FOOTNOTES:

FOOTNOTES:[27]"The Winning of the West," Theodore Roosevelt. New York, Putnam's, 1896, vol. 4, p. 262.[28]"American Negro Slavery," U. B. Phillips. New York, Appleton, 1918, pp. 171-2.[29]"History of the United States," James F. Rhoades. New York, Macmillan, 1906, vol. I, p. 87.[30]"Personal Memoirs," U. S. Grant. New York, Century, 1895, vol. I.[31]"Personal Memoirs," U. S. Grant. New York, Century, 1895, vol. I, pp. 115 and 32.[32]"Historical Register of the United States Army," F. B. Heitman. Washington, Govt. Print., vol. 2, p. 282.[33]"The Story of New Mexico," Horatio O. Ladd. Boston, D. Lothrop Co., 1891, p. 333.[34]"The Winning of the West," Theodore Roosevelt. Vol. I, p. 26, 27, and Vol. II, p. 370.

[27]"The Winning of the West," Theodore Roosevelt. New York, Putnam's, 1896, vol. 4, p. 262.

[28]"American Negro Slavery," U. B. Phillips. New York, Appleton, 1918, pp. 171-2.

[29]"History of the United States," James F. Rhoades. New York, Macmillan, 1906, vol. I, p. 87.

[30]"Personal Memoirs," U. S. Grant. New York, Century, 1895, vol. I.

[31]"Personal Memoirs," U. S. Grant. New York, Century, 1895, vol. I, pp. 115 and 32.

[32]"Historical Register of the United States Army," F. B. Heitman. Washington, Govt. Print., vol. 2, p. 282.

[33]"The Story of New Mexico," Horatio O. Ladd. Boston, D. Lothrop Co., 1891, p. 333.

[34]"The Winning of the West," Theodore Roosevelt. Vol. I, p. 26, 27, and Vol. II, p. 370.

During the half century that intervened between the War of 1812 and the Civil War of 1861 the policy of the United States government was decided largely by men who came from south of the Mason and Dixon line. The Southern whites,—class-conscious rulers with an institution (slavery) to defend,—acted like any other ruling class under similar circumstances. They favored Southward expansion which meant more territory in which slavery might be established.

The Southerners were looking for a place in the sun where slavery, as an institution, might flourish for the profit and power of the slave-holding class. Their most effective move in this direction was the annexation of Texas and the acquisition of territory following the Mexican War. An insistent drive for the annexation of Cuba was cut short by the Civil War.

Southern sentiment had supported the Louisiana Purchase of 1803 and the Florida Purchase of 1819. From Jefferson's time Southern statesmen had been advocating the purchase of Cuba. Filibustering expeditions were fitted out in Southern ports with Cuba as an objective; agitation was carried on, inside and outside of Congress; between 1850 and 1861 the acquisition of Cuba was the question of the day. It was an issue in the Campaign of 1853. In 1854 the American ministers to London, France and Madrid met at the direction of the State Department and drew up a document (the "Ostend Manifesto") dealing with the future of Cuba. McMaster summarizes the Manifesto in these words: "The United States ought to buy Cuba because of its nearness to our coast; because it belonged naturally to that great group of states of whichthe Union was the providential nursery; because it commanded the mouth of the Mississippi whose immense and annually growing trade must seek that way to the ocean, and because the Union could never enjoy repose, could never be secure, till Cuba was within its boundaries." (Vol. viii, pp. 185-6.) If Spain refused to sell Cuba it was suggested that the United States should take it.

The Ostend Manifesto was rejected by the State Department, but it was a good picture of the imperialistic sentiment at that time abroad among certain elements in the United States.

The Cuban issue featured in the Lincoln-Douglas Debates in 1858. It was hotly discussed by Congress in 1859. Only twenty years had passed since the United States, by force of arms, had taken from Mexico territory that she coveted. Now it was proposed to appropriate territory belonging to Spain.

The outbreak of hostilities deferred the project, and when the Civil War was over, the slave power was shattered. From that time forward national policy was guided by the leaders of the new industrial North.

The process of this change was fearfully wasteful. The shifting of power from the old régime to the new cost more lives and a greater expenditure of wealth than all of the wars of conquest that had been fought during the preceding half century.

The change was complete. The slaves were liberated by Presidential Proclamation. The Southern form of civilization—patriarchal and feudal—disappeared, and upon its ruins—rapidly in the West; slowly in the South—there arose the new structure of an industrial civilization.

The new civilization had no need to look outward for economic advantage. Forest tracts, mineral deposits and fertile land afforded ample opportunity at home. It was three thousand miles to the Pacific and at the end of the journey there was gold! The new civilization therefore turned its energies to the problem of subduing thecontinent and of establishing the machinery necessary to provide for its vastly increasing needs. A small part of the capital required for this purpose came from abroad. Most of it was supplied at home. But the events involved in opening up the territory west of the Rockies, of spanning the country with steel, and providing outlets for the products of the developing industries were so momentous that even the most ambitious might fulfill his dreams of conquest without setting foot on foreign soil. Territorial aggrandizement was forgotten, and men turned with a will to the organization of the East and the exploration and development of the West.

The leaders of the new order found time to take over Alaska (1868) with its 590,884 square miles. The move was diplomatic rather than economic, however, and it was many years before the huge wealth of Alaska was even suspected.

The new capitalist interests began to feel the need of additional territory toward the end of the nineteenth century. The desirable resources of the United States were largely in private hands and most of the available free land had been pre-empted. Beside that, there were certain interests, like sugar and tobacco, that were looking with longing eyes toward the tempting soil and climate of Hawaii, Porto Rico and Cuba.

When the South had advocated the annexation of Texas, its statesmen had been denounced as expansionists and imperialists. The same fate awaited the statesmen of the new order who were favoring the extension of United States territory to include some of the contiguous islands that offered special opportunities for certain powerful financial interests.

The struggle began over the annexation of Hawaii. After numerous attempts to annex Hawaii to the United States a revolution was finally consummated in Honoluluin 1893. At that time, under treaty provisions, the neutrality of Hawaii was guaranteed by the United States. Likewise, "of the capital invested in the islands, two-thirds is owned by Americans." This statement is made in "Address by the Hawaiian Branches of the Sons of the American Revolution, the Sons of Veterans, and the Grand Army of the Republic to their compatriots in America Concerning the Annexation of Hawaii." (1897.) These advocates of annexation state in the same address that: "The revolution (of 1893) was not the work of filibusterers and adventurers, but of the most conservative and law-abiding citizens, of the principal tax-payers, the leaders of industrial enterprises, etc." The purpose behind the revolution seemed clear. Certain business men who had sugar and other products to sell in the United States, believed that they would gain, financially, by annexation. They engineered the revolution of 1893 and they were actively engaged in the agitation for annexation that lasted until the treaty of annexation was confirmed by the United States in 1898. The matter was debated at length on the floor of the United States Senate, and an investigation revealed the essential facts of the case.

The immediate cause of the revolution in 1893 was friction over the Hawaiian Constitution. After some agitation, a "Committee of Safety" was organized for the protection of life and property on the islands. Certain members of the Hawaiian government were in favor of declaring martial law, and dealing summarily with the conspirators. The Queen seems to have hesitated at such a course because of the probable complications with the government of the United States.

TheU. S. S. Boston, sent at the request of United States Minister Stevens to protect American life and property in the Islands, was lying in the harbor of Honolulu. After some negotiations between the "Committee of Safety" and Minister Stevens, the latter requested the Commander of theBostonto land a number of marines. This was done on the afternoon of January 16, 1893. Immediately theGovernor of the Island of Oahu and the Minister of Foreign Affairs addressed official communications to the United States Minister, protesting against the landing of troops "without permission from the proper authorities." Minister Stevens replied, assuming full responsibility.

On the day following the landing of the marines, the Committee of Safety, under the chairmanship of Judge Dole, who had resigned as Justice of the Supreme Court of Hawaii in order to accept the Chairmanship of the Committee, proceeded to the government building, and there, under cover of the guns of the United States Marines, who were drawn up for the purpose of protecting the Committee against possible attack, a proclamation was read, declaring the abrogation of the Hawaiian monarchy, and the establishment of a provisional government "to exist until terms of union with the United States have been negotiated and agreed upon." Within an hour after the reading of this proclamation, and while the Queen and her government were still in authority, and in possession of the Palace, the Barracks, and the Police Station, the United States Minister gave the Provisional Government his recognition.

The Queen, who had 500 soldiers in the Barracks, was inclined to fight, but on the advice of her counselors, she yielded "to the superior force of the United States of America" until the facts could be presented at Washington, and the wrong righted.

Two weeks later, on the first of February, Minister Stevens issued a proclamation declaring a protectorate over the islands. This action was later repudiated by the authorities at Washington, but on February 15, President Harrison submitted a treaty of annexation to the Senate. The treaty failed of passage, and President Cleveland, as one of his first official acts, ordered a complete investigation of the whole affair.

The Senate Committee on Foreign Relations submitted a report on the matter February 26, 1894. Four membersreferred to the acts of Minister Stevens as "active, officious and unbecoming participation in the events which led to the revolution." All members of the committee agreed that his action in declaring a protectorate over the Islands was unjustified.

The same kind of a fight that developed over the annexation of Texas now took place over the annexation of Hawaii. A group of senators, of whom Senator R. F. Pettigrew was the most conspicuous figure, succeeded in preventing the ratification of the annexation treaty until July 7, 1898. Then, ten weeks after the declaration of the Spanish-American War, under the stress of the war-hysteria, Hawaii was annexed by a joint resolution of Congress.

The Annexation of Hawaii marks a turning point in the history of the United States. For the first time, the American people secured possession of territory lying outside of the mainland of North America. For the first time the United States acquired territory lying within the tropics. The annexation of Hawaii was the first imperialistic act after the annexation of Texas, more than fifty years before. It was the first imperialistic act since the capitalists of the North had succeeded the slave-owners of the South as the masters of American public life.

The real test of the imperial intentions of the United States came with the Spanish-American War. An old, shattered world empire (Spain) held Porto Rico, Cuba and the Philippines. Porto Rico and Cuba were of peculiar value to the sugar and tobacco interests of the United States. They were close to the mainland, they were enormously productive and, furthermore, Cuba contained important deposits of iron ore.

Spain had only a feeble grip on her possessions. For years the natives of Cuba and of the Philippines had beenin revolt against the Spanish power. At times the revolt was covert. Again it blazed in the open.

The situation in Cuba was rendered particularly critical because of the methods used by the Spanish authorities in dealing with the rebellious natives. The Spaniards were simply doing what any empire does to suppress rebellion and enforce obedience, but the brutalities of imperialism, as practiced in Cuba by the Spaniards, gave the American interventionists their opportunity. Day after day the newspapers carried front page stories of Spanish atrocities in Cuba. Day after day the ground was prepared for open intervention in the interests of the oppressed Cubans. There was more than grim humor in the instructions which a great newspaper publisher is reported to have sent his cartoonist in Cuba,—"You provide the pictures; we'll furnish the war."

The conflict was precipitated by the blowing up of the United States battleshipMaineas she lay in the harbor of Havana (February 15, 1898). It has not been settled to this day whether theMainewas blown up from without or within. At the time it was assumed that the ship was blown up by the Spanish, although "there was no evidence whatever that any one connected with the exercise of Spanish authority in Cuba had had so much as guilty knowledge of the plans made to destroy theMaine" (p. 270), and although "toward the last it had begun to look as if the Spanish Government were ready, rather than let the war feeling in the United States put things beyond all possibility of a peaceful solution, to make very substantial concessions to the Cuban insurgents and bring the troubles of the Island to an end" (p. 273-4).[35]

Congress, in a joint resolution passed April 20, 1898, declared that "the people of the Island of Cuba are, and of right ought to be, free and independent.... The United States hereby disclaims any intention to exercise sovereignty, jurisdiction or control over said island except forthe pacification thereof, and asserts its determination, when that is accomplished, to leave the government and control of the island to its people."

The war itself was of no great moment. There was little fighting on land, and the naval battles resulted in overwhelming victories for the American Navy. The treaty, ratified February 6, 1899, provided that Spain should cede to the United States Guam, Porto Rico, Cuba and the Philippines, and that the United States should pay to Spain twenty millions of dollars. As in the case of the Mexican War, the United States took possession of the territory and then paid a bonus for a clear title.

The losses in the war were very small. The total number of men who were killed in action and who died of wounds was 289; while 3,949 died of accidents and disease. ("Historical Register," Vol. 2, p. 187.) The cost of the war was comparatively slight. Hostilities lasted from April 21, 1898 to August 12, 1898. The entire military and naval expense for the year 1898 was $443,368,000; for the year 1899, $605,071,000. Again the need for a larger place in the sun had been felt by the people of the United States and again the United States had won immense riches with a tiny outlay in men and money.

Now came the real issue,—What should the United States do with the booty?

There were many who held that the United States was bound to set the peoples of the conquered territory free. To be sure the specific pledge contained in the joint resolution of April 20, 1898, applied to Cuba alone, but, it was argued, since the people of the Philippines had also been fighting for liberty, and since they had come so near to winning their independence from the Spaniards, they were likewise entitled to it.

On the other hand, the advocates of annexation insisted that it was the duty of the United States to accept the responsibilities (the "white man's burden") that the acquisition of these islands involved.

As President McKinley put it:—"The Philippines, like Cuba and Porto Rico, were entrusted to our hands by the providence of God." (President McKinley, Boston, February 16, 1899.) How was the country to avoid such a duty?

Thus was the issue drawn between the "imperialists" and the "anti-imperialists."

The imperialists had the machinery of government, the newspapers, and the prestige of a victorious and very popular war behind them. The anti-imperialists had half a century of unbroken tradition; the accepted principles of self-government; the sayings of men who had organized the Revolution of 1776; written the Declaration of Independence; held exalted offices and piloted the nation through the Civil War.

The imperialists used their inside position. The anti-imperialists appealed to public opinion. They organized a league "to aid in holding the United States true to the principles of the Declaration of Independence. It seeks the preservation of the rights of the people as guaranteed to them by the Constitution. Its members hold self-government to be fundamental, and good government to be but incidental. It is its purpose to oppose by all proper means the extension of the sovereignty of the United States over subject peoples. It will contribute to the defeat of any candidate or party that stands for the forcible subjugation of any people." (From the declaration of principle printed on the literature in 1899 and 1900.) Anti-imperialist conferences were held in New York, Philadelphia, Chicago, Indianapolis, Boston and other large cities. The League claimed to have half a million members. An extensive pamphlet literature was published, and every effort was made to arouse the people of the country to the importance of the decision that lay before them.

The imperialists said a great deal less than their opponents, but they were more effective in their efforts. The President had said, in his message to Congress (April 1,1898), "I speak not of forcible annexation, for that cannot be thought of. That, by our code of morals, would be criminal aggression." The phrase was seized eagerly by those who were opposing the annexation of the Spanish possessions. After the war with Spain had begun, the President changed front on the ground that destiny had placed a responsibility upon the American people that they could not shirk. Taking this view of the situation, the President had only one course open to him—to insist upon the annexation of the Philippines, Porto Rico and Guam. This was the course that was followed, and on April 11, 1899, these territories were officially incorporated into the United States.

Senator Hoar, in a speech on January 9, 1899, put the issue squarely. He described it as "a greater danger than we have encountered since the Pilgrims landed at Plymouth—the danger that we are to be transformed from a republic, founded on the Declaration of Independence, guided by the counsels of Washington, into a vulgar, commonplace empire, founded upon physical force."

Cuba remained to be disposed of. With the specific guarantee of independence contained in the joint resolution passed at the outbreak of the war, it seemed impossible to do otherwise than to give the Cubans self-government. Many influential men lamented the necessity, but it was generally conceded. But how much independence should Cuba have? That question was answered by the passage of the Cuban Treaty with the "Platt Amendment" attached. Under the treaty as ratified the United States does exercise "sovereignty, jurisdiction and control" over the island.

The territory acquired from Spain was now, in theory, disposed of. Practically, the Philippines remained as a source of difficulty and even of political danger.

The people of Cuba were, apparently, satisfied. The Porto Ricans had accepted the authority of the UnitedStates without question. But the Filipinos were not content. If the Cubans were to have self-government, why not they?

The situation was complicated by the peculiar relations existing between the Filipinos and the United States Government. Immediately after the declaration of war with Spain the United States Consul-General at Singapore had cabled to Admiral Dewey at Hong Kong that Aguinaldo, leader of the insurgent forces in the Philippines, was then at Singapore, and was ready to go to Hong Kong. Commodore Dewey cabled back asking Aguinaldo to come at once to Hong Kong. Aguinaldo left Singapore on April 26, 1898, and, with seventeen other revolutionary Filipino chiefs, was taken from Hong Kong to Manila in the United States naval vesselMcCulloch. Upon his arrival in Manila, he at once took charge of the insurgents.

For three hundred years the inhabitants of the Philippines had been engaged in almost incessant warfare with the Spanish authorities. In the spring of 1898 they were in a fair way to win their independence. They had a large number of men under arms—from 20,000 to 30,000; they had fought the Spanish garrisons to a stand-still, and were in practical control of the situation.

Aguinaldo was furnished with 4,000 or 5,000 stands of arms by the American officials, he took additional arms from the Spaniards and he and his people coöperated actively with the Americans in driving the Spanish out of Luzon. The Filipino army captured Iloilo, the second largest city in the Philippines, without the assistance of the Americans. On the day of the surrender of Manila, 15½ miles of the surrounding line was occupied by the Filipinos and 600 yards by the American troops. Throughout the early summer, the relations between the Filipinos and the Americans continued to be friendly. General Anderson, in command of the American Army, wrote a letter to the commander of the Filipinos (July 4, 1898) in which he said,—"I desire to have the most amicable relations with you and to have you and your people coöperate withus in military operations against the Spanish forces." During the summer the American officers called upon the Filipinos for supplies and information and accepted their coöperation. Aguinaldo, on his part, treated the Americans as deliverers, and in his proclamations referred to them as "liberators" and "redeemers."

The Filipinos, at the earliest possible moment, organized a government. On June 18 a republic was proclaimed; on the 23rd the cabinet was announced; on the 27th a decree was published providing for elections, and on August 6th an address was issued to foreign governments, announcing that the revolutionary government was in operation, and was in control of fifteen provinces.

The real intent of the Americans was foreshadowed in the instructions handed by President McKinley to General Wesley Merritt on May 19, 1898. General Merritt was directed to inform the Filipinos that "we come not to make war upon the people of the Philippines, nor upon any party or faction among them, but to protect them in their homes, in their employments, and in their personal and religious rights. Any persons who, either by active aid or by honest submission, coöperate with the United States in its effort to give effect to this beneficent purpose, will receive the reward of its support and protection."

The Filipinos sent a delegation to Paris to lay their claims for independence before the Peace Commission. Meeting with no success, they visited Washington, with no different result. They were not to be free!

On September 8, 1898, General Otis, commander of the American forces in the Philippines, notified Aguinaldo that unless he withdrew his forces from Manila and its suburbs by the 15th "I shall be obliged to resort to forcible action." On January 5, 1899, by Presidential Proclamation, McKinley ordered that "The Military Government heretofore maintained by the United States in the city, harbor, and bay of Manila is to be extended with all possible dispatch to the whole of the ceded territory." On February4, 1899, General Otis reported "Firing upon the Filipinos and the killing of one of them by the Americans, leading to return fire." (Report up to April 6, 1899.) Then followed the Philippine War during which 1,037 Americans were killed in action or died of wounds; 2,818 were wounded, and 2,748 died of disease. ("Historical Register," Vol. II, p. 293.)

The Philippines were conquered twice—once in a contest with Spain (in coöperation with the Filipinos, who regarded themselves as our allies), and once in a contest with the Filipinos, the native inhabitants, who were made subjects of the American Empire by this conquest.[36]

The Philippine War was the last political episode in the life of the American Republic. From February 4, 1899, the United States accepted the political status of an Empire. Hawaii had been annexed at the behest of the Hawaiian Government; Porto Rico had been occupied as a part of the war strategy and without any protest from the Porto Ricans. The Philippines were taken against the determined opposition of the natives, who continued the struggle for independence during three bitter years.

The Filipinos were fighting for independence—fighting to drive invaders from their soil. The United States authorities had no status in the Philippines other than that of military conquerors.

Continental North America was occupied by the whites after a long struggle with the Indian tribes. This territory was "conquered"—but it was contiguous—it formed a part of a geographic unity. The Philippines were separated from San Francisco by 8,000 miles of water; geographically they were a part of Asia. They were tropical incharacter, and were inhabited by tribes having nothing in common with the American people except their common humanity. Nevertheless, despite non-contiguity; despite distance; despite dissimilarity in languages and customs, the soldiers of the United States conquered the Filipinos and the United States Government took control of the islands, acting in the same way that any other empire, under like circumstances, unquestionably would have acted.

There was no strategic reason that demanded the Philippines unless the United States desired to have an operating base near to the vast resources and the developing markets of China. As a vantage point from which to wage commercial and military aggression in the Far East, the Philippines may possess certain advantages. There is no other excuse for their conquest and retention by the United States save the economic excuse of advantages to be gained from the possession of the islands themselves.

The end of the nineteenth century saw the end of the Republic about which men like Jefferson and Lincoln wrote and dreamed. The New Century marked the opening of a new epoch—the beginning of world dominion for the United States.

FOOTNOTES:[35]"A History of the American People," Woodrow Wilson. New York, Harpers, 1902, Vol. V, pp. 273-4.[36]For further details on the Philippine problem see Senate Document 62, Part I, 55th Congress, Third Session.

[35]"A History of the American People," Woodrow Wilson. New York, Harpers, 1902, Vol. V, pp. 273-4.

[36]For further details on the Philippine problem see Senate Document 62, Part I, 55th Congress, Third Session.

The people of the United States, through their contests with the American Indians, the Mexicans and the Filipinos, have established that "supreme and extensive political domination" which is one of the chief characteristics of empire.

But the American Empire does not rest upon a political basis. Only the most superficial portions of its superstructure are political in character. Imperialism in the United States, as in every other modern country, is built not upon politics, but upon industry.

The struggle between empires has shifted, in recent years, from the political and the military to the economic field. The old imperialism was based on military conquest and political domination. The new "financial" imperialism is based on economic opportunities and advantages. Under this new régime, territorial domination is subordinated to business profit.

While American public officials were engaged in the routine task of extending the political boundaries of the United States, the foundations of imperial strength were being laid by the masters of industrial life—the traders, manufacturers, bankers, the organizers of trusts and of industrial combinations. These owners and directors of the nation's wealth have been the real builders of the American Empire.

As the United States has developed, the economic motives have come more and more to the surface, until no modern nation—not England herself—has such a record in the search for material possessions. The pursuit of wealth, in the United States, has been carried forward ruthlessly; brutally. "Anything to win" has been the motto. Managainst man, and group against group, they have struggled for gain,—first, in order to "get ahead;" then to accumulate the comforts and luxuries, and last of all, to possess the immense power that goes with the control of modern wealth.

The early history of the country presaged anything but this. The colonists were seeking to escape tyranny, to establish justice and to inaugurate liberty. Their promises were prophetic. Their early deeds put the world in their debt. Forward looking people everywhere thrilled at the mention of the name "America." Then came the discovery of the fabulous wealth of the new country; the pressure of the growing stream of immigrants; the heaping up of riches; the rapacious search after more! more! the desertion of the dearest principles of America's early promise, and the transcribing of another story of "economic determinism."

Until very recent times the American people continued to talk of political affairs as though they were the matters of chief public concern. The recent growth and concentration of economic power have showed plainly, however, that America was destined to play her greatest rôle on the economic field. Capable men therefore ceased to go into politics and instead turned their energies into the whirl of business, where they received a training that made them capable of handling affairs of the greatest intricacy and magnitude.

The development of American industry, during the hundred years that began with the War of 1812, led inevitably to the unification of business control in the hands of a small group of wealth owners.

"Every man for himself" was the principle that the theorists of the eighteenth century bequeathed to the industrial pioneers of the nineteenth. The philosophy of individualism fitted well with the temperament and experience of the English speaking peoples; the practice ofindividualism under the formula "Every man for himself" seemed a divine ordination for the benefit of the new industry.

The eager American population adopted the slogan with enthusiasm. "Every man for himself" was the essence of their frontier lives; it was the breath of the wilderness.

But the idea failed in practice. Despite the assurances of its champions that individualism was necessary to preserve initiative and that progress was impossible without it, like many another principle—fine sounding in theory, it broke down in the application.

The first struggle that confronted the ambitious conqueror of the new world was the struggle with nature. Her stores were abundant, but they must be prepared for human use. Timber must be sawed; soil tilled; fish caught; coal mined; iron smelted; gold extracted. Rivers must be bridged; mountains spanned; lines of communication maintained. The continent was a vast storehouse of riches—potential riches. Before they could be made of actual use, however, the hand of man must transform them and transport them.

These necessary industrial processes were impossible under the "every man for himself" formula. Here was a vast continent, with boundless opportunities for supplying the necessaries and comforts of life—provided men were willing to come together; divide up the work; specialize; and exchange products.

Coöperation—alone—could conquer nature. The basis of this coöperation proved to be the machine. Its means was the system of production and transportation built upon the use of steam, electricity, gas, and labor saving appliances.

When the United States was discovered, the shuttle was thrown by hand; the hammer was wielded by human arm; the mill-stones were turned by wind and water; the boxes and bales were carried by pack-animals or in sailing vessels,—these processes of production and transportation wereconducted in practically the same way as in the time of Pharaoh or of Alexander the Great. A series of discoveries and inventions, made in England between 1735 and 1784, substituted the machine for the tool; the power of steam for the power of wind, water or human muscle; and set up the factory to produce, and the railroad and the steamboat to transport the factory product.

American industry, up to 1812, was still conducted on the old, individualistic lines. Factories were little known. Men worked singly, or by twos and threes in sheds or workrooms adjoining their homes. The people lived in small villages or on scattered farms. Within the century American industry was transformed. Production shifted to the factory; about the factory grew up the industrial city in which lived the tens or hundreds of thousands of factory workers and their families.

The machine made a new society. The artisan could not compete with the products of the machine. The home workshop disappeared, and in its place rose the factory, with its tens, its hundreds and its thousands of operatives.

Under the modern system of machine production, each person has his particular duty to perform. Each depends, for the success of his service, upon that performed by thousands of others.

All modern industry is organized on the principle of coöperation, division of labor, and specialization. Each has his task, and unless each task is performed the entire system breaks down.

Never were the various branches of the military service more completely dependent upon each other than are the various departments of modern economic life. No man works alone. All are associated more or less intimately with the activities of thousands and millions of their fellows, until the failure of one is the failure of all, and the success of one is the success of all.

Such a development could have only one possible result,—people who worked together must live together.Scattered villages gave place to industrial towns and cities. People were compelled to coöperate in their lives as well as in their labor.

The theory under which the new industrial society began its operations was "every man for himself." The development of the system has made every man dependent upon his fellows. The principle demanded an extreme individualism. The practice has created a vast network of inter-relations, that leads the cotton spinner of Massachusetts to eat the meat prepared by the packing-house operative in Omaha, while the pottery of Trenton and the clothing of New York are sent to the Yukon in exchange for fish and to the Golden Gate for fruit. Inside as well as outside the nation, the world is united by the strong hands of economic necessity. None can live to himself, alone. Each depends upon the labor of myriads whom he has never seen and of whom he has never heard. Whether we will or no, they are his brothers-in-labor—united in the Atlas fellowship of those who carry the world upon their shoulders.

The theory of "every man for himself" failed. The practical exigencies involved in subjugating a continent and wresting from nature the means of livelihood made it necessary to introduce the opposite principle,—"In Union there is strength; coöperation achieves all things."

The technical difficulties involved in the mechanical production of wealth compelled even the individualists to work together. The requirements of industrial organization drove them in the same direction.

The first great problem before the early Americans was the conquest of nature. To this problem the machine was the answer. The second problem was the building of an organization capable of handling the new mechanism of production—an organization large enough, elastic enough,stable enough and durable enough—to this problem the corporation was the answer.

The machine produced the goods. The corporation directed the production, marketed the products and financed both operations.

The corporation, as a means of organizing and directing business enterprise is a product of the last hundred years. A century ago the business of the United States was carried on by individuals, partnerships, and a few joint stock companies. At the time of the last Census, more than four-fifths of the manufactured products were turned out under corporate direction; most of the important mining enterprises were corporate, and the railroads, public utilities, banks and insurance companies were virtually all under the corporate form of organization. Thus the passage of a century has witnessed a complete revolution in the form of organizing and directing business enterprise.

The corporation, as a form of business organization is immensely superior to individual management and to the partnership.

1. The corporation has perpetual life. In the eyes of the law, it is a person that lives for the term of its charter. Individuals die; partnerships are dissolved; but the corporation with its unbroken existence, possesses a continuity and a permanence that are impossible of attainment under the earlier forms of business organization.

2. Liability, under the corporation, is limited by the amount of the investment. The liability of an individual or a partner engaged in business was as great as his ability to pay. The investor in a corporation cannot lose a sum larger than that represented by his investment.

3. The corporation, through the issuing of stocks and bonds, makes it possible to subdivide the total amount invested in one enterprise into many small units.[37]Thesechances for small investment mean that a large number of persons may join in subscribing the capital for a business enterprise. They also mean that one well-to-do person may invest his wealth in a score or a hundred enterprises, thus reducing the risk of heavy losses to a minimum.

4. The corporation is not, as were the earlier forms of organization, necessarily a "one man" concern. Many corporations have upon their boards of directors the leading business men, merchants, bankers and financiers. In this way, the investing public has the assurance that the enterprise will be conducted along business lines, while the business men on the board have an opportunity to get in on the "ground floor."

The corporation has a permanence, a stability, and a breadth of financial support that are quite impossible in the case of the private venture or of the partnership. It does for business organization what the machine did for production.

The corporation came into favor at a time when business was expanding rapidly. Surplus was growing. Wealth and capital were accumulating. Industrial units were increasing in size. It was necessary to find some means by which the surplus wealth in the hands of many individuals could be brought together, large sums of capital concentrated under one unified control, the investments, thus secured, safeguarded against untoward losses, and the business conservatively and efficiently directed. The corporation was the answer to these needs.

"United we stand" proved to be as true of organizers and investors as it was of producers. The corporation was the common denominator of people with various industrial and financial interests.

The corporation played another rôle of vital consequence. It enabled the banker to dominate the business world. Heretofore, the banker had dealt largely with exchange. The industrial leader was his equal if not his superior. Theorganization of the corporation put the supreme power in the hands of the banker, who as the intermediary between investor and producer, held the purse strings.

The early American enterprisers—the pioneers—began a single-handed struggle with nature. Necessity forced them to coöperate. They established a new industry. The factory brought them together. They organized their system of industrial direction and control. The corporation united them. They turned on one another in mortal combat, and the frightfulness of their losses forced them to join hands.

The business men of the late nineteenth century had been nurtured upon the idea of competition. "Every man for himself and the devil take the hindermost" summed up their philosophy. Each person who entered the business arena was met by an array of savage competitors whose motto was "Victory or Death." In the struggle that followed, most of them suffered death.

Capitalist set himself up against capitalist in bitter strife. The railroads gouged the farmers, the manufacturers and the merchants and fought one another. The big business organizations drove the little man to the wall and then attacked their larger rivals. It was a fight to the finish with no quarter asked or given.

The "finish" came with periodic regularity in the seventies, the eighties and the nineties. The number of commercial failures in 1875 was double the number of 1872. The number of failures in 1878 was over three times that of 1871. The same thing happened in the eighties. The liabilities of concerns failing in 1884 were nearly four times the liabilities of those failing in 1880. The climax came in the nineties, after a period of comparative prosperity. Hard times began in 1893. Demand dropped off. Production decreased. Unemployment was widespread. Wagesfell. Prices went down, down, under bitter competitive selling, to touch rock bottom in 1896. Business concerns continued to fight one another, though both were going to the wall. Weakened by the struggle, unable to meet the competitive price cutting that was all but the universal business practice of the time, thousands of business houses closed their doors. The effect was cumulative; the fabric of credit, broken at one point, was weakened correspondingly in other places and the guilty and the innocent were alike plunged into the morass of bankruptcy.

The destruction wrought in the business world by the panic of 1893 was enormous. The number of commercial failures for 1893 jumped to 15,242. The amount of liabilities involved in these failures was $346,780,000. This catastrophe, coming as it did so close upon the heels of the panics that had immediately preceded it, could not fail to teach its lesson. Competition was not the life, but the death of trade. "Every man for himself" as a policy applied in the business world, led most of those engaged in the struggle over the brink to destruction. There was but one way out—through united action.

The period between 1897 and 1902 was one of feverish activity directed to coördinating the affairs of the business world. Trusts were formed in all of the important branches of industry and trade. The public looked upon the trust as a means of picking pockets through trade conspiracies and the boosting of prices. The Sherman Anti-Trust Law had been passed on that assumption. In reality, the trusts were organized by far seeing men who realized that competition was wasteful in practice and unsound in theory. The idea that the failure of one bank or shoe factory was of advantage to other banks and shoe factories, had not stood the test of experience. The tragedies of the nineties had showed conclusively that an injury to one part of the commercial fabric was an injury to all of its parts.

The generation of business men trained since 1900 has had no illusions about competition. Rather, it has had as its object the successful combination of various forms ofbusiness enterprise into ever larger units. First, there was the uniting of like industries;—cotton mills were linked with cotton mills, mines with mines. Then came the integration of industry—the concentration under one control of all of the steps in the industrial process from the raw material to the finished product,—iron mines, coal mines, blast furnaces, converters, and rail mills united in one organization to take the raw material from the ground and to turn out the finished steel product. Last of all there was the union of unlike industries,—the control, by one group of interests, of as many and as varied activities as could be brought together and operated at a profit. The lengths to which business men have gone in combining various industries is well shown by the recent investigation of the meat packing industry. In the course of that investigation, the Federal Trade Commission was able to show that the five great packers (Wilson, Armour, Swift, Morris and Cudahy) were directly affiliated with 108 business enterprises, including 12 rendering companies; 18 stockyard companies; 8 terminal railway companies; 9 manufacturers of packers' machinery and supplies; 6 cattle loan companies; 4 public service corporations; 18 banks, and a number of miscellaneous companies, and that they controlled 2000 food products not immediately related to the packing industry.[38]

Business is consolidated because consolidation pays—not primarily, through the increase of prices, but through the greater stability, the lessened costs, and the growing security that has accompanied the abolition of competition.

Again the forces of social organization have triumphed in the face of an almost universal opposition. American business men practiced competition until they found that coöperation was the only possible means of conducting large affairs. Theory advised, "Compete"! Experience warned, "Combine"! Business men—like all other practical people—accepted the dictates of experience as theonly sound basis for procedure. Their combination solidified their ranks, preparing them to take their places in a closely knit, dominant class, with clearly marked interests, and a strong feeling of class consciousness and solidarity.

It was in the consummation of these combinations, integrations and consolidations that the investment banker came into his own as the keystone in the modern industrial arch.

The investment banker is the directing and coördinating force in the modern business world. The necessities of factory production demanding great outlays of capital; the immense financial requirements of corporations; the consolidation of business ventures on a huge scale; the broadened use of corporate securities as investments—all brought the investment banker into the foreground.

Before the Spanish War, the investment banker financed the trusts. After the war he was entrusted with the vast surpluses which the concentration of business control had placed in a few hands. Business consolidation had given the banker position. The control of the surplus brought him power. Henceforth, all who wished access to the world of great industrial and commercial affairs must knock at his door.

This concentration of economic control in the hands of a relatively small number of investment bankers has been referred to frequently as the "Money Trust."

Investment banking monopoly, or as it is sometimes called, the "Money Trust" was examined in detail by the Pujo Committee of the House of Representatives, which presented a summary of its report on February 28, 1913. The committee placed, at the center of its diagram of financial power, J. P. Morgan & Co., the National City Bank, the First National Bank, the Guaranty Trust Co., and the Bankers Trust Co., all of New York. The report refers to Lee, Higginson & Co., of Boston and New York;to Kidder, Peabody & Co., of Boston and New York, and to Kuhn, Loeb & Co., of New York, together with the Morgan affiliations, as being "the most active agents in forwarding and bringing about the concentration of control of money and credit" (p. 56).

The methods by which this control was effected are classed by the Committee under five heads:—

1. "Through consolidations of competitive or potentially competitive banks and trust companies which consolidations in turn have recently been brought under sympathetic management" (p. 56).

2. Through the purchase by the same interests of the stock of competitive institutions.

3. Through interlocking directorates.

4. "Through the influence which the more powerful banking houses, banks, and trust companies have secured in the management of insurance companies, railroads, producing and trading corporations and public utility corporations, by means of stock holdings, voting trusts, fiscal agency contracts, or representation upon their boards of directors, or through supplying the money requirements of railway, industrial, and public utility corporations and thereby being enabled to participate in the determination of their financial and business policies" (p. 56).

5. "Through partnership or joint account arrangements between a few of the leading banking houses, banks, and trust companies in the purchase of security issues of the great interstate corporations, accompanied by understandings of recent growth—sometimes called 'banking ethics'—which have had the effect of effectually destroying competition between such banking houses, banks, and trust companies in the struggle for business or in the purchase and sale of large issues of such securities" (p. 56).

Morgan & Co., the First National Bank, the National City Bank, the Bankers Trust Co., and the Guaranty TrustCo., which were all closely affiliated, had extended their control until they held,—

118 directorships in 34 banks with combined resources of $2,679,000,000.30 directorships in 10 insurance companies with total assets of $2,293,000,000.105 directorships in 32 transportation systems having a total capital of $11,784,000,000.63 directorships in 24 producing and trading companies having a total capitalization of $3,339,000,000.25 directorships in 12 public utility corporations with a total capitalization of $2,150,000,000.

118 directorships in 34 banks with combined resources of $2,679,000,000.

30 directorships in 10 insurance companies with total assets of $2,293,000,000.

105 directorships in 32 transportation systems having a total capital of $11,784,000,000.

63 directorships in 24 producing and trading companies having a total capitalization of $3,339,000,000.

25 directorships in 12 public utility corporations with a total capitalization of $2,150,000,000.

The investment banker had become, what he was ultimately bound to be, the center of the system built upon the century-long struggle to control the wealth of the continent in the interest of the favored few who happened to own the choicest natural gifts.

The struggle for wealth and power, actively waged among the business men of the United States for more than a century, has thus by a process of elimination, subordination and survival, placed a few small groups of strong men in a position of immense economic power. The growth of surplus and its importance in the world of affairs has made the investment banker the logical center of this business leadership. He, with his immediate associates, directs and controls the affairs of the economic world.

The spirit of competition ruled the American business world at the beginning of the last century, the forces of combination dominated at its close. The new order was the product of necessity, not of choice. The life of the frontier had ingrained in men an individualism that chafedunder the restraints of combination. It was the compelling forces of impending calamity and the opportunity for greater economic advantage—not the traditions or accepted standards of the business world—that led to the establishment of the centralized wealth power. American business interests were driven together by the battering of economic loss and lured by the hope of greater economic gains.

Years of struggle and experience, by converting a scattered, individualistic wealth owning class into a highly organized, closely knit, homogeneous group with its common interests in the development of industry and the safeguarding of property rights, have brought unity and power to the business world.

Individually the members of the wealth-controlling class have learned that "in union there is strength"; collectively they are gripped by the "cohesion of wealth"—the class conscious instinct of an associated group of human beings who have much to gain and everything to lose.

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