Confiscation of Lands.
“The former owners of these lands had now been practically dispossessed.
Many of them had gone to the cities and engaged in more profitable
business than farming. Many who were mortgaged had been sold out,
bankrupted and ruined, and had settled down into the condition of
peasants. The lands were now regarded as the property of the state.
This process of the transfer of the lands to the state went further in
Minnesota than the other states, because she was the first to adopt the
new plan of taxation. After the other states adopted it, the advantage
their farmers had over those of Minnesota was lost. Rents under the name
of taxes were levied, farming rendered unprofitable and the uncultivated
portions of the land abandoned by their owners. The few southern states
that did not go into this new plan could not reap much advantage from
their position, because their products were different from those of
the northern states and could not replace those whose cultivation was
repressed.
“Agricultural products fell off to such an extent, that in a few years
the United States ceased to be an exporter of them. The cities having
gained control of the states, it came to be a political theory that
each state was a community, and that the lands abandoned or forfeited
for taxes belonged to the Community and therefore came indirectly under
the control of the cities. From this position it was an easy step to the
idea that the taxes—or rents as they were designated—of the “people’s
lands” might be spent where most beneficial to the majority, that is, in
the cities. It was attempted to be pointed out by the more conservative
that this was class legislation. But the radical progressives replied
that it was in line with the theory of the single tax which was class
legislation if anything could be. And they asserted that the adoption of
the single tax carried with it an endorsement of the principle of class
legislation when demanded by the interests of the majority. Whether their
reasoning was sound or not they carried the day, and a great stride was
taken toward the centralization of power and population. It now happened
that when more money was wanted it was raised, not by increasing the
rents of city lots, but those of farming lands, and after a time the
principle revenues came to be derived from them. Although the exportation
of grain, flour, beef etc., had practically ceased, still the people
had to eat and their food had to be raised on the land. The business of
farming gradually took on entirely new features. Large operators took
large tracts on lease from the state at prices determined periodically
by appraisement fixed in proportion to the needs of the state. Lands
taken on these terms were guaranteed to be kept free from the competition
of squatters, so that the lands remaining vacant were cleared of
squatters, or else the latter were restricted to a mere garden patch.
Thus the country was no longer occupied by farmers residing on the lands
with their families as in former times. The agricultural districts were
inhabited only by a poor and thriftless class of peasants and during the
summers by the employes of the large contract farmers who made their
headquarters and resided with their families in the cities. In the
winter, only such hands as were required to care for the stock remained
in the country, the rest all flocking to the towns.
“One result of the increased rentals charged for the agricultural lands
appears not to have been anticipated. That was the great rise in the cost
of food. Of course the rents of the lands were simply added to the cost
of the production of grain and other foods, and finally were paid by the
consumer. It came to be seen after a time that the public revenues raised
out of the agricultural lands were finally paid by all the people in
proportion—not to their wealth or ability, but to their appetites and the
amount they consumed—so that a laboring man with a vigorous appetite paid
more to support the state than a dyspeptic millionaire. And a poor man’s
family of six or eight ravenous offspring contributed many times as much
as the scanty and sickly progeny of the exclusive aristocrat. It speedily
became a cause of great dissatisfaction and disappointment when the poor
and the working classes found out that the fine promises of the single
tax had so far failed that instead of lightening their burdens it had
increased them. And that the confiscation of the lands of the farmers
instead of adding to the prosperity of the common people had increased
the already plethoric wealth of the rich. A school of politicians now
arose who declared that the taxation of land was the taxation of the
poor man’s bread and butter and was all wrong. Instead of farming land
paying the bulk of the taxes they said it ought not to pay any. Every
facility and encouragement ought to be given for the production of cheap
food. People ought not to be taxed on what they consume, but on what
they save. Neither labor nor the laborer should be taxed, they should be
made as free and unhampered as possible for the production of wealth.
But when wealth was once produced then it should be taxed wherever found
and a necessary portion of it taken as the revenue of the state. The
laboring classes were in a mood to listen to this logic whether sound or
not. The lands having passed out of private hands, however, there was
no disposition to allow them to pass back to them again. And the new
party advocated state superintendence of the lands and free occupancy by
private individuals of such amounts as each could actually cultivate to
advantage. As the population and demand for land increased, the amounts
allotted to individuals was to be cut down proportionally, and a grade
or standard of cultivation and quantity of production was to be exacted,
and the state was to fix the prices at which the products were to be
sold. Eventually it was proposed that the state should be the purchaser
and distributor of these products so that speculation in them should be
prevented. The advantage possessed by some on account of their nearness
to market would be equalized by the state paying a less rate for their
products than for those further away.
“Taxes for revenue were then to be levied upon every piece of personal
property that could be found of every sort whatever including buildings.
In the cities a graded rent for lots was to be assessed according to
locality, beginning at zero in the vacant suburbs and increasing toward
the center of greatest activity and demand. A thoroughness in assessment
and the employment of methods that were called by their critics,
“odiously inquisitorial,” were to be adopted, but the fact was the mass
of the people were drifting rapidly toward socialism in their ideas, and
they asserted that the “inquisitorial methods” were alright. They said,
it was high time to know how much wealth people had and how they came
by it, and that reluctance to tell on the part of the possessors of it
indicated that either they had acquired it by questionable methods, or
wished to avoid the fair responsibility, that its ownership entailed.
They went further and declared it was high time that more scientific
processes were discovered and put into practice for the equitable
distribution of wealth. A thousand men contribute to the production
of $1,000,000 of wealth, all of which is gobbled up in a few weeks or
months by the scheming of a single “financier.” The board of directors
of a railroad, a mining company or a manufacturing company, may issue to
themselves certificates of watered stock for which they pay not a cent,
and which represent wealth having no existence, but which they are in a
position to compel the public to make good. A gang of speculators may get
up a corner on wheat or cotton or stocks of some sort and artificially
raise the price while they unload at the advanced rate thereby securing
wealth they never earned. Combinations and trusts in oil or sugar,
screws, nails, coal, whisky, gas-pipes or binding twine, arbitrarily
advance the price of the articles whenever they want more money, and thus
take as many thousands or millions from that patient ass, the public, as
they see fit without a pretense of returning an equivalent. All these
things the politicians of the new school declared must be stopped. They
said people should not be allowed to secure wealth without in some way
earning it, and if they had managed to secure it without rendering an
equivalent for it, it would be no more than right to confiscate it for
the benefit of the public at whose expense it must have been acquired.
The party advocating these ideas rapidly came into power and proceeded
to put their views into practice. It was found after much discussion and
some experimenting that people would not work and do their best unless
they were paid better for their best than for their worst. The experiment
of making the state the buyer and wholesale seller of all articles that
could be made the subjects of combines and trusts was found to work well.
The state did not at first undertake to manufacture or produce anything,
but monopolized its transfer from producer to consumer. For example the
producers of anthracite coal were required to sell their product to
the government, and it was unlawful for them to sell to anyone else.
The price of mining, handling and transportation and the selling rate
were each fixed by a board of arbitration and remained fixed till the
conditions changed. There was no such thing as striking among the hands,
for if they were dissatisfied all they could do was to leave and allow
others to take their places. If no others were willing to do the work it
was an indication that the rate was too low and the board of arbitration
raised it. It had been settled before this that the mine owner had no
royalty rights. These were regarded as the property of the state. So if
the mine owners attempted to combine to raise the price to the state or
from perverseness refused to furnish the amount required their properties
were placed by the state in the hands of receivers to be worked till such
time as the matters in dispute were regulated.
“Other mining industries, and the production of coal-oil, sugar and
other articles capable of control by trusts, were regulated and handled
in similar manner by the state. As to railroad, telegraph and express
properties, they all passed into direct government ownership before the
middle of the twentieth century.”
The Professor pausing here for a moment to shift his profile, I ventured
to say that I had in my day anticipated this move on the part of the
government, but many people had been unable to see how it could be
carried into effect without simple confiscation, because they said it
would bankrupt the country to buy the roads etc., and pay their value
for them.
“There was no difficulty at all in the matter,” the Professor continued,
“the owners of the roads received for them all they were worth, and yet
they did not cost the country a dollar. First the government had the
roads appraised on a capitalized basis, in which account was taken of the
actual value in cash of the property as it stood regardless of the amount
of stock and bonds outstanding against it. Next, account was taken of its
power to earn money.
“The government now provided for the issue of consolidated railway bonds
guaranteed by the government. These all bore the same rate of interest,
three per cent payable annually. They were in five series, due in 20, 40,
60, 80 and 100 years respectively, an equal amount of each. They were in
denominations of $20.00, $50.00, $100.00, and $1,000, with coupons for
the interest attached, the lower denominations payable at the earlier
dates.
“These bonds were issued in exchange for the railway securities on the
following terms. Bonds at their face value were allotted to each road to
the amount of its estimated cash value, plus its net earnings for that
one year next preceding the passage of the act of purchase. Many roads
earned only enough to pay their running expenses, and these received
only the amount of their appraised valuation. For the purpose of the
distribution of the allotment of the purchase bonds to the holders of
the railway securities in any given case, account was taken of the
market quotations of the several sorts of stocks and bonds at a date
one year previous to the act of purchase, and the value of each person’s
holding thus ascertained. Then the purchase bonds were distributed to the
individuals pro rata to these values. When seven-tenths in interest of
the proprietors of any road accepted the terms of the government purchase
the other three-tenths were obliged to accede or lose their interests.
“A few roads held out for a short time, but after the ice was broken
they all at once became eager to transfer their properties to the
government. The railway consols at once became popular and were rated
above par, the government guaranty making them in reality national
bonds. A new cabinet office—secretary of transportation—was created. All
the employes on the roads from the superintendents of transportation
down, held their places under civil service rules, and this branch
of the administration never came under political conditions, but was
managed upon strictly business principles like the post office. The
income from the roads, from the very first year not only paid the
interest on the railroad consols, but yielded a handsome surplus that
was annually laid aside in safe investments to serve as a sinking fund
for the redemption and cancellation of the bonds as they should mature.
Before the end of the twentieth century one-half of these bonds had been
retired and great reductions had been made in passenger and freight
rates and the service had vastly improved over what it was in your day.
Strikes, freight and passenger rate wars with their terrific waste and
demoralization of business were things of the long past. Many other leaks
of railway earnings were stopped when the roads became the property of
the government. Many small pieces of road became consolidated under
one superintendence; hordes of directors, presidents, vice presidents,
general managers, general agents, solicitors of business and other
officials were dispensed with; many of whom under the former regime,
not only drew salaries for supposed services, but absorbed besides in
various mysterious ways, vast wealth that of right should have gone to
the stockholders.
The total mileage of the railroads of the U. S. in 1893 was 173,370
Total capital stock $5,021,576,551
Total bonds 5,510,225,528
Total actual cost $45,000 per mile 7,801,650,000
Total earnings, one year 1,208,641,498
Total net earnings 358,648,918
Amount of the railroad consols to be issued in payment
of the R. R. 8,160,300,000
Annual interest on same at three per cent 244,809,000
Surplus of railway income after paying interest on
railroad consols to be applied to sinking fund 113,839,918
Amount of sinking fund after twenty years to be used
in the extinction of one-fifth of the consols 1,632,060,000
Net income of roads increased to 400,000,000
Surplus to be used in betterments 41,351,082
(The above figures I have worked out to accord with the Professor’s
suggestions—as he did not give details. I have put the average value of
the roads at $45,000 per mile which is much more than it would cost to
replace them.)
“I suppose,” said I, “that these bonds, especially those of the lower
denominations would circulate to some extent as currency.”
“They did, and those of the $1,000 denomination were used as the basis
of paper currency. But now at the close of the twentieth century over
half of these bonds have been retired and the currency based upon them
withdrawn. The railroad, telegraph, transportation, express, and car
companies have all disappeared and the entire business is conducted by
the general government. All of the roads will soon have been entirely
paid for and the rates for the transportation of passengers, goods and
messages are reduced almost to actual cost of the service including wear
and tear. You would doubtless be surprised by the schedule of prices. For
example, passenger rates for ten miles or under three cents, 20 miles
five cents, 50 miles ten cents, 100 miles fifteen cents, 200 miles 25
cents, 500 miles 50 cents and greater distances at the same rate provided
it is a continuous ride in the same train.”
“In my time,” said I, “electricity was being introduced as the motive
power on railways. Did it prove successful?”
“It did, eminently so, and entirely superseded steam locomotion, although
steam stationary engines were used principally, throughout the century.
But when we come to look forward into the twenty-first century, we shall
find some remarkable changes. But we have not reached that yet.”
“I am curious to know how the currency question was settled. After the
retirement of the railway consols, I suppose they fell back on gold or
paper based on it, did they?”
“The use of gold and silver money was never discontinued entirely, and
both were coined. Near the close of last century, the free coinage of
silver was strongly demanded by the people and strongly opposed by the
financiers. Finally they compromised. The government gave up the task of
maintaining the parity of the metals at any ratio, but coined both.
“The silver “dollar” with its fractions, half quarter and dime was coined
in quantities to accommodate the business. Silver was made a legal tender
for limited amounts. This gave silver the character of “fiat money,” or
money that is legal and current at inflated values. They made gold the
standard of value. In this they were right. There could logically be only
one unit of value. But the debtor class strenuously opposed the plan.
They said it worked great injustice to them, because their debts were
contracted at times when money bore inflated values; when for example
silver was intrinsically worth only half as much as gold. These debts
were therefore now payable in money twice as valuable and twice as hard
to get as that for which they had gone into debt. In other words they
paid back twice as much as they fairly owed and the creditor received
twice as much as he fairly loaned. There can be no doubt this is true
of debts of long standing. But most debts were not affected materially
by the rise in the value of gold, because they were not contracted at
its bottom value, but at various grades of value while it was on the
ascending movement. However as long as it was rising the creditor class
was reaping an unjust advantage over the debtors. The government issued
bank notes; some based on silver and some on gold; each kind redeemable
in the metal on which it was based. The quantity of this paper money was
regulated by the national legislature so as to insure a circulation in
proportion to the volume of business. The extended use of bank checks
has furnished a substitute for or supplement to the currency. When the
currency question was finally felt to be settled, the conditions were
practically accepted and the producing class was set to work, and in
an incredibly short time, replaced the wealth that had been abstracted
from them and more. Then came an era of speculation and the scattering
of wealth. Obligations rashly incurred in flush times, had to be met
when times became tight. This led to panics and the whole routine
had to be repeated about so often. But panics could not be entirely
eliminated by doctoring the currency, because currency is not the only
factor. No matter how much currency a man has, he is not likely to buy
articles he does not want. If mechanics have spent their time in the
production of something the public do not require or a surplus of what
they do ordinarily require, there will be difficulty in disposing of
the product. If two classes of mechanics each make things with the
expectation of selling them to the other class, and they turn out to
be such things as are not wanted in either case, there is sure to be
stagnation of exchange and consequent suffering. Where all are working
in ignorance of the requirements of others there are sure to be produced
many things for which there will be no demand. This had been partially
recognized by the government in your day and commissioners were appointed
to collect statistics and make estimates in regard to the production of
and probable demand for certain farm products. As the government became
more intimately the servant of the people its services in this direction
were greatly extended and inquiries covered many other departments
beside that of farming. The government itself became a large consumer
in operating its railroads, telegraphs, etc. Additional mileage had to
be constructed to meet the growing business besides the renewals on
account of wear and tear. By the publication in advance of the probable
demands on the various sorts of industry it became possible to estimate
approximately what amount of and what kind of product could be disposed
of. A still more fruitful source of financial trouble was to be found in
the spirit of recklessness and extravagance with which people spent their
money when times were prosperous or booming. It seemed so easy then to
get money and to pay debts that many thought it hardly worth while to
do it, if there appeared a chance for a profitable speculation, and so
instead of paying old debts they were very likely to incur fresh ones.
But as the state became more and more involved in business affairs,
it was able to advise what products would be in demand, when it was
advisable to use caution and economy and when activity would be rewarded.
The functions of the state as a medium of exchange between the producer
and the consumer became rapidly extended, and before the close of the
century it became the chief and in many things the only buyer and seller
of the products in most common use, as well as the sole factor in all
monopolies and in banking, insurance, and public amusements. It had not
yet gone into manufacturing or farming except to the extent necessary to
prevent combinations and private monopolies.”
“I think I can see the advantage of this,” said I, “they probably held to
the principle that competition is necessary to keep men up to their best
in exertion and industry.”
“That is correct,” he replied, “until work becomes an instinct it is
necessary to stimulate exertion by the better rewards that extra industry
can procure. The socialists in your day proposed no plan that calculated
sufficiently upon the selfishness of the individual. They expected that
everybody would accept the position assigned to him and work faithfully
for the good of all. But it was too soon to expect this. Your race is
very young. It is not so long since your ancestors ceased to depend
on the spontaneous productions of the earth for their sustenance, and
began to supplement them by their own exertions. With some of your
races work is beginning to be instinctive, but there are yet enough
in every nation, who, by their hereditary aversion to exertion are
ready to shirk out of labor and make the burden of the instinctively
industrious intolerable. Your race is too young yet, here at the close
of the twentieth century, to take on the purely instinctive socialistic
conditions as we Lunarians have them.”
“You think then that socialism to be successful must be instinctive as it
is with the bees?”
“To be permanently successful it must be founded upon such an instinct
for industry, that makes it more agreeable for a person to work, than
to be idle, or to be merely amused. That is, the individual must love
work for the sake of the work rather than for the reward that is to come
after it. It is indeed true that only the stimulation of the reward at
the end could ever have created or kept up the habit of work until it
became instinctive, and it is true that if this reward at the end should
habitually cease to be realized to at least some degree, the instinct
for the work would in course of time become undone—unwound as we might
say. The expectation of the reward if it is as constant as the work,
would naturally become a part of the instinct. But there are often
disappointments as to the reward, while the work itself remains constant,
so that this part of the instinct learns to be satisfied with smaller and
smaller results until finally the necessaries of painless existence in
which the working apparatus is kept in proper operating order are all the
reward that the instinct requires.”
“Then,” said I, “in this supreme ideal of socialistic instinct, I
understand you, that the individual lays aside all expectation of
personal enjoyment, or the possession of anything in the way of luxuries
or superfluities. It seems to me such an existence must be a very narrow
one.”
“The possession of superfluities,” said he, “does not contribute at all
to enjoyment of life. That is why they are superfluities. A luxury,
however, is something that gives or is supposed to give unaccustomed
pleasure, and it presupposes conditions or times in the ordinary life
of the individual in which he fails to get perfect returns of happiness
or satisfaction. But suppose there are no such times or conditions, and
that he has no possible desire that his habitual work does not satisfy.
Then his work is his luxury and no diversion to any unaccustomed function
would procure so great a luxury. As to such existence being narrow, it
all depends on the breadth of the work. If the work is circumscribed, the
life is narrow. If the work is wide, diversified and complicated, then
so is the life, whether it be accompanied by the elements of contingency
and uncertainty of mind as with you or the assurance of settled and
triumphant success as with us.
“All the same however true socialistic conditions are not realized to a
nearly perfect degree up to this close of the twentieth century, although
the advance toward them has been what the conservatives of your day
would have regarded as alarming. In all cases where honest competition
in the production of anything can be maintained, it is the policy of
government to refrain from interference; but if the articles produced
are necessary to consumers or are required as materials in the production
of other goods that are, and the manufacturers of such things form trusts
or combinations for the purpose of increasing the price, the government
appoints receivers for such business and has it operated long enough to
ascertain the cost of producing the article. The price is then fixed by
the government.”
“But what if the parties decline to sell at the prices fixed by the
state?”
“They do not decline unless they want to go out of business,” he replied,
“because when the state interferes in such cases it amounts to notice to
the parties that the state is ready, as an alternative, to undertake the
business itself, when it speedily destroys extortion by furnishing the
required product at a fair price.”
“It would seem then,” said I, “that the state has become a large factor
in the business of the country, and there has been a great centralization
of power.”
“That is true,” he answered, “there has been a remarkable evolution
and yet a perfectly natural and logical one. The very first principle
on which a state is organized is the defense and protection of all—the
weaker as well as the stronger members—against a common external foe.
The second principle which is easily derivable from the first is the
protection of the members of the society from each other. Under this
principle the weaker will be protected from the stronger, first in his
person, second in his property. It was the theory of many in all former
times that the functions of the state ought to end there. Some said,
that to go any further would contravene the wholesome natural law of
selection, and interfere against the survival of the fittest. Nature left
to herself, would put down and finally exterminate the weakest of the
race mentally and physically, leaving always the strongest and best to
survive, and so constantly improve the race. But if that consideration
were to prevail there should never have been any protective organization
of tribes and states in the first place. If when a community were
attacked each individual ran away or hid as best he could, the enemy
would catch and destroy the less swift and strong and the less shrewd and
wary, and so select the best for survival. But under the organization,
they stand together, and if the enemy is beaten off, the weak and
inferior members are saved with the best. The only consideration on which
this is right must be that the weaker members of the society are worth
more to the state than they cost, and therefore to the extent that they
are protected by the organization they are selected by nature in this
roundabout way for survival, for the benefit of the state.
“The further defense of the weak against the strong within the social
organization, must be on the same principle. And this principle having
been admitted there is no logical end to it short of protection against
every advantage the strong or the superior or the more wary can possibly
take or attempt. In a civilized society the oppression of the weak is no
longer so much from personal violence or robbery, but it takes the more
subtle form of absorbing their wealth under forms of law and business
formulas, so that in such a society the weak and unwary are valuable to
produce wealth, but are robbed of it, practically by a few.
“If the state would get the benefit of the exertions of its members, it
must protect them from these depredations, whether they are perpetrated
under the forms of highway robbery or of the laws of trade. In short the
protection of the individual by the state cannot logically terminate
till it prevents everyone from acquiring property he has not earned and
rendered a fair equivalent for.”
“Then ought it not also to protect society against the extortions of
anyone who would compel it to pay too much for something he alone could
produce?”
“Of course that is included in the first.”
“Well then, does not that imply also that the state shall insure a fair
return for the work of every individual to himself?”
“No,” said he, “that does not follow, unless the individual performs such
work as the community wants. If a man is free to do as he likes, and he
must be, he may sometimes choose to do something of no use to anyone
else. Then of course no one else should be obliged to take the useless
thing and pay for it. But if a man has nothing to do, the state should
upon his application furnish him employment and pay him for his work when
done under instructions.”