Transcriber's Note:
Footnotes have been corrected and moved to the end of chapters.

SOCIALISM AS IT IS

A SURVEY OF THE WORLD-WIDE
REVOLUTIONARY MOVEMENT

BY

WILLIAM ENGLISH WALLING

New York
THE MACMILLAN COMPANY
1918

All rights reserved

COPYRIGHT, 1912,
By THE MACMILLAN COMPANY.

Set up and electrotyped. Published April, 1912. Reprinted October, 1912; January, 1915.

Norwood Press
J. S. Cushing Co.—Berwick & Smith Co.
Norwood, Mass., U.S.A.

PREFACE

The only Socialism of interest to practical persons is the Socialism of the organized Socialist movement. Yet the public cannot be expected to believe what an organization says about its own character or aims. It is to be rightly understood only through its acts. Fortunately the Socialists' acts are articulate; every party decision of practical importance has been reached after long and earnest discussion in party congresses and press. And wherever the party's position has become of practical import to those outside the movement, it has been subjected to a destructive criticism that has forced Socialists from explanations that were sometimes imaginary or theoretical to a clear recognition and frank statement of their true position. To know and understand Socialism as it is, we must lay aside both the claims of Socialists and the attacks of their opponents and confine ourselves to the concrete activities of Socialist organizations, the grounds on which their decisions have been reached, and the reasons by which they are ultimately defended.

Writers on Socialism, as a rule, have either left their statements of the Socialist position unsupported, or have based them exclusively on Socialist authorities, Marx, Engels, and Lasalle, whose chief writings are now half a century old. The existence to-day of a well-developed movement, many-sided and world-wide, makes it possible for a writer to rely neither on his personal experience and opinion nor on the old and familiar, if still little understood, theories. I have based my account either on the acts of Socialist organizations and of parties and governments with which they are in conflict, or on those responsible declarations of representative statesmen, economists, writers, and editors which are not mere theories, but the actual material of present-day polities,—though among these living forces, it must be said, are to be found also some of the teachings of the great Socialists of the past.

It will be noticed that the numerous quotations from Socialists and others are not given academically, in support of the writer's conclusions, but with the purpose of reproducing with the greatest possible accuracy the exact views of the writer or speaker quoted. I am aware that accuracy is not to be secured by quotation alone, but depends also on the choice of the passages to be reproduced and the use made of them. I have therefore striven conscientiously to give, as far as space allows, the leading and central ideas of the persons most frequently quoted, and not their more hasty, extreme, and less representative expressions.

I have given approximately equal attention to the German, British, and American situations, considerable but somewhat less space to those of France and Australia, and only a few pages to Italy and Belgium. This allotment of space corresponds somewhat roughly to the relative importance of these countries in the international movement. As my idea has been not to describe, but to interpret, I have laid additional weight on the first five countries named, on the ground that each has developed a distinct type of labor movement. As I am concerned with national parties and labor organizations only as parts of the international movement, however, I have avoided, wherever possible, all separate treatment and all discussion of features that are to be found only in one country.

The book is divided into three parts; the first deals with the external environment out of which Socialism is growing and by which it is being shaped, the second with the internal struggles by which it is shaping and defining itself, the third with the reaction of the movement on its environment. I first differentiate Socialism from other movements that seem to resemble it either in their phrases or their programs of reform, then give an account of the movement from within, without attempting to show unity where it does not exist, or disguising the fact that some of its factions are essentially anti-Socialist rather than Socialist, and finally, show how all distinctively Socialist activities lead directly to a revolutionary outcome.

I am indebted to numerous persons, Socialists and anti-Socialists, who during the twelve years in which I have been gathering material—in nearly all the countries mentioned—have assisted me in my work. But I must make special mention of the very careful reading of the whole manuscript by Mr. J. G. Phelps Stokes, and of the numerous and vital changes made at his suggestion.

CONTENTS

• [Preface]
• [Introduction]

[PART I]

"STATE SOCIALISM" AND AFTER

• CHAPTER
• [I.] The Capitalist Reform Program
• [II.] The New Capitalism
• [III.] The Politics of the New Capitalism
• [IV.] "State Socialism" and Labor
• [V.] Compulsory Arbitration
• [VI.] Agrarian "State Socialism" in Australasia
• [VII.] "Equality of Opportunity"
• [VIII.] The "First Step" Towards Socialism

[PART II]

THE POLITICS OF SOCIALISM

• [I.] "State Socialism" within the Movement
• [II.] "Reformism" in France, Italy, and Belgium
• [III.] "Laborism" in Great Britain
• [IV.] "Reformism" in the United States
• [V.] Reform by Menace of Revolution
• [VI.] Revolutionary Politics
• [VII.] The Revolutionary Trend

[PART III]

SOCIALISM IN ACTION

• [I.] Socialism and the "Class Struggle"
• [II.] The Agricultural Classes and the Land Question
• [III.] Socialism and the "Working Class"
• [IV.] Socialism and Labor Unions
• [V.] Syndicalism; Socialism through Direct Action of Labor Unions
• [VI.] The "General Strike"
• [VII.] Revolution in Defense of Civil Government
• [VIII.] Political and Social Revolution
• [IX.] The Transition to Socialism
• [Index]

INTRODUCTION

The only possible definition of Socialism is the Socialist movement. Karl Marx wrote in 1875 at the time of the Gotha Convention, where the present German party was founded, that "every step of the real movement is of more importance than a dozen programs," while Wilhelm Liebknecht said, "Marx is dear to me, but the party is dearer."[1] What was this movement that the great theorist put above theory and his leading disciple valued above his master?

What Marx and Liebknecht had in mind was a social class which they saw springing up all over the world with common characteristics and common problems—a class which they felt must and would be organized into a movement to gain control of society. Fifty years before it had been nothing, and they had seen it in their lifetime coming to preponderate numerically in Great Britain as it was sure to preponderate in other countries; and it seemed only a question of time before the practically propertyless employees of modern industry would dominate the world and build up a new society. This class would be politically and economically organized, and when its organization and numbers were sufficient it would take governments out of the hands of the old aristocratic and plutocratic rulers and transform them into the instruments of a new civilization. This is what Marx and Liebknecht meant by the "party" and the "movement."

From the first the new class had been in conflict with employers and governments, and these struggles had been steadily growing in scope and intensity. Marx was not so much interested in the immediate objects of such conflicts as in the struggle itself. "The real fruit of their victory," he said, "lies, not in immediate results, but in the ever expanding union of the workers."[2] As the struggle evolved and became better organized, it tended more and more definitely and irresistibly towards a certain goal, whether the workers were yet aware of it or not. If, therefore, we Socialists participate in the real struggles of politics, Marx said of himself and his associates (in 1844, at the very outset of his career), "we expose new principles to the world out of the principles of the world itself.... We only explain to it the real object for which it struggles."[3]

But the public still fails, in spite of the phenomenal and continued growth of the Socialist movement in all modern countries, to grasp the first principle on which it is based.

"Socialism has many phases," says a typical editorial in the Independent. "It is a political party, an economic creed, a religion, and a stage of history. It is world-wide, vigorous, and growing. No man can tell what its future will be. Its philosophy is being studied by the greatest minds of the world, and it deserves study because it promises a better, a safer, and a fairer life to the masses. But as yet it is only a theory, a hypothesis. It has never been tried in toto.... It has succeeded only where it has allied itself with liberal and opportunist rather than radical policies."[4]

As the Socialist movement has nowhere achieved political power, obviously it can neither claim political success or be accused of political failure. Nor does this fact leave Socialism as a mere theory, in view of its admitted and highly significant success in organizing and educating the masses in many countries and animating them with the purpose of controlling industry and government.

Mr. John Graham Brooks, in the Atlantic Monthly, gives us another equally typical variation of the same fundamental misunderstanding. "Never a theory of social reconstruction was spun in the gray mists of the mind," says Mr. Brooks, "that was not profoundly modified when applied to life. Socialism as a theory is already touching life at a hundred points, and among many peoples—Socialism has been a faith. It is slowly becoming scientific, in a sense and to the extent that it submits its claims to the comparative tests of experience."[5]

Undoubtedly Socialist theories have been spun both within and without the movement, and to many Socialism has been a faith. But neither faith nor theory has had much to do with the great reality that is now overshadowing all others in the public mind; namely, the existence of a Socialist movement. The Socialism of this movement has never consisted in ready-made formulas which were later subjected to "the comparative test of experience"; it has always grown out of the experience of the movement in the first instance.

Another typical article, in Collier's Weekly, admits that Socialism is now a movement. But as the writer, like so many others, conceives of Socialism as having been, in its inception, a "theory," a "doctrine" promoted by "Utopian dreaming," "incendiary rhetoric," an "anti-civic jargon," he naturally views it with little real sympathy and understanding even in its present form. The same Socialism that was accused of all this narrowness is suddenly and completely transformed into a movement of such breadth that it has neither a new message nor even a separate existence.

"It is merely a new offshoot of a very old faith indeed," we are now told, "the ideal of the altruistic dreamers of all ages, an awakened sense of brotherhood in men. Stripped of all its husks, Socialism stands for no other aim than that. All its other teachings, the public ownership of the land, for example, the nationalization of the means of production and distribution, the economic emancipation of woman, have only program values, as they lead to that one end. Whether, so stripped, it ceases to be Socialism and becomes merely the advance guard of the world-wide liberal movement is not, of course, a question of more than academic interest."[6]

The moment it can no longer be denied that Socialism is a movement, it is at once confused with other movements to which it is fundamentally and irreconcilably opposed. Surely this is no mere mental error, but a deep-seated and irrepressible aversion to what is to many a disagreeable truth,—the rapid growth and development, in many countries, of political parties and labor organizations more and more seriously determined to annihilate the power of private property over industry and government.

The radical misconceptions above quoted, almost universal where Socialism is still young, are by no means confined to non-Socialists. Many writers who are supposed, in some degree at least, to voice the movement, are as guilty as those who wholly repudiate it. Mr. H. G. Wells, for instance, says that Socialism is a "system of ideas," and that "Socialism and the Socialist movement are two different things."[7] If Socialism is indeed no more than a "growing realization of constructive needs in every man's mind," and if every man is more or less a Socialist, then there is certainly no need for that antagonism to employers and property owners of which Mr. Wells complains.

Mr. Wells himself gives the true Socialist standpoint when he goes on to write that political parties must be held together "by interests and habits, not ideas." "Every party," he continues, "stands essentially for the interests and mental usages of some definite class or group of classes in the existing community.... No class will abolish itself, materially alter its way or life, or drastically reconstruct itself, albeit no class is indisposed to coöperate in the unlimited socialization of any other class. In that capacity of aggression upon the other classes lies the essential driving force of modern affairs."[8]

The habits and interests of a large and growing part of the population in every modern country are developing a capacity for effective aggression against the class which controls industry and government. As this class will not socialize or abolish itself, the rest of the people, Socialists predict, will undertake the task. And the abolition of capitalism, they believe, will be a social revolution the like of which mankind has hitherto neither known nor been able to imagine.

FOOTNOTES:

[1] John Spargo, "Karl Marx," pp. 312, 331.

[2] John Spargo, op. cit., p. 116.

[3] John Spargo, op. cit., p. 73.

[4] The Independent (New York), commenting on the Socialist victory in the Milwaukee municipal elections of April, 1910.

[5] "Recent Socialist Literature," by John Graham Brooks, Atlantic Monthly, 1910. Page 283.

[6] Collier's Weekly, July 30, 1910.

[7] H. G. Wells, "Socialism and the Family."

[8] H. G. Wells, "The New Macchiavelli."

SOCIALISM AS IT IS

PART I

"STATE SOCIALISM" AND AFTER

CHAPTER I

THE CAPITALIST REFORM PROGRAM

Only that statesman, writer, or sociologist has the hearing of the public to-day who can bind all his proposed reforms together into some large and far-sighted plan.

Mr. Roosevelt, in this new spirit, has spoken of the "social reorganization of the United States," while an article in one of the first numbers of La Follette's Weekly protested against any program of reform "which fails to deal with society as a whole, which proposes to remedy certain abuses but admits its incapacity to reach and remove the roots of the other perhaps more glaring social disorders."

Some of those who have best expressed the need of a general and complete social reorganization have done so in the name of Socialism. Mr. J. R. MacDonald, recently chairman of the British Labour Party, for example writes that the problem set up by the Socialists is that of "co-ordinating the forces making for a reconstruction of society and of giving them rational coherence and unity,"[9] while the organ of the middle-class Socialists of England says that their purpose is "to compel legislators to organize industry."[10]

Indeed, the necessity and practicability of an orderly and systematic reorganization in industrial society has been the central idea of British Socialists from the beginning, while they have been its chief exponents in the international Socialist movement. But the idea is equally widespread outside of Socialist circles. It will be hard for British Socialists to lay an exclusive claim to this conception when comrades of such international prominence as Edward Bernstein, who holds the British view of Socialism, assert that Socialism itself is nothing more than "organizing Liberalism."[11]

Whether Socialists were the first to promote the new political philosophy or not, it is undeniable that the Radicals and Liberals of Great Britain and other countries have now taken it up and are making it their own. Mr. Winston Churchill, while Chairman of the Board of Trade, and Mr. Lloyd George, Chancellor of the Exchequer, members of the British Cabinet, leaders of the Liberal Party, recognize that the movement among governments towards a conscious reorganization of industry is general and demands that Great Britain should keep up with other countries.

"Look at our neighbor and friendly rival, Germany," said Mr. Churchill recently. "I see that great State organized for peace and organized for war, to a degree to which we cannot pretend.... A more scientific, a more elaborate, a more comprehensive social organization is indispensable to our country if we are to surmount the trials and stresses which the future years will bring. It is this organization that the policy of the Budget will create."[12]

Advanced and radical reformers of the new type all over the world, those who put forward a general plan of reform and wish to go to the common roots of our social evils, demand, first of all, reorganization. But how is such a reorganization to be worked out? The general programs have in every country many features in common. To see what this common basis is, let us look at the generalizations of some of the leading reformers.

One of the most scientific and "constructive" is Mr. Sidney Webb. No one has so thoroughly mastered the history of trade unionism, and no one has done more to promote "municipal Socialism" in England, both in theory and in practice, for he has been one of the leaders of the energetic and progressive London County council from the beginning of the present reform period. He has also been one of the chief organizers of the more or less Socialistic Fabian Society, which has done more towards popularizing social reform in England than any other single educative force, besides sending into all the corners of the world a new and rounded theory of social reform—the work for the most part of Sidney Webb, Bernard Shaw, and a few others.

Mr. Webb has given us several excellent phrases which will aid us to sum up the typical social reformers' philosophy in a few words. He insists that what every country requires, and especially Great Britain, is to center its attention on the promotion of the "national efficiency." This refers largely to securing a businesslike and economic administration of the existing government functions. But it requires also that all the industries and economic activities of the country should be considered the business of the nation, that the industrial functions of the government should be extended, and that, even from the business point of view, the chief purpose of government should be to supervise economic development.

To bring about the maximum of efficiency in production would require, in Mr. Webb's opinion and that of the overwhelming majority of reformers everywhere, a vast extension of government activities, including not only the nationalization and municipalization of many industries and services, but also that the individual workman or citizen be dealt with as the chief business asset of the nation and that wholesale public expenditures be entered into to develop his value. Mr. Webb does not think that this policy is necessarily Socialistic, for, as he very wisely remarks, "the necessary basis of society, whether the superstructure be collectivist or individualist, is the same."

Mr. Wells in his "New Worlds for Old" also claims that the new policy of having the State do everything that can promote industrial efficiency (which, unlike Mr. Webb, he persists in calling Socialism) is to the interest of the business man.

"And does the honest and capable business man stand to lose or gain by the coming of such a Socialist government?" he asks. "I submit that on the whole he stands to gain....

"Under Socialist government such as is quite possible in England at the present time:—

"He will be restricted from methods of production and sale that are socially mischievous.

"He will pay higher wages.

"He will pay a large proportion of his rent-rate outgoings to the State and Municipality, and less to the landlord. Ultimately he will pay it all to the State or Municipality, and as a voter help to determine how it shall be spent, and the landlord will become a government stockholder. Practically he will get his rent returned to him in public service.

"He will speedily begin to get better-educated, better-fed, and better-trained workers, so that he will get money value for the higher wages he pays.

"He will get a regular, safe, cheap supply of power and material. He will get cheaper and more efficient internal and external transit.

"He will be under an organized scientific State, which will naturally pursue a vigorous scientific collective policy in support of the national trade.

"He will be less of an adventurer and more of a citizen."[13]

Mr. Churchill while denying any sympathy for Socialism, as both he and the majority of Socialists understand it, frankly avows himself a collectivist. "The whole tendency of civilization," he says, "is towards the multiplication of the collective functions of society. The ever growing complications of civilizations create for us new services which have to be undertaken by the State, and create for us an expansion of the existing services. There is a growing feeling, which I entirely share, against allowing those services which are in the nature of monopolies to pass into private hands. [Mr. Churchill has expressed the regret that the railways are not in the hands of the State.] There is a pretty steady determination, which I am convinced will become effective in the present Parliament to intercept all future unearned increment, which may arise from the increase in the speculative value of the land."[14] (Italics mine.)

Mr. Churchill's declared intention ultimately "to intercept all future unearned increment" of the land is certainly a tremendous step towards collectivism, as it would ultimately involve the nationalization of perhaps a third of the total wealth of society. With railways and monopolies of all kinds also in government hands, a very large part of the industrial capital of the country would be owned by the State, and, though all agricultural capital, and therefore the larger part of the total, remained in private hands, we are certainly justified in calling such a state of society capitalist collectivism.

But not one of the elements of this collectivism is a novelty. Railroads are owned by governments in most countries, and monopolies often are. The partial appropriation of the "unearned increment" is by no means new, since a similar policy is being adopted in Germany at the present moment, and is favored not by the radicals alone, but by the most conservative forces in the country; namely, the party of landed Prussian nobility. Count Posadovsky, a former minister, has written a pamphlet in which he urges that the State should buy up the land in and about the cities, and also that it should fix a definite limit beyond which land values must not rise. Nearly all the chief cities of Prussia, more than a hundred, are enforcing such a tax in a moderate form, and the conservatives in the Reichstag proposed that the national government should be given a right to tax in the same field. Their bill was enacted, and, in the second half of 1911, the German government, it was estimated, would raise over $3,000,000 by this tax, and in 1912 it is expected to give $5,000,000. This tax, which is collected when land changes hands by sale or exchanges, rises gradually to 30 per cent when the increase has been 290 per cent or more. Of course this scale is likely to be still further raised and to be made more steep as the tax becomes more and more popular.

Mr. Churchill's defense of the new policy of the British government is as significant as the new laws it has enacted:—

"You may say that unearned increment of the land," he says, "is on all-fours with the profit gathered by one of those American speculators who engineer a corner in corn, or meat, or cotton, or some other vital commodity, and that the unearned increment in land is reaped by the land monopolist in exact proportion, not to the service but to the disservice done. It is monopoly which is the keynote; and where monopoly prevails, the greater the injury to society the greater the reward of the monopolist will be....

"Every form of enterprise, every step in material progress, is only undertaken after the land monopolist has skimmed the cream off for himself, and every where to-day the man, or the public body, who wishes to put land to its highest use is forced to pay a preliminary fine in land values to the man who is putting it to an inferior use, and in some cases to no use at all.... If there is a rise in wages, rents are able to move forward because the workers can afford to pay a little more. If the opening of a new railway or a new tramway, or the institution of an improved service of workmen's trains, or the lowering of fares, or a new invention, or any other public convenience affords a benefit to the workers in any particular district, it becomes easier for them to live, and therefore the landlord and the ground landlord, one on top of the other, are able to charge them more for the privilege of living there." (Italics mine.)[15]

But we cannot believe that the government of Great Britain, which draws so much of its support from the wealthy free trade merchants and manufacturers has been persuaded to adopt this new principle so much by the argument that a land rent weighs on the working classes, though it is true that the manufacturer may have to pay for this in higher money wages, as it has by that other argument of Mr. Churchill's that it weighs directly on business.

"The manufacturer proposing to start a new industry," he says, "proposing to erect a great factory offering employment to thousands of hands, is made to pay such a price for his land that the purchase price hangs around the neck of his whole business, hampering his competitive power in every market, clogging far more than any foreign tariff in his export competition; and the land values strike down through the profits of the manufacturer on to the wages of the workman. The railway company wishing to build a new line finds that the price of land which yesterday was only rated at its agricultural value has risen to a prohibitive figure the moment it was known that the new line was projected; and either the railway is not built, or, if it is, it is built only on terms which largely transfer to the landowner the profits which are due to shareholders and the privileges which should have accrued to the traveling public." (My italics.)[16]

No doubt Mr. Churchill's failure to mention shippers was inadvertent.

It was a practical application of these business principles and chiefly in the interest of the employers, manufacturers, investors, and shippers, that the State decided, as a first step, to take 20 per cent of all the increase in land values from the present date and to levy an annual tax of one fifth of one per cent on all land held for speculation, i.e. used neither for agricultural nor for industrial nor building purposes.

The collectivist policy, that governments should undertake to reorganize industry and to develop the industrial efficiency of the population, is a relatively new one, however, and where non-Socialist Liberals and Radicals are adopting it, they do so as a rule with apologies. For while such reforms can be considered as investments which in the long run repay not only the community as a whole, but also the business interests, they involve a considerable initial cost, even beyond what can be raised by the gradual expropriation of city land rents, and the question at once arises as to who is to pay the rest of the bill. The supporter of the new reforms answers that the business interests should do so, since the development of industry, which is the object of this expenditure, is more profitable to them than to other classes. While Mr. Churchill declares that Liberalism attacks landlordism and monopoly only, and not capital itself, as Socialism does, he is at great pains to show that the cost of the elaborate program of social reform is borne not by monopolist alone, but by that larger section of the business interests vaguely known as those possessing "Special Privileges." In distributing the new taxes in the House of Commons, the question to be asked of each class of wealth is, he says, "By what process was it got?" and a distinction is to be made, not between monopoly and competitive business, but "between wealth which is the fruit of productive enterprise and industry or of individual skill, and wealth which represents the capture by individuals of socially created values."[17]

"A special burden," says Mr. Churchill, "is to be laid upon certain forms of wealth which are clearly social in their origin and have not at any point been derived from a useful or productive process on the part of their possessors."[18] And since all income "derived from dividends, rent, or interest," is, according to Mr. Churchill, unearned increment, it is evident that nearly every business, all being beneficiaries, ought to share the burden of the new reforms.[19] At the same time he hastens to reassure his wealthy supporters, especially among merchants and shippers, on grounds explained below by Mr. Lloyd George that the new taxes will not rise faster than the new profits they will bring in, that they "will not appreciably affect, have not appreciably affected, the comfort, the status, or even the style of living of any class in the United Kingdom."[20]

Mr. Lloyd George in proposing the so-called Socialistic Budget of 1910 reminded the representatives of the propertied interests [he might have added "in proportion to their wealth">[ that the State, in which they all owned a share, should not be looked upon so narrowly as a capitalistic enterprise. They could afford to allow the State to wait longer for its returns.

"A State can and ought to take a longer and a wider view of its investments," said Mr. Lloyd George, "than individuals. The resettlement of deserted and impoverished parts of its own territories may not bring to its coffers a direct return which would reimburse it fully for its expenditure; but the indirect enrichment of its resources more than compensate it for any apparent and immediate loss. The individual can rarely afford to wait; a State can; the individual must judge of the success of his enterprise by the testimony given for it by his bank book; a State keeps many ledgers, not all in ink, and when we wish to judge of the advantage derived by a country from a costly experiment, we must examine all those books before we venture to pronounce judgment....

"We want to do more in the way of developing the resources of our own country....

"The State can help by instruction, by experiment, by organization, by direction, and even, in certain cases which are outside the legitimate sphere of individual enterprise, by incurring direct responsibility. I doubt whether there is a great industrial country in the world which spends less money on work directly connected with the development of its resources than we do. Take, if you like, and purely as an illustration, one industry alone,—agriculture,—of all industries the most important for the permanent well-being of any land. Examine the budgets of foreign lands,—we have the advantage in other directions,—but examine and compare them with our own, and Honorable Members will be rather ashamed at the contrasts between the wise and lavish generosity of countries much poorer than ours and the short-sighted and niggardly parsimony with which we dole out small sums of money for the encouragement of agriculture in our country....

"We are not getting out of the land anything like what it is capable of endowing us with. Of the enormous quantity of agricultural and dairy produce, and fruit, and the timber imported into this country, a considerable portion could be raised on our own lands."[21]

The proposed industrial advance is to be secured largely at the expense of capital, but for its ultimate profit. The capitalists are to pay the initial cost. Mr. Lloyd George is very careful to remind them that even if the present income tax were doubled, five years of the phenomenal yet steady growth of the income of the rich and well-to-do who pay this tax, would leave them as well off as they were before. He proposes to leave the total capital in private hands intact on the pretext that it is needed as "an available reserve for national emergencies." And as an evidence of this he refused to increase the existing rate of inheritance tax levied against the very largest estates (15 per cent on estates of more than £3,000,000). Though up to this point he graduated this tax more steeply than before, and nothing could be more widely popular than a special attack on such colossal estates, Mr. Lloyd George draws the line at 15 per cent, on the ground that a large part of the income from such estates goes into investments, and more confiscatory legislation might seriously affect the normal increase of the capital and "the available reserves of taxation" of the country.[22]

Mr. Lloyd George does not fail to guarantee to capital as a whole, "honest capital," that it will suffer no loss from his reforms. "I am not one of those who advocate confiscation," he said several years ago, "and at any rate as far as I am concerned honest capital, capital put in honest industries for the development of the industry, the trade, the commerce, of this country will have nothing to fear from any proposal I shall ever be responsible for submitting to the Parliament of this realm." (My italics.)[23]

Mr. Lloyd George is well justified, then, in ridiculing the idea that he is waging war against industry or property or trying to destroy riches. He not only disproves this accusation by pointing to the capitalist character of his collectivist program, but boasts that the richest men in the House of Commons are on the Liberal side, together with hundreds of thousands of the men who are building up trade and business.

And the attitude of the Radicals of the present British government is the same as that of capitalist collectivists elsewhere. However certain vested interests may suffer, there is nowhere any tendency to weaken capitalism as a whole. Capitalism is to be the chief beneficiary of the new movement.

There are many differences of opinion, however, as to the ultimate effect of the collectivist program. In Great Britain, which gives us our best illustration, there are Liberals who claim that it is Socialistic and others who deny that it has anything to do with Socialism; Conservatives who accept part of the program, and others who reject the whole as being Socialistic; Socialists, who claim that their ideas have been incorporated in the last two Budgets, and other Socialists who deny that either had anything in common with their principles.

While it is certain that the present policy of the British government is by no means directed against the power or interests of the capitalist class as a whole, and in no way resembles that of the Socialists, were not Socialist arguments used to support the government's position, and may not these lead towards a Socialist policy?

Certainly some of the principles laid down seem at first sight to have been Socialistic enough. For example, when Mr. Churchill said that incomes from dividends, rent, and interest are unearned, or when Mr. Lloyd George cried out: "Who is responsible for the scheme of things whereby one man is engaged through life in grinding labor to win a bare and precarious subsistence for himself, and when, at the end of his days, he claims at the hands of the community he served, a poor pension of eight pence a day, he can only get it through a revolution, and another man who does not toil receives every hour of the day, every hour of the night, whilst he slumbers, more than his poor neighbor receives in a whole year of toil? Where did the table of that law come from? Whose fingers inscribed it?"[24]

Lord Rosebery has pointed to the extremely radical nature of Mr. Lloyd George's arguments. The representatives of the Government had urged, he said, that the land should be taxed without mercy:—

"(1) because its existence is not due to the owner;

"(2) because it is limited in quantity;

"(3) because it owes nothing of its value to anything the owner does or spends;

"(4) because it is absolutely necessary for existence and production."[25]

Lord Rosebery says, justly, that all these propositions except the last apply to many other forms of property than land, as, for instance, to government bonds, and that it certainly would be Socialism to attempt to confiscate these by taxation.

Lord Rosebery's task would have become even easier later, when Mr. Lloyd George enlarged his attack on the landlords definitely into an attack against the idle upper classes, who with their dependents he reckoned at two million persons. He accused this class of constituting an intolerable burden on the community, said that its existence was the symptom of the disease of society, and that only bold remedies could help. The whole class of inactive capitalists he viewed as a load both on the non-capitalist, wage-earning, salaried and professional classes, and on the active capitalists. Mr. Lloyd George argues with his capitalist supporters that capitalism will be all the stronger when freed from its parasites. But Lord Rosebery could answer that the active could no more be distinguished from the passive capitalists than landowners from bondholders.

An article in the world's leading Socialist newspaper, Vorwaerts, of Berlin, shows that many Socialists even regarded these speeches as revolutionary:—

"The Radical wing of the British Liberals," it said, "is leading the attack with ideal recklessness and lust of battle. It is conducting the agitation in language which in Germany is customarily used only by a 'red revolutionist.' If the German Junker (landlord conservative) were to read these speeches, he would swear that they were delivered by the Social Democrats of the reddest dye, so ferociously do they contrast between the rich and the poor. They appeal to the passion of the people; they exploit social distinctions in the manner best calculated to fire popular anger against the Lords.

"In the heart of battle the Liberals are employing language which at other times they would have considered twice. Their words will some day be assuredly turned against them, when more than the mere Budget or the existence of the Lords is at stake. When the Liberals, allied with the conservative enemy of to-day, are fighting the working classes, the Socialists will recall this language as proof that the Liberals themselves recognize the injustice of the existing order.

"Mr. Lloyd George made such a speech at Newcastle that the seeds he is planting may first bring forth Liberal fruit, but there can be no doubt that Socialism will eventually reap the harvest. His arguments must arouse the workingmen, and when they have accustomed themselves to look at things from this standpoint it is certain that once standing before the safes of the industrial capitalists they will never close their eyes."

It is perhaps true that the Socialists will at some future day reap the harvest from Mr. Lloyd George's and Mr. Churchill's campaigns, though a careful analysis of the expressions of these statesmen will show that they have said nothing and done nothing in contradiction to their State-capitalistic or "State Socialist" standpoint.

There is no doubt that the principle of the new taxes and the new expenditure these statesmen are introducing is radical, and that it marks a great stride towards a collectivist form of capitalism. Let us assume that development continues along the lines of their present policies. In a very few years the increased expenditure on social reform will be greater than the increased expenditure on army and navy, and the increase of direct and graduated taxes that fall on the upper classes will be greater than that of the indirect taxes that fall on the masses. We will assume even that military expenditure and indirect taxes on articles the working people consume will begin some day to decrease, while graduated taxes directed against the very wealthy and social reform expenditures rise until they quite overshadow them. There is every reason to believe that the social reformers of the British and other governments hope for such an outcome and expect it. This would be in no way inconsistent with their policy of subordinating everything, to use one of their expressions, to "that trade and commerce which constitutes the source of our wealth."

For the collectivist expenditures, intended to increase the national product through governmental enterprises for the promotion of industry, and for raising the industrial efficiency of the workers, would be introduced gradually, and would soon be accompanied by results which would show that they paid financially. And finally, even if railways and monopolies were nationalized and their profits as well as all the future rise in land value went to the State to be used for these purposes, as Mr. Churchill hopes, and even if a method could be found by which a large part of the income of the idle rich would be confiscated without touching the active capital of the merchant and manufacturer, the position of the latter classes, through this policy, might become still more superior relatively to that of the masses than it is at present. The industrial capitalists might even control a larger share of the national income and exercise a still more powerful influence over the State than they do to-day.

The classes that the more or less collectivist budgets of 1910 and 1911 actually do favor, those whose economic and political power they actually do increase, are the small and middle-sized capitalists and even the larger capitalists other than landlords and monopolists. The great mass of income taxpayers, business men, farmers, and the professional classes with incomes from about £200 to £3000 ($1000 to $15,000) are given every encouragement, while those with somewhat larger incomes are only slightly discriminated against on the surface, in the incidence of the taxes, and not at all when we inquire into the ways in which the taxes are being expended. Certainly nothing is being done that will "appreciably affect the status or style of living of any class in the United Kingdom," or that will check materially the enormous rise of this "upper middle" class both in wealth and numbers—for the income tax payers have doubled their income in a little more than a decade, until it has reached the total of more than a billion pounds a year. And surely no tendency could be more diametrically opposed to a Socialism whose purpose it is to improve the relative position of the "lower middle" and working classes.

While the new reform programs of the various parties are in general agreement in all countries, in that they are all collectivist, and favor as a rule the same social classes, there is much controversy as to names, whether they shall be called Socialistic or merely radical or progressive. The question is really immaterial.

"Capital, divested of its perversions, would be natural Socialism," says one of Henry George's most prominent disciples.[26] Whether the proposed reforming is done with a purified and strengthened capitalism in view, or in the name of "natural Socialism" or "State Socialism," the program itself is in every practical aspect the same.

If a contrast formerly appeared to exist between "Individualist" and "State Socialist" reformers, it was never more than a contrast in theory, quickly dispelled when the time for action arrived. The individualist radical would have the State do as little as possible, but still is compelled to resort to an increase of its powers at every turn; the "State Socialist" would have the State do as much as practicable, but would still retain State action within the rigid limits imposed by the need of gaining capitalist support and the desire for immediate political success. In economic policy the Individualist is for checking the excess of monopoly and special privilege in order to allow "equal opportunity" or a free development to whatever competition or "natural Capitalism" remains, while the "State Socialist" is more concerned with protecting and promoting the natural checking of the excesses of competitive capitalism and private property that comes with "natural monopoly" and its regulation by government. The "State Socialist," however critical he is towards competition, recognizes that the first practical possibility of putting an end to its excesses comes when monopoly is already established, and when it is relatively easy for the State to step in to nationalize or municipalize; the Individualist reformer who wishes to preserve competition where practicable, at the same time recognizes that it is impossible to do so where monopolies have become firmly rooted in certain industries, and he also at this point proposes nationalization, municipalization, or thoroughgoing governmental control.

Henry George himself recognizes that "State Socialism," which he called simply "Socialism," and the "natural Capitalism" he advocated, far from being contradictory, were complementary and interdependent. Mr. Louis Post says:—

"Even in the economic chapters of 'Progress and Poverty' its author saw the possibility of society's approaching the 'ideal of Jeffersonian Democracy, the promised land of Herbert Spencer, the abolition of government. But of government only as a directing and repressive power.' At the same time and in the same degree of approach, he regarded it as possible for society also to realize the dream of Socialism."[27]

The following passage leaves no doubt that Mr. Post is correct, and at the same time shows in the clearest way how the two policies of reform were interwoven in Henry George's mind:—

"Government could take up itself the transmission of messages by telegraph, as well as by mail, of building and operating railroads, as well as of the opening and maintaining common roads. With the present functions so simplified and reduced, functions such as these could be assumed without danger or strain, and would be under the supervision of public attention, which is now distracted. There would be a great and increasing surplus revenue from the taxation of land values for material progress, which would go on with great accelerated rapidity, would tend constantly to increase rent. This revenue arising from the common property would be applied to the common benefit, as were the revenues of Sparta. We might not establish public tables—they would be unnecessary, but we could establish public baths, museums, libraries, gardens, lecture rooms, music and dancing halls, theaters, universities, technical schools, shooting galleries, playgrounds, gymnasiums, etc. Heat, light, and motive power, as well as water, might be conducted through our streets at public expense; our roads be lined with fruit trees; discoveries and inventors rewarded, scientific investigation supported; in a thousand ways the public revenues made to foster efforts for the public benefit. We should reach the ideal of the Socialist, but not through government repression. Government would change its character, and would become the administration of a great coöperative society. It would become merely the agency by which the common property was administered for the common benefit." (Italics mine.)[28]

But the "State Socialist" and the Individualist reformer, who are often combined in one person, as in the case of Henry George, differ sharply from Socialists of the Socialist movement in aiming at a society, which, however widely government action is to be extended, is after all to remain a society of small capitalists.

Professor Edward A. Ross very aptly sums up the reformer's objections to the anti-capitalist Socialists. Capitalism must be "divested of its perversions," the privately owned monopolies and their political machines, primarily for the purpose of strengthening it against Socialism. "Individualism should make haste to clean the hull of the old ship for the coming great battle with the opponents of private capital...."[29] The reformers, as a rule, like Professor Ross, consciously stand for a new form of private capitalism, to be built up with the aid of the State. This is the avowed attitude of the larger part of the "progressives," "radicals," and "insurgents" of the day.

The new reform programs, however radical, are aimed at regenerating capitalism. The most radical of all, that of the single taxers, who plan not only that the state shall be the sole landlord, but that the railways and the mines shall be nationalized and other public utilities municipalized, do not deny that they want to put a new life into private capitalism, and to stimulate commercial competition in the remaining fields of industry. Mr. Frederick C. Howe, for instance, predicts a revival of capitalistic enterprise, after these measures are enacted, and even looks forward to the indefinite continuation of the struggle between capital and labor.[30]

FOOTNOTES:

[9] The Socialist Review (London), April, 1909.

[10] The New Age (London), Nov. 4, 1909.

[11] Edward Bernstein, "Evolutionary Socialism," p. 154.

[12] Winston Churchill, "Liberalism and the Social Problem," p. 345.

[13] H. G. Wells, "New Worlds for Old," p. 185.

[14] Winston Churchill, op. cit., p. 80.

[15] Winston Churchill, op. cit., pp. 326, 327.

[16] Winston Churchill, op. cit., pp. 326.

[17] Winston Churchill, op. cit., p. 396.

[18] Winston Churchill, op. cit., p. 399.

[19] Winston Churchill, op. cit., p. 336.

[20] Winston Churchill, op. cit., p. 339.

[21] Lloyd George, "Better Times," p. 163.

[22] Lloyd George, op. cit., pp. 94-101.

[23] Lloyd George, op. cit., p. 58.

[24] Lloyd George, op. cit., p. 174.

[25] Lord Rosebery's Speech at Glasgow, Sept. 10, 1909.

[26] Louis F. Post, "Social Service," p. 341.

[27] The Public (Chicago), Nov. 4, 1910.

[28] Henry George, "Progress and Poverty," Book IV, p. 454.

[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 competition, "we must proceed to State Socialism and vest the government with power to control every business." As competition 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 competitive 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 competition, 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 ownership.

The actual disappearance of competition 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 competition 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 ownership 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 competitive 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 Canal. 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 competition of the Panama Canal, 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 ownership or to Socialism [Mr. Perkins recognizes that they are two different things].

"I have long believed that we should have at Washington a business court, to which our great problems would go for final adjustment when they could not be settled otherwise. We now have at Washington 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-partnership 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. Japan also practically does this. But in the United States it cannot be done under government leadership, 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 partnership 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 "class-conscious," and it is true that they have not yet worked out any elaborate policy of social reform or government ownership. 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 passing 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 partnership 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 leadership, 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 Canal will be forgotten as the small beginning of the new movement.

It is true that for the moment the stupendous wealth and power of the "Large Interests," already more or less consolidated, threaten to overwhelm the rest. Mr. Steffens does not overstate when he says:—

"To state correctly in billions of dollars the actual value of all the property represented in this community of interests, might startle the imagination to some sense of the magnitude of the wealth of these men. But money is no true measure of power. The total capitalization of all they own would not bring home to us the influence of Morgan and his associates, direct and indirect, honest and corrupt, over presidents and Congresses; governors and legislators; in both political parties and over our political powers. And no figures would remind us of their standing at the bar and in the courts; with the press, the pulpit, the colleges, schools, and in society. And even if all their property and all their power could be stated in exact terms, it would not show their relative wealth and strength. We must not ask how much they have. We must ask how much they haven't got."[31]

But over against this economic power the small capitalists, farmers, shopkeepers, landlords, and small business men, have a political power that is equally overwhelming. Until the "trusts" came into being, no issue united this enormous mass. Yet they are still capitalists, and what they want, except the few who still dream of competing with the "trusts," is not to annihilate the latter's power, but to share it. The "trusts," on the other hand, are seeing that common action with the small capitalists, costly as it may be economically, may be made to pay enormously on the political field by putting into the hands of their united forces all the powers of governments.

If the principle of economic union and consolidation has made the great capitalists so strong, what will be the result of this political union of all capitalists? How much greater will be their power over government, courts, politics, the press, the pulpit, and the schools and colleges!

It is not the "trusts" that society has to fear, nor the consolidation of the "trusts," but the organized action of all "Interests," of "Big Business" and "Small Business," that is, of Capitalism.

A moment's examination will show that there is every reason to expect this outcome. Broadly considered, there is no such disparity between large capitalists and small, either in wealth and power, as at first appears. All the accounts of the tendency towards monopoly have been written, not in the name of non-capitalists, but in that of small capitalists. Otherwise we might see that these two forces, interwoven in interest at nearly every point, are also well matched and likely to remain so. And we should see also that it is inconceivable that they will long escape the law of social evolution, stronger than ever to-day, toward organization, integration, consolidation.

Messrs. Moody and Turner, for example, finished a well-weighed study of the general tendencies of large capital in this country with the following conclusion:—

"Through all these channels and hundreds more, the central machine of capital extends its control over the United States. It is not definitely organized in any way. But common interest makes it one great unit—the 'System,' so called.

"It sits in Wall Street, a central power, directing the inevitable drift of great industry toward monopoly. And as the industries one after another come into it for control, it divides the wealth created by them. To the producer, steady conditions of labor; to the investor, stable securities, sure of paying interest; to the maker of monopolies and their allies, the increment of wealth of the continent, and with it the gathering control of all mechanical industry."[32] (My italics.)

Certainly the fundamental social questions in any country at any time are: Who gets the increment of wealth? Who controls industry? No objection can be taken to the facts or reasoning of this and some of the other studies of the "trusts"—as far as they go. What vitiates not only their conclusions, but the whole work, is that written from the standpoint of the small capitalists, they forget that the "trusts" are only part of a larger whole.

The increment of wealth that has gone to large capital in this country in the census period 1900-1910 is certainly less than what has gone to small capital. Farm lands and buildings have increased in value by $18,000,000,000, while the increased wealth in farm animals, crops, and machinery will bring the total far above $20,000,000,000. The increase in city lands and houses other than owned homes, which has not been less than that of the country in recent years, must be reckoned at many billions, and these, like the farm lands, are only to a small degree in the hands of the "Trusts." Even allowing for the more modest insurance policies, and savings bank accounts, as belonging in part to non-capitalists, small capitalists have piled up many new billions within the same decade, in the form of bank deposits, good-sized investments in insurance companies, in government, municipal, and railway bonds, bank stock, and other securities. No doubt the chief owners of the banks, railways, and "trusts" have increased their wealth by several billions within the same period, but this is only a fraction of the increased wealth of the smaller capitalists. It is not true, then, that "the increment of wealth of the continent" has gone to—"the makers of monopolies and their allies."

Let us now examine the question of the control of industry from this broader standpoint. It is admitted that the direct control of the "Interests" extends only over "mechanical industry"—not over agriculture. We have seen that it does not extend over the mine of wealth that lies in city lands, nor over large masses of capital more and more adequately protected by the government. It might be said that by their strategic position in industry the large capitalists control indirectly both agriculture, city growth, savings banks and government. This would be true were it not for the fact that as soon as we turn from the economic to the political field we find that not only in this country, but also in Europe nearly all the strategical positions are held by the small capitalists. They outnumber the large capitalists and their retainers ten to one, and they hold the political balance of power between these and the propertyless classes. The control of industry and the control of government being in the long run one and the same, the only course left to the large capitalists is to compromise with the small, and the common organization of centralized and decentralized capital with the aid and protection of government is assured.

The fact that, for the masses of mankind, capitalism is the enemy, and not "Big Business," is then obscured by the warfare of the small capitalists against the large. Perhaps nowhere in the world and at no time in history has this conflict taken on a more definite or acute form than it has recently in this country. So intense is the campaign of the smaller interests, and it is being fought along such broad lines that it often seems to be directed against capitalism itself. The masses of the people, even of the working classes, in America and Great Britain have yet no conception of the real war against capitalism, as carried on by the Socialists of Continental Europe, and it seems to them that this new small capitalist radicalism amounts practically to the same thing.

The "Insurgents," it is true, differ fundamentally from the Populists of ten and twenty years ago, in so far they understand fully that in many fields competition cannot be restored, that the large corporations cannot be dissolved into small ones and must be regulated or owned by the government, because they have deserted the Jeffersonian maxim that "that government is best that governs least."

"With the growing complexity of our social and business relations," says La Follette's Weekly, "a great extension of governmental functions has been necessary. The authority of State and nation reaches out in numberless and hitherto unknown forms affecting and regulating our daily lives, our occupations, our earning power, and our cost of living. The need for this intervention, for collective action by the people through their duly constituted government, to preserve and promote their own welfare, is a need that is growing more and more important and imperative to meet the rapidly growing power of commerce, industry and finance, centralized and organized in the hands of a few men."

This is nothing more nor less than the creed of capitalist collectivism. The analysis of the present political situation of the Insurgents is not only collectivist, but, in a sense, revolutionary. After describing how "Big Business," controls both industry and politics, La Follette says:—

"This thing has gone on and on in city, State, and nation, until to-day the paramount power in our land is not a Democracy, not a Republic, but an Autocracy of centralized, systemized, industrial and financial power. 'Government of the people, by the people, and for the people' has perished from the earth in the United States of America."

An editorial in McClure's Magazine (July, 1911) draws a similar picture and frankly applies the term, "State Socialism," to the great reforms that are pending:—

"Two great social organizations now confront each other in the United States—political democracy and the corporation. Both are yet new,—developments, in their present form, of the past two hundred years,—and the laws of neither are understood. The entire social and economic history of the world is now shaping itself around the struggle for dominance between them....

"The problem presented by this situation is the most difficult that any modern nation has faced; and the odds, up to the present time, have all been with the corporations. Property settles by economic law in strong hands; it has unlimited rewards for service, and the greatest power in the world—the power of food and drink, life and death—over mankind. Corporate property in the last twenty years has been welded into an instrument of almost infinite power, concentrated in the hands of a very few and very able men.

"Sooner or later the so far unchecked tendency toward monopoly in the United States must be met squarely by the American people....

"The problem of the relation of the State and the corporation is now the chief question of the world. In Europe the State is relatively much stronger; in America, the corporation. In Europe the movement towards Socialism—collective ownership and operation of the machinery of industry and transportation—is far on its way; in America we are moving to control the corporation by political instruments, such as State Boards and the Interstate Commerce Commission....

"And if corporate centralization of power continues unchecked, what is the next great popular agitation to be in this country? For State Socialism?"

When a treaty of peace is made between "Big Business" and the smaller capitalists under such leadership as La Follette's, we may be certain that it will not amount merely to a swallowing up of the small fish by the large. The struggle waged according to La Follette's principles is not a mere bid for political power and the spoils of office, but a real political warfare that can only end by recognition of the small capitalist's claims in business and politics—in so far as they relate, not to the restoration of competition, but to government ownership or control. As early as 1905, when governor of Wisconsin, La Follette said:—

"It must always be borne in mind that the contest between the State and the corporate powers is a lasting one.... It must always be remembered that their attitude throughout is one of hostility to this legislation, and that if their relation to the law after it is enacted is to be judged by the attitude towards the Interstate Commerce Law, it will be one of continued effort to destroy its efficiency and nullify its provision." Events have shown that he was right in his predictions, and his idea that the war against monopolies must last until they are deprived of their dominant position in politics is now widely accepted.

The leading demands of the small capitalists, in so far as they are independently organized in this new movement, are now for protection, as buyers, sellers, investors, borrowers, and taxpayers against the "trusts," railways, and banks. Formerly they invariably took up the cause of the capitalist competitors and would-be competitors of the "Interests"—and millionaires and corporations of the second magnitude were lined up politically with the small capitalists, as, for example, silver mine owners, manufacturers who wanted free raw material, cheaper food (with lower wages), and foreign markets at any price,—from pseudo-reciprocity to war,—importing merchants, competitors of the trusts, tobacco, beer, and liquor interests bent on decreasing their taxes, etc.

The great novelty of the "Insurgent" movement is that, in dissociating itself from Free Silver, Free Trade, and the proposal to destroy the "trusts," it has succeeded in getting rid of nearly all the "Interests" that have wrecked previous small capitalist movements. At the same time, it has all but abandoned the old demagogic talk about representing the citizen as consumer against the citizen as producer. It frankly avows its intention to protect the ultimate consumer, not against small capitalist producers (e.g. its opposition to Canadian reciprocity and cheaper food), but solely against the monopolies. Indeed, the protection of the ultimate consumer against monopolies is clearly made incidental to the protection of the small capitalist consumer-producer. The wage earner consumes few products of the Steel Trust, the farmer and small manufacturers, many. Nor does the new movement propose to destroy the "trusts" by free trade even in the articles they produce, but merely to control prices by lower tariffs. With the abandonment of the last of the "Interests" and at the same time of the "consumers" that they use as a cloak, the new movement promises for the first time a fairly independent and lasting political organization of the smaller capitalists.

While Senator La Follette is the leading general of the new movement, either Ex-President Roosevelt or Governor Woodrow Wilson seems destined to become its leading diplomatist. While Senator La Follette declares for a fight to the finish, and shows that he knows how to lead and organize such a fight, Mr. Roosevelt and Mr. Wilson are giving their attention largely to peace terms to be demanded of the enemy, and the diplomatic attitude to be assumed in the negotiations. Perhaps it is too early for such peaceful thoughts, and premature talk of this kind may eliminate these leaders as negotiators satisfactory to the small capitalists. Their interest for my present purpose is that they probably foreshadow the attitude that will finally be assumed when the large "Interests" see that they must make terms.

Mr. Wilson's language is at times so conciliatory as to create doubt whether or not he will stand with Senator La Follette and the Republican "Insurgents" for the whole of the small capitalist's program, but it leaves no doubt that, if he lives up to his declared principles, he must aim at the government regulation, not of "Big Business" merely, but of all business—as when he says that "business is no longer in any sense a private matter."

"We are dealing, in our present discussion," he said in an address, delivered in December, 1910, "with business, and we are dealing with life as an organic whole, and modern politics is an accommodation of these two. Suppose we define business as economic service of society for private profit, and suppose we define politics as the accommodation of all social forces, the forces of business, of course, included, to the common interest." (My italics.)

It is evident that if the community gains by an extended control over business, that business gains at least as much by its claim to be recognized as a public service. And this Mr. Wilson makes very emphatic:—

"Business must be looked upon, not as the exploitation of society, not as its use for private ends, but as its sober service; and private profit must be regarded as legitimate only when it is in fact a reward for what is veritably serviceable,—serviceable to interests which are not single but common, as far as they go; and politics must be the discovery of this common interest, in order that the service may be tested and exacted.

"In this acceptation, society is the senior partner in all business. It first must be considered,—society as a whole, in its permanent and essential, not merely in its temporary and superficial, interests. If private profits are to be legitimatized, private fortunes made honorable, these great forces which play upon the modern field must, both individually and collectively, be accommodated to a common purpose." (My italics.)

Business is no longer "to be looked upon" as the exploitation of society, private profits are to be "legitimatized" and private fortunes "made honorable"—in a word, the whole business world is to be regenerated and at the same time rehabilitated. This is to be accomplished, as Mr. Wilson explained, in a later speech (April 13, 1911), not by excluding the large capitalists from government, but by including the small, and this will undoubtedly be the final outcome. He said:—

"The men who understand the life of the country are the men who are on the make, and not the men who are made; because the men who are on the make are in contact with the actual conditions of struggle, and those are the conditions of life for the nation; whereas, the man who has achieved, who is at the head of a great body of capital, has passed the period of struggle. He may sympathize with the struggling men, but he is not one of them, and only those who struggle can comprehend what the struggle is. I would rather take the interpretation of our national life from the general body of the people than from those who have made conspicuous successes of their lives."

But the "Interests" are not to be excluded from the new dispensation.

"I know a great many men," Mr. Wilson says further, "whose names stand as synonyms of the unjust power of wealth and of corporate privileges in this country, and I want to say to you that if I understand the character of these men, many of them—most of them—are just as honest and just as patriotic as I claim to be. But I do notice this difference between myself and them; I have not happened to be immersed in the kind of business in which they have been immersed; I have not been saturated by the prepossessions which come upon men situated as they are, and I claim to see some things that they do not yet see; that is the difference. It is not a difference of interest; it is not a difference of capacity; it is not a difference of patriotism. It is a difference of perception....

"Now, these men have so buried their minds in these great undertakings that you cannot expect them to have reasonable and rational views about the antipodes. They are just as much chained to a task, as if the task were little instead of big. Their view is just as much limited as if their business were small instead of colossal. But they are awakening. They are not all of them asleep, and when they do wake, they are going to lend us the assistance of truly statesmanlike minds.

"We are not fighting property," Mr. Wilson continues, "but the wrong conception of property. It seems to me that business on the great scale upon which it is now conducted is the service of the community, and the profit is legitimate only in proportion as the service is genuine. I utterly deny the genuineness of any profit which is gathered together without regard to the serviceability of the thing done.... Men have got to learn that in a certain sense, when they manage great corporations, they have assumed public office, and are responsible to the community for the things they do. That is the form of privilege that we are fighting." (Italics mine.)[33]

A second glance at these passages will show that Mr. Wilson speaks in the name rather of struggling small capitalists, business men "on the make," than of the nation as a whole. His diplomacy is largely aimed to move the "honest" large capitalists. These are assured that the only form of privilege that Mr. Wilson, representing the smaller business men, those "on the make," is attacking, is their freedom from political and government control. But the large capitalists need not fear such control, for they are assured that they themselves will be part of the new government. And as there is no fundamental "difference of interests," the new government will have no difficulty in representing large business as well as small.

No better example could be found of the foreshadowed treaty between the large interests and the whole body of capitalists, and their coming consolidation, than the central banking association project now before Congress. Originated by the "Interests" it was again and again moderated to avoid the hostility of the smaller capitalists, until progressives like Mr. Wilson are evidently getting ready to propose still further modifications that will make it entirely acceptable to the latter class. Already Mr. Aldrich has consented that the "State" banks, which represent chiefly the smaller capitalists, should be included in the Reserve Association, and that the President should appoint its governor and deputy governor. Doubtless Congress will insist on a still greater representation of the government on the central board.

Mr. Wilson emphasizes the need of action in this direction in the name of "economic freedom," which can only mean equal financial facilities and the indirect loan of the government's credit to all capitalists, through means of a government under their common control:—

"The great monopoly in this country is the money monopoly. So long as that exists, our old variety and freedom and individual energy of development are out of the question. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men who, even if their action be honest and intended for the public interest, are necessarily concentrated upon the great undertakings in which their own money is involved, and who necessarily by every reason of their own limitations, chill and check and destroy genuine economic freedom. This is the greatest question of all, and to this statesmen must address themselves with an earnest determination to serve the long future and the true liberties of men." (My italics.)

Undoubtedly this is a great question; the establishment of a political control over credit will mean a political and financial revolution. For it will establish the power of the government over our whole economic system and will lead rapidly to a common political and economic organization of all classes of capitalists for the control of the government, to a compromise between the group of capitalists that now rules the business world and that far larger group which is bound to rule the government. The financial magnates have seen this truth, and, as Mr. Paul Warburg said to the American Association (New Orleans, Nov. 21, 1911), "Wall Street, like many an absolute ruler in recent years, finds it more conducive to safety and contentment to forego some of its prerogatives ... and to turn an oligarchy into a constitutional democratic federation [i.e. a federation composed of capitalists]."

Mr. Roosevelt has announced a policy with regard to monopolies that foreshadows even more distinctly than anything Mr. Woodrow Wilson has said the solution of the differences between large and small capitalists. He urges that a government commission should undertake "supervision, regulation, and control of these great corporations" even to the point of controlling "monopoly prices" and that this control should "indirectly or directly extend to dealing with all questions connected with their treatment of their employees, including the wages, the hours of labor, and the like."[34]

This policy is in entire accord with the declarations of Andrew Carnegie, Daniel Guggenheim, Judge Gary, Samuel Untermeyer, Attorney-General Wickersham, and others of the large capitalists or those who stand close to them. It is in equal accord with the declarations of La Follette's Weekly and the leading "Insurgent" writers.

It is true that the private monopolies, as Mr. Bryan pointed out (New York Times, Nov. 19, 1911), "will soon be in national politics more actively than now, for they will feel it necessary to control Colonel Roosevelt's suggested commission, and to do that they must control the election of those who appoint the commission."

But the private monopolies will soon be more actively in politics no matter what remedy is offered, even government ownership. The small capitalist investors, shippers, and consumers of trust products can only protect themselves by securing control of the government, or at least sharing it on equal terms with the large capitalists.

The reason that Mr. Roosevelt's proposal was hailed with equal enthusiasm by the more far-sighted capitalists, whether radical or conservative, small or large, was that they have an approximately equal hope of controlling the government, or sharing in its control. The unbiased observer can well conclude that they are likely to divide this control between them—and, indeed, that the complete victory of either party is economically and politically unthinkable. Already banks, railways, industrial "trusts," mining and lumber interests, are being forced to follow a policy satisfactory to small capitalist investors, borrowers, customers, furnishers of raw material, and taxpayers—while small capitalist competitors are being forced to abandon their effort to use the government to restore competition and destroy the "trusts."

In the reorganization of capitalism, the non-capitalists, the wage and salary earning class are not to be consulted. Taken together with those among the professional and salaried class who are small investors or expect to become independent producers, the small capitalists constitute a majority of the electorate (though not of the population), or at least hold the political balance of power. It is capitalist interests alone that really count in present-day politics, and it is for capitalists alone that government control would be instituted.

Viewed in this light the statements of Mr. Woodrow Wilson that "business is no longer in any proper sense a private matter," or that "our program, from which we cannot be turned aside, is, that we are going to take possession of the control of our own economic life," and the similar statements of Mr. Roosevelt, are not so Socialistic as they seem. What their use by the leading "conservative-progressive" statesmen of both parties means is that a partnership of capital and government is at hand.

FOOTNOTES:

[31] Lincoln Steffens in Everybody's Magazine, beginning September, 1910.

[32] McClure's Magazine, 1911.

[33] Governor Woodrow Wilson, Speech of April 13, 1911.

[34] The Outlook, Nov. 18, 1911.

CHAPTER III

THE POLITICS OF THE NEW CAPITALISM

We are told that the political issue as viewed by American radicals is, "Shall property rule, or shall the people rule?" and that the radicals may be forced entirely over to the Socialist position, as the Republicans were forced to the position of the Abolitionists when Lincoln signed the Emancipation Proclamation. Mr. Ray Stannard Baker notes also that capital is continually the aggressor, as were the slaveholders, and that the conflict is likely to grow more and more acute, since "no one imagines that these powerful men of money will give up their advantage lightly" any more than the old slaveholders did.

Another "insurgent" publicist (Mr. William Allen White) says that the aim of radicalism in the United States is "the regulation and control of capital" and that the American people have made up their minds that "capital, the product of the many, is to be operated fundamentally for the benefit of the many." It is one of those upheavals, he believes, which come along once in a century or so, dethrone privilege, organize the world along different lines, take the persons "at the apex of the human pyramid" from their high seats and "iron out the pyramid into a plane."[35]

If the aim of the "progressives" is the overthrow of "the rule of property" as Mr. Baker claims—if, in the words of Mr. White again, "America is joining the world movement towards equal opportunity for all men in our modern civilization," then indeed the greatest political and economic struggle of history, the final conflict between capitalism and Socialism, is at hand.

But when we ask along what lines this great war for a better society is to be waged, and by what methods, we are told that the parties to the conflict are separated, not by practical economic interests, but by "ideas" and "ideals," and that the chief means by which this social revolution is to be accomplished are direct legislation and the recall and their use to extend government ownership or control so as gradually to close one door after another upon the operations of capital until its power for harm is annihilated, i.e. democracy and collectivism. In other words, the militant phrases used by Socialists in earnest are adopted by radicals as convenient and popular battle cries in their campaign for "State Socialism," as to banking, railroads, mines, and a few industrial "trusts," but without the slightest attempt either to end the "rule of property" or to secure "equal opportunity" for any but farmers and small business men. They do nothing, moreover, to bring about the new political and class alignment that is the very first requirement, if the rule of property in all its forms is to be ended, or equal opportunity secured for the lower as well as the comparatively well-to-do middle classes.

Similarly the essential or practical difference between the "Socialism" of Mr. Roosevelt's editorial associate, Dr. Lyman Abbott, who acknowledges that classes exist and says that capitalism must be abolished, and the Socialism of the international movement is this, that Dr. Abbott expects to work, on the whole, with the capitalists who are to be done away with, while Socialists expect to work against them.

Dr. Abbott claims that the "democratic Socialism" he advocates is directly the opposite of "State Socialism ... the doctrine of Bismarck," that it "aims to abolish the distinction between possessing and non-possessing classes," that our present industrial institutions are based on autocracy and inequality instead of liberty, democracy, and equality, that under the wages system or capitalism, the laborers or wage earners are practically unable to earn their daily bread "except by permission of the capitalists who own the tools by which the labor must be carried on." He then proceeds to what would be regarded by many as a thoroughly Socialist conclusion:

"The real and radical remedy for the evils of capitalism is the organization of the industrial system in which the laborers or tool users will themselves become the capitalists or tool owners; in which, therefore, the class distinction which exists under capitalism will be abolished."[36]

And what separates the advanced "State Socialism" of Mr. Hearst's brilliant editor, Mr. Arthur Brisbane, from the Socialism of the organized Socialist movement? Has not Mr. Brisbane hinted repeatedly at a possible revolution in the future? Has he not insisted that the crux of "the cost of living question" is not so much the control of prices by the private ownership of necessities of life (as some "State Socialist" reformers say, and even some official publications of the Socialist Party), as the exploitation of the worker at the point of production, the fact that he does not get the full product of his labor—phrases which might have been used by Marx himself?

The New York Evening Journal has even predicted an increasing conflict of economic interests on the political field—failing to state only that the people's fight must be won by a class struggle, a movement directed against capitalism and excluding capitalists (except in such cases where they have completely abandoned their financial interests).

Asked whether the influence of the Interests (the "trusts") would increase or diminish in this country in the near future, the Journal answered:—

"The influence of the interests, which means the power of the trusts, or organized industry and commerce, will go forward steadily without interruption.

"Just as steadily as early military feudalism advanced and grew, Until the People at last controlled it and owned it, just so steadily will To-day's Industrial Feudalism advance and grow without interruption Until the People control It and own it.

"The trusts are destined to be infinitely more powerful than now, infinitely more ably organized.

"And that will be a good thing in the long run for the people. The trusts are the people's great teachers, proving that destructive, selfish, unbrotherly competition is unnecessary.

"They are proving that the genius of man can free a nation or a world. They are saying to the people: 'You work under our Orders. One power can own and manage industry.'

"It is hard for individual ambition just now. But in time The People will learn the Lesson and will say to the Trust Owners:—

"'Thank you very much. We have learned the Lesson. We see that it is possible for One Power to own and control All Industry, All Manufactures, All Commerce, and we, the People, will be that One Power.'

"Just as the individual feudal lords organized their little armies in France, and just as the French people themselves have all the armies in one—Under the People's Power—so the industries organized Now by the barons of industrial feudalism, one by one, will be taken and put together by the people, Under the People's Ownership."[37]

Yet we find the Journal, like all the vehicles and mouthpieces of radicalism, other than those of the Socialists, unready to take the first step necessary in any conflict; namely, to decide who is the enemy. Unless defended by definite groups in the community, "the rule of property," could be ended in a single election. Nor can the group that maintains capitalist government consist, as radicals suggest, merely of a handful of large capitalists, nor of these aided by certain cohorts of hired political mercenaries—nor yet of these two groups supported by the deceived and ignorant among the masses. Unimportant elections may be fought with such support, but not revolutionary "civil wars" or "the upheavals of the centuries." In every historical instance such struggles were supported on both sides by powerful, and at the same time numerically important, social classes, acting on the solid basis of economic interest.

Yet non-Socialist reformers persist in claiming that they represent all classes with the exception of a handful of monopolists, the bought, and the ignorant; and many assert flatly that their movement is altruistic, which can only mean that they intend to bestow such benefits as they think proper on some social class that they expect to remain powerless to help itself. Here, then, in the attitude of non-Socialist reformers towards various social classes, we begin to see the inner structure of their movement. They do not propose to attack any "vested interests" except those of the financial magnates, and they expect the lower classes to remain politically impotent, which they as democrats, know means that these classes are only going to receive such secondary consideration as the interests of the other classes require.

Whether the radical of to-day, the "State Socialist," favors political democracy or not, depends on whether these "passive beneficiaries" of the new "altruistic" system are in a majority. If they are not in a majority, certain political objects may be gained (without giving the non-capitalist masses any real power) by allowing them all to vote, by removing undemocratic constitutional restrictions, and by introducing direct legislation, the recall, and similar measures. If they are a majority, it is generally agreed that it is unsafe to allow them an equal voice in government, as they almost universally fail to rest satisfied with the benefits they secure from collectivist capitalism and press on immediately to a far more radical policy.

So in agricultural communities like New Zealand, Australia, and some of our Western States, where there is a prosperous property-holding majority, the most complete political democracy has come to prevail. Judging everything by local conditions, the progressive small capitalists of our West sometimes even favor the extension of this democracy to the nation and the whole world, as when the Wisconsin legislature proposes direct legislation and the recall in our national government. But they are being warned against this "extremist" stand by conservative progressive leaders of the industrial sections like Ex-President Roosevelt or Governor Woodrow Wilson.

This latter type of progressive not only opposes the extension of radical democracy to districts like our South and East, numerically dominated by agricultural or industrial laborers, but often wants to restrict the ballot in those regions. Professor E. A. Ross, for example, writes in La Follette's Weekly that "no one ought to be given the ballot unless he can give proof of ability to read and write the English language," which would disqualify a large part, if not the majority, of the working people in many industrial centers; while Dr. Abbott concluded a lengthy series of articles with the suggestion that the Southern States have "set an example which it would be well, if it were possible, for all the States to follow."

"Many of them have adopted in their constitutions," Dr. Abbott continues, "a qualified suffrage. The qualifications are not the same in all the States, but there is not one of those States in which every man, black or white, has not a legal right to vote, provided he can read and write the English language, owns three hundred dollars' worth of property, and has paid his taxes. A provision that no man should vote unless he has intelligence enough to read and write, thrift enough to have laid up three hundred dollars' worth of property, and patriotism enough to have paid his taxes, would not be a bad provision for any State in the Union to incorporate in its constitution."[38]

Such a provision accompanied by the customary Southern poll tax, which, Dr. Abbott overlooked (evidently inadvertently), would add several million more white workingmen to the millions (colored and white) that are already without a vote.[39]

We cannot wonder, then, that the working people, who are enthusiastic supporters of every democratic reform, should nevertheless distrust the democracy of the new movement. It is generally supposed in the United States that the reason the new "Insurgency" is weaker in the East than in the West is because of the greater ignorance and political corruption of the masses of the great cities of the East. But when we see the radicalism of the West also, as soon as it enters the towns, tending to support the Socialists and Labor parties rather than the reformers, we realize that the distrust has no such local cause.

Perhaps the issue is more clearly seen in the hostility that exists among the working people and the Socialists towards the so-called commission plan of city government, which the progressives unanimously regard as a sort of democratic municipal panacea. The commission plan for cities vests the whole local government in a board of half a dozen elected officials subject to the initiative and referendum and recall. The Socialists approve of the last feature. They object to the commission and stand for the very opposite principle of an executive subordinate to a legislature and without veto power, because a board does not permit of minority representation, and because it allows most officials to be appointed through "influence" instead of being elected. They object also, of course, to the high percentages usually required for the initiative and the recall. It is Socialist and Labor Union opposition, and not merely that of political machines, that has defeated the proposed plan in St. Louis, Jersey City, Hoboken, and elsewhere, and promises to check it all over the country. As a device for saving the taxpayer's money, the commission plan in its usual form is ideal, as a means for securing the benefits of the expenditure of this money to the non-propertied or very small propertied classes, it is in its present form worse in the long run than the present corruption and waste. State legislatures and courts already protect the taxpayers from any measure in the least Socialistic, whatever form of local government and whatever party may prevail. It has caused more than a little resentment among the propertyless that the taxpayers should actually have the effrontery to propose the still more conservative commission plan as being a radically democratic reform.

It is on such substantial grounds that the propertyless distrust the democracy of the progressives and radicals. They find it extends only to sections or districts where small capitalist voters are in a majority. The "State Socialist" and Reform attitude towards political democracy is indeed essentially opportunistic. Not only does it vary from place to place, but it also changes rapidly with events. As long as the new movement is in its early stages, it deserves popularity, owing to the fact that it brings immediate material benefits to all and paves the way, either for capitalistic or for Socialistic progress, robs capitalism of all fear of the masses, and is ready to remove all undemocratic constitutional barriers and to do everything it can to advance popular government. These constitutional checks and balances prevent the small capitalists and their progressive large capitalist allies from bringing to time the reactionaries of the latter class, while they are so many that, in removing a few of them, there is little danger of that pure political democracy which would alone give to the masses any "dangerous" power. At a later stage, when "State Socialism" will have carried out its program, and the masses see that it is ready to go only so far as the small capitalists' interests allow and no farther, and when it will already have forced recalcitrant large capitalists to terms, and so have reunited the capitalist class, we may expect to see a complete reversal of the present semi-democratic attitude. But as long as the "State Socialist" program is still largely ahead of us, the large capitalists not yet put into their place, and full political democracy—in spite of rapid progress—still far in the distance, a radical position as to this, that, or the other piece of political machinery signifies little. So many reforms of this kind are needed before political democracy can become effective—and in the meanwhile many things can happen that will give ample excuse to any of the "progressive" classes that decide to reverse their present more or less democratic attitude, such as an "unpatriotic" attitude on the part of the masses, a grave railroad strike, etc.

For there will be abundant time before democratic machinery can reach that point in its evolution, when the non-capitalist masses can make the first and smallest use of it against their small and large capitalist masters. If, for example, the Supreme Court of this country should ever be made elective, or by any other means be shorn of its political power, and if then the President's veto were abolished, and others of his powers given to Congress, there would remain still other alternatives for vetoing the execution of the people's will—and one veto is sufficient for every practical purpose. Even if the senators are everywhere directly elected, the Senate may still remain the permanent stronghold of capitalism unless overturned by a political revolution.

The one section of the Constitution that is not subject to amendment is the allotment of two senators to each of the States. And even if public opinion should decide that this feature must be made changeable by ordinary amendment like the rest, it might require 90 or even 95 per cent of the people to pass such an amendment or to call a constitutional convention for the purpose. For Connecticut, Rhode Island, Vermont, Delaware, are not only governed by antiquated and undemocratic constitutions, but are so small that wholesale bribery or a system of public doles is easily possible. The constitutions of the mountain States are more modern, but Utah, Wyoming, Nevada, and New Mexico, and others of these States are so little populated as make them very easy for capitalist manipulation, as present political conditions show. Now if we add to these States the whole South, where the upper third or at most the upper half of the population is in firm control, through the disfranchisement of the majority of the non-capitalistic classes (white and colored), we see that, even if the country were swept by a tide of democratic opinion, it is most unlikely that it will ever control the Senate. Moreover, if the capitalists (large and small) are ever in danger of losing the Senate, they have only to annex Mexico to add half a dozen or a dozen new States with limited franchises and undemocratic constitutions.

Either the President, or the Senate, or the Supreme Court might prove quite sufficient to prevent the execution of the will of the people, in any important crisis—they would be especially effective when revolutionary changes in property, and rapid shifting of economic and political power into the hands of the people, are at stake, as Socialists believe they will be. But to resist such a movement, still another political weapon is available,—even if President, Senate, and Supreme Court fell into the hands of the people (and it is highly probable that the small capitalists, who themselves suffer under the above-mentioned constitutional limitations, will force the larger capitalists to fall back on this other weapon in the end),—namely, a limitation of the suffrage.

The property and educational qualifications for voting which are directed against the colored people in the Southern States are being used to a considerable degree, both North and South, against the poorer whites. While there is no likelihood that this process will continue indefinitely, or that it will spread to all parts of the country, it is already sufficient to throw the balance of political power in favor of the capitalists in the national elections. If we put the total number of voters in the country at 15,000,000, we can see how significant is the fact that more than a million, black and white, have already been directly disfranchised in the South alone.

In view of these numerous methods of thwarting democracy in this country (and there are others) there is no reason why the capitalists should not permit political leaders after a time to accept a number of radical and even revolutionary reforms in political methods. The direct election of senators, though it was bitterly opposed a few years ago, is already widely accepted; the direct nomination of the President has become the law in several States; Mr. Roosevelt threatens that the "entire system" may have to be changed, that constitutions may be "thrown out of the window," and the power of judges over legislation abolished, which, as he notes, has already been advocated by the Socialist member of Congress[40]; the Wisconsin legislature formally calls for a national constitutional convention and proposes to make the constitution amendable henceforth by the "initiative"; Governor Woodrow Wilson suggests that many of our existing evils may be remedied by national constitutional amendments[41], and two such amendments are now nearing adoption after forty years, during which it was thought that all amendment had ceased indefinitely.

Whether it will be decided to take away the power of the Supreme Court over legislation and make it directly responsible to Congress or the people, or to call a constitutional convention, is doubtful. A convention, as Senator Heyburn recently pointed out in the Senate, is "bigger than the Constitution" and might conceivably amend what is declared in that instrument not to be amendable, by providing that the States should be represented in the Senate in proportion to population. Even then the existing partial disfranchisement of the electors would prevent a new constitution from going "too far" in a democratic direction. It is also true, as the same senator said, that the habit of amending the Constitution is a dangerous one (to capitalism), and that it might some day put the capitalistic government's life at stake[42]. But this after all amounts only to saying that political evolution, like all other kinds, is cumulative, and that its tempo is in the long run constantly accelerated. Certainly each change leads to more change. None of these proposed political reforms, however, even a constitutional convention, is in itself revolutionary, or promises to establish even a political democracy. All could coexist, for example, with a still greater restriction of the suffrage.

Nor do any of these measures in themselves constitute the smallest step in the direction of political democracy as long as a single effective check is allowed to remain. If there is any doubt on the matter, we have only to refer to other constitutions than ours which accomplish the same object of checkmating democracy without a Supreme Court, without an absolute executive veto, without an effective second chamber, and in one important case without a written constitution (England).

Or, we can turn to France, Switzerland, or New Zealand, where the suffrage is universal and political democracy is already approximated but rendered meaningless to the non-capitalist masses by the existence of a majority composed of small capitalists. And in countries like the United States, where the small capitalists and their immediate dependents are nearly as numerous as the other classes, a temporary majority may also be formed that may soon make full democracy as "safe" for a considerable period as it is in Switzerland or New Zealand.[43]

As soon as "State Socialism" reaches its point of most rapid development, and as long as it continues to reach ever new classes with its immediate benefits, it will doubtless receive the support of a majority, not only of the voters, but also of the whole population. During this period the "Socialistic" capitalists will be tempted to popularize and strengthen their movement not only by uncompleted political reforms, that are abortive and futile as far as the masses are concerned, but also by the most thoroughgoing democracy. For radical democracy will not only be without danger, but useful and invaluable in the struggle of the progressive and collectivist capitalists against the retrogressive and individualist capitalists. As long as there is a majority composed of large and small capitalists and their dependents, together with those of the salaried and professional classes who are satisfied with the capitalistic kind of collectivism (i.e. while its progress is most brilliant), it is only necessary for the progressives to hold the balance of power in order to have everything their own way both against Socialism and reaction. The powerful Socialist and revolutionary minority created in industrial communities by equal suffrage and a democratic form of government, as long as it remains distinctly a minority, is unable to injure the combined forces of capitalism, while it furnishes a useful and invaluable club by which the progressive capitalists can threaten and overwhelm the reactionaries.

In Great Britain, for example, the new collectivist movement of Messrs. Churchill and Lloyd George, basing itself primarily on the support of the small capitalist class, which there as elsewhere constitutes a very large part (over a third) of the population, seeks also the support of a part of the non-propertied classes. It cannot make them any plausible or honest promise of any equitable redistribution of income or of political power, but it can promise an increase of well-paid government employment, and it can guarantee that it will develop the industrial efficiency of all classes and allow them a certain share, if a lesser one, in the benefits of this policy.

If then "State Socialism," like the benevolent despotisms and oligarchies of history, sometimes offers the purely material benefits which it brings in some measure to all classes, as a substitute for democratic government, it also favors democracy in those places where the small capitalists and related classes form a majority of the community. The purpose of the democratic policy, where it is adopted, is to stimulate new political interest in the "State Socialistic" program, and by increasing cautiously the political weight of the non-capitalists—without going far enough to give them any real or independent power—to check the reactionary element among the capitalists that tries to hold back the industrial and governmental organization the progressives have in view. It was in order to shift the political balance of power that the reactionary Bismarck introduced universal suffrage in Germany, and the same motive is leading Premier Asquith, who is not radical, to add considerably to the political weight of the working classes in England, i.e. not to the point where they have any power whatever for their own purposes, but only to that point where their weight, added to that of the Liberals, counterbalances the Tories, and so automatically aids the former party.

The Liberals are giving Labor this almost valueless installment of democracy, just as they had previously granted instead such immediate and material benefits as we see in the recent British budgets, as if they were concessions, only hiding the fact that they would soon have conferred these benefits on the workers through their own self-interest, whether the workers had given them their political support or not.

Mr. Lloyd George has said:—

"The workingman is no fool. He knows that a great party like ours can, with his help, do things for him he could not hope to accomplish for himself without its aid. It brings to his assistance the potent influences drawn from the great middle classes of this country, which would be frightened into positive hostility by a purely class organization to which they do not belong. No party could ever hope for success in this country which does not win the confidence of a large portion of this middle class....

"You are not going to make Socialists in a hurry out of farmers and traders and professional men of this country, but you may scare them into reaction.... They are helping us now to secure advanced Labor legislation; they will help us later to secure land reform and other measures for all classes of wealth producers, and we need all the help they give us. But if they are threatened with a class war, then they will surely sulk and harden into downright Toryism. What gain will that be for Labor?" (My italics.)[44]

The Chancellor of the Exchequer here bids for Labor's political support on the plea that what he was doing for Labor meant an expense and not a profit to the middle class, and that these reforms would only be assented to by that class as the necessary price of the Labor vote. I have shown grounds for believing that the chief motives of the new reforms have nothing to do with the Labor vote. However much Mr. Lloyd George, as a political manager, may desire to control that vote, he knows he can do without it, as long as it is cast against the Tories. The Liberals will hold the balance of power, and their small capitalist followers will continue to carry out their capitalistic progressive and collectivist program—even without a Labor alliance. Nor does he fear that even the most radical of reforms, whether economic or political, will enable Labor to seize a larger share of the national income or of political power. On the contrary, he predicted in 1906 that it would be a generation before Labor could even hope to be sufficiently united to take the first step in Socialism. "Does any one believe," he asked, "that within a generation, to put it at the very lowest, we are likely to see in power a party pledged forcibly to nationalize land, railways, mines, quarries, factories, workshops, warehouses, shops, and all and every agency for the production and distribution of wealth? I say again, within a generation? He who entertains such hopes must indeed be a sanguine and simple-minded Socialist."[45]

Mr. Lloyd George sought the support of Labor then, not because it was all-powerful, but because, for a generation at least, it seemed doomed to impotence—except as an aid to the Liberals. The logic of his position was really not that Labor ought to get a price for its political support, but that having no immediate alternative, being unable to form a majority either alone or with any other element than the Liberals, they should accept gladly anything that was offered, for example, a material reform like his Insurance bill—even though this measure is at bottom and in the long run purely capitalistic in its tendency.

And this is practically what Labor in Great Britain has done. It has supported a government all of whose acts strengthen capitalism in its new collectivist form, both economically and politically. And even if some day an isolated measure should be found to prove an exception, it would still remain true that the present policies considered as a whole are carrying the country rapidly and uninterruptedly in the direction of State Capitalism. And this is equally true of every other country, whether France, Germany, Australia, or the United States, where the new reform program is being put into execution.

Many "Socialistic" capitalists, however, are looking forward to a time when through complete political democracy they can secure a permanent popular majority of small capitalists and other more or less privileged classes, and so build their new society on a more solid basis. Let us assume that the railways, mines, and the leading "trusts" are nationalized, public utilities municipalized, and the national and local governments busily engaged on canals, roads, forests, deserts, and swamps. Here are occupations employing, let us say, a fourth or a fifth of the working population; and solvent landowning farmers, their numbers kept up by land reforms and scientific farming encouraged by government, may continue as now to constitute another fifth. We can estimate that these classes together with those among the shopkeepers, professional elements, etc., who are directly dependent on them will compose 40 to 50 per cent of the population, while the other capitalists and their direct dependents account for another 10 per cent or more. Here we have the possibility of a privileged majority, the logical goal of "State Socialism," and the nightmare of every democrat for whom democracy is anything more than an empty political reform. With government employees and capitalists (large and small)—and their direct dependents, forming 50 per cent or more of the population, and supported by a considerable part of the skilled manual workers, there is a possibility of the establishment of an iron-bound caste society solidly intrenched in majority rule.

There are strong reasons, which I shall give in later chapters, for thinking that some great changes may take place before this day can arrive.

FOOTNOTES:

[35] William Allen White in the American Magazine, January, 1911.

[36] Dr. Lyman Abbott in a series of articles published in the Outlook, 1910, entitled "The Spirit of Democracy," now in book form.

[37] New York Journal, Aug. 2, 1910.

[38] The Outlook, Sept. 10, 1910.

[39] In his enthusiasm for these undemocratic measures, Dr. Abbott has retrogressed more than the Southern States, which do not require both a property and educational qualification, but only one of the two. Moreover, by the "grandfather" and "understanding" clauses they seek to exempt as many as possible of the whites, i.e. a majority of the population in most of these States, from any substantial qualification whatever. Nor does it seem likely that even in the future they will apply freely; against the poor and illiterate of the white race, the measures Dr. Abbott advocates. Just such restricted suffrage laws were repealed in many Southern States from 1820 to 1850, and it is not likely that the present reaction will go back that far.

[40] The Outlook, May 24, 1911.

[41] Governor Woodrow Wilson, Speech in Portland, Oregon, May 18, 1911.

[42] Speech in Senate, May 24, 1911.

[43] Miss Jessie Wallace Hughan in her "American Socialism of the Present Day" (page 184) has quoted me as saying (in the New York Call of December 12, 1909) that the amendability of the Constitution by majority vote is a demand so revolutionary that it is exclusively Socialist property. Within the limitations of a very brief journalistic article I believe this statement was justified. It holds for the United States to-day. It does not hold for agrarian countries like Australia, Canada, or South Africa, for backward countries like Russia, or dependent countries like Switzerland or Denmark, where there is no danger of Socialism. And before it can be put into effect, which may take a decade or more, the increased proportion in the population of well-paid government employees and of agricultural lessees of government lands and similar classes, may make a democratic constitution a safe capitalistic policy, for a while, even in the United States.

[44] Lloyd George, op. cit., pp. 33, 34.

[45] Lloyd George, op. cit., p. 35.

CHAPTER IV

"STATE SOCIALISM" AND LABOR

State Capitalism has a very definite principle and program of labor reform. It capitalizes labor, views it as the principal resource and asset of each community (or of the class that controls the community), and undertakes every measure that is not too costly for its conservation, utilization, and development—i.e. its development to fill those positions ordinarily known as labor, but not such development as might enable the laborers or their children to compete for higher social functions on equal terms with the children of the upper classes.

On the one hand is the tendency, not very advanced, but unmistakable and almost universal, to invest larger and larger sums for the scientific development of industrial efficiency—healthy surroundings in childhood, good food and healthy living conditions, industrial education, model factories, reasonable hours, time and opportunity for recreation and rest, and on the other a rapidly increasing difficulty for either the laborer or his children to advance to other social positions and functions—and a restriction of the liberty of laborers and of labor organizations, lest they should attempt to establish equality of opportunity or to take the first step in that direction by assuming control over industry and government. From the moment it approaches the labor question the "Socialist" part of "State Socialism" completely falls away, and nothing but the purest collectivist capitalism remains. Even the plausible contention that it will result in the maximum efficiency and give the maximum product breaks down. For no matter how much the condition of the laborers is improved, or what political rights they are allowed to exercise, if they are deprived of all initiative and power in their employments, and of the equal opportunity to develop their capacities to fill other social positions for which they may prove to be more fit than the present occupants, then the human resources of the community are not only left underdeveloped, but are prevented from development.

In the following chapters I shall deal successively with the plans of the "State Socialists" to develop the productive powers of the laboring people and their children—as laborers, together with the accompanying tendencies towards compulsory labor, and formation of a class society.

"Our Home policy," says a manifesto of the Fabian Society (edited by Bernard Shaw), "must include a labor policy, whether the laborer wants it or not, directed to securing for him, what, for the nation's sake even the poorest of its subjects should have." (Italics mine.)[46]

Here is the basis of the attitude of the "State Socialist" towards labor. Labor is to be given more and more attention and consideration. But the governing is to be done by other classes, and the foundation of the new policy is to be the welfare of society as these other classes conceive it,—and not the welfare of the masses of the people as conceived by the masses themselves.

Indeed, a government official has recently pleaded with capital in the name of labor that the time has come when it pays to treat labor as well as valuable horses and cattle. George H. Webb, Commissioner of Labor of Rhode Island, begins his report on Welfare Work by assuring the manufacturers that it is profitable. He says: "Mankind, at least that portion of it that has to do with horseflesh, discovered ages ago that a horse does the best service when it is well fed, well stabled, and well groomed. The same principle applies to the other brands of farm stock. They one and all yield the best results when their health and comforts are best looked after. It is strange, though these truths have been a matter of general knowledge for centuries, that it is only quite recently that it has been discovered that the same rule is applicable to the human race. We are just beginning to learn that the employer who gives steady employment, pays fair wages, and pays close attention to the physical health and comfort of his employees gets the best results from their labor."[47]

Mr. George W. Perkins, recently retired from the firm of J. P. Morgan and Company, who has managed the introduction of pensions, profit sharing, and other investments in labor for the International Harvester Company, has also expressed the view that these measures were profitable "from a pecuniary standpoint." A good illustration is the calculation of the Dayton Cash Register Company, which has led in this "welfare work," that "the luncheons given each girl costs three cents, and that the woman does five cents more of work each day." Some such calculation will apply to the whole colossal system of governmental labor reforms now favored so widely by far-sighted employers.[48]

In order that the private policy of the more enlightened of the large corporations should become the policy of governments, which employers as a class know they can control, only two conditions need to be filled. Since all employers must to some degree share the burdens of the new taxes needed for such governmental investments in the improvement of labor, there must be some assurance, first, that all capitalists shall share in the opportunity to employ this more efficient and more profitable labor; and second, that the supply of cheap labor, which has cost almost nothing to produce, is either exhausted or, on account of its inefficiency, is less adapted to the new industry than it was to the old. The impending reorganization of governments to protect the smaller capitalists from the large (through better control over the banks, railroads, trusts, tariffs, and natural resources) will furnish the first condition, the natural exhaustion or artificial restriction of immigration now imminent together with the introduction of "scientific management," the second. From a purely business standpoint the greatest asset of the capitalists' government, its chief natural resource, the most fruitful field for conservation, and the most profitable place for the investment of capital will then undoubtedly be in the labor supply.

In presenting the British Budget of 1910 to Parliament, Mr. Lloyd George argued that the higher incomes and fortunes ought to bear a greater than proportionate share of the taxes, because present governmental expenditures were largely on their behalf, and because the new labor reforms were equally to their benefit.

"What is it," he said, "that enabled the fortunate possessors of these incomes and these fortunes to amass the wealth they enjoy or bequeath? The security insured for property by the agency of the State, the guaranteed immunity from the risks and destruction of war, insured by our natural advantages and our defensive forces. This is an essential element even now in the credit of the country; and, in the past, it means that we were accumulating great wealth in this land, when the industrial enterprises of less fortunately situated countries were not merely at a standstill, but their resources were being ravaged and destroyed by the havoc of war.

"What, further, is accountable for this growth of wealth? The spread of intelligence amongst the masses of the people, the improvements in sanitation and in the general condition of the people. These have all contributed towards the efficiency of the people, even as wealth-producing machines. Take, for instance, such legislation as the Educational Acts and the Public Health Acts; they have cost much money, but they have made infinitely more. That is true of all legislation which improves the conditions of life for the people. An educated, well-fed, well-clothed, well-housed people invariably leads to the growth of a numerous well-to-do class. If property were to grudge a substantial contribution towards proposals which insure the security which is one of the essential conditions of its existence or toward keeping from poverty and privation the old people whose lives of industry and toil have either created that wealth or made it productive, then property would be not only shabby, but shortsighted." (Italics mine.)[49]

The property interests should be far-sighted enough to support the present economic and labor reforms, not because there is any fear in Great Britain either from a revolutionary Socialist movement or from an organized political or labor union upheaval, for Mr. Lloyd George ridicules both these bogeys, but because such reforms contribute towards the efficiency of the people, even as wealth-producing machines—and increase the incomes of the wealthy and the well-to-do.

Mr. Lloyd George continued:—

"We have, more especially during the last 60 years, in this country accumulated wealth to an extent which is almost unparalleled in the history of the world, but we have done it at an appalling waste of human material. We have drawn upon the robust vitality of the rural areas of Great Britain, and especially Ireland, and spent its energies recklessly in the devitalizing atmosphere of urban factories and workshops as if the supply were inexhaustible. We are now beginning to realize that we have been spending our capital, at a disastrous rate, and it is time we should take a real, concerted, national effort to replenish it. I put forward this proposal, not a very extravagant one, as a beginning." (My italics.)[50]

In order to do away with the economic waste of profitable "human material" and the still more serious exhaustion of the supply, the propertyless wage earner or salaried man for the first time obtains a definite status in the official political economy; he becomes the property of the nation viewed "as a business firm," a part of "our" capital. His position was much like a peasant or a laborer during the formation of the feudal system. To obtain any status at all, to become half free he had to become somebody's "man." Now he is the "man," the industrial asset, of the government. This paternal attitude towards the individual, however, is not at all similar to the paternalist attitude towards capital. While the individual capitalist often does not object to having his capital reckoned as a part of the resources of a government which capitalists as a class control,—roughly speaking in proportion to their wealth,—we can picture his protests if either his personal activity or ability or his private income were similarly viewed as dependent for their free use and development on the benevolent patronage of the State. However, for the workers to become an asset of the State, even while the latter is still viewed primarily as a commercial institution and remains in the hands of the business class, is undoubtedly a revolutionary advance.

Mr. Winston Churchill also gives, as the basis for the whole program, the need of putting an end to that "waste of earning power" and of "the stamina, the virtue, safety, and honor of the British race," that is due to existing poverty and economic maladjustment.[51] Mr. John A. Hobson, a prominent economist and radical, shows that the purpose of the "New Liberalism" is the full development of "the productive resources of our land and labor,"[52] and denies that this broad purpose has anything to do with Socialist collectivism.

Professor Simon Patten of the University of Pennsylvania writes very truly about the proposed labor reforms, that "they can cause poverty to disappear and can give a secure income to every family," without requiring any sacrifice on the part of the possessing classes. No one has shown more clearly or in fewer words how intimately connected are the advance of the worker and the further increase of profits. "Social improvement," Professor Patten says, "takes him [the workman] from places where poverty and diseases oppress, and introduce him to the full advantage of a better position.... It gives to the city workman the air, light, and water that the country workman has, but without his inefficiency and isolation. It gives more working years and more working days in each year, with more zeal and vitality in each working day; health makes work pleasant, and pleasant work becomes efficiency when the environment stimulates men's powers to the full.... The unskilled workman must be transformed into an efficient citizen; children must be kept from work, and women must have shorter hours and better conditions."[53]

Professor Patten has even drawn up a complete scientific program of social reforms which lead necessarily to the economic advantage of all elements in a community without any decrease of the existing inequalities of wealth. "The incomes and personal efforts of those favorably situated," says Professor Patten, "can reduce the evils of poverty without the destruction of that upon which their wealth and the progress of society depend." (Italics mine.)

The reform program begins with childhood and extends over every period of the worker's life. Ex-President Eliot of Harvard and President Hadley of Yale and other leading educators propose that its principles be applied to the nation's children. Dr. Eliot insists that greater emphasis should be laid on vocational and physical training and the teaching of hygiene and the preservation of the health, which will secure the approval of every "State Socialist." Anything that can be done to elevate the health of the nation, and to increase its industrial efficiency by the teaching of trades, will pay the nation, considered as a going concern, a business undertaking of all its capitalists. It might not improve the opportunity of the wage earners to rise to better-paid positions, because it would augment competition among skilled laborers; while it would probably improve wages somewhat, it might not advance them proportionately to the general increase of wealth; it might leave the unequal distribution of wealth, political power, and opportunity even more unequal than they are to-day, but as long as the nation as a whole is richer and the masses of the people better off, "State Socialists" will apparently be satisfied.

President Hadley is even more definite than Dr. Eliot. The new educational policy so thoroughly in accord with the interests of the business and capitalist classes demands "for the people" every opportunity in education that will make the individual a better worker, while it allows his development as a man and a citizen to take care of itself. President Hadley urges that we follow along German lines in public education. What he feels we still lack, and ought to take from Germany, are the "industrial training and the military training of the people": the children are forced to go to the elementary schools for a time, and during that part of their education they are kept out of the shops and the factories. They, however, receive instructions in the rudiments of shop and factory work."[54] In other words, the children are kept out of the factory, but the shop and the factory are permitted to enter the school. Doubtless an improvement, but not yet the sort of education any business or professional man would desire for his own children at twelve, fourteen, or sixteen years of age.[55]

"State Socialism" looks at the individual, and especially the workingman, almost wholly from the standpoint of what the community, as at present organized, the capitalists being the chief shareholders, is able to make out of him. Each newborn child represents so much cost to the community for his education. If he dies, the community loses so and so much. If he lives, he brings during his life such and such a sum to the community, and it is worth while to spend a considerable amount both to prevent his early death or disablement and to increase his industrial efficiency while he lives. According to this view, Professor Irving Fisher of Yale has calculated that the annual child crop in the United States is worth about seven billion dollars per annum, a sum almost equal to the annual value of our agricultural crops. In both cases great economies are possible. Professor Fisher has estimated that 47 per cent of the children who die in America less than five years old could be saved at an average cost of $20 per child, which means an annual loss to the nation of $576,000,000, according to Professor Fisher's calculation of what would have been the future value of all the children now lost (above their cost of maintenance).