Part 3 (1/2)
[29] Professor E. A. Ross, ”Sin and Society,” p. 151.
[30] Frederick C. Howe, ”Privilege and Democracy in America,” p. 277.
CHAPTER II
THE NEW CAPITALISM
President Taft says that if we cannot restore compet.i.tion, ”we must proceed to State Socialism and vest the government with power to control every business.” As compet.i.tion cannot be revived in industries that have been reorganized on a monopolistic basis, this is an admission that, in such industries, there is no alternative to ”State Socialism.”
The smaller capitalists and business interests have not yet reconciled themselves, any more than President Taft, to what the Supreme Court, in the Standard Oil Case, called ”the inevitable operation of economic forces,” and are just beginning to see that the only way to protect the industries that remain on the compet.i.tive basis is to have the government take charge of those that have already been monopolized. But the situation in Panama and Alaska and the growing control over railroads and banks show that the United States is being swept along in the world-wide tide towards collectivism, and innumerable symptoms of change in public opinion indicate that within a few years the smaller capitalists of the United States, like those of Germany and Great Britain, will be working with the economic forces instead of trying to work against them. Monopolies, they are beginning to see, cannot be destroyed by private compet.i.tion, even when it is encouraged by the legislation and the courts, and must be controlled by the government.
But government regulation is no lasting condition. If investors and consumers are to be protected, wage earners will most certainly be protected also--as Mr. Roosevelt advocates. And from government control of wages, prices, and securities it is not a long step to government owners.h.i.+p.
The actual disappearance of compet.i.tion and the growing harmony of all the business interests among themselves are removing every motive for continued opposition to some form of State control,--and even the more far-sighted of the ”Captains of Industry,” like Judge Gary of the Steel Corporation and many others, are beginning to see how the new policy and their own plans can be made to harmonize. The ”Interests” have only recently become sufficiently united, however, to make a common political effort, and it is only after mature deliberation that the more statesmanlike of the capitalists are beginning to feel confident that they have found a political plan that will succeed. As long as the business world was itself fundamentally divided, small capitalists against large, one industry against the other, and even one establishment against another in the same industry, it was impossible for the capitalists to secure any united control over the government.
The lack of organization, the presence of compet.i.tion at every point, made it impossible that they should agree upon anything but a negative political policy.
But now that business is gradually becoming politically as well as economically unified, government owners.h.i.+p and the other projects of ”State Socialism” are no longer opposed on the ground that they must necessarily prove unprofitable to capital. If their introduction is delayed, it is at the bottom because they will require an enormous investment, and other employments of capital are still more immediately profitable. Machinery, land, and other material factors still demand enormous outlays and give _immediate_ returns, while investments in reforestation or in the improvement of laborers, for example, only bring their maximum returns after a full generation. But the semi-monopolistic capitalism of to-day is far richer than was its compet.i.tive predecessor.
It can now afford to date a part of its expected returns many years ahead. Already railroads have done this in building some of their extensions. Nations have often done it, as in building a Panama Ca.n.a.l.
And as capitalism becomes further organized and gives more attention to government, and the State takes up such functions as the capitalists direct, they will double and multiply many fold their long-term governmental investments--in the form of expenditures for industrial activities and social reforms.
Already leading capitalists in this country as well as elsewhere welcome the extension of government into the business field. The control of the railroads by a special court over which the railroads have a large influence proves to be just what the railroads have wanted, while there is a growing belief among them, to which their directors and officers occasionally give expression, that the day may come, perhaps with the compet.i.tion of the Panama Ca.n.a.l, when it will be profitable to sell out to the government--at a good, round figure, of course, such as was recently paid for railroads in France and Italy. Similarly the new wireless systems are leading to a capitalistic demand for government purchase of the old telegraph systems.
Mr. George W. Perkins, recently partner of Mr. J. P. Morgan, foreshadows the new policy in another form when he advocates a Supreme Court of Business (as a preventive of Socialism):--
”Federal legislation is feasible, and if we unite the work for it now we may be able to secure it; whereas, if we continue to fight against it much longer, the incoming time may sweep the question along either to government owners.h.i.+p or to Socialism [Mr. Perkins recognizes that they are two different things].
”I have long believed that we should have at Was.h.i.+ngton a business court, to which our great problems would go for final adjustment when they could not be settled otherwise. We now have at Was.h.i.+ngton a Supreme Court, composed, of course, of lawyers only, and it is the dream of every young man who enters law that he may some day be called to the Supreme Court bench. Why not have a similar goal for our business men? Why not have a court for business questions, on which no man could sit who has not had a business training with an honorable record? _The supervision_ of business by such a body of men, _who had_ reached such a court in such a way, would unquestionably _be fair and equitable to business_, fair and equitable to the public.” (Italics mine.)
Mr. Roosevelt and Senator Root are similarly inspired by the quasi-partners.h.i.+p that exists between the government and business in those countries where prices and wages in certain monopolized industries are regulated for the general good of the business interests. In the words of Mr. Root:--
”Germany, to a considerable extent, requires combination of her manufacturers, producers, and commercial concerns. j.a.pan also practically does this. But in the United States it cannot be done under government leaders.h.i.+p, because the people do not conceive it to be the government's function. It seems to be rather that the government is largely taken up with breaking up organizations, and that reduces the industrial efficiency of the country.”
As the great interests become ”integrated,” _i.e._ more and more interrelated and interdependent, the good of one becomes the good of all, and the policy of utilizing and controlling, instead of opposing the new industrial activities of the government, is bound to become general. The enlightened element among the capitalists, composed of those who desire a partners.h.i.+p rather than warfare with the government, will soon represent the larger part of the business world.
Mr. Lincoln Steffens reflects the views of many, however, when he denies that the financial magnates are as yet guided by this ”enlightened selfishness,” and says that they are only just becoming ”cla.s.s-conscious,” and it is true that they have not yet worked out any elaborate policy of social reform or government owners.h.i.+p. None but the most powerful are yet able, even in their minds, to make the necessary sacrifices of the capitalism of the present for that of the future. The majority (as he says) still ”undermine the law” instead of more firmly intrenching themselves in the government, and ”corrupt the State”
instead of installing friendly reform administrations; they still ”employ little children, and so exhaust them that they are poor producers when they grow up,” instead of making them strong and healthy and teaching them skill at their trades; they still ”don't want all the money they make, don't care for things they buy, and don't all appreciate the power they possess and bestow.” But all these are pa.s.sing characteristics. If it took less than twenty years to build up the corporations until the present community of interests almost forms a trust of trusts, how long, we may ask, will it take the new magnates to learn to ”appreciate” their power? How long will it take them to learn to enter into partners.h.i.+p with the government instead of corrupting it from without, and to see that, if they don't want to increase the wages and buying power of the workers, ”who, as consumers, are the market,”
the evident and easy alternative is to learn new ways of spending their own surplus? The example of the Astors and the Vanderbilts on the one hand, and Mr. Rockefeller's Benevolent Trust, on the other, show that these ways are infinitely varied and easily learned. Will it take the capitalists longer to learn to use the government for their purposes rather than to abuse it?
It is neither necessary nor desirable, from the standpoint of an enlightened capitalism, that the control of government should rest entirely in the hands of ”Big Business,” or the ”Interests.” On the contrary, it is to the interest of capital that all capitalists, and all business interests of any permanence, should be given consideration, no matter how small they may be. The smaller interests have often acted with ”Big Business,”--under its leaders.h.i.+p, but as industrial activities and destinies are more and more transferred to the political field, the smaller capitalist becomes rather a junior partner than a mere follower.
Consolidation and industrial panics have taught him his lesson, and he is at last beginning to organize and to demand his share of profits at the only point where he has a chance to get it, _i.e._ through the new ”State Socialism.” Moreover, he is going to have a large measure of success, as the political situation in this country and the actual experience of other countries show. And in proportion as the relations between large and small business become more cordial and better organized, they may launch this government, within a few years, into the capitalist undertakings so far-reaching and many-sided that the half billion expended on the Panama Ca.n.a.l will be forgotten as the small beginning of the new movement.