BOOK IIToC

Mr. Roosevelt in hisOutlookeditorial[14]said of the "Socialists who teach their faith as both a creed and a party platform" that "they are and necessarily must be bitterly hostile to religion and morality," that they "occupy in relation to morality and especially domestic morality a position so revolting—and I choose my words carefully—that it is difficult even to discuss it in a reputable paper."

When, however, he undertakes to substantiate this, he is obliged to admit that he cannot find any traces of it in American writers, and has to go to France and England for his examples. Had he been better informed, he would have known that not only is there no trace of immorality in our American Socialist press, but that there is one Socialist organ—the Christian Socialist—which has in the most vigorous terms denounced all those whose writings tend in any way to attack the fundamental principles of marriage. It is true that Christian Socialists in Mr. Roosevelt's opinion "deserve scant consideration at the hands of honest and clean-living men and women"; but he has not explained why. Nor has he ventured any explanation why Christian Socialists or any other Socialists should be "necessarily—bitterly hostile to religion and morality."

I must postpone to the chapter on the Ethical Aspect of Socialism[15]the explanation why Socialism, far from being "necessarily bitterly hostile to religion and morality," as Mr. Roosevelt maintains, is—on the contrary—the only form of society ever proposed which could make religion and morality possible. At the present time, itseems sufficient to point out the obvious fallacy of Mr. Roosevelt's syllogism.

Here it is:

Gabriel Deville wants to destroy the home.

Gabriel Deville is a Socialist;

Therefore: All Socialists want to destroy the home. The logic of this is bad enough, but even the premiss is false. Deville is no longer a Socialist; and if he does want to destroy the home, no one that I know of in America wants him back in the fold.

In exactly the same manner our ex-Presidential logician argues regarding divorce:

Herron divorced;

Herron is a Socialist;

Therefore: All Socialists divorce. Herron was divorced in 1901. He is the only leading Socialist who has divorced during twenty years to Mr. Roosevelt's knowledge or to mine. Whereas, during that time here are the statistics of divorces for the United States:

Total number of marriages 1887-1906, 12,832,044

Total number of divorces 1887-1906, 945,625 or about one in 12,[16]in all of which the majority of the men presumably voted for Mr. Roosevelt.

Can anyone who knows the family life of Socialists assert that the divorce rate among them is greater than that of the community in which they live?

Again, the pretence that the American home to-day is one which a capitalist like Mr. Roosevelt can hold up to the admiration of the world will not stand scrutiny.

Where there is wealth for leisure, there we find immorality enthroned as a vice; and where there is no leisure, there we find immorality imposed as a necessity. Are the filthy tenements and promiscuous lodgings ofthe congested districts in our large cities the homes to which Mr. Roosevelt is fearful that Socialism will put an end?[17]Or is it the so-called She-towns in New England from which men are driven because there is no employment in them for any save women and children?[18]Or the lumber camps to which these men are driven where there is no employment for women?[19]Or the home of the unemployed to which the bread-winner has returned day after day for two years now, seeking employment and finding none—guilty of no crime save that no man has hired him? Thousands—nay, hundreds of thousands of such so-called homes are scattered over the face of this land which Mr. Roosevelt has during seven years administered.

As a matter of fact, no decent home is possible for the majority of our fellow citizens so long as they are called upon to support it at present prices on present wages. All this will, I think, be made clear in the description of industrial conditions. Suffice it to say here that these conditions furnish a few luxurious and often licentious homes for the propertied class and a few comfortable and moral homes for the aristocracy of the working class, but leave a vast number of our families so nearly upon the edge of poverty as to drive their daughters to prostitution and their sons to crime.

Another charge made by Mr. Roosevelt is that Socialists propose to abolish property and distribute wealth. It has been repeated by both Mr. Taft and Mr. Bryan and is still being repeatedad nauseamby the press.Workingmen so absorbed by the making of bread that they have no time to discuss questions of government may be excused for being ignorant on such a point as this; to them ignorance cannot be imputed as a fault. But that those who set themselves up as the persons best fitted to govern and educate our country—as indeed the only persons in the country possessing the knowledge of statesmanship necessary to handle our governmental affairs and publish our daily press—should either never have taken the trouble to find out what Socialism is, or, having taken the trouble, should so traduce it, is a sad commentary upon our editors and statesmen.

Just as it has been demonstrated that Socialism is opposed to Anarchism, so can it be demonstrated that Socialism is opposed to the distribution of wealth or the abolition of property. Far from distributing wealth, the essence of Socialism is that it seeks to concentrate it. Far from wanting to abolish property Socialism seeks to put it on a throne. The question of property is so important that a special chapter has been devoted to it. I shall therefore only say here just enough to remove the error created by the misstatements current on the subject.

Property is not only the basis of our present civilization, but must be the basis of all conceivable civilizations. It may be said that not only all law, but all government, is founded upon it. Property was instituted to furnish to every industrious man security as regards himself, his family, and the means of their support; to protect him and them from theft, from fraud and evil doing.

Unfortunately property, like every human institution—even the best of them[20]—has been abused to servethe selfishness of the crafty; and there have arisen, therefore, notions and laws regarding property which have reversed the results which property was instituted to secure. Instead of making every industrious man secure as regards himself, his family, and the means of their support, it has actually deprived the majority of all security regarding these things and, indeed, put the majority as regards these things at the mercy of a very few. Not only this, it has created conditions which to-day are depriving several millions of us not only of all means of support, but of all opportunity of earning them.

The bourgeois' excuse for such conditions is that no better can be devised. Here is the whole issue of Socialism raised; for Socialism contends that these conditions are totally unnecessary; that it does not need any imagination or invention to substitute for them a system that will put an end to such evils as pauperism, prostitution, and, in great part, crime; that we have but to adopt as a community the principles already adopted by the men—the makers of the trusts—to whom the whole business world looks up as infallible on these subjects; and that this can be accomplished by ridding the institution of property of the fallacies with which it has been industriously defaced. Just indeed as the truly religious have during all ages sought to rescue religion from the crafty who tend to use it for their own ends—Christ from the Pharisee, Plato from the Sophist, Luther from the Borgias, so Socialists are now seeking to rescue property from the few who, under a mistaken theory of happiness, use property to injure their fellow creatures when these very few can attain happiness only by so using property as to benefit those they now injure.

It must, however, be specifically stated that Socialism does not involve the concentration of all wealth in the state. No sane Socialist proposes to vest in the state the things which a man uses, his personal apparel, his personal furniture, his objects of art, his musical instruments, his automobile, or even his private yacht.

There is no intention to suppress private property except so far as it is used for exploitation. Light is thrown upon this subject in another paragraph, which indicts the capitalist system for making the production of the necessaries of our lives the object of their competitive enterprises and speculations.

What the Socialist party proposes to do is not to abolish property, but to abolish the capitalist system, as it expressly states; and it proposes to do this not only in the interest of the proletariat, but also in the interest of the capitalist himself, who, to quote the words of the platform, is "the slave of his wealth rather than its master." The extent to which this last is true will be discussed in a subsequent chapter and ought to constitute an impressive argument for all—even millionaires—who have become the slaves of the very fortunes they have made. And the moral tendency to restore property to its original intention by abolishing the capitalist system is expressly stated in the platform as not an attempt "to substitute working-class rule for capitalist-class rule, but to free all humanity from class rule and to realize the international brotherhood of man." If this be immoral, then a great many of us do not know what morality is.

Nor does it propose to vest in the state anything but what it is indispensable for a state to own in order to rescue the unwealthy majority from the exploitation of the wealthy few. Nothing is more false or libelous than the allegation that Socialism proposes to destroyproperty, or to deprive a man of the benefit of his talents, or of the enjoyment of the products of his work. It is the present industrial system that deprives the majority of the product of their work. Socialism aims at the opposite of these things. What Socialism does propose is to preserve wealth by eliminating waste and to ensure to all men the fullest benefit of their talents and the enjoyment of the whole product of their work. It does not propose to level down, as is so often claimed; the necessary effect of Socialism is to level up, if indeed it levels at all. The extent to which it may be wise to concentrate wealth in the state, or whether it is necessary to concentrate it in the state at all, is a question which must be postponed until we have a clear idea of what Socialism is.

Meanwhile I venture to suggest one view of Socialism which, although it does not attempt to define it, may help us as a first effort to get a correct apprehension of it.

Socialism is the concentration of just so much wealth in the community—please note that I do not say "state"—as may be necessary to secure the liberty and the happiness of every man, woman, and child consistent with the liberty and the happiness of every other man, woman, and child.

We are obviously here brought to the question of what is liberty, and to the discussion of another error regarding Socialism upon which the bourgeois is disposed to insist, viz.: Socialism will impair liberty.

The same thing must be said of liberty as of property: both are such important subjects that they demand a chapter to themselves. But there are current errorsabout liberty which, when removed, will prepare the mind for the undoubted fact that Socialism, far from impairing liberty, will greatly enlarge it.

When negro slavery existed people thought that if slavery were only abolished, liberty would be secured. It was found, however, that when negro slavery was abolished there was still another liberty to be secured—political liberty.

Now that we have secured the constitutional right and the constitutional weapon by which political liberty ought to be attained, we discover that these rights and weapons are useless to us so long as the immense majority of us are still economic slaves.

Let us consider for a moment just what is meant by an economic slave.

An economic slave is a man who is dependent for his living on another man or class of men and who, because all his waking hours and all his vitality must be devoted to making a living, has no leisure either to exercise his political rights or to enjoy himself.

It may seem exorbitant to say that the "immense majority" of us are economic slaves, yet a very little consideration will, I think, convince that we are.

Workingmen are dependent on their employers under conditions worse than negro slavery. For a slave owner had an interest in the life of his slave just as a farmer has an interest in the life of his stock. He therefore fed his slaves and did not overwork them. Nor was a slave subject to losing his job. The factory owner, on the contrary, not being the owner of his factory hands, is free to dismiss them as soon as they are worn out, and it is to his interest, by speeding up his machinery, to get the most work out of his hands possible, regardless whether he is overworking them; for as soon as theyshow signs of overwork he has but to dismiss them and employ a younger generation. Nor can it be said of workingmen that they have leisure for education, politics, or enjoyment. Now the last census shows that our industrial population numbers 21,000,000.

In the second place, the farmer works himself as hard—if not harder—than the factory owner works his factory hand. He is driven by the same necessity as the factory owner—the necessity of making money.[21]There are of course a few large farmers who own enough land to work it as the factory owner works his factory—by the use of machinery and men. But these are few, and it is the extraordinary economy that these men make in working their farms that obliges the small farmer to work night as well as day to make a bare living out of his land. Now by the last census the farming population in the United States numbers 30,000,000.

And what has been said of the workingman is true of the clerk and domestic; and what has been said of the small farmer is true of the small tradesman. Now clerks, domestics, and tradesmen number 30,000,000. Summing up we have:

Industrial population21,000,000Farmers30,000,000Clerks, domestics and tradesmen30,000,00081,000,000

out of a total population of 90,000,000 are economic slaves.

And of the 9,000,000 that remain, how many are economically free?

These are in part teachers, physicians, and lawyers. I leave it to teachers to tell us how much time they can call their own. As to the rest, it is the dream of a young doctor to get a large practice; and when his dream is realized, how much leisure does he enjoy? He is at the mercy of his practice, not only weekdays, but Sundays—days and nights. He is the slave of his own practice. It is the dream of the young lawyer to get rich clients and handle big cases. When he gets them, he discovers that he must have an office that costs between $30,000 and $50,000 a year to take care of them, and that he must earn these large sums before there is a penny left for himself. So he too is the slave of his own office.

But further than this: Our great business men—amongst them the very greatest—I have seen with my own eyes slowly sink under the burden of the very institutions their own genius had created. They too have become the slaves of their own creations.

So we are all slaves, the greatest and the least of us, with exceptions so few that they are hardly worth mentioning. And how do these exceptions use their leisure? It were better not too closely to inquire. Too much leisure is as detrimental to happiness and progress as too much work. The enormous increase of lunacy in late years is a straw that shows how the stream runs. Because of too much work or too much leisure the race is marching with fatal speed toward general prostration of nerve, of body, and of mind.

Whether then we look at this question from the point of view of human progress or of human happiness, it seems indispensable that the whole machinery of production be speeded down a little instead of continuously up. Now this is what Socialism proposes to do: It proposes by the substitution of coöperation forcompetition to make the same economy for all humanity as trust promoters have made for themselves. And the economy will be an economy of time. We shall work as hard while we are working, but we shall work four hours instead of eight and twelve. And the rest of the time we shall have to ourselves; we shall be economically free.

Yet if the reader has in his mind any such idea of Socialism as Mr. Roosevelt's "state free lunch counter," resulting in an "iron despotism over all workers compared to which any slave system of the past would seem beneficent because less utterly hopeless"—he will be disposed to condemn in advance any economic freedom purchased at such a price. I beg the reader, therefore, to try to rid his mind of the prejudice created by such views as Mr. Roosevelt's until he has read the chapters on the Economy of Socialism and How Socialism May Come. If in these chapters the errors of Mr. Roosevelt's notions are not dissipated, then this book will have been written in vain.

One thing more, however, must be said on this subject. Inexcusable though Mr. Roosevelt may be in most of his attacks on Socialism, it must be admitted that the "iron despotism" to which he thinks Socialism will lead is justified by many Socialist authors, and it is only very lately that a way has been found for introducing coöperation without compulsion. Again, Mr. Roosevelt is in good company in making this charge. It is the greatcheval de batailleof every anti-Socialist.

In "A Plea for Liberty," edited by Herbert Spencer, the idea of concentrating wealth in the community is denounced as a "conception of life or conduct" which would compel men "to rise at morn to the sound of a state gong, breakfast off state viands, labor by timeaccording to a state clock, dine at a state table supplied at the state's expense, and to be regulated as to rest and recreation."

In fact, Socialism proposes none of these things. But if it did, a factory hand might very well ask whether such a conception of life or conduct would be worse than to rise at morn by the sound of a factory bell, labor by time according to a factory clock, neither breakfast nor dine at a factory table supplied at the factory's expense, but be regulated as to rest and recreation by factory rules. When we come to discuss liberty, we shall be in a position to compare the liberty enjoyed under Socialism with the liberty enjoyed to-day.

In the chapter on Property and Liberty, the subject of liberty is carefully analyzed; no more, therefore, need be said on this subject except in conclusion to insist that it is the competitive system of to-day that makes slaves of practically all of us, and that it is the coöperative system alone that will secure for us the last and greatest of all the liberties—economic liberty—because it is economic liberty alone that will enable us to enjoy the other two.

Having now chipped off some but not all of the errors that prevail, regarding Socialism, let us sum up what Socialism is not; it will help us to a study of what Socialism is.

Socialism is not Anarchism. It is the contradictory opposite of Anarchism. It believes in regulation, but demands that the regulation be wise and just.Socialism is not Communism. On the contrary it demands that workingmen be assured as nearly as possible the product of their labor.Socialism does not propose to eliminate competition, but only to abolish excessive competition that gives rise to pauperism, prostitution and crime.Socialism is not hostile to the home. On the contrary, it seeks to remove the evils that make the homes of our millions insupportable.Socialism is not immoral. On the contrary, it seeks to make the Golden Rule practical.Socialism does not propose to abolish property or distribute wealth. It proposes, on the contrary, to consecrate property and concentrate wealth so that all shall enjoy according to their deserts the benefits of both.Socialism will not impair liberty. On the contrary, it will for the first time give to humanity economic liberty without which so-called individual and political liberty are fruitless. It proposes to regulate production, consecrate property, and concentrate wealth only to the extent necessary to assure to every man the maximum of security and the maximum of leisure; thereby putting an end to pauperism, prostitution, and in great part, to crime, and furnishing to man environment most conducive to his advancement and happiness.Whether it will accomplish these things can only be determined by approaching it from the positive side. We shall proceed next then to answer the question what Capitalism is.

Socialism is not Anarchism. It is the contradictory opposite of Anarchism. It believes in regulation, but demands that the regulation be wise and just.

Socialism is not Communism. On the contrary it demands that workingmen be assured as nearly as possible the product of their labor.

Socialism does not propose to eliminate competition, but only to abolish excessive competition that gives rise to pauperism, prostitution and crime.

Socialism is not hostile to the home. On the contrary, it seeks to remove the evils that make the homes of our millions insupportable.

Socialism is not immoral. On the contrary, it seeks to make the Golden Rule practical.

Socialism does not propose to abolish property or distribute wealth. It proposes, on the contrary, to consecrate property and concentrate wealth so that all shall enjoy according to their deserts the benefits of both.

Socialism will not impair liberty. On the contrary, it will for the first time give to humanity economic liberty without which so-called individual and political liberty are fruitless. It proposes to regulate production, consecrate property, and concentrate wealth only to the extent necessary to assure to every man the maximum of security and the maximum of leisure; thereby putting an end to pauperism, prostitution, and in great part, to crime, and furnishing to man environment most conducive to his advancement and happiness.

Whether it will accomplish these things can only be determined by approaching it from the positive side. We shall proceed next then to answer the question what Capitalism is.

[12]The principal evil attending such laws is that they give rise to graft. In other words, our political machine actually favors such laws, because they put a club in the hands of the machine through which it can not only levy political contributions, but coerce their victims into support of the machine.

[13]The death rate in 1900 among occupied males in the professions was 15.3 per 1000; in clerical and official classes 13.5; mercantile, 12.1; laboring and servant classes 20.2 per 1000 (12th Census U.S.) Dr. Emmett Holt, writing in theJournal of the American Medical Association, points out the marked contrast between the death rate of the children of the poor and the children of the rich. See Appendix, p. 421.

[14]Outlook, March 20, 1909.

[15]Book III, Chapter V.

[16]U.S. Census Bulletin 96, p. 7, 12.

[17]"Poverty," by Robert Hunter. (Macmillan.)

[18]"Socialism and Social Reform," by R.T. Ely, p. 43. (Crowell.)

[19]Ibid.

[20]"Government or Human Evolution," Vol. II, p. 88et seq., by the author.

[21]"The American Farmer," A.M. Simons.

Socialism is necessarily twofold: destructive and constructive; critical and remedial. We shall take the critical or destructive rôle of Socialism first; setting down the evils in our existing industrial system which Socialism criticizes and seeks to destroy, and leaving the remedial or constructive rôle of Socialism where it properly belongs—to the end. For this reason the present book, which treats of the evils of the existing industrial system, is entitled "What Capitalism is."

For nearly two centuries men have produced and distributed the things they needed, upon what is called "the competitive system." That is to say, every individual is free to choose his particular share in this work and to make out of his work all that he can, in order with the money so made to purchase for himself the things that he individually needs. The farmer undertakes to furnish us with food, the forester with lumber, the miner with iron. Another set of men run railroads, steamboats, wagons, etc., to distribute thethings produced to those who are engaged in selling them—by wholesale to the trade, or by retail to the consumer. Every man engaged in production and distribution is in a measure competing with every other man engaged in it, each trying to make out of his particular calling the largest amount of money possible with the view of being able with the money so earned to purchase for himself the largest amount of necessaries, comforts, and luxuries. This so-called competitive system has been elaborately described by all writers of political economy from de Quesnay and Adam Smith, the fathers of our present system of political economy, to the present day; and because it follows the predatory plan of nature (by which one set of animals lives by devouring another set), it is claimed by some so-called philosophers to be "natural" and therefore wise. The most notorious author of this so-called scientific justification of the competitive system is Herbert Spencer.

The competitive system, however, has been found to result in great waste, misery, and disease; and it is to these evil consequences that the Socialist desires to put an end. He claims that the competitive system is not wise, not scientific, and above all, not economical, but is the most wasteful system conceivable. He alleges that the only intelligent, economic way of producing and distributing the things we need is by coöperation; and the whole economic issue between Socialism and our present industrial system is that Socialism stands for coöperation, and our present system for competition.

It is by no means a necessary part of Socialist philosophy that competition be entirely eliminated. On the contrary, it has been pointed out and will later be further seen that competition has many useful qualities.[22]Socialism, however, points out that competition, when allowed full sway in producing and distributing the necessaries of life, is the direct occasion of the larger part of the misery in the world, and insists, therefore, that asregards production and distribution of the necessaries of life, competition be sufficiently eliminated to assure to all men the opportunity to work, and as nearly as possible the full product of their work. The limitation in italics is the definite dose to which reference has already been made.[23]

One prominent feature of the competitive system is that men do not work for the purpose of supplying the needs of their fellow creatures. The Steel Trust does not manufacture steel to satisfy our need for steel; the farmer does not raise wheat to satisfy our need for bread; they produce these things simply for the purpose of making money for themselves in order that with this money they can procure for themselves the things they need. Socialism claims that the rôle played by money in the competitive system is unfortunate, because the amount of money available at any given time is not always properly adjusted. Sometimes it is so badly adjusted that there is more cotton in one place than the people in that place can use, and in another more people who need cotton than there is cotton to give them; so that it is deliberately proposed to burn cotton for lack of consumers in one place, while consumers are allowed to suffer for lack of cotton in the other. So a short time ago thousands were dying of starvation for lack of wheat in India, while we had such a superabundance of it in America that we were exporting it every day. But that wheat was not available for India because it had to be converted into money.

Socialists allege that this bad situation would never arise if things were produced for the purpose of satisfying human needs instead of for making money.

Let us enumerate some of the most important evils of the competitive system, which Socialism seeks to correct. These evils briefly are: The competitive system is stupid because wasteful and disorderly; it is unnecessarily immoral, unjust and cruel.

[22]See Book I, Chapter III.

[23]See Book I, Chapter III.

The first and most glaring evil of the competitive system is that it is stupid. In support of this I shall call as witnesses captains of industry whom the business men regard as the greatest authorities in the world: John D. Rockefeller[24], Henry O. Havemeyer[25], Elbert H. Gary[26]and others.

Socialists are accused of being impractical. I shall have failed in properly presenting the Socialist case if I do not succeed in demonstrating that the impractical people are the bourgeois, the Roosevelts, Tafts and Bryans who, though aware of the waste of the competitive system, insist upon maintaining it; and that the only practical people are those who, like the Socialists, having perceived the waste that attends the competitive system, seek to replace it by a more economic plan.

No one will, I think, deny that the most practical business men to-day in America are Rockefeller, Pierpont Morgan, Havemeyer, and the others who have been engaged in organizing our great trusts. Now the only object of a trust is to eliminate the unnecessary waste of competition; and the only difference between the Socialist and the trust magnate is that the Socialist wants the benefit derived from reducing competition to be shared by all; whereas Rockefeller, Pierpont Morgan and the other trust magnates want the profit secured by the elimination of waste all to themselves.

I do not suppose there is any man living so prejudiced or so dull as to deny that, if Socialism could present a system by which all could be made to profit from the elimination of the waste of the competitive system in such a manner that the profit of each shall be proportional to the amount which each contributes, Socialism would be justified. The only point upon which there can be discussion is whether it is possible to suggest a workable plan under which the evils of competition can be eliminated, and the blessings of coöperation take their place. In other words, is coöperation a practical cure for competition? It is obviously impossible to decide whether a given treatment would constitute a cure for a given disease, without a thorough knowledge of the disease. It is therefore essential that we should be clear as regards the defects of the competitive system, and how far these defects are curable and how far incurable.

The beauty of the competitive system upon which the bourgeois loves to dwell is that it is automatic; whenever there is overproduction in an industry prices fall, profits disappear and therefore capital flows awayfrom it; as soon as overproduction comes to an end prices rise, profits reappear and capital flows back to it. And the beauty of this automatic system is the more commended because it closely follows Nature; and indeed, the system of Nature is beautiful in the extreme. The sun draws the vapor of pure water from the salt ocean; lifts it high into the air, wafts it by propitious breezes to the continent; sheds it in beneficent rain upon the thirsty land, and deposits it in gigantic reservoirs of ice and snow upon our mountain heights; there is the supply upon which during hot summers we depend; and the hotter the summer, and the more therefore we need moisture, the more the snow and glaciers melt and furnish us with torrents of refreshing streams; so that at last the vapor that has been drawn by the sun from the ocean, in obedience to the inevitable law of gravitation, returns to it in a thousand rivers, after having performed its function of nutrition and refreshment on the way.

In the same fashion demand is ever beckoning labor and capital to seek new fields, tempting them from the low levels of low interest to high levels of high profit; and supply, increasing through their efforts, is forever bringing them back, like the force of gravitation, to the point whence they started; and the cycle is repeated over and over again, performing its mission of production and distribution on the way.

Unfortunately, Nature, though beneficial in the main, does not accomplish its work without distressing incidents. Breezes are not always propitious; they sometimes create disastrous havoc; torrents are sometimes more than refreshing, and summers unduly hot.

For example, the more abundant a crop is, the more prosperous the country which grows the crop oughtto that extent to be; but it sometimes happens that, in such case, prices fall so low as to bring disaster to those who have grown it.[27]

Nature is not always to be depended on. Occasionally a crop entirely fails, and when this happens, as lately in India, millions are exposed to starvation and thousands actually starve.

Even when Nature is most bountiful the competitive system results in misfortune. For example, the President of the Boston Chamber of Commerce in a speech to the Chamber said in 1891:

"In 1890 we harvested a cotton crop of over eight million bales—several hundred thousand bales more than the world could consume. Had the crop of the present year been equally large, it would have been anappalling calamityto the section of our country that devotes so large a portion of its labor and capital to the raising of cotton."[28]

In 1905 the newspapers announced "the South is proposing to burn cotton so as to keep up its price."[29]And still more recently the same suggestion has been made regarding the tobacco crop in Kentucky.

Again, the competitive system under which every man goes into the business where he sees most profit, inevitably leads to periods of overproduction, and overproduction leads to unemployment and misery.

No political economist denies the obvious fact that whenever an industry is known to be profitable, capitalists are likely to engage in this industry—indeed, this is one of the automatic processes which the Manchesterschool has put forward as constituting the chief merit of the system. It is, of course, important for the community at large that prices should in no one industry become excessive; and obviously the disposition of capital to rush into industries where profits are high, does by competition tend to reduce prices, and thus prevent them from becoming excessive. But economists, especially those of the Manchester school, have not been willing to recognize that this disposition of capital to flow into productive enterprises may, though sometimes beneficial, be also sometimes ruinous; may, indeed, often result in a devastating deluge. These economists, therefore, it may be well to confront with a brief history of one or two of our largest combinations. Let us take as a first example the sugar trust.

Just before the organization of this trust, overproduction had become so excessive that of forty refiners in the United States eighteen became bankrupt. Of the twenty-two that remained, eighteen combined. Of the refineries belonging to these eighteen, eleven were closed, leaving seven to do profitably the work which had previously been done unprofitably by forty.

The history of the whisky trust shows overproduction to a still more aggravated degree. Before the organization of the Distilling and Cattle-Feeding Company, agreements were entered into by the majority of the distillers; under one of them they agreed to reduce production to forty per cent of what it at that time was; subsequently they agreed to reduce still further to twenty-eight per cent; and of eighty of the principal distillers who organized the Distilling and Cattle-Feeding Company, the establishments of sixty-eight were closed, leaving only twelve distilleries operating.

The same succession of events is found in the historyof the American Steel and Wire Company, and indeed of practically all American trusts.

This inevitable tendency towards overproduction vitally concerns workingmen, for it is upon them that the evil consequences of this process first and most fatally fall. As soon as the process results in the inevitable reduction of prices to near cost, the manufacturer must either throw workmen out of employment or reduce wages. Wages constitute the only elastic element in cost, and it is therefore the workingman who first pays for the evil working of this system. And not only does the workingman pay for it, but the employer pays for it also; for workingmen, to protect their interests, strike, and only the wealthiest employers can stand the strain of a strike; the rest are ruined by it.

Even a reduction of the hours of work or the days of employment in the week will, if it lasts long enough, ruin the employer, for he has still to pay the fixed charges of the factory, and if prices get low enough, and he cannot sell his goods except at a ruinous loss, he ends by not having means to pay these charges; and this process is illustrated in the cases just mentioned; for example, eighteen out of forty sugar refiners became bankrupt; and it was not till the eighteen were ruined that a combination was possible amongst the rest.

One method employed by trusts to keep up prices at home is to sell their excess of goods in foreign markets at prices below cost.

Mr. Gary, President of the Federal Steel Company, testified before the Industrial Committee that steel had been recently shipped to Japan at a price below the domestic price.[30]

Mr. J.W. Lee, President of the three independentpipe-line organizations, testified that prior to 1895 "oil for export was sold below the cost of crude at the refinery."[31]

Again, at a time when the American trade was paying $28 for steel rails, the same steel rails were sold in Japan at $20.[32]

Obviously, the nations who are the victims of this process are not long going to tolerate it; but this is a relatively small part of the international complications produced by overproduction. The most serious consequence of overproduction is that manufacturers, when they can no longer get a remunerative price for their goods in the home markets, are inevitably driven to seek it elsewhere. They seek foreign markets, and failing foreign markets, they seek new markets by colonization or conquest.

It is impossible to read the history of the British Empire during the last 150 years without becoming persuaded that its so-called greed for conquest inevitably results from the necessity under which English manufacturers have been to secure markets for their increasing goods. Either British factories had to close, and British workmen to be thrown out of employment, or England must, by colonization or conquest, secure a price outside her own borders for the goods which competition perpetually tended to make her factories overproduce.

Indeed, the war through which England compelled China to purchase Indian opium looks like the greatest of international crimes; yet, when we understand this so-called crime of England, it turns out to have been a commercial necessity; for the remunerative prices obtained by the production of opium in India had sodeveloped this branch of business that millions of Indians depended for their lives upon it, and either Chinese must poison themselves with opium, or Indians must die of hunger. The responsibilities of England were to her subjects first. The Chinese had to pay the price of this responsibility.

No better illustration of the wicked despotism that results from existing industrial conditions could be given than this; it brought about a condition of things under which England must commit a crime against China, or millions of her subjects must perish in Hindustan.

The millions that would starve in India if the opium market were suddenly closed remind us of the millions who are on the verge of starvation here in the United States,[33]and have been for two years past because of inherent and incurable defects in our industrial system. It is no answer to say that the evil results of overproduction are promptly remedied by the fluidity of capital to flow towards profitable and to withdraw from unprofitable manufactures. Every time such withdrawal takes place a corresponding number of workmen are thrown out of employment, are subjected to want and anguish of anxiety. The evil of this system cannot be explained away by pointing out that the capital withdrawn from one manufacture will soon be reinvested in another. A cotton-spinner cannot in a week or a month become a boilermaker. The commercial system which makes it easy for a capitalist to maintain income at cost of agony to the workingman does not recommend itself to the political student seeking the establishment of Justice in economic conditions. For, unfortunately, labor is not as "fluid" or insensible as capital. The workingman is a human being with the capacity for pain andanxiety that characterizes our race; and every time that capital profits by its fluidity to flow from one industry to another, the lives of men, women, and children are threatened by want. Even in prosperous times memories of the last panic and the certainty of a recurring panic keep their hearts haunted by fear.

Overproduction is by no means the only cause for these periods of unemployment. Indeed, the panic of 1907 was not the result of overproduction, but of overinvestment, or what the French call the "immobilization of capital." Every nation has two very different uses for wealth: one for keeping its population alive and comfortable, the other for developing the resources of the country, e.g., building roads and railroads, exploiting mines and quarries, etc. If too much wealth is immobilized in the latter, there is not enough for the former. The important function of regulating this matter is in the hands of bankers who make money not only out of the prosperity of prosperous times, but out of the panic of panic periods. Thus in May, 1907, the bankers, knowing that there had been overinvestment, took care of themselves by selling securities at top-notch prices, occasioning what was called the "rich man's panic," because the rich men of leisure were its victims; so that when the poor man's panic came in October and stocks tumbled to one-half of May prices, the bankers were able to reinvest the proceeds of May sales at fifty per cent profit. One of the consequences of this operation was that in October, 1907, neither manufacturers nor railroad men could get money to keep their work going; gangs of five thousand men at a time were summarily dismissed by railroads, and manufactures shut down.

Of course, the bankers did not "make the panic," ashas been sometimes ignorantly asserted; they only made money out of it both ways—out of high prices in May and out of low prices in November. And this illustrates one of the great defects of the competitive system—that it puts different sets of men in a position where they can make individual profit out of the misfortunes of their neighbors; bankers out of panics; distillers and liquor dealers out of drunkenness; manufacturers and retailers out of adulteration, and so down the whole gamut of production and distribution; and this is the process which the bourgeois approves because it "makes character."

But the unemployment that is the necessary result of all periods of depression, whether produced by overproduction or overinvestment, deserves more than passing mention for its fruits in the shape of misery, pauperism, prostitution and crime, are menacing and prejudicial to the race.

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