environment is a powerful factor in bringing out talent even to
the exclusion of heredity. I doubt if you would care to be
understood to this limit, and yet where you enumerate on page
61 the reasons why certain cities are fecund in respective
talents, you seem to have overlooked the fact that if these
cities have been for many generations centers of talent to such
an extent as to provide exceptional environmental influences,
the same conditions would also provide exceptional parentage,
so that the birthrate of talent would be much higher in such a
region than the normal. In other words, the very same
conditions which would provide exceptional opportunities for
development also and at the same time provide an exceptional
birth condition. This is the rock on which very many arguments
tending to compare heredity and environment wreck
themselves.'[5]
[5] This is a criticism that needs to be met. Mr. George R.
Davies of this institution has submitted facts in a paper which
appeared in the March number of the Quarterly Journal of the
University of North Dakota, which fills in the gap. He shows
relative to American cities that there has been little or no
segregation of talented parentage.
We have arrived at a point where we are able to consider the
question of the conservation of talent. A position of advantage
has been gained from which to view this question. For we have
seen that talent has a decidedly important and indispensable
social function to perform. It is the creative and contributive
agency, the cause of achievement, and a vital factor in
progress. Its conservation is consequently devoutly to be
desired. We have also discovered the fact that, while a rare
commodity, it is present in society in a larger measure than we
have commonly believed. If progress is desirable in a measure
it is likely to be desirable in a large measure. If talent is
able to carry us forward at a certain rate with the development
of a minimum of the quantity that is in existence we should be
able to greatly accelerate our progress if all that is latent
could be developed and put into active operation. Further, we
have obtained some insight into the conditions which favor the
development of talent and likewise some of the obstacles to its
manifestation. If it abounds where certain conditions are
present in the situation and fails to appear where those
conditions are absent, we have a fertile suggestion as to the
method of social control and direction which will bring the
latent talent to fertility.
We must undoubtedly hold that if a larger supply of talent
exists than is discovered, developed and put to use that,
since, as we have seen, it is so valuable when estimated in
terms of social progress, we are dealing wastefully with
talent. We are allowing great ability to go to waste since we
are leaving it lie in its undeveloped form. Therefore one of
the problems of the proper conservation of talent consists in
finding a method of discovering and releasing this valuable
form of social energy.
When we come to inquire how this may be done, how this
discovery is to take place, we must take for our guide the
facts which were found to bear on the maturing of talent in the
above studies. We discovered that the local environment seemed
to contain the influential element in bringing forth talent.
When that local environment was analyzed it turned out that the
items of opportunity for leisure and the facilities for
education were the most fruitful factors. Leisure is absolutely
essential to afford that opportunity for self-development which
is required even of the most talented. This can only be had
when the income of the individual is sufficient to give him a
considerable part of his active time for carrying out his
intellectual aspirations. We have great numbers of people whom
we have reason to believe are as able on the average, have as
large a proportion of talent as the well-to-do, whose poverty
is so crushing and whose days of toil are so long and so
consuming of energy that the element of leisure is lacking. It
is only an occasional individual of this class of people who is
able to secure the wealth which means a measure of leisure by
which he is able to mount out of obscurity. An improvement in
the physical conditions of life of these people, together with
an increase in their economic possibilities is a necessary
means to the proper conservation of the talent of this group.
The cultural factor is one which must be made more omnipresent
than it is now before we shall be able to awake the latent
talent of the masses of people. There are certain sections of
all nations, and more especially of such nations as the United
States, where the population is widely scattered over vast
areas of farming regions in which the opportunities for
education and stimulative enterprises and institutions are
lacking or meager. The same is true of very large sections of
the populations of the cities. In both cases large
neighborhoods exist in which the lives of the people move in a
humdrum rut, never disturbed by matters which arouse the
creative element in human nature. Especially is this important
in the early years of life where the outlook for the whole
future of the individual is so strongly stamped. To come into
contact with no stimulus and arousing agent in the home, or the
neighborhood in the earliest years is to become settled into a
life-long habit of inert dullness.
When we revert to the schools which so generally abound, we
fail to find the stimulating element in them which might be
regarded as the necessary opportunity to develop talent. The
vast majority of elementary teachers are persons whose
intellectual natures have never been aroused. Their imaginative
and sympathetic capacities lie undeveloped. Their work in the
school is conducted on the basis of memory. It is parrot work
and ends in making parrots of the pupils. The rational and
causal as agencies in education are hardly ever appealed to.
Until our teaching force is itself developed in the directions
and capacities which alone characterize the intellectual we can
not hope for much in the way of recovering the rich field of
latent talent from its infertility.
Something remains to be said about the proper utilization of
talent which has been developed. Did all genius depend on the
hereditary factor and consequently we had developed all
individuals possessing exceptional ability into contributors
and creators, the question of their complete utilization by
society remains. That all able men and women are working at the
exact thing and in the exact place and under the exact methods
which will yield the greatest and most fruitful results for
society only the superficial could believe. Herbert Spencer
used up a very large part of his superb ability during the
larger portion of his life in the drudgery of making a living.
The work of the national eugenics laboratory of England is
carried on by a man of great talent, Professor Carl Pearson, in
cramped quarters and with insufficient equipment and support.
The enterprise is as important as any in England, that of
discovering the conditions and means of improving the human
race. The laboratory was built up in the first instance by the
sacrifice of Sir Francis Galton, and it is maintained by means
of the bequest of his personal fortune.
These are but instances of the many which exist where talented
individuals are working under great handicaps which neither
promote their talent nor secure fecundity of results to
collective man. In nearly every line of human endeavor gifted
individuals are consuming in an unnecessarily wasteful manner,
from the point of view of social improvement, their splendid
abilities. In educational institutions trained experts and
specialists are doing the work which very ordinary ability of a
merely clerical kind could conduct, sacrificing the higher and
more fruitful attainments thereby. I have known a faculty of
some forty members who were compelled to register the term
standings by sitting in a circle and calling off the grades of
several hundred students student by student and class by class
for each student as it came their turn, while a clerk recorded
the grades. The process consumed about ten hours per member
each term, or something over a thousand hours a year for the
whole faculty. Both economically and socially it was expensive
and wasteful because a cheap clerk could have done the whole
far better and have released the talent for productive
purposes.
We shall be wise when we realize the worth of our workable
talent and so establish its working conditions that it may
secure the full measure of its productiveness. If scientific
management for the mass of laborers of a nation is worth while
how much more serviceable would it be to extend its fructifying
influence to the most able members of the community.
But how to proceed in order to make the discovery of the latent
talent is the pressing problem. For a long time our methods
promise to be as empirical as are those we employ for the
advancement of science. Relative to the latter, after
enumerating a large list of conditions for promoting science of
which we are ignorant, Professor Cattell says:
'In the face of endless problems of this character we are as
empirical in our methods as the doctor of physic a hundred
years ago or the agricultural laborer to-day. It is surely time
for scientific men to apply scientific methods to determine the
circumstances that promote or hinder the advancement of
science.'[6]
[6] "American Men of Science," p. 565.
Since the discovery and utilization of genius and talent in
general are so closely related to the problem of the promotion
of science, his statement may be adopted to express the demand
existing in those directions.
WAR, BUSINESS AND INSURANCE[1]
[1] Chairman's address on Peace Day of the Insurance Congress,
Panama-Pacific International Exposition, San Francisco, October
11, 1915.
BY CHANCELLOR DAVID STARR JORDAN
STANFORD UNIVERSITY
THE complications behind the war in Europe are very many,
ruthless exploitation, heartless and brainless diplomacy,
futile dreams of national expansion (the "Mirage of the Map"),
of national enrichment through the use of force (the "Great
Illusion"), and withal a widespread vulgar belief in
indemnities or highway robberies as a means of enriching a
nation.
All these would represent only the unavoidable collision,
unrest and ambition of human nature, were it not that every
element involved in it was armed to the teeth. "When blood is
their argument" in matters of business or politics, all
rational interests are imperilled. The gray old strategists to
whom the control of armament was assigned saw the nations
moving towards peaceful solution of their real and imaginary
difficulties. The young men of Europe had visions of a broader
world, one cleared of lies and hate and the poison of an
ingrowing patriotism. After a generation of doubt and pessimism
in which world progress seemed to end in a blind sack, there
was rising a vision of continental cooperation, a glimpse of
the time when science, always international, should also
internationalize the art of living.
Clearly the close season for war was near at hand. The old men
found means to bring it on and in so doing to exploit the
patriotism, enthusiasm, devotion and love of adventure of the
young men of the whole world.
The use of fear and force as an argument in politics or in
business--this is war. It is a futile argument because of
itself it settles nothing. Its conclusion bears no certain
relation to its initial aim. It must end where it should begin,
with an agreement among the parties concerned. War is only the
blind negation, the denial of all law, and only the recognition
of the supremacy of some law can bring war to an end. In time
of war all laws are silent as are all efforts for progress, for
justice, for the betterment of human kind. If history were
written truthfully every page in the story of war would be left
blank, or printed black, with only fine white letters in the
darkness to mark the efforts for humanity, which war can never
wholly suppress.
In this paper I propose to consider only economic effects of
this war and with special reference to the great industry which
brings most of this audience together, the business of
insurance.
The great war debts of the nations of Europe began with
representative government. Kings borrowed money when they
could, bankrupting themselves at intervals and sometimes
wrecking their nations. Kings have always been uncertain pay.
Not many loaned money to them willingly and only in small
amounts and at usurious rates of interest. To float a
"patriotic loan," it was often necessary to make use of the
prison or the rack. With the advent of parliaments and chambers
of deputies, the credit of nations improved and it became easy
to borrow money. There was developed a special class of
financiers, the Rothschilds at their head, pawnbrokers rather
than bankers, men able and willing to take a whole nation into
pawn. And with the advent of great loans, as Goldwin Smith
wisely observed, "there was removed the last check on war."
With better social and business adjustments, and especially
with the progress of railways and steam navigation with other
applications of science to personal and national interests, the
process of borrowing became easier, as also the payment of
interest on which borrowing depends. Hence more borrowing,
always the easiest solution of any financial complication or
embarrassment. Through the substitution of regular methods of
taxation for the collection of tribute, the nations became
solidified. Only a solidified nation can borrow money. The
loose and lawless regions called Kingdoms and Empires under
feudalism were not nations at all. A nation is a region in
which the people are normally at peace among themselves. In
civil war, a nation's existence may be dissolved.
In all the ages war costs all that it can. All that can be
extorted or borrowed is cast into the melting pot, for the sake
of self-preservation or for the sake of victory. If the nations
had any more to give war would demand it. The king could
extort, but there are limits to extortion. The nation could
borrow, and to borrowing there is but one limit, that of actual
exhaustion.
Mr. H. Bell, cashier of Lloyd's Bank in London, said in 1913:
'The London bankers are not lending on the continent any more.
We can see already the handwriting on the wall and that spells
REPUDIATION. The people of Europe will say: "We know that we
have had all this money and that we ought to pay interest on
it. But we must live; and we can not live and pay."'
The chief motive for borrowing on the part of every nation has
been war or preparation for war. If it were not for war no
nation on earth need ever have borrowed a dollar. If provinces
and municipalities could use all the taxes their people pay,
for purposes of peace, they could pay off all their debts and
start free. In Europe, for the last hundred years, in time of
so-called peace, nations have paid more for war than for
anything else. It is not strange therefore that this armed
peace has "found its verification in war." It has been the "Dry
War," the "Race for the Abyss," which the gray old strategists
of the general staff have brought to final culmination.
The debt of Great Britain began with the revolution of 1869,
with about $1,250,000. This unpopular move, known as Dutch
finance, was the work of William of Orange. Other loans
followed, based on customs duties with "taxes on bachelors,
widows, marriages and funerals," and the profits on lotteries.
At the end of the war of the revolution the debt reached
$1,250,000,000, and with the gigantic borrowings of Pitt, in
the interest of the overthrow of Napoleon, the debt reached its
highest point, $4,430,000,000. The savings of peace duly
reduced this debt, but the Boer war, for which about
$800,000,000 was borrowed, swept these savings away. When the
present war began the national debt had been reduced to a
little less than $400,000,000 which sum a year of world war has
brought up to $10,000,000,000.
The debt of France dates from the French Revolution. Through
reckless management it soon rose to $700,000,000, which sum was
cut by paper money, confiscation and other repudiations to
$160,000,000. This process of easing the government at the
expense of the people spread consternation and bankruptcy far
and wide. A great program of public expenditure following the
costly war and its soon repaid indemnity raised the debt of
France to over $6,000,000,000. The interest alone amounted to
nearly $1,000,000,000. A year of the present war has brought
this debt to the unheard of figure of about $11,000,000,000.
Thus nearly two million bondholders and their families in and
out of France have become annual pensioners on the public
purse, in addition to all the pensioners produced by war.
Germany is still a very young nation and as an empire more
thrifty than her largest state. The imperial debt was in 1908 a
little over $1,000,000,000. The total debt of the empire and
the states combined was about $4,000,000,000 at the outbreak of
the war. It is now stated at about $9,000,000,000, a large part
of the increase being in the form of "patriotic" loans from
helpless corporations.
The small debt of the United States rose after the Civil War to
$2,773,000,000. It has been reduced to about $915,000,000,
proportionately less than in any other civilized nation. The
local debts of states and municipalities in this and other
countries are, however, very large and are steadily rising. As
Mr. E. S. Martin observes,
'We have long since passed the simple stage of living beyond
our incomes. We are engaged in living beyond the incomes of
generations to come.'
Let me illustrate by a supposititious example. A nation has an
expenditure of $100,000,000 a year. It raises the sum by
taxation of some sort and thus lives within its means. But
$100,000,000 is the interest on a much larger sum, let us say
$2,500,000,000. If instead of paying out a hundred million year
by year for expenses, we capitalize it, we may have immediately
at hand a sum twenty-five times as great. The interest on this
sum is the same as the annual expense account. Let us then
borrow $2,500,000,000 on which the interest charges are
$100,000,000 a year. But while paying these charges the nation
has the principal to live on for a generation. Half of it will
meet current expenses for a dozen years, and the other half is
at once available for public purposes, for dockyards, for
wharves, for fortresses, for public buildings and, above all,
for the ever-growing demands of military conscription and of
naval power. Meanwhile the nation is not standing still. In
these twelve years the progress of invention and of commerce
may have doubled the national income. There is then still
another $100,000,000 yearly to be added to the sum available
for running expenses. This again can be capitalized, another
$2,500,000,000 can be borrowed, not all at once perhaps, but
with due regard to the exigencies of banking and the temper of
the people. With repeated borrowings the rate of taxation
rises. Living on the principal sets a new fashion in
expenditure. The same fashion extends throughout the body
politic. Individuals, corporations, municipalities all live on
their principal.
The purchase of railways and other public utilities by the
government tends further to complicate the problems of national
debt. It is clear that this system of buying without paying can
not go on forever. The growth of wealth and population can not
keep step with borrowing, even though all funds were expended
for the actual needs of society. Of late years, war preparation
has come to take the lion's share of all funds, however
gathered, "consuming the fruits of progress." What the end
shall be, and by what forces it will be brought about, no one
can now say. This is still a very rich world, even though
insolvent and under control of its creditors. There is a
growing unrest among taxpayers. There would be a still greater
unrest if posterity could be heard from, for it can only save
itself by new inventions and new exploitations or by frugality
of administration of which no nation gives an example to-day.
Nevertheless, this burden of past debt, with all its many
ramifications and its interest charges, is not the heaviest the
nations have placed on themselves. The annual cost of army and
navy in the world before the war was about double the sum of
interest paid on the bonded debt. This annual sum represented
preparation for future war, because in the intricacies of
modern warfare "hostilities must be begun" long before the
materialization of any enemy. In estimating the annual cost of
war, to the original interest of upwards of $1,500,000,000 we
must add yearly about $2,500,000,000 of actual expenditure for
fighters, guns and ships. We must further consider the generous
allowance some nations make for pensions. A large and
unestimated sum may also be added to the account from loss of
military conscription, again not counting the losses to society
through those forms of poverty which have their primal cause in
war. For in the words of Bastiat, "War is an ogre that devours
as much when he sleeps as when he is awake." It was Gambetta
who foretold that the final end of armament rivalry must be "a
beggar crouching by a barrack door."
When the great war began, the nations of Europe were thus waist
deep in debt, the total amount of national bonded indebtedness
being about $30,000,000,000, or nearly three times the total
sum of actual gold and silver, coined or not in all the world.
A year of war at the rate of $50,000,000 to $70,000,000 per day
has increased this indebtedness to nearly $50,000,000,000, the
bonds themselves rated at half or less their normal value,
while the actual financial loss through destruction of life and
property has been estimated at upwards of $40,000,000,000.
In "The Unseen Empire," the forceful and prophetic drama of Mr.
Atherton Brownell, the American ambassador, Stephan Channing,
tries to show the chancellor of Germany that war with Great
Britain is not a "good business proposition." He says:
'Our Civil War has cost us to date, if you count pensions for
the wrecks it left--mental and physical--nearly twenty billions
of dollars. And that doesn't include property losses, nor
destruction of trade, nor broken hearts and desolate
homes--that's just cold hard cash that we have actually paid
out. You can't even think it. There have been only about one
billion minutes since Christ was born. Now if there had been
four million slaves and we had bought every one of them at an
average of one thousand dollars apiece, set them free and had
no war, we should have been in pocket to day just sixteen
billion dollars. That one crime cost us in cash just about the
equal of sixteen dollars a minute from the beginning of the
Christian era.'
The war as forecast in the play is now on in fact, and one
certain truth in regard to it is that it is assuredly not "a
good business proposition" for anybody in any nation, excepting
of course, the makers of the instruments of death.
DAILY COST OF GREAT EUROPEAN WAR (Charles Richet, 1912)
Feed of men. . . . . . . . . . . . . . . . . . $12,600,000
Feed of horses . . . . . . . . . . . . . . . . . 1,000,000
Pay (European rates) . . . . . . . . . . . . . . 4,250,000
Pay of workmen in the arsenals and ports (100 per day)1,000,000
Transportation (60 miles in 10 days) . . . . . . 2,100,000
Transportation for provisions. . . . . . . . . . 4,200,000
Munitions: Infantry 10 cartridges a day. . . . . 4,200,000
Artillery: 10 shots per day. . . . . . . . . . . 1,200,000
Marine: 2 shots per day. . . . . . . . . . . . . . 400,000
Equipment. . . . . . . . . . . . . . . . . . . . 4,200,000
Ambulances: 500,000 wounded or ill ($1 per day). . 500,000
War ships. . . . . . . . . . . . . . . . . . . . . 500,000
Reduction of imports . . . . . . . . . . . . . . 5,000,000
Help to the poor (20 cents per day to 1 in 10) . 6,800,000
Destruction of towns, etc. . . . . . . . . . . . 2,000,000
Total per day . . . . . . . . . . . . . . . . .$49,950,000
The actual war began, in accord with Professor Richet's
calculation, at a cost of $50,000,000 per day. Previous to this
the "dry war" or "armed peace" cost only $10,000,000 per day.
This is Richet's calculation in 1912, an underestimate as to
expenses on the sea and in the air. These with the growing
scarcity of bread and shrapnel, the equipment of automobiles,
and the unparalleled ruin of cities have raised this cost to
$70,000,000 per day.