He then began as follows:
“The close of the 19th century, was remarkable as being a turning point in American affairs and the beginning of a new era. Previous to that time the United States had been a nation very much to itself. It had kept aloof from the politics of the rest of the world and had no policy in regard to it except to prohibit European nations from meddling in affairs of the western hemisphere or acquiring any further possessions in it. But before the century was out public opinion was accustoming itself to the idea that the foremost nation of the earth ought to take a more active andinfluential part in the general affairs of the world. The first thing designed to give weight to the influence of the country was the development of a powerful navy. It is power that inspires the consideration and respect of others. It was a favorite idea with many of the leaders of political thought that arbitration might become the last resort in the settlement of international disputes instead of the ancient plan, by which the contestants temporarily laid aside such civilization as they might have acquired, reduced themselves back to barbarism in murdering each other, destroying property, plundering commerce, and often spending more money several times over than the matter in dispute was worth. But even these statesmen saw that a plan favoring peace would come with much more force and authority from a nation having power to enforce it by war, and so all were glad to see the great navy built.
“As the public lands became transferred to private ownership and prices steadily went up, attention was turned to the sparsely settled territories of neighboring countries, and the elements of a great party in favor of their annexation were developed in the ranks of all the parties, at the same time the theories of the land tax advocates received additional attention, especially from mechanics and the manufacturing classes. They reasoned that the increase in the value of land ought to belong to the state instead of to the people who had bought the land, and if the state had that increase, the interest on it would support the government and taxes could be abolished. Theenormous amounts raised by taxation came at last from labor, they said, part of it in the way of tariffs on goods imported and consumed by workers and part by direct taxation on the products of labor and even on the means and appliances—tools shops and factories—by which wealth was produced. This mode of taxation they said was, as far as it went, a ban placed upon industry and a penalty upon the creation of wealth. They proposed therefore to take all the taxes off from the products of labor and seize the rents of land or so much of them as might be required for the support of the government, in that way getting the interest on the increase in the value of the land that had taken place since it passed into private hands and which they denominated “unearned increment.” This agitation began in your day—you must remember it.”
The expression “in your day” had at first a singular effect on me. I had quite unconsciously but thoroughly entered into the spirit of the Professor’s method and had gone forward with him to the year 2,000 and followed closely his discussion of things that happened 100 years ago—from that standpoint. The sudden realization that my day had gone by, was startling—“Yes,” I said to myself, “that is so, ‘my day’ has gone by, my existence has been continued over a space during which I have not lived. Memory has nothing to say of it. It is as if I had slept it away. Well if one is asleep, one day to him, is as 1,000 years—aye, eternity!
“What can hurt him who is asleep? Nothing, unless it wakes him up.”
All this flashed through my brain in an instant and then my attention suddenly returned to what the Professor had been saying. “Remember it? Yes I remember it well. In my day there was a society in Minneapolis called, I think the Single Tax League, devoted to this agitation. Their ideas were those of Henry George, as set forth by him in his able book called: ‘Progress and Poverty.’”
“Yes, well, to the labors of this persistent and aggressive society are to be attributed in a great measure, the radical change in ideas of political economy that soon came about. After much discussion, petitioning of the legislature, agitation in the newspapers, the organisation of auxiliary societies, the presentation of the subject in labor associations etc., the working classes in the cities and even the landless laborers on farms were persuaded that their interests lay in the abolition of all taxes, except those on land. It was not long before these classes constituted a majority by reason of the rapid growth of the cities. As soon as they found themselves in power, they proceeded to get the constitution of the state amended to enable the legislature to release all classes from taxation except those who possessed land. In your day, about half the taxes had been raised from land and the other half from the buildings and improvements on the land and from personal property. It was estimated that relieving the latter half, would simply double the tax on land and so make it about four per cent on its valuation. It was argued thatthe farmer would experience no change at all, because the additional tax put upon his land would no more than equal that taken off his houses, barns, stock and tools. The only persons who would lose by the single tax would be the speculators, who held unimproved land and were waiting for the labor and improvements of their neighbors to raise its value, so they could sell out and get an increase in value which they had done nothing to earn. As these people were looked upon as a sort of parasites, they were not regarded as having any rights in the matter that need to be respected. All that was necessary in their case was simply to out-vote them. The benefits of the new system it was expected would fall upon the industrial classes especially and directly, but would be shared by all. Manufacturing industries relieved of the repression of taxation, would bound forward like a spring suddenly released. Nothing would any longer artificially limit the production of wealth and the great stimulation it would receive would result in making even articles of luxury so common as to place them within the reach of everyone.
“The land speculating class, while admitting that the rest of the people would be benefitted by the single tax, claimed that it would be done at their expense and unjustly. They had bought the land and paid for it and the state had got the money. With this money, and the interest on it, the state had built the university, the state capitol, the penitentiary, the charitable institutions and innumerable school houses. In other words, they had given the state the interest on their money and taken inlieu of it the anticipated increase in the value of the land. Moreover, they had paid taxes on the land as they would have done on the money, if they had retained it. And so they maintained that the increment in the value of the land was not unearned. It was simply the interest on their money which would have brought a like profit if it had been invested in mining manufacturing, banking or steamboating. They admitted that in some cases this profit had been greater than that derived from other sorts of investments, but in many cases it was far less. They said the single tax meant a confiscation of the land and the resumption of it by the state that had once sold it; because it would very soon, if not from the first, take the entire amount of the rent which would make the fee of the land worthless to the owner. It would no longer be possible to mortgage it or to sell it and the owner would lose his investment and be reduced to a mere tenant, who could hold it only as long as he paid the rent to the state the same as any other tenant, and if it were unimproved, the owner would have no inducement to pay the rent and would simply abandon it. In view of that, they said, that the state should at least pay back the purchase money it had received with interest at the rates prevalent during the time that she had possessed it, or failing that, she should postpone so radical a change or make it gradual by annually increasing the assessment upon land and diminishing it upon other property, and thus consume at least thirty years in making the transfer complete.
“The impatience of the tax reformers would notallow any such postponement as this. They said they did not propose to wait a whole generation to have this wrong made right.
“They said the state never had any right to sell the land in the first place. The people’s ownership therein was inalienable and any pretended sale was void the same as the sale of the property of a minor for taxes, or the sale of a stolen horse. The real owner had a right to take his property wherever he could find it, without compensation to the pretended owner who happened to be in possession as a party to a fraudulent sale. So they held that the people could take possession of their land if they saw fit, but they agreed that it would be better policy, to leave the claimants in possession and merely take all the rents except a small percentage to be left in the hands of the claimants as compensation to them for collecting and paying over said rents to the state. These rents moreover were to be called taxes instead of rents.
“The majority having without serious effort brought about a reconciliation between their logic and their interests, proceeded to put their conclusions into operation. The constitution of Minnesota was amended in due course and the new plan put into execution with much growling and protest on the part of the land owners, but without violence or serious trouble, all the rest of the country looking on with great curiosity.
“The effects very soon began to show themselves. Nearly the whole tax being removed from shops and factories, profits and manufacturing became at once very considerably enhanced. This inducednumbers of manufacturers to emigrate from other states and from Europe to Minnesota, and so the population and wealth of the cities increased with unexampled rapidity. By the year 1925, the population of Minneapolis had reached 1,780,000 and that of St. Paul, was over half as great.”
“Then,” said I, “the cities must have grown solidly together and formed a continuous town.”
“Not at all,” he replied, “University and Como avenues, became continuous streets, with good residences. But both cities became compactly built up with tall and substantial buildings for offices, dwellings and factories. Nearly everybody that paid rent lived in flats. These buildings were ten to 16 stories high, fire proof, furnished with elevators, electric heat and light. In connection with many of them, were cook shops, in which the tenants could get their provisions cooked at cheaper rates than they could do it themselves, and save their own time for other employment. A great many women who in your day, would have been kept at home all day to cook the meals for a small family were enabled to seek profitable employment in various kinds of shops factories and offices, or had their time for recreation or leisure.
“Cooking became a regular profession and people no longer cooked for themselves to any greater extent than they doctored themselves. Kindergartens were likewise attached to these great co-operative dwellings, in which those too young to go to school, were looked after in the absence of their parents.
“As mechanics and people of moderate incomescould live not only cheaper, but far better in these buildings, than in separate homes at long distances from the business and industrial centers, as well as enjoying far better opportunities for society amusement etc., they soon came to adopt that sort of life exclusively and separate residences continued to be maintained only by the rich. The growth of the cities continued for many years to be confined to the large spaces that in your day were left vacant far within the corporate limits. People owning such property, were anxious to get it improved so as to get their taxes back in the rents of buildings. Those owing suburban lands and lots soon found that it would be useless to improve them as people would not occupy them till all the more central lots were occupied. Much dispute arose as to the way in which such property should be taxed. At first the assessments of valuation on the lands were as high, as they had been before the adoption of the single tax plan. But it was soon found that the land no longer possessed such value. The value had been prospective or speculative, and people had paid as tax far more than the land would rent for, and held it and paid taxes on it for what it was expected to bring in the future. But now so much of the speculative value was taken out of this suburban land that the owners refused to pay the taxes in many cases, and nobody would buy it at the tax sales because the tax was more than the rent for agricultural purposes, and to buy for the future was like leasing property and paying rent on it for some years before occupying it.”
“But,” I interposed, “the single tax people in Minneapolis disclaimed the intention of taking a full rental of the land in the way of taxes, but only enough to support the government, and thought that four per cent of its value would do that. As money was then worth 6 per cent and rents would average about the same the owner would clear 2 per cent. This they said would be sufficient to make the owner retain his interest in the property.”
“Yes,” he answered, “that was their notion, but the events turned out very differently.
“When the tax was two per cent and the rents, six per cent, the owner got clear the equivalent of six per cent on two thirds of the value of the property. But when the tax was increased to 4 per cent, he got the equivalent of six per cent on only one third of it. Thus his net income being reduced to one-half of what it was, the selling and buying value of the land was likewise reduced one-half. This made no difference to the tenant paying rent, he still had to pay the same, but, two-thirds instead of one-third now went to the state. But within the corporate limits of Minneapolis, St. Paul and other cities, there was a great amount of unused land, that produced no rent. This unused land constituted about three-fourths of the total areas of those cities and represented one-third of their total land valuation. The very first assessment of the new tax was the signal for the reduction in the value of all this property, fifty per cent or more at once, and every acre was immediately thrown upon the market. By the time of the nextassessment the assessors were obliged to recognize this depreciation, and so all this land was returned at half or less than half of what it had been. The loss of tax money thus sustained had to be made up by a higher rate, and the second levy was placed at 5 per cent instead of 4 per cent. This worked a further reduction in the values of unoccupied lots and by the time of the third assessment these lots were estimated as having only the value of farm or garden lands; and so it became necessary to still further increase the rate of taxation, which was now established at six per cent.
“In the meantime it began to be discovered that the owners of improved lots had lost all the money they had invested in them. A certain person who had bought a lot on Nicollet ave., for $40,000 and erected a building on it at a cost of $40,000 more, did not for two or three years discover any great difference in his tax, because although it was transferred from the building to the lot the whole amount was nearly the same. But after the tax assessment reached six per cent, the building was burned down just after the expiration of the insurance policy. The gentleman thought he had lost half of his property by neglecting the insurance, but in reality, he had lost it about all. He could not mortgage the lot for enough to build a house, nor even for enough to pay one year’s tax. Nor could he sell it for one-tenth of what he gave. It was his only on condition that he continued to pay a full rent for it and this he could not do unless he could rebuild. Even if he rebuilt, his net income would be only the interest on the costof the building, he would get no return for the lot, or at best, but little. Thus the owner found himself no better off than a lease holder. He simply had the first right to pay the rent for his lot in the way of tax. And so it came about that if an owner could not immediately build something on his lot that he could rent to advantage, he simply defaulted on his taxes. The selling of vacant property for taxes became impossible except those lots wanted for immediate improvement, and not even those if several years’ taxes were in arrears. So the collection of back taxes became impossible on all vacant property.
“The effect of the single tax on farming land was much the same. Not over seven-tenths of the arable land in the state was under actual cultivation. Large tracts were held by nonresident speculators. When the increased tax came to be levied, these lands were all thrown on the market. The depreciation in prices of these lands at first brought a considerable access of population, but this soon became checked, because the farmers found that on account of the loss of taxes on these lands, the rates had to be increased and the additional burden fell on the resident farmers. These in almost all cases owned considerable land they did not cultivate, but were saving for speculation or for their children. Often a farmer owing 160 acres, cultivated, but 40. As the burdens fell heavier on this class, they commenced throwing up the uncultivated parts of their farms, so that from these various causes in a few years almost three-fourths of the arable land was without claimants,and of course yielded no taxes. The farmers, then found themselves greatly reduced in wealth, the lands they had counted on as belonging to them, now being thrown out as commons; and even for the acres they cultivated they paid more in the way of taxes than would have been considered a fair rent in Wisconsin or Iowa. Their net wealth was in fact reduced to their buildings, live stock, and tools.
“The lands themselves, they could neither sell nor mortgage. It was not practicable under these conditions to compete with the farmers in adjoining states, and so in a few years, the markets of Minneapolis and St. Paul came to be supplied chiefly from adjoining states. Many of the farmers ruined and disgusted, gathered up what they could and left the state. Others moved into the cities, which were booming, and went into other business.
“There now began to come into the rural districts of the state, two classes of settlers or rather occupants of a different character. The first of these were drovers with herds of cattle from adjoining states. They drove their cattle about from place to place, over the abandoned lands, but never settled anywhere and as cattle were not taxable, and they claimed no land, they paid no taxes. They also escaped taxes at their legitimate homes in other states, because their cattle were conveniently away at assessing time.
“The other class of new occupants that came in, were poor squatters. These brought little or no capital, and no enterprise or ambition beyond enough to supply the essentials of existence. Afamily of this kind would alight on an unoccupied spot, construct a cabin or a dug-out, cultivate four or five acres of grain and potatoes, and eke out the rest of a living with a few cows and pigs. Little or no tax could be collected from them, and of course little or no public improvements, such as schools, bridges, roads etc., were accomplished where they squatted in any considerable force. In short, it gradually came about that the inhabitants of the rural districts did but little more than sustain themselves. And the state ceased almost entirely to be an exporter of agricultural products. The cities however suffered nothing on this account. They got their supplies largely from the neighboring states, and they became large producers and exporters of manufactured articles, competing in that respect with some of the famous manufacturing towns of Europe; and they became enormously wealthy.
“The question of taxation was however always a difficult one. The lands near the centers of the towns of course were the most valuable. But lands were never sold—only the buildings—and any given lot came to be valued by the kind of building and the amount of business on it. So assessments finally had to be fixed by an arbitrary rule—the rates decreasing at a fixed ratio according to distance from the center of greatest business activity. The rule had a tendency to verify itself by compelling the most valuable business to be done in the places subject to the highest rates, since the less valuable could not afford it. By this rule the rates in the suburbs were low, and since the buildings paid notax, it often happened that a millionaire living in a $100,000 house paid little, if any more than a laborer living in a $300 shanty. But in the course of time it came to pass that notwithstanding the general prosperity, there were many who were wretchedly poor, made so by bad management, extravagance, indolence, ill health, dissipated habits, disappointment and ill luck. These became squatters in the vacant lands around the outskirts of the cities. They paid no rent and no taxes. It was found that it was useless to evict them as nobody could be found with money who could gain anything by paying their taxes, as long as there was plenty of unoccupied land. There also came to be a positive sentiment against eviction of the poor and so this non tax-paying class constantly increased and finally included many who were able to pay, but who shirked out, satisfying their consciences by the plea that the government had no right to discriminate, and exempt some and not others. These ideas expanded and finally crystallized into a political creed to the effect that a poor man ought not to be taxed for a spot on which to exist and bring up his family. Thus it came about that neither the very poor; nor the very rich whose property was chiefly in fine buildings, stocks, bonds and other personal effects, paid any considerable amount of the taxes.
“The taxes were paid by such of the farmers as had still too valuable improvements to justify their abandonment, and by the mechanics and merchants whose business and whose residenceswere packed in tall buildings on small areas of ground in the cities.
“The great stimulation of the growth of the Minnesota cities, and their apparently great prosperity, attracted the attention of the whole world and aroused the spirit of emulation in the cities of the United States and of the northern states in particular. In most of the northern states, the city populations controlled the politics of the states, and there developed a violent mania for following the example of Minnesota. There was much opposition from the conservative classes, and the people were warned that a policy that might benefit a small section of the nation, was not necessarily good for all. But it was held by many to be simply a measure of self defense for cities to compel their states to adopt the single tax, since those where this was done, not merely flourished, but flourished at the expense of those who remained under the old method. For they attracted from them, their manufacturing establishments and this was naturally followed by their wholesale trade. The result was that in a few years, all the northern states and several of the southern states adopted the single tax. The effect was not so marked in those that came into the plan among the last; but the first experienced much the same stimulation and rapid growth that distinguished the Minnesota towns, so that in a few years the majority of the population had crowded into the cities. This effect was brought about by the action of two causes. The first cause was the superior attractions of the cities as places for profitable employment and asplaces for the enjoyment of life. The cities rapidly became socialistic in their policy, and constantly extended the scope of the functions of the government. The municipality soon acquired the ownership of the lighting plants, the water works and street car lines. These were run at first as speculative enterprises, the cities selling light and water to private individuals, but the people soon demanded that these things should be free as the public libraries, schools, university and parks, were in your day. And this was gradually brought about, the cities furnishing at first so much water and so much light and so many street car rides free to each person, and at last taking off all limits, only making the citizen responsible for unreasonable waste. Then the populace demanded free amusements and entertainments and these were provided in the form of the concert, lecture, theater, circus etc. All these things cost money and the tax rates kept getting higher and higher. These were paid in the form of rents on the land, the buildings stood on and of course at once transferred to the rents paid by tenants for rooms, flats, shops, stores etc. Rents soon became higher than they had ever been known before the adoption of the single tax. To lighten these rents in the cities, it was now proposed to increase the rents of lands in the country.”
“The former owners of these lands had now been practically dispossessed. Many of them had gone to the cities and engaged in more profitable business than farming. Many who were mortgaged had been sold out, bankrupted and ruined, and had settled down into the condition of peasants. The lands were now regarded as the property of the state. This process of the transfer of the lands to the state went further in Minnesota than the other states, because she was the first to adopt the new plan of taxation. After the other states adopted it, the advantage their farmers had over those of Minnesota was lost. Rents under the name of taxes were levied, farming rendered unprofitable and the uncultivated portions of the land abandoned by their owners. The few southern states that did not go into this new plan could not reap much advantage from their position, because their products were different from those of the northern states and could not replace those whose cultivation was repressed.
“Agricultural products fell off to such an extent, that in a few years the United States ceased to be an exporter of them. The cities having gained control of the states, it came to be a political theorythat each state was a community, and that the lands abandoned or forfeited for taxes belonged to the Community and therefore came indirectly under the control of the cities. From this position it was an easy step to the idea that the taxes—or rents as they were designated—of the “people’s lands” might be spent where most beneficial to the majority, that is, in the cities. It was attempted to be pointed out by the more conservative that this was class legislation. But the radical progressives replied that it was in line with the theory of the single tax which was class legislation if anything could be. And they asserted that the adoption of the single tax carried with it an endorsement of the principle of class legislation when demanded by the interests of the majority. Whether their reasoning was sound or not they carried the day, and a great stride was taken toward the centralization of power and population. It now happened that when more money was wanted it was raised, not by increasing the rents of city lots, but those of farming lands, and after a time the principle revenues came to be derived from them. Although the exportation of grain, flour, beef etc., had practically ceased, still the people had to eat and their food had to be raised on the land. The business of farming gradually took on entirely new features. Large operators took large tracts on lease from the state at prices determined periodically by appraisement fixed in proportion to the needs of the state. Lands taken on these terms were guaranteed to be kept free from the competition of squatters, so that the lands remaining vacantwere cleared of squatters, or else the latter were restricted to a mere garden patch. Thus the country was no longer occupied by farmers residing on the lands with their families as in former times. The agricultural districts were inhabited only by a poor and thriftless class of peasants and during the summers by the employes of the large contract farmers who made their headquarters and resided with their families in the cities. In the winter, only such hands as were required to care for the stock remained in the country, the rest all flocking to the towns.
“One result of the increased rentals charged for the agricultural lands appears not to have been anticipated. That was the great rise in the cost of food. Of course the rents of the lands were simply added to the cost of the production of grain and other foods, and finally were paid by the consumer. It came to be seen after a time that the public revenues raised out of the agricultural lands were finally paid by all the people in proportion—not to their wealth or ability, but to their appetites and the amount they consumed—so that a laboring man with a vigorous appetite paid more to support the state than a dyspeptic millionaire. And a poor man’s family of six or eight ravenous offspring contributed many times as much as the scanty and sickly progeny of the exclusive aristocrat. It speedily became a cause of great dissatisfaction and disappointment when the poor and the working classes found out that the fine promises of the single tax had so far failed that instead of lightening their burdens it had increased them.And that the confiscation of the lands of the farmers instead of adding to the prosperity of the common people had increased the already plethoric wealth of the rich. A school of politicians now arose who declared that the taxation of land was the taxation of the poor man’s bread and butter and was all wrong. Instead of farming land paying the bulk of the taxes they said it ought not to pay any. Every facility and encouragement ought to be given for the production of cheap food. People ought not to be taxed on what they consume, but on what they save. Neither labor nor the laborer should be taxed, they should be made as free and unhampered as possible for the production of wealth. But when wealth was once produced then it should be taxed wherever found and a necessary portion of it taken as the revenue of the state. The laboring classes were in a mood to listen to this logic whether sound or not. The lands having passed out of private hands, however, there was no disposition to allow them to pass back to them again. And the new party advocated state superintendence of the lands and free occupancy by private individuals of such amounts as each could actually cultivate to advantage. As the population and demand for land increased, the amounts allotted to individuals was to be cut down proportionally, and a grade or standard of cultivation and quantity of production was to be exacted, and the state was to fix the prices at which the products were to be sold. Eventually it was proposed that the state should be the purchaser and distributor of these products so that speculationin them should be prevented. The advantage possessed by some on account of their nearness to market would be equalized by the state paying a less rate for their products than for those further away.
“Taxes for revenue were then to be levied upon every piece of personal property that could be found of every sort whatever including buildings. In the cities a graded rent for lots was to be assessed according to locality, beginning at zero in the vacant suburbs and increasing toward the center of greatest activity and demand. A thoroughness in assessment and the employment of methods that were called by their critics, “odiously inquisitorial,” were to be adopted, but the fact was the mass of the people were drifting rapidly toward socialism in their ideas, and they asserted that the “inquisitorial methods” were alright. They said, it was high time to know how much wealth people had and how they came by it, and that reluctance to tell on the part of the possessors of it indicated that either they had acquired it by questionable methods, or wished to avoid the fair responsibility, that its ownership entailed. They went further and declared it was high time that more scientific processes were discovered and put into practice for the equitable distribution of wealth. A thousand men contribute to the production of $1,000,000 of wealth, all of which is gobbled up in a few weeks or months by the scheming of a single “financier.” The board of directors of a railroad, a mining company or a manufacturing company, may issue to themselves certificates of watered stock for whichthey pay not a cent, and which represent wealth having no existence, but which they are in a position to compel the public to make good. A gang of speculators may get up a corner on wheat or cotton or stocks of some sort and artificially raise the price while they unload at the advanced rate thereby securing wealth they never earned. Combinations and trusts in oil or sugar, screws, nails, coal, whisky, gas-pipes or binding twine, arbitrarily advance the price of the articles whenever they want more money, and thus take as many thousands or millions from that patient ass, the public, as they see fit without a pretense of returning an equivalent. All these things the politicians of the new school declared must be stopped. They said people should not be allowed to secure wealth without in some way earning it, and if they had managed to secure it without rendering an equivalent for it, it would be no more than right to confiscate it for the benefit of the public at whose expense it must have been acquired. The party advocating these ideas rapidly came into power and proceeded to put their views into practice. It was found after much discussion and some experimenting that people would not work and do their best unless they were paid better for their best than for their worst. The experiment of making the state the buyer and wholesale seller of all articles that could be made the subjects of combines and trusts was found to work well. The state did not at first undertake to manufacture or produce anything, but monopolized its transfer from producer to consumer. For example the producers of anthracitecoal were required to sell their product to the government, and it was unlawful for them to sell to anyone else. The price of mining, handling and transportation and the selling rate were each fixed by a board of arbitration and remained fixed till the conditions changed. There was no such thing as striking among the hands, for if they were dissatisfied all they could do was to leave and allow others to take their places. If no others were willing to do the work it was an indication that the rate was too low and the board of arbitration raised it. It had been settled before this that the mine owner had no royalty rights. These were regarded as the property of the state. So if the mine owners attempted to combine to raise the price to the state or from perverseness refused to furnish the amount required their properties were placed by the state in the hands of receivers to be worked till such time as the matters in dispute were regulated.
“Other mining industries, and the production of coal-oil, sugar and other articles capable of control by trusts, were regulated and handled in similar manner by the state. As to railroad, telegraph and express properties, they all passed into direct government ownership before the middle of the twentieth century.”
The Professor pausing here for a moment to shift his profile, I ventured to say that I had in my day anticipated this move on the part of the government, but many people had been unable to see how it could be carried into effect without simple confiscation, because they said it would bankruptthe country to buy the roads etc., and pay their value for them.
“There was no difficulty at all in the matter,” the Professor continued, “the owners of the roads received for them all they were worth, and yet they did not cost the country a dollar. First the government had the roads appraised on a capitalized basis, in which account was taken of the actual value in cash of the property as it stood regardless of the amount of stock and bonds outstanding against it. Next, account was taken of its power to earn money.
“The government now provided for the issue of consolidated railway bonds guaranteed by the government. These all bore the same rate of interest, three per cent payable annually. They were in five series, due in 20, 40, 60, 80 and 100 years respectively, an equal amount of each. They were in denominations of $20.00, $50.00, $100.00, and $1,000, with coupons for the interest attached, the lower denominations payable at the earlier dates.
“These bonds were issued in exchange for the railway securities on the following terms. Bonds at their face value were allotted to each road to the amount of its estimated cash value, plus its net earnings for that one year next preceding the passage of the act of purchase. Many roads earned only enough to pay their running expenses, and these received only the amount of their appraised valuation. For the purpose of the distribution of the allotment of the purchase bonds to the holders of the railway securities in any given case, account was taken of the market quotations of theseveral sorts of stocks and bonds at a date one year previous to the act of purchase, and the value of each person’s holding thus ascertained. Then the purchase bonds were distributed to the individuals pro rata to these values. When seven-tenths in interest of the proprietors of any road accepted the terms of the government purchase the other three-tenths were obliged to accede or lose their interests.
“A few roads held out for a short time, but after the ice was broken they all at once became eager to transfer their properties to the government. The railway consols at once became popular and were rated above par, the government guaranty making them in reality national bonds. A new cabinet office—secretary of transportation—was created. All the employes on the roads from the superintendents of transportation down, held their places under civil service rules, and this branch of the administration never came under political conditions, but was managed upon strictly business principles like the post office. The income from the roads, from the very first year not only paid the interest on the railroad consols, but yielded a handsome surplus that was annually laid aside in safe investments to serve as a sinking fund for the redemption and cancellation of the bonds as they should mature. Before the end of the twentieth century one-half of these bonds had been retired and great reductions had been made in passenger and freight rates and the service had vastly improved over what it was in your day. Strikes, freight and passenger rate wars with their terrificwaste and demoralization of business were things of the long past. Many other leaks of railway earnings were stopped when the roads became the property of the government. Many small pieces of road became consolidated under one superintendence; hordes of directors, presidents, vice presidents, general managers, general agents, solicitors of business and other officials were dispensed with; many of whom under the former regime, not only drew salaries for supposed services, but absorbed besides in various mysterious ways, vast wealth that of right should have gone to the stockholders.
(The above figures I have worked out to accord with the Professor’s suggestions—as he did not give details. I have put the average value of the roads at $45,000 per mile which is much more than it would cost to replace them.)
“I suppose,” said I, “that these bonds, especially those of the lower denominations would circulate to some extent as currency.”
“They did, and those of the $1,000 denomination were used as the basis of paper currency. But now at the close of the twentieth century over half of these bonds have been retired and the currency based upon them withdrawn. The railroad, telegraph, transportation, express, and car companies have all disappeared and the entire business is conducted by the general government. All of the roads will soon have been entirely paid for and the rates for the transportation of passengers, goods and messages are reduced almost to actual cost of the service including wear and tear. You would doubtless be surprised by the schedule of prices. For example, passenger rates for ten miles or under three cents, 20 miles five cents, 50 miles ten cents, 100 miles fifteen cents, 200 miles 25 cents, 500 miles 50 cents and greater distances at the same rate provided it is a continuous ride in the same train.”
“In my time,” said I, “electricity was being introduced as the motive power on railways. Did it prove successful?”
“It did, eminently so, and entirely superseded steam locomotion, although steam stationary engines were used principally, throughout the century.But when we come to look forward into the twenty-first century, we shall find some remarkable changes. But we have not reached that yet.”
“I am curious to know how the currency question was settled. After the retirement of the railway consols, I suppose they fell back on gold or paper based on it, did they?”
“The use of gold and silver money was never discontinued entirely, and both were coined. Near the close of last century, the free coinage of silver was strongly demanded by the people and strongly opposed by the financiers. Finally they compromised. The government gave up the task of maintaining the parity of the metals at any ratio, but coined both.
“The silver “dollar” with its fractions, half quarter and dime was coined in quantities to accommodate the business. Silver was made a legal tender for limited amounts. This gave silver the character of “fiat money,” or money that is legal and current at inflated values. They made gold the standard of value. In this they were right. There could logically be only one unit of value. But the debtor class strenuously opposed the plan. They said it worked great injustice to them, because their debts were contracted at times when money bore inflated values; when for example silver was intrinsically worth only half as much as gold. These debts were therefore now payable in money twice as valuable and twice as hard to get as that for which they had gone into debt. In other words they paid back twice as much as they fairly owed and the creditor received twice asmuch as he fairly loaned. There can be no doubt this is true of debts of long standing. But most debts were not affected materially by the rise in the value of gold, because they were not contracted at its bottom value, but at various grades of value while it was on the ascending movement. However as long as it was rising the creditor class was reaping an unjust advantage over the debtors. The government issued bank notes; some based on silver and some on gold; each kind redeemable in the metal on which it was based. The quantity of this paper money was regulated by the national legislature so as to insure a circulation in proportion to the volume of business. The extended use of bank checks has furnished a substitute for or supplement to the currency. When the currency question was finally felt to be settled, the conditions were practically accepted and the producing class was set to work, and in an incredibly short time, replaced the wealth that had been abstracted from them and more. Then came an era of speculation and the scattering of wealth. Obligations rashly incurred in flush times, had to be met when times became tight. This led to panics and the whole routine had to be repeated about so often. But panics could not be entirely eliminated by doctoring the currency, because currency is not the only factor. No matter how much currency a man has, he is not likely to buy articles he does not want. If mechanics have spent their time in the production of something the public do not require or a surplus of what they do ordinarily require, there will be difficulty in disposing of the product.If two classes of mechanics each make things with the expectation of selling them to the other class, and they turn out to be such things as are not wanted in either case, there is sure to be stagnation of exchange and consequent suffering. Where all are working in ignorance of the requirements of others there are sure to be produced many things for which there will be no demand. This had been partially recognized by the government in your day and commissioners were appointed to collect statistics and make estimates in regard to the production of and probable demand for certain farm products. As the government became more intimately the servant of the people its services in this direction were greatly extended and inquiries covered many other departments beside that of farming. The government itself became a large consumer in operating its railroads, telegraphs, etc. Additional mileage had to be constructed to meet the growing business besides the renewals on account of wear and tear. By the publication in advance of the probable demands on the various sorts of industry it became possible to estimate approximately what amount of and what kind of product could be disposed of. A still more fruitful source of financial trouble was to be found in the spirit of recklessness and extravagance with which people spent their money when times were prosperous or booming. It seemed so easy then to get money and to pay debts that many thought it hardly worth while to do it, if there appeared a chance for a profitable speculation, and so instead of paying old debts they werevery likely to incur fresh ones. But as the state became more and more involved in business affairs, it was able to advise what products would be in demand, when it was advisable to use caution and economy and when activity would be rewarded. The functions of the state as a medium of exchange between the producer and the consumer became rapidly extended, and before the close of the century it became the chief and in many things the only buyer and seller of the products in most common use, as well as the sole factor in all monopolies and in banking, insurance, and public amusements. It had not yet gone into manufacturing or farming except to the extent necessary to prevent combinations and private monopolies.”
“I think I can see the advantage of this,” said I, “they probably held to the principle that competition is necessary to keep men up to their best in exertion and industry.”
“That is correct,” he replied, “until work becomes an instinct it is necessary to stimulate exertion by the better rewards that extra industry can procure. The socialists in your day proposed no plan that calculated sufficiently upon the selfishness of the individual. They expected that everybody would accept the position assigned to him and work faithfully for the good of all. But it was too soon to expect this. Your race is very young. It is not so long since your ancestors ceased to depend on the spontaneous productions of the earth for their sustenance, and began to supplement them by their own exertions. With some of your races work is beginning to be instinctive,but there are yet enough in every nation, who, by their hereditary aversion to exertion are ready to shirk out of labor and make the burden of the instinctively industrious intolerable. Your race is too young yet, here at the close of the twentieth century, to take on the purely instinctive socialistic conditions as we Lunarians have them.”
“You think then that socialism to be successful must be instinctive as it is with the bees?”
“To be permanently successful it must be founded upon such an instinct for industry, that makes it more agreeable for a person to work, than to be idle, or to be merely amused. That is, the individual must love work for the sake of the work rather than for the reward that is to come after it. It is indeed true that only the stimulation of the reward at the end could ever have created or kept up the habit of work until it became instinctive, and it is true that if this reward at the end should habitually cease to be realized to at least some degree, the instinct for the work would in course of time become undone—unwound as we might say. The expectation of the reward if it is as constant as the work, would naturally become a part of the instinct. But there are often disappointments as to the reward, while the work itself remains constant, so that this part of the instinct learns to be satisfied with smaller and smaller results until finally the necessaries of painless existence in which the working apparatus is kept in proper operating order are all the reward that the instinct requires.”
“Then,” said I, “in this supreme ideal of socialisticinstinct, I understand you, that the individual lays aside all expectation of personal enjoyment, or the possession of anything in the way of luxuries or superfluities. It seems to me such an existence must be a very narrow one.”
“The possession of superfluities,” said he, “does not contribute at all to enjoyment of life. That is why they are superfluities. A luxury, however, is something that gives or is supposed to give unaccustomed pleasure, and it presupposes conditions or times in the ordinary life of the individual in which he fails to get perfect returns of happiness or satisfaction. But suppose there are no such times or conditions, and that he has no possible desire that his habitual work does not satisfy. Then his work is his luxury and no diversion to any unaccustomed function would procure so great a luxury. As to such existence being narrow, it all depends on the breadth of the work. If the work is circumscribed, the life is narrow. If the work is wide, diversified and complicated, then so is the life, whether it be accompanied by the elements of contingency and uncertainty of mind as with you or the assurance of settled and triumphant success as with us.
“All the same however true socialistic conditions are not realized to a nearly perfect degree up to this close of the twentieth century, although the advance toward them has been what the conservatives of your day would have regarded as alarming. In all cases where honest competition in the production of anything can be maintained, it is the policy of government to refrain from interference;but if the articles produced are necessary to consumers or are required as materials in the production of other goods that are, and the manufacturers of such things form trusts or combinations for the purpose of increasing the price, the government appoints receivers for such business and has it operated long enough to ascertain the cost of producing the article. The price is then fixed by the government.”
“But what if the parties decline to sell at the prices fixed by the state?”
“They do not decline unless they want to go out of business,” he replied, “because when the state interferes in such cases it amounts to notice to the parties that the state is ready, as an alternative, to undertake the business itself, when it speedily destroys extortion by furnishing the required product at a fair price.”
“It would seem then,” said I, “that the state has become a large factor in the business of the country, and there has been a great centralization of power.”
“That is true,” he answered, “there has been a remarkable evolution and yet a perfectly natural and logical one. The very first principle on which a state is organized is the defense and protection of all—the weaker as well as the stronger members—against a common external foe. The second principle which is easily derivable from the first is the protection of the members of the society from each other. Under this principle the weaker will be protected from the stronger, first in his person, second in his property. It was the theory of manyin all former times that the functions of the state ought to end there. Some said, that to go any further would contravene the wholesome natural law of selection, and interfere against the survival of the fittest. Nature left to herself, would put down and finally exterminate the weakest of the race mentally and physically, leaving always the strongest and best to survive, and so constantly improve the race. But if that consideration were to prevail there should never have been any protective organization of tribes and states in the first place. If when a community were attacked each individual ran away or hid as best he could, the enemy would catch and destroy the less swift and strong and the less shrewd and wary, and so select the best for survival. But under the organization, they stand together, and if the enemy is beaten off, the weak and inferior members are saved with the best. The only consideration on which this is right must be that the weaker members of the society are worth more to the state than they cost, and therefore to the extent that they are protected by the organization they are selected by nature in this roundabout way for survival, for the benefit of the state.
“The further defense of the weak against the strong within the social organization, must be on the same principle. And this principle having been admitted there is no logical end to it short of protection against every advantage the strong or the superior or the more wary can possibly take or attempt. In a civilized society the oppression of the weak is no longer so much from personalviolence or robbery, but it takes the more subtle form of absorbing their wealth under forms of law and business formulas, so that in such a society the weak and unwary are valuable to produce wealth, but are robbed of it, practically by a few.
“If the state would get the benefit of the exertions of its members, it must protect them from these depredations, whether they are perpetrated under the forms of highway robbery or of the laws of trade. In short the protection of the individual by the state cannot logically terminate till it prevents everyone from acquiring property he has not earned and rendered a fair equivalent for.”
“Then ought it not also to protect society against the extortions of anyone who would compel it to pay too much for something he alone could produce?”
“Of course that is included in the first.”
“Well then, does not that imply also that the state shall insure a fair return for the work of every individual to himself?”
“No,” said he, “that does not follow, unless the individual performs such work as the community wants. If a man is free to do as he likes, and he must be, he may sometimes choose to do something of no use to anyone else. Then of course no one else should be obliged to take the useless thing and pay for it. But if a man has nothing to do, the state should upon his application furnish him employment and pay him for his work when done under instructions.”
“I suppose there has been a change in the position of women since my day?”
“In politics and in business, there is now no distinction on account of sex. A woman may be president or governor of a state, a senator or judge. Women are to be found in every department of business, and are fully as successful as the men. This materially disturbed the organization of the family, as it was before your time. The man was then the legal and often the actual head of the family, and both the wife and the children were supposed to be under his authority within certain limits. But as the sphere of woman extended and she became better educated, she soon passed the condition in which she was content to be subordinate to the man. She insisted upon and of course secured a position of equality as to legal rights and equal authority in the family. In your day the principal occupation of women was in domestic life, keeping the house and rearing the children. As women became interested in wider activities, many of them began to seek ways of avoiding family cares. Co-operative house-keeping was tried in many cases, kindergartens taking charge of the children.
“The state had for a long time asserted an interest in the education of children, first providing the means of education, then making it compulsory. Finding that some were kept from school from the inability of parents to provide books, the state provided books to those who needed them. Then because the pride of those who accepted this bounty, was wounded by this advertisement of their poverty, it became necessary for the state to furnish books to all children, both of the rich and the poor. Next it was found that want of suitable clothes kept some from school that ought to attend, and so the state commenced to supply school clothes to them and by a similar process of evolution finally came to supply a school uniform to all children. It was also perceived that the interest of the state in the individual did not end when it had taught him the three R’s and the two G’s; in fact it had only fairly begun. It was all important to the state to know whether the child she had educated was going to employ his talents for good or for ill. It was expected he would carve his way and make his living, but if he were not given an opportunity to learn an honest vocation, was it certain that he would not drift into a dishonest one? It was seen to be the duty of the state to see that every youth of both sexes were given such opportunity to learn some trade or occupation. This became the more necessary on account of the trades unions and combinations amongst working men who naturally were anxious to prevent their ranks from being crowded and jealously threw obstacles in the way of apprentices, so the state found it necessaryto care for the individual until he had attained the equipment essential for his self support.
“At first the state schools of trades were simply free to all; later they became compulsory, following the experience of the common schools. Scholars in the common school were educated with reference to the trade they fancied, and when they entered the trade school they were on trial for a limited period and were sorted according to their ascertained aptitudes. It became a necessary branch of the supervision of the state to ascertain the proper proportion of workmen required for each branch of business and when this proportion was being seriously disturbed by unequal selection by the scholars themselves, it was restored by state selection on examination according to aptitude.
“So much of the care and education of the youth having thus been assumed by the state, the way was opened for more. It was said that half the people who had children did not know how to bring them up properly; and teachers often complained that the example in bad manners, deportment, language etc., that the children got at home to a great extent neutralized the good lessons in these things they received at school.
“The kindergartens became by almost insensible degrees enlarged in the scope of their functions. At first, as in your day, they were merely stopping places for the children during the day, they going back to their parents to spend the night. As the mothers came to be more and more engrossed in affairs away from home, the kindergartens extendedtheir care over the children, furnishing them their meals, then their lodging, then medical attendance as well as education and amusement, finally assuming all the care and expense of maintaining and rearing them. At first the expense was paid by the parents, but was gradually assumed by the state by degrees till it finally became responsible for all. The advantage of these public nurseries was at first of course most marked in favor of the poorer classes. But as their functions and scope developed, the care and training of the children became more scientific, their powers, tastes and aptitudes were more thoroughly brought out. The wealthier classes at first objected to having their children reared in association with the plebians. But the children of plebians were no longer plebian when removed permanently from the influences of their parent’s homes; and they turned out a larger percentage of successful men and women than those of more comfortable position. In physical and mental ability they were superior, and in morality at least equal to the others. It was seen that these kindergartens were better adapted for the care of children than even the better equipped homes, and they received the patronage of a constantly increasing proportion of the people. At first there was nothing compulsory in this patronage. Parents left their children when it suited them, and took them away when they chose. But after a time this was outgrown. It came gradually to be understood that the state—that is the whole community—was really as much concerned in the destiny of the growing generation as theparents; and it was said that it was better that the children should have the constant care and attention of those intelligently qualified and perfectly equipped, than that their development should be interrupted when the caprice of parents craved them only for pets and playthings. So the selfishness of parents in this respect was gradually outgrown in favor of the more important welfare of the children. But economy as well as sentiment supported this evolution. The cost of caring for the children by the state was vastly less than under the old system, and it no longer fell with such crushing weight on those least able to bear it; for it was notorious that the poor were the most prolific. With the better care they received the mortality amongst the children was greatly reduced and a far greater proportion reached maturity. Another important consideration in the state nursery system was the cultivation of the democratic sentiment amongst the children, and the destruction of exclusiveness and aristocratic ideas and feelings.”
“From what you say,” said I, “it appears that the state has undertaken to take care of the race during their age of helplessness, from infancy to manhood.”
“That is correct,” he answered, “the state takes the child as soon as it is weaned, sometimes before, and keeps and provides for it every day till it is prepared to be selfsupporting. Every one is taught a trade or a profession according to its bent and the demand for services in the several callings, it being the policy of the state to so regulatethese things that the value of services is about the same in all callings.”
“Then can a mechanic make as much as a doctor?”
“About the same. As soon as any difference is observed, more are encouraged to enter the calling that tends to the higher pay, and so made to preserve the uniformity.”
“Well, if the state begins when the child is weaned, to take care of it, why should it not begin before—a long time before in fact? For ante-natal influences are often of the most powerful kind; and when they are mischievous, no amount of subsequent education is able to neutralize or rectify them. That was all thought out in my day by the more advanced thinkers.”
“O they have “maternity hospitals” and “Homes for Ladies” and all that sort of things—of course—but what you mean; not yet. That is still in the future—but we shall find it by and by in a way that will surprise you.”
“Well it seems to me, to get even where they are they must have met and solved some rather difficult riddles,” said I. “For example in my day there was a desperate struggle between Protestants and Catholics in regard to the religious education of the children. The Catholics hated the public schools, because they were “godless.” They insisted on having their children brought up in their own faith. They wanted a share of the public money so they could have schools of their own and mix their catechism with the rules of grammar and the rule ofthree. How did they ever settle this difficulty—or did they settle it?”
“O yes,” he said, “they settled it, or rather it settled itself. At first the Catholics and in some places the Lutherans and other sects of Protestants insisted on maintaining their own schools, kindergartens etc., but the state institutions were so far superior to what these sectarians could furnish, that the laity broke away from the control of their priests in this respect and followed their interests in putting their children under the care of the state. As however the state monopolized more and more of the pupils’ time, it was conceded that if the whole population was not to become “godless,” it would be necessary to allow religion to be taught in these public institutions in some form. So they compromised. The different religious bodies were allowed to hold Sunday schools and classes for religious instruction of the pupils in the creeds professed by their parents. The children were also taken to church according to the same rule. This was at first made compulsory if desired by the parents, but after a time compulsory attendance upon religious instruction was remitted at the age of 12 and the pupils were allowed to choose their religion. This arrangement preserved the proportions of the sects to each other fairly well, but in the meantime there arose conditions that made this preservation of small moment. These were such changes in the spirit and feeling of the members of different churches toward each other, and such a liberalizing of creeds that all were brought together and became not onlytolerant, but even cordial toward each other. The schools themselves did more than anything else to bring about this result, for as the older scholars were given their freedom of choice, it gradually became a fashion or fad amongst the pupils and finally a part of the regular curriculum to attend each other’s meetings and interchange ideas and arguments. As the ability grew amongst all, both the young and old, to reason more justly and logically, all sides became less tenacious of the dogmas they found themselves unable to prove. When these were lopped off from the various conflicting creeds their professors found themselves all standing on practically the same platform of facts and plain human duties. The things they differed on were mostly mere hypotheses. They still continued to differ, but no longer regarded their differences of such vital consequence as formerly. It came to be generally admitted as absurd that the future post mortem condition of men should depend on their intellectual convictions regarding unprovable metaphysical theories.”
“Doubtless the bringing together of the children of all creeds and educating them in each others notions had much to do with this liberalizing process; had it not?” I asked.
“It had of course, but the education of the children together, was itself a result of a liberalized public opinion. The fact is the human mind was constantly undergoing a process of expansion and growth. It could no longer be satisfied with the crude and childish notions of former generations, and was outgrowing them as children outgrowthe fables of the nursery. Until men got capacity, argument and logic were of no avail. Education in the great facts and discoveries of science and philosophy gave them capacity.”
“From what you say, I should suppose there has been a great modification of creeds?”
“There has been. No church remains the same either in theory or practice that it was in your day. Several of the minor protestant sects have entirely disappeared.
“In several cases two or three have united to form one. The whole number of sects is less than one-fourth of what it was. Creeds have become extremely simplified and in many cases practically ignored. The government among the protestant sects, is in most cases congregational and democratic. They no longer engage in missionary work for the conversion of the heathen, as there are no longer any heathen whose conversion is desired; and no organized effort is necessary for charitable work at home, because that is amply provided for by the state. But the church is useful as a social organization, promoting personal friendships and associations, providing intellectual and educational entertainment for its members fostering and fortifying the moral virtues and elevating and refining the manners. In many of these protestant congregations, the worship of God by prayer and ceremony is entirely discontinued, it being held that all worship is unworthy, and based upon a false notion of the relationship between God and man. Man they say cannot worship or serve God directly. God is not childish enough to want it.All man can do is to help his fellow man and himself and that constitutes his whole duty.”
“These,” said I, “would probably have been called free thinkers or agnostics in my day. But what of the Catholics?”
“The Catholics,” he replied, “are far more numerous than the Protestants. Forty years ago there was a great schism in the Catholic church, the American branch of it separating completely from the European, and setting up for itself as the “American Catholic Church.” At the same time important changes were made in the interpretation of the doctrines of the church and radical innovations in its government. The latter is now largely republican in form and the laity have representation in the councils of the church and a preponderating influence both in its doctrine and its temporal policy. The tendency toward this development showed itself strongly in the beginning of the twentieth century, and originated from the general increase of intelligence and feeling of personal assertion and responsibility among the laity and the example of the freer people about them. The clergy instinctively resisted this tendency, and called upon the Pope and the European church to help them to stop it. The help they afforded only stimulated the movement. The interference of the Europeans was resented as impertinent; the exercise of the papal authority was looked on as a display of superannuated tyranny. The Pope asserted that the American Church by its liberal practices and tendencies was corrupting the church in other parts of the world, and declared they were doingit more damage as members, than they could do as open enemies outside of its pale, and he threatened to excommunicate the whole American body. The immediate cause of the final act of separation was first the persistence of the laity in having the ownership of the church property in their own hands, represented by trustees of their own selection. Second, their demand to share in the government of the church, to which end they proposed a representative legislature composed of two houses, one composed of laymen and the other of clergy.