A CONTRAST IN PRINCIPLES
The Commercial Power of the United States--British Workmanship--
Tin-tacks and Conservatism--A Prophetic Frenchman--Imperialism
in Trade--The Anglo-Saxon Spirit--About Chaperons--"Insist
upon Thyself"--English and American Banks--Dealing in Futures--
Dog Eat Dog--Two Letters--Commercial Octopods--Trusts in
America and England--The Standard Oil Company--And Solicitors--
Legal Chaperons--The Sanctity of Stamped Paper--Conclusions--
American Courts of Justice--Do "Honest" Traders Exist?
The Englishman, even the Englishman with industrial experience and
commercial training, generally, when he makes a short visit to the
United States, comes away with a certain distrust of the stability of
the American commercial fabric--a distrust which he cannot altogether
explain to himself. The rapidity of movement, the vastness of the
results, these things are before his eyes; but there insists on
obtruding itself a sense of unsubstantiality. Habituated to English
surroundings, with their ages-old traditions, the rugged deep-rooted
institutions, the deliberate revolutions of all the fly-wheels of a
long-constituted society, he cannot believe that the mushroom
establishments, thrust up as it were from the soil of a continent which
is yet one half but partially broken wilderness, have permanence. He
cannot deny the magnitude or the excellence of the work that is being
done now, at this moment, under his eyes; but it all has too much the
seeming of unreality, as though suspended in midair, unsupported. He
misses the foundations of centuries of civilisation below and the lines
of shafting running back into the past. Often, it is to be feared,
having all his life been accustomed to see power exerted only in
cumbersome processes and through old-fashioned channels, he has come to
regard the cumbersomeness and the antiquity as necessary conditions of
such exertion--nay, even to confuse them with the sources of the power
themselves. It will be remembered that the first pig that was roasted in
China was roasted by the accidental burning down of a house; and for a
long time the Chinese supposed that only by burning down a house was it
possible to come at roast pig. Finally arose a great philosopher ("like
our Locke") who discovered that it was not necessary to burn houses, but
that pigs might be cooked by much less costly and more rapid methods.
Unquestionably many of those who had been accustomed to house-burning
must have looked at the new and summary culinary processes with profound
distrust. It may even be asserted with confidence that many of the older
generation died unconverted, though pig-roasting over all sorts of
makeshift fires had been going on around them for some years.
After a more or less prolonged residence in the United States, the
Englishman finds his distrust lessening. He in turn becomes accustomed
to doing without those traditions, those foundations, those lines of
shafting, which once he considered so essential to all sound
workmanship. When in due time he returns to England he is not seldom
amazed to see how many of the things which he was wont to regard as
effective links in the machinery are really no more than waste parts
which do but retard the motion and cause loss of power. It is not
difficult to make machinery so complicated that the power exhausts
itself in overcoming the resistance of belts and pulleys and cogs.
I had lived in the United States for many years before I ceased to cling
to the notion--which I never hesitated to impart cheerfully to Americans
when occasion offered--that though American workmen turned out goods
that served their purpose well enough, for really sound and honest
workmanship you had, after all, to come to England. It was only after I
had been back in England and had experience of the ways of English
workmen once more that doubts began to accumulate. English furniture
makers told me that England nowadays did not produce such well-made or
solid furniture as pieces that I showed them from America, and which are
made in America in wholesale quantities. English picture-frame makers
marvelled at the costliness of material and the excellence of the work
in American frames. A Sackville Street tailor begged me to leave in his
hands for a few days longer some clothes which he was pressing for me,
made in a far Western State, in order that he might keep them--where
they then were--hanging in his work-room as an object-lesson to his men
in how work ought to be done. These are but isolated instances out of
many which have bred misgiving in one who for many years cherished the
conviction that a British-made article was always the best. That English
workmen should be slower, less quick-minded, more loth to take up new
ideas, or to make things as you wanted them and not as they had always
made them--these things I had expected to find, and found less often
than I had expected. But that the English workman did ultimately produce
a better and more trustworthy article--that I never doubted, till I
found it, from the confessions of the workmen and manufacturers
themselves, far from necessarily true.
Few Englishmen returning to England after many years of residence in the
United States (unless perchance they have lived on a ranch where their
contact with the industrial or commercial life of the people has been
slight) do not find themselves more or less frequently appealed to for
opinions, in giving which they are compelled, however reluctantly, to
pose as prophets, warning their countrymen to flee from the wrath to
come, telling them that they underestimate the commercial power of the
United States. Sometimes it may be that there will be some one in the
company who has spent some few weeks, perhaps, in the United States.
"Now, I don't agree with you there," this traveller will say. "When I
was in the States, I saw . ." He saw, in fact, pigs being roasted at a
commonplace sort of fire, made for the purpose, of logs and sticks and
coal and things, whereas everybody knows that no pig can be duly roasted
unless chimney stacks and window-casings and front-door handles be mixed
up with the combustibles. And the others present take comfort and are
convinced that the Old Country is a long way from going to the dogs as
yet. Of course she is, bless her! But it is not many years since an
eminently distinguished authority on iron and steel (was he not
President of the Iron and Steel Association?), after having made a tour
of the United States, assured British manufacturers that they had
nothing to fear from American competition in the steel trade. It was
some years earlier that Chatham declared that he would not allow the
American colonies to manufacture even one hobnail for themselves.
* * * * *
I have no desire now to join the band of those who are urging England so
insistently to "wake up." This is not the place for such evangelism, for
that is not the gospel which this book is intended to spread. None the
less one story I must tell, told to me many years ago in America by one
who claimed to have had some part in the transactions; a story that has
to do with (let us say, to avoid hurting any susceptibilities) the sale
of tin-tacks to Japan. And whether the story is true or not, it is at
least well found.
England, then, had had for years a monopoly of the sale of tin-tacks to
the Japanese, when a trader in Japan became impressed with the fact that
the traffic was badly handled. The tacks came out from England in
packages made to suit the needs of the English market. They were
labelled, quite truthfully of course, "Best English Tacks," and each
package contained an ounce, two ounces, or four ounces in weight, and
was priced in plain figures at so much in English money. The trader had
continual trouble with those packages. His customers were always wanting
them to be split up. They wanted two or three _sen_ worth--not four
pennyworth; also they did not care about ounces. So the trader, starting
for a visit to England, had some labels written in Japanese characters,
and when he arrived in England he went to the manufacturers and
explained matters. He showed them the labels that he had had written and
said:
"The Japanese trade is worth considering and worth taking some little
trouble to retain; but the people dislike your present packages and I
have to spend most of my time splitting up packages and counting tacks.
If you will make your packages into two thirds of an ounce each and put
a label like that on them, you will be giving the people what they want
and can understand, and it will save a lot of trouble all around."
But the manufacturers, one after another, shook their heads. They could
not read the label. They never had put any such outlandish stuff on
anything going out of their works, nor had their fathers before them.
The Japanese ought to be satisfied with the fact that they were getting
the Best English Tacks and not be unreasonable about it. And the trader
exhausted himself with argument and became discouraged.
He returned to Japan _via_ the United States, and stopped to see the
nearest tack-manufacturer. He showed him the label and told his story.
"Looks blamed queer!" said the manufacturer, "but you say that's what
they want out there? Let's catch a Jap and see if he can read the
thing."
So a clerk was sent out to fetch a Japanese, which he did.
"How' do, John?" said the manufacturer to the new arrival. (Chinese and
Japanese alike were all "John" to the American until a few years ago.)
"You can read that, eh?"
The Japanese smiled, looked at the label and read it aloud.
"All straight goods, eh, John?" asked the manufacturer. The Japanese
answered in the affirmative and retired.
Then the manufacturer called for his manager.
"Mr. Smith," he said, as the manager came in, "this is Mr. Brown of
Tokio, Japan. He tells me that if we do up tacks in two third of an
ounce lots and stick that label on each package, we might do some good
business out there. That label--it don't matter which is the top of the
thing--calls for a price that figures out to us at about two cents a
pound more than our regular export rates. I want this gentleman to have
a trial lot shipped out to him and he'll see what he can do. Just go
ahead will you and see to it?"
"Yes, sir," said the manager; and when the trader sailed from San
Francisco a couple of weeks later the same vessel carried out a trial
order of tacks consigned to him at Tokio, made up in two thirds of an
ounce packages with mysterious hieroglyphics on the labels. It only took
the trader a few days, after his return, to satisfy himself that the
sooner he cabled the American manufacturer to duplicate the order the
better. There never has been anybody in the American works who has been
able to read what is on that label; but when instructions were given for
printing new labels after six months of trial the order was for a
quarter of a million, and British manufacturers were astonished to
discover that by some unexplainable chicanery they had lost the Japanese
market for tacks.
I have said that I do not know whether the story is true or not; but
fifty similar stories are. And in the aggregate they explain a good
deal.
But let me say again that the conservatism of British manufacturers is
not now my theme. But I do most earnestly believe that Englishmen as a
whole--even English traders and manufacturers--unwisely underestimate
the commercial power of the United States. What the United States has
accomplished in the invasion of the world's markets in the last ten
years (since the trade revival of 1896-97) is only a foretaste of what
is to come. So far from there being anything unsubstantial--any danger
of lack of staying power, any want of reserve force--the power has
hardly yet begun to exert itself. Of Europeans who have recently written
upon the subject, it seems to me that none has shown a truer
appreciation of the situation than M. Gabriel Hanotaux, the former
French Minister for Foreign Affairs.[378:1] He sees the shadow of
America's commercial domination already falling across Europe; and, so
far as France is concerned, he discerns only two directions from which
help can come. He pleads with young Frenchmen to travel more, so that
the rising generation may be less ignorant of the commercial conditions
of the modern world and may see more clearly what it is that they have
to fight, and, second, he points to the Colonial Empire of France, with
an area not much inferior to that of the United States, and believes
that therein may be laid the foundations of a commercial power which
will be not unable to cope even with that of America.
It may be only the arrogance and superciliousness of the Anglo-Saxon
that prevent one sharing the sanguineness of M. Hanotaux as to any
relief coming to the help of France from these two sources, for British
hopes can only lie in analogous directions. Englishmen also need to
understand better the conditions which have to be met and the power of
their competitors; and it is the young men who must learn. Also, if it
be impossible that the British Isles should hold their own against the
United States, there appears no reason why the British Empire should not
be abundantly able to do so.
It is not easy for one who has not lived all his life in England to
share the satisfaction with which the English papers commonly welcome
the intelligence that some great American manufacturing concern is
establishing branch works in Canada. It is well for Canada that such
works should be established; but it is pitiable for the Empire that it
should be left to the United States to establish them. British capital
was the chief instrumentality with which the United States was enabled
to build its own railways and conduct the other great enterprises for
the development of the resources of its mighty West, and it is, from the
point of view of a British Imperialist, deplorable that British
capitalists should not now be ready to take those risks for the sake of
the Empire which American capital is willing to take with no other
incentive than the probable trade profits.
His conservatism, it should be noticed, has a tendency to fall away from
the Englishman when he goes out from the environment and atmosphere of
the British Isles. The Canadian, or the Englishman who has gone to
Canada young enough to imbibe the colonial spirit, is not easily to be
distinguished from the citizen of the United States in his ways of
doing business. Even the Anglo-Indian refuses to subject himself, in
India, to all the cumbersome formalities with which he is compelled to
conduct any business transaction when at home. Mr. Kipling in one of his
latest stories has given us a delightful picture of the bafflement of
the Australasian Minister struggling to bring his Great Idea for the
Good of his Colony and the Empire to the attention of the officials in
Whitehall.
The encumbering conservatism which now hangs upon the wheels of British
commerce is no part of--no legitimate offshoot of--the English genius.
It is a fungoid and quite alien growth, which has fastened upon that
genius, taking advantage of its frailties. Englishmen, we hear, are slow
to change and to move; yet they have always moved more quickly than
other European peoples as the Empire stands to prove. And if the people
of Great Britain had the remodelling of their society to do over again
to-day, they, following their native instincts, would hardly rebuild it
on its present lines. With the same "elbow room" they would, it may be
suspected, produce something but little dissimilar (except in the
monarchical form of government) from that which has been evolved in the
United States.
When Englishmen, looking at the progress of the United States, doubt its
permanence--when they distrust the substantiality or the honesty in the
workmanship in the American commercial fabric--it might be well if they
would say to themselves that the men who are doing these things are only
Englishmen with other larger opportunities. Behind all this that meets
the eye is the same old Anglo-Saxon spirit of pluck and energy which
made Great Britain great when she was younger and had in turn her larger
opportunities. Above all, that pluck and energy are unhampered by
tradition and precedent in exerting themselves in whatever direction may
be most advantageous; and to be unhampered does not necessarily mean
freedom only to go wrong.
An American girl once explained why it was much pleasanter to have a
chaperon than to be without one:
"If I am allowed about alone," she explained, "I feel that I am on my
honour and can never do a thing that I would not like mama to see; but
when a chaperon is with me, the responsibility for my behaviour is
shifted to her. It is her duty to keep me straight. I have a right to be
just as bad as I can without her catching me."
The tendency of American business life is first to develop the
individuality and initiative of a man and, second, to put him, as it
were, on his honour. It is, of course, of the essence of a democracy
that each man should be encouraged to develop whatever good may be in
him and to receive recognition therefor; but there have been other
factors at work in the shaping of the American character besides the
form of government. Chief among these factors have been the work which
Americans have had to do in subduing their own continent and that they
have had to do it unaided and in isolation. Washington Irving has a
delightful sentence somewhere (in _Astoria_ I think) about the
frontiersman hewing his way through the back woods and developing his
character by "bickering with bears." "The frontiersmen, by their
conquest of nature, had come to despise the strength of all enemies,"
says Dr. Sparks in his _History of the United States_. It was only to be
expected, it was indeed inevitable, that the first of American
thinkers--the man whose philosophy caught the national fancy and has
done more towards the moulding of a national temperament than, perhaps,
any man who ever wrote, should have been before all things the Apostle
of the Individual. "Insist upon Thyself!" Emerson says--not once, but it
runs as a refrain through everything he wrote or thought. "Always do
what you are afraid to do!" "The Lord will not make his works manifest
by a coward." "God hates a coward." "America is only another name for
Opportunity." My quotations come from random memory, but the spirit is
right. It is the spirit which Americans have been obliged to have since
the days when the Fathers walked to meeting in fear of Indian arrows.
And they need it yet. It has become an inheritance with them and it,
more than anything else, shapes the form and method of their politics
and above all of their business conduct.
I have said elsewhere that in society (except only in certain circles in
certain cities of the East) it is the individual character and
achievements of the man himself that count; neither his father nor his
grandfather matters--nor do his brothers and sisters. And it is the same
in business. I am not saying that good credentials and strong friends
are not of use to any man; but without friends or credentials, the man
who has an idea which is commercially valuable will find a market in
which to sell it. If he has the ability to exploit it himself and the
power to convince others of his integrity, he will find capital ready
to back him. It is difficult to explain in words to those accustomed to
the traditions of English business how this principle underlies and
permeates American business in all its modes.
One example of it--trivial enough, but it will serve for
illustration--which visiting Englishmen are likely to be confronted
with, perhaps to their great inconvenience, is in the bank practice in
the matter of cheques. There is, as is well known, no "crossing" of
cheques in America, but all cheques are "open"; and many an Englishman
has gone confidently to the bank on which it was drawn with a cheque,
the signature to which he knew to be good, and has expected to have the
money paid over the counter to him without a word. All that the English
paying teller needs to be satisfied of is that the signature of the
drawer is genuine and that there is money enough to the credit of the
account to meet the cheque. But the Englishman in the strange American
bank finds that the document in his hands is practically useless, no
matter how good the signature or how large the account on which it is
drawn, unless he himself--the person who presents the cheque--is known
to the bank officials. "Can you identify yourself, sir?" The Englishman
usually feels inclined to take the question as an impertinence; but he
produces cards and envelopes from his pocket--the name on his
handkerchief--anything to show that he is the person in whose favour the
cheque is drawn. Perhaps in this way he can satisfy the bank official.
Perhaps he will have to go away and bring back somebody who will
identify him. It is the _personality of the individual with whom the
business is done_ that the American system takes into account.[384:1]
It is, as I have said, a trivial point, but it suffices. Vastly more
important is the whole banking practice in America. This is no place to
go into the details at the controversy which has raged around the merits
and demerits of the American banking system. In the financial panic of
1893 something over 700 banks suspended payment in the United States. At
such seasons, especially, but more or less at all times, a great
proportion of the best authorities in the United States believe that it
would be better for the country if the Scotch--or the Canadian
adaptation of the Scotch--system were to take the place of that now in
vogue. Possibly they are right. The gain of having the small local banks
in out-of-the-way places possess all the stability of branches of a
great central house is obvious, both in the increase of security to
depositors in time of financial stress and also in the ability of such a
house to lend money at lower rates of interest than is possible to the
poorer institution with its smaller capital which has no connections and
no resources beyond what are locally in evidence. It may be questioned,
however, whether the country as a whole would not lose much more than it
would gain by the less complete identification of the bank with local
interests. It would be inevitable that in many cases the local manager
would be restrained by the greater conservatism of the authorities of
the central house from lending support to local enterprises, which he
would extend if acting only by and for himself as an independent member
of the local business community. It is difficult to see how the country
as a whole could have developed in the measure that it has under any
system differing much from that which it has had.
In theory it may be that the functions of a bank are precisely the same
in Great Britain and in America. In practice different functions have
become dominant in the two. In England a bank's chief business is to
furnish a safe depository for the funds of its clients. In America its
chief business is to assist--of course with an eye to its own profit and
only within limits to which it can safely go--the local business
community in extending and developing its business. The American
business man looks upon the bank as his best friend. If his business be
sound and he be sensible, he gives the proper bank official an insight
into his affairs far more intimate and confidential than the Englishman
usually thinks of doing. He invites the bank's confidence and in turn
the bank helps him beyond the limits of his established credit line in
whatever may be considered a legitimate emergency. In any small town
whenever a new enterprise of any public importance is to be started, the
bank is expected to take shares and otherwise assist in promoting a
movement which is for the common good. The credits which American
banks--especially in the West--give to their customers are astoundingly
liberal according to an English banker's standards. Sometimes of
course they make mistakes and have to pocket losses. When a storm
breaks, moreover (as in the case already quoted of the panic of 1893),
they may be unable to call in their loans in time to take care
of their liabilities. But that they have been a tremendous--an
incalculable--factor in the general advancement of the country cannot be
questioned.
The difference between the parts played by the banks in the two
countries rests of course on two fundamental differences in the
condition of the countries themselves. The first of these is the fact
that while England is a country of accumulated wealth and large fortunes
which need safeguarding, America has until recently been a country of
small realised wealth but immense natural resources which needed
developing. The policy of the banks has been shaped to meet the demands
of the situation.
In the second place (and too much stress cannot be laid upon this in any
comparison of the business-life of the two peoples) the American is
always trading on a rising market. This is true of the individual and
true of the nation. Temporary fluctuations there are of course, but
after every setback the country has only gone ahead faster than before.
The man with faith in the future, provided only that he looked far
enough ahead to be protected against temporary times of depression, has
always won. Just as the railway companies push their lines out into the
wilderness, confident of the population that will follow, and are never
disappointed, so in all other lines the man who is always in advance,
who does not wait for the demand to be there before he enlarges his
plant to meet it, but who sees it coming and is ready for it when it
comes--the man who has always acted in the belief that the future will
be bigger than the present,--that man has never failed to reap his
reward. Of course the necessary danger in such a condition is that of
over-speculation. But nearly every man who amasses wealth or wins large
commercial success in the United States habitually takes risks which
would be folly in England. They are not folly in him, because the
universal growth of the country, dragging with it and buoying up all
industries and all values, as it goes, is on his side. It is inevitable
that there should result a national temperament more buoyant, more
enterprising, more alert.
* * * * *
What is important, too, is that whereas in England the field is already
more or less full and was handed down to the present generation well
occupied, so that new industries can, as it were, only be erected on the
ruins of old, and a site has to be cleared of one factory before another
can be built (all of which is, in a measure, only relative and
metaphorical), in the United States there is always room for the
newcomers. New population is pouring in to create new markets: new
resources are being developed to provide the raw material for new
industries; there is abundance of new land, new cities, new sites
whereon the new factories can be built. This is why "America" and
"opportunity" are interchangeable terms; why young men need never lack
friends or backing or the chance to be the architects of their own
fortunes. Society can afford to encourage the individual to assert
himself, because there is space for and need of him.
From this flow certain corollaries from which we may draw direct
comparison between the respective spirits in which business in the two
countries is carried on. In the first place, in consequence of the more
crowded condition of the field and the greater intensity of
competition, the business community in England is much more ruthless,
much less helpful, in the behaviour of its members one towards the
other. It is not a mere matter of the more exacting scrutiny of credits,
of the more rigid insistence on the exact fulfilment of a bond (provided
that bond be stamped), but it colours unconsciously the whole tone of
thought and language of the people. There are two principles on which
business may be conducted, known in America respectively as the "Live
and let live" principle, and the "Dog eat dog" principle. There was
until recently in existence in the United States one guild, or
association, representing a purely parasitical trade--that of
ticket-scalping--which was fortunately practically peculiar to the
United States. This concern had deliberately adopted the legend "Dog eat
dog" as its motto and two bull-dogs fighting as its crest; but in doing
so its purpose was to proclaim that the guild was an Ishmaelite among
business men and lived avowedly in defiance of the accepted canons of
trade. On the other hand one meets in America with the words "Live and
let live" as a trademark, or motto, on every hand and on the lips of the
people. Few men in America but could cite cases which they know wherein
men have gone out of their way to help their bitterest competitor when
they knew that he needed help. The belief in co-operation, on which
follows a certain comradeship, as a business principle is ingrained in
the people.
I was once given two letters to read, of which one was a copy and the
other an original. The circumstances which led up to the writing of them
were as follows: Two rich men, A. and B., had been engaged in a
business duel. It was desperate--_a outrance_,--dealing in large
figures; and each man had to call up all his reserves and put out all
his strength. At last the end came and A. was beaten--beaten and ruined.
Then the letters passed which I quote from memory:
"DEAR MR. B.:
"I know when I'm beaten and if I was quite sure you wouldn't
kick a man when he's down, I would come round to see you and
grovel. As perhaps you can guess, I am in a bad way.
"Yours truly, A."
"DEAR A.:
"There's no need to grovel. Come around to my house after
supper to-morrow night and let us see what we can do together
to put you straight.
"Yours truly, B."
I need hardly say that it was the second letter of which I saw the
original, or that it was A. who showed them to me, when they were
already several years old but still treasured, and A. was a wealthy man
again as a result of that meeting after dinner. A. told me briefly what
passed at that meeting. "He gave me a little more than half a million,"
he said. "Of course he has had it back long ago; but he did not know
that he would get it at the time and he took no note or other security
from me. At the time it was practically a gift of five hundred thousand
dollars."
And as I write I can almost hear the English reader saying, "Pooh! the
same things are done times without number in England." And I can hear
the American, still smarting under the recollection of some needlessly
cruel and unfair thrust from the hands of a competitor, smile cynically
and say that he would like to tell me certain things that he knows. Of
course there are exceptions on either side. It takes, as the American is
so fond of saying, "all kinds of men to make a world." It is the same
old difficulty of generalising about a nation or drawing up an
indictment against a whole people. But I do not think that any man who
has engaged for any length of time in business in both countries, who
has lived in each sufficiently to absorb the spirit of the respective
communities, will dissent from what I have said. Many Englishmen,
without knowledge of business in England, go to America and find the
atmosphere harder and less friendly than they were accustomed to at
home, and come to quite another conclusion. But they are comparing
American business life with the social club-and-country-house life of
home. Let them acquire the same experience of business circles in
England, and then compare the tone with that of business circles in
America, and they will change their opinions.
Let me recall again what was said above as to the difference in the
motives which may impel a man to go into business or trade in the two
countries. An Englishman cannot well pretend that he does it with any
other purpose than to make money. The American hopes to make money too,
but he takes up business as an honourable career and for the sake of
winning standing and reputation among his fellows. This being so,
business in America has a tendency to become more of a game or a
pastime--to be followed with the whole heart certainly--but in a measure
for itself, and not alone for the stakes to be won. It is not difficult
to see how, in this spirit, it may be easier to forego those stakes--to
let the actual money slip--when once you have won the game.
* * * * *
It is necessary to refer briefly again to the subject of trusts. In
England a great corporation which was able to demonstrate beyond dispute
that it had materially cheapened the cost of any staple article to the
public, and further showed that when, in the process of extending its
operations, it of necessity wiped out any smaller business concerns, it
never failed to provide the owners or partners of those concerns with
managerial positions which secured to them a larger income than they
could have hoped to earn as individual traders, and moreover took into
their service the employees of the disbanded concerns at equal
salaries,--such a corporation would generally be regarded by the English
people as a public benefactor and as a philanthropically and charitably
disposed institution. In America the former consideration has some
weight, though not much; the latter none at all.
When a trust takes into its service those men whom it has destroyed as
individual traders, the fact remains that their industrial independence
has been crushed. The individual can no longer "insist upon himself." He
is subordinate and no longer free. One of the first principles of
American business life, the encouragement of individual initiative, has
been violated, and nothing will atone for it.
The Standard Oil Company can, I believe, prove beyond possibility of
contradiction that the result of its operations has been to reduce
immensely the cost of oil to the public, as well as to give facilities
in the way of distribution of the product which unassociated enterprise
could never have furnished. It can also show that in many, and, I
imagine, in the majority, of cases, it has endeavoured to repair by
offers of employment of various sorts whatever injuries it has done to
individuals by ruining their business. But these things constitute no
defence in the eyes of the American people.
There is the additional ground of public hostility that the weapons
employed to crush competitors have often been illegal weapons. Without
the assistance of the railway companies (which was given in violation of
the law) the Standard Oil Company might have been unable to win more
than one of its battles; but this fact, while it furnishes a handle
against the company and exposes a side of it which may prove to be
vulnerable, and is therefore kept to the front in any public indictment
of the company's methods, is an immaterial factor in the popular
feeling. Few Americans (or Englishmen) will not accept a reduced rate
from a railway company when they can get it. Whatever actual bitterness
may be felt by the average man against the Standard Oil Company because
it procured rebates on its freight bills is rather the bitterness of
jealousy than of an outraged sense of morality. The real bitterness--and
very bitter it is--is caused by the fact that the company has crushed
out so many individuals. On similar ground nothing approaching the same
intensity of feeling could be engendered in the British public.
Let us now recur for a moment to the views of the young woman quoted
above on the interesting topic of chaperons. We have seen that
insistence on the individuality is a conspicuous--perhaps it is the most
conspicuous--trait of the American character. Encouraged by the wider
horizon and more ample elbow-room and assisted by the something more
than tolerant good-will of his business associates, colleagues, or
competitors, the individual, once insisted on, has every chance to
develop and become prosperous and rich. Everything helps a man in
America to strike out for himself, to walk alone, and to dispense with a
chaperon. The Englishman is chaperoned at almost every step of his
business career; and I am not speaking now of the chaperonage of his
colleagues, of his fellows in the community, or of his elders among whom
he grows up and, generally, in spite of whom the young man must make his
way to the top. There is another much more significant form of
chaperonage in English business circles, of which it is difficult to
speak without provoking hostility.
The English business world is solicitor-cursed. I mean by this no
reflection on solicitors either individually or in the mass. I am making
no reference to such cases as there have been of misappropriation by
solicitors here and there of funds entrusted to their charge, nor to
their methods of making charges, which are preposterous but not of their
choosing. Let us grant that, given the necessity of solicitors at all,
Great Britain is blessed in that she has so capable and upright and in
all ways admirable a set of men to fill the offices and do the work.
What I am attacking is solicitordom as an institution.
It is not merely that there are no solicitors, as such, in the United
States, for it might well be that the general practising lawyers who
fill their places, so far as their places have to be filled, might be
just as serious an incubus on business as solicitordom is on the
business of London to-day. Names are immaterial. The essential fact is
that the spirit and the conditions which make solicitors a necessity in
England do not exist in America. I do not propose to go into any
comparison in the differences in legal procedure in the two countries;
not being a lawyer, I should undoubtedly make blunders if I did. What is
important is that a man who is accustomed to walking alone does not
think of turning to his legal adviser at every step. Great corporations
and large business concerns have of course their counsel, their
attorneys, and even their "general solicitors." But the ordinary
American engaged in trade or business in a small or moderate way gets
along from year's end to year's end, perhaps for his lifetime, without
legal services. I am speaking only on conjecture when I say that, taking
the country as a whole, outside of the large corporations or among rich
men, over ninety per cent. of the legal documents--leases, agreements,
contracts, articles of partnership, articles of incorporation, bills of
sale, and deeds of transfer--are executed by the individuals concerned
without reference to a lawyer. Probably not less than three fourths of
the actual transactions in the purchase of land, houses, businesses, or
other property are similarly concluded without assistance. "What do we
need of a lawyer?" one man will ask the other and the other will
immediately agree that they need one not at all.
Of course troubles often arise which would have been prevented had the
documents been drawn up by a competent hand. The constitutional
reluctance to go to a lawyer is sometimes carried to lengths that are
absurd. But I do not believe that the amount of litigation which arises
from that cause is in any way comparable to that which is avoided by the
mere fact that legal aid is outside the mental horizon. The men who
conduct most of the affairs of life directly without legal help are most
likely to adjust differences when they arise in the same way. That is a
matter of opinion, however, based only on reasonable analogy, which I
can advance no figures to support; but what is not matter of opinion,
but matter of certainty, is, first, that the general gain in the
rapidity of business movement is incalculable, and, second, that
business as a whole is relieved of the vast burden of solicitors'
charges.
The American, accustomed to the ways of his own people, on becoming
engaged in business in London is astounded, first, at the disposition of
the Englishman to turn for legal guidance in almost every step he takes,
second, at the stupendous sums of money which are paid for services
which in his opinion are entirely superfluous, and, finally, at the
terrible loss of time incurred in the conclusion of any transaction by
the waiting for the drafting and redrafting and amending and engrossing
and recording of interminable documents which are a bewilderment and an
annoyance to him.
The Englishman often says that American business methods are slip-shod;
and possibly that is the right word. But Englishmen should not for a
moment deceive themselves into thinking that the American envies the
Englishman the superior niceties of his ways or would think himself or
his condition likely to be improved by an exchange. An example of
difference in the practice of the two countries which has so often been
used as to be fairly hackneyed (and therefore perhaps stands the better
chance of carrying conviction than a more original, if better,
illustration) is drawn from the theory which governs the building of
locomotive engines in the two countries.
The American usually builds his engine to do a certain specified service
and to last a reasonable length of time. During that time he proposes to
get all the work out of it that he can--to wear it out in fact--feeling
well assured that, when that time expires, either the character of the
service to be performed will have altered or such improvements will have
been introduced into the science of locomotive construction as will make
it cheaper to replace the old engine with one of later build. The
Englishman commonly builds his engines as if they were to last for all
time. There are many engines working on English railways now, the
American contemporaries of which were scrapped twenty years ago. The
Englishman takes pride in their antiquity, as showing the excellence of
the workmanship which was put into them. The American thinks it would
have been incomparably better to have thrown the old things away long
ago and replaced them with others of recent building which would be more
efficient.
The same principle runs through most things in American life, where they
rarely build for posterity, preferring to adapt the article to the work
it has to perform, expecting to supersede it when the time comes with
something better. If a thing suffices, it suffices; whether it be a
locomotive or a contract. "What is the use," the American asks, "when
you can come to an agreement with a fellow in ten minutes and draw up
your contract with him that afternoon,--what is the use of calling in
your solicitors to negotiate and then paying them heavily to keep you
waiting for weeks while they draft documents? We shall have had the
contract running a month and be making money out of it before the
lawyers would get through talking."
Out of this divergence in point of view and practice have of course
grown other differences. One thing is that the American courts have
necessarily come to adopt more liberal views in the interpretation of
contracts than the English; they are to a greater extent inclined to
look more to the intent than to the letter and to attach more weight to
verbal evidence in eliciting what the intent was. No stamping of
documents being necessary in America, the documents calling themselves
contracts, and which are upheld as such, which appear in American courts
are frequently of a remarkable description; but I have a suspicion that
on the whole the American, in this particular, comes as near to getting
justice on the average as does the Englishman.
And the point is that I believe it to be inevitable that the habit of
doing without lawyers in the daily conduct of business, the habit of
relying on oneself and dealing with another man direct, must in the long
run breed a higher standard of individual business integrity.
Englishmen, relying always on their solicitors' advice, are too tempted
to consider that so long as they are on the right side of the law they
are honest. It is a shifting of the responsibility to the chaperon;
whereas, if alone, you would be compelled to act on your honour.
What I think and hope is the last word that I have to say on this rather
difficult subject has to do with the matter already mentioned, namely
the absence of the necessity of stamping documents in America.
Englishmen will remember that the Americans always have evinced a
dislike of stamps and stamp duties and acts relating thereto. Of late
years the necessity of meeting the expenses of the Spanish war did for a
while compel the raising of additional internal revenue by means of
documentary and other stamps. The people submitted to it, but they hated
it; and hated it afresh as often as they drew or saw a cheque with the
two-cent stamp upon it. The act was repealed as speedily as possible and
the stamping of papers has for six years now been unknown.
I think--and I am not now stating any acknowledged fact, but only
appealing to the reader's common-sense--that it is again inevitable that
where a superior sanctity attaches to stamped paper a people must in the
long run come to think too lightly of that which is unstamped. I do not
say that the individual Englishman has as yet come to think too lightly
of his word or bond because it is informal, but I do think there is
danger of it. The words "Can we hold him?" or (what is infinitely worse)
"Can he hold us?" spring somewhat readily to the lips of the business
man of this generation in England.
Continual dependence on the law and the man of law, and an extra respect
for paper because it is legal, have--they surely cannot fail to have--a
tendency to breed in the mind a disregard for what is not of a
strictly legal or actionable character. It is Utopian to dream of a
state of society where no law will be needed but every man's written
and spoken word will be a law to him; but it is not difficult to imagine
a state of society in which there is such universal dependence on the
law in all emergencies that the individual conscience will become
weakened--pauperised--atrophied--and unable to stand alone.
That is, as I have said, the last point that I wish to make on this
subject; and the reader will please notice that I have nowhere said that
I consider American commercial morality at the present day to be higher
than English. Nor do I think that it is. Incontestably it is but a
little while since the English standard was appreciably the higher of
the two. I have cited from my own memory instances of conditions which
existed in America only twenty years ago in support of the fact--though
no proof is needed--that this is so. I by no means underestimate the
fineness of the traditions of British commerce or the number of men
still living who hold to those traditions. On the other hand, better
judges than I believe that the standard of morality in English business
circles is declining. In America it is certainly and rapidly improving.
Present English ideas about American commercial ethics are founded on a
knowledge of facts, correct enough at the time, which existed before the
improvement had made anything like the headway that it has, which facts
no longer exist. I have roughly compared in outline some of the
essential qualities of the atmosphere in which, and some of the
conditions under which, the business men in the two countries live and
do their business, showing that in the United States there is a much
more marked tendency to insist on the character of the individual and a
much larger opportunity for the individuality to develop itself; and
that in certain particulars there are in England inherited social
conditions and institutions which it would appear cannot fail to hamper
the spirit of self-reliance, on which self-respect is ultimately
dependent.
* * * * *
And the conclusion? For the most part my readers must draw it for
themselves. My own opinion is that, whatever the relative standing of
the two countries may be to-day, it is hardly conceivable that, by the
course on which each is travelling, in another generation American
commercial integrity will not stand the higher of the two. The
conditions in America are making for the shaping of a sterner type of
man.
* * * * *
_Postscript._--The opinion has been expressed in the foregoing pages
that in one particular the American on the average comes as near to
getting justice in his courts as does the Englishman. I have also given
expression to my great respect, which I think is shared by everyone who
knows anything of it, for the United States Supreme Court. Also I have
spoken disparagingly of the English institution of solicitordom. But
these isolated expressions of opinion on particular points must not be
interpreted as a statement that American laws and procedure are on the
whole comparable to the English. I do not believe that they are. None
the less Englishmen have as a rule such vague notions upon this subject
that some explanatory comment seems to be desirable.
Especially do few Englishmen (not lawyers or students of the subject)
recognise that the abuses in the administration of justice in America,
of which they hear so much, do not occur in the United States courts,
but in the local courts of the several States. So far as the United
States (_i. e._, the Federal) Courts are concerned I believe that the
character and capacity of the judges (all of whom are appointed and not
elected) compare favourably with those of English judges. It is in the
State courts, the judges of which are generally elected, that the
shortcomings appear; and while it might be reasonable to expect that a
great State like New York or Massachusetts should have a code of laws
and an administration of justice not inferior to those of Great Britain,
it is perhaps scarcely fair to expect as much of each of the 46 States,
many of which are as yet young and thinly populated.
The chief vice of the State courts arises, of course, from the fact that
the judges are elected by a partisan vote; from which it follows almost
of necessity that there will be among them not a few who in their
official actions will be amenable to the influence of party pressure. It
is perhaps also inevitable that under such a system there will not
seldom find their way to the bench men of such inferior character that
they will be directly reachable by private bribes; though this, I
believe, seldom occurs. The State courts, however, labour under other
disadvantages.
We have seen how Congressmen are hampered in the execution of their
duties by the constant calls upon their time made by the leaders of
their party, or other influential interests, in their constituencies.
The same is true on a smaller scale of members of the State
legislatures. Congress and the legislatures of the several States alike
are moreover limited by the restrictions of written constitutions. The
British Parliament is paramount; but the United States legislatures are
always operating under fear of conflict with the Constitution. Their
spheres are limited, so that they can only legislate on certain subjects
and within certain lines; while finally the country has grown so fast,
the conditions of society have changed with such rapidity, that it has
been inherently difficult for lawmaking bodies to keep pace with the
increasing complexity of the social and industrial fabric.
If the limitations of space did not forbid, it would be interesting to
show how this fact, more than any other (and not any willingness to
leave loopholes for dishonesty) makes possible such offences as those
which, committed by certain financial institutions in New York, were the
immediate precipitating cause of the recent panic. Growth has been so
rapid that, with the best will in the world to erect safeguards against
malfeasance, weak spots in the barricades are, as it were, only
discovered after they have been taken advantage of. With the
preoccupation of the legislators stable doors are only found to be open
by the fact that the horses are already in the street.
But, after all has been said in extenuation, there remain many things in
American State laws for which one may find explanation but not much
excuse.
Reference has already been made to the entirely immoral attitude of many
of the State legislatures towards corporations, especially towards
railway companies; and in some of the Western States prejudice against
accumulated wealth is so strong that it is practically impossible for a
rich man or corporation to get a verdict against a poor man. It would
be easy to cite cases from one's personal experience wherein jurors have
frankly explained their rendering of a verdict in obvious contradiction
of the weight of evidence, by the mere statement that the losing party
"could stand it" while the other could not. Of a piece with this is a
class of legislation which has been abundant in Western States, where
the legislators as well as most of the residents of the States have been
poor, giving extraordinary advantages to debtors and making the
collection of debts practically impossible. In some cases such
legislation has defeated itself by compelling capitalists to refuse to
invest, and wholesale traders to refuse to give credit, inside the
State.
Yet another source of corruption in legislation is to be found in the
mere numerousness of the States themselves. It may obviously inure to
the advantage of the revenues of a particular State to be especially
lenient in matters which involve the payment of fees. It is evidently
desirable that a check should be put on the reckless incorporation of
companies with unlimited share capital, the usual form of such a check
being, of course, the graduation of the fee for incorporation in
proportion to such capital. One State which has laws more generous than
any of its neighbours in this particular is likely to attract to it the
incorporation of all the companies of any magnitude from those States,
the formal compliance with the requirements of having a statutory
office, and of holding an annual meeting, in that State being a matter
of small moment. Similar considerations may govern one State in enacting
laws facilitating the obtaining of divorce.
There are, then, obviously many causes which make the attainment of
either an uniform or a satisfactory code of jurisprudence in all States
alike extremely difficult of attainment. It will only be arrived at by,
on the one hand, the extension of the Federal authority and, on the
other the increase in population and wealth (and, consequently, a sense
of responsibility) in those States which at present are less forward
than their neighbours. But, again, it is worth insisting on the fact
that the faults are faults of the several States and not of the United
States. They do not imply either a lack of a sense of justice in the
people as a whole or any willingness to make wrong-doing easy. But it is
extremely difficult for the public opinion of the rest of the country to
bring any pressure to bear on the legislature of one recalcitrant State.
The desire to insist on its own independence is indeed so strong in
every State that any attempt at outside interference must almost
inevitably result only in developing resistance.
* * * * *
And again I find myself regretfully in direct conflict with Mr. Wells.
But it is not easy to take his meditations on American commercial
morality in entire seriousness.
"In the highly imaginative theory that underlies the reality of an
individualistic society," he says (_The Future in America_, p. 168),
"there is such a thing as honest trading. In practice I don't believe
there is. Exchangeable things are supposed to have a fixed quality
called their value, and honest trading is I am told the exchange of
things of equal value. Nobody gains or loses by honest trading and
therefore nobody can grow rich by it." And more to the same effect.
A trader buys one thousand of a given article per month from the
manufacturer at ninepence an article and sells them to his customers at
tenpence. The extra penny is his payment for acting as purveyor, and the
customers recognise that it is an equitable charge which they pay
contentedly. That is honest trading; and the trader makes a profit of a
trifle over four pounds a month, or fifty pounds a year.
Another trader purveys the same article, buying it from the same
manufacturer, but owing to the possession of larger capital, better
talent for organisation, and more enterprise, he sells, not one
thousand, but one million per month. Instead of selling them at
tenpence, however, he sells them at ninepence half-penny; thereby making
his customers a present of one half-penny, taking to himself only one
half of the sum to which they have already consented as a just charge
for the services which he renders. Supposing that he pays the same price
as the other trader for his goods (which, buying by the million, he
would not do), he makes a profit of some L2083 a month, or L25,000 a
year. Evidently he grows rich.
This is the rudimentary principle of modern business; but because one
man becomes rich, though he gives the public the same service for less
charge than honest men, Mr. Wells says that he cannot be honest.
If two men discover simultaneously gold mines of equal value, and one,
being timid and conservative, puts twenty men to work while the other
puts a thousand, and each makes a profit of one shilling a day on each
man's labour, it is evident that while one enjoys an income of a pound a
day for himself the other makes fifty times as much. It is not only
obvious that the latter is just as honest as the former, but he can
well afford to pay his men a shilling or two a week more in wages. He
can afford to build them model homes and give them reading-rooms and
recreation grounds, which the other cannot.
Others, besides Mr. Wells, lose their heads when they contemplate large
fortunes made in business; but the elementary lesson to be learned is
not merely that such large fortunes are likely to be as "honestly"
acquired as the smaller ones, but also that the man who trades on the
larger scale is--or has the potentiality of being--the greater
benefactor to the community, not merely by being able to furnish the
people with goods at a lower price but also by his ability to employ
more labour and to surround his workmen with better material conditions.
The tendency of modern business industry to agglutinate into large units
is, as has been said, inevitable; but, what is better worth noting, like
all natural developments from healthy conditions, it is a thing
inherently beneficent. That the larger power is capable of greater abuse
than the smaller is also evident; and against that abuse it is that the
American people is now struggling to safeguard itself. But to assail all
trading on a scale which produces great wealth as "dishonest" is both
impertinent (it is Mr. Wells's own word, applied to himself) and absurd.
The aggregate effect of the great consolidations in America and in
England alike (of the "trusts" in fact) has so far been to cheapen
immensely the price of most of the staples of life to the people; and
that will always be the tendency of all consolidations which stop at any
point short of monopoly. And that an artificial monopoly (not based on
a natural monopoly) can ever be made effective in any staple for more
than the briefest space of time has yet to be demonstrated.
The other consideration, of the destruction of the independence of the
individual, remains; but that lies outside Mr. Wells' range.
FOOTNOTES:
[378:1] Preface to the _Encyclopaedia of Trade between the United States
and France_, prepared by the Societe du Repertoire General du Commerce.
[384:1] I do not know whether the story is true or not that Signor
Caruso was compelled, in default of other means of identification in a
New York bank, to lift up his voice and sing to the satisfaction of the
bank officials. As has been remarked, this is not the first time that
gold has been given in exchange for notes.