father dies, leaving his son the title deeds to a piece of city land. If
he has no confidence in his son's business ability or if his son is a
minor, he may leave the land in trust, and have it administered in his
son's interest by some well organized trust company. The father did not
make the land, though he did buy it. The son neither made nor bought the
land, it merely came to him; and yet each year he receives a
rent-payment upon which he is able to live comfortably without doing any
work. It must at once be apparent that this son of his father,
economically speaking, performs no function in the community, but merely
takes from the community an annual toll or rental based on his ownership
of a part of the land upon, which his fellowmen depend for a living. Of
what will this toll consist? Of bread, shoes, motor-cars, cigars, books
and pictures,--the products of the labor of other men.
This son of his father is living on his income,--supported by the labor
of other people. He performs no labor himself, and yet he is able to
exist comfortably in a world where all of the things which are consumed
are the direct or indirect product of the labor of some human being.
Living on one's income is not a new social experience, but it is
relatively new in the United States. The practice found a reasonably
effective expression in the feudalism of medieval Europe. It has been
brought to extraordinary perfection under the industrialism of Twentieth
Century America.
Imagine the feelings of the early inhabitants of the American colonies
toward those few gentlemen who set themselves up as economically
superior beings, and who insisted upon living without any labor, upon
the labor performed by their fellows. It was against the suggestion of
such a practice that Captain John Smith vociferated his famous "He that
will not work, neither shall he eat." The suggestion that some should
share in the proceeds of community life without participating in the
hardships that were involved in making a living seemed preposterous in
those early days.
To-day, living on one's income is accepted in every industrial center of
the United States as one of the methods of gaining a livelihood. Some
men and women work for a living. Other men and women own for a living.
Workers are in most cases the humble people of the community. They do
not live in the finest homes, eat the best food, wear the most elaborate
clothing, or read, travel and enjoy the most of life.
The owners as a rule are the well-to-do part of the community. They
derive much of all of their income from investments. The return which
they make to the community in services is small when compared with the
income which they receive from their property holdings.
Living on one's income is becoming as much a part of American economic
life as living by factory labor, or by mining, or by manufacturing, or
by any other occupation upon which the community depends for its
products. The difference between these occupations and living on one's
income is that they are relatively menial, and it is relatively
respectable, that is, they have won the disapprobation and it has won
the approbation of American public opinion.
The best general picture of the economic situation that permits a few
people to live on their incomes, while the masses of the people work for
a living, is contained in the reports of the Federal Commissioner of
Internal Revenue. The figures for 1917 ("Statistics of Income for 1917"
published August 1919) show that 3,472,890 persons filed returns, making
one for each six families in the United States. Almost one half of the
total number of returns made in 1917 were from persons whose income was
between $1000 and $2000. There were 1,832,132 returns showing incomes of
$2000 or more, one for each twelve families in the country.
The number of persons receiving the higher incomes is comparatively
small. There were 270,666 incomes between $5,000 and $10,000; 30,391
between $10,000 and $25,000; 12,439 between $25,000 and $50,000. There
were 432,662 returns (22 for each 1000 families in the United States)
showing incomes of $5,000 or over; there were 161,996 returns (8 returns
for each 1000 families) showing incomes of $10,000 or over; 49,494
showing incomes of $25,000 and over; 19,103 showing incomes of $50,000
and more. Thus the number of moderate and large incomes, compared with
the total population of the country, was minute.
The portion of the report that is of particular interest, in so far as
the present study is concerned, is that which presents a division of the
total net income of those reporting $2,000 or more, into three
classes--income from personal service, income from business profits and
income from the ownership of property.
PERSONAL INCOMES BY SOURCES--1917
_Amount of_ _Per Cent_
_Income_ _of Total_
_Source_ _Income_
1. Income from personal service;
salaries, wages; commission,
bonuses, director's
fees, etc $ 3,648,437,902 30.21
2. Income from business; business,
trade, commerce,
partnership, farming, and
profits from sales of real
estate, stocks, bonds, and
other property 3,958,670,028 32.77
3. Income from property; rents
and royalties 684,343,399 5.67
Interest on bonds, notes, etc. 936,715,456 7.76
Dividends 2,848,842,499 23.59
Total from Property 4,469,901,354 37.02
4. Total income 12,077,009,284 100.00
Those persons who have incomes of $2,000 or more receive 30 cents on the
dollar in the form of wages and salaries; 33 cents in the form of
business profits, and 37 cents in the form of incomes from the ownership
of property. The dividend payments alone--to this group of property
owners, are equal to three quarters of the total returns for personal
service.
These figures refer, of course, to all those in receipt of $2,000 or
more per year. Obviously, the smaller incomes are in the form of wages,
salaries, and business profits, while the larger incomes take the form
of rent, interest and dividends. This is made apparent by a study of the
detailed tables published in connection with the "Income Statistics for
1916."
Among those of small incomes--$5,000 to $10,000--nearly half of the
income was derived from personal services. The proportion of the income
resulting from personal service diminished steadily as the incomes rose
until, in the highest income group--those receiving $2,000,000 or more
per year, less than one-half of one per cent. was the result of personal
service while more than 99 per cent. of the incomes came from property
ownership.
A small portion of the American people are in receipt of incomes that
necessitate a report to the revenue officers. Among those persons, a
small number are in receipt of incomes that might be termed
large--incomes of $10,000 or over, for example. Among these persons with
large incomes the majority of the income is secured in the form of rent,
interest, dividends and profits. The higher the income group, the larger
is the percentage of the income that comes from property holdings.
The economic system that exists at the present time in the United States
places a premium on property ownership. The recipients of the large
incomes are the holders of the large amounts of property.
Large incomes are property incomes. The rich are rich because they are
property owners. Furthermore, the organization of present-day business
makes the owner of property more secure--far more secure in his income,
than is the worker who produces the wealth out of which the property
income is paid.
5. _Plutocracy_
The owning class in the United States is established on an economic
basis,--the private ownership of the earth. No more solid foundation for
class integrity and class power has ever been discovered.
The owners of the United States are powerfully entrenched. Operating
through the corporation, its members have secured possession of the bulk
of the more useful resources, the important franchises and the
productive capital. Where they do not own outright, they control. The
earth, in America, is the landlords and the fullness thereof. They own
the productive machinery, and because they own they are able to secure a
vast annual income in return for their bare ownership.
Families which enjoy property income have one great common
interest--that of perpetuating and continuing the property income; hence
the "cohesion of wealth." "The cohesion of wealth" is a force that welds
individuals and families who receive property income into a unified
group or class.
The cohesion of wealth is a force of peculiar social significance. It
might perhaps be referred to as the class consciousness of the wealthy
except that it manifests itself among people who have recently acquired
wealth, more violently, in some cases, than it appears among those whose
families have possessed wealth for generations. Then, the cohesion of
wealth is not always an intelligent force. In the case of some persons
it is largely instinctive.
Originally, the cohesion of wealth expresses itself instinctively among
a group of wealth owners. They may be competing fiercely as in the case
of a group of local banks, department stores, or landlords, but let a
common enemy appear, with a proposition for currency reform, labor
legislation or land taxation and in a twinkling the conflicting
interests are thrown to the winds and the property owners are welded
into a coherent, unified group. This is the beginning of a wealth
cohesion which develops rapidly into a wealth consciousness.
American business, a generation ago, was highly competitive. Each
business man's hand was raised against his neighbor and the downfall of
one was a matter of rejoicing for all. The bitter experience of the
nineties drove home some lessons; the struggles with labor brought some
more; the efforts at government regulations had their effect; but most
of all, the experience of meeting with men in various lines of business
and discussing the common problems through the city, state and national
and business organizations led to a realization of the fact that those
who owned and managed business had more in common than they had in
antagonism. By knifing one another they made themselves an easy prey for
the unions and the government. By pooling ideas and interests they
presented a solid front to the demands of organized labor and the
efforts of the public to enforce regulation.
"Plutocracy" means control by those who own wealth. The "plutocratic
class" consists of that group of persons who control community affairs
because they own property. This class, because of its property
ownership, is compelled to devote time and infinite pains to the task of
safeguarding the sacred rights of property. It is to that task that the
leaders of the American plutocracy have committed themselves, and it is
from the results of that accomplished work that they are turning to new
labors.
FOOTNOTES:
[41] Speech in the Senate, June 20, 1832. Works Colvin Colton, ed. New
York, Putnam's, 1904, vol. 7, p. 503.
[42] Ibid., p. 503.
[43] "Speeches," E. P. Whipple, ed. Little, Brown & Co., 1910, pp.
59-60.
[44] "The Constitutional Position of Property in America," Arthur T.
Hadley, _Independent_, April 16, 1908.
X. INDUSTRIAL EMPIRES
1. _They Cannot Pause!_
The foundations of Empire have been laid in the United States. Territory
has been conquered; peoples have been subjugated or annihilated; an
imperial class has established itself. Here are all of the essential
characteristics of empire.
The American people have been busy laying the political foundations of
Empire for three centuries. A great domain, taken by force of arms from
the people who were in possession of it has been either incorporated
into the Union, or else held as dependent territory. The aborigines have
disappeared as a race. The Negroes, kidnaped from their native land,
enslaved and later liberated, are still treated as an inferior people
who should be the hewers of wood and the drawers of water. A vast
territory was taken from Mexico as a result of one war. A quarter
million square miles were secured from Spain in another; on the
Continent three and a half millions of square miles; in territorial
possessions nearly a quarter of a million more--this is the result of
little more than two hundred years of struggle; this is the geographic
basis for the American Empire.
The structure of owning class power is practically complete in the
United States. Through long years the business interests have evolved a
form of organization that concentrates the essential power over the
industrial and financial processes in a very few hands,--the hands of
the investment bankers. During this contest for power the plutocracy
learned the value of the control of public opinion, and brought the
whole machinery for the direction of public affairs under its
domination. Thus political and social institutions as well as the
processes of economic life were made subject to plutocratic authority.
A hundred years has sufficed to promulgate ideas of the sacredness of
private property that place its preservation and protection among the
chief duties of man. Economic organization; the control of all important
branches of public affairs, and the elevation of property rights to a
place among the beatitudes--by these three means was the authority of
the plutocracy established and safeguarded.
Since economic political and social power cover the field of authority
that one human being may exercise over another, it might be supposed
that the members of the plutocratic class would pause at this point and
cease their efforts to increase power. But the owners cannot pause! A
force greater than their wills compels them to go on at an ever growing
speed. Within the vitals of the economic system upon which it subsists
the plutocracy has found a source of never-ending torment in the form of
a constantly increasing surplus.
2. _The Knotty Problem of Surplus_
The present system of industry is so organized that the worker is always
paid less in wages than he creates in product. A part of this difference
between product and wages goes to the upkeep and expansion of the
industry in which the worker is employed. Another part in the form of
interest, dividends, rents, royalties and profits, goes to the owners of
the land and productive machinery.
The values produced in industry and handed to the industrial worker or
property owner in the form of income, may be used or "spent" either for
"consumption goods"--things that are to be used in satisfying human
wants, such as street car transportation, clothing, school books, and
smoking tobacco; or for production goods--things that are to be used in
the making of wealth, such as factory buildings, lathes, harvesting
machinery, railroad equipment. Those who have small incomes necessarily
spend the greater part for the consumption of goods upon which their
existence depends. On the other hand, those who are in receipt of large
incomes cannot use more than a limited amount of consumption goods.
Therefore, they are in a position to turn part of their surplus into
production goods. As a reward for this "saving" the system gives them
title to an amount of wealth equal to the amount saved, and in addition,
it grants an amount of "interest" so that the next year the recipient of
surplus gets the regular share of surplus, and beside that an additional
reward in the form of interest. His share of the surplus is thus
increased. That is, surplus breeds surplus.
The workers are, for the most part, spenders. The great bulk of their
income is turned at once into consumption goods. The owners in many
instances are capitalists who hold property for the purpose of turning
the income derived from it into additional investments.
Could the worker buy back dollar for dollar the values which he produces
there would be no surplus in the form of rent, interest, dividends and
profits. The present economic system is, however, built upon the
principle that those who own the lands and the productive machinery
should be recompensed for their mere ownership. It follows, of course,
that the more land and machinery there is to own the greater will be the
amount of surplus which will go to the owners. Since surplus breeds
surplus the owners find that it pays them not to use all of their income
in the form of consumption, but rather to invest all that they can,
thereby increasing the share of surplus that is due them. The worker, on
the other hand, finds that he must produce a constantly larger amount of
wealth which he never gets, but which is destined for the payment of
rent, interest, dividends and profits. Increased incomes yield increased
investments. Increased investments necessitate the creation and payment
of increased surplus. The payment of increased surplus means increased
incomes. Thus the circle is continued--with the returns heaping up in
the coffers of the plutocracy.
Originally the surplus was utilized to free the members of the owning
class from the grinding drudgery of daily toil, by permitting them to
enjoy the fruits of the labor of others. Then it was employed in the
exercise of power over the economic and social machinery. But that was
not the end--instead it proved only the beginning. As property titles
were concentrated in fewer and fewer hands, and the amount of property
owned by single individuals or groups of individuals becomes greater,
their incomes (chiefly in the form of rent, interest, dividends and
profits) rose until by 1917 there were 19,103 persons in the United
States who declared incomes of $50,000 or more per year, which is the
equivalent of $1,000 per week. Among these persons 141 declared annual
incomes of over $1,000,000. Besides these personal incomes, each
industry which paid these dividends and profits, through its
depreciation, amortization, replacement, new construction, and surplus
funds was reinvesting in the industries billions of wealth that would be
used in the creation of more wealth. The normal processes of the growth
of the modern economic system has forced upon the masters of life the
problem of disposing of an ever increasing amount of surplus.
During prosperous periods, the investment funds of a community like
England and the United States grow very rapidly. The more prosperous the
nation, the greater is the demand from those who cannot spend their huge
incomes for safe, paying investment opportunities.
The immense productivity of the present-day system of industry has added
greatly to the amount of surplus seeking investment. Each invention,
each labor saving device, each substitution of mechanical power that
multiplies the productive capacity of industry at the same time
increases the surplus at the disposal of the plutocracy.
The surplus must be disposed of. There is no other alternative. If hats,
flour and gasoline are piled up in the warehouses or stored in tanks, no
more of these commodities will be made until this surplus has been used.
The whole economic system proceeds on the principle that for each
commodity produced, a purchaser must be found before another unit of the
commodity is ordered. Demand for commodities stimulates and regulates
the machinery of production.
Those in control of the modern economic system have no choice but to
produce surplus, and once having produced it, they have no choice except
to dispose of it. An inexorable fate drives them onward--augmenting
their burdens as it multiplies their labors.
Investment opportunities, of necessity, are eagerly sought by the
plutocracy, since the law of their system is "Invest or perish"!
Invest? Where? Where there is some demand for surplus capital--that is
in "undeveloped countries."
The necessity for disposing of surplus has imposed upon the business men
of the world a classification of all countries as "developed" or
"undeveloped." "Developed" countries are those in which the capitalist
processes have gone far enough to produce a surplus that is sufficient
to provide for the upkeep and for the normal expansion of industry. In
"developed" countries mines are opened, factories are built, railroads
are financed, as rapidly as needed, out of the domestic industrial
surplus. "Undeveloped" countries are those which cannot produce
sufficient capital for their own needs, and which must, therefore,
depend for industrial expansion upon investments of capital from the
countries that do produce a surplus.
"Developed" countries are those in which the modern industrial system
has been thoroughly established.
The contrast between developed and undeveloped countries is made clear
by an examination of the investments of any investing nation, such as
Great Britain. Great Britain in 1913 was surrounded by rich, prosperous
neighbors--France, Germany, Holland, Belgium. Each year about a billion
dollars in English capital was invested outside of the British Isles.
Where did this wealth go? The chief objectives of British investment,
aside from the British Dominions and the United States, were (stated in
millions of pounds) Argentine 320; Brazil 148; Mexico 99; Russia 67;
France 8 and Germany 6. The wealth of Germany or France is greater than
that of Argentine, Brazil and Mexico combined, but Germany and France
were developed countries, producing enough surplus for their own needs,
and, therefore, the investable wealth of Great Britain went, not to her
rich neighbors, but to the poorer lands across the sea.
Each nation that produces an investable surplus--and in the nature of
the present economic system, every capitalist nation must some day reach
the point where it can no longer absorb its own surplus wealth--must
find some undeveloped country in which to invest its surplus. Otherwise
the continuity of the capitalist world is unthinkable. Great Britain,
Belgium, Holland, France, Germany and Japan all had reached this stage
before the war. The United States was approaching it rapidly.
3. _"Undeveloped Countries"_
Capitalism is so new that the active struggle to secure investment
opportunities in undeveloped countries is of the most recent origin. The
voyages which resulted in the discovery, by modern Europeans, of the
Americas, Australia, Japan, and an easy road to the Orient, were all
made within 500 years. The actual processes of capitalism are products
of the past 150 years in England, where they had their origin. In
France, Germany, Italy and Japan they have existed for less than a
century. The great burst of economic activity which has pushed the
United States so rapidly to the fore as a producer of surplus wealth
dates from the Civil War. Only in the last generation did there arise
the financial imperialism that results from the necessity of finding a
market for investable surplus.
The struggle for world trade had been waged for centuries before the
advent of capitalism, but the struggle for investment opportunities in
undeveloped countries is strictly modern. The matter is strikingly
stated by Amos Pinchot in his "Peace or Armed Peace" (Nov. 11, 1918).
"If you will look at the maps following page 554 of Hazen's 'Europe
since 1815,' or any other standard colored map showing Africa and Asia
in 1884, you will see that, but for a few rare spots of coloration, the
whole continent of Africa is pure white. Crossing the Red Sea into
Arabia, Persia, Mesopotamia and Asia Minor, you will find the same or
rather a more complete lack of color. This is merely the cartographer's
way of showing, by tint and lack of tint, that at that time Africa and
Western Asia were still in the hands of their native populations.
"Let us now turn to the same maps thirty years later, i.e., in 1914. We
find them utterly changed. They are no longer white, but a patch work of
variegated hues....
"From 1870 to 1900, Great Britain added to her possessions, to say
nothing of her spheres of influence, nearly 5,000,000 square miles with
an estimated population of 88,000,000. Within a few years after
England's permanent occupation of Egypt, which was the signal for the
renaissance of French colonialism, France increased hers by 3,500,000
square miles with a population of 37,000,000, not counting Morocco added
in 1911. Germany, whose colonialism came later, because home and nearby
markets longer absorbed the product of her machines, brought under her
dominion from 1884 to 1899 1,000,000 square miles with an estimated
population of 14,000,000."
This is a picture of the political effects that followed the economic
causes summed up in the term "financial imperialism."
In the seventeenth and eighteenth centuries it was the trader, dealing
in raw stuff; in the nineteenth century it was the manufacturer,
producing at low cost to cut under his neighbor's price. During the past
thirty years the investment banker has occupied the foreground with his
efforts to find safe, paying opportunities for the disposal of the
surplus committed to his care. British bankers, French bankers, German
bankers, Belgian bankers, Dutch bankers--all intent upon the same
mission--because behind all, and relentlessly driving, were the
accumulating surpluses, demanding an outlet. European bankers found that
outlet in Africa, Asia, Australia and the Americas. The stupendous
strides in the development of the resources in these countries would
have been impossible but for that surplus of European capital.
The undeveloped countries to-day have the same characteristics,--virgin
resources, industrial and commercial possibilities, and in many cases
cheap labor. This is true, for example, in China, Mexico and India. It
is true to a less extent in South America and South Africa. The logical
destination of capital is the point where the investment will "pay."
The investor who has used up the cream of the home investment market
turns his eyes abroad. As a recent writer has suggested, "There is a
glamor about the foreign investment" which does not hold for a domestic
one. Foreign investments have yielded such huge returns in the past that
there is always a seeming possibility of wonderful gains for the future.
The risk is greater, of course, but this is more than offset by the
increased rate of return. If it were not so, the wealth would be
invested at home or held idle.
4. _The Great Investing Nations_
The great industrial nations are the great investing nations. An
agriculture community produces little surplus wealth. Land values are
low, franchises and special privileges are negligible factors. There can
be relatively little speculation. Changes in method of production are
infrequent. Changes in values and total wealth are gradual. The owning
class in an agriculture civilization may live comfortably. If it is very
small in proportion to the total population it may live luxuriously, but
it cannot derive great revenues such as those secured by the owning
classes of an industrial civilization.
Industrial civilization possesses all of the factors for augmenting
surplus wealth which are lacking in agricultural civilizations. Changes
in the forms of industrial production are rapid; special privilege
yields rich returns and is the subject of wide speculative activity;
land values increase; labor saving machinery multiplies man's capacity
to turn out wealth. As much surplus wealth might be produced in a year
of this industrial life as could have been turned out in a generation or
a century of agricultural activity or of hand-craft industry.
England, France, Germany, Holland, Belgium, Japan and the United States,
the great industrial nations, have become the great lending nations.
Their search for "undeveloped territory" and "spheres of influence" is
not a search for trade, but for an opportunity to invest and exploit. If
these nations wished to exchange cotton for coffee, or machinery for
wheat on even terms, they could exchange with one another, or with one
of the undeveloped countries, but they demand an outlet for surplus
wealth--an outlet that can only be utilized where the government of the
developed country will guarantee the investment of its citizens in the
undeveloped territory.
The investing nations either want to take the raw products of the
undeveloped country, manufacture them and sell them back as finished
material (the British policy in India), or else they desire to secure
possession of the resources, franchises and other special privileges in
the undeveloped country which they can exploit for their own profit (the
British policy in South America).
The Indians, under the British policy, are thus in relatively the same
position as the workers in one of the industrial countries. They are
paid for their raw material a fraction of the value of the finished
product. They are expected to buy back the finished product, which is a
manifest impossibility. There is thus a drastic limitation on the
exploitation of undeveloped countries, just as there is a limitation on
the exploitation of domestic labor. In both cases the people as
consumers can buy back less in value than the exploiters have to sell.
Obviously the time must come when all the undeveloped sections of the
world have been exploited to the limit. Then surplus will go a-begging.
Some of the investors in the great exploiting nations have abandoned the
idea of making huge returns by way of the English policy in India.
Instead the investors in every nation are buying up resources,
franchises and concessions and other special privileges in the
undeveloped countries and treating them in exactly the same way that
they would treat a domestic investment. In this case the resources and
labor of the undeveloped country are exploited for the profit of the
foreign investor.
The Roman conquerors subjugated the people politically and then exacted
an economic return in the form of tribute. The modern imperialists do
not bother about the political machinery, so long as it remains in
abeyance, but content themselves with securing possession of the
economic resources of a region and exacting a return in interest and
dividends on the investment. Political tribute is largely a thing of the
past. In its place there is a new form--economic tribute--which is
safer, cheaper, and on the whole far superior to the Roman method of
exploiting undeveloped regions.
5. _The American Home Field_
A hundred years ago the United States was an undeveloped country. Its
resources were virgin. Its wealth possibilities were immense. Both
domestic and foreign capitalists invested large sums in the canals, the
railroads and other American commercial and industrial enterprises. The
rapid economic expansion of recent years has involved the outlay of huge
sums of new capital.
The total capital invested in manufactures was 8,975 millions in 1899
and 22,791 millions in 1914. The total of railway capital was 11,034
millions in 1899 and 20,247 millions in 1914. Manufacturing and
railroading alone secured a capital outlay of over 20 billions in 15
years. Some idea of the increase in investments may be gained from the
amount of new stocks and bonds listed annually on the New York Stock
Exchange. The total amount of new stocks listed for the five years
ending with 1914 was 1,420 millions; the total of new bonds was 2,226
million. (_The Financial Review Annual_, 1918, p. 67.) The total capital
of new companies (with an authorized capital of at least $100,000) was
in 1918, $2,599,753,600; in 1919, $12,677,229,600, and in the first 10
months of 1920, $12,242,577,700. (Bradstreets, Nov. 6, 1920, p. 731.)
The figures showing the amount of stocks and bonds issued do not by any
means exhaust the field of new capital. Reference has already been made
to the fact that the United States Steel Corporation, between 1903 and
1918 increased its issues of stocks and bonds by only $31,600,000,
while, in the same time its assets increased $987,000,000. The same fact
is illustrated, on a larger scale, in a summary (_Wall Street Journal_,
August 7, 1919) of the finances of 104 corporations covering the four
years, December 31, 1914, to December 31, 1918. During this time, six of
the leading steel companies of the United States increased their working
capital by $461,965,000 and their surplus by $617,656,000. This billion
was taken out of the earnings of the companies. Concerning the entire
104 corporations, the _Journal_ notes that, "After heavy expenditures
for new construction and acquisitions, and record breaking dividends,
they added a total of nearly $2,000,000,000 to working capital." In
addition, these corporations, in four years, showed a gain of
$1,941,498,000 in surplus and a gain in inventories of $1,522,000,000.
Considerable amounts of capital are invested in private industry, by
individuals and partnerships. No record of these investments ever
appears. Farmers invest in animals, machinery and improved
buildings--investments that are not represented by stocks or bonds.
Again, the great corporations themselves are constantly adding to their
assets without increasing their stock or bond issues. In these and
other ways, billions of new capital are yearly absorbed by the home
investment market.
Although most of the enterprises of the United States have been floated
with American capital, the investors of Great Britain, Holland, France
and other countries took a hand. In 1913 the capitalists of Great
Britain had larger investments in the United States than in any other
country, or than in any British Dominion. (The U. S., 754,617,000
pounds; Canada and Newfoundland, 514,870,000 pounds; India and Ceylon,
378,776,000 pounds; South Africa, 370,192,000 pounds and so on.)
(_Annals_, 1916, Vol. 68, p. 28, Article by C. K. Hobson.) The aggregate
amount of European capital invested in the United States was
approximately $6,500,000,000 in 1910. Of this sum more than half was
British. ("Trade Balance of the United States," George Paisch. National
Monetary Commission, 1910, p. 175.)
By the beginning of the present century (the U. S. Steel Corporation was
organized in 1901) the main work of organization inside of the United
States was completed. The bankers had some incidental tasks before them,
but the industrial leaders themselves had done their pioneer duty. There
were corners to be smoothed off, and bearings to be rubbed down, but the
great structural problems had been solved, and the foundations of world
industrial empire had been laid.
6. _Leaving the Home Field_
The Spanish-American War marks the beginning of the new era in American
business organization. This war found the American people isolated and
provincial. It left them with a new feeling for their own importance.
The worlds at home had been conquered. The transcontinental railroads
had been built; the steel industry, the oil industry, the coal industry,
the leather industry, the woolen industry and a host of others had been
organized by a whole generation of industrial organizers who had given
their lives to this task.
Across the borders of the United States--almost within arm's reach of
the eager, stirring, high-strung men of the new generation, there were
tens of thousands of square miles of undeveloped territory--territory
that was fabulously rich in ore, in timber, in oil, in fertility. On
every side the lands stretched away--Mexico, the West Indies, Central
America, Canada--with opportunity that was to be had for the taking.
Opportunity called. Capital, seeking new fields for investment, urged.
Youth, enthusiasm and enterprise answered the challenge.
The foreign investments of the United States at the time of the
Spanish-American War were negligible. By 1910 American business men had
two billions invested abroad--$700,000,000 in Mexico; $500,000,000 in
Canada; $350,000,000 in Europe, and smaller sums in the West Indies, the
Philippines, China, Central and South America. In 1913 there was a
billion invested in Mexico and an equal amount in Canada. ("Commercial
Policy," W. S. Culbertson, New York, Appleton, 1919, p. 315.)
Capital flowed out of the United States in two directions:
1. Toward the resources which were so abundant in certain foreign
countries.
2. Toward foreign markets.
7. _Building on Foreign Resources_
The Bethlehem Steel Corporation is a typical industry that has built up
foreign connections as a means of exploiting foreign resources. The
Corporation has a huge organization in the United States which includes
10 manufacturing plants, a coke producing company, 11 ship building
plants, six mines and quarries, and extensive coal deposits in
Pennsylvania and West Virginia. The Bethlehem Steel Corporation also
controls ore properties near Santiago, Cuba, near Nipe Bay, Cuba, and
extensive deposits along the northern coast of Cuba; large ore
properties at Tofo, Chile, and the Ore Steamship Corporation, a carrying
line for Chilean and Cuban ore.
The American Smelting and Refining Company is another illustration of
expansion into a foreign country for the purpose of utilizing foreign
resources. According to the record of the Company's properties, the
Company was operating six refining plants, one located in New Jersey;
one in Nebraska; one in California; one in Illinois; one in Maryland,
and one in Washington. The Company owned 14 lead smelters and 11 copper
smelters, located as follows: Colorado, 4; Utah, 2; Texas, 2; Arizona,
2; New Jersey, 2; Montana, 1; Washington, 1; Nebraska, 1; California, 1;
Illinois, 1; Chile, 2; Mexico, 6. Among these 25 plants a third is
located outside of the United States.
These are but two examples. The rubber, oil, tobacco and sugar interests
have pursued a similar policy--extending their organization in such a
way as to utilize foreign resources as a source for the raw materials
that are destined to be manufactured in the United States.
8. _Manufacturing and Marketing Abroad_
The Bethlehem Steel Corporation and the American Smelting and Refining
Company go outside of the United States for the resources upon which
their industries depend. Their fabricating industries are carried on
inside of the country. There are a number of the great industries of the
country that have gone outside of the United States to do their
manufacturing and to organize the marketing of their products.
The International Harvester Company has built a worldwide organization.
It manufactures harvesting machinery, farm implements, gasoline engines,
tractors, wagons and separators at Springfield, Ohio; Rock Falls, Ill.;
Chicago, Ill.; Auburn, New York; Akron, Ohio; Milwaukee, Wisc., and
West Pullman, Ill. It has iron mines, coal mines and steel plants
operated by the Wisconsin Steel Company. It has three twine mills and
four railways. Foreign plants and branches are listed as follows:
Norrkoping, Sweden; Copenhagen, Denmark; Christiania, Norway; Paris,
France; Croix, France; Berlin, Germany; Hamilton, Ontario, Canada;
Zurich, Switzerland; Vienna, Austria; Lubertzy, Russia; Neuss, Germany;
Melbourne, Australia; London, England; Christ Church, New Zealand.
One of the greatest industrial empires in the world is the Standard Oil
Properties. It is not possible to go into detail with regard to their
operations. Space will admit of a brief comment upon one of the
constituent parts or "states" of the empire--The Standard Oil Company of
New Jersey. With a capital stock of $100,000,000, this Company, from the
dissolution of the Standard Oil Company, December 15, 1911, to June 15,
1918, a period of six and a half years, paid dividends of $174,058,932.
The company describes itself as "a manufacturing enterprise with a large
foreign business. The company drills oil wells, pumps them, refines the
crude oil into many forms and sells the product--mostly abroad." (_The
Lamp_, May, 1918.) The properties of the Company are thus listed:
1. The Company has 13 refineries, seven of them in New Jersey, Maryland,
Oklahoma, Louisiana and West Virginia. Four of the remaining refineries
are located in Canada, one is in Mexico and one in Peru.
2. Pipeline properties in New York, New Jersey, Pennsylvania and
Maryland.
3. A fleet of 54 ocean-going tank steamers with a capacity of 486,480
dead weight tons. (This is about two per cent of the total ocean-going
tonnage of the world.)
4. Can and case factories, barrel factories, canning plants, glue
factories and pipe shops.
5. Through its subsidiary corporations, the Company controls:
a. Oil wells in Pennsylvania, West Virginia, Ohio, Kentucky, Louisiana,
Arkansas, Mississippi, Texas, California, Peru and Mexico. In connection
with many of these properties refineries are operated.
b. One subsidiary has 550 marketing stations in Canada. Others market in
various parts of the United States; in the West Indies; in Central and
South America; in Germany, Austria, Roumania, the Netherlands, France,
Denmark and Italy.
The Standard Oil Company of New Jersey comprises only one part--though a
very successful part--of the Standard Oil Group of industries. It is one
industrial state in a great industrial empire.
Foreign resources offer opportunities to the exploiter. Foreign markets
beckon. Both calls have been heeded by the American business interests
that are busy building the international machinery of business
organization.
9. _International Business and Finance_
The steel, smelting, oil, sugar, tobacco, and harvester interests are
confined to relatively narrow lines. In their wake have followed general
business, and above all, financial activities.
The American International Corporation was described by its
vice-president (Mr. Connick) before a Senate Committee on March 1, 1918.
"Until the Russian situation became too acute, they had offices in
Petrograd, London, Paris, Rome, Mexico City. They sent commissions and
agents and business men to South America to promote trade.... They were
negotiating contracts for a thousand miles of railroad in China. They
were practically rebuilding, you might say, the Grand Canal in China.
They had acquired the Pacific Mail.... They then bought the New York
Shipbuilding Corporation to provide ships for their shipping interests."
By 1919 (_New York Times_, Oct. 31, 1919) the Company had acquired
Carter Macy & Co., and the Rosin and Turpentine Export Co., and was
interested in the International Mercantile Marine and the United Fruit
Companies.
Another illustration of the same kind of general foreign business
appeared in the form of an advertisement inserted on the financial page
of the _New York Times_ (July 10, 1919) by three leading financial
firms, which called attention to a $3,000,000 note issue of the Haytian
American Corporation "Incorporated under the laws of the State of New
York, owning and operating sugar, railroad, wharf and public utility
companies in the Republic of Hayti." Further, the advertisers note: "The
diversity of the Company's operations assures stability of earnings."
American manufacturers, traders and industrial empire builders have not
gone alone into the foreign field. The bankers have accompanied them.
Several of the great financial institutions of the country are
advertising their foreign connections.
The Guaranty Trust Company (_New York Times_, Jan. 10, 1919) advertises
under the caption "Direct Foreign Banking Facilities" offering "a direct
and comprehensive banking service for trade with all countries." These
connections include:
1. Branches in London and Paris, which are designated United States
depositories. "They are American institutions conducted on American
lines, and are especially well equipped to render banking service
throughout Europe." There are additional branches in Liverpool and
Brussels. The Company also has direct connections in Italy and Spain,
and representatives in the Scandinavian countries.
2. "Direct connections with the leading financial institutions in
Argentina, Uruguay, Chile, and Brazil." A special representative in
Buenos Ayres. "Through our affiliation with the Mercantile Bank of the
Americas and its connections, we cover Peru, Northern Brazil, Columbia,
Ecuador, Venezuela, Nicaragua, Honduras, Guatemala, and other South and
Central American countries."
3. "Through the American Mercantile Bank of Cuba, at Havana, we cover
direct Cuba and the West Indies."
4. "Direct banking and merchant service throughout British India,"
together with correspondents in the East Indies and the Straits
Settlements.
5. "Direct connections with the National Bank of South Africa, at Cape
Town, and its many branches in the Transvaal, Rhodesia, Natal,
Mozambique, etc."
6. Direct banking connections and a special representative in Australia
and New Zealand.
7. "Through our affiliations with the Asia Banking Corporation we
negotiate, direct, banking transactions of every nature in China,
Manchuria, Southeastern Siberia, and throughout the Far East. The Asia
Banking Corporation has its main office in New York and is establishing
branches in these important trade centers: Shanghai, Pekin, Tientsin,
Hankow, Harbin, Vladivostok. We are also official correspondents for
leading Japanese banks."
The advertisement concludes with this statement: "Our Foreign Trade
Bureau collects and makes available accurate and up-to-date information
relating to foreign trade--export markets, foreign financial and
economic conditions, shipping facilities, export technique, etc. It
endeavors to bring into touch buyers and sellers here and abroad."
The same issue of the _Times_ carries a statement of the Mercantile Bank
of the Americas which "offers the services of a banking organization
with branches and affiliated banks in important trade centers throughout
Central and South America, France and Spain." The Bank describes itself
as "an American Bank for Foreign trade." Among its eleven directors are
the President and two Vice-Presidents of the Guaranty Trust Company.
The Asia Banking Corporation, upon which the Guaranty Trust Company
relies for its Eastern connections, was organized in 1918 "to engage in
international and foreign banking in China, in the dependencies and
insular possessions of the United States, and, ultimately in Siberia"
(_Standard Corporation Service_, May-August, 1918, p. 42). The officers
elected in August 1918, were Charles H. Sabin, President of the Guaranty
Trust Co., President; Albert Breton, Vice-President of the Guaranty
Trust Co., and Ralph Dawson, Assistant Secretary of the Guaranty Trust
Company, Vice-Presidents, and Robert A. Shaw, of the overseas division
of the Guaranty Trust Company, Treasurer. Among the directors are
representatives of the Bankers Trust Company and of the Mercantile Bank
of the Americas.
10. _The National City Bank_
The National City Bank of New York--the first bank in the history of the
Western Hemisphere to show resources exceeding one billion
dollars--illustrates in its development the cyclonic changes that the
past few years have brought into American business circles. The National
City Bank, originally chartered in 1812, had resources of $16,750,929 in
1879 and of $18,214,823 in 1889. From that point its development has
been electric. The resources of the Bank totaled 128 millions in 1899;
280 millions in 1909; $1,039,418,324 in 1919. Between 1889 and 1899 they
increased 600 per cent; between 1899 and 1919 they increased 700 per
cent; during the 40 years from 1889 and 1919 the increase in resources
exceeded six thousand per cent.
The organization of the Bank is indicative of the organization of modern
business. Among the twenty-one directors, all of whom are engaged in
some form of business enterprise, there are the names of William
Rockefeller, Percy A. Rockefeller, J. Ogden Armour, Cleveland H. Dodge
of the Phelps-Dodge Corporation, Cyrus H. McCormick of the International
Harvester Co., Philip A. S. Franklin, President of the International
Mercantile Marine Co.; Earl D. Babst, President of the American Sugar
Refining Co.; Edgar Palmer, President of the New Jersey Zinc Co.;
Nathan C. Kingsbury, Vice-President of the Union Pacific Railroad Co.,
and Frank Krumball, Chairman of the Chesapeake & Ohio Railroad Co. Some
of the most powerful mining, manufacturing, transportation and public
utility interests in the United States are represented, directly or
indirectly, in this list.
The domestic organization of the Bank consists of five divisions, each
one under a vice-president. New York City constitutes the first
division; the second division comprises New England and New York State
outside of New York City; the three remaining divisions cover the other
portions of the United States. Except for the size and the completeness
of its organization, the National City Bank differs in no essential
particulars from numerous other large banking institutions. It is a
financial superstructure built upon a massive foundation of industrial
enterprise.
The phase of the Bank's activity that is of peculiar significance at the
present juncture is its foreign organization, all of which has been
established since the outbreak of the European war.
The foreign business of the National City Bank is carried on by the
National City Bank proper and the International Banking Corporation. The
first foreign branch of the National City Bank was established at Buenos
Aires on November 10th, 1914. On January 1st, 1919, the National City
Bank had a total of 15 foreign branches; on December 31st, 1919, it had
a total of 74 foreign branches.
The policy of the Bank in its establishment of foreign branches is
described thus in its "Statement of Condition, December 31st, 1919":
"The feature of branch development during the year was the expansion in
Cuba, where twenty-two new branches were opened, making twenty-four in
the island. Cuba is very prosperous, as a result of the expansion of the
sugar industry, and as sugar is produced there under very favorable
conditions economically, and the location is most convenient for
supplying the United States, the industry is on a sound basis, and
relations with the United States are likely to continue close and
friendly. Cuba is a market of growing importance to the United States,
and the system of branches established by the Bank is designed to serve
the trade between the two countries." The trader and the Banker are to
work hand in hand.
The National City Bank has branches in Argentina, Brazil, Belgium,
Chile, Colombia, Cuba, Italy, Porto Rico, Russia, Siberia, Spain,
Trinidad, Uruguay and Venezuela, all of which have been established
since 1914.
A portion of the foreign business of the National City Bank is conducted
by the International Banking Corporation which was established in 1902
and which became a part of the National City Bank organization in 1915.
The International Banking Corporation has a total of twenty-eight
branches located in California, China, England, France, India, Japan,
Java, Dominican Republic, Philippine Islands, Republic of Panama and the
Straits Settlements. Under this arrangement, the financial relations
with America are made by the National City Bank proper; while those with
Europe and Asia are in the hands of the International Banking
Corporation and the combination provides the Bank with 75 branches in
addition to its vast organization within the United States.
The National City Bank of 1889, with its resources of eighteen millions,
was a small affair compared with the billion dollar resources of 1920.
Thirty years sufficed for a growth from youth to robust adulthood.
Within five years, the Bank built up a system of foreign branches that
make it one of the most potent States in the federation of international
financial institutions.
11. _Onward_
Exploiters of foreign resources, manufacturers, traders and bankers have
moved, side by side, out of the United States into the foreign field.
Step by step they have advanced, rearing the economic structure of
empire as they went.
The business men of the United States had no choice. They could not
pause when they had spanned the continent. Ambition called them, surplus
compelled them, profits lured them, the will to power dominated their
lives. As well expect the Old Guard to pause in the middle of a
charge--even before the sunken road at Waterloo--as to expect the
business interests of the United States to cease their efforts and lay
down their tools of conquest simply because they had reached the ocean
in one direction. While there were left other directions in which there
was no ocean; while other undeveloped regions offered the possibility of
development, an inexorable fate--the fate inherent in the economic and
the human stuff with which they were working compelled them to cry
"Onward!" and to turn to the tasks that lay ahead.
The fathers and grandfathers of these Twentieth Century American
Plutocrats, working coatless in their tiny factories; managing their
corner stores; serving their local banks, and holding their minor
offices had never dreamed of the destiny that lay ahead. No matter. The
necessity for expansion had come and with it came the opportunity. The
economic pressure complemented the human desire for "more." The
structure of business organization, which was erected to conquer one
continent could not cease functioning when that one continent was
subdued. Rather, high geared and speeded up as it was, it was in fine
form to extend its conquests, like the well groomed army that has come
scatheless through a great campaign, and that longs, throughout its
tensely unified structure to be off on the next mission.
The business life of the United States came to the Pacific; touched the
Canadian border; surged against the Rio Grande. The continent had been
spanned; the objective had been attained. Still, the cry was "Onward!"
Onward? Whither?
Onward to the lands where resources are abundant and rich; onward where
labor is plentiful, docile and cheap; onward where the opportunities
for huge profits are met with on every hand; onward into the undeveloped
countries of the world.
The capitalists of the European nations, faced by a similar necessity
for expansion, had been compelled to go half round the earth to India,
to South Africa, to the East Indies, to China, to Canada, to South
America. Close at home there was no country except Russia that offered
great possibilities of development.
The business interests of the United States were more fortunate. At
their very doors lay the opportunities--in Canada, in Mexico, in the
West Indies, in Central and South America. Here were countries with the
amplest, richest resources; countries open for capitalist development.
To be sure these investment fields had been invaded already by foreign
capitalists--British, German, Belgian and Spanish. But at the same time
they were surrounded by a tradition of great virility and power--the
tradition of "America for the Americans."
XI. THE GREAT WAR
1. _Daylight_
The work of industrial empire building had continued for less than half
a century when the United States entered the Great War, which was one in
a sequence of events that bound America to the wheel of destiny as it
bound England and France and Germany and Japan and every other country
that had adopted the capitalist method of production.
The war-test revealed the United States to the world and to its own
people as a great nation playing a mighty role in international affairs.
Most Europeans had not suspected the extent of its power. Even the
Americans did not realize it. Nevertheless, the processes of economic
empire building had laid a foundation upon which the superstructure of
political empire is reared as a matter of course. Henceforth, no one
need ask whether the United States should or should not be an imperial
nation. There remained only the task of determining what form American
imperialism should take.
The Great War rounded out the imperial beginnings of the United States.
It strengthened the plutocracy at home; it gave the United States
immense prestige abroad.
The Era of Imperialism dawned upon the United States in 1898. Daylight
broke in 1914, and the night of isolation and of international
unimportance gave place to a new day of imperial power.
2. _Plutocracy in the Saddle_
The rapid sweep across a new continent had placed the resources of the
United States in the hands of a powerful minority. Nature had been
generous and private ownership of the inexhaustible wilderness seemed to
be the natural--the obvious method of procedure.
The lightning march of the American people across the continent gave
the plutocracy its grip on the natural resources. The revolutionary
transformations in industry guaranteed its control of the productive
machinery.
The wizards of industrial activity have changed the structure of
business life even more rapidly than they have conquered the wilderness.
True sons of their revolutionary ancestors, they have slashed and
remodeled and built anew with little regard for the past.
Revolutions are the stalking grounds of predatory power. Napoleon built
his empire on the French Revolution; Cromwell on the revolt against
tyrannical royalty in England. Peaceful times give less opportunity to
personal ambition. Institutions are well-rooted, customs and habits are
firmly placed, life is regulated and held to earth by a fixed framework
of habit and tradition.
Revolution comes--fiercely, impetuously--uprooting institutions,
overthrowing traditions, tearing customs from their resting places. All
is uncertainty--chaos, when, lo! a man on horseback gathers the loose
strands together saying, "Good people, I know, follow me!"
He does know; but woe to the people who follow him! Yet, what shall they
do? Whither shall they turn? How shall they act? Who can be relied upon
in this uncertain hour?
The man on horseback rises in his stirrups--speaking in mighty accents
his message of hope and cheer, reassuring, promising, encouraging,
inspiring all who come within the sound of his voice. His is the one
assurance in a wilderness of uncertainty. What wonder that the people
follow where he leads and beckons!
The revolutionary changes in American economic life between the Civil
War and the War of 1914 gave the plutocrat his chance. He was the man on
horseback, quick, clever, shrewd, farseeing, persuasive, powerful.
Through the courses of these revolutionary changes, the Hills, Goulds,
Harrimans, Wideners, Weyerhausers, Guggenheims, Rockefellers,
Carnegies, and Morgans did to the American economic organization exactly
what Napoleon did to the French political organization--they took
possession of it.
3. _Making the Plutocracy Be Good_
The American people were still thinking the thoughts of a competitive
economic life when the cohorts of an organized plutocracy bore down upon
them. High prices, trusts, millionaires, huge profits, corruption,
betrayal of public office took the people by surprise, confused them,
baffled them, enraged them. Their first thought was of politics, and
during the years immediately preceding the war they were busy with the
problem of legislating goodness into the plutocracy.
The plutocrats were in public disfavor, and their control of natural
resources, banks, railroads, mines, factories, political parties, public
offices, governmental machinery, the school system, the press, the
pulpit, the movie business,--all of this power amounted to nothing
unless it was backed by public opinion.
How could the plutocracy--the discredited, vilified plutocracy--get
public opinion? How could the exploiters gain the confidence of the
American people? There was only one way--they must line up with some
cause that would command public attention and compel public support. The
cause that it chose was the "defense of the United States."
4. _"Preparedness"_
The plutocracy, with a united front, "went in" for the "defense of the
United States,"--attacking the people on the side of their greatest
weakness; playing upon their primitive emotions of fear and hate. The
campaign was intense and dramatic, featuring Japanese invasions, Mexican
inroads, and a world conquest by Germany.
The preparedness campaign was a marvel of efficient business
organization. Its promoters made use of every device known to the
advertising profession; the best brains were employed, and the country
was blanketed with preparedness propaganda.
Officers of the Army and Navy were frank in insisting that the defense
of the United States was adequately provided for. (See testimony of
General Nelson A. Miles. _Congressional Record_, February 3, 1916, p.
2265.) Still the preparedness campaign continued with vigor. Congressman
Clyde H. Tavenner in his speech, "The Navy League Unmasked," showed why.
He gave facts like those appearing in George R. Kirkpatrick's book,
"War, What For"; in F. C. Howe's "Why War," and in J. A. Hobson's
"Imperialism," showing that, in the words of an English authority,
"patriotism at from 10 to 15 per cent is a temptation for the best of
citizens."
Tavenner established the connection between the preparedness campaign
and those who were making profits out of the powder business, the nickel
business, the copper business, and the steel business, interlocked
through interlocking directorates; then he established the connection
between the Navy League and the firm of J. P. Morgan & Co., 23 Wall St.,
New York. Regarding this connection, Congressman Tavenner said, "The
Navy League upon close examination would appear to be little more than a
branch office of the house of J. P. Morgan & Co., and a general sales
promotion bureau for the various armor and munition makers and the
steel, nickel, copper and zinc interests."[45]
The preparedness movement came from the business interests. It was
fostered and financed by the plutocrats. It was their first successful
effort at winning public confidence, and so well was it managed that
millions of Americans fell into line, fired by the love of the flag and
the world-old devotion to family and fireside.
5. _Patriots_
From preparedness to patriotism was an easy step. The preparedness
advocates had evoked the spirit of the founders of American democracy
and worked upon the emotions of the people until it was generally
understood that those who favored preparedness were patriots.
Plutocratic patriotism was accepted by the press, the pulpit, the
college, and every other important channel of public information in the
United States. Editors, ministers, professors and lawyers proclaimed it
as though it were their own. Randolph Bourne, in a brilliant article
(_Seven Arts_, July, 1917) reminds his readers of "the virtuous horror
and stupefaction when they read the manifesto of their ninety-three
German colleagues in defense of the war. To the American academic mind
of 1914 defense of war was inconceivable. From Bernhardi it recoiled as
from a blasphemy, little dreaming that two years later would find it
creating its own cleanly reasons for imposing military service on the
country and for talking of the rough rude currents of health and
regeneration that war would send through the American body politic. They
would have thought any one mad who talked of shipping American men by
the hundreds of thousands--conscripts--to die on the fields of
France...."
The American plutocracy was magnified, deified, and consecrated to the
task of making the world safe for democracy. Exploiters had turned
saviors and were conducting a campaign to raise $100,000,000 for the Red
Cross.[46] The "malefactors of great wealth," the predatory business
forces, the special privileged few who had exploited the American people
for generations, became the prophets and the crusaders, the keepers of
the ark of the covenant of American democracy.
Radicals who had always opposed war, ministers who had spent their lives
preaching peace upon earth, scientists whose work had brought them into
contact with the peoples of the whole world, public men who believed
that the United States could do greater and better work for democracy by
staying out of the war, were branded as traitors and were persecuted as
zealously as though they had sided with Protestantism in Catholic Spain
under the Inquisition.
By a clever move, the plutocrats, wrapped in the flag and proclaiming a
crusade to inaugurate democracy in Germany, rallied to their support the
professional classes of the United States and millions of the common
people.
6. _Business in Control_
After the declaration of war, the mobilization and direction of the
economic war work of the government was placed in the hands of the
Council of National Defense, an organized group of the leading business
men. The Council consisted of six members of the President's Cabinet,
assisted by an Advisory Commission and numerous sub-committees. The
"Advisory Commission" of the Council (the real working body) contained
four business men, an educator, a labor leader and a medical man. ("The
Council of National Defense" a bulletin issued by the Council under date
of June 28, 1917.)
Each member of the Advisory Commission had a group of persons
cooperating with him. The make-up of these various committees was
significant. Among 706 persons listed in the original schedule of
sub-committees, 404 were business men, 200 were professional men, 59
were labor men, 23 were public officials and 20 were miscellaneous. It
was only in Mr. Gompers' group that labor had any representation, and
even there, out of 138 persons only 59 were workers or officials of
unions, while 34 were business men and 33 professional men, so that
among Mr. Gompers' assistants the business and professional men combined
considerably outnumbered the labor men.
The make-up of some of the sub-committees revealed the forces behind the
Defense Council. Thus Mr. Willard's sub-committee on "Express" consisted
of four vice-presidents, one from the American, one from the
Wells-Fargo, one from the Southern and one from the Adams Express
Company. His committee on "Locomotives" consisted of the Vice-President
of the Porter Locomotive Company, the President of the American
Locomotive Company, and the Chairman of the Lima Locomotive Corporation.
Mr. Rosenwald's committee on "Shoe and Leather Industries" consisted of
eight persons, all of them representing shoe or leather companies. His
committee on "Woolen Manufactures" consisted of eight representatives of
the woolen industry. The same business supremacy appeared in Mr.
Baruch's committees. His committee on "Cement" consisted of the
presidents of four of the leading cement companies, the vice-president
of a fifth cement company, and a representative of the Bureau of
Standards of Washington. His committee on "Copper" had the names of the
presidents of the Anaconda Copper Company, the Calumet & Hecla Mining
Company, the United Verde Copper Company and the Utah Copper Company.
His committee on "Steel and Steel Products" consisted of Elbert H. Gary,
Chairman of the United States Steel Corporation; Charles M. Schwab, of
the Bethlehem Steel Company; A. C. Dinkey, Vice-President of the Midvale
Steel Company; W. L. King, Vice-President of Jones & Loughlin Steel
Company, and J. A. Burden, President of the Burden Steel Company. The
four other members of the committee represented the Republic Iron and
Steel Company, the Lackawanna Steel Company, the American Iron and Steel
Institute and the Picklands, Mather Co., of Cleveland. Perhaps the most
astounding of all the committees was that on "Oil." The chairman was the
President of the Standard Oil Company, and the secretary of the
committee gives his address as "26 Broadway," the address of the
Standard Oil Company. The other nine members of the committee were oil
men from various parts of the country. What thinking American would have
suggested, three years before, that the Standard Oil Company would be
officially directing a part of the work of the Federal Government?
Comment is superfluous. Every great industrial enterprise of the United
States had secured representation on the committees of business men that
were responsible for the direction of the economic side of war making.
Then came the Liberty Loan campaigns and Red Cross drives, the direction
of which also was given into the hands of experienced business men. In
each community, the leaders in the business world were the leaders in
these war-time activities. Since the center of business life was the
bank, it followed that the directing power in all of the war-time
campaigns rested with the bankers, and thus the whole nation was
mobilized under the direction of its financiers.
The results of these experiences were far-reaching. During two
generations, the people of the United States had been passing anti-trust
laws and anti-pooling laws, the aim of which was to prevent the business
men of the country from getting together. The war crisis not only
brought them together, but when they did assemble, it placed the whole
political and economic power of the nation in their hands.
The business men learned, by first hand experience, the benefits that
arise from united effort. They joined forces across the continent, and
they found that it paid. James S. Alexander, President of the National
Bank of Commerce (New York), tells the story from the standpoint of a
banker (_Manchester Guardian_, January 28, 1920. Signed Article.) In a
discussion of "the experience in cooperative action which the war has
given American banks" he says, "The responsibility of floating the five
great loans issued by the government, together with the work of
financing a production of materials speeded up to meet war necessities,
enforced a unity of action and cooperation which otherwise could hardly
have been obtained in many years."
7. _Economic Winnings_
The war gains of the plutocracy in the field of public control were
important, as well as spectacular. Behind them, however, were economic
gains--little heralded, but of the most vital consequence to the future
of plutocratic power.
The war speeded production and added greatly to the national income, to
investable surplus, to profits and thus to the economic power of the
plutocrats.
The most tangible measure of the economic advantage gained by the
plutocracy from the war is contained in a report on "Corporate Earnings
and Government Revenues" (Senate Document 259. 65th Congress, Second
Session). This report shows the profits made by the various industries
during 1917--the first war year.
The report contains 388 large pages on which are listed the profits
("percent of net income to capital stock in 1917") made by various
concerns. A typical food producing industry--"meat packing"--lists 122
firms (p. 95 and 365). Of these firms 31 reported profits for the year
of less than 25 percent; 45 reported profits of 25 but under 50 percent;
24 reported profits of 50 but under 100 percent, and 22 reported profits
of 100 percent or more. In this case, a third of the profits were more
than 25, but less than 50 percent, and half were 50 percent or over.
Manufacturers of cotton yarns reported profits ranging slightly higher
than those in the meat packing industry (pp. 167, 168, 379). Among the
153 firms reporting, 21 reported profits of less than 25 percent; 61
reported 25 but less than 50 per cent; 55 reported 50 but under 100
percent, and 16 reported 100 percent or more.
Profits in the garment manufacturing industry were lower than those in
yarn manufacturing. Among the 299 firms reporting (pp. 171, 380) 74 gave
their profits as less than 25 percent; 121 gave their profits as 25 but
under 50 percent; 65 gave profits of 50 but less than 100 percent, and
39 gave their profits as 100 percent or over.
The profits of 49 Steel plants and Rolling Mills (pp. 100, 365) were
considerably higher than profits in any of the industries heretofore
discussed. Four firms reported profits of less than 25 percent; 13
reported profits of 25 but less than 50 percent; 17 reported profits of
50 but less than 100 percent, and 15 reported profits of more than 100
percent. In this instance two-thirds of the firms show profits of 50
percent or over.
Bituminous Coal producers in the Appalachian field (340 in number, pp.
130 and 372) report a range of profits far higher than those secured in
the manufacturing industries. Among these 340 firms, 23 reported profits
of less than 25 percent; 45 reported profits of 25 but under 50 percent;
79 reported profits of 50 but under 100 percent; 135 reported profits of
100 but under 500 percent; 21 reported profits of 500 but under 1,000
percent, and 14 reported profits of 1,000 percent and over. In the case
of these coal mine operators only a fourth had profits of under 50
percent and half had profits of more than 100 percent.
The profits in these five industries--food, yarn, clothing, steel and
coal--are quite typical of the figures for the tens of thousands of
other firms listed in Senate Document 259. Profits of less than 25
percent are the exception. Profits of over 100 percent were reported by
8 percent of the yarn manufacturers, by 13 percent of the garment
manufacturers, by 18 percent of the meat packers, by 31 percent of the
steel plants, and by 50 percent of the bituminous coal mines. A
considerable number of profits ranged above 500 percent, or a gain in
one year of five times the entire capital stock.
When it is remembered that these figures were supplied by the firms
involved; that they were submitted to a tremendously overworked
department, lacking the facilities for effective checking-up; and that
they were submitted for the purposes of heavy taxation, the showing is
nothing less than astounding.
8. _Winnings in the Home Field_
What has the American plutocracy won at home as a result of the war? In
two words it has gained social prestige and internal (economic)
solidarity. Both are vital as the foundation for future assertions of
power.
The plutocracy has unified its hold upon the country as a result of the
war. Also, it has won an important battle in its struggle with labor.
The position held by the American plutocracy at the end of the Great War
could hardly be stated more adequately than in a recent Confidential
Information Service furnished by an important agency to American
business men:
"SHALL VICTORS BE MAGNANIMOUS?
"There is no doubt about it--Labor is beaten. Mr. Gompers was at his
zenith in 1918. Since then he has steadily lost power. He has lost power
with his own people because he is no longer able to deliver the goods.
He can no longer deliver the goods for two reasons. For one thing, peace
urgency has replaced war urgency and we are not willing to bid for peace
labor as we were willing to bid for war labor. For another thing, the
employing class is immensely more powerful than it was in 1914.
"We have an organized labor force more numerous than ever before.
Relatively twice as many workers are organized as in 1916. But this same
labor force has lost its hold on the public. Furthermore, it is divided
in its own camp. It fears capital. It also fears its own factions. It
threatens, but it does not dare.
"We said that the employing class was immensely more powerful than in
1914. There is more money at its command. Eighteen thousand new
millionaires are the war's legacy. This money capacity is more
thoroughly unified than ever. In 1914 we had thirty-thousand banks,
functioning to a great degree in independence of each other. Then came
the Federal Reserve Act and gave us the machinery for consolidation and
the emergency of five years war furnished the hammer blows to weld the
structure into one.
"The war taught the employing class the secret and the power of
widespread propaganda. Imperial Europe had been aware of this power. It
was new to the United States. Now, when we have anything to sell to the
American people we know how to sell it. We have learned. We have the
schools. We have the pulpit. The employing class owns the press. There
is practically no important paper in the United States but is theirs!"
9. _The Run of the World_
The war gains of the American plutocracy at home were immense. Even more
significant, from an imperial standpoint, were the international
advantages that came to America with the war. The events of the two
years between 1916 and 1918 gave the United States the run of the world.
Destiny seemed to be bent upon hurling the American people into a
position of world authority. First, there was the matter of credit. The
Allies were reaching the end of their economic rope when the United
States entered the war. They were not bankrupt, but their credit was
strained, their industries were disorganized, their sources of income
were narrowed, and they were looking anxiously for some source from
which they might draw the immense volume of goods and credit that were
necessary for the continuance of the struggle.[47]
The United States was that source of supply. During the years from 1915
to 1917, the industries of the United States were shifted gradually from
a peace basis to a war basis. Quantities of material destined for use in
the war were shipped to the Allies. The unusual profits made on much of
this business were not curtailed by heavy war taxation. Thus for more
than two years the basic industries of the United States reaped a
harvest in profits which were actually free of taxation, at the same
time that they placed themselves on a war basis for the supplying of
Europe's war demand. When the United States did enter the war, she came
with all of the economic advantages that had arisen from selling war
material to the belligerents during two and a half years. Throughout
those years, while the Allies were bleeding and borrowing and paying,
the American plutocracy was growing rich.
When the United States entered the war, she entered it as an ally of
powers that were economically winded. She herself was fresh. With the
greatest estimated wealth of any of the warring countries, she had a
public national debt of less than one half of one percent of her total
wealth. She had larger quantities of liquid capital and a vast economic
surplus. As a consequence, she held the purse strings and was able,
during the next two years, to lend to the Allied nations nearly ten
billion dollars without straining her resources to any appreciable
degree.
The nations of Europe had been so deeply engrossed in war-making that
they had been unable to provide themselves with the necessary food. All
of the warring countries, with the exception of Russia, were importers
of food in normal times. The disturbances incident to the war; the
insatiable army demands, and the loss of shipping all had their effect
in bringing the Allied countries to a point of critical food scarcity in
the Winter of 1916-1917.
The United States was able to meet this food shortage as easily as it
met the European credit shortage--and with no greater sacrifice on the
part of the American people. Then, too, with the exception of small
amounts of food donated through relief organizations, the food that
went to Europe was sold at fancy prices. The United States was therefore
in a position to lay down the basic law,--"Submit or starve."
With the purse strings and the larder under American control, the
temporary supremacy of the United States was assured. She was the one
important nation (beside Japan) that had lost little and gained much
during the war. She was the only great nation with a surplus of credit,
of raw materials and of food.
The prosperity incident to this period is reflected in the record of
American exports, which rose from an average of about two billions in
the years immediately preceding the war to more than six billions in
1917. In the same year the imports were just under three billions,
leaving a trade balance--that is, a debt owing by foreign countries to
the United States--of more than three billions for that one year.
10. _Victory_
The war had been in progress for nearly three years before the United
States took her stand on the side of the Allies. At that time the flower
of Europe's manhood had faced, for three winters, a fearful pressure of
hardship and exposure, while millions among the non-combatants had
suffered, starved, sickened and died. The nerves of Europe were worn and
the belly of Europe was empty when the American soldiers entered the
trenches. They were never compelled to bear the brunt of the conflict.
They arrived when the Central Empires were sagging. Their mere presence
was the token of victory.
For the first time in history the Americans were matched against the
peoples of the old world on the home ground of the old world, and under
circumstances that were enormously favorable to the Americans. European
capitalism had weakened itself irreparably. The United States entered
the war at a juncture that enabled her to take the palm after she had
already taken billions of profit without risk or loss. The gain to the
United States was immense, beyond the possibility of present estimate.
The rulers of the United States became, for the time being, at least,
the economic dictators of the world.
The Great War brought noteworthy advantages to the American plutocracy.
At home its power was clinched. Among the nations, the United States was
elevated by the war into a position of commanding importance. In a
superficial sense, at least, the Great War "made" the plutocracy at home
and "made" the United States among the nations.
FOOTNOTES:
[45] "The Navy League Unmasked," Speech of December 15, 1915,
_Congressional Record_.
[46] This campaign was conducted by H. P. Davison, one of the leading
members of the firm of J. P. Morgan and Co. Later a great war-fund drive
was conducted by John D. Rockefeller, Jr. Cleveland H. Dodge of the
Phelps-Dodge corporation was treasurer of another fund.
[47] J. Maynard Keynes notes the "immense anxieties and impossible
financial requirements" of the period between the Summer of 1916 and the
Spring of 1917. The task would soon have become "entirely hopeless" but
"from April, 1917" the problems were "of an entirely different order."
"The Economic Consequences of the Peace." New York, Harcourt, Brace &
Howe, 1920, p. 273.
XII. THE IMPERIAL HIGHROAD
1. _A Youthful Traveler_
Along the highroad that leads to empire moves the American people, in
the heyday of its youth, sturdy, vigorous, energy-filled, replete with
power and promise--conquerors who have swept aside the Indians, enslaved
a race of black men, subdued a continent, and begun the extension of
territorial control beyond their own borders. More than a hundred
million Americans--fast losing their standards of individualism--fast
slipping under the domination of a new-made ruling class of wealth-lords
and plutocrats--journey, not discontentedly, along the imperial
highroad.
The preliminary work of empire-building has been accomplished--territory
has been conquered; peoples have been subjected and a ruling class
organized. The policy of imperialism has been accepted by the people,
although they have not thought seriously of its consequences. They have
set out, in good faith, as they believe, to seek for life, liberty and
happiness. They do not yet realize that, along the road that they are
now traveling, the journey will not be ended until they have worn
themselves threadbare in their efforts to conquer the earth.
The American people,--lacking in political experience and in world
wisdom; ignorant of the laws of economic and social change,--have
committed themselves, unwittingly, to the world old task of setting up
authority over those who have no desire to accept it, and of exacting
tribute from those who do not wish to pay it.
The early stages of the journey led across a continent. The American
people followed it eagerly. Now that the trail leads to other continents
they are still willing to go.
"Manifest destiny" is the cry of the leaders. "We are called," echo the
followers, and the nation moves onward.
There was some hesitancy among the American people during the Spanish
War. Even the leaders were not ready then. Now the leaders are
prepared--for markets, for trade, for investments. They are indifferent
to political conquest, but economically they are prepared to go on--into
Latin America; into Asia; into Europe. The war taught them the lesson
and gave them an inkling of their power. So they move along the imperial
highroad--followed by a people who have not yet learned to chant the
songs of victory--but who are destined, at no very distant date, to
learn victory's lessons and to pay victory's price. Along the path,--far
away in the distance they see the earth like a ball, rolling at their
feet. It is theirs if they will but reach out their hands to grasp it!
2. _An Imperial People_
This is the American people--locked in the arms of mighty economic and
social forces; building industrial empires; compelled, by a world war,
to reach out and save "civilization,"--capitalist civilization,--a
people that, by its very ancestry, seems destined to follow the course
of empire.
The sons and daughters of the native born American stock are, in the
main, the descendants of the conquering, imperial races of the modern
world. During recent times, three great empires--Spain, France and Great
Britain--have dominated western civilization. It was these three empires
that were responsible for the settlement of America. The past generation
has seen the German empire rise to a position that has enabled her to
shake the security of the world. The Germans were among the earliest and
most numerous settlers of the American colonies. Those who boast
colonial ancestry boast the ancestry of conquerors. The
Anglo-Saxon-Teutonic races, the titular masters of the modern world;
the races that have spread their power where-ever ships sail or trade
moves or gain offers, furnished the bulk of the early immigrants to
America.
The bulk of the early immigration to the United States was from Great
Britain and Germany. The records of immigration (kept officially since
1820) show that between that year and 1840 the immigrants from Europe
numbered 594,504, among them there were 358,994 (over half) from the
British Isles, and 159,215 from Germany, making a total from the two
countries of 518,209, or 87 percent of the immigrants arriving in the
twenty-year period. During the next twenty years (1840-1860) the total
of immigrants from Europe was 4,050,159, of which the British Isles
furnished 2,386,846 (over half) and Germany 1,386,293, making, for these
two countries, 94 percent of the whole immigration. Even during the
years from 1860 to 1880, 82 percent of those who migrated to the United
States hailed from Great Britain and Germany. American immigration, from
1820 to 1880, might, without any violence to facts, be described as
Anglo-Teutonic, so completely does the British-German immigrant dominate
this period.
Literally, it is true that the American people have been sired by the
masters and would-be masters of the modern earth.
3. _A Place in the Sun_
The Americans, like many another growing people, have sought a place in
the sun--widening their boundaries; grasping at promised riches. Unlike
other peoples they have accomplished the task without any real
opposition. Their "promised land" lay all about them, isolated from the
factional warfare of Europe; virgin; awaiting the master of the Western
World.
The United States has followed the path of empire with a facility
unexampled in recent history. When has a people, caught in the net of
imperialism, encountered less difficulty in making its imperial dream
come true? None of the foes that the American people have encountered,
in two centuries of expansion, have been worthy of the name. The Indians
were in no position to withstand the onslaught of the Whites. The
Mexicans were even less competent to defend themselves. The Spanish
Empire crumpled, under attack, like an autumn leaf under the heel of a
hunter. Practically for the taking, the American people secured a
richly-stocked, compact region, with an area of three millions of square
miles--the ideal site for the foundation of a modern civilization.
The area of the United States has increased with marvelous rapidity. At
the outbreak of the Revolution (1776) the Colonies claimed a territory
of 369,000 square miles. The Northwest Territory (275,000 square miles)
and the area south of the Ohio River (205,000 square miles) were added
largely as a result of the negotiations in 1782. The official figures
for 1800 give the total area of the United States as 892,135 square
miles. The Louisiana Purchase (1803) added 885,000 square miles at a
cost of 15 millions of dollars. Florida, 59,600 square miles, was
purchased from Spain (1819) for 5 millions of dollars; Texas, 389,000
square miles was annexed in 1845; the Oregon Country, 285,000 square
miles, was secured by treaty in 1846; New Mexico and California, 529,000
square miles, were ceded by Spain (1848) and a payment of 15 millions
was made by the United States; in 1853 the Gadsen Purchase added 30,000
square miles at a cost of ten millions of dollars. This completed the
territorial possessions of the United States on the mainland (with the
exception of Alaska) making a continental area of 3,026,798 square
miles. Between 1776 and 1853 the area of the United States was increased
more than eight fold. What other nation has been in a position to
multiply its home territory by eight in two generations?
These vast additions to the continental possessions of the United States
were made as the result of a trifling outlay. The most serious losses
were involved in the Mexican War when the casualties included more than
13,000 killed and died of wounds and disease. The net money cost of the
war did not exceed $100,000,000. In return for this outlay--including
the annexation of Texas--the United States secured 918,000 square miles
of land.[48]
There is no way to estimate the loss of life or the money cost of the
Indian Wars. For the most part, the troops engaged in them suffered no
more heavily than in ordinary police duty, and the costs were the costs
of maintaining the regular army. The total money outlay for purchases
and indemnities was about 45 millions of dollars. Within a century the
American people gained possession of one of the richest portions of the
earth's surfaces--a portion equal in area to more than three times the
combined acreage of Belgium, France, Germany, Italy, Japan and the
British Isles[49]--in return for an outlay in money and life that would
not have provided for one first class battle of the Great War.
Additions to the territory of the country were made with equal facility
during the period following the Civil War. Alaska was purchased from
Russia for $7,200,000; from Spain, as a result of the War of 1898, the
United States received the Philippines, Porto Rico, and some lesser
islands, at the same time paying Spain $20,000,000; Hawaii was annexed
and an indemnity of $10,000,000 was paid to Panama for the Canal strip.
During the second half of the nineteenth century, 716,666 square miles
were added to the possessions of the United States. The total direct
cost of this territory in money was under forty millions. These gains
involved no casualties with the exception of the small numbers lost
during the Spanish-American and Philippine Wars.
One hundred and thirty years have witnessed an addition to the United
States of more than two and a half million square miles of contiguous,
continental territory, and three-quarters of a million square miles of
non-contiguous territory. The area of the United States in 1900 was four
times as great as it was in 1800 and more than ten times as great as the
area of the Thirteen Original Colonies. For the imperialist, the last
century and a half of American history is a fairyland come true.
Other empires have been won by the hardest kind of fighting, during
which blood and wealth have been spent with a lavish hand. The empire of
the French, finally crushed with the defeat of Napoleon, was paid for at
such a huge price. The British Empire has been established in savage
competition with Holland, Spain, France, Russia, the United States,
Germany and a host of lesser powers. The empires of old--Assyria, Egypt,
Rome--were built at an intolerable sacrifice. So terrible has been the
cost of empire building to some of these nations that by the time they
had succeeded in creating an empire the life blood of the people and the
resources of the country were devoured and the empire emerged, only to
fall an easy prey to the first strong-handed enemy that it encountered.
No such fate has overtaken the United States. On the contrary her path
has been smoothed before her feet. Inhabiting a garden spot, her immense
territory gains in the past hundred and fifty years have been made with
less effort than it has cost Japan to gain and hold Korea or England to
maintain her dominion over Ireland.
Once established, the old-world empire was not secure. If the territory
that it possessed was worth having, it was surrounded by hungry-eyed
nations that took the first occasion to band together and despoil the
spoiler. The holding of an empire was as great a task as the building of
empire--often greater because of the larger outlay in men and money that
was involved in an incessant warfare. Little by little the glory faded;
step by step militarism made its inroads upon the normal life of the
people, until the time came for the stronger rival to overthrow the
mighty one, or until the inrushing hordes of barbarians should blot out
the features of civilization, and enthrone chaos once more.
How different has been the fate of the people of the United States!
Possessed of what is probably the richest, for the purposes of the
present civilization, of any territory of equal size in the world, their
isolation has allowed them more than a century of practical freedom from
outside interference--a century that they have been able to devote to
internal development. The absence of greedy neighbors has reduced the
expense of military preparation to a minimum; the old world has failed
to realize, until within the last few years, what were the possibilities
of the new country; vitality has remained unimpaired, wealth has piled
up, industry has been promoted, and on each occasion when a greater
extent of territory was required, it has been obtained at a cost that,
compared with the experience of other nations, must be described as
negligible.
So simple has been the process of empire building for the United States;
so natural have been the stages by which the American Empire has been
evolved; so little have the changes disturbed the routine of normal life
that the American people are, for the most part, unaware of the imperial
position of their country. They still feel, think and talk as if the
United States were a tiny corner, fenced off from the rest of the world
to which it owed nothing and from which it expected nothing.
The American Empire has been built, as were the palaces of Aladdin, in a
night. The morning is dawning, and the early risers who were not even
awakened from their slumbers by the sound of hammer and engine, are
beginning to rub their eyes, and to ask one another what is the meaning
of this apparition, and whether it is real.
4. _The Will to Power_
The forces of America are the forces of Empire,--the geography, the
economic organization, the racial qualities--all press in the direction
of imperialism. There is logic behind the two centuries of conquest in
which the American people have been engaged; there is logic in the rise
of the plutocracy. Now it remains for the rulers of America to accept
the implications of imperialism,--to thrill with the will to power; to
recognize and strengthen imperial purpose; to sell imperialism to the
American people--in other words to follow the call of manifest destiny
and conquer the earth.
The will to power is very old and very strong. Economic and social
necessity on the one hand, and the driving pressure of human ambition
and the love of domination on the other, have given it a front place in
human affairs. The empires of the past were driven into being by this
ardent force. As far back as history bears a record, one nation or tribe
has made war on its more fortunately situated neighbor; one leader has
made cause against his fellow ruler. The Egyptians and Carthaginians
have conquered in Africa; the Persians, Assyrians and Babylonians
conquered in Asia; the Macedonians, Greeks, Romans, Spanish, Dutch,
French, and British built their empires on one or more of the five
continents. Conqueror has succeeded conqueror, empire has followed
empire. Spoils, domination, world power, have been the objects of their
campaigns.
Each great nation grew from small beginnings. Each arose from some
simple form of tribal or clan organization--more or less democratic in
its structure; containing within itself a unified life and a simple folk
philosophy.
From such plain beginnings empires have developed. The peasants, tending
their fertile gardens along the borders of the Nile; the vine dressers
of Italy, the husbandmen and craftsmen of France and the yeomen of Merry
England had no desire to subjugate the world. If tradition speaks truth,
they were slow to take upon themselves anything more than the defense of
their own hearthstones. It was not until the traders sailed across the
seas; not until stories were brought to them of the vast spoil to be
had, without work, in other lands, that the peasants and craftsmen
consented to undertake the task of conquest, subjugation and empire
building.
The plain people do not feel the will to power. They know only the
necessities of self-defense. It is in the ambitions of the leisure
classes that the demands of conquest have their origin. It is among them
that men dream of world empire.[50]
The plain people of the United States have no will to power at the
present time. They are only asking to be let alone, in order that they
may go their several ways in peace. They are babes in the world of
international politics. For generations they have been separated by a
great gulf of indifference from the remainder of the human race, and
they crave the continuance of this isolation because it gives them a
chance to engage, unmolested, in the ordinary pursuits of life.
The American people are not imperialists. They are proud of their
country, jealous of her honor, willing to make sacrifices for their dear
ones. They are to-day where the plain folk of Egypt, Rome, France and
England were before the will to power gripped the ruling classes of
those countries.
Far different is the position of the American plutocracy. As a ruling
class the plutocracy feels the necessity of preserving and enlarging its
privileges. Recently called into a position of leadership, untrained and
in a sense unprepared, it nevertheless understands that its claim to
consideration depends upon its ability to do what the ruling classes of
Egypt, Rome, France and England have done--to build an empire.
Almost unconsciously, out of the necessities of the period, has come the
structure of the American Empire. In essence it is an empire, although
the plain people do not know it, and even the members of the plutocracy
are in many instances unaware of its true character. Yet here, in a land
dedicated to liberty and settled by men and women who sought to escape
from the savage struggles of empire-ridden Europe, the foundations and
the superstructure of empire appear.
1. The people of the United States have conquered and now hold
possession of approximately three million square miles of continental
territory that has been won by armed force from Great Britain, Mexico,
Spain, and the American Indians. (The entire area of Europe is only
3,800,000 square miles.)
2. The people of the United States have conquered and now hold under
their sway subject people who have enjoyed no opportunity for
self-determination. A whole race--the African Negroes--was captured in
its native land, transported to America and there sold into slavery. The
inhabitants of the Philippine Islands were conquered by the armed forces
of the United States and still are subject people.
3. The United States had developed a plutocracy--a property holding
class, that is, to all intents and purposes, the imperialist
class--controlling and directing public policy.
4. This plutocratic class is exploiting continental United States and
its dependencies. After years of savage internal strife, it has
developed a high degree of class consciousness, and led by its bankers,
it is taking the fat of the land. The plutocrats, who have made the
country their United States, are at the present moment busy disposing of
their surplus in foreign countries. As they build their industrial
empires, they broaden and deepen their power.