workers’ bankers, and create a hundred billion dollars of new money,
and pay for the industries, and there you are! Not a court in the land
can stop us, and if any capitalist tries to, he is a revolutionist, and
we have criminal syndicalism laws for him!
This is “inflation,” we are told; and inflation raises the cost of
goods, and so brings no benefit to the worker. Yes, Judd, but get the
point clear--inflation is one thing if you use it to buy goods, and
quite a different thing if you use it to buy factories. In buying
goods, you buy on a rising market, but in buying factories you buy at a
fixed price, and so it is the owners who suffer the loss. And that is
the beauty of this scheme I am unfolding; these Wall Street gentry have
“passed the buck” to us--and we pass it right back!
The Russian revolutionists made a grave mistake in their dealings with
world capitalism; they were too honest. They repudiated the debts of
the Tsar’s government--declaring that the money had been spent to
enslave the Russian workers, and they would never repay it. Therefore
world capitalism went to war with Russia, and is still at war, and
that error in tactics has cost the new government many times the
debts of the old regime. But how much more clever were the capitalist
governments of Italy and France! They also owed us money; but they
were so polite--they are the politest people in the world! They owed
it, of course, and they would pay, of course; never would they dream
of failing to pay their debts; but just now they were very poor, and
couldn’t pay, and wouldn’t we please lend them another hundred million
or so? We loaned it--because if they go bankrupt they will also go
Bolshevik, and that scares the gizzard out of our bankers. So these
smooth capitalist nations have never paid us a dollar, but their
credit is still good, and we never think of them as criminals and
murderers--oh, nothing like that, it is all between gentlemen in Wall
Street, and the worthless bonds have been worked off on the general
public, and all is serene!
So, Judd, I say, let us be gentlemen, too, and pay! Pay any price the
capitalists ask--anything to get them out of the factories, and get
the workers in! It will mean that we support a horde of parasites for
awhile; but we are doing that, anyhow, and can do it better then,
because we shall double production. Young Johnny Coaloil will still be
able to keep his yacht and his chorus girls on the Riviera, and Mrs.
Silly Splash will continue to wear diamond-embroidered bathing suits at
Palm Beach; but notice the difference, Judd--from now on they can buy
nothing but goods with their money, they can no longer buy the means of
production, and so they will not be able to increase their income!
On the contrary, we can proceed at once to cut it down, by means of
an inheritance tax. We already have such a tax--the Coolidge crowd is
trying to get rid of it at this moment, and likewise the publicity
clause of the income tax, which exposes the big exploiters to
uncomfortable daylight! But we can put it back, Judd; we can make the
provisions that gifts in anticipation of death count as inheritance;
we can register the owners of the bonds, and so wipe out that whole
mass of privilege in a generation or two. I promised to show you how
the useful workers of America can take possession of their industrial
plant, and here is the way. Nothing prevents them but lack of
knowledge; and that is why I am writing these letters!
LETTER XVI
MY DEAR JUDD:
We have been discussing the problem of how the workers are to get
possession of the industrial machinery of the country. I have proposed
to pay for it; but there are some who insist that the workers should
seize the plant. It has been built by the workers, and taken from
them by fraud; if we purchase it, we merely continue exploitation
under another form; the government replaces the owners as task-master,
and collects the profits and pays them to the owners in the form of
dividends.
This statement sounds all right, but it overlooks the essential factor
in our business situation--that “iron ring” I have been telling you
about. At the present time not one per cent of our factories are
run at full capacity all the year round; but when we get possession
for the workers, we break the iron ring, and can run them all day
and all night. We have five million unemployed--the average of good
years and bad, you remember--five million men to go to work, to turn
out more goods for themselves and for all. We cut out the wastes and
reduplication; and according to the lowest estimate, we double our
production of goods.
The plant we propose to buy is worth, roughly, one hundred billion
dollars, and its annual product is twenty billions, possibly thirty;
let us say twenty, to be safe. We pay for it with five per cent bonds,
which means the former owners get five billions a year. If we double
production, we have forty billions a year, which leaves thirty-five
billions for us. In other words, Judd:
_We can work half an hour a day for the owners, and four hours a
day for ourselves, and be twice as rich as at present._
So you see why I am in favor of compensation! Not because I love the
owners, but because, as a matter of cold cash, we shall do better that
way. I will go so far as to argue that if we try to pay nothing, we
shall really pay more. If we try to kick the bosses out, and seize the
factories, and run them by workers’ councils--obviously, that may mean
civil war. The bosses have the factories, and they have machine-guns
and airplanes and poison gas--a system for wiping out the lives of
thousands of workers, if necessary. One of the embarrassments of
physical force revolution is that it may fail, and the workers, instead
of getting the factories, may get castor oil and Fascist clubs. There
is a big group of our masters who think that is what the workers need,
and would take delight in administering it.
I know some young revolutionists who are prepared to die for the
proletariat, in a fine spirit of martyrdom. They are impatient of talk
about money, but I beg them to pause and consider the balance sheet of
Compensation versus Confiscation. Even though they succeed in their
revolution, they surely cannot do it without industrial waste. They
will have to stop the machines while they are fighting; they may shoot
holes in the factories, and even burn some of them down. And just what
will that cost? We are reckoning, you understand, on our possible
double production--forty billions a year. The interest we pay the
owners is five billions a year. So now:
_If in the course of our revolution we destroy one-eighth of our
industrial plant, it would have been cheaper to pay the owners for
the whole thing._
Or, suppose we have the good luck to get by without much fighting--what
then? Well, the present management, which knows the industry, and is
keeping the plant going--this management is hired by the owners, and
is loyal to the owners, and will have to be booted out the back door,
which will certainly stop production, cripple it for months, perhaps
years. But if our government comes to the owners in a business deal,
and buys the plant, the management will stay on, as it did when we
took over the railroads during the war. On that basis, we shall not
lose an hour of the plant’s time, nor will the workers lose an hour
of their wages. And how does this figure up, in the balance sheet of
Compensation versus Confiscation? Listen:
_If our industrial plant is idle for six weeks, we have lost what
would have paid the owners for a year._
And again, an obvious consequence:
_Every day over six weeks that the plant is idle, the workers are
paying from their own pockets!_
Our young revolutionists are going by the Russian model, and that is
natural, because many of them come from there. But Russia had a small
industrial plant, and we have a great one, enormously complicated.
Moreover, Russia had no middle class, while we have a powerful one,
ready to turn out at a moment’s notice and use machine guns and poison
gas in the interest of property rights. The workers’ revolution
succeeded in Russia, because the country was broken by war; but to
bring us to a similar state of disorganization would take decades of
suffering and waste--I venture the guess that it would be twenty times
cheaper to buy the capitalists out, than to bring America to the point
where a physical force revolution could prevail.
And yet, having said all that, fairness compels me to admit another
side. I have been setting forth the ideal procedure; but this is not an
ideal world, and many times we have to take what we can get, instead of
what we want. Having told you my hopes, I will now tell you my fears.
The masses of our country are ignorant and unorganized. More than half
of them do not vote at all; a large percentage value their votes at
two dollars each, and the rest take their party as they take their
God--from their grandfathers. They are interested in baseball and
prize fighting, and jazz, and the doings of the “smart set”; they do
not know how to think, and they never read anything but the “kept”
newspapers and magazines, which tell them they are the greatest people
in the world. Never in history has there been so elaborate a system
for the hoodwinking of a hundred million people; and they lap up the
propaganda, and go to the polls and vote their government into a
branch-office of J. P. Morgan and Company.
But all this does not stop the process of industrial evolution; rather
it speeds it up--giving the rich more money to produce more goods, and
causing the poor to have less money to buy the goods. So the crisis
comes on like a cyclone; and we shall find ourselves with our factories
idle and millions of people starving, and no idea of the next step
to take. There will be no time to teach the masses, no machinery for
reaching them; but the desperate workers in our cities will hear the
voice of the Communist soap-boxer, saying, “Take the factories, and
produce goods for yourselves and your fellows.” The soap-boxer will
ask: “Do you have to starve, because the majority has not voted you
food?” He will ask: “Does a man have to remain a slave because the
majority has not voted him free?” So it may happen that the hungry
workers seize the factories and attempt to run them; and we shall have
to make the best of it and help them to success.
In such an emergency, the social changes will be sudden and drastic;
and that is the reason why I do not attempt to foretell what the new
industrial forms will be. Just how the business will be managed depends
in great part upon those who now have the power in their hands; they
may choose either to be stubborn and brutal, or to display vision and
a sense of justice, not to say of common prudence. You can see the
difference this makes if you compare the great French revolution of
a century and a half ago with the series of changes that have taken
place in England during the same period. England has become a partly
democratic country in fact, while remaining a monarchy in form; the
reason being that the governing classes never pushed the people to the
last extreme, but made concessions, just enough to keep themselves in
power.
There is room for a variety of compromises between the workers and
the capitalists, and also between the workers and the state. The
capitalists may permit the setting up of shop committees, with
the right of control over working conditions; they may consent to
representation of the workers in boards which oversee each industry,
with power to make adjustments and enforce decrees. Or both sides may
prefer to call upon the government to do the adjusting. Or again, the
workers may get control of the government, and laws may be passed
providing for the taking over of control by the trade unions. A
practical program has been worked out by the railway brotherhoods, the
Plumb plan; providing for the purchase of the roads by the government,
and their operation by a board representing the government, the
brotherhoods, and the bondholders until the latter have been paid off.
The day may come when the money-masters of this country will wish they
had had the statesmanship to put that plan into operation while there
was time.
I have argued here for government ownership of industry; but you must
understand--that is not the same thing as operation of industry by
politicians. The people who understand an industry are those who work
in it; and the way to combine democracy with efficiency is to make each
industry a self-governing unit, and confine the part of government to
supervision, and the regulation of prices. Let us have an industrial
constitution and an industrial parliament, and let every man become
a citizen of industry, with a voice in the control, and equal rights
with all other citizens. That is the goal we work towards, and it is a
strictly American goal, in line with American traditions. The practical
steps are, first, to organize the workers in each industry, and make
them class conscious, awake to their own interests; and second, to use
the power of the state to open the books of each industry and expose
the profits, cutting down the share which goes to the idle owners, and
increasing the share which goes to the useful workers.
LETTER XVII
MY DEAR JUDD:
The social revolution has already happened over one-sixth of the
earth’s surface, and 140,000,000 people are now living in a working
class world. Whatever may be our point of view, we cannot afford to
misunderstand what has happened in Russia, for capitalism has made the
world one, and our efforts to shut ourselves up in our own country are
bound to fail.
The Russian revolution came as the result of a breakdown in the
midst of war. The great empire was rotten with graft, and after three
years of fighting, had got to a state where it could no longer keep
its railways going, or feed the people in its cities. With starvation
actually upon them, the soldiers, sailors and workers formed unions,
and in October, 1917, they overthrew the government of the Tsar, and
formed a new government--and gave world capitalism the most painful
shock of its career.
There have been slave revolts all through history, but always blind
and futile, put down with hideous slaughter. But here in the Russian
revolution appeared a new thing; the control was seized by a group
of men who had been trained in Western ideas, and had a theory of
revolutions, and of working-class mastery of society. These men knew
what they wanted, and they tried their plan, and it worked--at least
to the extent that they are still in power, in spite of two years of
war waged upon them by the whole capitalist world, and six more years
of financial blockade, plus the greatest campaign of falsehood in all
history.
Who were these men? They call themselves Marxians, and apply the
adjective “scientific” to themselves, because they think they have
studied the capitalist system--the laws of its growth and decay, the
forces which are destined to overthrow it, and the kind of society
these new forces will establish. History, says Marx, is a series of
class struggles, and the end is the victory of the working class, and
the beginning of a society in which there are no classes, for the
reason that nobody lives by exploiting anybody else. “Workers of all
countries, unite,” runs the slogan. “You have nothing to lose but your
chains; you have a world to gain.”
The Marxian theory is, in brief, that the development of large-scale
capitalism brings the workers into factories, where they toil for the
benefit of absentee owners whom they never see; it subjects them to low
wages, long hours and uncertainty of employment, and forces them to
organize and fight for better conditions. In this fight they develop
“class consciousness,” and in the end they are forced by capitalist
breakdown to revolt, and take possession of the factories, and run them
for the benefit of the workers and not of the masters.
They had a chance to try it in Russia, and they did so; the question
of what they have accomplished is the most fiercely debated of all
questions today. To help us get it straight, understand first, that
they had to do what they did. In other countries--America, England,
France, Germany, Austria--the middle class took charge of the
revolutions; but in Russia there was practically no middle class, it
was the workers or chaos. And second, they took over a busted machine,
a country in collapse after three years of modern war, the most
destructive of all things known this side of hell. And third, they had
to face years of invasion from Europe, America and Japan, fighting on
26 fronts at once; and at the same time civil war, and a blockade, and
financial boycott, and world propaganda, besides two successive years
of famine, something which comes every so often in Russia--caused by
drought, and not by revolutions.
In spite of all this, Soviet Russia confronts its world of enemies,
eight years young, and proud and confident. It has restored its
agriculture to the pre-war standard, and its industry to nearly 80 per
cent of this standard, with the certainty of passing it in 1926 or 1927
if peace is maintained. It has turned one-sixth of the earth’s surface
from a militarist empire into a federated group of commonwealths,
governed under a new system, in which the voters are classified
according to their occupations. It has trained a new generation of
young workers, and taken some five hundred thousand of them into its
governing party. It has taught millions of men and women to read and
write, including everybody in its army, and nearly everybody in its
industries. It would seem that all this entitles the new system to
study, and to fair play in the field of thought.
But Russia is not democratic; so they tell you, Judd--and you are
strong for democracy. Well, I also share that faith; but if, as time
goes on, the workers of the world discover that democracy means
inequality such as we have here in America, while the “dictatorship of
the proletariat” means cultural freedom for the workers and a swiftly
spreading plenty for all--well, Judd, we advocates of democracy will
have a hard time in debates! But the truth is that we have in America
political democracy alongside industrial autocracy; and these two are
making a war upon each other, and we shall have to choose whether our
country is to become a capitalist empire or an industrial republic.
Russia has never had democracy, nor even the ideal of it, except among
a few dreamers. Less than seventy-five years ago its farm population
were all serfs, bound to the soil. Many of its outlying peoples are
semi-barbarous tribes. Its factories are few and at the time of the
world war they were financed by foreign capital, and run by foreigners.
There came this devastating war, and then a breakdown; and to expect
those who took control to set up at once such a democratic system as we
know in America, is to be absurd. Many who talk about it are dishonest,
for they know that if their own parties get control, they will hold it
by exactly the same means as the Bolsheviks--that is, by force.
What the Bolsheviks are doing is to educate the workers and peasants,
and then take them into the governing party. The purpose of that party
is to hold power until all the workers have come into it, and the
“Union of Socialist Soviet Republics” includes the whole population of
the former empire of the Tsar. In fact, they expect to include a lot
more, because they think the workers of some other countries are going
to join them; and the rulers and capitalists of those countries fear
the same thing--which is the reason they hate the Bolsheviks, and carry
on such deadly lying about them.
The British Tories, backed by American bankers, are now conducting
a world-wide intrigue against Russia; and soon they may be calling
the American people to join in a new war “to make the world safe for
democracy.” And what then? The chances are that the American people
will join in, for they dearly love everything that is upper-class
British, and enjoy nothing so much as crushing labor anywhere in the
world. They elected Coolidge in a fervor of patriotism because they
thought--mistakenly--that he had had something to do with smashing
the Boston police strike. As I write, our government is donating a
billion dollars--in the form of a pretended “debt settlement”--to the
Italian government, because Judge Gary and our other masters so love
these black-shirt Fascisti, and look forward to the time when they can
administer the castor-oil treatment to American labor.