Our Benevolent Feudalism

II

The tendencies make not only for combination in specific trades, but for unification – for complete integration of all capital which is susceptible of organization. Capitalistic atoms of low valency – to use a term from chemistry, – such as those invested in some of the hand trades, custom and repairing and the like – may continue their course, but those of a high valency are sooner or later brought into association. From this fundamental grouping comes integration, the concentration of the material units which go to make up an aggregate. The lesser gravitates to the larger. It needs no modern Newton to proclaim that in finance, commerce, and industry, as in the physical world, all bodies attract one another in direct proportion to their mass. Distance provides a limitation, it is true, to the action of this law in the physical world; but less so in the economic world, for such is the perfection of our means of communication that they provide a more transmissible medium to capital than is the pervading ether to light and gravitation.

The separate trade trusts are not sufficient unto themselves, but move steadily toward unification. A glance at the directorates of the leading combinations shows many names repeated through a long list of varied industries. The combinations themselves reach out and acquire new interests, often distinct from their primary interests. In Pennsylvania coal is mined and railroads are operated by practically the same companies, and in Colorado and West Virginia nearly as complete an identity is discovered. The steel corporation owns coal lands, limestone quarries, railroads, and docks; it is allied with the great Atlantic shipping trust; it is related, not distantly, to the Standard Oil Company; and the beginnings of a public opinion trust are indicated, for already its chief magnate has acquired several newspapers and a prominent magazine. Bishop Potter’s prediction, it would seem, is in fair way of fulfilment. “We must fully realize,” he said to the Yale students last April, “the danger that mind as well as matter will be at some time in the future capitalized, and that the real thinking and planning for the many will be done by a mere handful.” Beet and cane sugar are soon to be joined, we read; paper and lumber, if not already wedded, are at least on excellent terms. Oil and gas on the one hand, coal and iron on the other, have a “common understanding,” and each of them holds morganatic relations with one or more of the railroads. All the great combinations recognize a growing community of interest; they tend more and more to a potential, if not an actual, coalescence; and in the face of popular agitation, legislative aggressiveness, or the formal demands of labor, they develop a unity of purpose and method. Their support is thrown, in general, to the same candidates for governors, senators, judges, and tax assessors. In brief, they tend to the formation of a state within a state, and their individual members to the creation of an industrial and political hierarchy.

III

The counter-tendency toward the persistence of small-unit farming and of small-shop production and distribution must not be lost sight of, nor must the great combinations be looked upon as necessarily a proof of individual concentration of wealth. That they generally so result is hardly to be disputed; but primarily, they mean the massing together of separately owned capitals, often small, for a particular use. There is every reason to suppose that the shareholders grow in numbers, and that they increase their holdings. So that while the magnates tend to become Midases, there is a concurrent tendency making for diffused ownership. The small investor is to be found in every stratum of society, and the number of shareholders in some of the great combinations reaches an astonishing figure. The “one touch of nature” which in Shakespeare’s eyes made the whole world kin was the love of novelty; in our day it is the passion for investing in shares.

Petty industries and small-unit farming persist, despite the movement toward combination. The recent census gives the number of manufacturing establishments in the United States as 512,726, an increase of 44.3 per cent. This is a larger percentage of increase than is shown for any other of the fifteen items in the census summary of manufactures, except capital, children’s wages, and miscellaneous expenses. Doubtless many of these establishments belong to the trusts; but with all allowances the numerical growth is remarkable. The undeveloped sections show the greatest increase, but even industrially settled States, such as Massachusetts, Connecticut, and Rhode Island, reveal marked gains. Professor Ely has pointed out several branches of industry in which small-shop production is increasing. Some investigations which the present writer made two years ago in two branches confirm this tendency. It is pronounced in the notion trades and in the manufacture of women’s ready-made wear. In the latter the industry has been revolutionized, the large houses being menaced with disaster and some of them with extinction. In dry-goods distribution the tendencies are confused and puzzling. While the number of general jobbing houses in New York City has decreased from thirty-five to five in twenty-five years, the remaining ones growing to enormous proportions, the number of smaller houses distributing special lines has either maintained its own or has grown. In Baltimore and St. Louis small jobbing houses persist in the face of the larger houses. In the retail trades, even in New York, despite the creation of a number of mammoth general stores, the dullest observer will note the continuance of thousands of small grocery, dry-goods, and furniture stores, confectionery and butcher shops; while custom and repairing work is still done in the little tailoring and shoemaking shops that speak a sort of defiance to the great emporiums. Through convenience of location to the community of customers about them – often, too, by the giving of credit – many of these little shops and stores furnish a social service that cannot be performed by the larger stores, which are mostly to be found massed in the central shopping district.

Something of the same nature is to be found in agriculture. Though the great estates are increasing in size, so also is the number of small holdings increasing. Nearly every State and Territory shows an increase in the number of farms, while the majority show a decrease in average acreage. The great stock-grazing farms of the West and the unproductive “gentlemen’s estates” of the East help to make the census figures misleading. It is probable that in every State real farming is done on a smaller average acreage than ever before.

Even independent capital in trading and manufactures shows an unexpected persistence. An interesting article in a recent issue of the New York Journal of Commerce puts the capitalization of the great trusts for the twelve years ending with 1901 at $6,474,000,000, of which it marks off $2,000,000,000 as “spurious common stock,” that is, stock not representing real capital in any form. Not more than $300,000,000 of new capital, it maintains, had been thrown into the consolidations. This would leave $4,474,000,000 as the sum of values already established by previous investment. On the other hand, it maintains that actual records show that in seventeen months from the beginning of 1901, in the four States of New York, New Jersey, Delaware, and Maine, the aggregate capitalization of newly organized companies with a capital of $1,000,000 and upwards is $1,969,650,000; and it calculates that for the whole country, including the large and small corporations, “the national industrial capital (exclusive of that for transportation appliances) must have increased approximately $5,000,000,000 since the end of 1900.” Several rather obvious demurrers might be made to the conclusions reached, but they need not now concern us. With all possible discounting, strong proof is given of the aggressive persistence of independent capital.

IV

Such facts, however, do not carry on the surface their real import. Independent capital persists as a force, but the units that compose it melt like bubbles in a stream. These companies are but the raw or “partly manufactured” material out of which the great combinations are made. Formation, growth, and absorption into a trust are generally the three terms in their life-history; or if, through ill environment or spirited warfare waged against them, they fail to get secure footing, they soon slip back into the slough of disaster. The fate of independent tobacco factories, sugar and oil refineries, railroads, independent companies of one kind or another, is constantly before us. If they are worth having, they are more or less benevolently assimilated; and if they are not worth having, they are permitted to struggle onward to the almost inevitable collapse.

Neither do small holdings in agriculture mean economic independence. As the late census reveals, they mean tenantry. The number of farms operated by owners is decreasing; tenantry is becoming more and more common, and so is salaried management of great estates. Of the 5,739,657 farms of the nation, tenants now operate 2,026,286. Owners operated 74.5 per cent of all farms in 1880, 71.6 per cent in 1890, 64.7 per cent in 1900. The tendency is general, and applies to all sections. Since 1880 tenantry has relatively increased in every State and Territory (no comparative data are given for the Indian Territory) except Arizona, Florida, and New Hampshire. Since 1890 it has increased in Arizona. In twenty years it has increased 49.4 per cent in Florida, though the unloading of “orange groves” and other tropical paradises on the too susceptible Northerner has increased ownership by a slightly greater ratio; while in New Hampshire, where 2857 farms have been given up in the last twenty years, tenantry has decreased by but five-tenths of 1 per cent since 1890, and but six-tenths of 1 per cent since 1880.

So, too, with petty industries and the small retailers. M. Emile Vandervelde, in his sterling work, “Collectivism and Industrial Evolution,” has well shown how “small trade is the special refuge of the cripples of capitalism.” It is the particular refuge “of all who prefer, in place of the hard labor of production, the scanty gleaning of the middleman, or who, no longer finding a sufficient revenue in industry or farming, desire to add a string to their bow by opening a little shop.” But it would be a mistake, he continues, to suppose that these miniature establishments, which the census officials characterize as distinct enterprises, can be generally regarded as the personal property of those who carry them on. “A great number of them, and a number constantly increasing, as capitalism develops, have only a phantom of independence, and are really in the hands of a few great money lenders, manufacturers, or merchants.”

Though M. Vandervelde argues on the basis of these phenomena as observed in Belgium, France, Germany, and England, the same conclusions are applicable in the United States. Our national census figures are practically useless as illuminators on the subject, and one must get his data from the observation or investigation of himself or others. It is generally known that small industries the product of which is more or less ingenious or artistic manage to survive; that those the product of which is common or usual are sooner or later extinguished; and that the petty retailers represent so many heterogeneous elements that it is impossible to predicate anything of them as a class. Of these latter there is a moderate number who, by furnishing a needful social service, make profits; there is a large and constantly changing number who, through ease of credit, manage to obtain stock without capital, and who almost invariably succumb; there is then a larger number whose little shops are run by women and children, the husbands and fathers working at some trade or office job, and hopefully expending their weekly earnings in the vain attempt to “build up a business”; finally, there is a class, the numbers and relative importance of which it is impossible to estimate, whose businesses are owned, directly or indirectly, by other men or by companies.

V

Many of these so-called independent concerns find it possible, and some of them find it fairly profitable, to continue. But the more the large combinations wax in power, the greater is the subordination of the small concerns. An increasing constraint characterizes all their efforts. They are more closely confined to particular activities and to local territories, their bounds being dictated and enforced by the pressure of the combinations. The petty tradesmen and producers are thus an economically dependent class. Equally subordinate – and for the most part subservient – are the owners of small and moderate holdings in the trusts. The larger holdings – often the single largest holding – determine what shall be done. Generally, too, the petty investors are acquiescent to the will of the Big Men. But occasionally, as in the case of the transfer of the Metropolitan Street Railway stock, they rebel, and it becomes necessary to suppress them. At the meeting which determined this action, the protesting minority were emphatically ordered to “shut up”; when they still objected, the presiding officer declared, “We will vote first; you can discuss the matter afterward,” and the vote was promptly taken. The head of an American corporation, moreover, is often an absolute ruler, who determines not only the policy of the enterprise, but the personnel of the board of directors. It was a naïve letter which a well-known New York financier recently wrote to his “board of directors” on the occasion of his retirement from the presidency of a great trust company in favor of a retiring Cabinet minister. He had been looking about, he explained, for some time for a competent successor. Now he had found him and had chosen him. Of course the formal action of the board would be a welcome detail; and, equally a matter of course, it was promptly given. One of the copper kings recently testified in a legal action that he “didn’t want to call the board of directors together to obtain authority to buy adjacent properties.” He went ahead, did what he pleased, and let the board discuss the matter afterward. If there was ever so much as a question about it, it was but a profitless interference.

VI

The tendencies thus make, on the one hand, toward the centralization of vast power in the hands of a few men – the morganization of industry, as it were – and, on the other, toward a vast increase in the number of those who compose the economically dependent classes. The latter number is already stupendous. The laborers and mechanics were long ago brought under the yoke through their divorcement from the land and the application of steam to factory operation. They are economically unfree except in so far as their organizations make possible a collective bargaining for wages and hours. The growth of commerce raised up an enormous class of clerks and helpers, perhaps the most dependent class in the community. The growth and partial diffusion of wealth has in fifty years largely altered the character of our domestic service and increased the number of servants many fold. The professions, too, have felt the change. Behind many of our important newspapers are private commercial interests which dictate their general policy, if not, as is frequently the case, their particular attitude upon every public question; while the race for endowments made by the greater number of the churches and by all colleges except a few State-supported ones, compels a cautious regard on the part of synod and faculty for the wishes, the views, and the prejudices of men of wealth. To this growing deference of preacher, teacher, and editor is added that of two yet more important classes, – the makers and the interpreters of law. The record of legislation and judicial interpretation regarding slavery previous to the Civil War has been paralleled, if not surpassed, in recent years by the record of legislatures and courts in matters relating to the lives and health of manual workers, especially in such matters as employers’ liability and factory inspection. Thus, with a great addition to the number of subordinate classes, with a tremendous increase of their individual components, and with a corresponding growth of power in the hands of a few score magnates, there is needed little further to make up a socio-economic status that contains all the essentials of a renascent Feudalism.

CHAPTER III
Our Magnates

With the rise of the magnates to power comes a growing self-consciousness of their authority and responsibility. “I am a citizen of no mean state,” is the reflection of each of them as he looks upon the emergent order of which he is so large a part; and thereupon it becomes his mission to live up to his rank and function. Frequently his benefactions increase, and always he takes on a more Jovian air, and views with a more providential outlook the phenomena passing before and about him. He is a part not only, as Tennyson makes Ulysses say, of all that he has met, but of the primary causes of things. He is at once the loaf-giver to the needy, the regulator of temporal affairs, the lord protector of church and society; and he holds his title directly from the Creator. “The rights and interests of the laboring man,” wrote the chief of the anthracite coal magnates last August, “will be protected and cared for, not by the labor agitators, but by the Christian men to whom God in His infinite wisdom has given the control of the property interests of the country.” Gradually there comes the renascent development of the seigniorial mind.

I

“Business” is the main thought, and the apotheosis of “business” the main cult of the new magnates. “Of gods, friends, learnings, of the uncomprehended civilization which they overrun,” indignantly writes Mr. Henry D. Lloyd, “they ask but one question: How much? What is a good time to sell? What is a good time to buy?.. Their heathen eyes see in the law and its consecrated officers nothing but an intelligence office, and hired men to help them burglarize the treasures accumulated for a thousand years at the altars of liberty and justice, that they may burn their marble for the lime of commerce.”

Though a forcible, it is an extreme view, for it leaves out of consideration the high professions of morality, the frequent appeal to Christian ideals, the tender solicitude for honesty, integrity, law and order, with which our new magnates gild their worship of “business.” Such of them as have recently invaded literature give edifying glimpses of the new seigniorial attitude. The artistic career, writes Mr. Andrew Carnegie in his entertaining volume, “The Empire of Business,” is most narrowing, and produces “petty jealousies, unbounded vanities, and spitefulness”; the learned professions also produce narrowness, albeit often a high specialization of faculty and knowledge. But “business,” properly pursued, broadens and develops the whole man. It is a view echoed to greater or less extent by the other literary magnates, particularly Mr. James J. Hill, Mr. Russell Sage, Mr. S. C. T. Dodd, Mr. John D. Rockefeller, Jr., the Hon. Marcus A. Hanna, and Mr. Charles R. Flint.

A flattering unction that all lay to their souls is the dictum that success in business is a matter of honesty, intelligence, and energy. “There is no line of business,” writes Mr. Carnegie, “in which success is not attainable. It is a simple matter of honest work, ability, and concentration.” “To rail against the accumulation of wealth,” writes Mr. Sage, in the Independent, “is to rail against the decrees of justice. Intelligence, industry, honesty, and thrift produce wealth… So long as some men have more sense and more self-control than others, just so long will such men be wealthy, while others will be poor.” Mr. Dodd, in his address to the students of Syracuse University, adds this contribution: “Why is there still so much poverty? One reason is because nature or the devil has made some men weak and imbecile and others lazy and worthless, and neither man nor God can do much for one who will do nothing for himself.” Mr. Rockefeller appeals both to evolution and to divine sanction. “The growth of a large business,” he is reported as declaring in one of his Sunday-school addresses, “is merely a survival of the fittest… The American Beauty rose can be produced in the splendor and fragrance which bring cheer to its beholder only by sacrificing the early buds which grow up around it. This is not an evil tendency in business. It is merely the working out of a law of nature and a law of God.”

It matters not that many millions of men, tirelessly energetic and reasonably intelligent, can be shown to have toiled all their lives without winning even a competence. Nor does it matter that some of these, in addition to being energetic and intelligent, have been reasonably honest. To be honest, as this world goes, is to be one man picked out of ten thousand; and the fact that most of the greater affairs of the business world sooner or later find their way into the courts, for the testing of the amount and quality of honesty involved therein, might well cause some hesitation in positing this virtue as a necessary qualification for “business.” But the notion is not to be argued with; it is a characteristic outcropping of the seigniorial mind.

The praise of labor is the antiphony to the praise of “business,” and the lyres of all the magnates are strung tensely when chanting tributes to toil.

 
“Round swings the hammer of industry, quickly the sharp chisel rings,
And the heart of the toiler has throbbings that stir not the bosom of kings,”
 

warbles Mr. Flint in his article on “Combinations and Critics,” in “The Trust: Its Book.” Toil is the foundation of wealth, they all aver, though the rhapsodical nature of the tributes prevents a clear and definite utterance on the question, Of whose wealth is it the foundation? But there is no lack of definiteness regarding their attitude toward those defensive societies, the trade-unions, which the toilers organize to secure a larger part of their product to themselves. Mr. Flint, indeed, somewhat cautiously acknowledges an element for good in the unions, but the general attitude of the seigniorial mind is distinctly inimical. The recent interesting correspondence between the coal magnates and President Mitchell is an instance in point; so are the frequent utterances on the subject by the president of the steel trust, and any number of examples could be given of a like character. A crowning example of a distinctly feudal attitude is furnished by a letter from a prominent New York merchant, printed in the issue of June 9, 1902, of a newspaper which makes a considerable to-do about the printing of such of the news as it sees fit to print. The prominent merchant objects very strongly to labor leaders and walking delegates, describing them in almost as temperate and judicial language as that of United States District Judge Jackson. The flower of his contribution is his seigniorial remedy for strikes: —

“The only remedy, in my opinion, for strikes is to get as many men as there are officers in the different [labor] associations admitted to their meetings, where they would have a chance to talk to the men in a businesslike way, explaining matters to them in such a manner as to bring the effects of a strike very plainly before them.”

Moral suasion, however, is not the only method suggested for bringing sense to the workers. A hint of more forcible means is occasionally broached. A New York newspaper, which makes a boast of printing unimpeachable interviews, reports, in its issue of July 31st last, a significant warning from the president of the New York, Ontario and Western Railroad. This is one of the coal-carrying railroads, and the reference is to the anthracite strike. “After the men return to work,” he said, “I believe that legal steps will be taken in the United States courts against those who are responsible for the loss occasioned by the strike.” The Hon. Abram S. Hewitt echoed this interesting suggestion in an interview of August 25th. “The consequences of such strikes,” he says, “are so disastrous, not merely to the parties directly concerned, but to the whole community, that every effort should be made as soon as the existing strike has been called off and the excitement is abated to prevent by appropriate legislation the recurrence of such calamitous conflicts where everybody is injured and no one is benefited.” Criminal codes, it may be said generally, depend largely on the economic conditions of the time and place where they obtain: horse-stealing, in a community girdled by trolley lines, degenerates to petty larceny, while in Wyoming or Arabia it is a capital offence. In the new order, which requires peace and stability for its proper operation, it may readily enough come about that voluntary leaving of work will be severely penalized.