For any social movement or development there must be a maximum limit
beyond which it cannot proceed. That civilization which does not advance
must decline, and so, when the maximum of development has been reached in
any given direction, society must either retrograde or change the
direction of its advance. There are many families of men that have
failed, in the critical period of their economic evolution, to effect a
change in direction, and were forced to fall back. Vanquished at the
moment of their maximum, they have dropped out of the whirl of the world.
There was no room for them. Stronger competitors have taken their
places, and they have either rotted into oblivion or remain to be crushed
under the iron heel of the dominant races in as remorseless a struggle as
the world has yet witnessed. But in this struggle fair women and
chivalrous men will play no part. Types and ideals have changed. Helens
and Launcelots are anachronisms. Blows will be given and taken, and men
fight and die, but not for faiths and altars. Shrines will be
desecrated, but they will be the shrines, not of temples, but
market-places. Prophets will arise, but they will be the prophets of
prices and products. Battles will be waged, not for honor and glory, nor
for thrones and sceptres, but for dollars and cents and for marts and
exchanges. Brain and not brawn will endure, and the captains of war will
be commanded by the captains of industry. In short, it will be a contest
for the mastery of the world's commerce and for industrial supremacy.
It is more significant, this struggle into which we have plunged, for the
fact that it is the first struggle to involve the globe. No general
movement of man has been so wide-spreading, so far-reaching. Quite local
was the supremacy of any ancient people; likewise the rise to empire of
Macedonia and Rome, the waves of Arabian valor and fanaticism, and the
mediaeval crusades to the Holy Sepulchre. But since those times the
planet has undergone a unique shrinkage.
The world of Homer, limited by the coast-lines of the Mediterranean and
Black seas, was a far vaster world than ours of today, which we weigh,
measure, and compute as accurately and as easily as if it were a child's
play-ball. Steam has made its parts accessible and drawn them closer
together. The telegraph annihilates space and time. Each morning, every
part knows what every other part is thinking, contemplating, or doing. A
discovery in a German laboratory is being demonstrated in San Francisco
within twenty-four hours. A book written in South Africa is published by
simultaneous copyright in every English-speaking country, and on the day
following is in the hands of the translators. The death of an obscure
missionary in China, or of a whiskey-smuggler in the South Seas, is
served, the world over, with the morning toast. The wheat output of
Argentine or the gold of Klondike are known wherever men meet and trade.
Shrinkage, or centralization, has become such that the humblest clerk in
any metropolis may place his hand on the pulse of the world. The planet
has indeed grown very small; and because of this, no vital movement can
remain in the clime or country where it takes its rise.
And so today the economic and industrial impulse is world-wide. It is a
matter of import to every people. None may be careless of it. To do so
is to perish. It is become a battle, the fruits of which are to the
strong, and to none but the strongest of the strong. As the movement
approaches its maximum, centralization accelerates and competition grows
keener and closer. The competitor nations cannot all succeed. So long
as the movement continues its present direction, not only will there not
be room for all, but the room that is will become less and less; and when
the moment of the maximum is at hand, there will be no room at all.
Capitalistic production will have overreached itself, and a change of
direction will then be inevitable.
Divers queries arise: What is the maximum of commercial development the
world can sustain? How far can it be exploited? How much capital is
necessary? Can sufficient capital be accumulated? A brief resume of the
industrial history of the last one hundred years or so will be relevant
at this stage of the discussion. Capitalistic production, in its modern
significance, was born of the industrial revolution in England in the
latter half of the eighteenth century. The great inventions of that
period were both its father and its mother, while, as Mr. Brooks Adams
has shown, the looted treasure of India was the potent midwife. Had
there not been an unwonted increase of capital, the impetus would not
have been given to invention, while even steam might have languished for
generations instead of at once becoming, as it did, the most prominent
factor in the new method of production. The improved application of
these inventions in the first decades of the nineteenth century mark the
transition from the domestic to the factory system of manufacture and
inaugurated the era of capitalism. The magnitude of this revolution is
manifested by the fact that England alone had invented the means and
equipped herself with the machinery whereby she could overstock the
world's markets. The home market could not consume a tithe of the home
product. To manufacture this home product she had sacrificed her
agriculture. She must buy her food from abroad, and to do so she must
sell her goods abroad.
But the struggle for commercial supremacy had not yet really begun.
England was without a rival. Her navies controlled the sea. Her armies
and her insular position gave her peace at home. The world was hers to
exploit. For nearly fifty years she dominated the European, American,
and Indian trade, while the great wars then convulsing society were
destroying possible competitive capital and straining consumption to its
utmost. The pioneer of the industrial nations, she thus received such a
start in the new race for wealth that it is only today the other nations
have succeeded in overtaking her. In 1820 the volume of her trade
(imports and exports) was 68,000,000 pounds. In 1899 it had increased to
815,000,000 pounds,--an increase of 1200 per cent in the volume of trade.
For nearly one hundred years England has been producing surplus value.
She has been producing far more than she consumes, and this excess has
swelled the volume of her capital. This capital has been invested in her
enterprises at home and abroad, and in her shipping. In 1898 the Stock
Exchange estimated British capital invested abroad at 1,900,000,000
pounds. But hand in hand with her foreign investments have grown her
adverse balances of trade. For the ten years ending with 1868, her
average yearly adverse balance was 52,000,000 pounds; ending with 1878,
81,000,000 pounds; ending with 1888, 101,000,000 pounds; and ending with
1898, 133,000,000 pounds. In the single year of 1897 it reached the
portentous sum of 157,000,000 pounds.
But England's adverse balances of trade in themselves are nothing at
which to be frightened. Hitherto they have been paid from out the
earnings of her shipping and the interest on her foreign investments.
But what does cause anxiety, however, is that, relative to the trade
development of other countries, her export trade is falling off, without
a corresponding diminution of her imports, and that her securities and
foreign holdings do not seem able to stand the added strain. These she
is being forced to sell in order to pull even. As the London Times
gloomily remarks, "We are entering the twentieth century on the down
grade, after a prolonged period of business activity, high wages, high
profits, and overflowing revenue." In other words, the mighty grasp
England held over the resources and capital of the world is being
relaxed. The control of its commerce and banking is slipping through her
fingers. The sale of her foreign holdings advertises the fact that other
nations are capable of buying them, and, further, that these other
nations are busily producing surplus value.
The movement has become general. Today, passing from country to country,
an ever-increasing tide of capital is welling up. Production is doubling
and quadrupling upon itself. It used to be that the impoverished or
undeveloped nations turned to England when it came to borrowing, but now
Germany is competing keenly with her in this matter. France is not
averse to lending great sums to Russia, and Austria-Hungary has capital
and to spare for foreign holdings.
Nor has the United States failed to pass from the side of the debtor to
that of the creditor nations. She, too, has become wise in the way of
producing surplus value. She has been successful in her efforts to
secure economic emancipation. Possessing but 5 per cent of the world's
population and producing 32 per cent of the world's food supply, she has
been looked upon as the world's farmer; but now, amidst general
consternation, she comes forward as the world's manufacturer. In 1888
her manufactured exports amounted to $130,300,087; in 1896, to
$253,681,541; in 1897, to $279,652,721; in 1898, to $307,924,994; in
1899, to $338,667,794; and in 1900, to $432,000,000. Regarding her
growing favorable balances of trade, it may be noted that not only are
her imports not increasing, but they are actually falling off, while her
exports in the last decade have increased 72.4 per cent. In ten years
her imports from Europe have been reduced from $474,000,000 to
$439,000,000; while in the same time her exports have increased from
$682,000,000 to $1,111,000,000. Her balance of trade in her favor in
1895 was $75,000,000; in 1896, over $100,000,000; in 1897, nearly
$300,000,000; in 1898, $615,000,000; in 1899, $530,000,000; and in 1900,
$648,000,000.
In the matter of iron, the United States, which in 1840 had not dreamed
of entering the field of international competition, in 1897, as much to
her own surprise as any one else's, undersold the English in their own
London market. In 1899 there was but one American locomotive in Great
Britain; but, of the five hundred locomotives sold abroad by the United
States in 1902, England bought more than any other country. Russia is
operating a thousand of them on her own roads today. In one instance the
American manufacturers contracted to deliver a locomotive in four and
one-half months for $9250, the English manufacturers requiring
twenty-four months for delivery at $14,000. The Clyde shipbuilders
recently placed orders for 150,000 tons of plates at a saving of
$250,000, and the American steel going into the making of the new London
subway is taken as a matter of course. American tools stand above
competition the world over. Ready-made boots and shoes are beginning to
flood Europe,--the same with machinery, bicycles, agricultural
implements, and all kinds of manufactured goods. A correspondent from
Hamburg, speaking of the invasion of American trade, says: "Incidentally,
it may be remarked that the typewriting machine with which this article
is written, as well as the thousands--nay, hundreds of thousands--of
others that are in use throughout the world, were made in America; that
it stands on an American table, in an office furnished with American
desks, bookcases, and chairs, which cannot be made in Europe of equal
quality, so practical and convenient, for a similar price."
In 1893 and 1894, because of the distrust of foreign capital, the United
States was forced to buy back American securities held abroad; but in
1897 and 1898 she bought back American securities held abroad, not
because she had to, but because she chose to. And not only has she
bought back her own securities, but in the last eight years she has
become a buyer of the securities of other countries. In the money
markets of London, Paris, and Berlin she is a lender of money. Carrying
the largest stock of gold in the world, the world, in moments of danger,
when crises of international finance loom large, looks to her vast
lending ability for safety.
Thus, in a few swift years, has the United States drawn up to the van
where the great industrial nations are fighting for commercial and
financial empire. The figures of the race, in which she passed England,
are interesting:
Year United States Exports United Kingdom Exports
1875 $497,263,737 $1,087,497,000
1885 673,593,506 1,037,124,000
1895 807,742,415 1,100,452,000
1896 986,830,080 1,168,671,000
1897 1,079,834,296 1,139,882,000
1898 1,233,564,828 1,135,642,000
1899 1,253,466,000 1,287,971,000
1900 1,453,013,659 1,418,348,000
As Mr. Henry Demarest Lloyd has noted, "When the news reached Germany of
the new steel trust in America, the stocks of the iron and steel mills
listed on the Berlin Bourse fell." While Europe has been talking and
dreaming of the greatness which was, the United States has been thinking
and planning and doing for the greatness to be. Her captains of industry
and kings of finance have toiled and sweated at organizing and
consolidating production and transportation. But this has been merely
the developmental stage, the tuning-up of the orchestra. With the
twentieth century rises the curtain on the play,--a play which shall have
much in it of comedy and a vast deal of tragedy, and which has been well
named The Capitalistic Conquest of Europe by America. Nations do not die
easily, and one of the first moves of Europe will be the erection of
tariff walls. America, however, will fittingly reply, for already her
manufacturers are establishing works in France and Germany. And when the
German trade journals refused to accept American advertisements, they
found their country flamingly bill-boarded in buccaneer American fashion.
M. Leroy-Beaulieu, the French economist, is passionately preaching a
commercial combination of the whole Continent against the United
States,--a commercial alliance which, he boldly declares, should become a
political alliance. And in this he is not alone, finding ready sympathy
and ardent support in Austria, Italy, and Germany. Lord Rosebery said,
in a recent speech before the Wolverhampton Chamber of Commerce: "The
Americans, with their vast and almost incalculable resources, their
acuteness and enterprise, and their huge population, which will probably
be 100,000,000 in twenty years, together with the plan they have adopted
for putting accumulated wealth into great cooperative syndicates or
trusts for the purpose of carrying on this great commercial warfare, are
the most formidable . . . rivals to be feared."
The London Times says: "It is useless to disguise the fact that Great
Britain is being outdistanced. The competition does not come from the
glut caused by miscalculation as to the home demand. Our own
steel-makers know better and are alarmed. The threatened competition in
markets hitherto our own comes from efficiency in production such as
never before has been seen." Even the British naval supremacy is in
danger, continues the same paper, "for, if we lose our engineering
supremacy, our naval supremacy will follow, unless held on sufferance by
our successful rivals."
And the Edinburgh Evening News says, with editorial gloom: "The iron and
steel trades have gone from us. When the fictitious prosperity caused by
the expenditure of our own Government and that of European nations on
armaments ceases, half of the men employed in these industries will be
turned into the streets. The outlook is appalling. What suffering will
have to be endured before the workers realize that there is nothing left
for them but emigration!"
* * * * *
That there must be a limit to the accumulation of capital is obvious.
The downward course of the rate of interest, notwithstanding that many
new employments have been made possible for capital, indicates how large
is the increase of surplus value. This decline of the interest rate is
in accord with Bohm-Bawerk's law of "diminishing returns." That is, when
capital, like anything else, has become over-plentiful, less lucrative
use can only be found for the excess. This excess, not being able to
earn so much as when capital was less plentiful, competes for safe
investments and forces down the interest rate on all capital. Mr.
Charles A. Conant has well described the keenness of the scramble for
safe investments, even at the prevailing low rates of interest. At the
close of the war with Turkey, the Greek loan, guaranteed by Great
Britain, France, and Russia, was floated with striking ease. Regardless
of the small return, the amount offered at Paris, (41,000,000 francs),
was subscribed for twenty-three times over. Great Britain, France,
Germany, Holland, and the Scandinavian States, of recent years, have all
engaged in converting their securities from 5 per cents to 4 per cents,
from 4.5 per cents to 3.5 per cents, and the 3.5 per cents into 3 per
cents.
Great Britain, France, Germany, and Austria-Hungary, according to the
calculation taken in 1895 by the International Statistical Institute,
hold forty-six billions of capital invested in negotiable securities
alone. Yet Paris subscribed for her portion of the Greek loan
twenty-three times over! In short, money is cheap. Andrew Carnegie and
his brother bourgeois kings give away millions annually, but still the
tide wells up. These vast accumulations have made possible
"wild-catting," fraudulent combinations, fake enterprises, Hooleyism; but
such stealings, great though they be, have little or no effect in
reducing the volume. The time is past when startling inventions, or
revolutions in the method of production, can break up the growing
congestion; yet this saved capital demands an outlet, somewhere, somehow.
When a great nation has equipped itself to produce far more than it can,
under the present division of the product, consume, it seeks other
markets for its surplus products. When a second nation finds itself
similarly circumstanced, competition for these other markets naturally
follows. With the advent of a third, a fourth, a fifth, and of divers
other nations, the question of the disposal of surplus products grows
serious. And with each of these nations possessing, over and beyond its
active capital, great and growing masses of idle capital, and when the
very foreign markets for which they are competing are beginning to
produce similar wares for themselves, the question passes the serious
stage and becomes critical.
Never has the struggle for foreign markets been sharper than at the
present. They are the one great outlet for congested accumulations.
Predatory capital wanders the world over, seeking where it may establish
itself. This urgent need for foreign markets is forcing upon the
world-stage an era of great colonial empire. But this does not stand, as
in the past, for the subjugation of peoples and countries for the sake of
gaining their products, but for the privilege of selling them products.
The theory once was, that the colony owed its existence and prosperity to
the mother country; but today it is the mother country that owes its
existence and prosperity to the colony. And in the future, when that
supporting colony becomes wise in the way of producing surplus value and
sends its goods back to sell to the mother country, what then? Then the
world will have been exploited, and capitalistic production will have
attained its maximum development.
Foreign markets and undeveloped countries largely retard that moment.
The favored portions of the earth's surface are already occupied, though
the resources of many are yet virgin. That they have not long since been
wrested from the hands of the barbarous and decadent peoples who possess
them is due, not to the military prowess of such peoples, but to the
jealous vigilance of the industrial nations. The powers hold one another
back. The Turk lives because the way is not yet clear to an amicable
division of him among the powers. And the United States, supreme though
she is, opposes the partition of China, and intervenes her huge bulk
between the hungry nations and the mongrel Spanish republics. Capital
stands in its own way, welling up and welling up against the inevitable
moment when it shall burst all bonds and sweep resistlessly across such
vast stretches as China and South America. And then there will be no
more worlds to exploit, and capitalism will either fall back, crushed
under its own weight, or a change of direction will take place which will
mark a new era in history.
The Far East affords an illuminating spectacle. While the Western
nations are crowding hungrily in, while the Partition of China is
commingled with the clamor for the Spheres of Influence and the Open
Door, other forces are none the less potently at work. Not only are the
young Western peoples pressing the older ones to the wall, but the East
itself is beginning to awake. American trade is advancing, and British
trade is losing ground, while Japan, China, and India are taking a hand
in the game themselves.
In 1893, 100,000 pieces of American drills were imported into China; in
1897, 349,000. In 1893, 252,000 pieces of American sheetings were
imported against 71,000 British; but in 1897, 566,000 pieces of American
sheetings were imported against only 10,000 British. The cotton goods
and yarn trade (which forms 40 per cent of the whole trade with China)
shows a remarkable advance on the part of the United States. During the
last ten years America has increased her importation of plain goods by
121 per cent in quantity and 59.5 per cent in value, while that of
England and India combined has decreased 13.75 per cent in quantity and 8
per cent in value. Lord Charles Beresford, from whose "Break-up of
China" these figures are taken, states that English yarn has receded and
Indian yarn advanced to the front. In 1897, 140,000 piculs of Indian
yarn were imported, 18,000 of Japanese, 4500 of Shanghai-manufactured,
and 700 of English.
Japan, who but yesterday emerged from the mediaeval rule of the Shogunate
and seized in one fell swoop the scientific knowledge and culture of the
Occident, is already today showing what wisdom she has acquired in the
production of surplus value, and is preparing herself that she may
tomorrow play the part to Asia that England did to Europe one hundred
years ago. That the difference in the world's affairs wrought by those
one hundred years will prevent her succeeding is manifest; but it is
equally manifest that they cannot prevent her playing a leading part in
the industrial drama which has commenced on the Eastern stage. Her
imports into the port of Newchang in 1891 amounted to but 22,000 taels;
but in 1897 they had increased to 280,000 taels. In manufactured goods,
from matches, watches, and clocks to the rolling stock of railways, she
has already given stiff shocks to her competitors in the Asiatic markets;
and this while she is virtually yet in the equipment stage of production.
Erelong she, too, will be furnishing her share to the growing mass of the
world's capital.
As regards Great Britain, the giant trader who has so long overshadowed
Asiatic commerce, Lord Charles Beresford says: "But competition is
telling adversely; the energy of the British merchant is being equalled
by other nationals. . . The competition of the Chinese and the
introduction of steam into the country are also combining to produce
changed conditions in China." But far more ominous is the plaintive note
he sounds when he says: "New industries must be opened up, and I would
especially direct the attention of the Chambers of Commerce (British) to
. . . the fact that the more the native competes with the British
manufacturer in certain classes of trade, the more machinery he will
need, and the orders for such machinery will come to this country if our
machinery manufacturers are enterprising enough."
The Orient is beginning to show what an important factor it will become,
under Western supervision, in the creation of surplus value. Even before
the barriers which restrain Western capital are removed, the East will be
in a fair way toward being exploited. An analysis of Lord Beresford's
message to the Chambers of Commerce discloses, first, that the East is
beginning to manufacture for itself; and, second, that there is a promise
of keen competition in the West for the privilege of selling the required
machinery. The inexorable query arises: _What is the West to do when it
has furnished this machinery_? And when not only the East, but all the
now undeveloped countries, confront, with surplus products in their
hands, the old industrial nations, capitalistic production will have
attained its maximum development.
But before that time must intervene a period which bids one pause for
breath. A new romance, like unto none in all the past, the economic
romance, will be born. For the dazzling prize of world-empire will the
nations of the earth go up in harness. Powers will rise and fall, and
mighty coalitions shape and dissolve in the swift whirl of events.
Vassal nations and subject territories will be bandied back and forth
like so many articles of trade. And with the inevitable displacement of
economic centres, it is fair to presume that populations will shift to
and fro, as they once did from the South to the North of England on the
rise of the factory towns, or from the Old World to the New. Colossal
enterprises will be projected and carried through, and combinations of
capital and federations of labor be effected on a cyclopean scale.
Concentration and organization will be perfected in ways hitherto
undreamed. The nation which would keep its head above the tide must
accurately adjust supply to demand, and eliminate waste to the last least
particle. Standards of living will most likely descend for millions of
people. With the increase of capital, the competition for safe
investments, and the consequent fall of the interest rate, the principal
which today earns a comfortable income would not then support a bare
existence. Saving toward old age would cease among the working classes.
And as the merchant cities of Italy crashed when trade slipped from their
hands on the discovery of the new route to the Indies by way of the Cape
of Good Hope, so will there come times of trembling for such nations as
have failed to grasp the prize of world-empire. In that given direction
they will have attained their maximum development, before the whole
world, in the same direction, has attained its. There will no longer be
room for them. But if they can survive the shock of being flung out of
the world's industrial orbit, a change in direction may then be easily
effected. That the decadent and barbarous peoples will be crushed is a
fair presumption; likewise that the stronger breeds will survive,
entering upon the transition stage to which all the world must ultimately
come.
This change of direction must be either toward industrial oligarchies or
socialism. Either the functions of private corporations will increase
till they absorb the central government, or the functions of government
will increase till it absorbs the corporations. Much may be said on the
chance of the oligarchy. Should an old manufacturing nation lose its
foreign trade, it is safe to predict that a strong effort would be made
to build a socialistic government, but it does not follow that this
effort would be successful. With the moneyed class controlling the State
and its revenues and all the means of subsistence, and guarding its own
interests with jealous care, it is not at all impossible that a strong
curb could be put upon the masses till the crisis were past. It has been
done before. There is no reason why it should not be done again. At the
close of the last century, such a movement was crushed by its own folly
and immaturity. In 1871 the soldiers of the economic rulers stamped out,
root and branch, a whole generation of militant socialists.
Once the crisis were past, the ruling class, still holding the curb in
order to make itself more secure, would proceed to readjust things and to
balance consumption with production. Having a monopoly of the safe
investments, the great masses of unremunerative capital would be
directed, not to the production of more surplus value, but to the making
of permanent improvements, which would give employment to the people, and
make them content with the new order of things. Highways, parks, public
buildings, monuments, could be builded; nor would it be out of place to
give better factories and homes to the workers. Such in itself would be
socialistic, save that it would be done by the oligarchs, a class apart.
With the interest rate down to zero, and no field for the investment of
sporadic capital, savings among the people would utterly cease, and
old-age pensions be granted as a matter of course. It is also a logical
necessity of such a system that, when the population began to press
against the means of subsistence, (expansion being impossible), the birth
rate of the lower classes would be lessened. Whether by their own
initiative, or by the interference of the rulers, it would have to be
done, and it would be done. In other words, the oligarchy would mean the
capitalization of labor and the enslavement of the whole population. But
it would be a fairer, juster form of slavery than any the world has yet
seen. The per capita wage and consumption would be increased, and, with
a stringent control of the birth rate, there is no reason why such a
country should not be so ruled through many generations.
On the other hand, as the capitalistic exploitation of the planet
approaches its maximum, and countries are crowded out of the field of
foreign exchanges, there is a large likelihood that their change in
direction will be toward socialism. Were the theory of collective
ownership and operation then to arise for the first time, such a movement
would stand small chance of success. But such is not the case. The
doctrine of socialism has flourished and grown throughout the nineteenth
century; its tenets have been preached wherever the interests of labor
and capital have clashed; and it has received exemplification time and
again by the State's assumption of functions which had always belonged
solely to the individual.
When capitalistic production has attained its maximum development, it
must confront a dividing of the ways; and the strength of capital on the
one hand, and the education and wisdom of the workers on the other, will
determine which path society is to travel. It is possible, considering
the inertia of the masses, that the whole world might in time come to be
dominated by a group of industrial oligarchies, or by one great
oligarchy, but it is not probable. That sporadic oligarchies may
flourish for definite periods of time is highly possible; that they may
continue to do so is as highly improbable. The procession of the ages
has marked not only the rise of man, but the rise of the common man.
From the chattel slave, or the serf chained to the soil, to the highest
seats in modern society, he has risen, rung by rung, amid the crumbling
of the divine right of kings and the crash of falling sceptres. That he
has done this, only in the end to pass into the perpetual slavery of the
industrial oligarch, is something at which his whole past cries in
protest. The common man is worthy of a better future, or else he is not
worthy of his past.
* * * * *
NOTE.--The above article was written as long ago as 1898. The only
alteration has been the bringing up to 1900 of a few of its statistics.
As a commercial venture of an author, it has an interesting history. It
was promptly accepted by one of the leading magazines and paid for. The
editor confessed that it was "one of those articles one could not
possibly let go of after it was once in his possession." Publication was
voluntarily promised to be immediate. Then the editor became afraid of
its too radical nature, forfeited the sum paid for it, and did not
publish it. Nor, offered far and wide, could any other editor of
bourgeois periodicals be found who was rash enough to publish it. Thus,
for the first time, after seven years, it appears in print.