Fabian Essays in Socialism

Edited by: Shaw, George Bernard
(1856-1950)
BIO
Display paragraphs in this book containing:
Editor/Trans.
H. G. Wilshire, American editor.
First Pub. Date
1889
Publisher/Edition
New York: The Humboldt Publishing Co.
Pub. Date
1891
Comments
Collected essays, various authors. Includes "Industry under Socialism," by Annie Besant.

The Basis of Socialism
Industrial

by William Clarke
M.A., Cambridge.

I.2.1

MY object in the following paper is to present a brief narrative of the economic history of the last century or century and a half. From this I wish to draw a moral. That moral is that there has been and is proceeding an economic evolution, practically independent of our individual desires or prejudices; an evolution which has changed for us the whole social problem by changing the conditions of material production, and which ipso facto effects a revolution in our modern life. To learn clearly what that revolution is, and to prepare ourselves for taking advantage of it in due course—this I take to be briefly what is meant by Socialism. The ignorant public, represented by, let us say, the average bishop or member of Parliament, hears of the "Social Revolution" and instantly thinks of street riots, noyades, with a coup d'état: a 10th of August, followed perhaps by its nemesis in an 18th Brumaire. But these are not the Social Revolution. That great change is proceeding silently every day. Each new line of railway which opens up the trackless desert, every new machine which supplants hand labor, each fresh combination formed by capitalists, every new labor organization, every change in prices, each new invention—all these forces and many more are actually working out a social revolution before our eyes; for they are changing fundamentally the economic basis of life. There may possibly come some one supreme moment of time in which a great dramatic incident will reveal to men the significance of the changes which have led up to it, and of which it is merely the final expression. And future historians may write of that as The Revolution just as historians now write of the fall of the Bastille, or the execution of Louis XVI., as though these events constituted the French Revolution instead of being the final terms in a long series of events which had been loosening the fabric of French feudalism through several generations. The true prophet is not an ignorant soothsayer who foretells some Armageddon, but rather he who perceives the inevitable drift and tendency of things. Somewhat in this spirit we may consider the economic history of the modern industrial era in order to discern its meaning, to see what it has led up to, and what, consequently, are the problems with which we find ourselves confronted to-day.

I.2.2

Had we visited a village or small town in England where industrial operations were going on 150 years ago, what should we have found? No tall chimney, vomiting its clouds of smoke, would have been visible; no huge building with its hundred windows blazing with light would have loomed up before the traveler as he entered the town at dusk; no din of machinery would have been heard; no noise of steam hammers; no huge blast furnaces would have met his eye, nor would miles of odors wafted from chemical works have saluted his nostrils. If Lancashire had been the scene of his visit he would have found a number of narrow red-brick houses with high steps in front, and outside wooden shutters such as one may still see in the old parts of some Lancashire towns to-day. Inside each of these houses was a little family workshop, containing neither master nor servant, in which the family jointly contributed to produce by the labor of their hands a piece of cotton cloth. The father provided his own warp of linen yarn, and his cotton wool for weft. He had purchased the yarn in a prepared state, while the wool for the weft was carded and spun by his wife and daughters, and the cloth was woven by himself and his sons. There was a simple division of labor in the tiny cottage factory; but all the implements necessary to produce the cotton cloth were owned by the producers. There was neither capitalist nor wage-receiver: the weaver controlled his own labor, effected his own exchange, and received himself the equivalent of his own product. Such was the germ of the great English cotton manufacture. Ferdinand Lassalle said: "Society consists of ninety-six proletaires and four capitalists. That is your State." But in old Lancashire there was neither capitalist nor proletaire.

I.2.3

Or even much later had one visited—Stafford, let us say, one would not have found the large modern shoe-factory, with its bewildering variety of machines, each one with a human machine by its side. For shoemaking then was a pure handicraft, requiring skill, judgment, and some measure of artistic sense. Each shoemaker worked in his own little house, bought his own material from the leather merchant, and fashioned every part of the shoe with his own hand, aided by a few simple and inexpensive tools. He believed there was "nothing like leather," and had not yet learned the art of putting on cheap soles, not made of leather, to cheap boots, which, in a month's time, will be almost worn out. Very likely the shoemaker had no vote; but he was never liable to be locked out by his employer, or to be obliged to go on strike against a reduction of wages, with his boy in prison for satisfying hunger at the expense of the neighboring baker, or his girl on the streets to pay for her new dress. Such was the simple industrialism of our great-great-grandfathers. But their mode of life was destined to change. All progress, says Mr. Herbert Spencer, is differentiation; and this formidable factor began to appear in the quiet sleepy English county. About 1760 a large share of calico-printing was transferred from London to Lancashire, where labor was then cheaper. There was a consequent fall in prices, and an increased demand for calicoes of linen warp and cotton weft. Then the Manchester dealers, instead of buying fustians and calicoes from the weaver, began to furnish him with the materials for his cloth, and to pay him a fixed price per piece for the work when executed. So the Manchester dealer became what the French call an entrepreneur; and the transformation of the independent weaver into a wage receiver began. The iron law of wages and the unemployed question also began to loom dimly up. For as the weaver came to hire himself to the dealer, so the weaver let out part of his work; and it frequently happened that the sum which the master weaver received from his employer was less than what he found himself compelled to pay to those whom he employed in spinning. "He durst not, however, complain," says Mr. Watts in his article on cotton (Encyclopaædia Britannica), "much less abate the spinner's price, lest his looms should be unemployed." The quantity of yarn producible under this simple system by the aid of the one-thread wheel was very small. The whole did not exceed in quantity what 50,000 spindles of our present machinery can yield. As one man can now superintend 2,000 spindles, it will be seen that twenty-five men with machinery can produce as much as the whole population of old Lancashire. In 1750 the first important invention in the cotton industry was made in the shape of the fly-shuttle, invented by Kaye of Bury. In 1760 improvements were made in the carding process. In 1767 the spinning-jenny was invented by Hargreaves, and this was at length brought to work as many as eighty spindles. The ingenious Hargreaves had ample opportunity for practical study of the "unemployed" question; for the spinners, some of whom were forced into idleness by the new invention, broke into his house and destroyed his machine. Shortly after, there was a general rising over industrial Lancashire: the poor hand-workers, whose prophetic souls were evidently dreaming on things to come, scouring the country and breaking in pieces every carding and spinning machine they could find.

I.2.4

Progress by differentiation, however, heeded not the second sight of Lancashire workers. In 1769, Arkwright contrived the spinning frame, and obtained his patent for spinning with rollers. In 1775, Crompton, of Bolton, invented the mule-jenny, enabling warps of the finest quality to be spun.*49 In 1792, further improvements in this machine were made by Pollard, of Manchester, and Kelly, of Glasgow. In 1785, steam was first applied to the spinning of cotton in Nottinghamshire. In 1784 the Rev. E. Cartwright, of Kent, invented power-loom weaving, and completed and patented his invention in August, 1787. Here, then, within a period of about forty years, was a series of mechanical inventions which had the effect of absolutely changing the method of production, and enormously increasing the output; of dividing the labor of producing, which had formerly been effected by a single family within the walls of a single room, between scores and hundreds of people, each of whom only undertook a single process in a complex operation; of massing together hundreds of thousands of people under new conditions; of bringing a heretofore isolated district into intimate relations with distant foreign lands; and of separating the work of spinning or weaving from the ownership of the instruments by whose aid the work was done. The independent weaver was gone; or rather he was subjected, like an amœba, to a process of fission, but with this difference: that whereas the amœba produces by fission other similar amœbæ, the weaver was differentiated into a person called an employer and another called an employé or "hand." Multiply this "hand" by thousands, and we get the mill or factory, divided into departments, each with its special detail of work, each detail fitting into all the rest, each machine taking up the work where the last machine left it, and each contributing its share to the joint product. Multiply the employer; add enormously to the aggregate of his capital; remove the barrier of national frontiers from his operations; relieve him of the duty of personal supervision; and we get the joint-stock capitalist.

I.2.5

Pause a moment to consider the famous world-events which made so much noise while these industrial processes were going on. The conquest of Canada, the victories of Clive in India, the Seven Years' War, the successful revolt of the American colonies, the Declaration of Independence and formation of the American Constitution, the deeds of Frederic the Great, Pitt's accession to power, Washington's election to the Presidency, the Fall of the Bastille, the death of Mirabeau, the fall of the old French monarchy, the National Convention—all these great events which shook the world were contemporary with the industrial revolution in England; and that revolution was in promise and potency more important than them all.

I.2.6

I will glance at the development of another great industry, that of iron. In former times iron was largely worked in the south of England, notably in Sussex, in a district now purely agricultural. By the middle of the 18th century, important iron industries had begun to cluster round Coalbrookdale; and here many of the industrial changes in the working of iron were first introduced. From 1766 to 1784 improvements were made in the mode of working malleable iron and of transferring cast into wrought iron. The puddling forge was invented in 1784; and it gave an immense impetus to the manufacture. In 1828 the use of the hot blast was substituted for cold air; in 1842 Nasmyth invented the steam-hammer; and in 1856 the Bessemer process of making steel was patented. Subsequently we have the Siemens regenerative furnace and gas producer, the use of machinery in lieu of hand labor for puddling, casting of steel under great pressure, and the improvements in the Bessemer process. As a result of these inventions the increase in the production of steel during the last few years, especially in the United States and Great Britain, has been enormous. In all this we see the same series of phenomena, all tending to huge monopolies. Machinery supplants hand labor; production is greatly stimulated; the immense capital needed enables only the large producers to survive in the competitive conflict; and we get as the net result well defined aggregations of capital on the one hand, and dependent machine minders on the other.

I.2.7

I have alluded to the shoe industry as having been formerly a pure handicraft. Simple machine processes for fastening soles and heels to inner soles began to be adopted in 1809; and from that time onward successive inventions have converted the pure handicraft into one of the most mechanical industries in the world. In the United States in 1881 no less than 50,000,000 pairs of boots and shoes were sewed by the Blake-Mackay machines. A visitor to a shoe factory to-day will see the following machines: for cutting leather, for pressing rollers for sole leather, for stamping out sole and heel pieces, for blocking and crimping, for molding uppers or vamps, for vamp-folding, for eyeleting, lasting, trimming and paring, scouring, sand papering and burnishing, for stamping, peg-cutting, and nail-rasping. It is well to witness all these processes going on in one large factory in order to grasp fully the idea that the old individual industry of the last century is almost as extinct as the mastodon—that the worker in a shoe factory to-day is, so to speak, a machine in a vast complex system. The great industry has supplanted the small one; such great industry involves the aggregation of capital: consequently competition on the part of the small producer is hopeless and impossible. Thus in the proletarian class the intensity of the struggle for existence is increased, keeping down wages and ever widening the margin of the unemployed class. The small producer must become a wage earner either as manager, foreman, or workman. As well attempt to meet Gatling guns with bows and arrows, or steel cruisers armed with dynamite bombs with the little cockle-shells in which Henry V.'s army crossed over to win the field of Agincourt, as to set up single shoe-makers or cotton-weavers against the vast industrial armies of the world of machinery. The revolution is confined to no one industry, to no one land. While most fully developed in England, it is extending to most industries and to all lands. Prince Kropotkin, it is true, reminds us in an interesting article in the Nineteenth Century for October, 1888, that a number of small industries can still be found in town and country. That is so, no doubt; and it is not unlikely that for a long time to come many small trades may exist, and some may even flourish. But the countries in which small industries flourish most are precisely those in which there is least machine industry, and where consequently capitalism is least developed. In no country, says Kropotkin, are there so many small producers as in Russia. Exactly; and in no country is there so little machinery or such an inefficient railway system in proportion to population and resources. On the other hand, in no country is machinery so extensively used as in the United States; and it is precisely that country which contains the fewest small industries in proportion to population and resources. Many of the small industries, too, as Kropotkin admits, are carried on by persons who have been displaced by machines, and who have thus been thrown unemployed on the labor market; or who have drifted into large towns, especially into London, because in the country there was no work for them. At best the great majority of these people earn but a scanty and precarious living; and, judging from the number of hawkers and vendors who wander about suburban streets and roads without selling anything, one would imagine that great numbers can scarcely make any living at all.

I.2.8

Furthermore, when Kropotkin refers to the sweaters' victims, and to the people in country places who make on a small scale clothes or furniture which they dispose of to the dealers in large towns, and so forth, let it be remembered that so long as human labor is cheaper than machinery it will be utilized by capitalists in this way. The capitalist uses or does not use machinery according as it pays or does not pay; and if he can draw to an unlimited extent on the margin of unemployed labor, paying a bare subsistence wage, he will do so, as the evidence given before the House of Lords Committee on Sweating shows. While admitting then that a good many small industries exist, and that some will continue to exist for an indefinite time, I do not think that such facts make against the general proposition that the tendency is to large production by machinery, involving the grouping of men and the massing of capital, with all the economic and social consequences thereby involved.

I.2.9

Even agriculture, that one occupation in which old-fashioned individualism might be supposed safe, is being subjected to capitalism. The huge farms of Dakota and California, containing single fields of wheat miles long, are largely owned by joint stock corporations and cultivated exclusively by machinery. It was the displacement of human labor by machinery on these farms as well as the crisis in mining operations which helped to bring about the phenomenon of an unemployed class in the richest region of the world, and led Mr. Henry George to write his Progress and Poverty. These huge farms,*50 combined with the wheat "corners" in New York and Chicago and the great railway corporations of America, have played havoc with many of the small farmers of the Mississippi Valley, as the statistics respecting mortgaged farms will show. And when it is remembered that the American farmer will be more and more obliged to meet the growing competition of the wheat of India, produced by the cheapest labor in the world, his prospect does not appear to be very bright.

I.2.10

In order to perceive clearly the immense development of machine industry and the consequent displacement of labor, one must resort to figures, mere rhetoric being of no avail. The following figures are cited from the United States, because American public statistics are so much better than British, being both more complete and more accessible. The facts are taken from the first Annual Report of the United States Commissioner of Labor Statistics in Washington for 1886. The Commissioner, inquiring into the industrial crisis, finds that it is mainly due to the immense development of machine industry under the joint-stock system; and he takes up various trades one after another to show how labor has been displaced by machinery. In the timber business, he says, twelve laborers with a Bucker machine will dress 12,000 staves. The same number of men by hand labor would have dressed in the same time only 2,500. In the manufacture of paper a machine now used for drying and cutting, run by four men and six girls, will do the work formerly done by 100 persons, and do it much better. In the manufacture of wall-paper the best evidence puts the displacement in the proportion of a hundred to one. In a phosphate mine in South Carolina ten men accomplish with machinery what 100 men handle without it in the same time. There has been a displacement of 50 per cent. In the manufacture of rubber boots and shoes. In South Carolina pottery the product is ten times greater by machine processes than by muscular labor. In the manufacture of saws, experienced men consider that there has been a displacement of three men out of five. In the weaving of silk the displacement has been 95 per cent., and in the winding of silk 90 per cent. A large soap manufacturing concern carefully estimates the displacement of labor in its works at 50 per cent. In making wine in California a crushing machine has been introduced with which one man can crush and stem 80 tons of grapes in a day, representing an amount of work formerly requiring eight men. In woolen goods modern machinery has reduced muscular labor 33 per cent. in the carding department, 50 per cent. in the spinning, and 25 per cent. in the weaving. In some kinds of spinning one hundred to one represents the displacement.*51 In the whole United States in 1886 the machinery was equal to 3,500,000 horse power. If men only had been employed, it would have required 21,000,000 to turn out the actual total product: the real number was four millions. To do the work accomplished in 1886 in the United States by power machinery and on the railways would have required men representing a population of 172,500,000. The actual population of the United States in 1886 was something under 60,000,000, or a little more than one-third.

I.2.11

Commenting on these very remarkable statistics, the Labor Commissioner says: "The apparent evils resulting from the introduction of machinery and the consequent subdivision of labor have to a large extent, of course, been offset by advantages gained; but it must stand as a positive statement, which cannot be successfully controverted, that this wonderful introduction and extension of power machinery is one of the prime causes, if not the prime cause, of the novel industrial condition in which the manufacturing nations find themselves." One of the results of the "novel industrial condition" in America in 1885 was an unemployed class variously estimated at from one to two millions of men, the condition of many of whom as tramps furnished subjects for some very sorry jests to the American press. Such facts as are here suggested will show how a new country may soon be reduced to a condition which aggregated capital on the one hand and unemployed labor on the other render little better than that of an old European State with its centuries of misery and oppression. And incidentally they also show that such a nostrum as emigration, if intended not as a palliative but as a solution, is simply quackery. The inference would seem to be irresistible. Just as fast as capitalists find it profitable to introduce improved machinery, as fast also will the helplessness of a growing number of the proletariat increase. The "unemployed" question is the sphinx which will devour us if we cannot answer her riddle.

I.2.12

The wonderful expansion of Lancashire perhaps affords the best illustration of the change from individual to collective industry. A cotton-mill in one of the dismal "hell-holes" called towns in Lancashire is a wonderful place, full of bewildering machines. Here is a machine called an "opener," by which 15,000 lbs. of cotton can be opened in 56 hours. There is a throstle, the spindles of which make from 6,000 to 7,000 revolutions per minute. Here is a man who, with the aid of two piecers to take up and join the broken ends, can work 2,000 spindles. Among the distinct separate machines used are opener, scutcher and lap machine, drawing frame, slubbing frame, intermediate frame, roving frame, throstle, self-acting mule and hand mule, doubling frame, and mule doublers or twiners. By means of these appliances the following results have been attained. Within eight years, from 1792 to 1800, the quantity of cotton exported from the United States to Lancashire had increased from 138,000 lbs. to 18,000,000 lbs. In 1801 Lancashire took 84,000 bales of cotton from the United States: in 1876 she took 2,075,000 bales; and whereas in the former year only 14,000 bales came from India, in 1876 from that country came 775,000 bales, besides a great increase in Brazilian cotton, and a new import of 332,000 bales from Egypt. In 1805, one million pieces of calico were sold in the Blackburn market during the whole year; and that was considered a very large sale. In 1884, according to Ellison's Annual Review of the Cotton Trade, there were exported 4,417,000,000 yards of piece goods besides the vast quantity produced for home consumption. In 1875, in place of the little cottages with their hand-looms of a century before, Lancashire contained 2,655 cotton factories with 37,515,772 spinning spindles and 463,118 power looms; and she produced yarn and piece goods to the weight of 1,088,890,000 lbs. and of the value of £95,447,000. See, too, how through the use of machinery the cost of production had been lowered. In 1790 the price of spinning the yarn known technically as No. 100 was 4s. per lb.: in 1826 it had been reduced to 6½d. The sale price of yarn No. 100 in 1786 was 38s.: in 1793 it was reduced to 15s. 1d., in 1803 to 8s. 4d., in 1876 to 2s. 6d. The decreased cost in each case followed on economy in production, itself dependent on increased differentiation in machinery; that in turn involving larger and larger capital; and that again necessitating aggregation and the crushing out of small concerns which could not command machinery or sell at a profit in competition with it.

I.2.13

Speculation on the possibility of foreign competition destroying the industrial supremacy of Lancashire, Mr. Watts writes in the Encyclopædia Britannica: "It may perhaps be sufficient to recall to our readers the small part of the cost of the commodity which now belongs to the labor of the hand, and the daily diminution which is taking place even of that part, by the introduction of new mechanical substitutes."*52 Mr. Watts wrote as an expert; and the inference one is compelled to draw from his dictum is that concentration of capital and growth of monopoly must continue to develop; and that the "unemployed" problem must force itself on Lancashire. One who is not an expert will only venture to criticise with great diffidence Mr. Watts's optimistic tone; but it is well to point out that in India capitalists can command the cheapest labor in the world—labor, too, at present entirely unregulated by law. The cotton of India, and also of Asiatic Russia, is spun and woven near to where it is grown, and where it can easily command the great Asiatic market. One is not surprised to find, therefore, that the Bombay cotton mills are already giving cause for some anxiety in Lancashire; and there seems no rational ground for supposing that that anxiety will decrease; in which case the increasing competition would seem to involve in Lancashire either immense development of machinery or reduction in wages in order to cheapen the cost of production. Either alternative forces the social problem forward.

I.2.14

I now pass on to consider the social problem as it has actually been forced on the attention of the British Government through the new industrial conditions.

I.2.15

The unrestrained power of capitalism very speedily reduced a large part of England to a deplorable condition. The Mrs. Jellybys of the philanthropic world were busy ministering to the wants of Borioboola Gha by means of tracts and blankets, neither of which were of the slightest use to those for whom they were intended. But Borioboolo Gha was an earthly paradise compared with civilized England. There was not a savage in the islands of the Pacific who was not better fed, happier, healthier, and more contented than the majority of the workers in the industrial parts of England.*53 Children, it was discovered, were transferred in large numbers to the north, where they were housed in pent-up buildings adjoining the factories, and kept to long hours of labor. The work was carried on day and night without intermission; so that the beds were said never to become cold, inasmuch as one batch of children rested while another batch went to the looms, only half the requisite number of beds being provided for all. Epidemic fevers were rife in consequence. Medical inspectors reported the rapid spread of malformation of the bones, curvature of the spine, heart diseases, rupture, stunted growth, asthma, and premature old age among children and young persons: the said children and young persons being worked by manufacturers without any kind of restraint. Manufacturing profits in Lancashire were being at the same time reckoned at hundreds and even thousands per cent. The most terrible condition of things existed in the mines, where children of both sexes worked together, half naked, often for sixteen hours a day. In the fetid passages, children of seven, six, and even four years of age, were found at work. Women were employed underground, many of them even while pregnant, at the most exhausting labor. After a child was born, its mother was at work again in less than a week, in an atmosphere charged with sulphuric acid. In some places women stood all day knee-deep in water and subject to an intense heat. One woman when examined avowed that she was wet through all day long, and had drawn coal carts till her skin came off. Women and young children of six years old drew coal along the passages of the mines, crawling on all fours with a girdle passing round their waists, harnessed by a chain between their legs to the cart. A sub-commissioner in Scotland reported that he "found a little girl, six years of age, carrying half a cwt., and making regularly fourteen long journeys a day. The height ascended and the distance along the road exceeded in each journey the height of St. Paul's Cathedral." "I have repeatedly worked," said one girl seventeen years of age, "for twenty-four hours." The ferocity of the men was worse than that of wild beasts; and children were often maimed and sometimes killed with impunity. Drunkenness was naturally general. Short lives and brutal ones were the rule. The men, it was said, "die off like rotten sheep; and each generation is commonly extinct soon after fifty." Such was a large part of industrial England under the unrestrained rule of the capitalist. There can be no doubt that far greater misery prevailed than in the Southern States during the era of slavery. The slave was property—often valuable property; and it did not pay his owner to ill-treat him to such a degree as to render him useless as a wealth-producer. But if the "free" Englishman were injured or killed, thousands could be had to fill his place for nothing.

I.2.16

Had this state of things continued we should have returned to a state of nature with a vengeance. Of man thus depicted we may say with Tennyson:

"Dragons of the prime,
That tare each other in their slime,
Were mellow music match'd with him."

It was evident that capitalist monopoly must be restrained, reluctant as English statesmen brought up under the commercial system were to interfere. The zenith of laissez faire was at the close of the last century; but a great fabric often looks most imposing shortly before it begins to collapse. The first piece of labor legislation was the Morals and Health Act of 1802, which interfered with the accommodation provided to children by the employers, to which reference has been made. The Cotton Mills Act was passed in 1819, partly owing to the exertions of Robert Owen. It limited the age at which children might work in factories; and it limited the time of their labor to seventy-two hours per week. Seventy-two hours for a child of nine who ought to have been playing in the green fields! And even that was a vast improvement on the previous state of things. Saturday labor was next shortened by an Act passed by the Radical politician, Sir John Cam Hobhouse, in 1825. Workmen, Radicals, Tories, and philanthropists then joined in an agitation under Mr. Richard Oastler, a Conservative member of Parliament, to secure a Ten Hours' Bill. Hobhouse tried by a Bill introduced in 1831 to reduce the time in textile industries; but he was beaten by the northern manufacturers. However, Althorp the Whig leader, who had helped to defeat Hobhouse, was obliged himself to introduce a measure by which night work was prohibited to young persons, and the hours of work were reduced to sixty-nine a week. Cotton-mill owners were at the same time disqualified for acting as justices in cases of infringement of the law. This measure is regarded by Dr. E. Von Plener in his useful manual as the first real Factory Act. Mr. Thomas Sadler, who had succeeded Oastler as leader in the cause of the factory operatives, brought in a Bill in 1832 limiting the hours of labor for persons under eighteen; but it was met by a storm of opposition from manufacturing members and withdrawn.

I.2.17

To Sadler succeeded that excellent man, who has perhaps done more for the working-classes than any other public man of our time, Lord Ashley, better known as Lord Shaftesbury. And here let me pause to point out that it was the Radicals and a large section of the Tories who took the side of the operatives against the Whigs, official Conservatives and manufacturing class. The latter class is sometimes regarded as Liberal. I think the truth is, that it captured and held for some time the Liberal fort, and made Liberalism identical with its policy and interests. If the men of this class had the cynical candor of Mr. Jay Gould, they might have imitated his reply when examined by a legislative committee: "What are your politics, Mr. Gould?" "Well, in a Republican district I am Republican, in a Democratic district I am a Democrat; but I am always an Erie Railroad man." One of Lord Ashley's strong opponents was Sir Robert Peel, the son of a Lancashire capitalist; but the most bitter and persistent was Mr. John Bright. Lord Ashley introduced a Ten Hours' Bill which included adults. Lord Althorp refused to legislate for adults, but himself passed an Act in 1833 prohibiting night work to those under eighteen; fixing forty-eight hours per week as the maximum for children, and sixty-nine for young persons; also providing for daily attendance at school, and certain holidays in the year. As this Act repealed that of 1831, manufacturers were again eligible to sit as justices in factory cases; and although numerous infractions were reported by inspectors, the offenders in many cases got off scot free. In 1840 Lord Ashley brought to the notice of Parliament the condition of young people employed in mines; and through his activity was passed the first Mining Act, prohibiting underground work by women and by boys under ten. Peel then passed a consolidating Factory Act in 1844. Lord Ashley proposed to restrict to ten per day the working hours for young persons; but Peel defeated the proposal by threatening to resign if it were carried. By the Act of 1844 the labor of children was limited to six and a half hours per day; and they had to attend school three hours daily during the first five days of the week. The next year, 1845, Lord Ashley secured the passage of a Bill forbidding night work to women. In 1847 Mr. Fielden introduced a Bill limiting the time of labor for all women and young persons to eleven hours per day, and after May, 1848 to ten hours. Peel and the factory owners opposed; but the Bill was carried. The Act of 1850 further reduced the legal working day for women and young persons; and an Act of 1853 prohibited the employment of children before 6 a.m., or after 6 p.m. In 1860 bleaching and dyeing works were subjected to the factory laws. Further legislation on this branch of industry took place in 1870. A Mines Act was passed in 1860, and made more stringent in 1862 with reference to safety and ventilation. Acts with reference to the lace industry were passed in the years 1861-64, to bake-houses in 1863, chimney-sweeping and pottery works in 1864. The Workshops Regulation Act, relating to small trades and handicrafts was passed in 1867, and a consolidating Factory and Workshops Act in 1871. The Act now in force is the Factory and Workshops Act 1878, modified in respect of certain industries by the Act of 1883. Further Acts relative to the regulations of mines were passed in 1872 and 1887.

I.2.18

This brief and imperfect survey of the legislation which has destroyed the regime of Laissez faire is sufficient for my purpose to prove: (1) That with private property in the necessary instruments of production, individual liberty as understood by the eighteenth century reformers must be more and more restricted, i.e., that in our existing economic condition individualism is impossible and absurd. (2) That even hostile or indifferent politicians have been compelled to recognize this. (3) That unrestrained capitalism tends as surely to cruelty and oppression as did feudalism or chattel slavery. (4) That the remedy has been, as a matter of fact, of a Socialistic character, involving collective checking of individual greed and the paring of slices off the profits of capital in the interests of the working community. These four propositions can scarcely be contested.

I.2.19

The immense development of English industry under the conditions previously set forth was due in great degree to the fact that England had secured an immense foreign market in which she had for a long time no formidable rival. Most of the wars in which England was engaged during the eighteenth century are quite unintelligible until it is understood that they were commercial wars intended to secure commercial supremacy for England. The overthrow of the Stuart monarchy was directly associated with the rise to supreme power of the rich middle class, especially the London merchants. The revolution of 1688 marks the definite advent to political power of this class, which found the Whig party the great instrument for effecting its designs. The contrast between the old Tory squire who stood for Church and King, and the new commercial magnate who stood by the Whigs and the House of Hanover, is well drawn by Sir Walter Scott in Rob Roy. The Banks of England and Scotland and the National Debt are among the blessings conferred on their descendants by the new mercantile rulers. They also began the era of corruption in politics which is always connected closely with predominance of capitalists in the State, as we see in France, the United States, and the British Colonies. "The desire of the moneyed classes," says Mr. Lecky,*54 "to acquire political power at the expense of the country gentlemen was the first and one of the chief causes of that political corruption which soon overspread the whole system of parliamentary government." What remained of the old aristocracy often found it convenient to form alliances with the new plutocracy; and it was this combination which governed England during the eighteenth century, and which specially determined her foreign policy. That policy was directed toward the securing of foreign markets and the extension of English trade. Napoleon's sneer at the "nation of shopkeepers" was not undeserved. The conquest of Canada, the conquest of India under Clive and Warren Hastings—the latter an agent of a great capitalist body, who illustrated well in his Indian career the methods of his class—the Colonial policy, the base destruction of Irish manufactures in the interest of English capitalists, were all part of the same scheme. The policy was successfully consummated in the war waged by Pitt against the French Revolution. That Revolution was itself brought about mainly by poverty. Not only was the French peasantry beggared; but some of the new machinery which had been brought from England had thrown many persons out of work. It was mainly unemployed workmen who stormed and captured the Bastille.*55 The chief counterblast to the Revolution was prepared by Pitt. What were his motives? The Austrian and Prussian monarchs, the emigrant nobles, the imbecile English King and the Tory English bishops may perhaps have seriously believed that England was fighting for altar and throne. But Pitt was under no such delusion. While he derived from his illustrious father a real pride in England, his divinities were rather the ledger and the cash-box. He was no bigot: even while an undergraduate at Cambridge he was a close student of Adam Smith; he started in public life as a reformer, and his refusal to bow to the ignorant prejudices of George III. cost him office in 1801. It has been abundantly proved that at first he felt no violent antipathy to the Revolution. A long period elapsed before he was brought to join the monarchical alliance. But he was essentially the great capitalist statesman, the political successor of Walpole, the political predecessor of Peel. He saw that French conquest might threaten seriously the English social fabric, and that if England's chief rival were struck down, the English commercial class might gain control of the world's commerce. To secure that end he skillfully welded together all the moneyed interests, the contractors, landlords, financiers, and shopkeepers; and he tried to persuade the simpler portion of the country that he was fighting for the sacred cause of religion and morality. Those who resisted him he flung into prison or transported beyond the seas. When the long war was brought to an end, the working-classes were in a wretched condition; although in those days also there were sophistical politicians who tried to prove that never had the people so much reason to be contented. When, in 1823, the Lancashire weavers petitioned Parliament to look into their grievances, an honorable member, who had presumably dined well if not wisely, had the audacity to declare that the weavers were better off than the capitalists—an observation not dissimilar to those we have heard in more recent times. As a matter of fact, the landlords, through protection and high rents—the capitalists, through enormous profits, were enriched "beyond the dreams of avarice." But the time had come for a conflict between these two classes: the conflict which is known as the Free Trade controversy. Protection was no longer needed by the manufacturers, who had supremacy in the world-market, unlimited access to raw material, and a long start of the rest of the world in the development of machinery and in industrial organization. The landlord class on the other hand was absolutely dependent on Protection, because the economic isolation of England by means of import duties maintained the high prices of food which were the source of the high agricultural rents. Capitalist interests, on the contrary, were bound up with the interaction between England and the rest of the world; and the time had come when the barriers which had prevented that interaction must be pulled down. The triumph of Free Trade, therefore, signifies economically the decay of the old landlord class pure and simple, and the victory of capitalism. The capitalist class was originally no fonder of Free Trade than the landlords. It destroyed in its own interest the woolen manufacture in Ireland; and it would have throttled the trade of the Colonies had it not been for the successful resistance of Massachusetts and Virginia. It was Protectionist so long as it suited its purpose to be so. But when cheap raw material was needed for its looms, and cheap bread for its workers: when it feared no foreign competitor, and had established itself securely in India, in North America, in the Pacific; then it demanded Free Trade. "Nothing in the history of political imposture," says Mr. Lecky, "is more curious than the success with which, during the Anti-Corn Law agitation, the notion was disseminated that on questions of Protection and Free Trade the manufacturing classes have been peculiarly liberal and enlightened, and the landed classes peculiarly selfish and ignorant. It is indeed true that when in the present century the pressure of population on subsistence had made a change in the Corn Laws inevitable, the manufacturing classes placed themselves at the head of a Free Trade movement from which they must necessarily have derived the chief benefit, while the entire risk and sacrifice were thrown upon others. But it is no less true that there is scarcely a manufacture in England which has not been defended in the spirit of the narrowest and most jealous monopoly; and the growing ascendancy of the commercial classes after the Revolution is nowhere more apparent than in the multiplied restrictions of the English Commercial Code."*56

I.2.20

Cheap raw material having been secured by the English manufacturer through a series of enactments extending over a generation; and machinery having been so developed as to enormously increase production, England sent her textile and metal products all over the world; and her manufacturers supported exactly that policy which enabled them to secure markets for their goods or raw produce to work up in their mills. Cobdenism was in the ascendant; and the State was more and more regarded from the commercial point of view. The so-called "Manchester school" was in the main a peace party because war weakens that confidence on which commerce is based. But this attachment to peace principles did not prevent Cobden himself from declaring for a powerful navy as an instrument of commercial insurance. Nor did it prevent Manchester from supporting Palmerston's nefarious Chinese policy in 1857, or the equally nefarious aggression in Egypt in 1882: both being regarded as helpful to Manchester trade. In behalf of this extension of English trade to new markets war has been made on China, Egypt, the Soudan, Burmah, and Thibet. Germany follows England with cautious tread. Adventurers like Emin, Stanley, and Bartelott are employed to "open up" Africa to the gentle influences of civilization by the agency of rum and revolver, under the pretense of putting down the slave trade. France, not to be behind, exploits Tonquin in the interests of Paris speculators. An unscrupulous government in Italy attempts to divert the attention of the country from domestic reforms to expeditions in Africa in the interests of moneyed people in Europe. Perhaps the greatest move is yet to come: the move on the vast market of China. For this England, America, France, and Germany will compete. Tentative steps are already being taken. By her absorption of Burmah and her operations in Thibet, England is approaching nearer to China. By her acquisition of Tonquin, France has been brought into actual contact with China. America will probably, by a judicious reduction of her tariff, compete with England all over the Pacific, and will send her goods from the Atlantic ports through the Panama or Nicaragua Canal of the near future. In short, the machinery for the wholesale exploitation of Asia and Africa is in rapid progress. The whole globe will soon be the private property of the capitalist class.

I.2.21

The appropriation of the planet has been powerfully aided by the developments of transport and communication in our time: indeed, it would have been impossible without them. The mere application of machinery to production could not have produced the economic results of to-day but for the shrinkage of the globe caused by railways and telegraphs. For it is through these inventions that the capitalist class has become cosmopolitan, has broken up old habits, destroyed local associations, spared nothing either beautiful or venerable where profit was concerned. It has assimilated the conditions of life in various lands, and has brought about a general uniformity which accounts for much of the ennui felt in modern life.

I.2.22

As England was the first country to develop machine industry, so was she the first to develop railways and to form a powerful steam mercantile marine. Through the latter agency she has now in her hands about sixty-four per cent. of the carrying trade of the world. Within sixty years about 350,000 miles of railway have been built throughout the globe. Atlantic and Pacific are united by several lines of steel; while the locomotive has penetrated remote regions of Africa inhabited by barbarous tribes, and wastes of central Asia where it confronts the relics of dead and buried civilizations. This immense power, the greatest in the modern world, is mainly in the hands of monopolist corporations, among whom there is the same necessary tendency to aggregation, only far more marked, as is found in productive industries. The first small lines built to connect towns not far off have been added to others bit by bit; as from the original Stockton and Darlington Railway, less than twenty miles long, we get the great and wealthy North Eastern Railway of to-day. In America a single corporation controls as much as 7,000 miles of rail*57; and the end of the century will perhaps see the great Siberian Pacific in actual existence. As in railways, so in steam vessels. Huge fleets like the Cunard, the Orient, the Messageries Maritimes, are owned by cosmopolitan capital, and sustain the traffic and commerce, not of a country, not even of a continent, but of the whole world. Such is the immense revolution in the methods of distribution effected in our time by the operation of capitalism.

I.2.23

We must now consider what the term "capitalist" is coming to signify. Had the term been used half a century ago it would have connoted a class, unscrupulous perhaps in the main, with low aims, little culture, and less fine sympathy or imagination. It was nevertheless a socially useful class, which at that time performed real services. It is a leading thought in modern philosophy that in its process of development each institution tends to cancel itself. Its special function is born out of social necessities: its progress is determined by attractions or repulsions which arise in society, producing a certain effect which tends to negate the original function. Thus early society among the Aryan peoples of Europe develops a leader in war or council who grows, by processes which in England, e.g., can be clearly traced, into a king with genuine functions, a leader of the people in war like William I., or a powerful civil ruler and statesman like Henry I. The fact that such men were brutal or wicked is of little account: the important fact about them is, that in a barbarous chaotic society they performed some indispensable services. But the very putting forth of the kingly power arouses antagonism; then produces armed resistance by a combined group; and finally leads to overthrow either by the destruction of the king or by depriving him of all real power and reducing him to a mere ornamental puppet. The very power originally believed to be beneficent becomes tyrannical: it needs to be checked more and more, until finally it practically ceases to exist, and the curious paradox is seen of a monarch who does not rule. History proves abundantly that men do not rise and overthrow wicked and corrupt rulers merely because they are wicked and corrupt. It is part of the terrible irony of history that a Louis XV. dies in his bed, while a William the Silent or a Lincoln falls a victim to the assassin. What men do not long tolerate is either obstructiveness or uselessness.

I.2.24

Now, if we apply these ideas to the evolution of the capitalist, what is it we see? The capitalist was originally an entrepreneur, a manager who worked hard at his business, and who received what economists have called the "wages of superintendence." So long as the capitalist occupied that position, he might be restrained and controlled in various ways; but he could not be got rid of. His "wages of superintendence" were certainly often exorbitant; but he performed real functions; and society, as yet unprepared to take those functions upon itself, could not afford to discharge him. Yet, like the king, he had to be restrained by the legislation already referred to; for his power involved much suffering to his fellows. But now the capitalist is fast becoming absolutely useless. Finding it easier and more rational to combine with others of his class in a large undertaking, he has now abdicated his position of overseer, has put in a salaried manager to perform his work for him, and has become a mere rent or interest receiver. The rent or interest he receives is paid for the use of a monopoly which not he, but a whole multitude of people created by their joint efforts.

I.2.25

It was inevitable that this differentiation of manager and capitalist should arise. It is part of the process of capitalist evolution due to machine industry. As competition led to waste in production, so it led to the cutting of profits among capitalists. To prevent this the massing of capital was necessary, by which the large capitalist could undersell his small rivals by offering, at prices below anything they could afford to sell at, goods produced by machinery and distributed by a plexus of agencies initially too costly for any individual competitor to purchase or set on foot. Now for such massive capitals, the contributions of several capitalists are needed; and hence has arisen the Joint Stock Company or Compagnie Anonyme. Through this new capitalist agency a person in England can hold stock in an enterprise at the Antipodes which he has never visited and never intends to visit, and which, therefore, he cannot "superintend" in any way. He and the other shareholders put in a manager with injunctions to be economical. The manager's business is to earn for his employers the largest dividends possible: if he does not do so he is dismissed. The old personal relation between the workers and the employer is gone: instead thereof remains merely the cash nexus. To secure high dividends the manager will lower wages. If that is resisted there will probably be either a strike or lock-out. Cheap labor will be perhaps imported by the manager; and if the workpeople resist by intimidation or organized boycotting, the forces of the State (which they help to maintain) will be used against them. In the majority of cases they must submit. Such is a not unfair picture of the relation of capitalist to workman to-day: the former having become an idle dividend-receiver. The dictum of orthodox political economy, uttered by so competent an authority as the late Professor Cairnes, runs:—

"It is important, on moral no less than on economic grounds, to insist upon this, that no public benefit of any kind arises from the existence of an idle rich class. The wealth accumulated by their ancestors and others on their behalf, where it is employed as capital, no doubt helps to sustain industry; but what they consume in luxury and idleness is not capital, and helps to sustain nothing but their own unprofitable lives. By all means they must have their rents and interest, as it is written in the bond; but let them take their proper place as drones in the hive, gorging at a feast to which they have contributed nothing."*58

The fact that the modern capitalist may be not only useless but positively obstructive was well illustrated at a meeting of the shareholders of the London and South Western Railway on 7th February last. Three shareholders urged a reduction in third-class fares. The chairman pointed out the obvious fact that such a reduction would probably lower the dividend, and asked the meeting if that was what they wished. He was, of course, answered by a chorus of "No, no!"; and all talk of reduction of fares was at an end. Here is a plain sample (hundreds might be quoted) of the evident interests of the public being sacrificed to those of the capitalist.

I.2.26

That joint-stock capitalism is extending rapidly everyone knows. In the United States, according to Mr. Bryce, the wealth of joint-stock corporations is estimated at one-fourth of the total value of all property.*59 In England every kind of business, from breweries, banks, and cotton-mills down to automatic sweetmeat machines, is falling into the hands of the joint-stock capitalist, and must continue to do so. Twenty years ago who would have supposed that a brewery like that of Guinness or such a banking firm as Glyn, Mills and Co. would become a joint-stock company? Yet we know it is so to-day. Capitalism is becoming impersonal and cosmopolitan. And the combinations controlling production become larger and fewer. Barings are getting hold of the South African diamond fields. A few companies control the whole anthracite coal produce of Pennsylvania. Each one of us is quite "free" to "compete" with these gigantic combinations, as the Principality of Monaco is "free" to go to war with France should the latter threaten her interests. The mere forms of freedom remain; but monopoly renders them nugatory. The modern State, having parted with the raw material of the globe, cannot secure freedom of competition to its citizens; and yet it was on the basis of free competition that capitalism rose. Thus we see that capitalism has canceled its original principle—is itself negating its own existence. Before considering its latest forms, attention may here be conveniently directed to the Coöperative movement, which is, on one side at any rate, closely allied to the joint-stock development.

I.2.27

The Coöperative movement had in England a Socialistic origin; for its founder was Robert Owen. As Mr. Seligman says very truly in the Political Science Quarterly: "Owen was the founder of the Coöperative movement in England, a fact often ignored by those who glibly use the word to-day with an utter failure to discern its true significance." And Owen himself avowed that his grand ultimate object was "community in land," with which he hoped would be combined "unrestrained coöperation on the part of all, for every purpose of human life." It is thus important to associate Coöperation with Robert Owen—clarum et venerabile nomen—because there are many persons who suppose that Coöperation began with the Rochdale Pioneers in 1844. What the Rochdale movement really did was to commence the process of joint-stock shopkeeping, a very different thing from that which Owen had in view.

I.2.28

A powerful impetus was given to coöperation by the Christian Socialist movement under Maurice and Kingsley. "Of all narrow, conceited, hypocritical, anarchic and atheistic schemes of the Universe," said Kingsley, "the Cobden and Bright one is exactly the worst." The orthodox economic conclusions of the day fared badly at Kingsley's hands. "The man who tells us," says he, "that we ought to investigate Nature, simply to sit still patiently under her, and let her freeze, and ruin, and starve, and stink us to death, is a goose, whether he calls himself a chemist or a political economist." These Christian Socialist leaders felt deeply the anguish and poverty of the workers and the selfish apathy of the rich. "Mammon," says Kingsley, "shrieks benevolently whenever a drunken soldier is flogged; but he trims his paletot and adorns his legs with the flesh of men and the skins of women, with degradation, pestilence, heathendom, and despair; and then chuckles complacently over his tailor's bills. Hypocrite! straining at a gnat and swallowing a camel." All this is very admirable; but cheap clothes are not made solely or cheaply for Mammon, but for the masses, who are poor people. It is part of the sad irony of the situation that the great majority are obliged to accept the alternative of cheap clothes or none at all. And as the English climate and the British matron combine to exercise an absolute veto over the latter form of prehistoric simplicity, it follows that one portion of the working-classes must, in order to be clothed, connive at the sweating of another portion.

I.2.29

The Christian Socialist, which was the organ of Maurice and Kingsley, betrayed great simplicity as to the real nature of the economic problem. It neglected Owen's principle of "community in land," and supposed that by working together and selling articles of good quality at a fair price poverty could be eliminated, while yet every worker in the community was paying his tribute of economic rent to the owners of the instruments of production. Thus the movement had no economic basis; and when the moral idealism had departed from it, no wonder that it degenerated into mere "divvy" hunting and joint-stock shop-keeping.*60 The economic advantages of joint-stock shop-keeping are thus summed up by Mr. Robert Somers in the Encyclopædia Britannica (Art., "Coöperation"): "Wholesome commodities, ready-money payments, a dividend of from five to ten per cent. on share capital, and a bonus to non-members on the amount of their purchases." As joint-stock shop-keeping, coöperation is a useful and cheap method of distribution, which has doubtless benefited a considerable number of persons; but the notion that it can solve the economic problem before society is "chimerical," as Dr. J. K. Ingram tells us is the opinion of modern economists.*61 This, indeed, might only be expected from the fact that 961 out of every 1,000 persons in England die without furniture, investments, or effects worth £300.*62 Economically considered, coöperation is, now that the initial enthusiasm has died out of it, a subsidiary branch of the great joint-stock enterprise. Ethically considered, its results are often doubtful. In its chief stronghold, Lancashire, one observes a narrow selfishness among its votaries which could not be surpassed in the most genteel quarters of Bayswater. Its ideal is not the raising of the working class as a whole, but the raising of certain persons out of the working into the middle class. If the advocates of coöperation will abate their pretensions, and claim merely (1) that their method is a useful and economic means of distribution among the lower-middle and upper-working classes; and (2) that by its agency working men can learn the important functions of organization and administration, their claim will be freely admitted. But if they go further their vaulting ambition will o'erleap itself. At the present rate of progress made by coöperative societies as compared with joint-stock capitalist companies, several generations will be in their graves before any deep or general impression is made. And meanwhile, unless economic rent is diverted from the class which at present absorbs it to the community which creates it, coöperators, like the rest of us, must pay tribute to the lords of the soil and of money. But the noteworthy fact about coöperation is that its very existence testifies to the process of industrial and capitalist aggregation here insisted on as the great social factor of our period. For coöperative societies supersede individual by social distribution, effecting it without the waste attendant on a number of little shops all competing against each other, the owners of none of which can make a decent living. Coöperation, therefore, well illustrates the economic evolution of the present age.

I.2.30

I now come to treat of the latest forms of capitalism, the "ring" and the "trust" whereby capitalism cancels its own principles, and, as a seller, replaces competition by combination. When capitalism buys labor as a commodity it effects the purchase on the competitive principle. Its indefinitely extended market enables it to do so; for it knows that the workman must sell his labor to secure the means to live. Other things being equal, therefore, it buys its labor in the cheapest market. But when it turns round to face the public as a seller, it casts the maxims of competition to the winds, and presents itself as a solid combination. Competition, necessary at the outset, is found ultimately, if unchecked, to be wasteful and ruinous. It entails great expense in advertising; it necessitates the employment of much unproductive labor; it tends to the indefinite lowering of prices; it produces gluts and crises, and renders business operations hazardous and precarious, To escape these consequences the competing persons or firms agree to form a close combinatian to keep up prices, to augment profits, to eliminate useless labor, to diminish risk, and to control the output. This is a "ring," which is thus a federation of companies. The best examples of "ring" and "pools" are to be found in America, where capitalism is more unrestrained and bolder in its operations than in Europe; and also where nearly all the active intellect is attracted to those commercial pursuits that dominate American life.

I.2.31

The individualist devotees of laissez faire used to teach us that when restrictions were removed, free competition would settle everything. Prices would go down, and fill the "consumer" with joy unspeakable; the fittest would survive; and as for the rest—it was not very clear what would become of them, and it really didn't matter. No doubt the "consumer" has greatly benefited by the increase in production and the fall in prices; but where is "free competition" now? Almost the only persons still competing freely are the small shop-keepers, trembling on the verge of insolvency, and the working-men, competing with one another for permission to live by work. Combination is absorbing commerce. Here are a few instances of the formation of rings.

I.2.32

A steel rail combination was some years ago formed among previously competing firms in America. This combination discovered that too many rails were being made and that prices were being cut. Accordingly, one of the mills in the combination—the Vulcan mill of St. Louis—was closed, and stood smokeless for years: its owners meanwhile receiving a subsidy of $400,000 a year from the other mills in the combination for not making rails. That is how the owners of the Vulcan mill earned their "wages of superintendence." It is needless to add that no payment was made to the men for not working: they were thrown on the streets to meditate on the right to "liberty and the pursuit of happiness," secured to them by the Declaration of Independence.

I.2.33

Or, again, take the case of the anthracite coal lands of Pennsylvania, occupying an area of some 270,000 acres, and held by the Reading Coal and Iron Company, the Lehigh Valley Railroad, the Delaware, Lackawanna and Western Railroad, the Delaware and Hudson Railroad, the Pennsylvania Railroad, the Pennsylvania Coal Company, and smaller firms and corporations tributury to these. The rich owners, popularly known as the. "coal barons," agree to fix absolutely the wholesale price of coal, always securing an immense rise just before the winter sets in. There is no such thing known or possible as free trade or open competition in the anthracite coal produce of America.

I.2.34

Combinations in the United States have been made by the Western millers, the New York icemen, Boston fish dealers, manufacturers of sewer pipe, copper miners, makers of lamps, pottery, glass, hoop-iron, shot, rivets, candy, starch, sugar, preserved fruits, glucose, chairs, vapor stoves, lime, rubber, screws, chains, harvesting machinery, pins, salt, hardware, type, brass tubing, silk and wire. In these trades freedom of production and sale has been for a time partially or wholly destroyed. The American business man is very angry when boycotting is resorted to by workmen; but he is quite ready to boycott others when his interests lead that way. The stamped tinware makers in 1882 formed a ring and expelled members who sold at lower prices than the fixed rates, and refused to allow anyone in the pool to sell to the offenders. Some of the previous facts are taken from an article by Mr. Henry D. Lloyd,*63 who has investigated capitalist combinations with much knowledge and insight. From the same article I quote the following:

"On the 1st April, 1882, when the rest of us were lost in the reckless gaiety of All Fools' Day, forty-one tack manufacturers found out that there were too many tacks, and formed the Central Manufacturing Company of Boston, with 3,000,000 dollars capital. The tack-mills in the combination ran about three days in the week. When this combination a few weeks ago silenced a Pittsburg rival by buying him out, they did not remove the machinery. The dead chimneys and idle machines will discourage new men from starting another factory, or can be run to ruin them if they are not to be discouraged in any other way. The first fruits of the tack-pool were an increase of prices to twice what they had been."

I.2.35

Again I quote Mr. Lloyd:

"The men who make our shrouds and coffins have formed a close corporation known as the 'National Burial Case Association,' and held their annual convention in Chicago last year. Their action to keep up prices and keep down the number of coffins was secret, lest mortality should be discouraged."

From coffins to crackers is a short step in the study of capitalist methods:

"The Western Cracker Bakers' Association met in Chicago, in February, to consider among other things 'the reprehensible system of cutting prices' (i.e., the reprehensible system of free competition which capitalists in buying labor tell us is our salvation). They first had a banquet. After their 'merriment and diversion' the revelers, true to Adam Smith's description, turned to consider 'some contrivance to raise prices.' 'The price lists were perfected,' said the newspaper report; 'and then they adjourned.' "

In 1875 broke out a severe competition among the fire insurance companies, upon the collapse of a previous pool; and the competition cost them in New York city alone $17,500,000 in seven years. Consequently in 1882 they made a new combination which covered the whole country, and which Mr. Lloyd declares to be wealthy, cohesive, and powerful. Though there is no pool or ring, I am credibly informed that there is a common understanding among the fire insurance companies of London. One of the most noted of combinations has been the great Copper Syndicate which attracted world-wide attention early in 1888. It was formed by some French speculators in October, 1887, and during the eighteen months of its existence, maintained copper at a purely arbitrary price in all the markets of the world. At its head was M. Eugène Secretan, managing director of the Société des Métaux, the world's largest buyer of, and dealer in, manufactured copper. The syndicate's agents bought all the copper that was visible and for sale, the result of their speculation being that the price of copper in the London market rose from less than £40 to over £80 a ton, and the price of Lake Superior copper in America rose from 10½ cents to 17¾ cents per pound. M. Secretan informed a London journal that his designs were purely philanthropic. "Our only purpose," said he, "is that every miner, dealer and manufacturer should have fair remuneration for his work." Thanks to M. Secretan's philanthropy, copper, tin, lead and spelter rose enormously in price; several trades were more or less paralyzed; and in France large numbers of workmen were thrown out of employment. And let it not be supposed that the suicide of M. Denfert-Rochereau, which heralded the collapse of this first attempt to corner the world's copper—a collapse due to a miscalculation of the extent to which the supply of copper could increase under the stimulus of high prices—offers us any security against a repetition of the attempt. On the contrary, it has shown how the thing may be safely done. The metal hoarded by the unlucky speculators is still so far cornered that it has been kept off the market up to the present, prices being not yet normal. "To a regular trust it must and will come at last," says Mr. E. Benjamin Andrews, of Cornell University. "Nor has aught taken place to indicate that a Copper Trust, organized like the Standard Oil Trust, with its energy and relentless methods, would fail."*64

I.2.36

The Individualist who supposes that Free Trade plus private property will solve all economic problems is naturally surprised at these "rings," which upset all his crude economic notions; and he very illogically asks for legislation to prevent the natural and inevitable result of the premises with which he starts. It is amusing to note that those who advocate what they call self-reliance and self-help are the first to call on the State to interfere with the natural results of that self-help, of that private enterpise, when it has overstepped a purely arbitrary limit. Why, on ordinary commercial principles, should not a copper syndicate grasp all the copper in the world? It is merely the fittest surviving. The whole case against Socialism is assumed by its most intelligent opponents to lie in that Darwinian theory. And yet when the copper syndicate or the "coal barons" survive, they arouse against themselves the fiercest and, from the commercial point of view, the most unreasonable antagonism. As sin when it is finished is said to bring forth death, so capitalism when it is finished brings forth monopoly. And one might as well quarrel with that plain fact as blame thorns because they do not produce grapes, or thistles because they are barren of figs.

I.2.37

The story of the growth of capitalism is not yet complete. The "ring" is being succeeded by a more elaborate organization known as the "trust." Although in England great combinations like the Salt Union are rapidly rising, yet we must again travel to America to learn what the so-called "trust" is. The fullest information on the subject of trusts is contained in a report of a Committee of the New York State Legislature, which was appointed to investigate the new combination. The following trusts were inquired into: Sugar, milk, rubber, cotton-seed oil, envelope, elevator, oil cloth, Standard oil, butchers', glass, and furniture. A trust is defined by the Committee as a combination "to destroy competition and to restrain trade through the stockholders therein combining with other corporations or stockholders to form a joint-stock company of corporations, in effect renouncing the powers of such several corporations, and placing all powers in the hands of trustees." The general purposes and effects are stated to be "to control the supply of commodities and necessities; to destroy competition; to regulate the quality; and to keep the cost to the consumer at prices far beyond their fair and equitable value." It is unnecessary to deal with all these trusts, which possess certain features in common. I will select one or two, particularly the great Standard Oil Trust and the Cotton-seed Oil Trust.

I.2.38

The Standard Oil Trust*65 is probably the largest single business monopoly in the world, the value of all its included interests being estimated, according to the evidence submitted, at £29,600,000. In the report it is described as "one of the most active and possibly the most formidable moneyed power on this continent. Its influence reaches into every State, and is felt in remote villages; and the products of its refineries seek a market in almost every seaport on the globe." The germ of this huge monopoly was a small petroleum refinery near Cleveland, bought by one Rockefeller, a book-keeper in a store, and a friend of his, a porter, with borrowed money. Rockefeller formed an acquaintance with a rich whiskey distiller, who advanced money and put his son-in-law Flagler into the business. This person's doctrines are thus described: "He says that there is no damned sentiment about business; that he knows no friendship in trade; and that if he gets his business rival in a hole he means to keep him there." Such a man is eminently fitted to be the founder of a monopoly: he is a hero of self-help; for he helps himself to anything he can lay his hands on. A second refinery was established in Ohio, and a warehouse opened in New York. The concern grew, and was incorporated as the Standard Oil Company. It is charged with having secured special legislation by judicious expenditure in the lobbies of the Ohio and Pennsylvania Legislatures. By entering into arrangements with the trunk railway lines, it secured special rates for transit. New refineries were established and new oil lands in Pennsylvania acquired; the capital was increased; and an enormous yearly business was done. After a time the company controlled every avenue of transportation; managed all the largest refineries in the land; and was able to shut off every competitor from either receiving supplies or shipping its products. New companies, nominally distinct, but all under the control of the same men, were incorporated in New Jersey, Ohio, West Virginia, and other States. The monopoly elected one of its chief stockholders into the United States Senate, it is said, through bribery in the Ohio Legislature, over which body it certainly acquired strong hold. These tactics were known as "coal oil politics." All the dirty work was, of course, done through agents, the directors pretending perfect innocence. In 1882 the Standard Oil Companies were consolidated into the Standard Oil Trust.*66 The stockholders surrendered their stock to the trustees, nine in number, created under the agreement, and received certificates in the place thereof, the representatives of the Trust and the stockholders in the refineries making a joint valuation of the refineries, and the certificates being issued to that amount. Thus the separate concerns were merged in one gigantic business, controlled by nine men (owning a majority of the stock), having a monopoly of nearly all the oil lands in America, controlling legislative votes, forming a solid alliance with the railway and shipping interests, and determining to a gallon how much oil shall be produced and refined, and to a fraction of a cent what shall be its price. In 1887 there was a cash dividend of 10 per cent. declared, besides a stock dividend of 20 per cent. on the certificates of four years' aggregation. In addition to the emormous stock they hold, the trustees receive an annual salary of £5,000. What are the economic results of this combination? It has not raised prices, as the trusts were charged by the committee with doing. On the contrary there has been a steady decrease in price during the decade 1877-1887. The consumption of oil has also enormously increased. The working and producing expenses have been greatly lowered by the dismissal of needless labor and vast improvements in machinery; the pipe lines controlled by the trust having displaced 5,700 teams of horses and 11,400 men in handling the oil. Thus of this trust we may say that though the means used to establish it were morally doubtful or even bad, the political results disastrous, the economic results have been beneficial, except in the matter of helping to form an unemployed class through the dismissal of needless labor consequent on the development of machinery.

I.2.39

The Cotton-seed Oil Trust was organized*67 two or three years ago in the State of Arkansas.*68 Upward of seventy different companies had been competing with each other, and consequently suffering heavy losses. Their mills being comparatively small and equipped with imperfect machinery, they were glad to combine; and those that did not were forced to close. The seventy corporations, the vast majority of the members of which had agreed to the combination, surrendered their stock to a body of trustees and received in return $100 certificates. The various mills send a monthly report to the trust; and if the officers in a given mill do not sell at the terms imposed, they are dismissed by the trust.*69 The object of the trust was declared by a witness to be to prevent bankruptcy, to improve methods, to find markets, to develop the enterprise and to make money. The economic result has been displacement of labor by machinery and great economy in production. Incidentally it came out that much cotton-seed oil was sold to French and Italian buyers, who mix it with a little olive oil and export it back to America and to England, where a confiding public purchases it as pure Tuscan olive oil—an interesting illustration of international trade morality.

I.2.40

An examination of the milk and butchers' trusts ought to be a revelation to those who imagine that trade is "free," and that competition rules. On April 29th, 1885, the directors of the Milk Exchange met in New York and unanimously resolved:

"That on the first day of May next, and until otherwise ordered, the market price of milk produced from meadow hay and sound cereals be 2½ cents per quart, and that produced from brewers' grains and glucose and corn starch refuse be 2 cents per quart."*70

I.2.41

A representative of the Sheep and Lamb Butchers' Mutual Benefit Association testified that the members of that body agreed that they would only buy sheep and lambs from the Sheep Brokers' Association, a penalty for violation of this rule being imposed at the rate of 15 cents a head per sheep or lamb. The absolute despotism, and the system of espionage involved in such regulation is obvious. Here is a copy of a document issued by this body:

"New York, January 9th, 1888. Permission has been granted by the board of trustees of this Association to Simon Strauss to buy sheep and lambs in New York markets, providing he buys no sheep and lambs from outsiders, under penalty of 15 cents per head fine. Richard S. Tobin, secretary."*71

Occasionally the Association relaxed. On November 5th, 1887, according to its minutes:

"The application of John Healey, No. 2, to be granted the privilege of buying a few sheep and lambs without the 15 cents being charged to the brokers, was favorably acted upon."

I.2.42

This is not a record of Bagdad under the caliphs, but of the Republican State of New York! The threatened despotism of Socialism has been often eloquently dwelt on; but what of the actual despotism of to-day?

Now what does this examination of trusts show? That, granted private property in the raw material out of which wealth is created on a huge scale by the new inventions which science has placed in our hands, the ultimate effect must be the destruction of that very freedom which the modern democratic State posits as its first principle.*72 Liberty to trade, liberty to exchange products, liberty to buy where one pleases, liberty to transport one's goods at the same rate and on the same terms enjoyed by others, subjection to no imperium in imperio: these surely are all fundamental democratic principles. Yet by monopolies every one of them is either limited or denied. Thus capitalism is apparently inconsistent with democracy as hitherto understood. The development of capitalism and that of democracy cannot proceed without check on parallel lines. Rather are they comparable to two trains approaching each other from different directions on the same line. Collision between the opposing forces seems inevitable.

I.2.43

But both democracy and the new capitalist combinations which threaten it are inevitable growths of an evolutionary process. We are, therefore, brought to consider the question whether the ring, syndicate, or trust either can or ought to be destroyed. These combinations can be shown to be the most economical and efficient methods of organizing production and exchange. They check waste, encourage machinery, dismiss useless labor, facilitate transport, steady prices, and raise profits—i.e., they best effect the objects of trade from the capitalist's point of view. Now, the opponents of Socialism say that without this enterprising capitalist we cannot live. He "provides employment," they say. Well, if we need him, we must obviously pay his price. If he has a natural monopoly of a function indispensable to social progress, society must concede the terms he imposes. These terms are briefly large combinations of capitalist ownership. In this way he can best organize business: if we do not choose to let him do it in this way, he will not do it for us at all. From his point of view that is a fair position to take up; and it places the Individualist opponent of trusts in an awkward dilemma. For he must either submit to trusts or give up capitalists, in which latter case he becomes a Socialist. The answer of Socialism to the capitalist is that society can do without him, just as society now does without the slave-owner or feudal lord, both of whom were formerly regarded as necessary to the well-being and even the very existence of society. In organizing its own business for itself, society can employ, at whatever rate of remuneration may be needed to call forth their powers, those capitalists who are skilled organizers and administrators.*73 But those who are mere dividend-receivers will no longer be permitted to levy a contribution on labor, but must earn their living by useful industry as other and better people have to do.

I.2.44

It may be said that society is not yet ripe for this transformation, nor is it.*74 The forms of the democratic State are not yet perfected, nor has the economic evolution yet proceeded generally far enough, even in England, not to speak of the less advanced European countries. Much yet remains to be done through both the education of the intellect and the development of a nobler public spirit. But on the other hand we seem to be rapidly approaching such an impasse that some very large and definite extension of collective authority must be made. This would seem to involve on one side general reduction of the hours of labor, and on the other an attempt to absorb by the community a portion of those social values which it creates. In reference to ground values it may be anticipated that local democratic authorities will secure them for the benefit of the people by any means which may be found expedient.

I.2.45

As regards the great combinations of capital, State action may take one of three courses. It may prohibit and dissolve them; it may tax and control them; or it may absorb and administer them. In either case the Socialist theory is ipso facto admitted; for each is a confession that it is well to exercise a collective control over industrial capital. If the first of these courses is taken a distinctly retrogressive policy is definitely adopted, a policy of alarm at what Mr. Cleveland called the "communism of capital," a policy of reversion to the chaos of "free competition," and of cession of the undoubted benefits which combination has secured. Such a policy would signify the forcible prevention of acquisition of property, the very thing dearest to the individualist. If the powers of acquisition, now evidently dependent on combination, are to be restricted, what becomes of the "incentive to industry," the "reward of abstinence," and all the rest of the worn out phrases which have so often done duty in the place of argument? If the syndicate or the trust represents the legitimate outcome of capitalism*75—if it is necessary to give order to trade and to prevent the ruinous waste of unrestricted competition, how absurd it is for the State to say to the capitalist: "You shall carry your privileges of acquisition just up to the point where competition is likely to ruin you; but there you shall stop. Immediately you and your friends combine to prevent waste, to regulate production and distribution, to apply new methods of manufacture, we shall absolutely prevent you or restrain you by vexatious regulations." To which the capitalist may be supposed to reply: "I cannot fulfill my function in society at this serious risk. I shall never know security—never be even moderately sure of reaping that reward to which I am admittedly entitled. If you intend to fetter my action in this way after having proclaimed me free to own the raw material out of which wealth is made—if you compel me to stop at a purely arbitrary line, I must inform you that I am not going to undertake business on such terms." Would not the capitalist say something like this; and from his point of view would he not be right?

I.2.46

If it were instantly possible to do so, we should take the capitalist at his word; appropriate the necessary instruments of production; and make them common property, the values they create accruing to the community. But the human race generally contrives to exhaust every device which stupidity can suggest before the right line of action is ultimately taken. I think, therefore, that some probably inefficient method of taxation and public control over combinations will, as a matter of fact, be adopted. Such legislation will immensely restrict individual liberty in certain directions, will produce much friction, and may possibly hamper production; until by a long series of experiments men shall discover what is the most reasonable way of acquiring for the community as a whole the wealth which it produces. But in any case individualism or anything whatever in the nature of laissez faire goes by the board.

I.2.47

And now, finally, what is the immediate policy for rational students of economics and genuine social reformers to adopt? Their motto must be, Nulla vestigia retrorsum. To all quack proposals they must offer a steady resistance. These proposals will take the form of attempts to bring back some economic condition out of which society has emerged. One quack will desire to revive the old British yeomanry; another will talk nonsense about "Fair Trade;" a third will offer to the rustic "three acres and a cow;" while a fourth will see salvation in getting rid of primogeniture and entail and "planting" prosperous laborers on the soil—as though the laborers grew there like trees. Those who understand the economic crisis may be ready and eager to support any reform, however small, which is a genuine step forward; but they cannot support any effort to call back the past. They may help to build a new bridge across the gulf that separates us from the Coöperative Commonwealth; but they can never repair the old broken-down structure which leads back to Individualism. Instead, therefore, of attempting to undo the work which capitalists are unconsciously doing for the people, the real reformer will rather prepare the people, educated and organized as a true industrial democracy, to take up the threads when they fall from the weak hands of a useless possessing class. By this means will the class struggle, with its greed, hate, and waste, be ended, and the life hinted at by Whitman in his Song of the Exposition be attained:

"Practical, peaceful life, the people's life, the People themselves,
Lifted, illumined, bathed in peace—elate, secured in peace."


Notes for this chapter


49.
It is not without significance that 1776 saw both the publication of Adam Smith's individualistic Wealth of Nations and the Declaration of American Independence.—Am. Ed.
50.
See Recent Economic Changes, by D. A. Wells.—Am. Ed.
51.
This refers to spinning wool. The displacement in cotton spinning is as great as eleven hundred to one.—Am. Ed.
52.
Enc. Brit., art. "Cotton."
53.
English parishes sold orphan and pauper children to the manufacturers, and at least in one case, manufacturers bargained to take one idiot child for every so many sound ones.—Am. Ed.
54.
History of the Eighteenth Century, I, 202.
55.
See the evidence contained in Vol. I, of Mr. Morse Stephen's History of the French Revolution.
56.
History of the Eighteenth Century, iv., 450.
57.
If railroad corporations in America continue to be absorbed at the rate they did in the twelve months previous to the last report of the Interstate Commerce Commission, two years and a half will see only two railroad companies in the United States.—Am. Ed.
58.
Some Leading Principles of Political Economy, p. 32.
59.
The American Commonwealth, iii, note on p. 421.
60.
Present Christian Socialism both in England and America goes much further and is really socialistic. With the spirit of Maurice and Kingsley, it combines the economics of Marx, Rodbertus, or at least Schaeffle.—Am. Ed.
61.
Encyclopædia Britannica: Art., "Political Economy."
62.
Mulhall: Dictionary of Statistics.
63.
"Lords of Industry." North American Review, June, 1884.
64.
Quarterly Journal of Economics, July, 1889.
65.
See Monopolies and the People by Baker. (G. P. Putnam's Sons.)
66.
Report of Senate Committee, p. 419.
67.
The Cotton-seed Oil Trust, the Linseed Oil Trust, and the White Lead Trust are all controlled by the same man who controls the Standard Oil Trust, viz.: J. D. Rockefeller.—Am. Ed.
68.
Report of Senate Committee, p. 233, et. seq.
69.
Report, p. 244.
70.
Report of Senate Committee, p. 305.
71.
Report of Senate Committee, p. 497.
72.
Some economists, like Prof. Ely, a little afraid of Socialism, say we do not need full Socialism, but only the nationalization and municipalization of "natural monopolies," such as railroads, telegraphs, gas and electric lighting, etc. But what are "natural monopolies?" Is not this a very convenient and yet unscientific phrase, like "natural rights?" Are not all monopolies natural? Some trades are more easily monopolized than others, but does not the study of Trusts show that all trades tend to monopolization, and that, therefore, the Socialists are right in urging that gradually and eventually, their principles be extended to all trades. The nationalization of "natural monopolies" means eventually the nationalization of all. Socialists need not quarrel with Prof. Ely.—Am. Ed.
73.
American Socialists say, "Combination is inevitable. Production on a large scale is wise. The only question is shall we have a combination of the money bags or combination of the people. The question is not combinations versus competition, but Socialism versus Plutocracy."—Am. Ed.
74.
It would seem that in the United States, judging from the almost entire substitution of competition by combination in most large industries through the working of the Trusts, society there at least is ripe enough for evolutionary social transformation.—Am. Ed.
75.
This is admitted by David A. Wells in his last book, Recent Economic Changes.

The Basis of Socialism, Moral, by Sydney Olivier.

End of Notes


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