CHAPTER VBUSINESS AND POLITICS
In this discussion of the process of wealth-concentration, I have so far purposely omitted all mention of the most important aspect of the phenomenon—the seizing by the “constantly increasing mass of capital” of the powers of the State, and their use for purpose of intensifying exploitation. I have avoided that feature, partly because it is conspicuous enough to deserve a chapter to itself, but mainly in order to make clear my view-point, that the phenomenon, while important, is secondary—an effect rather than a cause.
This is, of course, contrary to the view usually taken. In most discussions of the problems of the time, it is taken for granted that “government by special interests” is the source of all the evil. But while recognising how enormously the process of wealth concentration has been accelerated by the political alliance, it is my thesis that exactly the same conditions would have developed had economic forces been left to work out their own results. I maintain that economic competition is a self-destroying stage insocial development; and that to regard it as permanent is simply not to realise what it is. For competition is a struggle, and the purpose of every struggle is a victory; to conceive of a struggle without the intention to end the struggle, is simply impossible in the nature of things. In the industrial combat the end is the victory of a class, and the reduction of all other classes to servitude—with the ultimate extinction of all individuals not needed by the victors.
Again, it is generally the custom to regard this phenomenon of class-government with indignation and astonishment, as if it were something abnormal and monstrous; but from the point of view of this discussion, it is a perfectly natural and inevitable incident of the intensification of competition. You are to picture Capital, seeking profits; like a wild beast in a cage, pacing about, watching for an opening, here and there; like water, caught behind a dam, creeping up, crowding forward, feeling for a weak spot. And the one thing to be determined is:Is there any way in which profits can be made through the powers of government?If so, it is quite certain that there will be an attempt made by capital to get possession of those powers.
You can see the thing in its germ in any primitive community; I once amused myself by studying it in a little village in Canada, where the trusts had never been heardof. The storekeeper was a rich man, and he had a “pull” with the squire and with the constable and with the game-warden; he did little favours for them, and they for him—so that a poor “Frenchman” who was suspected of stealing a pair of socks found himself in jail before he knew why. And then there was a big “lumber man” in the township; he owned all the jobs, and he traded with the storekeeper, and the storekeeper in return ran the political machine. That was the whole story of the politics of the district—except that there were several fellows of independent temperament, who grumbled, and who constituted the germ of the Socialist movement.
Political corruption first became epidemic in our country in 1861, when the government had to go into business upon an enormous scale. There were contractors—and competition. And then, of course, there was the tariff, a shrewd scheme to compel the people to pay high prices without knowing it. Later on someone discovered the brilliant idea of the franchise, the selling for a nominal sum of the right to tax the public without limit. And so capital went into politics.
At first it did a purely retail business, buying up the legislators as it needed them; but soon the thing became systematised, and Capital got wholesale prices—it financedthe machines, and chose its own candidates. The process culminated at the beginning of the present decade, when “big business” was in practically undisputed possession of both the majority parties, of Congress and the Presidency, and of the governments in every town, city and state in America.
You see, it was as if our society was in unstable equilibrium. We had a political democracy, and we were developing an industrial aristocracy; and it was impossible for them to exist side by side. Innocent people had taken it for granted that they could; but it is no more possible for a democracy to be aristocratic in any of its aspects and remain a democracy, than it is for a virtuous man to be vicious in one particular, and remain a virtuous man. Democracy is not a code of laws, nor is it a system of government—it is an attitude of soul. It has as its basis a perception of the spiritual nature of man, from which follows the corollary that all men either are equal, or must become so. And so between aristocracy and democracy, wherever and under whatever aspects they appear, there is, and forever must be, eternal and deadly war. Here is the testimony and the warning of the greatest of American democrats, Abraham Lincoln, who if he could rise from his grave to speak to us in these times of our country’s trial could speak no more pertinentwords than these. He had declared that the Slavery question was one between right and wrong. “Right and wrong,” he said—“that is the issue that will continue in this country when these poor tongues of Judge Douglas and myself shall be silent. It is the eternal struggle between these two principles—right and wrong—throughout the world. They are the principles which have stood face to face from the beginning of time and will ever continue to struggle. The one is the common right of humanity, and the other is the divine right of kings. It is the same principle in whatever shape it develops itself. It is the same spirit that says: ‘You work and toil and earn bread, and I’ll eat it.’ No matter in what shape it comes, whether from the mouth of a king who seeks to bestride the people of his own nation, and live by the fruit of their labour, or from one race of men as an apology for enslaving another race, it is the same tyrannical principle.”
It is worth while pointing out the utter hopelessness of the struggle. On the one hand was the capitalist, with his millions, alert, aggressive and resourceful; he had an army of experts to help him—shrewd attorneys, skilful lobbyists, newspapers and publicity bureaus, political henchmen trained all their lifetime to the trade; he was cold and unscrupulous—as a rule hewas not a man at all, but a corporation, a thing without a soul, a monster “clamouring for dividends.” He had a thousand devices, a thousand pretences, a thousand disguises. And opposed to him was the Public—unorganised, uninformed, and sound asleep!
Recently, when Mr. H. G. Wells was in this country, I had a long talk with him, and he asked me how I accounted for the saturnalia of corruption in our political life; he said that our people did not seem to him degraded or brutal, and he could not understand why things were so much worse here than in England. I said that in England the economic process had been modified by the existence of an hereditary aristocracy, holding over from old times and having high traditions of public service. By nature this aristocracy sympathised with capital, and to a certain extent fraternised with it; but it would not abdicate to it, and occasionally, to preserve its own power, it made concessions to the public, and so served as a check upon the forces of commercialism. On the other hand the American people had only themselves to rely upon and until they had been goaded into revolt, there was no limit whatever to the power of greed.
I suppose it is unnecessary to offer any proofs of the existence of “government by special interests.” If there is anyone whohas been out of the country for the past three years and has not read any of the magazines, it will be sufficient to refer him to the two books of Mr. Lincoln Steffens—“The Shame of the Cities” and “The Struggle for Self Government.”
Steffens himself is a proof of the evil conditions: a man who has spent ten years studying our politics, who went to the task with no preconceptions, and only a passion for honesty and fair dealing—and who has been made into a thorough-going radical by the irresistible logic of facts. It was his particular service to the Republic to trace the stream of graft to its fountain-head, which is what he calls “big business”; and the series of papers in which he proved that thesis to our people will long be studied as models of the higher journalism—the journalism which is to ordinary newspaper writing what statesmanship is to politics.
As I say, there is no need of proof; but simply by way of illustration, and to call the picture to the reader’s mind, let me quote a few paragraphs from one of these papers—“Pittsburg, a City Ashamed”:
“The railroads began the corruption of this city. There always was some dishonesty, as the oldest public men I talked with said, but it was occasional and criminal till the first great corporation made it business-like and respectable. The PennsylvaniaRailroad was in the system from the start, and as the other roads came in and found the city government bought up by those before them, they purchased their rights of way by outbribing the older roads, then joined the ring to acquire more rights for themselves and to keep belated rivals out. As corporations multiplied and capital branched out, corruption increased naturally, but the notable characteristic of the ‘Pittsburg plan’ of misgovernment was that it was not a haphazard growth, but a deliberate, intelligent organisation.... The Pennsylvania Railroad is a power in Pennsylvania politics, it is part of the State ring, and part also of the Pittsburg ring. The city paid in all sorts of rights and privileges, streets, bridges, etc., and in certain periods the business interests of the city were sacrificed to leave the Pennsylvania road in exclusive control of a freight traffic it could not handle alone.”
The “bosses” who ruled Pittsburg were Magee and Flynn, and Mr. Steffens prints in full the agreement between them and Senator Quay, by which they divided the boodle of the state. “Magee and Flynn were the government and the law. How could they commit a crime? If they wanted something from the city they passed an ordinance granting it, and if some other ordinance was in conflict it was repealed oramended. If the laws of the state stood in the way, so much the worse for the laws of the state; they were amended. If the constitution of the state proved a barrier, as it did to all special legislation, the Legislature enacted a law for cities of the second class (which was Pittsburg alone) and the courts upheld the Legislature. If there were opposition on the side of public opinion, there was a use for that also.
“As I have said before, unlawful acts were exceptional and unnecessary in Pittsburg. Magee did not steal franchises and sell them. His councils gave them to him. He and the busy Flynn took them, and built railways, which Magee sold and bought and financed and conducted, like any other man whose successful career is held up as an example for young men. His railways, combined into the Consolidated Traction Company, were capitalised at thirty million dollars. There was scandal in Chicago over the granting of charters for twenty-eight and fifty years. Magee’s read, ‘for nine hundred and fifty years,’ ‘for nine hundred and ninety-nine years,’ ‘said Charter is to exist a thousand years,’ ‘said Charter is to exist perpetually,’ and the Councils gave franchises for the ‘life of the charter.’”
And all this was a regular profession, a custom of the country, which its devoteesstudied. “Two of them told me repeatedly that they travelled about the country looking up the business, and that a fellowship had grown up among boodling aldermen of the leading cities in the United States. Committees from Chicago would come to St. Louis to find out what ‘new games’ the St. Louis boodlers had, and they gave the St. Louisans hints as to how they ‘did the business’ in Chicago. So the Chicago and St. Louis boodlers used to visit Cleveland and Pittsburg and all the other cities, or, if the distance was too great, they got their ideas by those mysterious channels which run all through the ‘World of Graft.’ The meeting place in St. Louis was Decker’s stable, and ideas unfolded there were developed into plans which the boodlers say to-day, are only in abeyance. In Decker’s stable was born the plan to sell the Union Market; and though the deal did not go through, the boodlers, when they saw it failing, made the market-men pay ten thousand dollars for killing it. This scheme is laid aside for the future. Another that failed was to sell the court-house, and this was well under way when it was discovered that the ground on which this public building stands was given to the city on condition that it was to be used for a court-house and nothing else.... The grandest idea of all came from Philadelphia. In that city the gas-workswere sold out to a private concern, and the water-works were to be sold next. The St. Louis fellows have been trying ever since to find a purchaser for their water-works. The plant is worth at least forty million dollars. But the boodlers thought they could let it go at fifteen million dollars, and get one million dollars or so themselves for the bargain. ‘The scheme was to do it and skip,’ said one of the boodlers who told me about it, ‘and if you could mix it all up with some filtering scheme it could be done. Only some of us thought we could make more than one million dollars out of it—a fortune apiece. It will be done some day.’...
“Such, then, is the boodling system as we see it in St. Louis. Everything the city owned was for sale by the officers elected by the people. The purchasers might be willing or unwilling takers; they might be citizens or outsiders; it was all one to the city government. So long as the members of the combines got the proceeds they would sell out the town. Would? They did and they will. If a city treasurer runs away with fifty thousand dollars there is a great halloo about it. In St. Louis the regularly organised thieves who rule have sold fifty million dollars’ worth of franchises and other valuable municipal assets. This is the estimate made for me by a banker, whosaid that the boodlers got not one-tenth of the value of the things they sold.”
Two or three years ago, before I met Mr. Steffens, I thought that he knew only as much as he “let on”; and so I wrote him an “open letter,” to point out the consequences of this régime of “big business.” The story of this manuscript is an amusing one, and worth telling for the light it throws upon my argument. Mr. Steffens was so good as to say that it was the best criticism of himself that he had ever read; and it was scheduled for publication in one of our three or four largest magazines. But alas—it was purchased by the enthusiastic young editor, and then read by the elderly and unenthusiastic proprietor. When I rebelled at the long wait which followed, the proprietor invited me to dinner, and unbosomed his soul to me. He was the dearest old gentleman I ever met, and he put his arm about me while he explained the situation. “My boy,” he said, “you are a very clever chap, and you know a lot; but why don’t you put it all into a book, where you can’t hurt anyone but yourself? Why do you try to get it into my magazine, and scare away my half million subscribers?”
So the letter was shelved. But the questions it asked are now the questions which events are asking of the American people; and so I shall take the advice ofthe elderly and unenthusiastic proprietor—and publish some of the letter in a book! It ran as follows:
This is the question I have wished to ask you, Mr. Steffens. “A revolution has happened,” you tell us; we have no longer “a government of the people, by the people, for the people,”—we have “a government of the people, by the rascals, for the rich.” And if we find that that revolution, which has overthrown the law, and which defies the law, cannot be put down and overcome by the means of the law—what are we going to do then? Are we going to sit still, and content ourselves with saying it is too bad? Are we going to bear it—to bear it forever?Canwe bear it forever? And if we cannot bear it forever what are we going to do when we can bear it no longer?
A revolution is a serious thing, Mr. Steffens. A man should not talk about a “revolution” except with a thorough realisation of what the word implies. A revolution means that the social contract has been broken, that rights have been violated and justice defied—that, in a word, the game of life has not been fairly played, that those who have lost may possibly have had the right to win. And the game of life is a pretty stern game for many of us, Mr. Steffens.
You and your friends, I and my friends, belong to a class whom this “system” touches only through our ideals. Editors and authors, clergymen and lawyers, we are pained to know that corruption is eating out the heart of our country—but still, if the problem be not solved to-day, we can put it off till to-morrow, and not realise what a difference it makes. But there are some in our country whom the System touches far more intimately and directly than this—some to whom the difference between to-day and to-morrow is simply a difference between life and death. I happened only yesterday to be reading a letter from a man who, I think, knows that “System,” which is our new government, in this personal and intimate way. I will quote a few words from his letter:
“I have been arrested, put in jail, prosecuted and persecuted. I have had my customers driven away; I have been boycotted to the extent that men who dared to trade with me have lost their jobs; I have had my home broken into at night; been beaten with guns and abused by vile and foul-mouthed thugs; been torn, partly dressed and bleeding, from the side of my wife, who was driven from her bedroom and roughly handled; and finally I have been shipped out and told that if I returned to my home I would be hung. Not satisfiedwith this they have twice deported my brother, who was conducting the business in which we were both earning our living, so that it became necessary for an adjuster to take charge, of our store.” All this was, needless to say, in Colorado; the writer is Mr. A. H. Floaten, a storekeeper of Telluride, but now of Richmond County, Wisconsin, where he was working in a hayfield when he wrote. He goes on to add that the charge upon which he was “deported” was that of selling goods to members of the Western Federation of Miners. “As for my brother and myself,” he states, “I defy any and all persons to show a single instance where either of us have ever violated any law or even been suspected of crime, or have ever wronged any person.”
Here is your “revolution,” Mr. Steffens, in full swing. One of the questions which I have for some months found myself longing to ask you is, how clearly you recognised in the Colorado civil war the natural and inevitable consequences of a continuation of your “government of the people, by the rascals, for the rich?” Here is an unequivocal declaration, by a vote of two to one, by the people in one of the states of this free country, in favour of a constitutional amendment permitting an eight-hour law; and here are representatives of both the majority parties pledging themselves toenact it, and then openly and shamelessly selling themselves out to the predatory corporations of the state. The people then resort to a strike to secure their rights; and when they are seen to be winning, the militia is summoned, criminals are hired to commit a dynamite outrage and afford the necessary pretext, and then every tradition of American liberty and every safeguard of free institutions is overthrown, and the strike crushed and the striker’s organisation exterminated with a ruthlessness and a recklessness which no police official in Russia could have surpassed. And then the party of “law and order”—that is the “System”—sat enthroned in Colorado, and the guileless reader of newspaper despatches believed that an “election” took place in that state last November! The “System” suspended theHabeas CorpusAct, censored newspapers and telegrams, opened mails, entered houses without warrant and drove women from their beds at dead of night, deported men, defied and threatened judges, shut down mines in spite of their owners’ will—and finally haled a score or two of elected officials before it and put ropes around their necks and compelled them to resign. And then the “rebellion,” that is, the agitation for an eight-hour law, attempted to reassert itself in the form of ballots; and by means of a threat of deposition it compelledthe newly elected governor to accede in everything to its will—and in particular to retain in office the infamous militia official who was its agent in these crimes!
But we, as I said before, are touched by these things only through our ideals. We are sorry to see American institutions overthrown in an American state; but we do not live in Colorado, and we are quite sure that there is no danger of our being turned out of our homes. And yet we know that the system exists in our own city and state, and sits just as surely intrenched there as in Colorado. And we know also that it exists for a purpose—that it exists to rule. And are we to imagine that it exists to rule the people of Patagonia, of Greenland and Afghanistan? Do we not know that it exists to ruleus?
How does it rule us? How does it rule the people of Colorado? Whatever is it that is wanted of the people of Colorado? Why, simply that they should go into the mines and factories and work, not eight hours a day, as they wished to, but twelve hours a day, the time the “System” bade them to. And what is it that it wants everywhere else—in California, in Maine and in Texas? What, save that those who have labour to sell shall sell it at the price the “System” is paying, and that those who have goods to buy shall buy them at the price the “System”asks? If this be so, is not the only difference between us and the people of Colorado that they went on strike against the “System,” whereas we are not on strike—wepay?
Let us deal with facts. Here is a corporation which runs a street-railroad in a city. It gives an abominable service, its cars are cold and filthy, its employees are underpaid wretches who work thirteen and fifteen hours a day—and the fare is just double that of the splendid government service of Berlin. And the public-spirited men of the city have for ten or twenty years been trying to do something with that corporation at the state capital; but the corporation has its lobby and continues to pay pig dividends upon its watered stock year after year. And then do the people of the city organise and go on strike against that corporation? No indeed—they pay.
You know of the agitation for a parcels post; you know that under the parcels-post system an Englishman can send a package to California for one-third of what it costs us to send one from New York. In Germany a ten-pound package may be sent anywhere in the Empire for twelve cents; and our post office pays the railroads more for its service than all the rest of the civilised world combined, though the quantity of mail matter carried is less than that ofGreat Britain, France and Germany alone! Yet we know that it is a waste of ink setting these facts forth. Is not the president of the United States Express Company the United States senator from your own state? The railroad systems of this country have, of course, their lobby in every state capital, and in Washington as well; and every single year the railroad systems of this country slaughter and maim the equivalent of a Gettysburg campaign—there were as many people killed in the last three years as the British lost in the entire Boer war. Yet there is not the least reason for this; the railroads could, if they chose, build cars which will not crumble up like matchboxes—they have proven it by killing only six Pullman-car passengers in the same three years. But of course you have to pay a large sum extra to ride in a Pullman car. If you cannot pay with money, you pay with your bones—in either case, of course, you pay.
And then there is the tariff. You, Mr. Steffens, are a man who has both the ability and the honesty to think, and you know what the tariff is. You know that it is a device to keep out foreign competition and thus enable home manufacturers to charge higher prices. You know that in the early days its effect was to make manufacturing possible by keeping prices at a level where afair profit was paid. Above this level they could not go, because there was free domestic competition. The tariff was thus a tax, self-imposed by every man in the country, for the purpose of building up the country’s home industries; exactly as if the owner of a sugar-plantation should conclude it would pay him to grind his own cane, and should set aside his gains for a few years to buy the machinery. Now I might stop to argue the socialistic implications of such a procedure—involving as it does the doctrine that the manufactures are the interest and concern of the whole people, to the advantages of which, when completed, they all have a right. (No plantation master, I take it, would expect to furnish himself with machinery out of the wages of his hands.) Continuing, however, to discuss facts and not theories, you see that these industries which we have “encouraged” have now become the mightiest power in the land. It is they who have accomplished the revolution and set up the “System”; it is they who use the money which the people have turned over to them, to maintain and perpetuate the old arrangement—an arrangement which now enables them, since they have become monopolies, to charge for their products from thirty to fifty per cent. more than a fair price, as is proven by what they charge abroad.
The workingman, you know, Mr. Steffens, has all this justified to him by the fact that he gets his share of this “prosperity”; but of late the workingman has been finding that he doesnotget his share. He has brought the industrial machinery of the country to such a pitch of perfection that he produces more than the country needs; and so when foreign markets fail he is out of work part of the time; and the mass of unemployed labour operates by the “iron law” to beat down wages and to break strikes, and to make his share less and less. And all the time, to pay interest on the constantly increasing capital of the country, the prices of trust products are being raised yet higher, and the cost of living is rising, year by year.
In the cotton mills of Alabama and Georgia little children six and eight years of age are working twelve hours for a wage of nine cents a day. And how do you think they fare in this fearful race for profits—what do you think is the effect upon them of the continued operation of the “System”? You may remember that I said a little way back that there were people in this country to whom the difference between to-day and to-morrow is simply a difference between life and death. It was such people as these I had in mind.
Look, Mr. Steffens; you go from town tocity, and from city to state, and everywhere you show us hordes of political parasites battening on corruption; and you tell us that the fortunes that they make represent but a small portion of what is made by the “big business men” who bribe them. Magee and Quay, you tell us, made thirty millions out of the street railroads of Pittsburg; and all over this land, year in and year out, such sums are being “made.” And soon afterward came Mr. Lawson’s story of how the Standard Oil group “made” forty-six million dollars in a single deal without turning over their hands. Mr. Lawson expatiates upon this way of “making” dollars—he makes reflections which I had often wondered if you were making. I have wondered if you realised entirely that these millions of dollars wererealdollars? Dollars that a man might spend, just the same as any other dollars—with which he might purchase food that men had toiled to raise, and houses that men had toiled to build! I am writing these words in October, and the windows of my room look out upon a cornfield. All the year long I have watched a farmer and his son at work in this field—first plowing it, then harrowing it back and forth and across, then planting the corn, patiently, row by row. The field is ten acres in size, and it seemed to me that not a week passed all summer that the farmerwas not plowing and weeding it; and now that the fall has come he has cut it stalk by stalk, and stacked it; and now I can see him and his son sitting on the bare, bleak hillside this morning, husking it, ear by ear. That will take them all of two or three weeks, and when the whole thing has been done they will gather up the ears to cart them to town, and the farmer will have five hundred bushels of corn and will get for them two hundred and fifty dollars. And then I read Mr. Lawson’s account of how the Rockefellers “made” forty-six million dollars out of Amalgamated Copper—and strive to realise that what they made was the equivalent of the labour of the farmer and the farmer’s sons and the farmer’s horses in one hundred and eighty-six thousand ten-acre cornfields such as the one I look out upon!
Is it not obvious that if I were to have the power to call a piece of paper one dollar and to put it into circulation, exchanging it for two bushels of corn, I could only do it by diminishing the value of every other dollar in the country a certain small amount? Supposing that the total wealth of the country was one billion dollars, I should diminish every single dollar by one-billionth. Suppose that similarly I “made” one million dollars—by any sort of “making” whatever save by producing someuseful thing and increasing the total wealth of the country—I should then tax the holder of every dollar one mill. A man who owned ten thousand dollars would be robbed by me of ten dollars—he would be robbed of it just as literally and as actually as if I had broken into his house and stolen his watch. He would not know that he was robbed, perhaps—all that he would know would be that when he spent his ten thousand dollars he would not get quite so much. In Dun’s and Bradstreet’s the event would be recorded in the statement that the cost of living had risen one-tenth of one per cent. since last week, and that interest rates had similarly declined. And now here is the young girl who works in the sweatshops of Chicago for a wage of forty cents a week, as thousands of them do. The great Amalgamated Copper deal is consummated, Mr. Rockefeller and his fellow-conspirators “make” forty-six million dollars—and the young girl’s wage becomes thirty-nine cents and a fraction. At forty cents she was hanging on for her life; at thirty-nine cents and a fraction she enters the nearest brothel. Here is the little child of eight years toiling from six at night till six in the morning in the midst of throbbing cotton-looms for nine cents. Magee and Quay of Pittsburg “make” thirty million dollars in street railroads—and the little child’s wage becomes eightcents and a fraction. At nine cents he was starving; at eight and a fraction he faints, and the machinery seizes him, and his arm has been torn out of him before anyone can answer his screams. So it is, Mr. Steffens, that there are people in this country to whom the difference between to-day and to-morrow is simply a difference between life and death.
That farmer about whose work I spoke will take his two hundred and fifty dollars to the bank for deposit; and in the line before the window will be a young spendthrift idler with a month’s income from his father’s estate, and a politician with a bribe for a street railway franchise; and to the banker all these deposits will stand upon equal terms, they will all be equally “good,” and will claim and get interest at the same rate. The farmer will have to content himself with a lower rate, because of the competition of the others; and next week, when the activities of some speculator in Wall Street bring about a failure of the bank, he will get not a bit more out of the wreck than the other two. And then he will go back and toil for another year, to raise a similar crop—and what will he find then? Why this: the forty-six millions of the Standard Oil gang will have survived all mischances, and having by their enormous mass attracted profits, will havebecome fifty millions, or even sixty; and the thirty millions of Magee and Quay will have become thirty-five. All the untold millions of the capital of the country will have increased similarly; and the investment field will have become more crowded yet, and the prizes fewer yet, and the chances more hazardous yet; and the cost of living will be a little higher yet; and the interest rate a little lower yet, and wages a little lower yet; and the whole of human society will be toiling a little harder yet to pay the profits upon that heaped-up mass of wealth. More men will be taking to drink, and more women will be taking to brothels—more to suicide, madness, vagabondage and crime. The race for profits will be a little more fierce, social ostentation will be a little more vulgar, political corruption will be a little more shameless, strikes and riots will be a little more common, the socialists will be a little more active—and you, Mr. Lincoln Steffens, will be a little more saddened at the sight of your country’s downward career.
I have noticed the very curious fact about your views, that all your hope of betterment is in the future—it is always how we can prevent new stealing, never how we can punish the past. And so those thirty million dollars of Magee and Quay, the forty-six millions of the Amalgamated deal—they are safe and beyond recall forever?Mr. Lawson talks about “restitution”; do you think he will ever bring it about—do you see any signs of it so far? And yet those forty-six million dollars, assuming that they grow at ten per cent., a small earning for such a sum—year after year they will be, roughly speaking, as follows: 46, 51, 56, 63, 69, 76, 84, 92, 101, 111, 122, 134, 147, 162, 178, 196, 216, 238, 262, 288, 318, and so on. In other words, the heirs of the “Amalgamated” financiers will twenty years from now have multiplied that sum nearly seven times, and be receiving nearly seven times as much tribute from the sewing-girl in the Chicago slums and the children in the Georgia cotton mill. I, Mr. Steffens, am one of those who look upon all profits, rent, interest, and dividends as a survival of barbarism, the last but not the least of the devices whereby the strong enslave the weak and profit by their toil; but I assume that you are not one of these—that you are one of the class I heard described by a speaker the other night, “who think that the first dollar is a male dollar and the second a female, and that when you put them in the bank together they bring forth dimes and nickels, which in the course of the years grow up to be dollars as big as their parents.” Yet even so, you can not but recognise the distinction between legitimate and illegitimate children. You cannot—to drop an inconvenient metaphor—claim that society can by any possibility whatever be required to go on paying tribute to that stolen forty-six millions—the three hundred and eighteen millions of twenty years from now. It is a maxim of law, Mr. Steffens, that there is no wrong without its redress.
And if you grant this and begin to examine the millions in that light—what perplexities you come upon! Only take the tariff, for instance—is there a dollar invested in the business of this country to-day which has not profited by that, and which is therefore not made up out of the tiny contributions of thousands of persons who not only do not own that dollar, but do not own any other dollar? And then consider that the beginnings of most of our great fortunes were made in Civil War times, when the nation in its extremity paid two dollars for every dollar in value it received! And consider the chaos of political corruption that followed, the twenty years of plundering of every variety that American ingenuity could invent, from Black Friday to the Western land grabs and railroad steals! Try to figure how many crimes are represented by the Vanderbilt millions, how many by the Goulds’s; think of the commercial assassinations represented by the word Standard Oil—the secret rebates and discriminations,the wholesale buyings of legislatures and elections; think of the whole institution of corruption of the present day, of the “System,” intrenched in village and town, city, and state, and nation, owning both parties, the executive, the legislative, and the judicial branches of the Government, the schools, the colleges, the pulpits, the press, literature, and art, and public opinion—making it, not figuratively and hyperbolically, but literally, simply, and indisputably the fact that there is not to-day in the land a place where a man can take a dollar and invest it, and get back a copper cent that is not tainted with corruption, polluted by violence, treason, and crime, and stained with the blood and tears of uncounted thousands of agonised women and children!
So much for the letter. If there is anyone who, after reading it, is still of the opinion that the people should pay the tribute demanded twenty years from now, there is nothing more that I can say to him—except to give a few statistics by way of further elucidation, showing him how many more millions of dollars there will be to enter their claim. There will be, for instance, the four hundred and fifty million dollars of the Astor family—all invested in New York City real estate, and at the rate of growth of the city, certainly destined to be a billiondollars in twenty years from date. There is the half billion dollars of Mr. Rockefeller, increasing by a most conservative estimate at the rate of ten per cent. per year, and therefore destined to be over four billions at that time. And then there are the railroads of the country. We are now being prepared for a decision to be some day delivered by the Supreme Court, to the effect that any rate regulation which interferes with dividends is confiscation, and therefore unconstitutional. And yet we know that railroad capitalisation is simply a function of earning-power; that what the financiers have uniformly done was to charge all the traffic would bear, and then water their stock until the rate of dividends came down to the market average. The capitalisation of the railroads of the country, fixed upon this basis, is thirteen billion dollars, whereas their actual cost was only six or seven billions. To give one or two samples of this process, the Western Maryland Railroad was bought up by the Goulds, and watered from nine millions up to fifty-one millions. The Central Railroad of Georgia, which cost less than seven millions, has now been watered up to fifty-five millions. Assuming that the watering were to stop to-day, and that the railroads simply re-invested their dividends at the present rate of six per cent., in twenty years we should bepaying interest upon over forty billion dollars.
From a brokerage circular which recently came in my mail, I have clipped a few more instances of the workings of trust finance. The argument of the circular is that I need not be frightened at their offer to make my money earn more than six per cent.—that over a hundred per cent. is “being frequently earned by legitimate business.” Thus the Diamond Match Company recently paid ten per cent. on a capitalisation of fifteen million dollars, when its original capitalisation had been only six million dollars. The Western Union Telegraph Company began in 1858 with only three hundred and eighty-five thousand dollars, yet in 1874 it paid one hundred and fourteen per cent. on seventeen million dollars. Anyone who had invested one thousand dollars in this stock in 1858 would by 1890 have received fifty thousand dollars in stock dividends and one hundred thousand dollars in cash dividends. The present capital is over ninety-seven millions—“and the greater part of the equipment has been created out of the earnings of the company!” In the case of the Prudential Life Insurance Company (owing, though the circular does not state it, to a little deal between United States Senator Dryden and the New Jersey State Legislature) for every one thousanddollars originally paid in, the stockholders now own twenty-two thousand dollars’ worth of stock and received annual cash dividends of twenty-two hundred dollars, or two hundred and twenty per cent. upon their original investment!
And then, to diversify the subject, let us consider the tariff, and its variegated plunderings. In a letter to the New YorkEvening Postof Oct. 26th, 1904, Mr. J. R. Dunlap gave some figures showing the “scandalous taxes imposed by trusts upon the people”:
“Now, to show how the Dingley duty of eight dollars per ton on steel rails taxes American railroads and hence reaches deep into the pockets of shippers and travellers on American railroads, I need only cite the fact that, during the year 1903 our American railroads purchased from the steel pool exactly three million forty-six thousand eight hundred and thirty-six tons of new steel rails (see statistical abstract, Department of Commerce and Labour). The price toforeignrailroads being, say twenty dollars per ton—as wenow know—and the pool price to American railroads being twenty-eight dollars per ton, that means that the American people,during the single year last past, contributed a clean net profit of twenty-four million three hundred and seventy-four thousand six hundred and eighty-eight dollarsto the rail pool—by reason, presumably, of their “patriotic” belief in the Dingley duties! And during the past six years—since the Dingley Bill was enacted—these same American railroads have been forced to contribute to the few members of the rail pool exactly one hundred and two million six hundred and twenty-one thousand two hundred and fifty-six dollars, or eight dollars per ton on twelve million eight hundred and twenty-seven thousand six hundred and fifty-seven tons of rails bought and used. Dividing that stupendous sum of protection profit (one hundred and two million six hundred and twenty-one thousand two hundred and fifty-six dollars) by eighty million of population, we see that the rail pool alone—to say nothing of other combinations “sheltered” by the Dingley duties—has collected a tax of exactly one dollar and twenty-eight and one-quarter cents ($1.28¼) for every man, woman, and child in America, white and coloured.
“To further indicate the fabulous profits which the Dingley duties make possible to our ‘infant’ iron and steel industries, I need only cite recent and familiar records. In the spring of 1899, when the Steel Trust was in process of formation, and when it became necessary for the influential men in the steel industry toprovewhat enormous profits the steel manufacturers were making,and thus to induce the investing public to put their money into Steel Trust stocks—then it was that Mr. Charles M. Schwab, president, wrote to Mr. Henry C. Frick, chairman of the Carnegie Steel Company, the famous letter of May 15, 1899, now public property, in which Mr. Schwab used these words:’
“‘What is true of railsis equally true of other steel products....You knowwe can make rails for less than twelve dollars per ton, leaving a nice margin on foreign business.’
“Mark you, that was in 1899, when the boom was at its zenith, when wages were highest, and when all the costs of production were far above all averages of recent boom years.
“To show how accurate Mr. Schwab was in these statements, and to show how trustworthy was his confident forecast of future profits, I need only cite the following speaking figures from the two annual statements which have been made public by the United States Steel Corporation, namely:
Total number of employees:
Total annual salaries and wages paid:
Net earnings:
“It will be observed that during these two years the average annual net earnings of the Steel Trustexceeded the total labour cost of their entire product!”
“Turning from the iron and steel industry, we might take quinine, and many other medicinal products; we might take chemicals, many of them most essential in manufacturing industry; we might take borax, which sells in America at seven and one-half cents per pound, and in Britain at two and one-half cents per pound, because the Dingley duty is exactly five cents per pound; we might take mica, a mining product largely used in the electrical, wall-paper and stove-making industries, and which enjoys a modest protection ranging from one hundred and fifty to four thousand per cent. In short, we might take each and every staple product now made in America, and needlessly sheltered by the Dingley duties, and prove, by comparative prices at home and abroad, that the fabulous profits which the gentlemen engaged in these industries are now making—and which they have capitalised into watered “industrials”—are due chiefly and directly to the fostering care of the Dingley Bill, which was designed to protect our ‘infant’ industries.”
In the same issue, another correspondent, Mr. W. J. Gibson, shows how the Government serves as a tool of the trusts in tariff exactions. He gives several columns of facts about such outrages as the “Rupee Cases.” For instance:
“There have been nine or ten decisions on this one question against the Government, and still the secretary of the treasury refuses to refund the money which the courts have decided so often he has exacted illegally. The money he has directed to be wrongfully assessed and collected, and is retaining in these cases, known as “the Rupee Cases,” amounts to over a million dollars. The parties cannot get any interest for their money so wrongfully withheld, and the customs officials are still being directed to assess all merchandise coming from India on the basis of the rupee at the value of thirty-two cents in our money. This has gone on for more than six years, and against the decision of the United States Circuit Court since January 7, 1899.”
And now, can we get any broad view of the results of this long process of wealth-concentration? In 1850 the wealth of the United States was estimated at nine billions; in 1870 it was thirty billions; in 1890 it was sixty-five billions; and in 1900 it was ninety-five billions. How is this wealth distributed? Writing in 1896, Dr. C. B.Spahr made his famous calculation, embodied in the statement that one-eighth of the population owned seven-eighths of the wealth, and that one per cent. owned more than the remaining ninety-nine per cent. And at that time the machinery of exploitation had hardly more than got under way. The best attempt at an estimate since then is the one by Lucien Sanial, published by the American Branch of the International Institute of Social Science. This is the result of a careful analysis of the census of 1900; it shows that of ninety-five billions of the country’s present wealth, sixty-seven billions are owned by a capitalist-class of two hundred and fifty thousand persons, twenty-four billions by a middle class of eight million four hundred thousand persons, and four billions by a working-class of over twenty million persons. And now, if the sixty-seven billions owned by the capitalists be assumed to earn ten per cent.—which is surely a reasonable average amount—our people will be paying interest upon four hundred and fifty billion dollars at the end of the twenty year period!
And that represents the centralisation of the actual ownership of wealth; but one does not get a real understanding of the situation until he begins to consider the centralisation of thecontrolof wealth. In explaining the struggle over the surplusof the life-insurance companies, one of our financial magnates remarked to me: “I would rather have the power of manipulating four hundred million dollars, than the actual ownership of fifty millions.” And with that crucial fact in mind, let one consider the figures given by Mr. Sereno S. Pratt inThe World’s Workfor December, 1903, and summarised in Dr. Strong’s “Social Progress,” as follows:
“One-twelfth of the estimated wealth of the United States is represented at the meeting of the Board of Directors of the United States Steel Corporation.
“They represent as influential directors more than two hundred other companies. These companies operate nearly one-half of the railroad mileage of the United States. They are the great miners and carriers of coal. The leading telegraph system, the traction lines of New York, of Philadelphia, of Pittsburg, of Buffalo, of Chicago, and of Milwaukee, and one of the principal express companies, are represented in the board. This group includes also directors of five insurance companies, two of which have assets of seven hundred millions of dollars. In the Steel Board are men who speak for five banks and ten trust companies in New York City, including the First National, the National City, and the Bank of Commerce, the three greatest banks inthe country, and the heads of important chains of financial institutions. Telephone, electric, real estate, cable, and publishing companies are represented there, and our greatest merchant sits at the board table.
“What the individual wealth of these men is, it would be impossible and beside the point to estimate; but one of them, Mr. John D. Rockefeller, is generally estimated to be the richest individual in the world. But it is not the personal, but the representative, wealth of those men that makes the group extraordinary. They control corporations whose capitalisations aggregate more than nine billion dollars—an amount (if the capitalisations are real values) equal to about the combined public debts of Great Britain, France, and the United States. It is this concentration of power which is significant. There were at the time of the last statement sixty-nine thousand nine hundred and fifty-five stockholders in the Steel Corporation. But the control of this corporation is vested in twenty-four directors, and this board of directors is guided by the executive and finance committees, which in turn are largely directed by their chairmen, who are probably selected by the great banker who organised the corporation and in a large part sways its policy.
“Examinations show that the concentration of control of these great New YorkCity banks has gone so far that a comparatively small group of capitalists possesses the power to regulate the flow of credit in this country. In the last analysis it is found that there are actually only two main influences, and that these are centred in Mr. Morgan and Mr. Rockefeller. It is possible to express in approximate figures the extent of the Morgan influence”—which the writer shows in a table to figure up over six billion two hundred and sixty-eight million dollars. How very conservative is Mr. Pratt’s estimate is shown by the fact that he gives the number of holders of shares of the railroads of this country as nine hundred and fifty thousand persons; with which the reader may contrast the following editorial paragraph from a recent issue of the New YorkTimes:
“It would appear from evidence collected by the Interstate Commerce Commission and communicated to the Senate, that the ownership of the railroad system of this country is not as widely diffused as has been supposed. On the 30th of June, 1904, the 1,220 railroads reporting to the Commission had only 327,851 stockholders of record. This total includes many duplications, as it was impossible to know in how many instances one capitalist was represented in the stockholding interest of several railroads. Assuming the population of the UnitedStates to be, in round figures, eighty millions, the entire mileage of the railroads doing an interstate business is owned by about four-tenths of 1 per cent. of the people of this country.”
Such is the situation. It completes our view of the process of Industrial Evolution, so far as it has progressed up to date. The condition is like that of an oak tree planted in a jar, or a chick developing within its shell; the indefinite continuance of the process is inconceivable. What form the collapse will assume, and when it may be expected to occur, is the problem next to be taken up.