XV.

THE SOVEREIGN RIGHTS OF THE PEOPLE AND OF THEIR REPRESENTATIVE, THE

GOVERNMENT.

We have now at last deduced the important facts, that the only remedy

for the evils of monopoly must come from the popular will, expressed in

direct action by the government; that the government may possibly keep

competition alive by checking its intensity, or can certainly allow

events to take their natural course and permit monopolies to be

established. It can then protect the public, either by assuming itself

the ownership and operation of the monopoly, or by taking the less

radical step of placing the monopoly under official supervision and

control while permitting its private ownership to continue. This

conclusion is of the utmost importance, for it marks out one single

direction as the one in which relief from the evils which vex us may be

found. If we can once make the thinking people of the country understand

the effect which monopolies have upon their welfare, and that the evil

will not cure itself and cannot be cured by attempts to create

competition or by any remedy short of direct action by the government,

we shall have made a great advance.

But with this goal reached, new questions at once present themselves.

Can the interference of the government with private industries be

defended? How shall government exercise its control, so as to protect

the people without infringing vested property rights and discouraging

private enterprise? It may be objected, too, that, while our preceding

discussion has fully proved the weakness of other methods of dealing

with monopoly, compared with that by the direct action of government, it

has not been shown that the latter is practicable, or that it would not

be likely to result in more harm than good to the people at large.

These questions are coming before the people in a thousand practical

forms. They are being fought over in courts and legislatures and

councils, and are destined to be fought over at the polls. How important

their right decision is, we have already seen. Let us make some attempt

to find what this right decision is.

In taking up first the question of the rights of private property

holders, we touch a point over which there is likely in the future to be

serious dispute. A certain faction vigorously contend that past

precedents are no ground on which to base future action, and that little

attention need be paid to the rights of private owners if the public

interest is at stake. A far stronger and more influential faction are

jealous of every thing which seems to question their right to hold and

use their property in whatever way they see fit. But certainly, if their

claims are just, they need not fear the result of that investigation

which every idea we have inherited from former generations has in these

days to receive. It would be beyond the scope of our investigation to

make any exhaustive study of this subject, but it is necessary to note

some of the important facts in connection with property rights as light

upon the question at issue.

In the first place, it must be conceded that the question is to be

decided upon its merits, and not by precedent. It is of little use for

one faction to show, as they can, that the idea of private property is

largely of modern growth; or for their opponents to prove, as they may,

that the progress of law and government has been continually toward

better protection of the rights of property. The question must be, on

what grounds of inherent right or public expediency is property held

to-day in private ownership? Distasteful as it may be, to realize that

what has been considered a fundamental principle of civilized society is

here challenged and put upon the defensive, the fact remains that the

defence must be made, and must be based only on what is just and wise

to-day, for the opposing side may properly reject arguments based on the

wholly different conditions under which past generations lived.

The question of the rights of property in the products of labor we may

pass briefly, as it is almost undisputed; and while certain thinkers

have asserted that there is no such thing as a natural right to the

ownership of property of any sort, it seems certain that this is true

only in a technical sense; and that a man's right to hold, control,

dispose of, and enjoy the fruits of his own strength or skill is as

certain as his right to "life, liberty, and the pursuit of happiness,"

and follows from that right as a natural sequence. The most radical

revolutionist hardly ventures nowadays to argue against this fact. Thus,

though it is recognized that private property even in one's own strength

and skill must, at times, be subjected to the higher law of public

necessity--as when in time of war a man may be obliged to give up his

time, strength, and even life for the public welfare--in general the

right to hold the results of labor as private property is well

established, on the grounds both of natural right and public expediency.

But when we consider the private ownership of the gifts of Nature and of

public franchises, it is apparent that we are on very different ground.

These forms of property, which constitute a great proportion of the

world's total wealth, are not created by labor. Nature's gifts were not

stored up to enrich and benefit any one man, but the whole race. It

follows, therefore, that they are always, in the first instance, public

property.

The argument presented to prove any inherent right of the private owners

to any form of natural wealth seem to be insufficient to prove the case.

The fact seems to be that the inherent right to the benefit of every one

of Nature's gifts is vested, if perfect equity were established, in the

whole human race; or, as a reasonable approach to this, in that portion

of the public to whom this gift is a direct benefit. The title which the

public holds may be transferred to private individuals, as a matter of

expediency; but the public must still retain a prior claim upon the

property. Its right to have the property used for the general welfare,

transcends the right of any private owner to direct it solely to his own

profit and the public injury.

It is thus plain that the private ownership of our natural wealth and of

all public franchises rests on the grounds of expediency alone. All the

lands and mineral wealth, all franchises for railway lines and for the

various public works discussed in the chapters on municipal monopolies

were the heritage of the whole people in the first instance, and they

have only transferred the title to private owners because it seemed

expedient so to do. On the grounds of expediency alone, then, is the

private ownership of natural wealth to be considered.

It can hardly be doubted that in the case of our own country, the

transfer to private owners of the title to our natural resources has

been in the past the wisest and only proper course. It is a fact not

often realized that the title to nearly all the natural wealth of the

country, almost all the lands and mines and forests, has been held

directly by the public within a century, and that the transfer to

private owners of a great part of it has taken place within a

generation.

The question now comes: Did the public, in transferring the title to a

private owner, relinquish all its right to the future control of these

valuable properties, as a private owner would have done? The answer must

be in the negative. Regarded simply as a matter of expediency, it is

plain that to cause the act of any public official to bind all

succeeding generations, living under dissimilar conditions and

circumstances, which were then unknown and unprophesied, might result in

unbearable evils. Necessary as it might be at the start to give away

valuable properties to meet present needs, one generation or its

representatives has no conceivable right to sell for a mess of pottage

the heritage of all succeeding ones. The fact is, then, that the natural

title to all gifts of Nature is vested in the public at large; and while

it is in duty bound to observe the contracts which it makes with private

parties, it is also not to be thought that the dishonesty or

incompetence of a public official, or the failure to foresee the future,

can work for too long a time an injury to the community.

It seems certain that, in every case where the public has transferred to

private owners the title to any gift of Nature, or has conferred any

franchise upon a corporation, under whatever conditions, the right of

supreme control still remains with the natural owner, the public; and

when the need arises, this control may be exercised. The rights of the

owners and the contract obligations into which the public has entered

should be regarded so far as possible; but when the public necessity

demands, control on its behalf can always be exercised.

This may seem like a formidable and revolutionary doctrine, but, in

reality, it is based on every-day acts of the public representatives,

with which every one is familiar. Suppose it is conceived to be for the

public interest that a certain railway shall be built. To do this it is

necessary to cross many hundred tracts of land, the title to which was

many years ago transferred by the public to private owners who have

bought and sold since then as they pleased, as if their control were

absolute. Many of the owners of these lands may be opposed to parting

with the right of way necessary for a railroad, but their private wishes

must not stop the progress of improvements necessary to the general

welfare. The State, which has the natural title, asserts its right to

supreme control; and, if necessary, will use all its power to force

these private owners to relinquish their land for the public good. This

is the commonest example of the exercise of the right of eminent domain,

but other cases frequently occur. The laying out of city streets,

building public bridges, and, in fact, highways of every class, furnish

a similar example. Provision of public water supply often requires an

exercise of this power even more positive than in the cases just cited.

By the construction of one great reservoir to store the flow of the

Croton water-shed for the supply of New York City, it is proposed to

condemn the dwellings and lands now owned and occupied by several

thousand people. It is to be noted that, in every case, the rights of

the private owners are observed, and compensation is made them for the

damage done.

Under the common law the owner of lands bordering a running stream has

certain rights to its use; and these riparian rights, as they are

called, have been established by precedent for centuries. But, in the

State of Colorado, it was found that the water in the streams was of

such value for irrigation that the old system of permitting private

ownership of these riparian rights led to grave abuses. The State

Constitution, therefore, declares that all water in running streams is

the inalienable property of the whole people, and the system providing

for its use by private parties is based on this principle.

So much for the power of the public to exercise its supreme control,

when public exigency requires, over Nature's gifts in land and water. As

an example of the supreme control of the public over the franchises

which it grants, take the case of the railway again. It is well

established that the public has the right through its legal

representatives to regulate the management and operation of the railway

in every detail; and not only that, but the rates which the railway may

charge for its services as well. Many other examples might be given, for

the necessities of the present decade have awakened men as never before

to the facts which we have just discussed. The final conclusion must

inevitably be that _the public as the sole possible holder of the

natural title to the gifts of Nature, while it may find it expedient to

transfer this ownership to private owners, retains always supreme

control, which may be exercised as the public exigency demands_.

We have next to determine in what cases the exercise by the public of

this right of supreme control over its heritage is demanded. We are

greatly aided here, however, by the thorough study we have made of the

laws of competition. It is evident at once that competition in the case

of natural agents acts according to the laws already found. Agricultural

land in this country is so abundant and its ownership is so widely

diffused that any monopoly of it is now impossible. Each farmer competes

with every other farmer, and the extension of transportation facilities

has so broadened the field of competition that in no industry is the day

when the few competing units shall replace the many, and monopoly shall

ensue, farther off than in this. In Great Britain and Ireland opposite

conditions prevail. A limited amount of land is held by a few owners,

and its rental is fixed without competition; consequently the land

question has been almost, if not quite, the chief issue in British

politics during this decade.

If we examine Nature's gifts to the world in the shape of metals, we

find iron to be so widely distributed that competition has always acted

to reduce profits, and that combinations to restrict competition in the

production of the metal have only recently become even possible. On the

other hand, the workable deposits of copper are so scarce and the number

of competitors in its production is so much smaller, that it has become

the subject of the greatest monopoly the world has ever seen.

With these examples--and any number of others might be cited--is it not

plain enough that the laws of competition are exactly applicable to aid

in solving the problem? The smaller the number of competing units, the

stronger the tendency to monopoly. Certain gifts of Nature are given to

us in profusion. The people transfer the title to private owners, and

of these there must of necessity be so many that they will compete

steadily with each other. The consequence is that the people receive the

benefit from the country's natural resources, while the private owner

gets only enough to compensate him reasonably well for the labor he

employs and the capital which he invests. Certain other gifts of Nature

are, as we have found, very scarce; the number of men who can own and

use them and compete with each other in offering their advantages to the

public is necessarily small. The inevitable result of this condition is,

first, intense competition and then monopoly.

It is thus evident that there is no necessity for the State to interfere

with the private ownership of those gifts of Nature which are so widely

distributed that competition can act for the protection of the public.

As regards those other gifts which are so limited in their extent that

their control has become a matter of monopoly, the right of the public

to exercise its control is already proven. Whether in any given case the

exigency is so great as to call for the assertion of this power, is a

question which must be decided in each case separately.

It may be objected, with truth, that nothing short of the actual

ownership of all Nature's gifts by the public is in accord with

absolutely perfect justice; but as a matter of fact every human work

carried out by human hands and brains is only an approach to perfection.

It will never be possible by any human agency to distribute the wealth

production of the world with absolute equity. A careful writer says:

"The view that the right of every human being to his share in the gifts

of Nature should be recognized is not an unreasonable one." But by no

system possible of putting into practical execution can these gifts be

equitably divided among all men. What can be done is to cause the

benefit of these gifts to be widely distributed, and to prevent them

from being monopolized for the benefit of a few.

The fact maybe alluded to, that even under widespread competition the

holders of the most favorably situated and richest lands, mines, etc.,

receive a benefit which in absolute equity should be divided among all

men. But the vastly more important matter of the monopolies which

prevent the public from obtaining the benefit of the natural resources

to which it holds an inalienable title, so overshadows such trivial

injustices that they may be neglected. So much attention has been called

of late, however, to the fact that land as a gift of Nature should, if

absolute justice were done, have the benefit from its use equally

divided among all men, that something further on this subject may be

said.

Let us first note the fact, which no one will dispute, that the title

held by the public refers only to the "site value." The value of all

improvements which are the product of labor belongs to the owner by

natural right. Now it is conceivable that of the total value of

$10,197,000,000 at which the farms of the United States were valued at

the last census, $7,000,000,000 may perhaps have been the value of the

land apart from the value of the buildings and improvements made since

the country was settled. In 1880 there were at least 3,500,000 farmers

who owned agricultural lands. It is a well-known fact that the holding

of agricultural land in large parcels is the rare exception. We may

reasonably conclude, therefore, that the "site value" held by each

farmer was about $2,000. This is the sum which in absolute equity is

said to belong to the public at large. But let us reflect that each

farmer has only received a small proportion of this $2,000 through the

increase in the value of his land. The fact is that the land which at

first was actually valueless has increased in value with each

generation, and it is this increase alone, apart from the increase due

to the betterments, after which the public has any right to inquire.

Remembering the number of sales and changes in the ownership which take

place in this country, how often the benefits which have accrued to a

single property are divided up among a number of heirs, and that each

owner represents on the average a family of three individuals, it seems

reasonable to suppose that this increase in the "site value" of each

farm may have been divided among twenty different persons. Thus, while

the statement may be made that the public has a claim upon the farms of

the country of $7,000,000,000, it must be remembered that this sum has

been divided among about 70,000,000 different people, and that this

division has been in progress for over two centuries. When the benefits

of our natural resources are so widely distributed as this, there can be

little occasion to alarm ourselves regarding injustice through the

private control of farming lands.

This, however, is somewhat apart from our argument. The main point, of

which we must not lose sight, is that the private ownership of those

gifts of Nature which are widely distributed operates to the general

benefit of the community far more than any system of public ownership

that could be devised. But, on the other hand, in the case of natural

agents limited in amount, it is practically certain that sooner or later

a monopoly will be established by their private owners, to the serious

detriment of the public at large. The sovereign right of the public in

this latter case to take such steps as are necessary for its proper

protection, is something which both _a priori_ reasoning and judicial

decisions amply prove.

The great problem of monopoly would be a far easier one to solve, both

theoretically and practically, were it as easy to regulate justly those

forms of monopoly whose strength lies in combination only, as it is

those whose power depends on the possession of gifts of Nature, which we

have just considered. In dealing with trusts, monopolies in trade, and

labor monopolies, we are in danger, on the one hand, of sanctioning

oppressive interference with private business, and on the other of

permitting a license in the conduct of private business which encourages

its managers to continue to extort unjust gains from the public. In the

face of this difficulty, which careful consideration shows to be very

serious, and in the dread of other evils, such as the government proving

incompetent to safely undertake these new and strange responsibilities,

we may well feel like trying to get along with the aid of those old

defenses against monopolies that have always, until the modern

concentration of industry was accomplished, been ample to hold them in

check.

But the one argument which prevents this is the fact that this tendency

to concentration and consolidation is still actively at work. In the

words of Prof. Ely: "Production on the largest possible scale will be

the only practical mode of production in the near future." It is for

this reason that we must not cease to look about for some better

protection against this new class of monopolies than are afforded by

merely placing stumbling-blocks in their way. We shall have need, for

many years yet, of such weapons in fighting monopoly as the public is

already familiar with; the creation of new competitors and their support

by public opinion, judicial decisions against combinations, and the

like. But before these grow absolutely useless, we ought to be prepared

to meet the new conditions of industry with something better than mere

opposition; and even now be experimenting and studying upon a permanent

and consistent policy.

In attempting to control monopolies which are not dependent on natural

agents for their strength, we are met at once by the declaration that

the government has no power or right to interfere with property which is

the product of labor; and that the owner cannot be prevented from making

such disposition of it as he chooses. The President and Counsel of the

Sugar Trust said after Judge Barrett's decision was announced: "We do

not believe that the law prevents two persons engaged in rivalry with

each other from uniting their interests." This seems indeed true; and

yet, on reflection, it appears to be absolutely certain that power must

reside in the sovereign people to protect themselves from the unjust

taxation which a monopoly may seek to enforce. Let us brush away cobwebs

and set the facts clearly before us. That competition among producers is

the sole present protection of the public against extortionate prices is

undoubted. When by combination this defense is abolished, has not the

public a right to adopt some other means of protection? There can be no

doubt that it has; the only question is, what form should that

protection take?

It must be plain that, as a general rule, it is unfitting that

government should own and operate industrial establishments. Practical

experience has indicated that this experiment is wellnigh certain to

result in failure, for reasons so evident as to require no mention here.

The only alternative remaining is government regulation with private

ownership and management. The essential features in the adoption of any

plan should be that the returns of the private owner should be in

proportion to the skill and economy which he exercises in managing his

business; that competition and its resulting waste be done away with;

and that the industry be placed on such a safe and stable basis that the

capital invested in it shall receive the lowest possible rate of

interest, thus leaving the greatest possible amount for the payment of

wages of labor and permitting sales of the product at a low price.