Glass JASn-Zi. Book JBjSJS- COPYRIGHT DEPOSm Science of Value. Number 6 DISTRIBUTION By HENRY RAWIE Autkor of Principles of A New Political Economy," Etc. Copyright secured 1907 by Henry Rawie. \ ^^^^5^ I LIBRARY of CONiMJESS Two Copies Receive*.' DEC 30 1907 Copyrigni tritr> GLASS /5? XXc, No. f COPY B. Modern Slavery. CHAPTER I. WHEN WE come to consider business as an af- fair of the centuries and as a process of evolu- tion, we change our views concerning the in- dividual power of our men of affairs. Instead of a great man creating a great business, we will find that the business created our great men. Men who are en- gaged in the commercial or industrial world do not create that world, and are not the arbiters of its destinies. The world moves forward resistless in the path of busi- ness as it moves resistless in its orbit around the sun. However high a great business may elevate a man, he has no power to assist or prevent his own success. It is true that there is a natural process of selec- tion in the commercial world, as well as there has been in the physical world, and many men court business and pursue commerce who fail. But this only illustrates a great truth, that instead of a man selecting a business and succeeding therein, the contrary is true, and business selects the man who will fill its requirements, and re- wards him for such service. The vast sums however, which accumulate to make great individual fortunes, must not be regarded as the reward Nature bestows upon the men whom she selects to carry on a successful business. As the whole world moves resistlessly forward, men are moved with it, and they share in all its faults, as well as in the successes. 4 DISTRIBUTION. For this reason, among many other reasons, the single individual is utterly powerless to change the tide of great events, except as he may discover new truth. It is a very common opinion among men that if given all the money they desire, they could change the world to make it fit a pattern and theory of their own selection, but, because our world is governed by natural laws, which provide for centuries in advance of us, we may influence events, only as we discover natural laws, and as we discover the purpose of our world. We can- not interfere as individuals with the tide of events; a man cannot, for example, accumulate hundreds of mil- lions of dollars in business and then select some avenue of spending this money, and change the world according to his idea. A revolution seeking to provide an entirely new form for society fails as absolutely. No king in history could conquer the world, however great his treas- ure and his army. So, also, no money king may mold society to a new form. But although we are thus hemmed in by natural laws fixing boundaries to our affairs, we must not con- clude that Nature's Law is a law of fatalism in the affairs of man. We must not conclude that because evolution during millions of years has developed our marvelous world of continents and oceans, rivers and lakes, that evolution does not require something of us who occupy the summit of development. When man appeared on the earth, a change occur- red, and he has been given power to interfere with the orderly process of nature. Man cannot, therefore, fall back upon the fatalist doctrine, and say he need do nothing to assist in the social world, because all things will come out all right in the end. MODERN SLAVERY. 5 Man is an exception to the laws of physical evolu- tion, and is a law unto himself; he has been given power to hold back the- progress of the world, although God will destroy him for his ignorance and folly. As our affairs in society become more and more highly developed, they become more and more import- ant as factors of evolution. We may well say that until a few generations ago the social world moved for- ward regardless of man, but as it moves to higher and higher levels, man becomes more and more an object of the world's regards. Man is given more power to inter- fere as the world advances, which power, when prop- erly considered, is the power to assist nature in the process of evolution. Nature has made a very rapid progress in natural selection within a very short time, and while she lifts some savages out of bondage, and brings them in com- munion with her God, there remain millions of savages waiting to be redeemed-. Man, according to Herbert Spencer, was never known to do right until he had exhausted all possible ways of doing wrong. To understand how men will grasp the reins of power and become kings and princes of finance among a slavish people, we need only to discover the same type in a primitive community, and by changing the surround- ings and the opportunity to tyranize we get our modern instance of the lucky millionaire. As a type of this character, the writer knew a man who was pictured to be an exceptional gentleman of his class, and it was a small class, but he occupied the unique prominence of having shot and killed three men. This man was ordi- narily quiet, hospitable and well behaved, and did not 6 DISTRIBUTION. drink nor swear nor chew tobacco, but he was a gam- bler and sold whisky for a living. He had for a wife a quiet and modest woman, who was a good mother to several well-behaved children, and he held another young and pretty woman as his property, openly and in defiance to law and order. He kept, also, a pack of hounds that annoyed all the people thereabouts, but as he had killed three men, his hounds were treated with marked respect and consideration. His notion of fem- inine justice was displayed when in buying a new dress for his mistress, he bought an identical dress for his wife, so the mountain public could not charge him with invidious favoritism. He killed his men because they came into his lordly way and perchance attempted to win a smile of approval from his female property. In the last killing he carried a Winchester with shells loaded with buckshot; his first duty in the morning was to ti*y out the gun on a three-inch oak plank at fifty yards, the plank looked like it had been riddled with railroad spikes. He sought his man immediately who Vv^as unconscious of the death facing him at the time he fell. This aristocratic citizen of lordly temper was too cowardly to risk a return shot from a wounded antag- onist, and made sure that he ran no risk if he had the first shot. He had a trial as a natural consequence of his living in a free country, and he was acquitted on a plea of self-defense. He afterwards sent word to an- other mountaineer, who had opened a whisky shop with- in his territory, that unless he moved he would kill him. The other man not desiring to be killed, or to move, nor to wait and find out if he meant what he said, took the first favorable opportunity to kill this particular individual. MODERN SLAVERY. 7 If you would understand the character of many of our successful men you may put this type of moun- taineer under modern surroundings, where his lack of soul, and his savage egotism can find a full field for its malevolent activity. Instead of the men gambling for the money of miners and lumbermen with a few bar- flies for 'touts,' give him the officers of banks and cor- porations and boards of directors and the undistributed wealth flowing ocean deep with its hundreds of millions of dollars seeking to gamble or invest in his enterprises. Instead of a few men who are denied all health and pleasure in life, bringing a few paltry dollars, and beg- ging for drink, give him the millions of poor to exploit who must beg for work to keep themselves and their families from want. Instead of the primitive idea of clothing the mis- tress no better than the wife, he has created our great White Ways blazing in light, shining in gold, brilliant in jewels where a throng of kept women ride swiftly in sumptuous luxury, splashing the mud from the street upon the patient wives and children who shrink back in confusion and shame. Capital is a coward we are told. No, it is not true, it is the capitalist who is a cow- ard, who fears for the men he has killed, and for the sins that will find him out, and who carries a Winchester loaded with buckshot, too cowardly to risk a return shot from his antagonist. He, also, has his pack of hounds who feed from his hand, who howl his praises to the world, and who reward him with a dog's fidelity and gratitude. When you are told that the great salaries and emol- uments of men of affairs are the natural rewards of conspicuous and exceptional talent, think before you leap 8 DISTRIBUTION. in your judgment, think of the latest favorites of wealth, of the crown of jewels in the flashing light, and remem- ber the rewards of successful prostitution among the predatory rich. A chancellor of a university has gained some no- toriety by his overflowing praises of the virtues and talents of men of wealth and by diatribes against the drunkenness and vices of the men who work. He re- minds one very forcibly of the Oriental low caste woman who has no other hope for her female children but to spend patient years in training them to pander to the degenerate vices of high caste men, so they may honor her by being selected for the high caste Harem. It is quite true, and to their credit, be it said, the common people can scarcely believe that other people have the impulses, vices and ferocity disclosed by our newspapers. They cannot comprehend a life so selfish and lawless and so lacking in boundaries of order and decency. But we, as a rule, are hemmed in some safe har- bor with a round of daily duties marked out for us; we have never been thrust into the swift currents of the storm world of hungry wealth and wolfish desire, nor been drawn into the vortex of the underworld. We cannot, therefore, understand human nature as it changes when acted upon by unjust and unequal wealth and is thrown back upon primitive and savage passions. We are startled by the killing of a prominent man and read with horror of his ferocious passions of conquest among innocent maidens that led to the tragedy. This "Maiden tribute to Modern Babylon" is a sign of the times and of the reckoning to come. This utter lack of moral responsibility, this absence of all fear, except MODERN SLAVERY. 9" of being found out, and this foul consolation that money will pay all damage is not the result of mere individual failing, but is the result of a stream of filth engendered by our system of distributing wealth. Evil grows with what it feeds upon and injustice multiplies itself as it pushes back the safeguards of society. But a short time ago, and we heard of injus- tice and cruelty as though it was among a foreign peo- ple in the underworld of a great city, but daily it creeps closer and closer to our doors. We now hear of it all about us, it numbers among its victims our childhood acquaintances and we come in close relation to it. On every side there is evidence of great wealth and plenty, abundant riches is no longer a distance away, and in its near shadows, we see the hovering forms of poverty and despair our close neighbor. Unless a change for the better comes quickly we know that we too must cross the trail and face poverty and misery for our fam- ily. We feel the savage blood rushing to our temples and the primitive man under the skin stands ready to strike when danger comes too near. We are now at a time of great prosperity, which we call great because the mass of the people find ready employment at living wages, we forget how the standard of living changes. In these times of prosperity the greater part of the people^ can do no more than merely live from hand to mouth, and each day they are further removed from helping themselves and become more and more dependent upon distribution. We are told that wages were never before so abundant, and yet never be- fore has discontent been so acute, and if these times are the form and pattern of the future, then alas for the future. That civilization now faces a change is 10 DISTRIBUTION. everywhere in evidence and in this change other changes must come and make conditions very much better, or very much worse. Ever since the modern age of indus- try began about 1830, there has been a succession of ahernate periods of prosperity and hard times and these periods were marked by the spreading of our people over new lands until they now cover the country. Dur- ing each of these prosperous seasons we made a spurt to realize the true level of wages, but we could only ad- vance by increasing our debts, and we were soon brought to a sudden stop by coming to the end of the chain of debt. These debts consist mainly of the increasing prices of land, and each advance only builds the final difficulty higher, and makes the burden heavier from day to day. It is difficult to - imagine why a sensible man need fear a radical change in our system of wealth, why he need be in fear of wealth getting into worse hands than those now controlling it. The very names of the men to whom we are indebted for the blessings of civiliza- tion, the inventors and students and builders of society are swallowed up in the greed of bankers and financiers, and the public rarely hears of them. The owners and managers and directors of our great enterprises assume a knowledge and importance that make them ridiculous and make their control of business dangerous. These men are the creatures and spawn of an un- just and iniquitous system of distribution who have no interest in progress, no appreciation of civiHzation, no sympathy with labor, no admiration for science and me- chanics and no use for religion. A change of control from such freebooting owners to men of technical knowledge and of mechanical skill is a consummation de- voutly to be wished. However complicated and con- MODERN SLAVERY. 11 fused we find our problems we must remember that the distribution of wealth is behind them and covers them all and reaches to the far corners of every undertaking. Any derangement of distribution must, therefore, affect every inhabitant of a country and the disorder must increase and grow more complicated as the de- rangement continues, and when we discover the cause we may safely apply the remedy, and may feel sure the remedy itself must be harmless. In these strenuous days it is a favorite pastime of some writers to tell us stories of the Kings and Queens of other times and how they suffered for the want of conveniences, they could not even- imagine. By such comparisons we are reminded of the inestimable bless- ings we now enjoy, of telephones, electricity, means of travel, of parks, museums and libraries, and we are told that the every day comforts of the common people would be luxuries undreamed by Kings and Queens not longer ago than Elizabeth of England. Rabelais tells a story of a roast meat cookery in Paris where the cook found a porter eating his dry bread above the steam and vapor of his cooking. The cook seized the porter and demanded pay for thus fur- nishing the porter smoke from his meat, saying he was not obliged to nourish a vagrant porter he had never 5een before. The porter refused to pay, saying the smoke would otherwise have evaporated, and the cook lost nothing. The dispute waxed hot and was referred to Seyny John, the fool of Paris, who after hearing the evidence, decided the cook was in the right and should ht paid for furnishing savory odors as an agreeable sauce to the porter's bread. The Paris fool thereupon decreed the cook was to have judgment and the porter 12 DISTRIBUTION. was required to jingle small coin in the ear of the cook so he might be paid for the smoke of his meat with the sound of the money. The writers who enlarge upon our abounding and; marvelous prosperity speak the truth, and no extrava- gance of tongue or pen, no luxury of imagination can do justice to the wonderful and God-like stride of mod- em industry. The figures of our stupendous undertakings and the grand totals of our achievements pass beyond the power of our understanding, and we simple individuals, are amazed and stand filled with pride at our wonderful prosperity. Yet with it all, we feel a sense of want as though most of us were outside and were standing upon the- grating above the cook where we may only see the feast, smell the smoke and hear the music of the coin. We hear and read of hundreds of millions of dollars spent for railway terminals and equipment; of the most glor- ious and stupendous buildings in the world. We learn that our architects and builders now surpass the won- der work of Ancient Greece, and we build in a trice when formerly generations were required. We read of copper and its wonderful uses in the extensions of elec- tricity, of the advances made in great office buildings, and of modern hotels which no palace on earth may rival. When we begin to analyze our great prosperity we find it consisting of great things, and the day of small undertakings seems to be passing away. We do not hear of the mass of workers acquiring millions of new homes, and of getting independent in- comes from our marvelous systems of railways, steam- ships, telephones and telegraphs. But on the contrary. MODERN SLAVERY. 13 alas, the census tell us more homes are lost than new ones are gained, and the mass of the people are con- tracting stupendous and increasing debts, which they are never to repay. A prominent public man of England in a recent visit to the United States during a time of our greatest activity, is reported to have said, "The one ^reat predominating characteristic of your people, which most deeply impressed him was sadness." So soon and so true we have now become a sad people. We were taught from the earliest times that industry and thrift were the sure foundation of riches, and that ability and honesty alone was the sure bedrock of success. We look about us at the marvelous advances of men, at their undertakings, at the concentration in ownership, at riches piling mountain high. We see this concentra- tion of wealth making kings and princes and favorites of finance, without industry or ability, and without hon- esty or thrift, and we become a sad people. We ask why are all our great undertakings steeped in debt? Why are all our railways bonded with more debt than they cost to build? And piled high upon this debt, are other debts for equipment and terminals until no peg is left on which to hang an obligation. When we look abroad to consider the benefits the mass of the people enjoy, we find they are driven by the speed of steam and electricity, and are given scarcely time to eat and sleep in a mad haste to build with magic power tremendous totals of fixed property that a few men will own and control. We look again and we see the sums which have been paid to labor to do all this work, were secured by debts upon this property they create, and in this way labor is required to furnish the credit, and supply the value which other men manipu- 14 DISTRIBUTION. late, who secure the ownership of the entire estate of man. No doubt, we have become a sad people because the lessons we were taught in childhood; lessons of working, of saving and of honesty, have become as fairy tales intended to amuse children, and as stories of gob- lins to scare them and hush them to sleep. Yes, we are- a sad people, because integrity has become a supersti- tion, honor an empty dream, and liberty has become a child's toy, in our mad scramble to secure unearned wealth. It has not been long since we were taught that debt was an evil thing, we were taught to avoid debt as we would avoid the plague, and a man deeply in debt was accursed. But now Aladdin's Lamp is a playthings compared with the magic power of debt, for debt now creates our kings and princes of finance, and gives them power and prestige without a parallel in the history of the world. We were taught to avoid debt because we were told that we were bound by our most sacred honor- to pay debts with our own hands, we contracted for our own benefit. Today the men of eminence, who occupy the high places of honor, the men who are re- garded as patterns of integrity are men who have grown great by contracting debts for their own benefit, which other men will be required to pay. The ability to sad- dle debts upon the back of labor through the ownership of land, and by the machinery of corporations has caused billions of wealth to concentrate to the men who now control all our means of transportation and finance. It is by this method that we corrupt the very source of integrity and pollute all the springs of honor. No kings or princes at any time in the history of the world could distribute favors with so lavish a hand as MODERN SLAVERY. 15 the modern king of finance. Before our day the revenues of the king were derived directly from the earnings of the people and he could not thus surround the people with debts and have such marvelous machinery at his command so that more than one-half the population could be made the mere creatures of his will. We are indeed a sad people, as we look upon this spectacle of irrespon- sible power, as we see it make and unmake Presidents, Congress, Governor and Legislature, and as we realize that it holds all the sources of preferment in the hol- low of its hand, and as we see it lay the self-respecting in the dust and lift the beggar to a throne. Do these powerful princes of finance and their fa- vorites feel any gratitude to the mass of honest, dili- gent laborers who have thus dowered them with king- doms and principalities? Far from it, for they stride the world with the most impudent and collossal assur- ance, claiming that without their superior wisdom and without this grant of power, the common people would die of starvation. They not only keep their hands elbow deep in the pockets of labor in their own behalf, but they scatter other millions to equally shameless favorites, and add charity and benevolence in enormous endowments seek- ing to dominate the spiritual realm and thus again unite the church and state in a new king:. What defense do our public men and servants, the guardians of the interests of the people, make to this unparalleled slavery of debt. We are told, as though it was less criminal, that these debts are not to be now paid by the living, but will be paid by the future generations. So cunningly is this hold upon the property of the country secured, 16 DISTRIBUTION. that these debts are never to be paid, but are to become a new form of slavery from which there is to be no way open to redeem mankind. Could sophistry go to greater lengths than to claim that the railroads we are now building, the mammoth hotels and factories, the coal, iron and copper we are mining and goods we produce, can be paid for at some future time? If these men we call financiers have discovered a plan whereby the unborn are to pay for our present works, they should carry this scheme to its logical con- clusion and earn the everlasting gratitude of the human race. If the future population may be made to pay for the greater part of our present belongings and enjoy paying for them, as we are told they will, why deny them the pleasure of paying for everything, and why not put the time for payment so far in the future that we, nor our immediate descendants, need work or worry about it ? There seems no absurdity too great to bring to the sup- port of our monstrous inequality of wealth and no sense of shame in advancing and supporting any outrageous doctrine. A Personal God tke Religion of Economics. Economics. CHAPTER 11. THE entire cause of the failure of our people to enjoy the blessings of civilization may be written large in one word ''Distribution." The wonder- ful advance of science has now made production almost automatic and fast approaching perfection. In times past the simplicity of production made it connect directly and intimately with distribution, and the one could not proceed far without the close fellowship of the other. We have made the most marvelous advances in our ca- pacity to produce aided by automatic machinery, but we have taken no thought about distribution, seeming to believe that when production was once accomplished, the work was done, and distribution would take care of itself. Modern production differs in many ways from that we have just passed. Science has changed our methods from the simple and direct to the compound and to the roundabout. Instead of each worker providing in a large degree for his own wants he now works for wages and is under the dominion of the market. Instead of a vast majority of men being engaged in producing simple things like shoes, and hats and food and clothing, which they may trade directly, they have 18 DISTRIBUTION. been entirely separated from any direct connection with supplies. The greater number of laborers are now en- gaged at entirely new occupations; the railways alone employ one million men and have a population of about five million people depending upon them, and there are four million teachers and professional workers. Thus you may see a great change has suddenly taken place in the civilized world, entirely unlike any other period in the history of the race. You hear it repeatedly that laborers should receive in wages all the wealth they produce, and in times past when most men brought some concrete product to market and exchanged it for other products there was some direct connection between production and distribution. But now the most valuable and necessary labor is intangible, it is not engaged in creating commodities having a market price. Such labor must be valued and the value with which it is paid must be included in the market price of goods in order to be distributed. A man now works, not to feed himself with the products of his own hands, but because he must obtain a supply of value with which to buy what he wants. This struggle to obtain value on account of its pur- chasing power is necessary in order to live, is exciting in order to become rich, and furnishes us the motive, or cause, for all social activity. This neces- sity of securing value first before we may satisfy our hunger, our pride or our ambition, makes the distribu- tion of value the most important science in the world. Thus we find we are possessed with the most pressing de- sire to get money which, when once secured will relieve us from all fears of poverty and distress, however the required money may have been obtained. THE RELIGION OF ECONOMICS. 19 In order to acquire money we depend upon distribu- tion and not upon employer and employed because the employer must also get money with which to pay the employed. Distribution is only possible through our markets, and every conceivable form of property must be valued before it may be offered for sale, and before the property so valued can be sold, the value with which to buy must have been previously distributed in the form of money or credit. The failure of all theories of politi- cal economy, of finance and of reform, is owing to the fart that value was held to be of no great importance, ar.d that distribution was held to be a matter of trade and transportation, a matter of barter made easy on ac- count of money. We cannot now estimate labor in terms of eoods, we car no longer say this man produces so much corn and should get so many bushels as wages, or another produces shoes and should be paid so many pairs. So- ciety is no longer made up of groups of families inde- pendent on each other, and who may supply their own wants. Society on the contrary, is rapidly becoming complete, when all manner of property, and all labor and supplies must contribute to the life of the body politic, and must obey the natural laws of progress. This separation of the individual worker from his means of life, making him helpless in supplying his most simple and pressing wants, has been recognized by re- form writers, but has been attributed to other causes than the true one. The Socialists, for example, point to the advance of machinery and to the division of labor, to the factory system and claim that men can no longer depend upon their own hands to supply themselves, but are harnessed to machines and thus become slaves to 20 DISTRIBUTION. the owners of factories and machinery. In their argu- ment, the price of the product and the dependence of machinery upon the market has no place and they over- look the more important truth that machinery does not diminish the demand for labor. The introduction of machinery has enormously in- creased the demand for labor by developing many new classes of work at wages that keep advancing, and our dependence upon labor grows greater day by day. The land reformers seeing this separation of labor from their means of life, seeing the direct connection between pro- duction and distribution has disappeared, attribute the loss of wages and lack of employment to property in land. They claim that man is a land animal and when land is divided into individual ownership, he loses his , right to land and is thus separated from the earth, and becomes the helpless slave of the landlord. They fail to see the dependence of the landlord upon the market, and that he is limited in his demands by the price of goods, they fail to see, also, that it is the price of land and not the annual rent that does the damage to society, because the price of land prevents other prices from ris- ing, and thus prevents so much wealth from being dis- tributed. The m.oney reformers see this dependence of .modern labor and say that neither land nor machinery has anything to do with the case, and it is a problem purely of getting money away from the control of money lenders, because they say if men can always get money for their work and exchange the value of their prop- erty for money on demand, then they will buy the land and machinery as they need it. That value has any- thing to do with money, or that prices control the dis- tribution of money, or that natural law has power to THE RELIGION OF ECONOMICS. 21 regulate its circulation has never entered into the minds of currency reformers. These conflicting ideas of reform are rooted to the primitive idea that the world dates from Adam and man came to earth full armed with all his present powers and capacit}^ To the belief that our civilization arose from the selfish conflict of greedy clans of men and fol- lowed inspired rules of religion, to the belief that our institutions and laws are accidents and happy compro- mises secured by a few great men, and that the history of the world is a history of its noted men. But when we consider the progress of science, the unfolding of natural law and the magnificent procession of evolution the view changes. When we look upon the world from the stand- point of science and the truths of nature, the importance of the individual man shrinks away, and the Almighty looms great on the new horizon. The view changes when we see the world consoli- dating, when we see men finding places and doing work vrithout a thought of any general plan, and as we look backward we find our progress has been carefully and intelligently planned for us. The modern world demon- strates to the student that we are working unconsciously to some great end, we are helping to achieve some great destiny, and that we are building society in obedience to superhuman intelligence. But a few generations ago, the civilized man of today was a savage, clad in skins of animals, who had to be taught, forced, coaxed and bribed into the task of building civilization. As a savage the man had a hatred of work, rein- forced by a million years of hereditary idleness, when he roamed the earth at will and gratified his passion of the moment. These savage men must be taught a lang- 22 DISTRIBUTION. uage, be made to talk, write, print, to build and invent, and become the intelligent men we find today. In so doing, in so delivering the savage from his wilderness, there was only selfishness and brutality, hunger and pain as a foundation for the Great Teacher and Master Workman to build upon. Society must be built accord- ing to some plan and must obey some purpose and we, so far, have had no knowledge of this plan or purpose, but are engaged in working it out whether we will or not. To compel men to thus carry on as great a work as our" civlization presents to us, we must admit has required Divine Intelligence and Wisdom. To compel men thus to work who were confirmed in their hatred of all work, required some powerful insistance, and to this end they were separated from their means of life that hunger and pain should drive them into the paths of progress. They were taught, by hard experience, that they could gratify their savage desires easier by follow- ing a path marked out for them, than by following paths of their own choosing. In thus following lines of least resistance and of greatest satisfaction, they were induced to lay the foundation of our society and develop our present civilization. The position of value in this process of compelling men to follow new paths is not hard to understand, for as a builder may now employ workmen because he holds value in his hand, and because the workmen re- quire this value he is able to direct their work according to his plan. So the Master Workman holds value in his hand and bestows value where he wants work done, and withholds value where he would discourage work all over the civilized world. But we do not see the per- THE RELIGION OF ECONOMICS. 23 sonal control of the Master Workman in building our civilization, as we see personal control in our small but imitative work, and we are just now becoming con- scious that we are being directed according to a great plan. In some of our great enterprises, like a great rail- way system, the connection between the workman and the management seems to be lost in the complex details of system, and laws of operation seem to control, yet the personal oversight of every workman is never lost or the laws of operation would fail. In society we have a great amount of evidence of the careful, intelligent and personal supervision of Deity which our ignorance pre- vents us from realizing and perhaps denies us commun- ication with Him. When we survey the field of modern industry and commerce we must be amazed at the wonderful strides we are making in every direction in such quick time. Progress has now so many sides, and has become so complex that no single individual can keep in touch with his own working department, not to mention the entire plan and work. This whole world of progress moves forward har- moniously and connectedly in obedience to one plan under a single intelligence, and according to an order not only beyond human control, but beyond human imagination. The most remarkable truths of our wonderful progress seem to contradict the science of material and physical evolution. Society does not travel the road of slow undirected growth, and does not depend upon hap-haz- ard selection and environment. We build our own en- vironment, and we direct the hitherto undirected forces. We harness them and we discover their laws; we push 24 DISTRIBUTION. the car of progress with hydraulic jacks, we drive it with steam and we speed it hke Hghtning with elec- tricity. For the first time in the history of the human race, the individual has lost his power to interfere, to enslave, and to tyranize. Our industrial progress carries us along with reckless, heedless, rushing speed to some destiny that all past theory of state, of religion or philosophy is utterly unable to comprehend or estimate. Society now moves and grows as one great organism, uniting all the earth under one great economic government subject to universal natural law. All boundaries of church and state, all religious and social institutions are being merged by one universal plan for the progress of the whole world and for the benefit of all mankind. Between one day and the next we are taken from one world into another, and we are awakening to a new world, a world of ideas, where every material and physical force is being brought to the service of ideas, and we work with fevered haste and with inspired knowledge. The man who is now to be counted among the mil- lions must become a man of ideas, and one to whom an idea will be an inspiration for good work. We are faintly beginning to realize the nearness of God in our world, to feel the power of his hand, to learn of his imag- ination from its surpassing beauty, and we are begin- ning to understand His love from the joy and happiness we may give and receive. We are just beginning to see and realize that the individual man does not dis- cover and does not originate. The inventions, new ideas, and increase in knowledge are not the separate works of single men, but arise from out of the spirit of the times'. THE RELIGION OF ECONOMICS. 25 All our inventions and discoveries are a part of a general plan, each one is linked to another, a discovery in one branch of science leads to a new discovery in an- other branch and adds something at another place that seemed entirely apart. In all this growth of knowledge and development we are like babies who are just awaken- ing to an acquaintance with the world around them, the baby perceives the light and smiles with pleasure or comes to know the heat and cries. So we, also, are children awakening to a newer, a more wonderful and more perfect world, we discover a law and we invent a machine without knowing the Father lays it in our path to stumble over that we will straigh'ten up taller and fairer with a higher conscious- ness. It is as though the personal God was ever at the elbow of some men to suggest new ideas, to lift them with His wisdom when they have the grace to receive it. It is in this particular direction, in this direct intelli- gent control over the path of our progress that social development seems to conflict with the laws of physical evolution. The growth of civilization, the rapid advance of science w^ithin a few years seems to force us to the con- clusion that God is ever seeking the help of man to hasten this work of building, and that without our help God has no personal power in the development of society, and man becomes his agent through whom He works to secure results in much quicker time. ' Although we must admit that the idea of God car- Vies with it the idea of infinite power, and admit that all things could have been secured without direct help from man and with the personal attention of deity, yet this admission of infinite power involves the admission, 26 DISTRIBUTION. also, of infinite time. But when time becomes definite and finite, then the idea changes and the personal atten- tion of deity seems necessary. We must always remem- ber that a finite and objective world unfolds before our eyes to satisfy and please our senses and to make our" lives delightful. Natural forces and laws acting alone but in obed- ience to Divine Will and suggestion would be able to build any world the Divine Mind would conceive, pro- vided time was unlimited. The slow minute changes made by natural processes alone could gather and accum- ulate such a world as ours in endless seons of time. But if, to these undirected forces, we add a personal and intelligent control, then we begin to shorten the time and increase the speed of development. Looking at human progress from this point of view the individual and not the race again occupies the cen- ter of the world's stage in the drama of civilization. Man comes closer to God as he learns the secrets of nature and how the work is done and how natural forces are controlled. When man begins to use the forces of nature and to direct his work according to law he gets into communication with the Divine Mind and partakes of the personal power of God. But man who arose from: the savage has the animal, as yet, most strongly in- trenched in his blood, and lest we forget, there is an endless variety of brutes and only one kind of God. This power by which we progress and which is outside of man has in time past seemed to reside in the digni- taries of the church and in the divine right of kings and emperors. But the rapid pace of this age of steam and elec- tricity has changed the opinions of men respecting the THE RELIGION OF ECONOMICS. 27 seat of power, and we find it being now claimed by financiers, bankers and owners. Yet we are admonished by panics and hard times that this world-creating-power does not reside in church or state nor among particular men. Just at this time the chief impelling force is found in the markets of the world, and we may say with some truth that civilization is carried around the world by commerce, and that industry depends upon trade. We stand before the dawn of a new day with startling and radical changes knocking at the gate for admission, and the night is dark. We stand face to face with the need of a 'higher intelligence in our political affairs for we soon must write the laws of nature into our constitu- tions and frame them into the structure of the state. We are rapidly coming to the time when we can no longer experiment with legislation, when we must know what course to follow or be destroyed. We can- not go on blindly feeling our way as formerly, we are now required to see ahead and to divine the future ac- cording to law. We are not to have ten million years to build the structure of the social organism as was taken to build the human body. We leap great gaps in the line of ascent, we jump from one type to a type a million years in advance. Instead of waiting, for example, for the slow process of growing a system of arteries to allow for the circulation of our social blood requiring a million years of evolution, we now build arteries at the rate of ten thousand miles a year in the railroads of the United States. Instead of waiting for thousands of years on slow and undirected forces to lay out lines of nerve communication, we build telegraph and telephone lines by thousands of miles per month. ^8 DISTRIBUTION. For these reasons among many others the modern world is unhke any time of the past and it calls for men with corresponding ideas and knowledge to take charge of its affairs. The consolidation of the world from sep- arate governing powers, feudal clans, and states into one great economic organism, is being marked out by one great economic law called distribution. Consider industry as you "will in any of its separate branches and you will find that progress in each line is connected with distribution and the influence of the market is world-wide. Inventions and discoveries can only come into existence and exert an influence as they are able to conform to distribution. One industry help- ing another, and giving help Avherever it crosses or touches another, is able to do so on account of the depen- dence established by distribution. There is no longer a power of landlord over tenant, of master over servant; vrhen the direct connection between production and dis- tribution was changed the power of one man over an- other man vanished with it, and we all now depend upon distribution and upon the prices and markets established by it. Saving m Time tne Cause of Progress. CHAPTER III. WE HAVE grown in wealth and power as we have been able to put machines to work and as we have learned to utilize the forces of nature. These forces of machinery and powers of nature are free gifts to mankind and our problem is one of distributing these blessings to each, according to his wants and ac- cording to his ability. Machines are only an advantage as they are automatic. A locomotive engineer sits in his cab with hands upon throttle and levers, a fireman shovels coal and the machine pulls three thousand tons on a level road at a speed of twenty miles an hour. In addition to the benefits of machinery we must add the raw material of nature which is also free. Coal, iron, clay, gold and silver are all donated to mankind without cost, hence you may well ask what we pay for when we buy diamonds or potatoes. We pay for dis- tributing these free gifts and not for producing them and although we may now estimate the cost of produc- tion as an item of expense, yet ninety per cent of such cost has been taken away and the ability of labor to pur- chase has so increased that the distributing price now governs the market. We can readily see the justness of this plan because some way must be determined by which the exact quantity and exact variety of an endless number of gifts are properly placed so as to develop civilization, and this proportion could not be arrived at except by the sums spent by each member of societ}^ 30 DISTRIBUTION. Suppose a man has the monopoly of a machine and he dispenses with much labor and sells the product for a high price, he thereby gets rich and gains unjust wealth. The question is, does the machine produce the price of this product and is this machine turning out wealth without labor? Assuredly not, because the pro- duct must be sold to laborers who earn the money, be- cause the machine has no power to earn money. Price is made by the buying of men who earn the money by their work, and these men furnish the owner of the machine with money. A wheat field is an automatic machine more perfect and more marvelous than any of our at- tempts to approach it, and we have had enough expe- rience in growing wheat to know that the price of the crop is limited by our purchasing power and nothing can be paid for the time and work of nature. If our wheat crop was suddenly to fail we would pay a very high price per bushel, not because the wheat had intrinsic value, but because we could draw upon our credit so as to save the marvelous machinery hidden in the seed. Suppose there was no labor cost of production, suppose we could use machinery to the extent that all production was a part of our education and work became a pleasure, in such case would our products have a market price? We may suppose the modern world of wealth to begin when ninety out of every hundred laborers were working to provide the mere food and clothing for all the people; wages were then so limited that nine-tenths of the purchasing power was spent for mere subsist- ance, leaving but one-tenth for better living and improve- ment. As machinery was introduced more and more of this labor was set free, and the quantity and variety of subsistance increased with a diminishing cost to labor. SAVING IN TIME THE CAUSE OF PROGRESS. 31 When machinery becomes complete and does its work automatic hke the machinery of Nature, there will then be no labor cost of anything in the market and all prices will be wholly the cost of distributing the blessings of <:ivilization. If our goods and commodities of every kind are represented as growing from plants, and cost- ing nothing, there will yet be a natural limit in the quantity of such products and a natural law requiring their proper distribution. We may therefore look upon commodities as growing from plants, free to whomso- ever may gather them, but they must be divided up into individual portions and distributed. This process of alot- ting to each individual his proportion of the free gifts ■of nature is determined by the money he receives for his work and the prices this money makes in the market, as it is being spent. Let the reader impress his mind clearly with the truth that distribution is not the business of transport- ing commodities from producers to the consumers. Dis- tribution is a science of finance, and deals with money and prices, with the sums going to laborers as wages. The first, and most important act of society, is the dis- tribution of wages to labor, because the entire activity of all our railways, factories, telegraphs, telephones, steamships and farms, depend upon the money spent by laborers. It is a mistake to call machinery labor saving, be- cause it does not save labor, but on the contrary very greatly increases the demand for labor. If the reader will only consider such an example as the sewing ma- chine, he will find that the introduction of this machine has greatly increased the number of laborers engaged in hand sewing. Aside from single instances, we are 32 DISTRIBUTION. now (1907) having a world-wide demand for labor ow- ing to the spread of machinery to South America, Asia and Africa. We are rapidly approaching a period when wages must rise over the entire world, or machinery must be abandoned and the world must return to Barbarism to begin over again. With but few exceptions the nations of the world are now beginning to bid against each other for laborers to supply the rapidly increasing world-wide demand for labor made by the spreading abroad of machinery. How- ever important .you may regard this growth of the ma- chinery of production, you will find the machinery of distribution is even more important. The machinery of distribution is almost as deeply mysterious as the ma- chinery of life, but we may study it and learn how it works, although its greater mystery may never be ex- plained. Money going into circulation and moving through all the channels of trade, paying wages and establishing prices is the visible effect of the machinery of distribution, while value is the cause which is hidden and mysterious. Money is the most useful and important of any of our automatic time saving machines, but money must pass through the hands of labor continually so as to get the supply of value which it carries about and distributes. The value of money arises from the fact that laborers receive a given sum of money for a given time at work, and labor time endows money with value, and from this foundation of labor time, money communicates value by its circulation to all forms of property. We, in the United States, now pay out about fifty million dollars a day in wages, and upon the circulation of this sum each SAVING IN TIME THE CAUSE OF PROGRESS. 33 day all our prosperity and the value of all property de- pends. This daily sum of wages is the source of primary purchasing power, and of primary distribution, and as this rises or falls the world of wealth falls or rises to meet it. Based upon this primary circulation of money, we have a secondary source of power called credit, and based upon credit we issue a great volume of secondary money in the form of checks and drafts. Primary money going into circulation to employ labor enables the employer to save time and to use labor to the best advantage, and from this saving in time we get an increase in prices called profit, which means the margin of price above the cost to the employer. This does not mean that the employer may save some of the dollars and thus gain them, but that he spends all his money, for the more he spends to advant- age the more he may gain. The profit made from the use of money is secured upon the return of money for property when it is sold. But the mystery of money only deepens on this account because buying and sellings appear to be one transaction, and appear to be carried on at the same time, but buying from labor and selling back to labor has an interval of time between, owing to the roundabout methods of production. But yet the mystery remains because we deal with a fixed sum of money, and how may the sellers be get- ting more money than buyers all the time when the same money circulates for both sides at the same time? How, for example is a man to pay out a certain sum of money with his left hand, and reach for the money again with his right hand and always take in more money than he pays out. How is it that he may drop ■34 DISTRIBUTION. « one-fourth of the dollars from his right hand into a pocket as a profit and pass the same number of dollars to the left hand to pay out and to again increase as the right hand gathers them in? How can such a process be made continuous with- out reducing the number of dollars in circulation and stopping the entire distribution? This explanation is to be found in banking, between the left hand paying out money to labor, and the right hand gathering it in, the money passes through a bank and is expended by the use of checks and drafts. Next in importance to money in the development of civilization comes banking; banks furnish reservoirs where free value may accumulate so that money may pick up this value and distribute it without waiting on the slow process of each dollar of actual money passing directly through the hands of labor. This store or reservoir of value accumulating in banks to endow money with life and activity is called a deposit. A deposit in a bank appears to be a mere innocent book account; something vague and intangi- ble, but next to the value of money itself, the free value deposited in banks is the most potent force in the civi- lized world. Deposits in banks indicate the net gains arising from improvements which are awaiting distribution. Deposits represent deferred purchasing power and are a credit accumulated by labor in one form to be redeemed in some other form. The most important use that can be made of deposits is to provide secondary money by which the currency is automatically expanded or con^ tracted without interfering with the functions of money. A depositor in a bank has the power to issue his own SAVING IN TIME THE CAUSE OF PROGRESS. 35 money to the full value of his deposit. This money is redeemed and re-issued constantly by exchanging checks for actual primary money and if bank checks or second- ary money, could only be issued dollar for dollar of the money with which to redeem them, if the banks had to retain a sum in cash equal to the sum of deposits, then this secondary money would be of no benefit. But experience has proven that this secondary money of banks may be issued or expanded to about six dollars of credit money for each dollar held in reserve by banks. The most important work done by our bank- ing system is thus to expand the currency without inter- fering with its value, and allow prices to rise, and to be distributed over the market, and more particularly to assist in the distribution of these same deposits and allow them to go into new development. Probably the most difficult and most important truth in the entire world of finance arises in the relation between primary and secondary money. Not only is this relation of great importance in banking, but it is even more important in an understanding of the labor ques- tion, and of the distribution of money as wages. Primary money or cash must necessarily be limited in quantity and of fixed and stable quality so that its value will be unquestioned, and so it may circulate with- out resistance or difficulty. But if we had to depend upon primary money alone, we would never correct the natural inequalities of distribution and human greed would be greatly strengthened. Primary money must circulate from hand to hand, it must pass back to labor after it is spent, so that it may be endowed with a new supply of value. 36 DISTRIBUTION. Primary money moves slowly but it alone has the power to save time, to make prices, and to gather pro- fits. The owners of money control the most powerful automatic machinery Nature has ever produced and by this control of money they may limit and prevent all ad- vance in civiliziation. It is by the invention of secondary money that profits are returned to labor, and that money is able to expand and prices increase. Nature is necessarily unequal in the primary dis- tribution of wealth, because the gains arising from the use of money must all go to the owners of money with- out regard to the service the owner may render. These gains are profits and they represent not something stolen from labor, but something given as a bonus by nature. If we were to depend upon primary money alone there would be no way of getting the gains of civilization dis- tributed among the people, and we would be limited by the fixed volume of primary money to a fixed and un- changed social condition. Primary money could only circulate to labor once and then must be returned to labor to be endowed with value, and the gains made by the use of this money could never be distributed beyond the owners of money except by charity. But when the gains in civilization become profits and are deposited in banks we accumulate reser- voirs of value, and we need not then wait on the slow circulation of every dollar to return to labor, to have its value renewed, but can call upon our reserve of value. We then have an opportunity to create a secondary dis- tribution of wealth by an expansion of the currency and this will cause a rise in prices. This rise in prices, brought about by expanding the currency, is the auto- matic method of nature, whereby the gains in civiliza- tion are to be distributed to the mass of mankind. SAVING IN TIME THE CAUSE OF PROGRESS. 37 Unless we could thus expand the currency we would be absolutely limited to a fixed wage for labor, and a fixed status for society. But when once we have a money that may automatically expand and contract in obedience to the natural machinery of distribution, we alone are to blame if wealth is unjustly distributed. Currency re- formers have recognized the importance of rising prices in order to secure a wider and more equitable distribution of wealth, but they make a grave mistake in advocating an expanding issue of primary money which could only intensify the unequal conditions. If primary money is issued without a limit to its expansion, it would soon entirely destroy the value of money and all that money means to civilization. In the circulation of secondary money we will see the cause of our brilliant seasons of prosperity, when we spend increasing billions each year, because we have an expanding currency at hand to distribute the profits gained from rising prices. While prices are rising, the farmer, the merchant, the trader, and manufacturer gain rapidly in wealth, and the gain is thus widespread, and is communicated to the entire countrv^ In dull times the annual trade in the United States is about twenty billion dollars in round numbers. When deposits begin to flow from banks into new business and begin to increase the demand for labor, then prices will rise and profits will increase. At such time the rise in prices will add, let us say, ten per cent to the value of the property being exchanged. This advance of ten per cent in a total of twenty billion a year means a gain of two billions in volume of profits, and this gain may become secondary money and expand 38 DISTRIBUTION. the currency. This rise in prices cHmbing quickly into hundreds of milHons, and then into 'bihions, will widen the activity of production on all sides and consump- tion will keep an even pace with production. As profits grow into greater deposits there will come a new expan- sion of money which, on again going out, will repeat the impulse to greater activity. Trade will thus jump in a few years from a total of twenty to thirty billion dollars, and prices again advancing over this new and wide fields will open up the ball and begin the mad race for unearned wealth. Whips will then be applied to horses and men, steam and electricity will be driven at topmost speed as we revel in the golden rain of dollars, the cry will be, ''On with the dance! More speed! More music! More frenzy!" In this wild race for money we ask ourselves, Where will it end? If we are insane, if the world has gone mad, what limit will we meet? Where will we stop? There must be some limit to this piling up of a higher price upon prices already advanced many times; a limit upon expanding^ a currency expanded many times before, and upon the reckless and extravagant schemes to gain these growing paper profits. We know that there must be a limit ; we cannot thus keep on doubling money and prices and profits without end ; there must be some law regulat- ing distribution, some return to first principles. There is a limit beyond which we may not go in this mad struggle for wealth, and we would never rush blindly to this limit except for the fact that billions of dollars fail to go to those who earn them and become glittering prizes of unearned wealth for those who may secure them. The limit to which secondary money may thus ex- pand credit and prices is fixed by the volume of primary SAVING IN TIME THE CAUSE OF PROGRESS. 39 money, and the limit to the volume and circulation of pri- mary money is fixed by its necessary return to labor to secure its value. These billions of value added to prices must travel back again through the wage fund or they cannot be sustained and be redeemed. And failing in this, they must crash and fall. In a regular distribution of wealth, profits get back into the wage fund by being spent for new construction and for a greater volume of goods at higher prices, and profits fail to get back when they are invested in land or property not created by labor. When there is such a failure of deposits to return and when bank deposits seek investment outside the labor market, they are not dis- tributed, and do not break up to buy labor or goods. In such case these deposits remain intact as a mass of credits on one side and debts on the other side, and are being continually loaned and reloaned, but continually increase in quantity. This growth of deposits requires the banks to maintain a corresponding growth of reserve in primary money, and the volume of money concentrating to banks must keep pace with the increasing volume of deposits. The absolute limit which the total deposits may reach before reaction sets in, may be put roughly at five times the volume of currency. We have at this time, for example, January, 1907, a volume of about three bil- lion dollars of currency, and when deposits reach a total of fifteen billion dollars, we reach the limit of expansion. At such times the banks will have contracted the total volume of money by half and will hold fifteen hundred million dollars as reserve which they dare not loan, and this will cause a widespread stringency of money. Then will begin the reaction, and we will then have a violent 40 DISTRIBUTION. contraction, also, in the circulation of checks, and this will again aggravate the money famine. When banks are loaned ''full up," and new loans cannot be made, the volume of expansion has met its limit and contraction is about to begin. When deposits are first loaned out, the loan becomes a new deposit to be checked against, and thus provides secondary money. If all loans were paid as they fall due, and all profits were invested in labor products, this action of loans and deposits would be automatic and would never press upon the limits of expansion. But owing to the unequal distribution of wealth, the depositors in banks soon divide into rich and poor in about the same ratio as outside the bank circle. Banks find that loans are not paid when due, and the character of depositors changes from men who were using their deposits con- stantly to men who have no use for them. As loans are not paid and must be renewed, a vio- lent contraction in the circulation of checks will follow. This contraction of checks and the contraction of money in circulation at the same time, stops the increase in busi- ness and turns the tide of rising prices. When circulation expands on account of an increase in primary or secondary money, this expansion can only get into circulation through the daily wage market, and is communicated from this market to other property. Therefore changes in price, either up or down, must have their nev\^ measure taken by being exchanged for basis mone}^ and prices are limited in this way. To make this matter clear we will suppose our present wage rate of fifty million dollars a day will sustain our present range of prices. An accumulation of purchasing power that fails to be distributed, seeks investment in the property SAVING IN TIME THE CAUSE OF PROGRESS. 41 market and bids up the price of property without in- creasing the purchasing power of wages. The effect of such investment would be to increase the purchase power of one class of property, while the source of purchase power and the measure of it remains unchanged. But for our facility of getting into debt, there would be a quick reaction w^hen the price of one class of property rose above its true level, but the easy method of putting off payment, and of never exacting full payment, leads to a wide inequality before we have a collapse. In order to put off the redemption of this accumulating purchase power, it is necessary to offer a desirable investment, which may be done by taking a share of the profits to pay dividends upon new debts. Let us take our present circulation of money day by da}^ and follow it: We now pay out in wages fifty mil- lion dollars each w^orking day, and owing to the time we save by the use of money and machinery, this fifty mil- lion dollars a day will gain a profit of twenty per cent, or ten million dollars each day. We work one day and we call upon our volume of money to furnish fifty million -dollars to pay labor, and then we work the next day and we call for another fifty million dollars; and so continue from day to day until the money paid to labor is able to get around to the place of beginning in sufficient vol- ume to keep all of our activities going. Each day this fifty million dollars will deposit its profit, and ten million dollars in profit will thus accumu- late day by day for secondary distribution. In five days fifty million dollars will accumulate, which is equal to the total wages of one day. Now it will be clear that this credit or option will not be allowed to accumulate for twenty days, when it equals one week's work, and be 42 DISTRIBUTION. redeemed so quickly as to take the entire proceeds of labor for one week. The way in which accumulated prof- its may be redeemed by labor is to exchange them for money and call upon labor to redeem this money. This- growing surplus is intended to increase the demand for labor, and thus allow labor to share in secondary distri- bution. But if this enormous accumulation of profits may be so divided that only a small part called interest is. spent for labor and the principle is continually invested in land or like property, then the secondary distribution upon which labor depends, will fail. Ho^v Great Fortunes Grow. CHAPTER IV. FOR the purpose of illustrating the rapid accumula- tion of wealth in our own times, we will imagine a young man of most exemplary habits, of relig- ious temperament and of economy and thrift, who dreams by day and by night of becoming the richest man in the world on account of an idea. In our problem of distri- bution we have a tremendous sum of daily profits that fails to be distributed because it is in the hands of men who do not care to take the risks and chances of business and who are therefore anxious to loan this money at a small interest, or who buy property in land which is not subject to ordinary risks and loss. This sum of accumu- lating profits amounts in round numbers to ten million dollars per day, and it is this sum seeking to avoid em- ploying labor, but to so invest as to command labor, that gives us our problems. It was this pressure for investment causing an in- tense war of competition that deeply impressed our young man of dreams, and inspired him with an idea of doing away with this conflict and competition by furnishing a stable business at fixed prices and allow these competing millions to be invested in his own various undertakings. This idea of centralization and monopoly was not all a dream ; it was more of an inspiration, because the unpar- alleled forces of nature were then working to secure the same end, and were seeking to reward the man who could direct the wayward forces and bring them into line with 44 DISTRIBUTION. modern development. And at the same time we were in the midst of a wonderful introduction of machinery wherein the capital required to produce the enormous products was greatly increased, and where the relation established between all lines of industries was making competition very difficult and very dangerous. It is dreams such as these that puts a man on horseback to ride up the steps of a palace and mount upon a throne because the stars light up his pathway and the forces of the uni- verse are ready to do his bidding. In looking about to realize his dream of riches, he saw the chief obstacle to overcome was competition, and he saw how his idea of centralized ownership would hold competition in check and would prevent its ruinous interference and make it more difficult and dangerous to undertake. As the mind of this young man traveled forward seeking roads to suc- cess, he discovered that great riches was not to be ex- pected by the mere banker and money lender, as other men had calculated, but that the source of all gains was in the profits derived from industry of which the money lender received a small share. With this discovery the idea began to grow and the size of the reward began to increase, for he was to con- trol prices against competition, and this would allow him the greatest possible profit. Centralization, when it could control the market against competition, would be able to buy its raw material and labor at the low level of the outside market and would sell at a monopoly level, giving the highest price and the widest possible margin of profit. This advantage in one industry alone, where a large vol- ume of business was selling to every family, would in time concentrate all the property in the country to the men who so controlled this one industry. HOW GREAT FORTUNES GROW. 45 In looking over the industry, which our man of dreams was fast securing control, he found the annual profits, although subject to losses from competition, to be greater than twenty-four per cent, and he found money in great volume seeking men to use it at less than five per cent. The imagination of our man with an idea leaped forward to the sources of money and to methods of gaining control of other industries one at a time. He looked about him at the stress and w-aste of competition, of plants being duplicated, business being divided, and profits cut into many parts by division among warring factions. He saw four competing firms dividing* a busi- ness and profits giving them ten per cent each, where,, had his plan been in control, one business would have declared forty per cent and would have also have made great savings in expenses. He contrasted the business as he saw it, sinfully wasteful, cheating and extravagant, with the golden sunrise of his dream, where prices would be regular and waste eliminated. Looking over the one industry fast coming into his control, and dreaming of conquest as Alexander dreamed of having the world at his feet, our man with an inspired idea begins to plan for money to buy control, because the slow process of accumulation took too much time, w'hile this frightful waste was in progress. He talked his idea of centraliza- tion to the men of money he could reach, and like other great pioneers of thought, he was held to be dangerous and reckless and was forced back to depend upon his own powers and those of his near friends and associates, to whom he was something more than a mere man. The money with which to buy, the sums to be re- quired, were not to be measured in the paltry dollars to be secured by himself and friends upon paper discounted 46 DISTRIBUTION. in banks, but millions and tens of millions and untold other millions beyond would be needed to carry on the campaigns he planned. The industries and railroads to be centralized would require billions, and the yearly pro- duct of goods sold was now fast approaching ten billion dollars in manufactures alone. Consider the soul-stirring ambition to conquer and rule in this industrial world, a simple citizen, with an army of peaceful and contented labor, with artillery of gold and paper ; consider the am- bition to subjugate a world more difficult and dangerous than the campaigns of Caesar, and requiring more skill and daring, more tact and genius than Napoleon. Thinking of money, millions of money, tens of mil- lions, hundreds of millions, the imagination at last coupled the vast accumulations of profits, the millions of idle money seeking investment to his car of centraliza- tion, which was then hitched to a star. Again the imagi- nation leaped forward, but now to the fulfillment, to the accomplishment, to the artillery and ammunition and to the plans of campaign. To buy a railroad system or any branch of industry and thus secure a stable price and a certain profit meant earnings of not less than twenty-four per cent, and money in millions was to be had at six per cent or less. Bonds could be sold that would require but one-fourth the earnings if the price of the industry was not too great and the industry so secured would return eighteen per cent, and all the future gains would accrue to insiders and he would be behind the sacred altar of the inner temple. To secure one industry and reorganize it, to issue bonds enough to get a return of the purchase money, was to open up a clear path into all of the works of the enemy. This source of money once tapped, this idle money seek- HOW GREAT FORTUNES GROW. 47 ing investment, would provide an unfailing stream to accomplish his purpose and at the same time relieve him from this same money seeking to compete and destroy his profits. He was now about to turn the flank of the enemy and to strike in front and to cut off retreat in the rear. To conquer this world was now but a question of moving forward and to establish breastworks to repel the attacks of the increasing army of opposition. But the battle was not to be won in a few years with- out fierce opposition from this same competition he was seeking to put under control. The one industry in hand W'as now remarkably successful, and was attracting em- barrassing notice, and as this industry was to furnish the base of supplies and the road for retreat, it must be de- fended at all hazard. But now this success began to appear phenomenal and this new idea began to attract •disagreeable attention from men who were without the soul-inspiring idea of centralization, but who were for w^ar, for competition, for a seat among the mighty or for a fight. And his success, instead of inspiring other men to follow his example, created an army in opposition to force him to return to the old ways or to be destroyed. But like other master minds of rare courage and genius, he had calculated with his host and never faltered nor was he ever dismayed, but met the rising tide of vili- fication, abuse and hate and bitter war without a thought of changing, as unfaltering as the stars in their courses. His plan of greater conquest was soon moving forward on the strongest outposts of the enemy, scorning the weak places, but seeking the grounds of greatest advan- tage and security. One industry secured, bonds issued and sold, and the money received not only paid for the property, but gave a considerable surplus. And in this 48 DISTRIBUTION. way the idea advanced from one industry to another^ from one railroad to a system of railroads, and is now moving forward to a railway kingdom. And the idea has now its host of new millionaire imitators who have reaped a golden harvest as camp followers to the main army. That this is not a fanciful picture is made evident when we call to mind the career of one man who, between young manhood and before old age, has become the most powerful man of wealth in the world. Moved by the force of this idea of centralization, he, with a few fol- lowers and associates, now control and dominate the industries and transportation of the United States, and they own billions of the total wealth of the country. From this commanding position, secured in less than a generation, consider a moment the increasing size of these rapidly increasing millions and their increasing power of absorption. This conquest of industry was based upon two principles, one of which was rightly estimated ta be of priceless benefit to mankind, while the other is a fatal error. To buy at the level established by competition and to sell at the level established by monopoly, was to enjoy the greatest industrial power upon earth. This difference in levels, in one branch of industry alone, would in time force all other property into the hands of men who held this advantage. The days to pass before supreme con- trol was to be secured, were shortened as one industry after another came under the sway of this remarkable "System." Whether or not there was the foresight here described in this conquest for power, nevertheless the laws of economic forces determined that success must follow these lines and events opened the paths when fore- HOW GREAT FORTUNES GROW. 49 sight failed. While it was rightly estimated that prices must be held uniform and stable and competition must be kept under control, the true source of the vast sums of idle money seeking investment was overlooked and the future consequence of this continued surplus will wreck this ambitious structure unless distribution is corrected. The first industry under control was one in which the product was most widely demanded, and was of in- creasing usefulness; the raw material was so difficult to estimate that the control of the manufacture could so limit the price of raw material as to keep the supply level with the growing demand. Since the product of this first industry was sold in every family, however poor, the ultimate source of the market was thus demonstrated to arise from the w^ages of the people, and this fact must have been impressed upon the minds of these men. For this reason w^e find they have ever been consistent advo- cates of higher w^ages, and their example has changed the entire treatment of labor in the United States. Under the theories of competition it was held that the greatest advantage lay w^ith the man controlling the cheapest labor, and the pity of it w-as that brutality was everywhere encouraged and talent overlooked. In times past, the most successful overseer was thought to be the man who could cut wages to the lowest notch and drive men to the last ditch. But now volume and skill and organization are recognized as the requirements of pro- duction, and a high wage rate is fast becoming to be the necessary condition for a successful business. There are reasons to believe these men estimated that the millions seeking investment were derived from the savings of the people, which they would invest judiciously for them. If we now add a religious temperament to this conquering 50 DISTRIBUTION. ambition to obtain control of the industrial world, we may picture to ourselves the benevolent feudalism they contemplate when their plans are at last fulfilled. All the industries of the country are to be centralized under one board of control, and labor is to be paid what they consider a high rate of wages in order to sustain the market. Labor is to have plenty to eat and wear, with free churches, free libraries, free parks, free baths, free music, because he will have no opportunity of becom- ing an independent owner of anything. The one great mistake in all this calculation is that the source of the idle millions seeking investment is to be found in the pinching economy of the wage earners. The truth was overlooked that this vast surplus value is the gain arising from the continual progress of civilization which has failed in distribution, and such failure has kept the mass of the people from getting the benefits of civilization. As competition is being super- seded in one industry after another, this difference in levels between prices will diminish and at the same time the necessity for tremendous loans will also have passed. But prices must in some way be sustained by wages, and surplus value must in some way be prevented from again undoing the great work, and the only way open is for this surplus value to be properly distributed in wages so that the mass of the people may buy these centralized in- dustries and enjoy the income from them. So long as borrowed millions are being spent to enlarge existing facilities, to increase machinery, and plant, to build more railways, to add tracks, rolling stocks and equipment, there is a large part of the surplus re- turned to the wage fund, large enough to keep labor at work at standard wages, when his own wages would HOW GREAT FORTUNES GROW. 51 have failed to do so. But we have a succession of panics wherein this partial failure to distribute overtakes pros- perity and brings on labor troubles and hard times. While one group of men were thus engaged in getting control of industries by offering an investment for idle money, they were subject to competition in another form that could absorb all the idle value, and this other form of investment did get five times as much of this value as did the centralizing financiers. Financiers could take a part of the profits with which to pay interest on bonds, and such part could only be taken after ground rent had first been taken. Ground rent increased with every advance in civilization, and offered a better investment for the idle millions than some of the bonds. In all this advance in centralization to date, the tremendous balance of benefits has been on the side of the general public, in higher wages, in better corporation service and in a much better standard of liv- ing. But while a few billions of wealth were thus con- centrating to the owners of our industrial system, the increasing value of land was taking its tens of billions, rolling up a mountain of iniquity, increasing crime, sui- cide and insanity, growing up to destroy civilization un- less we apply a remedy. Property in land follows the same line in securing these idle millions that is followed by corporations except that no bonds are required be- cause the debt power is already in existence in the power to collect rent. The increasing annual rent demanded by owners of land furnished the basis upon which land sold for a con- stantly increasing price, and every time the rate of in- 52 DISTRIBUTION. terest declined ten per cent, the total value of land advanced, so as to absorb a ten per cent gain in its price. When the price of land advances under a stimulation of buying, the drain upon the money becomes so great as to check all other demands, and prices fall, and a panic and hard times follow. The Part Prices Play m DistriDution. CHAPTER V. AS OUR increasing" population spreads over new territory, and over wider fields, it can only do so as prices rise or as wages fall owing to the limit established by the value of the land. As we go ahead we need increasing quantities of all kinds of sup- plies and we must use thinner and poorer veins of metals and mineral, we must cultivate and improve under greater costs farther from the markets. And unless prices rise or wages fall, we cannot develop this more difficult territory and population congests in slums and poverty grows. This dependence upon higher prices may be well illustrated by the present boom in the copper industry, the rise in the price of copper from 14 to 24 cents a pound causes a flow of population and capital over a very wide teritory, to develop mines that will pay wages and profits with copper selling at 24 cents a pound, that cannot be developed with copper selling at 14 cents. Conversely when the price of copper falls on account of the present rise in the price of land, there will follow an adverse movement in which capital in- vested and labor employed near the margin of profit must lose, and such enterprise must be abandoned. But for our advances in science whereby new gains in purchasing power are being added to wages we would be held to a dead level of poverty and misery by this limit and could only get room for more population by 54 DISTRIBUTION. -reducing wages or profits. We cannot extend business over new fields and open new mines and forests indefi- nitely and when we consider the extent of territory we have explored within fifty years we may see that the tide is now turning back upon us, our own people are cross- ing our borders into Canada in the hope of finding an independent existence in a new territory. When the value of land sets a limit to all other prices we advance in civilization by moving on new lands or by putting new machinery at work, or by new discoveries and in- ventions. New advances in science increase the gains or pro- fits of industry and we increase our standard of living by the new occupations and higher wages we pay. But the land market will follow every season of prosperity by an advance in price of land and when the price of land gains its share of the new development a new limit is fixed which prevents any general or permanent rise in wages or profits. The discussion of theories about money has led to much confusion regarding prices because the substance and solid foundation of prices is not distinguished from the mere name of dollars and cents. When we say for example that copper metal sells for twenty-four cents a pound we are giving a name, 24 cents, to the value of a pound of copper. We may increase the volume of money and change this name of copper from twenty- four to thirty cents a pound but the value of copper will not change. What we are concerned about is the rela- tion which a price of one commodity bears to the price of another commodity and this relation is determnied by the limit to the total price of all property. When a given volume of money once establishes a given series THE PART PRICES PLAY. 55 of names or level of prices it does so because the value of money sets a limit to the total price, and the laws of distribution determine the relation which a price of one kind must bear to a price of another kind. We are concerned only with the fact that a level or limit of all prices is determined by natural laws and the proper distribution of wealth depends upon an equal relation between prices and does not depend upon the volume of money by which a level is established. With- out any change in the general level of prices we have great changes inside this limit which produces our in- equalities of wealth. The price of land operates to dis- turb the natural relations between all other prices because of the limit to which all prices must confonn, and when land sells for a price it reduces the quantity of value to be distributed for other prices. These differences of prices inside the limit gave us our margins of profit and when land sells for a price it reduces other prices and reduces the margin of profit and thus sets a new limit beyond which development cannot proceed. In order to arrive at some basis for comparing prices and recording changes inside the natural limits and to avoid the confusion arising from the volume of money we have a standard for comparing the prices of one year with prices of other years known as Dun's Index Figure. To arrive at a basis, the prices of a considerable line of goods and building material are taken and divided into classes and this level or aver- age is given an index number 100. When in any given year, the prices of any class of goods rise or fall below this basis the percentage will at once be shown by the change in the index number for that year. We find for example that the index number 56 DISTRIBUTION. for all commodities and building material for the year 1897 was 72.4, while for the year 1906, we may safely estimate the index number at 100 as it was 98.3 in 1905. This indicates a general rise in the prices of consumers' goods of 27 y2 points or about 35 per cent. In 1897 when business and wages touched bottom we began a new advance and a new period of prosperity, which was brought about by the reinvestment of profits in new business. Prices advanced from the low level of 72.4 in 1897 to 102 in 1903, which was the crest of the wave, then real estate became active and turned the tide of in- vestment away from the general market. Suppose that we begin an illustration with the year 1897, that we credit a gain in prices of ten per cent, for 1898 upon a business of twelve billion dollars for that year. This advance in prices of ten per cent, meant an increase of more than one billion in wages for the year 1898, and business increased from twelve to thirteen and a quarter billion dollars. In 1899 the same gain of 10 per cent, or more would add one and one half billions to the wage fund, and our business would rise to fifteen billions. In 1900 the gain would add another billion and a half dollars to the total and by the end of 1902 we would be doing a business of twenty billion dollars a year in consumers' goods. The advance of the various items was far from being regular, pig-iron for example sold approximately nine million tons at fourteen dollars a ton in 1897, and twenty-five million tons at twenty-four dollars a ton in 1906, an advance of seventy per cent, in price and one hundred and sixty per cent, in quantity. Copper metal advanced from eleven cents to twenty-four cents, about one hundred and twenty per cent. THE PART PRICES PLAY. 57 In general classes the advances as given by Dun's figures are as follows : Breadstuffs, eighty per cent., meats, fifteen per cent., dairy and garden, fifty per cent., clothing thirty per cent. This difference in the various levels of advance indicates the degrees of competition and the inequality in the distribution. Had the enor- mous profits which were reaped from this advance been returned to the wage fund after 1903, as they were in the years 1897 to 1903. the rise in wages would have been very rapid, because all the labor was then called to work and competition among laborers to obtain work was changing to competition among employers to obtain men. Altho the level of land values in 1897 established a fixed limit beyond which wages and profits could not be safely invested this limit was now ready for a wide ad- vance, which was to give landowners eight or ten billion dollars of an increase in company with the advance in other prices. The low prices of 1897 followed the panic of 1893, the weak property holders were sold out, their lands and lots were foreclosed and this caused a fall from the high prices for land in 1893, the public was sick from investments in land. When profits accumu- lated in 1897 they had no other outlet except to employ labor and return to the channels of trade. Owing to the fact that there was no market for real estate at that time there was a plethora of money, because the sums before used in the land market were idle and were seek- ing to employ labor. As new profits were used to increase the employ- ment of labor there was an advance of industry over the fields that before had to be abandoned on account of falling prices. Higher prices can only be propagated 58 DISTRIBUTION. through the payment of profits in new wages. Hence land had no power to advance until the advance had been general over the entire field, and until the higher prices for goods required capital and labor to bid higher prices for land. When all building material had thus advanced and profits were rapidly increasing there was a rush to extend business so as to gather in the excep- tional high profits. Land remaining stationary in price while other prices were advancing soon began to attract attention as offering a good investment. During this season of prosperity a new demand for buildings of all kinds arose, the old buildings on cheaper lands were command- ing higher rents and were selling for higher prices. If land failed to advance there was a large margin of profit in lots on which to build to supply the demand for more buildings. It is necessary that buildings sell for higher prices if wages are to advance to new levels, because the price of a building limits the wages we may pay to labor for doing the work. But when capital seeks to get land for building or for mining or to cultivate, he must bid for the land, and in so doing he is forced to pay all the gain to landowners by paying higher prices for land. The rise in the price of all commodities and the great increase in the quantity sold gave enormous pro- fits which had no field open to employ more labor after 1903, and were invested in land, or in stocks and bonds. The change in the current of demand from the labor to the land market set the brakes on the car of progress. This is only another method of saying that the distribu- tion of profits taken from the enormous volume of busi- ness ceased, and the accumulation and congestion of THE PART PRICES PLAY. 59 bank deposits was to take their place. Altho wages had increased from twenty-five million dollars a day in 1897 to fifty million dollars a day in 1903, there was no increased distribution of wealth to labor because the increase in wages was largely an increase in number of men and of hours of work, and was not increase in the wages to each laborer. It is true there was a twenty per cent, general increase in the rate but it was more than offset by the forty per cent, advance in prices, and wages were farther reduced by the advance in rents fol- lowing the year 1901. When the general advance in the market is checked by a rise in the price of land, and when the daily profits of business fail to be redistributed, they will pile up as idle bank deposits seeking investment. However the individual depositor may invest his gains they are not distributed, but remain as undigested bank deposits con- centrating to fewer individuals who understand the game. These deposits may be used over and over again to bid up prices of securities of all kinds, and to bid up prices of land until the limit of expansion is reached, when the bubble will burst with a panic. During a period of higher prices for bonds and stocks and lands the important change that is taking place in banking is the change from a deposit payable on demand to a debt payable in the future. The wise investor having experience knows that a collapse is inevitable, hence, he seeks what he calls a safe invest- ment and safety is only to be secured by changing the character of the credit he holds against labor. It is as certain as fate that ten million dollars profit each day failing to be distributed cannot continue to accumulate and be redeemed on demand because the power to re- 60 DISTPJBUTION. deem is already fixed at the prevailing wage limit. It follows, therefore, that a point is soon to be reached where a collapse must follow, and the men who have succeeded in changing demand credits into long time debts well secured, are able to escape the storm. When you read statistics of the growing billions of bank deposits in prosperous times you will also read that the bank loans these deposits above the required reserve as rapidly as they accumulate. The money accumulating from the great volume of business following 1902 which could not be distributed must soon begin to clog the market as it grows greater day by day without an outlet except to expand the bubble of speculation and of wild extravagance. When money is merely taken from a bank by one man to buy property it is returned again by the man selling, but when the deposits grow beyond measure and reason, when billions of dollars worth of new land value is added to billions of undigested de- posits the banks become top heavy, and we are riding prosperity for a fall. Deposits can only be redeemed in one way and that way is to pay them off with money and they cannot be |)aid faster than the money which has been loaned can be returned. The growth of deposits in normal times requires but one dollar of money, held as a reserve, for every ten dollars held as a deposit, and this is easily accomplished while deposits are increasing. When a banker is taking in more money over his counter each day than he pays out he accumulates cash which he reduces by loaning money. But the situation changes very rapidly when the banker is called upon to pay out more money each day than he takes in and must call in his loans. And this situation occurs when the market reaches its highest prices and turns backward. THE PART PRICES PLAY. 61 Money comes into the bank rapidly because prices are rising, but when prices stop rising the tide will stand still, and when prices turn and begin to fall then the same elements that swelled deposits will operate to con- tract them. We then find we are hemmed by walls of land value which will not shrink or release their debt. The billions of deposits payable on demand in cash are loaned out and the bank depends upon calling in these loans to keep enough money on hand to meet its de- mands. But the borrower who w^as making a profit when prices were rising is as surely making a loss when prices are falling and altho a man may be willing to sacrifice he cannot find the money with which to pay. It is not difiicult to understand the present stringency of money, for at this time, January 1907, the deposits in all our financial institutions aggregate fifteen billion dol- lars and require one-half the total supply of money to be held as a reserve upon a basis of but one dollar in cash for each ten dollars of demand liability. Money outside the bank vaults with which to pay becomes very scarce and will become more so as de- posits are drawn down, as each bank in seeking to pro- tect itself contracts the currency by trying to keep all the money it gets to strengthen its reserve. The crash comes when the top heavy structure must fall because loans cannot be paid and depositors demand money which the debtor has no method of getting. }|« :j« :jj si« Ht Development spreading in all directions during sea- sons of prosperity pushes out into more and more haz- ardous schemes as the volume of gains increase. We build upon the thinnest ice around the longest diameter on the outside of every business. In every city and vil- 62 DISTRIBUTION. lage you will find residences, business blocks and office buildings pushing ahead of any possible margin of profit unless the good seasons continue. The industrious builder is well aware of this fact, but hopes to sell out and allow another to suffer the inevitable loss. As it is with the more permanent structures so is it also in other business lines, from department stores in the center of a city to the Delicatessen in the suburbs there is a wide expansion of the bubble of prosperity. When prices fall and trade diminishes these thou- sands of incipient enterprises go down and carry others with them. Laborers in large numbers are thrown out of work and general demoralization takes place. In all the literature of prices, including Dun's index, the price of land is never taken into account, and one must be amazed at the blindness which calculates the effects of prices and overlooks the price of land. It is the rise and fall in the price of land that is responsible not only for the rises and declines in the general market, but is also responsible for other wide changes that have never been explained. In our present season of prosperity, for example, we have two conspicuous examples of very high prices out of all relation to the general rise; namely, Pig Iron and Copper. To simplify matters we need but to state that there is a natural price for everything to which price belongs, this natural price is as high as the laws of nature will permit, no combination of capital and no organization of labor can prevail against this law and get a penny more than the natural price. Price is merely a statement of the equal relations of natural forces of distribution. The total purchase power bids for the total supply and THE PART PRICES PLAY. 63 makes the total price and this is the highest possible price. We cannot have prices above this level because our civilization has not advanced beyond its own plane, but since we come from naked savages who roamed the plains and forests, we may return to naked savages again. So, therefore, we may have prices below the normal but never above it and all the decline below the true level is an indication that the savage existence is being forced upon unwilling citizens by taking their purchase power away from them and by investing it in debts for which they are held as slaves to pay. The most cursory examination will prove that the monopoly price is the only just price for all concerned, and brings about the widest possible economy of forces. What we call competition should now have another name and be known as the social disease of the unem- ployed; monopoly should be given the name selected by Herbert Spencer, and be called relative competition. If land could not be bought and sold and if ground rent was taken for taxation, the entire organization of capi- tal to obtain higher prices and of labor to obtain higher wages would be useless. But when large volumes of purchase power are be- ing taken from the market by property in land a rea- sonable self defense will require capitalists and laborers to organize to prevent it. This organization of capital and labor to resist a loss makes the unorganized classes so much weaker and the concentration of wealth so much more rapid. The way out is not to return to barbarism by trying to enforce a warfare of competition, but to lift all prices to the natural monopoly level by stopping all interference. 64 DISTRIBUTION. When we have succeeded in doing away with the price of land and have removed this pressure from the market all prices will rise to the natural level and there will be no unfair advantage in great organizations of capital. Organizations of capital and labor have now an advantage because of the difference in levels between monopoly and competitive prices. We can wipe out this difference just as effectually by moving to the upper level of monopoly as we could if it were possible to pull enter- prise down to the lower level of competition. The Riddle of the Sphinx. CHAPTER SIX. IT HAS ever been a great mystery to many students as to what becomes of the power of modern machin- ery, because there is a great volume of energy lost in some strange manner. Modern labor has its power increased many times ; the farmer today has eight hun- dred times the power of the Middle Ages cultivator and in other lines there has been a similar gain. On this ac- count men have dreamed of a world devoid of all poverty and filled with peace and plenty. The mass of laborers, however, are but slightly better provided than the men of the Middle Ages and they Avork more hours continuously than men ever worked before. Our machinery produces other machines, we build railways and produce great quantities of goods but there is somewhere a tremendous loss and a tremendous dis- appointment because the mass of the people are not re- lieved to any considerable extent from poverty, anxiety and crime. In fact, this contrast and this failure of modern society to benefit each of us as we feel we should be benefited is responsible for a great increase in vice, crime, insanity and suicide. The hopeless classes grow, our new methods make them hopeless and dependent and for some mysterious reason there is a remarkable failure in benefits. This failure is one of distribution. But when we consider the material things of our world we find they are being consumed by the people, that QQ DISTRIBUTION. machinery has enormously increased the total of con- sumable goods and that these same goods are enjoyed by the mass of the people. We turn to fixed property and although we find it concentrating to a few owners yet the owners are so limited by natural laws and the property is so governed that it must work for the benefit of the masses or not work at all. Thus, while railways, telephones and tele- graphs, factories and buildings are becoming the prop- erty of but a few men, we, also, realize that in so much as these same properties are put to use they must become a benefit to mankind at large. Again we face the riddle of the Sphinx as we admit these facts on one side and as we know there is a great loss going on continually which we seek to uncover on the other side. This machinery is all at work in prosperous times, but its product in some strange way fails to balance. We have fifty men of machinery to assist each human work- man and we realize there is somewhere a great loss be- cause this machinery at work fails to register over one- half of its benefits. Is it possible this machinery produces credits on paper instead of tangible results, that these credits pile up in prosperous times, making higher prices for land, and great volumes of new debts which the suc- ceeding panic wipes out, and that after a panic this beneficent machinery is set to work again producing more credits and debts and is only allowed to produce enough goods and tangible property to float credits and to pay interest on debts and supply human subsistence? If this is the true status of the case we get a solution of our riddle, we see men run the machinery of production wholly in the interest of bank accounts, we see this ma- chinery is turned to earning money which is allowed to THE RIDDLE OF THE SPHINX. 67 pile up in banks until the inequality of purchasing power causes a panic and the top-heavy credits are wiped out and then we begin the same crazy and idiotic proceeding over again. According to the laws of distribution the machinery of production must use money first, must first create a purchasing power to be distributed so the people may buy the goods and property created. It is not the intention of the law to produce pur- chasing power in the form of credits merely to pile them up, such a process must defeat itself, and no more credits can be used than can be redeemed by the money paid out in wages. In any prosperous season we will produce a net undistributed surplus fund of about ten million dollars a day, this fund becomes a bank account and is used to buy land or buy other debts. Since property in land is not subject to continual production and consump- tion like coal it cannot yield up its purchasing power nor can buying land distribute any of this purchase power to labor. Every season of general prosperity follows a rise in prices of commodities because higher prices promote a wider diffusion of wealth. Every season of adversity is brought about by falling prices or commodities and indi- cates a failure in distributing the gains of the preceding prosperity — thus compelling a new division of property among owners when those who are strong financially gain the property of the weak. This condition does not indicate the survival of the fittest, which could only be determined in a fair field with no favors, but indicates a failure in our general system by which wealth con- centrates when it should be diffused. 68 DISTRIBUTION. Under such conditions, and under such a system, the advantage is on the side of the cunning, of chicanery and graft, as it is in every age of tyranny and oppression. To enable the reader to understand distribution as a science separate and distinct from production he must first understand that prices of all kinds are the particu- lar province of the laws of distribution. When a season of general prosperity is being ushered in by a tide of rising prices we see the effect of a more generous distri- bution of new w^ealth. To see this machinery of dis- tribution in its broad lines wc must see how money cir- culates to pay wages, for it is by the circulation of money that wealth has its beginning and starts distributing. A given circulation of money establishes a given level of wages and whether it be in America, China or Japan, the principles of distribution are identical and the laws by which the level changes are universal. To get this matter clearly in mind the reader must separate primary from secondary distribution. Wealth is primarily distributed as wages and growing out of these wages as they are spent profits will arise and will furnish a fund for secondary distribution. Wages, for example, may continue at a relatively fixed sum for a number of years and this wage fund will determine the volume of money for primary distribution. And with- out any apparent disturbance in this labor market there may be going on a very great and very unequal concen- tration of wealth from secondary distribution, because the profits taken daily from wages fail to return to cir- culation. Labor may thus be paid the ruling wages with full employment, and may be producing enormous totals of fixed property in addition to the goods consumed, yet THE RIDDLE OF THE SPHINX. 69 wealth will concentrate ^•erv unequally because the valu- able income bearing property is unjustly distributed to a few men outside the ranks of labor. Our enormous power of machinery and labor cre- ates a growing surplus, which allows billions of dollars to be taken away from the general market while we work on, unconscious and undisturbed. It is on account of our facility in making debts that we may thus continue to work while distribution is un- equal, the time of payment is set ahead and the sums intended to increase wages are used to buy a debt and put a perpetual service upon labor. The financial legerdemain by which the credits pro- duced by labor have been turned to debts against him arises from our failure to adjust distribution to new development. The increase of machinery, of railways and factories changes the time between production and distribution; much of our work now requires great ser- vices from labor for which complete payment is deferred. This time arising between rendering a service and its ultimate payment is bridged over by credit which is sup- plied by the volume of money. When we consider so simple an example as the production of shoes, we find credit from labor starting with the cattle on the plains, going over railroads to packing houses in the cities and then to tanneries and leather companies, to manufacturer and merchant and finally to consumer. The shoes selling to the consumer pay the accumulated bills and the money must go back to each one who in any way helped in this shoe industry. This complete process occupies considerable time for one circuit and we cannot wait for one circuit to be complete before we begin another, and so the capital to pay this 70 DISTRIBUTION. expense for one day must be increased in amount accord- ing to the number of days required for a regular circuit of receipts and expenses to balance. By paying as we go instead of waiting, we use the money much more economically by using it over and over again. The money paid out all along the line is put back into circu- lation by banks and thus the money paid for labor, where shoe making begins, gets back and is ready to buy from the retailer and even up the demand and supply. This example will show how modern industry re- quires large sums of money and credit depending upon the daily wage rate. Our roundabout methods of pro- duction and distribution require time, and we must have a volume of money sufficient to pay wages at the stan- dard rates for as many days as may be required to com- plete the circuit. For example we now pay in round numbers fifty million dollars a day in wages and if twenty days are necessary and we pay cash it would re- quire one thousand million dollars of our circulation in the labor market alone. In addition to the labor market we have the market for fixed property, the value of which is nearly one hundred billion dollars, and this property is in constant process of distribution, either spreading among more owners- or concentrating to fewer owners. This property market will consume or take up, a volume of currency in proportion to the sums involved in this trade, which is to say that the entire circulation of a country will divide into its channels and that prices will be made according to this volume of money in circu- lation. The introduction of railways and great factories had the effect of widening the paths between demand and supply. It is quite simple and easy to understand THE RIDDLE OF THE SPHINX. 71 that when laborers are only producing simple goods they buy and sell to, and from, each other, but now they buy and sell in the market. Wages in the hands of labor is the shuttle in the loom passing forward and back weav- ing a complete fabric and the variety of occupations and variety of products do not change this principle. This continued action of production and distribution is called supply and demand and when we look upon simple laborers trading products with each other, it is easy to tell how the failure of one to buy prevents the other from selling. But when w^e introduce entirely new classes of products like great engines and steam boilers, trip hammers, railways, telephone systems, and the like, we change the paths between demand and supply and require more time between production and distribution, this change in time gives rise to difficulties in distri- bution. Our great trip hammers, steam boilers, railways and industries of all kinds are a part of the daily product of labor and must become a part of daily distribution also, if we are ever to secure justice and equality. The total effect of labor at work each day must be valued and be distributed so as to pay them and become a cause for their work the next day. Our great failure in distribu- tion arises on this account because the mass of laborers get no share of any kind in the distribution of the fixed and income property of the country. Billions of dollars fail to return to the wage fund where laborers may get this money with which to buy their share of wealth and these billions that lodge and clog the markets are borrowed and thus used to convey ownership to the men who deal in debts. 72 DISTRIBUTION. When a man builds a house he cannot do so him- self in one day and as a result he must get credit for all the extra days work of building the house over the one day or few da3^s he himself might engage in it. Although the man pays money for the house as the work is being done the money so paid out is merely a credit extended by society for the purpose of increasing our social activity. Before the house can be finally equalized in distri- bution all such credits must have traveled around many circles so as to equalize service among laborers. To make this matter clear to the reader we will take an ordinary building and loan society as first organ- ized in this country. A hundred men for example, desire houses of a hun- dred different varieties, having a hundred different ca- pacities to pay for them. Confining our illustration to this one hundred men they must depend upon their sur- plus earnings to establish a credit fund with which to build, and the old practice was to offer this credit fund to the highest bidder for the money with which to build the first house. Now manifestly the problem of distribution would be plain, as the first man to build must continue to pay to the others until all his debt has been paid, at which time the last man will have acquired a house for con- siderably less than its cost. The circle of distribution and the time required to balance all the credits in this example is not difficult to calculate. Each man in his turn will not only be re- quired to earn his own house by his own labor but he will also pay for the advantage in time, pay for getting a house before others by paying the interest upon the loan. THE RIDDLE OF THE SPHINX. 73 This is a good example of a just and natural dis- tribution of wealth in a small association of house builders. But suppose instead of securing houses in this com- mon way of earning them a hundred men organize a wild cat oil company and sell enough bogus stock to build their houses and pay for them. The reader will readily admit that this is simply a legal way of robbing unsuspecting people of their sav- ings and will have no difficulty in tracing the source of such an unequal distribution of wealth. But to carry the example a step farther, suppose this association of one hundred men buys a plot of land, divides it into lots and sell the lots for enough profit to pay for a house for each. In such a case the tedious process of earning the house and of waiting, and of paying interest is dispensed with. But can houses be built and be thus given away unless some one earns the money and pays the principal and interest while other men wait? When the hundred men sell lots for money they acquire the credit to build houses from the sale of lots, which otherwise they must earn. This credit they change into a debt in the value of the lots they sell, but it is a different debt than the one men contract who borrow directly from each other and wdio must return the money so borrowed or surrender the house to the association. The value of the land becomes a fixed and perma- nent debt upon the total earning power of all laborers, which can never be paid but which can be exchanged in the real estate market for money by merely selling the land to a man who wants to buv such a debt. 74 DISTRIBUTION. The inequality of distribution in such case is much more difficult to locate because no particular man owes the debt to another particular man, but only the poor, the downtrodden and defenseless are thus chained to slavery by debts other men contract for their own bene- fit and for which the poor are reduced to slavery. Capitalists are supposed to furnish the money with which our great enterprises are carried on, but capital- ists cannot furnish a dollar unless they are also laborers and then only so much as they may earn. Capitalists sell securities and thus secure the floating and idle purchasing power, and they invest it for its owners but retain more than half of the total for them- selves. In order that a railway or factory may get into the channels of distribution it must be valued on the basis of other values and it should be sold directly to purchasers as commodities are sold. It is supposed that railways are built from the savings of the people, that there is a direct connection between the production and distribution of them and that the debts are evidence of ownership among workmen. But we do not build railways in such manner and could not because workm.en are not paid enough to buy them after they build them. The prosperous seasons for building always follow fast upon hard times when peo- ple have had no opportunity to save, our building periods are short and brilliant. When we are having a pros- perous season we spend billions of dollars that come from the difference between rising prices and stationary wages. We do a normal business of twenty billion dol- lars a year in dull times and when prices rise a few men take off this increase as a profit. Thus starting with a business of twenty billion dol- lars a year a ten per cent, increase will scatter a bonus THE RIDDLE OF THE SPHINX. 75 of two billion dollars and this is not distributed to the people so they may buy or build homes but becomes idle capital in the hands of the people who have no use for the money and who seek to invest it. These extra billions get into the channel of trade by being loaned, but even in so doing they expand the growing volume of business from twenty to thirty billion dollars and because wages remain practically stationary there w'ill be a growling profit accumulate of from three to five billion dollars each year. These billions must seek investment and they can do so only by buying property or by being loaned. If the property so bought is of a kind produced by labor there could be no accumu- lation of idle money because every dollar of profit rein- vested in the services of labor becomes a part of the wage fund and is broken up and distributed. The owners of such accumulations do not need the services of labor at the time but want future service and in order to get it they buy bonds or property in land whose value keeps increasing. The price of land is now more than fifty billions of dollars and represents a purchase powxr earned by labor but turned into a debt against him and because of this debt his wages are held down and the gains in wealth are taken from him and are being continually added to the principal of the debt. Land commands a price in the general market only as it gives its owner the power to take a share of the daily earnings of labor, as the owner may interfere with distribution. The owner refuses to allow men to dig unless they pay a royalty to be taken from the price of the product, or he has a location w^herein he can take all time saved as rent for the use of his land. 76 DISTRIBUTION. On account of this A'ariation in the amount any single owner may take, the selHng price of land will vary greatly being but a few cents an acre for wild mountain land and twenty million dollars an acre in New York City. Bear in mind that property in land is not an evil on account of the sums it takes from labor as rent, but its evil is measured by its selling price which represents the amount of purchasing power that fails to be dis- tributed and which should have become a part of the wage fund. The reason the price of land introduces a new sys- tem of slavery is because the market for land absorbs the money that should go to labor as his share of the advances made by civilization. This property offers an investment for all these accumulations and by so doing it fixes a limit to the sums distributed to labor as wages and a limit to the sums distributed as capital. It is this power to drain away all the purchasing power from la- bor except enough to enable him to live and to pay inter- est, taxes, and rents that establishes slavery among them. The essence of slavery is not found in owning a man and in flogging him to worl^ for you, but in own- ing him so that all his gains above his living will be yours. And when a system will enable the owner to enslave men unconsciously and can fasten all manner of taxes and other charges upon the shoulders of such of the slaves as are yet earning a decent living, we have a system of fiendish and refined torture. A system where men are driven by the fear of poverty, by the lash of public opinion, and the scorn of their own family and friends as they see the deep gulfs of misery under their feet. The Part Money Plays m Distribution. CHAPTER SEVEN. PICTURE the millions of tons of coal and iron and other metals and minerals and the tremendous totals of farm products all in process of moving to their respective places to be consumed. And again picture that as each ton or bushel moves along a square on this checker board, another ton or bushel pushes into the vacant place. In consumable goods alone we have a vast total of property ever on the wing, and labor must furnish this supply as a credit so as to carry on our modern system of production and distribution. Consider again that labor must be paid subsistence every day and that these credits are gains above sub- sistence which he has not received as wages and for the benefit of which he pays a profit. Consider again that this moving volume of credit establishes thousands of paths where the ends meet and where each credit is being continually redeemed in the retail market by the con- sumers. In addition to this moving volume of consum- ers' goods of every description there is also a tremendous amount of fixed property in buildings, railways and machinery to assist this process which is also a credit advanced by labor over and above subsistence. This wealth is all in process of being consumed and its time of life varies greatly and it must all be paid for in money. The reason we have money in society is be- cause labor must advance credits which cannot be paid 78 DISTRIBUTION. directly and at once, but must be paid indirectly and by many redistributions. We must have a volume of money great enough to carry these credits, and to enable us to pay labor from the beginning of a product through all its wanderings until it is sold to the consumer and thus balances the account. And moreover the volume of money must be large enough to sustain this credit for as many days as it takes the entire volume to make a complete circuit so the money may be used over again. We require a volume of money sufficient to pick up and carry all the labor credits represented by goods mov- ing to markets to be consumed and we need an additional volume to carry the credits required to build railroads and other property until the ownership in them is set- tled and distributed. Although we thus need a consid- erable volume of money yet these same needs are abso- lutely limited, and to issue more money than we need becomes an intereference. Money must be valuable be- fore it is useful, its value must be more stable than any other value and it must renew its value at its source con- tinually. We are thus limited in the volume of money and credit by its necessary return to labor to be redeemed by a given time at work. This fixity in the volume of money gives rise to the secondary money of banks as a more flexible medium of credit, a more liquid currency that comes and goes in greater volume and is issued and redeemed without interfering with the value of primary money, but which must be redeemed in primary money on demand in order to be valuable. Prices are made by the volume of primary money that is paid out every day in wages because this payment measures the purchasing power which determines all prices. The price of fixed property is maintained by a volume of money that circu- THE PART MONEY PLAYS IN DISTRIBUTION. 79 lates for the purpose of exchanging and distributing this kind of property, but all such prices must conform to the basis established by a day's pay for labor. It is the spending of wages that makes prices, and you cannot have a lower price and the same spending volume at one and the same time, this is to say there can not be low prices for goods and high wages at the same time. When we now pay fifty million dollars a day in wages we do so only because fifty million dollars a day is being spent for goods. This does not mean that every laborer spends all the money that he receives each day, but he may save a larger part of it provided the same sum is put into the market by new construction at other places. When ten million dollars accumulate each day as profit from a business of fifty million dollars a day this profit is received as so many dollars in money, and if this money was held out of circulation business would soon come to grief, therefore we have developed banking. With ten million dollars of credit accumulating in banks each day it soon becomes an alarming sum which must be distributed by a secondary process if the primary process of working every day is to continue. This sum of millions failing to advance wages as prices of goods advance will not remain idle money but will seek some outlet so as to secure some share of profits. To get into the channels of profit sharing surplus money must com- pete with other industries and thus increase the hazard of business and greatly reduce profits by dividing the gains among competing companies, or it must buy land at in- creasing prices. This sum of ten million dollars a day surplus will grow to a billion in a hundred days and to three billion in a year. 80 DISTRIBUTION. To enter into competition is to begin a war of de- struction, to stop accumulating profits, to reduce prices over the entire market and to force wages to the lowest point of subsistence. The problem of preventing this competition resolved itself into one of unequal distribu- tion by dividing the surplus into interest and principal for new debts and selling securities to take up and con- centrate the growing wealth. If industries can be so controlled that this idle money cannot compete and be wasted by a needless duplication of plants, securities may then be issued bearing a small part of this surplus profit as interest and by selling securities to the owners of idle capital the credit provided by laborers to carry on mod- ern business is changed into a debt to enslave them. Bus- iness is subject to risks and changes from new inventions and therefore requires a high rate of profit to become successful. Men who own idle money which they secure from advancing prices are willing to invest this easy money at a low rate to insure its safety. For this reason, among others, the men who have special knowledge and experience are able to secure enormous wealth by a mere issuance of paper securities which they sell to idle capital seeking any return it may get. This idle surplus seeking a safe investment leads to the problem of security and to have us inquire upon what security investments are based. Is the security of capi- tal furnished by the fixed property now worth a hundred billion dollars, or does it depend upon the fifty million of dollars circulating each day as wages? Manifestly the security depends upon the certainty with which inter- est will be paid because this alone will establish a market for the principal. Thus we are forced again to return to the primary source of all purchasing power, to the sum of daily wages out of which profits are derived. THE PART MONEY PLAYS IN DISTRIBUTION. 81 Bear in mind that when this daily profit cannot get into its proper channel and increase wages it must ex- pend itself in competing against a limit in wages. This competing surplus growing in volume w^ithout limit must finally meet the limit of wages and cause a wide disturb- ance in credits. Idle money seeking investment can have but one effect which is to bid up the price of property command- ing an annual income or rent such as bonds and stocks and lands. Thus when business must pay twelve dollars a year income on each hundred dollars of capital, idle money will bid up a gx)vernment bond to six hundred dollars in order to secure twelve dollars a year income. Consider how this selling of securities will effect the distribution of wealth and how it will concentrate owner- ship to the men who accept all idle money and only return a small share of profits to investors. We now have an annual gain of about three billion dollars in surplus which on a tw'enty-four per cent, basis of earnings is paid as extra dividends on property costing but twelve billion dollars. The competition to share in dividends is so great that six dollars a year income will sell at one hundred dollars. One-third of our annual surplus or one billion dollars a year if it was set aside to pay six per cent, interest on new bonds would allow an aggre- gate of more than sixteen billion dollars to be issued and capitalists need only wait on the surplus to accumu- late to give them a market for these bonds and then they may buy billions of dollars worth of other property with this money. It may seem that frenzied finance is a dream, that to capitalize property costing twelve billions by an in- crease of sixteen billion and retain the original property 82 DISTRIBUTION. is absurd. But we can point to a single class of property that cost not one cent and now commands about one- third the free profits of business and which sells at a mar- ket price of not less than fifty billion dollars, property in lands, lots and mines, and this value is exclusive of all improvements. Under present conditions labor can never redeem this land value debt because as one land owner may sell for money with which to employ labor he must sell to a man who has taken the money from the market and as he buys land he again invests it as a debt upon labor. The price of land is a marked exception to other prices because men cannot thus bid up the price of coal and corn and cotton without the money going into wages. To bid up the price of wheat for example means that labor has wheat to sell and thus shares at once in the distribution and furthermore the wheat will be con- sumed daily and labor will bring on continued supplies and keep getting his share of the profits. But land and bonds are an exception to this rule as they are not con- sumed and are not in the hands of labor representing some service, but only represent the power of taxation, of taking a share of profits and of selling the right to tax labor to the highest bidder. In bidding for land there is no competition among owners to sell as there is among owners of wheat anxious to secure the highest prices, but greed operates to make land scarce in the market as soon as the price advances because owners hold for a hig*her price instead of selling. As a result of this union among owners of land advanc- ing the price, population will scatter over a territory three times as great as their industry and activity re- quires, or they will concentrate into narrow circles in THE PART MONEY PLAYS IN DISTRIBUTION. 83 cities where the center allows the greatest saving in time and the greatest economy in the use of land and in payment of rent. Land is the fundamental source of every concrete product upon which we depend, and all the labor engaged in growing or transporting or trading must have direct access and undisturbed possession of the land required. We are, therefore, compelled to pay the owners to keep them from excluding us from the earth so we may serve each other and distribute our services. Land, when con- sidered as land, can have no value or purchase power of its own, in the way that money has its purchase power, land is barren of any service on account of inherent fer- tility or inherent supplies of metals or minerals. Coal for example can have no purchase power until after it is mined and is able to perform a service and its price will depend upon the service it may give. It is on account of this value of land that we get the gulf be- tween the rich and the poor, and of our failure to prop- erly distribute the gifts and blessings provided by a wise and benevolent God. Interference witn Distribution. CHAPTER EIGHT. BY PROPERTY in land a method has been dis- covered to change credits payable on demand into irredeemable debts by changing the time from pay- ing on demand to paying in the distant and uncertain future. We are required to provide a store of goods, of buildings and supplies and of machinery to carry for- ward our modern system and it is necessary to pay large profits and encourage men to save for this purpose. But, beyond this purpose saving has no power to increase the general wealth, when this credit has been provided and when we continue to pile up billions of dollars instead of consuming them in a better living we are piling up trouble for ourselves and our followers. We cannot keep on creating vast totals of credits in banks and get no return in distribution while the stan- dard of living becomes more difficult and expensive from day to day. Labor is paid for a day's time consumed by work, this payment must be used as a purchasing power so as to be set free and pay for more work. This action and reaction of production and distribution, of supply and demand, is governed by a natural law illustrated all around us and most familiar in our rainfall. The production of rain and snow must equal evapo- ration and the fall of rain must exactly balance the evap- oration. Each drop of water or crystal of snow is not expected to return to the same place from where it was INTERFERENCE WITH DISTRIBUTION. 85 taken because the air has a storage cai^acity for vapor and clouds. If there was not an exact balance between rainfall and evaporation the world would become devoid of life and would lose its atmosphere and its water. To illustrate the same principle, we breathe in oxygen gas and give out carbonic acid gas and we would all die from suffocation unless the plant life exactly reversed this process by taking up the carbonic acid gas and restoring the oxygen to the air. When we fail to balance production by distribution we interfere with this natural law. When we pile our surplus energy into clouds of debt we call down the storm upon our unprotected heads, and we vitiate the atmosphere of society and suffocate from vice and de- generation. The credit labor is required to furnish arises from the profits secured from the advances made by civilization. This profit coming from the outside and being an addition to the prevailing levels of distribution will recjuire secondary distribution to raise the level of wages so as to consume this new volume of purchasing power. This secondary distribution is a very simple matter and nothing more is required from us than to spend these profits for labor in any direction that pleases us, and although profits may seem abnormal yet by spending them for labor we put them back into circulation and bring back the true level again. To have machinery and other improvements throw increasing purchasing powers upon the market and then to fail in distributing them is the cause of oin* social inequality. There is only one way in wdiich the owners of these vast acctimulations may prevent labor from getting a share and that way is to change credits into debts by changing the time of re- 86 DISTRIBUTION. deeming money from present payment on demand to a payment in the distant future. If we create a system whereby our deferred pay- ments become permanent debts, we will need a market wherein one man may sell and change his debt into a credit and where the man who buys changes his credit into a debt. When these deferred payments are thus being bought and sold, we must not get confused into believing that property is being bought and sold unless we are willing to make property of our own kith and kin and of our flesh. What is being bartered is human life, present and prospective, the men now living and the men who are expected to follow and to continue to work for their owners. We sell the right to take from labor all the gains of modern civilization that exist now and that may arise in the future. We sell the right to take away everything but a mere existence and leave labor almost naked and wholly defenseless. Be not deceived when you are told that capitalists furnish valuable aids to la- bor by supplying money, machinery and raw material for such is not the case. All these blessings are furnished free by nature and by the laws of evolution. The men who own land values and who barter them have no claim of any kind worthy a moment's consider- ation from any honest man. The principal market in Avhich we offer our human slaves upon the block is the real estate market, the prices we pay for land measures the slave value of American workmen who are now worth more than fifty billion dollars to their owners. And the money with which slaves are bought and sold is the money they create daily, it is not the money saved from the past, but their own hands are made to forge the chains of slavery to their own ankles which lengthen INTERFERENCE WITH DISTRIBUTION. 87 as they are driven forward and grow heavier as they drag after them. No man may go to nature's manufacturing estab- Hshment and supply himself according to his needs al- though nature is boundless in her generosity because we are now^ so highly civilized that we use goods from the four corners of the world on our dining tables. Besides these world wide demands we use other things that have not been estimated as a part of our daily consump- tion. When you read of the market requiring twenty- live million tons of pig iron to satisfy its appetite for one year you forget that your own appetite consumes its portion of pig iron. We read of four hundred million tons of coal eaten up in a year and we forget about our per capita consumption. We consume millions upon millions of pounds of lead, tin and copper every pound of which must be paid for and balanced in the yearly settlement of each wage earner. Assuming that all these products grow as freely as berries at the roadside, and that each man, woman and child has a particular share in them and must pay for its share, we begin to realize the vast and complicated net work of natural laws distributing these gifts. This com- plicated system of carrying on the distribution and keep- ing an indivdual account has a deep meaning for by this process every man w^orks for the whole system yet each man gets a distinct individual return differing from the return of every other man. We do not have equal shares in this common good nor do we contribute equally to bring it about. Under this plan the evidence of w^ealth enjoyed by the individual should be the evidence of benefit he contributes. 88 DISTRIBUTION. The wages paid to the laborer are intended to be spent and if they are saved it should only be to increase the spending to greater advantage at some future time. The pleasure we receive from spending is in a large measure determined in advance for us because we are all born into a world having a fixed and stable existence to which we must conform. The necessity for individual pushing ahead arises from the fact that each individual is charged with his share of the daily expense of running this earth and we must pay it with our labor and ability, and if we fall behind we are weeded out to be superceded by the men who are able. Society advances from lower to higher planes as it is able to build an environment wherein such able men may thrive and live and push for- ward the great work. The common good, so much discussed, is common only in the sense that the good of nature is universal, but is not common in the sense that we are to share equally in all the benefits of civilization. >!c ^ >5< i{< ^ When we read statistics of enormous totals of rail- ways and iron and coal and farm products we must not forget that this grand total of value is made up and sus- tained by tlie daily wages of labor and by the credit established by labor. Consider our annual coal bill of more than one billion dollars from the standpoint that this price must be paid by wage earners and from each according to his ability. Does this enormous coal bill merely represent an expense for coal which we might save? Coal as a material product does not cost one cent and its price is but the necessary method of distributing one billion dollars a year in wages. INTERFERENCE WITH DISTRIBUTION. 89 Coal carries value along its route which has been advanced as a credit by a host of the most dissimilar kinds of labor and which will be finally balanced and paid when coal is finally sold and consumed. The reason coal is so peculiarly fitted to gather up these credits and carry them along and discharge them is because of its steady flow through the market and its regular daily consumption and renewal. This is a very important fact to bear in mind because the elasticity of distribution de- pends upon mediums of credit like coal and does not de- pend upon an elastic currency as we are being advised by bankers. The labor of man and the purchase power he creates is ephemeral, it lives but one day and must be renewed the next day. It is important that we gather and dis- tribute this purchase power so we may each buy our share of the gifts of nature, and it is equally important that it gathers upon property like coal and food which will as readily release it by being consumed. The total price of property is not something we may increase without limit, we could not for example pile up stores of coal and pig iron and copper and wheat and corn and clothing and increase the total price and wealth in this way. The total price is fixed by the pur- chasing power, and if we store the work of a week as a credit and try to have it redeemed in a day by selling the goods we suffer by a great decline in prices and a great waste of material. Wealth cannot be increased by piling up goods beyond our daily requirements because we need the service of men for more important work, and we cannot liquidate debts any faster than our daily credits will pay them. We depend upon a daily circula- tion of money and the value of this money is limited by 90 DISTRIBUTION. the time-labor for which it is paid. The greater the sum spent for daily wages the greater will be the volume of our activity, because this activity is multiplied by the number of times which a day's work may be used as a credit. Remember how our market is made up, remember that we each consume a share in coal, pig iron, copper, railways, light and all other forms of property. As the reader is able to extend his view and to take in this com- plex system of production and distribution and to see the number and windings of the roads we follow he will realize the most important of facts, namely, that time is the most important element in civilization. When the savage first discovered some way of keeping a record on his fingers and began to count he saved time for himself, and when a language developed it saved time for all the men so endowed. We have received from nature a lim- ited and fixed amount of vital power and our only road for advancement is to discover methods by which we may save time in our actions so that a limited power may in- crease the number of its activities. Every advance we make is made upon the basis of our having a limited force of vitality and we use it up in a given time and our only chance to gain is by making the most of our time. Hence we find natural laws are so formed, and we must study them according to the time we may utilize and save. Money is valuable on this account and its gains are multiplied b}^ the time each dollar may save by its use and so also all our machinery saves time and sets men free to employ the time saved for higher uses. The basis of our system of debts is found in the ability to control a share of profits without being required to work INTERFERENCE WITH DISTRIBUTION. 91 for it. Men will buy any form of a debt which will en- able them to enjoy the blessings of civilization without work, and others will take all kinds of risks and chances and will work with frenzy in order to free themselves from the necessity of devoting all their time to work. The reason w^e have property whose income will relieve men from work and give them time to play is on account of the time saved and built into a credit by property. It is but simple justice that when one man's work has saved one hour's time each day for a thousand men he should be paid by them so he could save some of his own time for himself if he so desired. Unless this was done there would be no encouragement for the in- dividual to promote the happiness of others. We have a vast amount of property that is used to assist labor and to thus save time and the profits we pay for the use of this property must always be estimated as a part of the time we save. This fact limits profits to the time of life of such property, and since such property must be reproduced the profits diminish and wages increase as we move along. Unless there was a continual advance in civiliza- tion all profits would be absorbed by the general increase of wages. There is nothing in this natural system by which any man may acquire a right upon the labor of the generations yet to come, although they come into a world filled with time saving appliances. Unless the future generations are permitted to have the advantages of the new world into which they are born they must fail in meeting the new responsibilities which go with it. We must not confuse the profits of this kind which are paid for the use of time saving appliances and which are never a burden, with the sums taken by a system of slav- ery where no benefit is returned. 92 DISTRIBUTION. Such property as our homes, office buildings, fac- tories, machinery, railways, water and light plants, may pay a large income to capital and also pay large increases in wages at the same time. The demands from the own- ers of such property will regulate themselves as the prop- erty requires labor to operate, to maintain and reproduce. Property in land is directly opposed to labor, the ow^ier occupies the position of the dog in the manger, he does not give anything himself and he must be driven away or placated before labor is allowed to use the appliances that save time^ :^j ^ ^ i!< :^ ^ Turn your attention once more to the picture of our system of distribution, to vast quantities of food and luxuries, of supplies and building material, of mineral and metal being daily consumed and of moving a step at a time to their respective places. We have an almost endless variety and a great quantity of these moving stores, our social life is con- stantly changing and needs reciprocal changes in the dis- tribution of this wealth. We need more coal and more iron and less of other things because we make an advance in industry and the proportion between each and every product is maintained by its price. The difference of one quarter of a cent a pound in meat for our great packing houses would wipe out their profits on one side or double them on the other side if they could not make other changes to equalize this change in price. We have a given purchase power that maintains all prices and we are limited by this power, although prices vary in rela- tion to each other the total price of all property is firmly bound within fixed limits. It is on account of this limit that changes in price of one kind must be met with equal- INTERFERENCE WITH DISTRIBUTION. ^ 93 izing changes of other kinds, because the total price does not greatly change. To increase the price of coal for example will be followed by an increase in the quantity offered and unless the new demand for coal comes from a new distribution of purchasing power the greater quantity for sale will push the price back to its former level. jfc ^ ijs ;|s :}: :j« Look now at the picture of supplies moving like regiments of soldiers to central camps and we will find coal and iron, for example, coming from mines widely apart and under widely different conditions. Some mines are nearer the market than other mines which makes a difference in time, and the veins of ore are richer and thicker and easier worked at some places than at others which is again an advantage in time. Farm lands and forests have the same differences in situation and in relation to the market. Where lines of distribution cross each other from all directions cities and towns will grow because at such places exchanges may be made with the greatest saving of time. All man- ner of products coming from points of supply and going to points of demand have to overcome different degrees of resistance which consume labor and time but the pro- duct sells in a market where such differences have been leveled by uniform prices. As a result of the natural advantages of some points of supply over other points there will be wide margins of profit, owing to the fact that demand will meet the price of the most difficult sup- ply. This irregularity of natural conditions under the smooth surface of the market is something we cannot overcome by increase of knowledge or by invention and there is no way by which we may compel a distribution 94 DISTRIBUTION. of this advantage except by taking it by taxation and spending it for the common good. The owner of land favorably located has the power to interfere with progress by refusing access to his land and he need only wait until labor and capital are forced to bid for the land and give up the gain by paying higher prices for land. * >k ^^ * >fs ^ j^3^j^ ^\^q i^^^ saved money or gained money in business will prefer property in land that gives him an income, and he will pay more for the same income from such property than for any other. This preference for property in land, as an invest- ment, establishes limits for capital above which all gains are drained away to increase the price of land and a limit is established for wages above which all gains in- crease the price of land. Since the total price is limited, land can only have a price by preventing a general ris€ in prices of all other property because it takes its pur- chase price from the general market. The sums taken by property in land increase with every improvement not only of machinery, but in arts, literature, education, morals and religion, and the rakeoff of the landowner follows the footsteps of man from the cradle to the grave. Bear in mind that the evil of property in land is not measured in ground rent, by the sums we pay for the use of land, but is measured by the value of land which is taken without giving anything in return. Any man who buys land at a low price and sells the same land for a high price will realize that he, at least, has made money, — but who pays when the pur- chaser can always get his money returned by selling the land, who loses but labor? The price we must pay for land is a perpetual debt which when once established INTERFERENCE WITH DISTRIBUTION. 95 can never be paid, when one man sells the land the debt is redeemed and when the other man buys the debt is reinstated. The price paid for land is fixed by the sum the landowner may take each year from the earnings of labor without giving any return, and by his right to continue to take this sum from the living and from their decedents for all time. When land is sold we must not forget that labor is sold and the capitalized value of land is the value of slaves who are required to work at a fixed return and all their earnings above this sum are taken away as a bonus by the owners of land. The capital offering to build and develop is limited by the capital first required to buy land and practically one-half of the total expenditure is taken out of the labor market in this way. This power of land owners is all the more dangerous because it is insiduous, be- cause they do not directly exercise their power but labor and capital tied down to narrow limits must bid for the privileges of widening the bed they sleep in as they are being crowded to the wall. Let the self-satisfied man take warning in time and prepare for the future or his own family will sink to the levels of the families he now despises. We have not as yet felt the real pressure of landlordism. We have steadily worked from ocean to ocean opening a con- tinent of new lands and mines and forests. Many who have profited from the rise in the value of land do not realize how a happy chance has favored them. As we keep adding farm to farm, city to city and thousands of miles of railroads, we employ a large share of our sur- plus in new development by increasing our debts but the time is rapidly approaching when all resource from this 96 DISTRIBUTION. direction will close in upon us. Our increasing popula- tion now spreads over wider territory only because such new development gives rise to new gains and the rising prices enable us to experience periods of prosperity. But we need not flatter ourselves that the laws of nature make an exception in our case and the time approaches rapidly when no new worlds will remain to conquer, when the advances we do make cannot effect the great mass of our wealth. In a few years when we face this condition, we will be like prisoners in Russia, confined in cells with moving walls that close down upon us slowly but relentlessly day by day, and the only escape is to break down the walls while we have the strength and before it is too late. Tke Price of Land the Cost of Slavery. CHAPTER NINE. THE peace of the civilized world now depends upon the patience and virtue of its working popu- lation, who when once aroused to a full sense of the injustice of the modern distribution of wealth will wreak their vengeance upon society. The injustice which reeks through the world and undermines its foun- dations can do so only as it spreads among an ever in- creasing number of people and comes in closer contact with each member of the body politic. The mass of mankind is too fully occupied with the immediate de- mands of life to consider injustice when it is farther re- moved than their own doorstep and until the creeping evil with its hundred legs crosses the individual path. The working world cannot, moreover, act singly against wrong and injustice as the wrongdoer may act against them. Labor is being robbed and exploited by bad laws and a false system and must endure patiently until the accumulated evils force them to a cumulative resistance. The ignorance of mankind has in times past held them in fear and slavery but now the light is spread- ing and men understand the meaning of revolution who 'before were taught implicit and slavish obedience to custom. Our land system reduces labor to slavery by pre- venting it from sharing in the benefits of new develop- ment. 98 DISTRIBUTION. The money spent for land is money that otherwise would have been spent to buy some kind of property requiring some service from labor and would have been distributed in wages. The effect of diverting the stream of demand from the general market to the real estate market is to cause a failure of demand in the general market, the supply failing to be sold begins to compete so as to sell at lower prices. To speak about a supply of goods being sold at lower prices is to say the purchase power can not take the supply at the former price but if the price is re- duced so as to meet the lower volume of purchase power the volume of goods may be sold at a lower price. The purchase price provided by natural laws is amply able to buy all the possible supply because while the supply is being created, the purchase power equal to it is also created at the same time, and by the same operation. But when money received from wages is spent for land the purchase power is turned aside and the demand for labor is changed to a demand for land. Competition comes into the market to lower the level of prices so as to equalize the supply to the lower level of demand. Competition in the sense that prices are regulated by it, and monopoly in the sense that it defies regulation is as close an approach to absolute human stupidity as can be found in all literature. Our legislators and courts are spending almost half their time devising laws to en- force competition and devising punishment for monop- oly, they are taking it for granted that competition is the patron of all virtues and monopoly is an invention of the devil. It ought to be clear that prices are regu- lated by natural laws and our troubles arise on account of our interference with these laws. THE PRICE OF LAND THE COST OF SLAVERY. 99 The writer once secured an option on nine acres of land at the edge of a growing city and divided the land into lots and sold them for enough money to pay for the land, and to build a modern seven room house. It was very clear to him that there was a vast difference be- tween getting a home with this easy money in a few months than in the regular way of working every day for wages and by years of saving acquire enough money to build a house. It was also clear that this house came as a gift from some unknown source as though Aladdin's lamp was rubbed and a brand new house appeared. There was no service given in exchange because buying land at a low price and selling it in smaller parts at a higher price accomodates no one but makes it more difficult to live by making land more expensive. This house was se- cured as a bonus, and some people must have been com- pelled to build it and give it away and were thus de- prived of having a home of their own. This loss is very difficult to trace because no particular person contributed to this gift at any definite time. The reason a loss of this kind can be so minutely divided and so widely distributed and escape detection arises from the fact that the buyer of a lot changes his money from a credit payable on demand into a debt. The money received from the sale of lots is used to build the house and labor redeems its credit on demand by building the house, but the debt remains to be col- lected from the mass of laborers at the option of the owner of the lots some time in the future. When lots are sold for money the sums received are credits upon labor redeemable on demand, the man who buys noes not need the present services of labor but LOFC 100 DISTRIBUTION. wants future service which he feels sure of getting at any time by again selling the lots. But when the money is used to build a house labor has redeemed its debt but is under the necessity of re- deeming the same debt over and over again as often as a surplus can be accumulated and the lot be sold. When a house is built we bring a new creation into existence and something is added to our environment, something to promote civilization, to save time and to increase our chances for good living. When we pay for a house we are paying for a new appliance that will benefit us more than it costs. We cannot build houses individually, we have neither the knowledge or experience, hence we exchange a service that is easy and habitual to us, when we buy a house, for other services that would have been difficult if not impossible. But the land we buy has no such relation to our lives. We buy land because we cannot otherwise build and improve. The price we pay for land is a contribu- tion forced upon some one and since the buyer can not he made to suffer he may shift the loss upon the land- less. The reader may not be able to see clearly that spending money for a piece of land can differ in principle from investing money in a savings bank to be loaned to labor. He may admit that the profit taken from the increase in value of land is a loss to labor but cannot see that it differs from profit taken in any other transaction. What, for example, is the difference between buying a building lot for two hundred dollars and then selling it for a profit of fifty dollars, from buying a horse for two hundred dollars and selling the same horse again for two hundred and fifty dollars. THE PRICE OF LAND THE COST OF SLAVERY. 101 The difference is wholly a question of who gains or loses in the transaction. A man buys a horse for fifty dollars less than it proves to be worth and he makes fifty dollars in the trade and, if you please, the other man lost fifty dollars. In this case the transaction ends here and has no public concern as it is an aft'air wholly between two individuals. But when a man buys a horse for two hundred dol- lars and makes some one else furnish him the money, it becomes a very dift'erent problem and in such case, the officers of the law begin a search for the man to punish him as a thief. When a man spends his savings for a horse the money so spent was his own and he pays for the horse by his own services and such buying is always limited to the men directly concerned. The same is true of a bank deposit. You may de- posit your savings in a bank to be drawn out at some future time when you may spend them at your leisure. Meanwhile the deposit may have been loaned over and over again and have been issued to labor and re- deemed many times but in each and every transaction of this kind no one could be injured because no one but the people directly concerned can be made to pay. But when land is bought something is sold w^hich no one earned and which originally cost no man any- thing. The price paid for land must be made up by small contributions exacted from the pennies of the poor because when land is dear the landless become poor by contributing the value of land to its owners. You often read how certain great corporations in- crease the price of their product and thus impose what is called a tax upon the consumers and you read further- 102 DISTRIBUTION. more how this higher price enables the corporation to pay large dividends and thus to issue and sell great quantities of securities which have no other foundation of value than the ability of the corporation to collect and pay the dividend. But suppose a corporation was organized that could control, not one price, but all prices of commodities by merely controlling the exchange of titles between land owners and could collect all we pay for commodities^ above the cost of production. The dividends of this corporation would then support securities equal to fifty billion dollars in value and such securities would sell in our market as readily as real estate now sells. The entire sum of our land values would in such case appear in its true light as a monstrous debt fast- ened around the necks and resting upon the shoulders of the poor which they are never to be allowed to pay but which they must forever redeem in part as fast as a sur- plus arises by which the real estate market may be made active and land values be made to advance and the debt to increase. This new form of slavery is all the more vicious because it is so insidious and because no one man di- rectly enslaves any other man but allows the rich as a class to enslave the poor as a class. It is this slavery in our midst that gives rise to commercialism and snobbery, to the grovelling to wealth and to the rapid development of new forms of caste. We may bewail the worship of Mammon and the hardening of hearts in our scramble for wealth. We may feel just contempt for the independence and assurance of our men of money but they are made so by the servile conduct inspired by the fear of slavery in other men. THE PRICE OF LAND THE COST OF SLAVERY. 103 People must feel this new slavery instinctively be- cause they so instinctively shun poverty and seek to escape its appearance and to deny any suggestion of it in their daily lives. The history of mankind tells us clearly that man and woman will prefer and submit to any form of social vice and crime before they consent to become recognized slaves. Modern poverty in contrast with modern plenty produces a slavery more degrading than the slavery of Rome in its decline, you avoid the poor and condescend to them because you are beginning to realize that they are slaves. The men who advocate land reform assert freely that the power- of the land lord is the power of life or death over the landless. They assert that the men own- ing the land may drive the landless off the earth and by reason of this powder take away from labor and capital all they may gain above the sums required to keep them at work. While we must acknowledge that a legal fiction con- fers upon the individual land owner such lordly powers, yet as a matter of fact, the laws of distribution hold him in check. If individual landowners had been given such pow- ers their greed would long since have overstepped all boundaries and the civilized world would have returned to barbarism. Each landowner seeking to get more from labor than another would long since have driven the landless to become savages. In a simple condition of industry where the relation betw^een landlord and tenant was direct and where his power over the tenant was absolute, the landlord was 104 DISTRIBUTION. forced by his own interest to make some kind of a gain with his laborers so as to have them produce a sur- plus for his own use. As industry has grown and has become more and more complex this direct power of landlord over tenant has disappeared and the landlord must depend upon his power to influence prices in the general market in order to get something for nothing from labor. It is true the landowner may now demand more rent for the use of his land than the rate of wages or the price of goods will permit labor or capital to pay. But it is also true that such landowners like the capitalists who want too much from the market, are quickly ruined and sold out by the sheriff. Admitting that the sums paid to landowners as rent for the use of land are a robbery of labor and capital without justification or excuse, nevertheless the sums so taken do not account for the losses and wrongs in our civilization. The sums of ground rent equal more than a billion dollars each year above the taxes paid by landowners. And the ground rent collected from industry per- mits a small army of men and women to live in luxury at the expense of society. But the rapid advance of machinery and the increas- ing gains of industry would make such a loss a mere trifle in the annual settlement of our business if the evil of our land system was limited to the annual payment of ground rent. To understand the greater evil, to understand how the price of land prevents labor from increasing his wages and his purchase power and thus prevents the THE PRICE OF LAND THE COST OF SLAVERY. 105 growth of civilization is to understand the important problems of our civilization. Property in land can have a price only as it is able to find a buyer of land in the market. The sums which accumulate in the market with which to buy land can only accumulate during prosperous periods when profits arise and increase. W^hen property in land offers an investment for this money the demand changes from a demand for goods which caused the prices of goods to advance to a demand for land which then causes prices of land to advance. This change in demand undermines the market and the increasing floods of goods must sell at lower prices in order to be sold. The money spent for land is not buried in the land and does not diminish the quantity of money on one hand nor the quantity of credits which have accumulated during the era of rising prices on the other hand. A man buying land with the money he has accumu- lated merely changes places with some other man. The sums accumulated in banks as a credit do not diminish on this account but merely concentrate to fewer owners. What happens when the price of land advances is that the bank credits are used to increase land values. Some men change a credit payable on demand into a debt payable in the future and other men sell land and change debts payable in the future into credits payable on demand. When land values thus advance six or more billion dollars in prosperous times we have used our bank de- posits to increase the fixed debt represented by land 106 DISTRIBUTION. values by six or more billion dollars and we have also the original sum of bank deposits redeeemable on demand. This process shifts ownership of land from men who need money to men who do not and the credits in banks gravitate to a class of men who will soon demand payment. During this period, while bank deposits were growing, the volume of money was being contracted to become a reserve. Labor will only redeem credits by accepting actual primary money for their work and on some fair day when financial skies seem clear the attempt to redeem impossible credits on demand provokes a storm out of the clear sky and we are visited by a panic and all the misery and suffering and crime it brings in its train. Wkat tlie Single Tax Will Do. CHAPTER TEN. HENRY GEORGE was inspired to write Progress and Poverty by the misery he witnessed in the cities in contrast with the conditions he found in CaHfornia. He was among the early gold-seekers who rushed to the Pacific coast, a restless, energetic, adven- ture-loving band of pioneers, composed of men in the prime of life, of every trade and calling, but of little capi- tal, and few animals or tools. These men landed on free and fertile soil with but their own hands to gather riches for them. Henry George told us that from the beginning wages for all kind of labor were considered high. These gold-seekers had a new empire before them and began to work with high wages but without capital or improvements, they had high hopes and great expectations of the wealth that would flow to them when capital, tools, and inven- tions, doubled and quadrupled the power of their bare arms. They expected that with every increase in numbers there would be a better co-operation and market, and all wages would advance, that new tools put to use, every new road opened, every house built and the increase in capital would all co-operate to increase the power of each laborer and would greatly increase wages. They had hopes of railroads and better service on the Pacific and naturally expected that poverty would be forever 108 DISTRIBUTION. abolished and progress would continue without interrup- tion in the new empire. What happened in California within the lifetime of these pioneers is now a matter of history, their hopes and dreams were fulh^ realized as to the advance of wealth, and in the power of labor to create wealth, but they were to be bitterly disappointed by the distribution of this wealth and by the increasing- pressure of poverty in the face of the most remarkable progress. The increase in power came to California, inven- tions multiplied, shipping increased, railroads were built, farming grew beyond their own needs and a golden abundance overflowed all their markets. But the diffi- culty in California was the stationary distribution of wealth to labor, the failure of the men who produced this overflowing plenty to get a just share in it. The mystery of the distribution of this wonderful gain was the cup of Tantalus ever at the lips of labor but never to quench his thirst. Although wages Avere stationary or declined for the mass of the w^orkers, there was a marked and wonderful increase in the value of land that seemed to absorb this gain. Mr. George said while riding out one day on his horse, many miles from town he met a solitary man working in a field surrounded by miles of vacant unused land. In conversation with him he asked the price f land thereabout, and his acquaintance replied that there- abouts there was no land for sale, but some miles farther away he might buy land for a thousand dollars an acre. A thousand dollars an acre had an ominous and warning sound in the ears of Henry George. A thou- sand dollars an acre for land which had never felt the touch of human hand but lay in wait like a robber for WHAT THE SINGLE TAX WILL DO. 109 the coming of industry and civilization to gather in its thousands of dollars. It was this land, at a thousand dollars an acre, that started his great hrain to thinking and led to the Single Tax movement inspired by Henry George. This calls to my mind an experience in Central Illi- nois a few years ago when the farmers were selling their land at high prices to move on cheaper lands and repeat the experiment. An Illinois farmer at whose house I stopped for the night had just returned from a land hunt in central Indiana and was not pleased with the farms he inspected. He said ''the great objection I found to Indiana farms was the lack of uniformity, that I saw no single quarter section of land that was all good, it had either a swamp that could not be drained or a barren knoll." "Here in Illinois," he said, 'T can close my eyes and pick out any section of land in twenty miles square and not a single quarter section will have a poor acre on it." I replied that I was familiar with the section of Indiana he described and was surprised at his opinion. I told him that in Indiana every section had a good gravel pike on one side, that there were good fences and houses and barns on every quarter, the farms were pro- ductive and had plenty of stock of all kinds. In Indiana, I continued, there were wxll-filled school houses in every towmship, and churches on every side with good towns and cities in every county. I said that there was no dif- ficulty in paying taxes which were about one dollar per acre as against forty cents in Illinois, but there was much to show for money spent from taxes. ''Here in Illinois, it is true, you have the most fer- tile land under the sun and this land has now been culti- 110 DISTRIBUTION. vated for twenty-five years in corn without a change in crop, without a crop failure, and with Chicago a close market. What have you people in Central Illinois to show for all these years of hard work, for all this corn and stock you have been sending to market. You have no roads and no ditches, you cannot leave your farm- yards in winter and are shut out from the world for months at a time. You have no good barns or farm- houses and tenants are allowing the old houses to fall in ruins, you are closing your township schools because pop- ulation is so sparse that you have not enough children to support schools. Let me tell you what you are doing, the early settlers coming to this part of the state bought land for five dollars per acre and each one tried to buy all the land that joined his own. You refused to pay taxes to build roads or ditches or make any permanent improvements and support schools. "Every dollar that was saved was spent to buy more land, paying part in cash and giving mortgage for part. The result of this general buying and selling of land with the proceeds of twenty-five years of hard work is now the same land without improvements, much reduced in fertility and selling for twenty-five times its former price. Your gains were lost in every panic and tenant farmers succeeded the independent cultivator, you have no evidence of wealth, prosperity or happiness for miles and miles of the most fertile spot on this round world. What has this buying and selling land done for the peo- ple except to advance the price of land by gambling away your savings, hoping In this gamble to get the earnings of other men by owning all the land." My host was sur- prised and said the idea was new to him, and it did look as though they had labored in vain. WHAT THE SINGLE TAX WILL DO. HI Henry George was the first to see that in some un- explained way the rise in the value of land just about balanced the increase of wealth that failed to go to labor. He saw intuitivel}^ that most of the gains from inven- tions, from science, from new lands, railways, telegraphs and machinery were not distributed to labor but did have the effect of increasing the selling price of land and of doing this in the ratio of this increased power of pro- duction, while wages remained practically stationary. But in attempting to find a solution and explanation of this modern Riddle of the Sphinx he followed the economists who were before him and omitted value from consideration, thinking it to be of no practical import- ance, to represent a mere ratio of exchange, a mere con- venience in the barter of commodities. Let us examine the explanation given by Mr. George, so we may thus set out our own problem more distinctly by way of con- trast. Instead of seeing that value of land arose from the investment of profits that failed to be distributed, Mr. George saw only the annual rent for land as thq failure in equal distribution. He saw vast tracts of unused land held for higher prices and he reasoned that if this land was as free as when he first landed in California it would take up the idle and underpaid labor, and the increase in products thus secured would reduce prices and add so much more to the total goods to be distributed. Thus to Henry George the solution of the riddle became a question of the unused land and of an increase in the quantity of products and of increased competition. More land was obviously not needed anywhere in California in order to increase the quantity of goods, or to take up all the la- borers, but only higher wages, which upon being spent 112 DISTRIBUTION. would call idle labor into employment upon the land al- ready paying rent and not fully used. The land in use was nowhere producing the quantity, nor employing the laborers it was capable of employing, because there was no profitable market in which to sell the products. For this reason men were forced to compete with other men for employment and wages could not rise, not because there was any scarcity of land in use but because pur- chasing power was badly distributed. The whole difficulty was to be found in the purchase power, the quantity of products of every kind overflowed the market, but in order to sell, prices had to be reduced, which discouraged production and reduced wages thus keeping men out of employment. Aside from this, it should be very clear that unused land could have nothing to do with the main problem, the wealth growing from the land in use was superabundant, there was no famine but there was a failure of distribution which more land put in use could only aggravate. Let us now consider what it means in our problem to reduce all its terms to questions about commodities which we consume and which are delivered at our doors and leave value out of the question. By omitting value we also omit from calculation the distribution of our railways, steam ships, factories and all great enterprises of which we can get no part in distribution unless we get a share in the value of them. How can any conceiv- able trade in consumers' goods include the finished rail- roads, factories and all the modern appliances which inr crease our w^ealth? It is true they are built up from consumable goods and goods are consumed In their con- struction but this is not distribution by which we can get WHAT THE SINGLE TAX WILL DO. 113 any benefit, and our share can only arise by getting a share in ownership after construction. If the goods that merely satisfy our hunger, our pride or ambition was all in which the workman was supposed to share he would forever live from hand to mouth and be denied the independence arising from the t)wnership of income property. Is not the problem of modern civilization wholly outside the distribution of goods which must go to the masses, because otherwise they could not be sold, and does not our problem lie wholly within the distribution of homes and of vast prop- erties now concentrating to a few men? The problem to-day is not one to relieve the mass of the people from hunger and nakedness, but to relieve them from the anxiety of a hand to mouth existence, which is prevalent in spite of our enormous consumption of food and clothing and great numbers of luxuries. What does it prove when you say ''labor is getting more wages than ever before, that he is spending more, that he has more luxuries and his children are better clothed.'* The standard of family living has risen to a level that now strains the energies of the best paid workman to keep in the race, and on this account the discontent of labor is not relieved but is increased. To argue for the benefit of a better hand to mouth existence is the same as to argue for the delights of a glorious drunk or for the pleasures of the opium eater. Modern discontent is based upon the very fact that we now need much more to only live from hand to mouth and that so much more is now required from the meager wage. To be deprived of this standard of living is a social disgrace, and to have no other dependence is to have the sword of Democles suspended over our heads. 114 DISTRIBUTION. Society requires that we must not only live well every day and provide well for the family but we should have some safe footing so that a day's loss of wages will not cast us out into the needy and helpless classes. It is not because people are hungry and cold that we have such general discontent, but because they walk with un- certain step along a dizzy precipice, just above them is a safe and joyous living, and just below is poverty, in- sanity, vice and crime and we see many slipping down, but few climbing higher. When Henry George saw idle labor on one hand and unused land on the other he jumped to the conclu- sion that one was cause and the other effect. If the in- creased purchasing power arising from the use of ma- chinery in California had been distributed in higher wages instead of being wasted in buying land there would have been no idle labor and less land would have been required than by the wasteful method entailed upon that community. In order to produce in greater quantities we are not necessarily required to open new lands and mines and forests but we are strictly required to have a better mar- ket for products. In California the introduction of modern civilization did enormously increase the poweii of labor and this power when it becomes value means purchase power. The fact is apparent that modern ma- chinery was in use all the time /turning out enormous totals of something and labor was not gaining its share. Labor has no chance to get its share unless the purchas- ing power of labor is increased, this purchase power is measured by value and it is easy to see that the purchase power which failed to go to labor did go to landowners in the increased value or purchase power of land. WHAT THE SINGLE TAX WILL DO. 115 Looking now at the power to purchase from the other point of view and omit value and fixed property from the problem,, we may soon discover why attempts at explanation end in failure. In common with other economists Henry George believed that the purchase power of labor was only to be increased permanently by lower prices of commodities. This commodity theory asserts that machinery is made effective by greatly in- creasing the quantity of goods produced and thus cheap- ening the price of machine products. As a resuk of this increase in quantity of goods competition was to be the hope of labor and he was to get a share of the bene- fits of machinery because at a lower price he could buy a few more supplies. It was very unfortunate that Mr. George was so far misled by the old economists because he educated a host of defenders of the most indefensible evil of our time. It seems to never have occurred to the defenders of competition that the facts were violently opposed to their theory, and that it was not by cheap prices labor was to share in civilization but by high wages. By wages so high that after buying the goods he needed, he could buy the railways and factories he had built. The effect of this defense of competition has been to obscure the great work of Henry George and his fol- lowers have been leading into a wilderness instead of leading to the promised land. The greatest mistake we make in legislation, the mistake that does most mischief, is to enact laws trying to enforce competition at a time when nature is striving with might and main to abolish it, and when she is enriching men beyond imagination, who help her to make monopoly the universal rule of industry and commerce. Why is the truth so general 116 DISTRIBUTION. that during times of low prices our country is filled with poverty, distress and idleness, that low prices and pen- niless buyers come as twins to perplex us ? There are no facts to support the writers who de- fend competition, not a fact to show that anyone is bene- fitted on account of the low prices of commodities, but on the contrary all the facts without exception demon- strate that times of high prices are times of wide gen- eral prosperity and high wages. .How could it be otherwise? How is it possible to distribute increasing wages to labor and not expect la- borers to increase prices as they increase their buying on such enormous scale? AVe do not deal with the buy- ing of one man, but with the millions of men, women and children who spend money. We have before us a straight and narrow road to travel to secure reform, and a blind man although he runs, need not stumble therein. We dare not interfere with profits because we depend upon profits to advance Avages and promote civilization. We dare not interfere with created property because we depend upon property to reward the frugal and industrious and to secure the welfare of the family and home. But with injustice so appalling and with evils so wide and universal we cannot hope for permanent good unless we adopt some measure which will insure radical and far reaching changes. We must in plain words make so radical a change in the dis- tribution of wealth as will give to each man and every person their full rights in all the benefits of our civiliza- tion. The change we propose is to change sixty or more billion of dollars from the debt side on the national ledger to the credit side at one stroke, and then allow the WHAT THE SINGLE TAX WILL DO. 117 natural laws to bring about the individual correction. We propose to so obstruct one wide channel of distri- bution as to prevent all flow of wealth in that direction and to destroy the prices of all property depending upon this flow. And at the same stroke and by the same in- strument we will open up thousands of other channels so that wealth may follow its natural outlets that other property may gain the prices that property in land loses. \\c may easily accomplish this radical change without disturbing any individual in his ownership of property, by a simple change in taxation. We may change the location and distribution of bil- lions of dollars worth of property by merely changing the income upon which the value depends, and we may transfer the value of land to other property by taxing- land value and by taking taxes off of other property. If, for example, fifty billion dollars worth of land, lots and mines, will sell for such sum because they return a net income of two billion dollars a year, we may drive away this fifty billion dollar price by taking the two billion a year in taxes, and by remitting two billion of taxes in other classes of property. We furnish a transfer of value and the price of land will change into the price of other property. This is a concise and simple statement of the effect that will follow upon the adoption of the single tax which has been so ably presented in the writings of Henry George and Thomas G. Shearman. As a mere reform in taxation, without taking into account the radi- cal change in the distribution of wealth, this system meets the approval of all students of this much discussed question. Mr. Shearman was so deeply impressed with the inequality of the present system that he dismissed all 118 DISTRIBUTION. other claims from his mind and founded his faith upon taxation alone. He considered that the change in the tax burden proposed by single tax would so effect the savings of the common people and so prevent the accum- ulations of the rich as to effectually change the distribu- tion of wealth in a generation. Men of wealth are now successful in escaping taxes because we attempt to tax thousands of different kinds of property in as many different ways, in different times and at different places. The present system allows just so many thousand openings of escape and makes it easy to shift from one kind of property to another and to move from a place where your property is known to where it is unknown. But the laborer cannot escape be- cause taxes must come from wages and are taken out of profits, and when we levy taxes upon a man's property we merely require him to collect such taxes from labor and expect him to surrender them to the treasury. When any man may hide or evade this tax he is able to pocket the sum collected and labor must again pay by an increase of taxes in other directions and by taxes upon consum- able goods. Mr. Shearman was deeply impressed with the present unjust system because as a lawyer having wealthy clients he was so often called upon for advice to enable them to escape taxation. Mr. Henry George held different views and while admitting the tremendous incidental benefits to be de- rived from a system of taxation which was eminently just, and which no man could cheat or evade and which offered no premium upon liars, yet, he hoped to forever abolish poverty as the great and immediate result of single tax. In the single tax Henry George saw a wea- pon that would forever abolish landlordism from the WHAT THE SINGLE TAX WILL DO. 119 earth and to his mind landlordism and slavery had the same meaning and produced the same results. In order to prefer the idea of single tax as advanced by Mr. Shearman over the more radical idea of Henry George we are invited to take more for granted than was asked by Mr. George. Mr. Shearman proposed that by remitting taxes on goods, tariff, internal revenue and personal property the result would allow laborers to save all this gain in taxa- tion and this would increase labor's opportunity to save at the rate of about one billion dollars each year, and would retard the wealth of the plutocracy by a like amount. Although this calculation seems to balance like a problem in bookkeeping there are a number of entries left out. We are asked to take it for granted that in such case wages would not fall as laborers found they could save more money, and also that prices would not change and that capitalists who stand in front of labor would allow this saving in taxes to get around them without taking any of it. The trouble with such a weak presentation of the case is that labor w^ill not consent to the change for the slim chance of such a remote gain and the hope of get- ting a little increase in savings. It is not in the province of labor to crawl and cringe and beg and petition for his earnings and to be satisfied with what remains after the Horse Show Royalty has been supplied, but he must have his earnings first and the other world must wait and gather the crumbs that fall from his table. The vision of Henry George was the clear vision of the in- spired prophet and it was unfortunate that the single tax movement was led astray by the cold calculations of Mr. Shearman which w^ere permitted to supercede the 120 DISTRIBUTION. warm heart impulses of Henry George and the religious enthusiasm of Dr. McGlynn. The single tax will accomplish all that the genius of Henry George pictured and all that the devotion of Dr. McGlynn and his Anti-Poverty Society hoped and be- lieved. When the single tax is fully instituted the bil- lion upon billions of dollars which are now a value of land and watered securities will change from a debt now creating the most degrading system of slavery to a credit which will insure the weakest member of society the full enjoyment of all the benefits of civilization. By this one stroke of taxation, by placing the entire burden of taxes upon natural advantages which no man has the right to appropriate and to free all forms of property from direct and indirect taxes we will change the en- tire flow of demand and supply. There will then be no price for land and no intereference on this account with the true level of prices and instead of the low level established by competition and a high level established by monopoly we will have but one level which will con- sist of the highest possible wages and prices. Without any other laws we will make protective tariffs, labor organizations, patent laws and special legis- lation inoperative. No organization of labor or capital can raise prices above this natural level. Sixty billion dollars of debts changed into si:^ty billion dollars of credits will make a change so profound and so far reaching that the human imagination is utterly powerless to predict or estimate its effect. As prices of land are driven down by taxation the pressure of competition and of idle capital will be re- moved and wealth will flow into the channels calling for labor and must greatly increase wages. This change in WHAT THE SINGLE TAX WILL DO. 121 demand for labor will run into billions each year and we will then realize how much we are blessed by the introduction of machinery and by the discoveries of science. \\^ith prices and wages risen to the natural level war will become far too expensive for the most favored nation to undertake. W^ith high wages and a new stan- dard of living holding up a new world of delight to mankind no one may be had for the soldiering business, unless he volunteers to fight for a noble cause regardless of pay. iut One Problem to oe Solved. CHAPTER ELEVEN. IN CONCLUDING this study of distribution we need to gather together its many sides and complex rela- tions into a single view. We need to look upon dis- tribution as it covers the civilized world in its complete mastery of all social activity. The reader must not make the mistake of confusing a great number of effects flow- ing from one cause, into believing that we suffer from a number of social evils having a corresponding number of causes and requiring separate and distinct treatment for each class of evil effects. There is no capitalistic system robbing labor, as a distinct evil ; there is no landowning system to be abol- ished. There are no trusts to be busted, no money sharks to be hunted down and destro3^ed and no tyrants to be dethroned. We have but one great crime to remedy, from which all evil flows and all iniquity springs. There is one world wide crime that produces all other crimes, together with its vices, its poverty, its suicide and in- sanity. There is but one great evil to be abolished, not a new monster born of modern conditions, but a crime as old as the human race, the crime of slavery. Be not deceived into believing that the talk you may hear about modern slavery is but a figure of speech, be warned in time of the truth. BUT ONE PROBLEM TO BE SOLVED. 123 We are confronted by an actual slavery of the masses of our people, a curse more damnable than any the greed of man ever before fastened upon the human race. Modern slavery differs from the slavery of the past because our people are slaves to a system and to unknown masters. Instead of knights and barons spreading chains across the rivers of commerce and taking cargoes and people for their purposes we have great industrial battles and schemes of finance for which slaves are used to furnish funds. Now men, women and children are harnessed to tasks more cruel, and to masters more re- lentless* than old slave drivers. Men, women and children are now speeded by ma- chinery to make money, to establish deposits of value that become counters in battles between men who stake the millions wrung from slaves upon the changes of a stock ticker. In a great industrial corporation like the United States Steel Company the purpose of the management is not to secure products for general distribution but to control industry, to pile up unlimited profits and to en- gage in the new sport of kings who desire to divide the ownership of the world among a few financiers. When black slaves worked in fields making cotton and tobacco, the limits set by nature, the rising and set- ting of the sun, the time and the season offered some relief to the slave. In chattel slavery the owner had to be content with a natural limit of the product and could reward the in- dustrious slave by some show of favor. But now there is no limit to the fierce and unrelenting toil imposed on slave labor because there is no limit to the sums which 124 DISTRIBUTION. may accumulate as a credit to the masters and no limit to the ambition to buy all the property in the civilized world over and over again in the changing fields of financial wars. Slaves are so plentiful and the possibility of free- dom is so remote that families are divided, the sons going down to the gutter by drink and degeneration and the daughters following, they know not where, seek- ing to escape they know not what. Slaves are so plentiful that women and children by the million are bound, they do not belong to particular owners but may shift to new masters at will. They are so plentiful, and they are so set about by hunger and anxiety that seeking a master has added a new burden to the modern slave. Slaves are so plentiful that one of a family is owned by another, and the poor relations divide into degrees of desperate desponding servitude. Because of our universal slavery our republican government is a mockery and the Christian Religion is an insult to God. Courts of Justice, mark the words "Courts of Justice," when seven men, women and chil- dren out of every ten of our people are slaves who are punished because they are seeking freedom of some kind, seeking relief in drunkenness, prostitution, in vice and crime and finding almshouses, jails, insane asylums and the suicide's unmarked grave. Let us review the process by which the civilized world has become enslaved while believing it enjoys the largest liberty, the most equal justice and the greatest happiness of any people in all history. To comprehend the power which the ownership of valuable property gives to some men and how other men BUT ONE PROBLEM TO BE SOLVED. 125 are thereby enslaved we need to change many fomier beliefs concerning wealth and study it in the light of science and of evolution. The first and most important principle of evolution relating to wealth is that all our forms of property and commodities, all machinery, railways, telegraphs, tele- phones, food, clothing and luxuries are products of growth and are not products of labor in the true sense. If the reader will be patient it will not be difficult to demonstrate a most important truth, which on first sight seems to be splitting hairs, to be dividing a shadow from a substance and to be giving the shadow more weight than the substance. Nature creates all our forms, whether it be a blade of grass or a paper of pins, and the process in each case is subject to identical laws of growth. In the blade of grass we see merely the automatic machinery bring out its own product withotit personal attention from an in- telligent creating being. In the paper of pins we see a human being inter- vene, who somehow embodies a small part of personal creative intelligence that allows us to witness a crude process of rapid growth in a very crttde mechanism. The important truth to now consider is that nature gives her powers of creation as a bounty to man and does not compel him to pay, or work for her, in return. Mark this point well, that from the side of creation there is no wealth in the material world, that all manner of products of machinery and supplies are furnished as ab- solutely free as the sunshine and the air. To make this subject more clear the reader should be able to see the line dividing property from the value of property, to see the difference between the ownership 126 DISTRIBUTION. of property and the control of a definite quantity of value. Men are not slaves because they own no property but because they cannot secure the small sums with which they may buy each day such access to the whole as they require. The man of greatest liberty, who is most to be envied, is not the owner of railroads, banks and palaces, but rather the man of broad learning, of common sense and a liberal mind who may earn enough money at con- genial employment, anywhere in the civilized world to give him a key to the treasuries of the world. A man, who when he yearns for a palace can find more comfort and luxury in a great hotel for a few days. A man who need not own a theater in order to enjoy a play, own thousands of acres of park to enjoy the beauties of nature and who is content to visit a national gallery and enjoy master works of art rather than hog the art treasures of the world into his own museum. A man who finds an infinite variety in his pleasant association with his fellow men and on whom the grand simplicity of natural beauty is never lost. We need not own the world in order to enjoy the greatest bounty, but we must be able to secure access to its every source and variety of pleasure. To secure this access we depend upon that vague and intangible something which is known to us as value. It is not material to this discussion how the reader may regard value provided his view enables him to grasp the cause and cure of modern Slavery. The solution of the entire problem rests upon the quantity of value and the means of its distribution. Te secure enough value each day and to be able to buy the advantages of civilization will enable each man BUT ONE PROBLEM TO BE SOLVED. 127 to solve his own labor problem and will free him from slavery. If the reader has a false idea of value, if he fails to realize the limit in its quantity and to realize the im- portance of its distribution he must fail to understand the problems of our civilization. The common idea of value resulted from looking at the facts entirely from the side of the individual, from his present relations, without connecting the past or predicating the future. The individual realizes that he must have food and clothing and in order to work he must have access to land and machinery. He fihds the food and clothing and the land and machinery to be the property of other men and finds he is thereby thrown out of the world with no hold upon life except as he may bid for his living in competition with like outcasts. Value is thus erroneously regarded as a result, or as an effect of excluding men from the world; the property owmed by men is supposed to be valuable on its own account, and as science advances, as inventions de- velop this property of a country not only increases in quantity but also increases in value and therefore the power of the property class is said to grow greater and the dependence of labor is said to become more acute. If this view of value is conceded to be true then the socialist has the logical and necessary solution which is to dissolve the property class and to have no private property. But if value is considered in a broader sense, if we take the past history of development into our picture and seek for natural laws under social conditions we arrive at an opposite conclusion. 128 mSTRIBUTION. Instead of considering value to he a quality of pro- perty upon which labor depends for existence zve shoidd consider value as a quality of labor upon zvhich property depends for its distribution. In such case value is limited by the number and efficiency of laborers instead of being fixed arbitrarily by the owners of property. The increase in wealth is not secured by an increase in quantit}^ of property but by development of industry where the daily distribution of value is determined by the daily earning power of labor. We can accumulate only as much reserve wealth as we may establish credits, and as we may establish banks and other institutions where these credits may accumulate. Fixed property is thus limited in its value in a to- tally different way from the common idea, and property cannot advance in price beyond a limit fixed by the cir- culation of money depending upon the capacity of labor, and upon the volume of credit, and the volume of credit is determined b}^ the circulation of money. The solution of our problem then differs radically from the Socialist when we adopt this view of value.. Instead of doing away with private property we look to a proper distribution of value wherein each work- man may acquire his share of property according to his ability and according to the service he gives to others and then the number of property owners will equal the number of good laborers. The capitalist has no power given him by his own- ership of propert}^ or machinery to enslave labor but on the contrary the dependence of property upon labor grows greater with every increase in wealth. BUT ONE PROBLEM TO BE SOLVED. 129 The owner of machinery controls products which sell in the market to laborers, and the price at which the product sells gives profit to the men who control property. But this profit must be renew^ed daily and is subject to constant change while the power that holds labor down is the incessant power of master over slave. The control of the circulation or distribution of money gives power to capital and this power arises by securing a great and constant volume of money and credit outside the hands of laborers. This volume of money and credit which never re- turns to distribution is secured at first from profit, from the sale of commodities and this condition cannot be avoided if civilization and progress is to continue. But if secondary distribution returned this profit back to its source there would be no slavery nor inequal- ity of condition. And furthermore it must return to its source unless it can change from a credit payable on demand into a debt which labor can never redeem. It is only because of the existence of billions of irredeem- able debts upon labor that a volume of money and credit accumulates outside the labor market and thus holds the world of labor in subjection and slavery. IQ