CHAPTER LXXVII.GREAT WEALTH AND SOCIAL UNREST.[5]

5.An address delivered by Henry Clews at the Thirty-fourth Annual Assembly of the Chautauqua Institution at Chautauqua, N. Y., July 29, 1907.

Mr. Chairman, Ladies and Gentlemen:

I think that you will agree with me when I say that there is nothing more commendable and that augurs better for the future of the institutions of our country—our great American Republic—than the interest shown by all classes in the important sociological questions of the day. The general willingness of our citizens to solve the serious problems involved by rationally debating them, and allowing careful consideration and calm judgment to lead the way to honest conviction, is one of the good signs of the times.

We are progressive in spirit as well as in our practical achievements, and, in many respects, we have set the pace for other nations.

At one time, we know, capitalists and leaders of industry too often either wholly ignored the discontent or appeals of the laboring people in their employ, or subject to their influence, or, if appreciating the causes of their discontent, showed no disposition whatever to right their wrongs, or even to define their own views and position, or make any attempt to defend their own side of the case.

This was the attitude of Capital toward Labor in former times that I may liken to the Dark Ages. It was, of course, radically wrong and unjust. The refusal, or, at least, the unwillingness, of Capital to recognize the fact that there are two sides to every case was not only oppressive, but often ledto costly and destructive strikes, and, doubtless, in a measure, retarded development and progress in industrial and other human affairs. But now Capital is showing more readiness to meet Labor on the same platform of discussion; and in keeping with this opening of the door to fair and full two-sided discussion is the general tendency of legislation to improve the condition of the masses, and the Chautauqua Institution in holding this Convention to consider the question of Social Unrest is entitled to great credit for the performance of a most laudable service in the interest of education and progress and the uplifting of humanity. It is sowing the seeds of future advancement and greatness in those directions.

The fact that Social Unrest exists, and moreover is very prevalent, not only here but throughout the world, cannot be denied. Thus, in Russia, just emerging from the throes of a deadly and costly war, the spirit of discontent and Nihilism is rampant, and in France the Terrorists are gaining in numbers and clamoring for their rights, while Austria and Germany are greatly disturbed by the constant persistence of the violent and revolutionary Socialists in railing against society and government as they now exist. In Great Britain, too, the Socialists have stirred the people to uneasiness by the loud threats, and rule or ruin alarms, that they are sounding.

While this unrest and discontent are especially great in foreign countries, we cannot shut our eyes to the fact that these exist in the United States—though not in such large proportions as in Europe. Moreover, they are largely of a different kind and quality.

But it is not well for us to give undue recognition to the Socialistic outcries in this country, for by so doing we might encourage and aggravate a condition that, to my mind, is an equal menace to both Capital and Labor—the two great living forces of our national life. We may increase an evil by magnifying it.

Too much appreciation and regard cannot, however, possibly be shown to that spirit of unrest existing among us,which leads to individual betterment and national development, and which is especially characteristic of the American people.

Ever since the blazing torch of civilization threw its bright light upon the world, it has been the paramount disposition of man to add to his possessions and to aspire to higher and better conditions. In this he is distinguished from savages and the lower orders of animal life, which have no perception of what we call ambition and achievement.

Man being endowed with a mind, it is through the exercise of his mental faculties that he is made restless under unsatisfactory conditions; and civilized man is fired with a desire for improvement, and particularly to improve his own fortunes and position by increasing his possessions, and acquiring distinction, or reputation in his business. This is well, so long as it does not degenerate into graft, or the misuse of other people’s money.

It is this unrest and this aspiration that constitute the great incentive to human progress, and that have given us our cultivated fields and teeming harvests, endowed and multiplied our noble edifices of learning and religion, built our large and splendid cities and homes, our great bridges and other engineering works, and our vast factories and other busy hives of industry. This is laudable ambition that stimulates national development.

We must, however, be careful to draw a plain line of demarcation between that unrest I have described, and which springs from an appreciation of the solidity and soundness of our foundation and aspires to build thereon so as to realize the highest ideals of perfection and success—and that misguided or malicious unrest and discontent incited by Socialism. This is really at enmity with all civilized forms of government and all measures of advancement in the right direction, and seeks their overthrow and utter destruction.

The spirit of unrest that I have commended, and which I have termed an American type, is not noisy and clamorous in its nature, and it manifests itself mostly through organizationsof labor, in demands for adequate or increased compensation, or the fixing of a stated reasonable number of hours to constitute a day’s work. With these purposes, and the aims of Labor-Unions generally, I want to state that I am in the fullest accord. The laborer is worthy of his hire, as the Bible says.

But it is not from this source that the wail and cry of Social Unrest comes. No, “The shallows murmur, while the depths are dumb,” and it is from the other and Socialistic class that we hear the government and its institutions decried, and capital and commerce attacked, and the spirit of competition and achievement assailed. I say, Down with these assassins of good government, these assailants of law and order!

True, we see Labor strikes in some places; but these are incidents that have not been uncommon at any time in the past, and are not marked or significant enough now to form a particular feature of the prevailing Social Unrest. We have not yet reached the Millennium!

But whence comes the Socialist’s expression of unrest and discontent, and what is it based on? It reminds me of Don Quixote, and the fight against a windmill.

What is the sum and substance of the Socialists’ grievance? They see only evil in what is really good government, and none are so blind as those who will not see.

They claim to be dissatisfied with the existing order of things. But what remedies that are not revolutionary do they prescribe for the cure of existing social and political ills? The fact is that many Socialists at heart are anarchists!

In almost every instance you will find among the rabble at a Socialist meeting some honest but mistaken theorists, who plausibly find fault not only with the conduct of our government, but with the very form of our government itself, and picture, under the delusion they cherish, an utterly impossible Utopia where—

“The people all are blessedAnd the weary all have rest.”

“The people all are blessed

And the weary all have rest.”

These visionaries are reinforced by pretended reformers and professional agitators, often of great persuasive powers, who appeal strongly to the passions and prejudices of the ignorant people of various nationalities who are made to imagine that they are still down-trodden. Here, in my opinion, lies a real menace and danger—that of these people being carried away by the power and passion of such appeals, the inflammatory utterances of reckless demagogues and firebrands. They are the public enemies we have most need to guard against.

The path of safety lies in standing ready to discuss every proposition which they advance, and then refute, with cool reasoning and argument, the fallacy and falsity of their position and the destructive doctrines they teach.

It will also be very noticeable that the people comprising the Socialistic audiences at such meetings are mostly foreigners who, seeking better social and political environments, emigrated to America, a large part of them within the past decade or two. As discontented aliens they become as dangerous as the firebrands they listen to, but there is no spirit of self-sacrifice among them. Moreover, they are slaves to what is worst in Socialism and blind followers of a false god!

That this peculiar condition of things should exist in this country seems almost paradoxical. It is something that a patriotic American cannot tolerate, and mainly an outcome of Russian oppression, imported by those who have fled from it, and who fail to understand or appreciate the new conditions under which they live. We can well understand and appreciate how, in a country ruled by a despot, whose heel of oppression and tyranny is ever on the necks of the down-trodden people, the masses, desiring some measure of free action and equality, would revolt against these conditions, and seek a reorganization of society. They would, naturally, look as far away as they could from such a government of despotism—the only one they had ever known—to the other extreme—an imaginary country where the State should ownall the land and capital, employ all the people and divide everything, share and share alike, among the community. Such a government will, of course, never exist. It is simply impossible.

But the spirit of revolt, which, in that case, may be patriotism, becomes ridiculous, and open to the charge of insincerity, when its worst doctrines are transplanted and cultivated upon American soil by our foreign population. When it appears here it is really more like Anarchism than Socialism, and I emphasize this.

Born of the spirit of resistance to oppression, with the broadest and freest constitution that the world has ever known—a land of freedom and equality in the best and most liberal sense of the term—it would seem that the sincere lover of liberty and equality could ask no better home than this democracy of ours—whose glorious flag floats over eighty-four millions of prosperous and enlightened people.

With further reason, also, must we question the sincerity of the violent type of Socialist, who, leaving oppression behind, emigrates to this country, where tyranny and despotism are unknown, and yet continues to echo Socialism’s war-cry of destruction, wrung from his heart by the cruelty of his old-time oppressors. When he does this he becomes an enemy of our Republic, unworthy of citizenship.

He comes here from a land of want and thraldom to a land of plenty and freedom. He may come without name, fame, or property, and he is received with open arms. After a brief residence, he is entitled to full citizenship, and is then a part of the government, enjoying all the rights and privileges of the native born. He is a sharer in the equality possessed by all, the right to share in the government such as the electoral franchise and eligibility to public office. He is possessed of the civil rights enjoyed by all citizens in the equality of material conditions—that is, the right to acquire wealth and all that wealth implies.

Every opportunity for him to achieve success and happiness abounds on every hand, and every incentive to industryand accomplishment awaits him, and, if he is energetic and skilful, there is nothing to hinder him from becoming prosperous, or, in other words, successful in whatever vocation in life he may engage. With qualities that commend themselves to his fellow men, there is no limit to the possibilities of his achievements, and very soon, as has been very often the case, he may become not only wealthy but a leader of men. If, therefore, he is sincere, surely he must agree with me that in view of these conditions this is no place for the Socialist. He must be an ingrate who would fail to appreciate the splendid boon.

Does it not, indeed, sound like a paradox to hear this cry of Socialism still rending the air while every avenue of fortune lies open to everyone? It is a glaring anomaly of the times, an offence to American institutions, a poor return for our national hospitality. Vague and illogical as the theories advanced by the doctrinaires of Socialism are, there runs throughout all their teachings and preachings bitter and radical opposition to individual accumulation of wealth and individual competition in industry.

Socialists would, in other words, fence up the great field of free opportunity, deaden all incentive or inspiration for great achievement and not only curtail, but wholly remove the right to compete and excel and make it impossible to achieve success as the result of individual effort. They would reduce us all to a barren uniformity.

Think of this monstrous proposition! Why, the very thing that the Socialists attack as untenable and wrong in government, namely, individual competition, has done more than anything else to make us what we are as a nation; has kept alive the precious fires of liberty and freedom, and preserved the institutions of our country. Take away the progressive spirit of Individualism from the people, and you at once eliminate the American spirit—the love of freedom—of free industry—and free and unfettered opportunity—you take away indeed freedom itself!

The state of society the Socialists seek to establish mightbe beneficial to a class which, under any conditions, lacks frugality, thrift and self-reliance; but just where the general mass of humanity would be bettered or elevated socially, morally or politically, is a point not satisfactorily explained, and never will be.

If you render equally accessible to each and every member of the human family the benefits of civilization, all holding “properly in common,” why should a man rack his brain or strain his muscles in producing something which he expects to prove remunerative or beneficial to himself in some way, but which under the Socialistic state would contribute to the equal financial benefit of all? The highway to distinction and opulence would be closed.

As illustrating the inconsistency of some poor specimens of human nature, when put to the test of Socialism, I will tell two stories:

Jerry Sullivan had proclaimed himself a Socialist, and was being interviewed by his friend, Mike Casey.

“Jerry, do you believe in dividing up everything with your neighbor?”

“Indeed, and I do that.”

“If you had two horses (Jerry had none) would you give one to your neighbor Flanagan?”

“I’d be only too glad to.”

“And if you had two automobiles, would you give him one?”

“Sure, Mike, I would. We should have share and share alike in this world.”

“And if you had two Angora goats (which Jerry did have) would you give one to Flanagan?”

“What, give him one of my goats! Not by a jugful! Let Barney Flanagan buy his own goats.”

One of my millionaire clients, on his return from a trip abroad, called upon me to pay his respects. In the course of our conversation he said he had become a confirmed Socialist. I expressed surprise, and said, “Then, of course, you are going to divide up all your properly with your less fortunateassociates?” He said, “Oh no, but I want all the other fellows to do it.”

The most commendable object in Socialism is the uplifting of the down-trodden and poor, yet that great Commoner and Tribune of the People, William Jennings Bryan, tells us that under Individualism we have seen a constant increase in altruism. That the fact that the individual can select the object of his benevolence and devote his means to the causes that appeal to him has given an additional stimulus to his endeavors. And Mr. Bryan pointedly asks the question: “Would this stimulus be as great under Socialism?” Let it not be forgotten that by means of present tendencies and existing economic laws the poor are constantly growing richer, that is, better off, particularly as indicated by the savings bank deposits. The common people and the savings banks were never before so prosperous as they are now. Labor has made great strides, and the uplift in the lower walks of life in all Christendom during this generation and particularly during the past twenty years has been beyond precedent. Give us wise and just legislation, and complaints of the inequitable distribution of wealth will quickly disappear. Let us put down and keep down the revolutionary Socialists and Anarchists.

Of course, if the unrest of a people is prompted by a desire to promote the good of the greatest number of their fellow beings it will be productive of lasting benefit to all in the long run. But if any combination of capitalists, laborers, politicians, or religious bodies, has for its aim the particular good of only a certain class or party, such action as they take will be prompted by selfish desire, and will work for evil and injustice. The great mass of the people of this country, outside of the big cities, are not allied with either the members of labor unions or the very large capitalists, and the feeling of discontent is largely bred in cities, where it is magnified by the prominence given to it by agitators and the newspapers.

The wage earner in the cities is more or less disheartenedby the high prices of food supplies, the higher rents and the higher rates of interest on mortgages, and he argues that his pay has not advanced in the same proportion as the price of home necessaries. Mechanics and other laboring men are receiving higher average wages than ever before, but the display of wealth in modern palaces for the rich, and the abundance of automobile and kindred luxuries among them, have kindled envy and whetted their desire for things beyond their means or hopes of attainment. While no law can change the nature of a man, and while we cannot expect an ambitious man with an elastic conscience to always become a benefactor, or a labor union leader, filled with hate, to become a saint, I hope that the agitation now existing may lead in time to a more general observance of the Golden Rule, to do unto others as we would they should do unto us.

I may say here that I believe nine-tenths of the dissatisfaction of the masses is based upon mistaken ideas. Few men are capable of judging impartially of the rights or the motives which actuate those upon whom Fortune has smiled: Success may be often a matter of luck and opportunity; but it cannot be denied that judgment, mental force and courage are the factors which are bound to insure success.

I now speak not only of success from a monetary standpoint—for many of our most useful, intelligent and influential citizens are comparatively poor—but of all success. Our larger cities are the hotbeds of unrest. The older generation, being anxious that their sons shall have more, and know more, than themselves, and enjoy the good things in life which they have desired but have not been able to obtain, now try to give their children a liberal education and fit them for what they consider more congenial or higher-class occupations than their own.

The outcome of this is that the younger men, when their education is completed, drift into the cities, where they think they have a better chance of getting on in life. It is the same with farmers, laborers and mechanics. Their children desire to rise above their early environments, and wish to occupypositions where they can use their brains rather than their hands. Hence the many deserted farms in New England and in the State of New York, for poor soil is not sufficient cause for their desertion. It can be made good by fertilizers, and where there’s a will there’s a way.

This discontent is producing a superfluity of clerks and other brain workers, who think work with the head more genteel than work with the hands, and a great shortage of farm workers that are needed to develop our agricultural resources. Even the children of the most ignorant foreigners are imbued with this ambition before they are able to speak our language. Too many despise honest labor and want to live by their wits. So we have a vast host of surplus politicians, office-seekers, promoters, brokers, lawyers, clerks, canvassers and drones.

In olden days the young were willing to follow in the footsteps of the old, and begin life where their fathers began. Now they expect to begin where their fathers leave off, and are dissatisfied and disappointed if they find that they have to start from the foot of the ladder.

What we most need in this country to promote and popularize farm and village life, and check the general tendency of both young men and young women to drift to the large cities, is a change in our educational system. We should establish trade schools everywhere to teach the trades and practical sciences, and so make country-bred people proficient in occupations that they could follow on the farm, and in village as well as town life. This knowledge would induce them to stay where they were born, instead of rushing off to make or mar their fortunes in the overcrowded cities where many come to grief. Thus the congestion of population in the cities would be relieved, and the country generally would be able to retain the men and women it needs for its industries that are now held in check by an insufficiency of labor. In this way we might gain millions of good mechanics and other useful workmen where they are most needed, and reduce the number of the inefficient and unemployed in the cities, to say nothing of the chronic idlers and the sporting, gamblingand criminal classes. Men instructed for the professions would of course still study in the colleges, but the masses have no use to which they can put the higher education of even the high schools.

There are a lot of well-meaning theorists engaged in so-called Social reform who are largely responsible for many things that add to the unrest in the poorer sections of our cities. Far be it from me to criticize anyone who has the desire to better the condition of his less fortunate brothers, but the work of many of these reformers reminds me of the man who threw a panful of kerosene on a small fire with the idea of putting out the flames. To be a true Social reformer a man must be well informed on conditions which obtain on all sides of life. A rich man may have acquired wealth by miserly habits, but if he has not been dishonest he is entitled to his savings, and no law can compel him to divide with the poor man who has been profligate in the use of his earnings. The thousands of immigrants who arrive at our ports each week are, for the most part, poor and ignorant. The greater number of them remain in our cities and add to the congestion and widespread poverty of the cities. But these same immigrants are willing to work, and in a year or two, instead of being a charge upon the community, have savings bank accounts of their own. However, they are ripe for the reception of the gospel of unrest, as they have lived hitherto in places where the poor are always poor, with no lookout for improvement, and willingly listen to the agitator and prophet of discontent. Mr. Roosevelt has said and done things in the last four years which have shaken our land. Many investors have thought that he had gone too far in his insistence that the law should be rigidly enforced, as they, innocent holders of securities, had been made to suffer loss by the depression in prices. While it is hard that such losses should have been incurred, it is no fault of the President, and his action, in the long run, is to be of untold value to our national and individual prosperity. If his actions will insure the fulfillment of the law by the magnates in power in our railroads and corporations,the little man will be on a par with the big man, and all investments will be on a safer basis, and the dark secrets of the manipulator will give place to the open publication of rates and earnings so that a stockholder will know where he stands and what his company is doing.

Daniel Webster, as far back as 1842, found that the spirit of unrest was in the air as it is now. In an address in that year he said:

“There are persons who constantly clamor. They complain of oppression, speculation and the pernicious influence of accumulated wealth. They cry out loudly against all banks and corporations and all means by which small capitals become united in order to produce important and beneficial results. They carry on mad hostility against all established institutions. They would choke the fountain of industry, and dry all the streams. In a country of unbounded liberty they clamor against oppression. In a country of perfect equality they would move heaven and earth against privilege and monopoly. In a country where property is more evenly divided than anywhere else they rend the air shouting agrarian doctrines. In a country where the wages of labor are high beyond parallel, they would teach the laborer that he is but an oppressed slave.”

I will here deviate to another division of the subject.

Considerable uneasiness and unrest have been evinced not only by the Socialists, but by many others, as to whether great individual or corporate wealth—in other words, capital—is inimical and hostile to the public welfare and a menace to our institutions.

I think that it can be clearly shown that this anxiety and unrest are without any good foundation. There is nothing in fact to justify this unrest.

In our own country especially, where individual opportunities are practically limitless and where thought and effort are exerted to the utmost straining point, most fruitful, indeed, has been the result. We have seen that the making of large fortunes coincidently with great general prosperity, thatis, by those doing a profitable business on a large scale, is an inevitable economic result.

The past forty-five years in the United States embrace a new era of wealth—an era in which the accumulation of vast amounts of money, or its equivalent, in individual and corporate hands, has accompanied the most marvelous national growth and prosperity in all history.

New conditions have arisen, and new methods have had to be employed, while new men, equipped with new ideas, have not been found wanting to meet all requirements, and to keep step with the march of progress on both land and sea. Unlike the people of some of the older countries, where, as in Russia, they distrust their government, Americans do not hoard their wealth. They employ it. They have nothing to hoard it for. Their quickly acquired fortunes are generally lavishly disbursed, both in their style of living and their investments. With much of the money they put into circulation, railroads are built and extended, mammoth factories are constructed, labor is employed on a larger scale than before, more farms are cultivated, and more crops are moved and exported. Through all the arteries of trade and commerce the wealth thus employed flows and adds to the growth and prosperity of the country.

Keeping the wheels of commerce moving, by supplying the demands of the financial, mercantile, manufacturing and agricultural world with the “sinews of war,” in the up-to-date American way, instead of merely gathering wealth and hiding it away, has been to my mind one great secret of our unprecedented national advancement.

CHARLES M. SCHWAB.

Although it is impossible to demonstrate just how important an influence this practice of keeping wealth actively in use has played in helping to bring about and preserve the generally progressive and prosperous condition of affairs, there is evidence enough to refute much that has been said against the possession of great wealth, and also to show that the hostile or critical attitude of the press and the people toward it is unjust, and should be derided instead of beingpopular with the masses, as it is. The assistance which Americans of great wealth have given the nation, in the founding and preservation of institutions for the public benefit and in many other ways, has never been sufficiently appreciated or acknowledged.

Wealth in good hands serves good purposes. The richest men of the Thirteen Colonies in the American Revolution were among the most active and self-sacrificing of American patriots. They included George Washington, John Adams, John Hancock, Thomas Jefferson, James Madison and Robert Morris, whose names are imperishable on our national roll of fame.

In that glorious struggle for freedom, these wealthy patriots performed a leading and arduous part, and aided largely in effecting that grand result—the establishment of this great republic, the United States of America, under the best and freest Constitution in the world.

Passing onward from that memorable time, we come to that of the Rebellion, when Secession reared its aggressive head, and the very life of our institutions was in extreme jeopardy. In the early part of the great Civil War—when the Government, friendless abroad, knew not which way to turn for the financial aid that it so sorely needed to defend itself and prosecute the war—history will recall that the great wealth of private individuals proved not a menace, but a blessing and a godsend to the Nation. These served their country well by coming forward with their wealth and buying United States bonds in large amounts when the risk was hazardous. By so doing they rendered patriotic public service that should make even the Socialists hesitate before condemning great individual wealth as dangerous to the national welfare.

I might in illustration of what I say enumerate instances almost without number where, from the rock-ribbed coast of Maine to the Golden Gate of California, under the beneficent rays of great gifts of the wealthy the seeds of education have been sown broadcast and have grown into grand and telling factors in shaping the character of the risinggeneration of American manhood and the destiny of this great country.

In keeping with the hostility, or unrest, concerning great individual wealth, and large corporate capital, we are at times confronted by the bold assertion, made by extremists, that some limit should be set to the amount of property an individual may own. The impracticability and inadvisability of any such measure are at once apparent. You might as well try to limit the capacity or energy of an individual. When you prevent an individual from accumulating you at once discourage his productiveness. This is an axiom beyond dispute.

As regards great corporate capital, I must admit that there has been in many instances, in the past, good cause for much of the unrest and dissatisfaction manifested by the people.

Toward competitors large corporations have too often been unscrupulous, just as the railways were in giving rebates to control the heavy traffic. These illegal and reprehensible methods were pursued far too long, not only causing immense personal and commercial loss and injury, but shaking the confidence of the public in the large corporations called Trusts. These offences can, however, under our new laws, hardly be repeated in the future.

Under the provisions of the Sherman Anti-Trust law, the Elkins Anti-Rebate law and other and later restraining statutes, condign punishment will, doubtless, be dealt out to offenders, and a rigid enforcement of these laws, and their necessary amendments, will be sufficient to regulate corporate bodies and stand as an ægis of protection for the nation.

In this very active period of business reform overcapitalization is an evil that must be classed with rebates, railroad discrimination, and other corporate abuses. This also applies almost equally to both the industrial and railroad systems. However much this evil may have been regarded and thought inevitable in the past, owing to peculiar and lax conditions in the pioneer days of railroads and industrial upbuilding, it is intolerable now, and should be made impossible in the future. There is not the slightest doubt that a great deal of the publicunrest has proceeded from this source. But, with the stoppage of the evil, it ought to subside.

Overproduction of any kind is a detriment to trade and leads first to extravagance and then to disaster; overfeeding produces disease; overtraining of an athlete weakens him and causes his defeat; overstudy racks the nerves of the student and unfits him for usefulness. Overwork kills man and beast, and ruins even our locomotives and machinery. Too much rain, too much wind, and too much sunshine spoil our crops; too much confidence or too much caution prevents a business man from achieving success. There is a happy medium in all things which produces good results and promotes success. Under our modern system of financing our railroads and industrial corporations overcapitalization has in many instances run riot and produced an overplus of undigested securities. This system of financing will surely lead to disaster if not curbed and conducted in a rational manner. If a company needs additional funds for legitimate purposes, such capital is a necessity which stockholders will willingly provide; but the managers of corporations should be compelled to state exactly and definitely for what purpose such funds are needed, and should also be compelled to make a clear and definite report.

Centralization of power in the hands of an able executive is a good idea if he prove worthy of the trust his colleagues confide in him, but, on the other hand, makes him a master, and them slaves, if he be unscrupulous and crafty.

Happily, the days of overcapitalization are seemingly over, and an aroused public opinion will, no doubt, be expressed in whatever prohibitive laws are necessary, if those already enacted prove insufficient.

In, at least, some instances the existing laws seem inadequate. It is likewise due to the sound corporations of the country, as well as to the public, that something further should be provided to overcome the feeling of suspicion toward them, and to keep the people informed as to their existing methods and the true condition of their affairs.

The remedy for corporation wrongdoing is found in publicity! This publicity is the great need of the present and the future, and the public should demand it. It is a lamp that we should always keep burning.

In a recent address delivered by me before the Wharton School of Finance of the University of Pennsylvania, I urged that the New York Legislature, as well as the Legislatures of the other States, should respond to the popular agitation for this publicity by passing laws requiring all corporations to make at least semi-annual reports of their condition, certified to by registered public accountants, with power invested in the State superintendents to order special examinations by such accountants at any time when deemed necessary, that is, whenever any of them were suspected of being unsound or irregular in their business methods.

The question now to decide is what remedies can best be adopted to prevent a repetition of stock-watering. My plan is for the Government to appoint a salaried director in each of the interstate roads, this director to be on the executive committee also. His duty should be to act as a watchdog, and he should be required to report to the Interstate Commerce Commission all crooked acts or suspicions of any; besides which the interstate roads should be compelled by law to issue sworn statements of their exact condition semi-annually. Officials of railroad companies found guilty of any illegal acts whatsoever should be punished by imprisonment. Money penalties are of no use in stopping wrongs of wealthy corporations.

Railroad discriminations and other abuses were incident and owing to our extraordinary development during the last half century, and especially to the striking failure of our Legislatures to keep pace with national progress.

Let us briefly look into a few of the causes which were responsible for this railway abuse. Both before and after our recent Civil War this country was greatly in need of more railway transportation than it had, and national development was impossible without it. We had millions of square milesof territory rich in natural resources, but totally undeveloped and awaiting population, capital and transportation. Of course transportation had to be provided before either population or capital could venture with any freedom into the Great West. In those days it was vastly more difficult to raise $1,000,000 for a new railroad enterprise than it was to procure $100,000,000 in more recent times. The public was not accustomed to such ventures, and the country did not then contain the large number of wealthy men who must now be depended upon to back such great enterprises.

In those days railroads required relatively large capital; the risks were new and great, and some means of securing large profits had to be devised in order to tempt men of means to venture into such enterprises, which from their very nature involved a long wait for profit. Our earliest railroad builders were men of unbounded faith in the future, and they well knew that many years of patience and outlay would be necessary before such enterprises could become profitable. It is almost axiomatic to say that in this country our railroads have been the principal factors in national progress. In the United States, railroads were called upon to develop both population and traffic. In Europe, population and traffic were already in existence and simply awaited the railroad. When railroad building first began, England was already a closely settled country; and it was only necessary to construct the lines to obtain profitable traffic at once. No special inducements were necessary for the attraction of capital, and no preliminary period of waiting or loss was required to develop traffic. It was vastly different here; railroads had to be built across thousands of miles of new country, frequently over apparently insurmountable mountains where neither traffic nor population existed; and their builders, men of monumental ability and enterprise, knew full well that a generation must pass before such enterprises could be considered profitable and solid investments.

Under such conditions what inducements could be offered to overcome such overwhelming obstacles? While governmentaid was eagerly sought, it was restricted mainly to the Pacific roads where political reasons, such as unification of new territory, justified government support. Another form of national aid was the giving of large land grants to railroad corporations as a stimulus to the settlement of new territory and the building of roads adjacent thereto. Even those helps were insufficient.

Meanwhile, the treasures of the Great West offered irresistible attractions to new enterprise and settlement. The demand for more railroads was insistent; then came the devices of stock-watering and overcapitalization as inducements to new capital. Roads were often built entirely on bonds; and stock, having little or no value except for voting, was given away as a bonus with the bonds, or used for various purposes, often in speculation, and such stock frequently found its way back to the original promoters at bargain if not waste-paper prices. This era of speculative railroad building was naturally accompanied by all sorts of illegitimate operations; overcapitalization bearing a leading part. No one would now dare think of resorting to such practices as were common in those pioneer days. They were utterly indefensible, and yet as an expedient they served their purposes in raising much of the capital with which to develop our early railroad systems.

Our great railroad builders were fully entitled to great profits, since their boldness and skill developed the finest railroad systems the world has ever seen, and without them the United States would never have obtained its present magnificent position and prosperity. We must admit their methods were open to serious criticism, and would not be tolerated in these days of improved business standards. Nevertheless, they were the methods of the day, and must be judged as such. I do not wish to be understood as defending or apologizing for overcapitalization, for I consider it an economic evil of the most dangerous character, and its penalties—political as well as economic—cannot be averted.

It should not be forgotten that the great wave of grangerismand anti-railroad agitation which swept this country in the ‘80s was a direct revulsion of popular feeling against the burdens of overcapitalization and their tax upon traffic. These were the political results of such abuses. The economic consequences which followed—somewhat late to be sure—were witnessed in the reconstruction period that followed the panic of 1873, when vast millions of railroad capital were literally wiped out by the reorganization of railway corporations.

To-day most of our railroads are comparatively free of overcapitalization, both because much of the water has been eliminated by reorganizations, and because the increased value of terminals and other properties, as well as the large improvements that were paid for out of earnings, have increased the intrinsic value of shares which at one time may have been practically valueless. This process of accretion has been going on for many years, so that now there is comparatively little difference between intrinsic and market values. Of course, some recent striking departures from sound railroad financing can be cited; but I am speaking in broad terms, and have no hesitation whatever in asserting that American railroad investments are now sounder financially than any similar class of securities in the world, and this notwithstanding that railway companies are compelled to borrow enormous sums in order to meet the demands of a wonderfully expanding traffic.

A comparison greatly in our favor could be made with British railroads which have for years been inflating their shares by a policy of charging improvements to capital account; the American system being to charge such items against earnings. The result is that British railroad shares, which were once held up to us as models of soundness and honest capitalization, are now seriously threatened with an excess of water; and unless the present policy is changed, English stockholders will soon be discarding their home favorites for the bonds and stocks of more soundly managed American railroads.

I have dwelt considerably upon the overcapitalization of our railroads. Now a word about overcapitalization in anotherdirection, where it is a vastly more serious affair. While we now have little to fear from overcapitalization of railroads, an inflation has taken place in our industrials of the most extravagant character, and this is one of the most serious menaces to our industrial and financial future. A feature of our national development which has attracted world-wide attention during the last ten years has been the consolidation of nearly all our great industries into a few “Trusts.” This era of consolidation, or “Trust-making,” must be classed as an industrial revolution of the highest import, containing tremendous possibilities for both good and evil. Within a few short years a large proportion of our industries were combined or turned into Trusts, and securities issued in exchange aggregating about $6,000,000,000.

Of course, many of the objects of these combinations were perfectly legitimate. The seeking of better and more economic methods of production and distribution was eminently proper, but the grasping for monopoly was not legitimate, and has proved more largely responsible for the political and social unrest of the times than any other single cause. Nothing has done more to stimulate Socialism than this unwholesome tendency toward monopoly and excessive centralization. On this feature, however, it is not my intention to dwell further; I must even entirely pass over the overcapitalization of public franchises as a subject of sufficient importance to demand special treatment.

All things considered, however, I feel safe in saying that there is practically no more reason for unrest on the part of the business community or the people of the nation, on account of the large aggregation of capital represented by Trusts, than from equally large sums in the hands of individuals; for both are equally controlled by law and influenced by public opinion, and public opinion is often more powerful than law in righting wrong. Moreover, public opinion makes the laws. As the Latin aphorism says, The People’s voice is the Voice of God!

I take decided issue with a certain distinguished gentlemanfrom Maryland, that the existing unrest has been brought about by the national administration at Washington, and by the Chief Executive of our country, and challenge the truth of this assertion. It is both a surprising and ridiculous accusation. The leading men of thought—not only in the United States, but all over the world—agree that if, after the startling exposures of the life insurance and railroad abuses, President Roosevelt had not taken the sturdy and bold stand that he did, the confidence of the public would not only have been severely shaken, but would have been well-nigh uprooted; and such a general spirit of unrest would have followed as to be truly alarming in its nature.

As it was, his level-headed and courageous course was timely and almost providential, and instead of being the subject of adverse criticism, he is entitled to the highest praise from all. Apart from some politicians and a few others, we are indeed all paying him this deserved tribute. He has often shown us that he possesses the courage of his convictions. In conclusion, while we doubtless all agree that the existing social unrest, anxiety and prejudice are to be deplored, may we not also unite in the hope that, under the educating influence of a full discussion of the economic questions of the hour, and with the enforcement of the laws in the hands of an honest and courageous executive, the way to betterment will be thoroughly paved? It is a patriotic duty to endeavor to lessen popular discontent and promote social and political peace and harmony, and substitute public confidence for unrest and the violent agitation of Socialism, and so enhance the manifold blessings we enjoy as American citizens, yes, as citizens of the foremost nation of the world, with a future even grander than its past, a country where Nature is everywhere lavish of her abundance, and freedom and independence are our birthright. Beholding then, my friends, this grand spectacle of national progress and achievement even as it appears to us at this day, it certainly needs no prophetic tongue to foretell with confidence and absolute verity that to the true and ardent patriot and ambitious American, in fact,to every man inspired with lofty ideals and imbued with a spirit and desire for improvement and the perfection of democratic government, the social and political vista of our country’s future will disclose a picture of prosperity and contentment that will prove a glorious inheritance to the coming generations of the American people.

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