Class jt\^_Lli Book 4 Goi)yriglrtN"_^\i^3 COPYRIGHT DEPOSIT. ^ooltfi ijp |)enrj> |)nlt Calmire. Man and Nature. Sixth edition re- vised. Crown 8vo, $1.50. Sturmsee. Man and Man. Third edition re- vised. Crown 8vo, $1.50. On the Civic Relations. Being a third edi- tion of " Talks on Civics " rewritten from the catechetical into the expository form, and re- vised and enlarged. HOUGHTON, MIFFLIN & CO. Boston and New York ON THE CIVIC RELATIONS BY HENRY HOLT, A.B., LL.B., LL.D. Member of the New York Academy of Political Science, the Am.erican Political Science Association, and the America7t Economic Association ; Author o/"" Sturmsee : Man and Man" etc. BOSTON AND NEW YORK HOUGHTON, MIFFLIN & COMPANY 0DZ i!iiticr?ibe ^iti^^ Camliritige 1907 •f fLiSRARY of congress! Two Cooles Received j MA^ 13 190r Cooyrifrht Entry cuss COPY B. ^^ COPYRIGHT 1907 BY HOUGHTON MIFFLIN & CO. First Edition ( Third of " Talks on Civics ") printed May IQ07 \L PREFACE TO THE THIRD EDITION. While this book is, in one sense, a third edition of my "Talks on Civics ", it is really, in many important differences and additions, almost a new work. Among the peculiarities, not to speak of the defects, under which the earlier editions labored, was the catechetical form, of which I expressed my divStrust in the first preface. That form was adopted largely because the work was aimed at very young pupils. Before it was finished, I became convinced, as stated in a note to the earlier editions, that the aim was not one suited either to the greatest possible usefulness of the book, or to the capacity of the author. Both in regard to the aim, and to the catechetical form, this conviction was supported by many readers, and in consequence I have rewritten the book. The rewriting of course has led to many differences of detail ; and the growth of my owm convictions, as well as the astonishing develop- ment during the past few years in many of the matters treated, and the increase of topics demanding treat- ment, have combined to make the work, as already stated, in many particulars a new one. So rapid has been the development in some particulars, as almost to render them unfit for treatment in a book, and to make it impossible to keep pace with them except in the daily and periodical press. Each proof and each revise has clamored for insertions, and I go to press neglecting important matter that has appeared since my copy, and also my revises, went to the printer. I must even beg the reader's charity for some incon- iii iv Preface to the Third Edition. sistencies that must have escaped me between matter coming after the original draft, and matter contained in it. Notwithstanding the space saved by doing away with question and answer, this edition is more than a hundred and fifty pages longer than the preceding one. The added matter contains its share of the sort of repeti- tions that were confessed, and I hope justified, in the preface to the first edition. Most of it relates to "the labor question", socialism and municipal trading, and will be found principally in Chapters XIX-XXII, and XXVIII-XXX. I confess, not quite without shame, to having, in the earlier editions, handled the first of those subjects very briefly, and with gloves; the excuse, such as it was, being that whatever good the book might do, would be put out of the reach of common-school pupils by "Labor" influences. Having come to reahze, however, before the book was finished, that it had grown unavail- able for such pupils, in this edition I have entirely abandoned the attempt to adapt it to them. Yet there may be places where enough of the earlier ten- derness for the juvenile mind has survived, to demand my humble apologies to the dignity of the under- graduate. But a much stronger reason for the changes regarding the subjects mentioned, was their growing importance. In the six years since the second edition was published, the "labor question" has become, not- withstanding the graft in corporations, the leading question of the time. I am sorry that my limits do not permit even a fuller treatment of it, but less sorry than I should be if I could not refer the reader for fuller information to so admirable a book as the ' ' Labor Problems" of Prof. T. S. Adams and Miss Helen L. Sumner. Despite the strange showings of figures which I have alluded to on page 252, and despite some other matters which I cannot endorse, Professor Adams's chapter on Strikes and Boycotts surpasses anything on the subject which I know. The book has appeared since the last edition of this one, and has done not a Preface to the Third Edition. v little to furnish me material for hope that this edition may be an improvement. What I have found to say regarding the right to stop work and the right to strike, tho not entirely novel, and tho somewhat anticipated even by court decisions, has nevertheless pla^yed so small a part as yet in dis- cussions of the subject, that I cannot help regarding it as well worth saying. I am also vain enough to hope that the additional matter regarding socialism may do a little to clear up in some minds that inevitably foggy subject, or at least to show why it is inevitably foggy- The book is of course ''second-hand": to write from original investigation in so many fields, would be impos- sible: for even if life were long enough, while an author would be investigating one department, those pre- viously gone over would grow beyond him. The utmost possible is the exercise of reasonable care and dis- crimination in choosing authorities. This I have striven for, but I have not made any attempt like those which I have sometimes been uncharitable enough to suspect in others, to make the book appear more learned than it is, by bothering the reader with citations of authori- ties for all the statements. Tho disliking excuses, I will allow myself the one afforded in this connection, for not having taken the trouble to hunt up the names of law cases when they were not given where I found the substance of the decisions. A book intended primarily for under- graduates and general readers, does not need details required only by the profession and investigators. One of the critics of an earlier edition was at the pains to inform his readers that its treatment of law topics can be of little use to the profession. It will also be of little use to students of Chinese. Perhaps, however, I may be excused for saying that other critics (I do not know whether of equal authority) have said that the book contained a good introduction to the study of the municipal law. Whether it did or not, this edition contains a better one, largely due to the friends named vi Preface to the Third Edition. below. I have also gleaned a few new points from Professor Burdick's "Essentials of Business Law." I am indebted for various valuable criticisms of the earlier editions to Professor Daniels, Judge Baldwin, and Messrs. Samuel Huntington and Ralph Curtis Ring- wait of the New York bar. My obligations to other writers not consulted for the earlier editions, are, I believe, all acknowledged in the body of the work. I am glad again to name Mr. Neu, and to express my continued obligation for his admirable proof-read- ing, and for help in the cross-references and index. I crave the reader's consideration for the reasons set forth in the preface to the first edition, why the work is a considerable departure from previous works in the same field. H. H. New York, March 29, 1907. FROM THE PREFACE TO THE FIRST EDITION. (March i, 1901.) THE MOTIVES. This book was written in the hope of doing a Httle something to develop in young people the character of mind which is proof against political quackery — espe- cially the quackery which proposes immediate cures by legislation for the abiding ills resulting from human weakness and ignorance. Since the Civil War, America has been cursed by such proposals probably more* than any other country ever was. What beneficent institu- tions we have, have all been evolved through the long and painful struggles which have at the same time evolved character and morality. If Nature's ways are plain in anything, they are plain in showing that it is only for such prices that she yields such rewards. And yet of all our hard-bought institutions, there is scarcely one, from a stable currency down to the very right of accumulating property, that has lately escaped a strong attempt to overthrow it, and to substitute for it some invention of the moment — or rather some invention bearing a name of the moment, but being really a form of some protean error as old as history. As these errors all propose to get along faster than Evolution, they would of course be impossible to a mind habitually recognizing the law of Evolution. Yet that law has not even been named, so far as I can recall at the moment, in any of the American elementary books vii viii From the Preface to the First Edition. on civic subjects that I have been able to get hold of.* This may not in all cases be due to neglect, but some- times to the conviction that it is useless to present the subject to the young. My view is more hopeful, and this book is, perhaps more than anything else, an at- tempt to saturate young people's minds with the reali- zation that social institutions are evolutions, and there- fore (I) that they can no more be modified by laws or votes or any other manifestations of human will than plants or animals can ; but (II) that they can be modified as much as plants or animals can, tho only by the same means — careful study of their life-histories and habits, and cautious efforts in accordance with the proved con- ditions of their well-being; and (III) that they will be vitiated or destroyed by forced or ignorant treatment' This is why I have spent so much time over such topics as early land-tenure and the relations of status and contract — in short, over the archaeology of the sub- ject. I want to give the pupil a consciousness that en- during institutions are growths, and do not spring up responsive to any magician's wand, be it in the hands of Mr. Altgeld, Mr. Bryan, or even so good a man as Henry George — I want to accustom him, when any method is presented for his vote, to ask: Has this thing roots.'* A second motive for the book was to place before American youths at least one text -book that should not claim that our constitutions — state and national, present the final word of human wisdom. Perhaps the admission of notorious defects will bring upon the book charges of lack of patriotism, yet it is not written in a pessimistic spirit. The pessimist generally despairs because achieve- ments fall short of ideals: the wise man compares, rather, what he and his have achieved, with what others have achieved. Our government may not be the best, but we are too near the best to despair. But if our gov- ernment is ideally good already, why bother to teach * There is abundant illustration of Evolution in Mr. Fiske's " Civil Government in the United States ", but I believe the word is not even mentioned, perhaps because of the theological preju- dices prevailing so far back in the dark ages as ten years ago. From the Preface to the First Edition. ix anything about it ? : it can take care of itself ; and in fact, until lately, our people have generally been taught to leave it to do so. A third motive of the book has been to get some teaching on our constantly recurring quCvStions of money, land-tenure, distribution and taxation, into some places where Economics are not usually taught, and also to get into some places where Economics are taught, a fuller treatment of those four topics than is usually given. A fourth intention has been to spread a just concep- tion of Contract, The absence of such a conception is at the root of most of the labor troubles, not to speak of private breaches of faith.. Those who realize the im- portance of the subject will not be impatient with the rather protracted and abstract discussion that prefaces the treatment of the laws relating to it. In time the pupil will, as a voter, need to make up his mind on many hard subjects — so hard, some of them, that for his conclusions, or anybody's, to be taken seri- ousl}^, seems almost ridiculous. But I am not sure that just that fact is not the most important of all that I want him to appreciate — the fact that in broad civic questions, the wisest man can only feel his way — as Lincoln did: and that of all pests for the voter to avoid, the chief is the man with a scheme — be it silverism, greenbackism, grangerism, socialism, communism, anarchism, or (I am tempted to add) protectionism and militarism, but some- times there are circumstances justifying these two. This attitude regarding a scheme may seem inconsist- ent with my close approach to recommending one re- garding taxation. But that approach is only incidental to an effort to trace the indications of Evolution. If our men of schemes would honestly restrict themselves to such efforts, they would be less dangerous. I have hoped to add life, as well as significance, even at the cost of interruptions, by frequent compari- sons of early conditions with present ones. I have not hesitated to repeat — even to repeat often, where the topic seemed worth iterating or presenting X From the Preface to the First Edition. from several sides. The significance of the matters here treated is not as plain as that of the multiplication- table, which needs to be presented but once. THE MATERIAL. From the unlimited range of topics embraced in civic relations, how to select the little bookful best adapted to the needs of the average American youth, is a hard problem. Probably the authors of some of the other text-books would be more puzzled to find good reasons for my selections, than I am for theirs. They generally give much more attention than I do to the anatomy of the government — state minutely all the offices, national, state and local, and not only the qualifications legally required for them, but even for voting for them. Now most of these things, so far as they affect a vote, the voter, as he grows up, is pretty sure to learn from the world; and so far as they do not affect his vote, they must be relegated to the vast domain of useless knowl- edge — unless indeed he aspire to be, as a politician, something more than a mere voter. The few boys, however, who have this spark of aspiration, get it from the altar of genius, even if it be genius for nothing higher than running a primary: and genius teaches itself. A man who tries to judge broad questions by details is not going to get anywhere : they involve too inany de- tails : he can compass but a small part of them, and is in danger of getting the wrong ones and missing the right ones. Broad questions can only be judged on broad principles. Then, it might be asked: Why expect the man of ordinary attainments to judge them at all? I never have been able to find out why ; but inasmuch as a vote has been given him, that responsibility has been laid upon him, whether he is fit for it or not. Well, with a fatuity equal perhaps to that which gave him the vote, I have tried in this little book to give him some notion of the broad principles on which the vote should be used. If Ethics — the profoundest and vaguest of all ^ From the Preface to the First Edition. xi sciences, is taught in some shape from the cradle, is it plain that problems of Civics need be entirely neglected in all shapes, during adolescence? Frankly, I do not expect to teach very much about them : but I do hope to give such a' notion of how some sound principles look from the outside, that the voter can tell whether they are recognized or not by those who seek his suffrages, and give his vote accordingly. And yet I am far from believing that all of even this little book can have much meaning, before it is illumi- nated by experience. I do believe, however, that much here which may be memorized as little more than dog- matic statement, will gain meaning from day to day, until it becomes significant ; and I have even some hope that if the desperate experiment fails with the young, the labor may be rewarded by clarifying to some maturer minds a grave problem or two, through the same courses of thought (even if borrowed thought) that have, I assume, clarified them to my own. It may seem inconsistent with the foregoing talk about broad principles, that the book includes some groups of such specific rules of the Municipal Law as a layman ought to know and might have to learn at his cost in ordinary business experience. Not only, how- ever, do I think that their value makes them a justifi- able part of the only teaching of civic relations that many of my hoped-for readers are apt to get, but I have tried to put even such matter in such a way that it will do its share in impressing the main lesson of the book — the evolution of all the elements of social order, especially the inevitably imperfect evolution of some of the most important elements — "the glorious uncertainties of the law ". The original design included a second part, on the Evolution of Government, to be issued in the same vol- ume with the first. The first part, however, as is usually the case, outran expectation; and as it has a certain completeness in itself, and is long enough to take up the time given in the majority of classes to the subject, and especially as it contains most of the xii From the Preface to the First Edition. ^ ''practical" matter contemplated in the entire scheme, it has been thought best to publish it without waiting for the completion of the second part ; and perhaps to let the completion of that part depend upon the reception accorded to the very uncertain experiment as tried in the present volume. Although in this part the evolution of several institu- tions has been considered, the evolution of government in general has not. The intention for the second part, has been not only to give an account of that, but also, as a natural concomitant, to give a fuller idea of the structure of government, tho substituting for much of the detail usually given in books for the same grade of pupils, some of the criticism and suggestion usually avoided. I let the foregoing paragraph stand to emphasize this one. Since that one was written, I have reread the ' ' Civil Government in the United States", by my lamented friend Professor John Fiske, and I realize more fully than I did in m}^ first reading, that it is in many re- spects what, while writing my first part, I have come to intend my second part to be. If I ever carry out that intention, it will be because of the other respects, and especially because of a desire to reach minds less mature than perhaps Mr. Fiske 's book can reach. Meanwhile, and perhaps afterwards (if there ever should be an afterwards), Mr. Fiske's iDook may be regarded as the best one known to me for supplementing what I have tried to do here. AUTHORITIES. In addition to some of the older authorities which are already matters of course, I am specially indebted to the following, most of which are rapidly becom- ing matters of course, if not so already. I let the list grow larger than is usual in acknowledgments, in order that it may serve as a brief bibliography for the use of teachers.* — The late David A. Wells's * I permit this to stand, tho the present edition is intended for a grade of pupils whose teachers will know more of the bibliography of the subject than I do. From the Preface to the First Edition. xiii "Recent Economic Changes" and "Theory and Prac- tice of Taxation ",* Professor Mayo-Smith's "Economics and Statistics ", President Hadley's "Economics ", Pro- fessor Adams's "Finance", Professor Daniels's "Ele- ments of Pubhc Finance", Professor vSeligman's books on Taxation, Mr. Shearman's "Rational Taxation", Judge Baldwin's "Modern Political Institutions", Mr. Mallock's "Labor and the Popular Welfare" and "Classes and Masses ", Professor Goodnow's "Municipal Problems ", Doctor Shaw's books on Municipal Govern- ment, the valuable quarterly on "Municipal Affairs" published by the Refonn Club, especially Dr. Maltbie's number on "Municipal Functions", and Mr. Godkin's "Problems of Democracy" as well as The Nation from the time he founded it. A word of acknowledg- ment is also due to the excellent articles on Civic questions in Johnson's Cyclopaedia. Among elementary books for pupils, I have found help in Mr. Raleigh's admirable little "Elementary Politics" (which, unfortunately for us, Avas written for England), Professor Robinson's "Elem±entary Law", Professor Bolles's "Commercial Law ", the summary of Municipal LaAV in Mr. Young's "Government Class Book", Mr. Fiske's "Civil Government in the United States " (tho its field is very different from that of this volume), and in several features of Mr. Martin's "Civil Government". His summary of the "Establishment of Liberty in England" (of course not touched in my present volume), seems to me a little gem, tho possibly rather condensed for the young pupil. I have also found Mr. Ford's "American Citizen's Manual" and Mr. Bartlett's "What I ought to know about the Government of my Country" handy for quick reference. * Two real books that ought to be read by every human being old enough and civilized enough to understand them; this, too, in spite of the fact that the latter was largely written during the lamented author's last illness, and therefore lacks the terseness and vigor of his earlier work. It appeared after the chapters on taxation in this present volume were written, but it was still pos- sible to inject from that work much of whatever good they may contain. xiv From the Preface to the First Edition. If I have done what I have attempted, avS well as these authors have done the very different things which they attempted, I ought to be content. My hearty thanks are due to Mr. Theodore Neu for rare intelligence, interest, and suggestiveness in read- ing the proofs and preparing the index. I am also under very great obligations to Professor Goodnow for reading the proofs, and for calling atten- tion to errors. Of course he is not responsible for those which remain. I shall be similarty grateful to any one pointing out any of them. CONTENTS. Preface to the Third Edition page iii From the Preface to the First Edition vii PRELIMINARY SURVEY. Chapter I. — Society's Control of the Individual — Government i Sec. I. Introductory. 2. Social Influence and Control : 2 (a), through the Family; 2 (6). through Public Opinion; 2 (c). through Imitation; 2 (d). through Education; 2 (e) . through Government. 3. Civic Relations Defined. 4. Government's Functions Illustrated. 5. Government's Functions Classified. 5 (a). Protection of Rights. 5 (b). Promotion of Convenience. 5 (c). Taxation. 6. Some General Results of Bad Govern- ment. 7. Responsibility for Bad Government. 8. Good Gov- ernment Requires Intelligence, Character and Effort. 9. Ex- tent of Government's Influence. 9 (a). Illustrated by Money- Geographical Divisions of Government. Sec. 10. Each Citizen Lives under Several Governments. II. Overlappings of Local Governments. 12, Functions of Local Government. 13. Of County Government, 14. Of State Government. 15. Of National Government. 15 (a). Sover- eignty. DeparUnents of Government. Sec. 16. Legislative, Judicial, Executive. 17, Sources of Gov- ernment. iS. The Three Departments Illustrated in Civil and Criminal Suits. 19. Legislative, Judicial and Executive Func- tions in Local Government. 20. The Functions in Counties. 21. The Three Functions in States. 22. The Same Functions in the Nation. XV xvi Contents. BOOK I.— THE PROTECTION OF RIGHTS. Chapter II. — Of Rights in General 21 Sec. 23. Rights Impose Duties. 24. "Greatest Happiness" Principle and its Application in the Three Kinds of Law. 25 Rights and Duties Imply Each Other. 26 Rights Classi- fied. Chapter III.— Right to Life 25 Sec 27. The State's Claims. 28. Humanity's Claims. 29. Professional Claims. 30. Life and Work. 31. The Right to "Work 31 (a). Subject Only to the State. 31 {b). Picketing and Boycotting. 32. Duties Conditioning the Right to Work. 33 Society's Alleged Duty to Provide Work. 34. The Eng- lish Poor Law and the French Workshops. 35. PubUc Charity. Chapter IV. — Liberty 32 Sec. 36. Boundaries of Liberty. 37. Barbarian Liberty and CiviHzed Liberty. 38. Duties Balancing Rights to Liberty. 39. State's Right to Restrain Liberty. 40. "Eternal Vigil- ance." 41. Constitutional Defences, Bill of Rights. 42. The Man with a Pull. 43. Freedom of Opinion. 44. Laws Threatening Liberty. Chapter V. — The Pursuit of Happiness 39 Sec. 45. A General Term for Many Rights. 46. Restricted, as All Rights are. 47. The Right to Work Involves Rights of Property and Exchange. 47 («)• Limited, like All Other Rights. 48. The Rights to Work, to Property and of Ex- change Involve Rights to Contract 49. and to Reputation. 50. State does not Furnish Means to Happiness, but Only Rights to Work for Them. 51. Evolution of Property Rights. 51 (a). Their Sources — Raw Material, Labor, Ability. Chapter VI. — Real Property 44 Sec. 52 . Land and Sea the Source of Raw Material. 53 . Early Conditions. 54. Communistic Ownership. 55. The Feudal Sys- tem. 55 (a). Why an Advance on Communism. 55 (b). When Established. 55 (c). Evolution of Hereditary Feudal Relations. t55 {d). Guardianship, Disposal by Marriage. 55 {e). Domesday Book. 56. Evolution of Private Ownership. 56 (a). Scutage. 56 (6). Leases for Labor. 56 (c). Money Commuta- tion of Labor Leases. 57. Land-tenure in America. 58. Land- tenure Similar among All Peoples of the Same Grade. 59. Pri- vate Property in Land a Great Stimulus to Ability. 60. The Strong Man's Chance Not at the Expense of the Weak. 61. Proportion of Private Owners Increases with Civilization. 62. Landowners the Best Guardians of Government, 63. and the C Clients. xvii Most Thrifty Citizens. 64. Exaggerated Claims from the Fore- going Advantages. 64 (a). The Right to a Home. 64 {b) . The Right to a Living. 65. Land Valueless to All but Able Men. 66. Proposed Reversion to Government Ownership. 67. Landowners Support the Government under Either System. 68. Some Advocate Robbery, which would Disappoint Them. 69. The Only Way to Help the Poor is to Help Them Help Themselves. 70. The Moral Arguments — Original General Ownership. 71. Attempt to Remedy Injustice Sometimes only Increases It. 72. Performing Duties of Ownership Breeds Rights of Ownership. 73. Ri;^hts in Improvements. 74. The Unearned Increment. 74 (a). Not Characteristic of Land Alone. 75. All Schemes to Abolish Private Ownership are Retrogressive. 76. Private Property in Land of Universal Importance. 77. Rights in Land Limited like All Rights. 78. Rights of Eminent Domain. Chapter VII. — Law of Real Property 65 Sec. 79. The Law in General. 80. Real Estate and Per- sonal Property. 81. Laws Protecting Ownership. 81 (a). Damages for Trespass. 81 {h) . Right of Ejectment. 82. Laws Affecting Transfers. 82 (a). Livery of Seisin. 82 (h) . Statute of Frauds Requiring Written Evidence of Transfer. 82 {c) . Contracts of Sale. 82 {d) . Deeds. 82 {e). Seal and its Effect. 82 (/). Essentials of Deeds. 82 (g). Dower and Courtesy. 82 {h). Value of Established Forms. 82 {i). Registry. Title- search. 82 (j). Judgments. 82 {k). Statutes of Limitations. Prescriptions. Appurtenances. 82 (/). Title Insurance. 82 (w). Clouds on Title. 82 {n). Delivery of Deed. 83. Mortgages. 83 (a). Bonds. 84. Leases. 85. Rights of Third Parties Re- garding Registry. 86. Effect of Fraud. 87. Land Differs from Negotiable Papers. 88. Technical Meaning of "Estate" in Land. 89. Rights under Estates for Years. 89 (a). Repairs. 89 (6). Subletting. 89 {c) . Termin ability, Notice. 90. Rights under Life Estate. 91. Under Estates at Will. 92. Appur- tenances. 92 (a). Party Walls. 92 {h) . Land beside Roads. 92 (c). Land by Water. 93. Restrictions. 94. The Torrens System. Chapter VIII. — Personal Property : 87 Evolution of Rights in It. Sec. 95. Product Varies with Abilitv. 95 (a), even the Product of the Lowest Laborers. 96. Difficulty of Adjusting Rights between Ability and Labor. 97. General Functions of Ability. 97 (a). The Civilized Man Loses the Savage's Inde- pendence. 97 (6). Things Made to Embody Thoughts. 97 (c). Averages and Ability. 97 {d). The Lower Depends on the Higher. 97 {e) . "Finds Work." 97 (/). Increases Product. 97 {^)- Saves Waste. 98. Detailed Functions of Ability. xviii Contents. 98 (a). Prophesying Wants. 98 {h). Raising Capital. 98 (c). At the Works. 98 {d) . Outside of the Works. 99. Popular View of the Enterpriser. 100. Divisionlof Labor. loi. Few Men can Conduct Large Enterprises. 102. Ability Outside of Tangible Production. 103. "The Great Industry" Cheapens Product. 104. Enterpriser's Income Not at Expense of Labor. 105. Invention and Evolution. 106. Labor Abounds in Poorest Countries. 107. The Enterpriser must Pay Good Wages. 107 (a). Often in Bad Times. 108. Where Ability's Reward does Come from. 109. Production Not All by Hand. no. Destruction of Bad Economics. in. Values Depend on Sound Morals. 112. Paradoxes of Distribution. 113. Para- doxes of Opinion. 114. Why Returns of Labor are Nearly Fixed. 115. Why Those of Ability Vary Widely. 116. Capi- tal's Return More Like Labor's than Ability's. 117. Ability cannot Waste Time and Strength in Grinding Labor or Capital. 118. Capital and Labor Powerless without Ability. 119. The Rates of Division. 120. Enterprisers Generally Get Less than Nothing. 121. Handworkers of Special Ability. 122. Prop- erty Not All Tangible. 123. Comparative Profits in Different Fields of Ability. 124. Why so Few have Great Ability. 125. Discovery of the Foregoing Truths. 126. Ability In- creasing. 127. Suum Cuique. 128. Minimum Wage and Slid- ing Scale. 129. No Lack of Opportunity. 130. But Few Able to Embrace It. 131. Is Inequality of Fortune Right? 132. Evils have their Uses. Chapter IX. — Property as Capital 116 Sec. 133. As Much Entitled to Government's Protection as Wages. 134. A Man who can Use Money can Hire It. 135. What Capital Consists in. 136. Rent. 137. Interest. 138. Usury. 138 (a). Laws against It Useless. 138 (6). Disappear- ing from Enlightened Communities. 138 (c). Hard on Bor- rowers. 139. Needs for Associating Capital. 140. Incorpora- tions. 140 (a). As Affecting Liability. 140 (6). Perpetuity. 140 {c). Stocks and Bonds. 141. Large Corporations Not All Owned by the Rich. 142. Irresponsibility of Corporations. 143. Very Small Corporations Undesirable. 144. Why Labor Hates Corporations. i4S- Danger of Monopoly. Chapter X. — Competition, Monopoly and Industrial AND Labor Trusts 127 Sec. 146. Rights of and to Competition. 147. Hated by the Lazy and Stupid. 148. Benefits Illustrated. 148 (a). In Do- mestic Convenience. 148 (h) . In Travel. 148 (c). In Com- mercial Traveling. 148 [d). In Regulation of Prices through Demand and Supply. 148 {e). Minor Exceptions. 149. Evils in Competition. 149 (a). Suppressing Incapacity not among Them. 149 {h). Nor is Poverty. 149 (c). But Wastefulness is. 150. Public Seldom Gainer by Wasteful Competition. 151. Contents. xix Cooperation and Competition. 152. Capital Trusts. 152 (a). Their Economy. 152 (b). Not Generally Profitable. 152 (c). Their Monopoly Sometimes Causes its Own Cure, 152 (d) . and Sometimes does Not. 153. Property Rights do Not Always Include Monopoly Rights. 154. State Control. 154 (a). By Anti-trust Laws. 154 (b). Capital Trusts and Labor Trusts. 154 (c). By Fixing Prices. 154 (d). By Eminent Domain. 154 ( i i • more like. Labor's cipient oi the lion s share, as he is com- than Ability's. monly held to be, generally is that, only so far as he is both capitalist and enterpriser. Otherwise, he is only about on a par with the wage-earner. Capital is. everywhere, and there is a market rate for it, just as for wages, tho as it does not generally need its in- come from week to week, it is more apt to take chances at a share of the profits than the laborer is : the laborer nearly always (tho not always — not in fisheries, for in- stance) commutes his share for a fixed sum regularly paid. As the laborer and the capitalist are so nearly in the same boat, the unending talk of the conflict between capital and labor is mainly a survival of words from old conditions. In the early days of the great industry, the capitalist and the enterpriser were generally the same man; but even then, the struggle for shares of product was really with him as an enterpriser rather than as a capitalist. Nowadays when the enterpriser is so generally merely an officer of a corporation, in which his share may be little or nothing, and when he is apt to be a mere borrower of all or most of his capital, capital's share of product is nearly as fixed as labor's, and the enterpriser is really the person struggling to see how much he can realize after paying both. The conflict, then, so far as there is any conflict, is between Ability on one side, and Capital and Labor on the other, when the enterpriser is not at peace § 1 19] Personal Property. loy with capital by owning most of it himself, wiste timlanT°* But it is the cheapest sort of nonsense to strength in gnnding claim that in our day men of hi2:h ability labor or capiial. ^ ,. . . . -^ ^ . , & _ "-^^-lj-luj waste tneir time m trying to grind the face of either capital or labor : able heads are apt to be too full of making money, to bother themselves much with petty means of saving it. The pettifogging is carried on by a lower type of man ; altho the wisest men make mistakes, and all men, rich as well as poor, and poor as well as rich, see their own side too exclu- sively. 118. Canital and , ^^ ^^ °^^^^ supposed that if the laborers labor powerless thcmselves owned the factory, or the store without Ability. Q^ ^j^g steamboat, and all in them, they could then get along without the Man of Ability. But in the first place, they very seldom do own the estab- lishment; and where, by saving up and putting their money together, they have owned it, they have always failed, unless the born Man of Ability arose among them. Then the born Man of Ability has generally in time got his share of the product, and until very lately (126), he has generally ended as the owner of the con- cern. And he has not stolen it : without him, the thing has generally soon been shut up. But where he has taken hold, he has enabled the men to produce enough to pay their wages, and sometimes more; and what was over, was of course fairly his own production. Outside of a few cooperative establish- division! ""^^^^ °^ ments carried on by very exceptional work- ingmen, men without a manager have not produced enough to pay their wages. It seems to fol- low, then, that when an exceptional establishment does pay, the production above ordinary wages, is pre- sumably the manager's. Karl Marx and his school say that the manager gets this production and more too. The modern school says that he gets less. Mal- lock says that the workmen produce five thirteenths of the output, and get paid for seven thirteenths. Sound economists agree with his general position, tho he alone io8 The Protection of Rights. [§119 is responsible for his figures. But this does not mean that if the enterpriser gets six thirteenths of what is produced — that if every day he were paying seven hundred rnen three dollars apiece, he would get eighteen hundred dollars a day to each man's three dollars. It means that the six thirteenths have to pay not only profits, but taxes, insurance, rent, interest on borrowed capital, and dividends to stockholders, if there are any. 120. Enterprisers ^^ ^ matter of fact, what the enterpriser generally_ get less generally gets out of the six thirteenths, is than nothing. something less than nothing at all — he gen- erally uses up all the money that has been put in the business, and fails (loi). The wage-earners get their share first, and next the other claimants — landlord, sup- pliers of machinery, fuel, raw material and merchandise, and lenders of money — get what they can, and if there is anything left (which in most cases there is not), the enterpriser gets it. But to the casual observer of the business world, all this will read like nonsense. He will naturally ask: If the money embarked in business is generally lost — if ninety-nine enterprisers in a hundred lack the ability to succeed, how can large industries be carried on at all? They are carried on by the one man in a hundred, or the one in a thousand. Until an enterpriser has proved himself, people will not trust him with much capital. So before much is lost by incapable managers, they fail — competition weeds them out and returns them to the ranks, while the capable ones survive to conduct the large industries. 121. Handworkers ^^ have Spoken SO far mainly of Ability of special Ability, ^g guiding mechanics or others who handle material things. Let us stop a moment to con- sider other men of ability who work with their muscles. Artists, musicians, pubhc performers of all kinds, work with their muscles, and sometimes those of great Ability make thousands of dollars an hour. ''Goods" are not all of them mere material things: art, literature and science are among the highest goods, and people pay high for them, when of best quality, whether in music, books, § 123] Personal Property. 109 pictures, statues and beautiful houses, or fees to doctors, lawyers and engineers. 122. Property not Property, then, is not only in tangible all tangible. things : some of the most valuable proper- ties are in mere rights, such as the rights to make and sell patented inventions and (tho seldom of equal value) copyrighted books, music and pictures. Some other examples of mere rights that have a money value, are that at the great fairs, the rights to keep restaurants, rent out rolling chairs, sell papers, candy, and even peanuts, are sold for large sums. So often are rights to put down railways, even before a tool has been used in the work. Of course, to exercise ability and reap its rewards, a man need not necessarily either guide hands, his own or others', in producing or handling material things. Not to speak of inventors, the lawyers and statesmen regulate productive industry, and so add to production. We might liken the world to steam machinery. The steam-power — the engine, is labor; machines — like looms and cotton-gins, are the ability that makes the power useful ; and the lawyers and statesmen are the governors and fly-wheels. So far as they see that justice is done, that taxes are wise and government good, they keep things running easily and smoothly — the power from being wasted, and the machines from going too slow, or so fast as to tear themselves to pieces. .00 r r There seems to be a general impression, 123. Comoarative ,,.,. -, i,ri .1,1 • Drofits indifferent Dut it IS a douDtiul One, that busmess men fields of Ability. ^^ ability— who control material things, are as a rule richer than the surgeons, and artists, and lawyers, and statesmen. It is certainly doubtful whether they are, in proportion to their numbers ; many doctors and lawyers are rich, but there are a great many more men in business, and therefore a great many more rich ones, and of the comparatively few men in the fine arts and the other professions, by no means all have much ability, any more than have men in business. Whether as a question of causes, or as one of natural justice, there are certainly few questions more interest- no The Protection of Rights. [§124 ing than why a few men have most all the ability, and therefore most all the property, while have ^-eat AbiliTy- ^^^^ men have very little of either; and it is but a superficial answer to say that it is probably for the same reason that a few horses have all the speed and beauty : for we do not know the answer much better regarding the horses than regarding the men. The causes are all a question of evolution, not very well worked out yet. The truths we have been considering about the shares of the various producers, have not long been understood. ioc n- ^ The bottom ones were first clearly stated 125. Discovery ot . ^ , ttt n , ii-r\ i-, • 1-1^ ,, the foregoing m General Walker s Political i^conomy, *''"^^^' in 1874, and since then they have been followed up and expanded, particularly by Professor Marshall and Mr. Mallock. It used to be believed that what the enterpriser got, he got by having control of the tools and materials, the store, the railroad, the steamboat, and forcing his men to let him keep a part of what they really produced or exchanged. 126. Ability '^^^^ Man of Ability is certainly appear- increasing. ing oftener than he used to. A new state of affairs is growing up in England. At last workmen are putting their money together and enterprising their own industries, and are rapidly developing so much ability that they can manage themselves through direct- ors elected by themselves. Of course they cannot all be bosses, but they are capable of directing sufficiently to prevent having to depend entirely on any one or two men; and the rank and file are developing sense enough to help their leaders instead of hindering them, as has been too often the case before. 127. Suum That men who are mere machines — who cuique. (Jo not economize production, have any just title to profits from economized production — that men who take no part in organization, have any just claim in the profits from organization, are both prop- ositions which, however desirable the advance of such men's lots may be, are too absurd to promote such an advance, or any other good thing. But such descrip- §128] Personal Property. iii tions of limited function do not apply accurately to many men, and ought not to apply to any. As already intimated, there is ability in varying amount, among men who are directed by larger ability; and the ability of men under direction can" be stimulated and increased. Moreover, it is plain that ability, little or big, should have its little or big share of profits. .00 M- ■ A rouph and limited justice in this re- 128. Minimum ^ . ^. ^ 111 wage and slid- gard IS already reached by wages varymg ingscaie. somewhat with the productiveness of em- ployees, but the justice is very rough and very limited. Various schemes have been tried to improve it. Among them have been sliding scales of wages, varying with the profits of the business. A minimum wage (272 d, 276) is of course a necessary feature of this: for the men cannot be expected to have any reserves to fall back upon if the business pays no profits, and moreover, in many such cases, they go on producing in their way, and are entitled to their production. If the enter- priser cannot make money out of it, that is his risk — a risk he often takes for the sake of his men, when, in a sense, it is no risk at all, but a dead certainty against him. Nevertheless, in average cases, an enterpriser sets his men to making product, from the expectation that he will make a profit on it, and there can be no question that so far as labor goes into that product, the product belongs to labor, and labor is entitled to the value from it which was commuted as wages. Hence a minimtim wage, with an advance varying with profits, is a clearly logical scheme, at least so far as concerns the minimum. As concerns the advance, it is logical so far as profits are contributed to by advanced energy, carefulness and economy on the part of the workmen; but it is not logical so far — and that is the main dis- tance — as the profits depend upon initiative, organizing ability, prophetic sense, study of the market, and finan- ciering ability — air en the part of the employer. As soon as a workman shows any appreciable amount of these rare elements of ability, the question of a sliding scale of- wages will have brief interest for him : his employers 112 The Protection of Rights. [§ 128 will be only too glad to use him in some higher place where such questions do not arise, or he will himself be able to put himself there. It would appear, then, that the portion of profits which can reasonably be devoted to a rising scale of wages, beyond the amount to which the wage-earner is entitled anyhow, cannot be a very large one. 129. No lack of ^^ "^^e various schemes for making the opportunity, whole establishment a vast partnership, it will not do to lose sight of the same principles. As the man of ability is a rare product of Nature, and as any considerable business is fated, to destruction without him, and as he mtist provide his weaker brethren with their wages, and bear whatever losses may arise in so doing, whatever profits come out of the concern (and as said before, comparatively few men who essay the task, bring out any) are logically his, except in the small degree that his men may be able to contribute his kind of virtues. The difiiculty of their contributing them is not only in the rarity of such virtues, but in some small degree, as business is inevitably organized, in opportunity. But how rela- tively small that lack of opportunity is, can be realized only by those who, like the writer of these lines, have been for many years anxiously watching among a group of subordinates for the slightest gleam of business capacity, and on finding it, in one man in scores, eagerly setting it to fitting work; and this at least as much from selfish motives as from desire to give another his due chance. The minimum wage and the small share in profits (and none in losses) being then the best present chance of the man who lacks the ability to rise beyond wage- earning, and that chance being distributed with an approach to uniformity that but very roughly recog- nizes differences in capacity, what can be done to give the wage-earner a better chance? Whatever can be done, he will do most of himself. Gen- to e'mbrace^it.^^'^ erally he will do nothing beyond furnishing an equivalent, more or less adequate, for §131] Personal Property. 113 his wages, and will finish his life as he began it. As the world is now organized, sometimes he will show enough ability to attract the attention of his superiors, and will be welcomed to such higher functions in the establishment as he is able to perform — perhaps its headship. Sometimes he will save his money, and start a little industry of his own. In this he will gen- erally fail, and revert to the ranks. In rare cases he will succeed, and furnish opportunities to make a living to some who cannot make opportunities for them- selves. In rarer cases, he will furnish enough such opportunities, and exercise enough capacity in shaping and handling the results, as to make himself rich, whereupon all those for whom he has provided the opportunities, will say that he has got rich by robbing them. Or finally, by becoming a cooperator, our wage- earner may get the benefit of whatever ability may be in him, and may rise without incurring jealousy. But success in producing has so far attended very few cooperative experiments before they had ceased to be cooperative, and had come under the ownership of men of ability. Yet more men of ability appear to be developing from the ranks, and the ability of the ranks themselves seems increasing. As to the question of natural justice already alluded to — does it seem right that because one man is born very able, and another, who may be a offortunTnght?^ better man at heart, is not very able, the first should be prosperous, and the second poor? That depends upon what we mean by "right", and that again depends upon what we are using the word for. If we are using it for our hands, the right hand is the one most people can use best ; if we are talk- ing about a right line, it means one that goes direct from point to point; if a clergyman speaks of a right action, he means such a one as his church would approve ; a lawyer means by a right, something that the govern- ment, or the law, will or should secure to a man; and a, philosopher would mean, an act for the greatest good of the greatest number, or he might mean an act in 114 ^^<^ Protection of Rights. .. [§131 accord v/ith Nature's laws. The fortunes of Peabody, Cooper, Vanderbilt and Stewart are certainly in accord with Nature's laws, and therefore in this sense must be ' ' right " . As to the greatest good of the greatest number, probably few would question regarding Pea- body's and Cooper's; and certainly Vanderbilt's and Stewart's resulted from work which "the greatest number" could well afford to pay the fortunes for, if they had had to. But they did not have to: for, as we have seen, the fortunes would not have existed but for the savings effected for the community, part of which savings made the fortunes of the enterprisers. Admitting, then, that wealth honestly acquired is right, especially when used as Peabody and Cooper used theirs, is the corresponding poverty right too? Well, if "corresponding poverty" means that the majority of mankind is poor because the minority is rich, there is no "corresponding poverty": men of ability while making their own fortunes, imiprove those of their employees and of the whole community, in- stead of diminishing them.. We often find things in accord with Nature's laws that seem not for the greatest good of the greatest number, but even to our finite vision, investigation generally shows that they only seem so. 132. Evils have True, Nature is a hard mother to the their uses. ineffective man. She starves him, freezes him, often kills him, unless the effective man guides him or saves him by charity. She fills the world with beauty and opportunity; but so far, she has evolved few who care for the beauty, and fewer still who can seize the opportunity. Harder still, perhaps, she even takes away from the ineffective man most of anything he may have, and passes it around, unless it is wasted, until it reaches the hands of the effective man. Truer words were never spoken than: "Unto every one that hath, shall be given, and he shall have abundance; but from him that hath not, shall be taken away even that which he hath." And yet Nature, by her very hardness, through forcing §132] Personal Property. 115 her children to help themselves and depend for help on each other, has evolved from the ineffective merci- less savage, the effective sympathetic man ; and through him she is indirectly showing to her less favored children the mercy that she does not show directly. Poverty and disease exist only because Nature (in- cluding the man she has evolved) has not yet worked entirely beyond them. Nevertheless, great numbers of people have vowed not to help in the improvement, but to be poor all their lives, because they thought it for their own good, and for the good of their fellow men; and some of them have even gone so far as to try to make themselves sick by fasting and vigils. We can hardly assume that there was not any truth whatever in their ideas. But good people often do very foolish things because they get too enthusiastic over one part of the truth. The part here is that poverty and sick- ness, being natural, must have some good resulting from them, but the good is in overcoming them, not in seek- ing them, as the ascetics used to. Some of the noblest efforts and wisest discoveries and greatest advances of the race have been made in overcoming poverty and sickness. In fact, the history of civilization has been an overcoming of disadvantages. Most of the intelli- gence and morality of mankind have grown up through conquering the hard conditions of Nature. All early men were savages, man has become civilized only through the conquests he has made. Through over- coming Nature's difficulties, he has become brave and strong; through hard study of her secrets, he has become wise; and through helping others who would not have needed help if there were no poverty or sick- ness, he has become benevolent. Poverty and sickness, then, do tend to develop use- fulness, tho most modern men prefer to have their usefulness arise from different experiences, even at the cost of disagreeing with the early saints. CHAPTER IX. PROPERTY AS CAPITAL. The sources of property rights we have so far consid- ered, are Land (including, of course, its rent), the wages of ordinary Labor, and the profits of AbiHty. That government should protect all those property rights — in rent, wages and profits, is a matter-of-course too simple to discuss. Equally of course, that governm.ent tftfed toTovem"-' should protect any one honest dollar of as^wa%s'"°^^^^'°" rent, wages or profits more than any other honest one, would be absurd. If a laborer does not use up all his wages, that it should be govern- ment's duty to protect his rights in only the portion which he uses up, would be an idea twice as absurd as the other. And yet many people unconsciously enter- tain that idea. Of course if government should protect a man's enjoyment of his wages, it should protect his enjoyment of his savings. If, instead of wasting his surplus wages in expensive food or drink, or unnecessarily fine clothes, he sees fit to save them and add to the permanent wealth of the community in the shape of, say, an addition to his house, or to add to the amount of cultivated land by a garden, it is plainly government's duty to protect his rights in them. To support the contrary would be even more ridiculous than to support either of the previous suppositions. If then, instead of enjoying his savings himself by, say, adding to his house or garden, he sees fit to provide ii6 § 135] Property as Capital. 117 employment for other laborers, say by building a little factory and stocking it with tools, to doubt that govern- ment should equally protect his rights in that, would be the most ridiculous of all. Supposing, then, that instead of stopping at saving enough to build a little factory, he were in time to save enough to build a big one, or even a railroad, it is self- evident that government should protect his rights in that too. To question it would be to say that government should protect a man while he is being of comparatively moderate usefulness, but should desert him as soon as he begins to be of great usefulness. Now we have just been going over the ground through which most rich men have become rich. The men who are constantly grumbling that the "poor man stands no chance ' ' keep their eyes tight shut to the plain fact that the vast majority of rich men started poor, and got rich by the ways we have been describing. Not one in ten of them inherited his money, and when he did, his father generally began poor, and got it in the ways described. Yet they seldom saved all they made use 134. A man who of. As soon as a man shows that he has can fifreTt"^^ the ability to make, save and use a little money, other people who have saved are glad to lend him more. Money seeks just such invest- ments. Money thus saved, and employed in the instruments of production, is called Capital. The usual forms of capital are land — consisfs^fn. ^^'''^^' where used for a farm, mine, factory, store, railroad, or anything else that produces or saves wealth; all tools used in production — includ- ing machinery, vehicles and animals ; all stocks of goods for sale ; and all wages and other expenses to keep the industry going before the product is sold. We first named the essentials of modern industry as Labor, Ability and Land. But as we have gone on, we have indicated many things besides land — such as ii8 The Protection of Rights. [I ^2>S buildings, raw material and machinery, as equally essential. Yet altho those things eventually depend on the land, it is much handier to group it with them under the name of Capital. If capital is in land, it gets its returns in Rent. Even if a man works his land himself, what he gets more than the equivalent of wages, can fairly be called rent. If an enterpriser hires tools, what he pays for ' ^" ' them is often called rent. If instead of hiring tools or land, he goes to a man whose savings are in money, and hires that, in order that he may buy land and tools to give workmen employment, the name given to what he pays for the use of the money depends upon whether he turns over a share of his profits, whatever they may be, or pays a fixed price. If he pays a fixed amount for each dollar ' " ^""^^ ' and each day's use of it, he pays interest. There is no reason why, if a man keeps his savings ready to hire to others in the shape of money, he should not get paid for the use of them, just as he is paid for the use of them if he puts them into land or tools. To deny a man's right to interest on his m.oney is as absurd as to deny his right to rent for his land, or hire for his horse or boat or tools. Yet the world long held the opposite opinion. But the world has had to outgrow a great many foolish opinions, and will have to outgrow a great many more. In the good old times when people were ■ ^"'*^' even more foolish than they are now, all interest on money v/as called usury, and the taking of usury was considered wrong, and it sometimes is still. But only interest above the legal rate is called usury now, and there is not even a legal rate everywhere. In some places people can agree on what rate they please, but the law generally provides a rate that shall apply to a debt in dispute or otherwise delayed, until it is settled. Yet in places where the law fixes a rate which L ws ^^^ never legally be exceeded, such laws against it are not generally observed. They are "^^'^^^' simply ridiculous survivals of the old § 138 ^] Property as Capital. 119 superstitions that prevailed before people knew much about money. About the end of the nineteenth century, public opinion in New York had grown sufficiently enlightened for the passage of the following law regarding Interest. It leaves many, perhaps most, of the large transactions subject to the law of supply and demand, while it con- tinues the alleged but illusive paternal policy of pro- tecting the man not up to large transactions. "The legal rate is six per cent. A corporation cannot plead usury as a defence. The taking or agreeing to take any greater sum renders the contract or obhgation void, except in bottomry and respondentia bonds and contracts. For advance of money of not less than five thousand dollars, payable on demand, made upon warehouse receipts, bills of lading, certificates of stock and of deposits, bills of exchange, bonds, or other nego- tiable instruments, pledged as collateral security for such re- payment, it shall be lawful to receive or to contract to receive and collect, as compensation for making such advances, any sum to be agreed upon in writing by the parties to such trans- action." Tho the legal rate in New York is six per cent., the actual rate in Wall Street is generally from two to four per cent., but sometimes, for a short pinch, from one hundred to two hundred per cent. The law, in New York for instance, (except as modified above,) nominally punishes taking more than the legal rate, by canceling the debt; but practically does not punish at all. The most law-abiding citizens do not call upon the law, though it v/ould enable them to get rid of their debts: for if anybody did, he would not have to pay back the money borrowed. But a man's promise to pay is a more sacred thing than a worn-out law, and a man who acted to the contrary would find it hard to borrow the next time he might be in need. A large part of the world has already acted more freely than New York upon these opinions about the 138 r6;.D/sappea.- absurdity of usury laws. In England ing from eniight- there has uot been a usury law for over ened communities. .1 • j. j • thirty years, and m our more progressive states, people can contract for any rate they please, I20 The Protection of Rights. [§ 138 ^ without collateral, tlio a legal rate is always provided in case money lying in dispute is ultimately' recovered. The useless and ridiculous law is kept on some of our statute-books, however, because the majority of voters are too stupid to get trusted with much money, or know much about money, and they have an idea that a legal rate of interest enables them, if they can borrow at all, to borrow lower than they otherwise could. The fact is quite the reverse : they gen- ^b^riower^'^'^ ^" ©rally havc to pay more than the market rate, in order to compensate the lender for the risk of their appealing to the law to release them from paying back. The best opinion now is that usury laws are a disadvantage to everybody, and to the poor man most of all. The poor man nearly always has to pay the legal rate, while the rich man may not be paying a quarter as much; and when the man in good credit can get all he wants at the legal rate or below, it is generally impossible for even the deserving poor man to get it below the legal rate, and often impossible for him to borrow at all. If there were no usury laws, he would generally be able to get money at somewhere near the market price. Yet in backward and ignorant countries, clever usurers sometimes despoil the stupid people frightfully. Such people might be better off if paternal governmients would give them usury laws. But a people professing (rightly or wrongly) the ability to govern themselves, should in consistency profess to be able to make their own contracts. .09 M A f Now let us take up a new phase of associating capital. We have seen (100, 103) that for ^^P'^^'" the community to get the benefit of "the great industry" through cheapened product, it is necessary to do things on a very large scale, and there are some things that it is not worth while to do at all unless they are done on a very large scale — railroads and steamships, for instance. If each man in the civi- lized world who is rich enough, were to build a railroad § I40 a] Property as Capital. 121 or a steamship or a great factory or some other great convenience, there are probably not half enough rich men to give us all the railroads and steamships and similar great enterprises that are needed. Even if there were enough rich men, it would not be wise for one to put his whole fortune into making one or two such things : it is never wise to put all the eggs in one basket. In fact, there are some very important enter- prises, such as new inventions and mines and explora- tions, and other uncertain things, into which it is very unwise for anybody to put more than he can afford to lose. The capital is generally obtained for enterprises too large or too uncertain to be undertaken by one man, or by a partnership of two or three, by a great number ,^„ , ,. of people — sometimes thousands, putting 140. Incorporations. .i- ^ ,1 iij^- r their money together, and electing some 01 their number to manage the enterprise. Judge Bald- win * says that probably four fifths of the business capital and of the industry of the country are now rep- resented in such associations. But, it may be asked: if a hundred men combine to do a business, how would anybody want to trust them, when to collect, say, a hundred dollars, he might have to sue a hundred men for a dollar apiece .f* The law has met this difficulty by providing that, under proper circumstances, a number of persons may be incorporated into one fictitious person called a Corporation, and that the corporation may be sued, or may sue, or do business in almost any way, just as if it were a single person. HQ (a). As affect- Morcovcr, if men go into business to- ing liability. gethcr as partners, no matter if each puts in only a tenth of what he has, any one of them can run the firm into debt so that all might have to pay out all that they have, and this while all are attending to the business themselves every day. Therefore, if an enterprise were proposed to be owned by a thousand partners whose interests do not average more than a * "Modern Political Problems." ■ 122 The Protection of Rights. [§ 140 a thousand dollars apiece, apparently nobody would be foolish enough to take an interest, when any one of the thousand partners might run the concern into debt so as to use up the whole fortune of any of the others. Yet people have often been just that foolish. A very conspicuous case is that of the Glasgow Bank which failed in the seventies: partners who were not interested more than a hundred or two dollars — some of them women and old people and children, were de- prived of that and of all their other means of support, to pay the bank's debts. After such experiences, people take the risk of these big enterprises only because laws have been made that the members of corporations observing certain rules to protect the public against bad management, shall not be liable for the debts of the corporations beyond the amounts they have invested. 140 eft;. Perpetu- In a partnership, if a partner dies, the ^^y- partnership usually comes to an end ; and (unless careful arrangements have been made to the contrary) the business must be sold, even if it is bought in by the other partners and the family of the deceased. But if there are a thousand people in a corporation, it is not necessary to sell the whole thing out whenever any one of them dies. The law provides that corpora- tions shall not come to an end when one of the con- tributors dies, but that his share shall go on, without being entirely separated from the rest, to those who inherit from him. 140 (c). Stocks When there are numbers of subscribers, and bonds, i]^q shares are kept track of by entering all the subscriptions in a book, and issuing for them numbered certificates, called shares of stock, generally one share for each hundred dollars subscribed. Preferred stock is a separate portion of the total stock, which shall be entitled to a certain amount of the divided profits (dividends) before any are paid on the remaining, or "common", stock. Sometimes the dividends on preferred stock are "cumulative" — that is : before any dividends can be paid on common stock, §i4oc] Property as Capital. 123 payment must be made for any deficiencies of previous years below the rate prescribed for the preferred stock. When a corporation wishes to borrow for a con- siderable time, it generally executes a mortgage (83) to some one party, who sells out the claim secured by the mortgage, in portions generally varying from fifty dollars to one thousand dollars, according to circum- stances. These portions are expressed in documents under seal (82 d) which are called bonds (83 a), and are sold to anybody who wants them. Many of ours have been bought by Europeans: in other words, the Euro- peans have lent us a great deal of money. The chief differences between stocks and bonds are: (I) a certificate of stock declares that the holder is part owner of property, while a bond declares that the holder owns a claim against a property, which claim is fixed in amount, and must be satisfied before the owners of the property can benefit from the property; (II) bonds have a steadier value than stocks. A piece of property need not pay more than a hundred cents on the dollar upon any bonds it may be liable for, and it must pay that much if it can, and it generally can: for people are not apt to take bonds on a piece of property for more than a part of what it is worth. But if it turns out to be worth barely the amount of its bonds, the stock- holders get nothing. On the other hand, if an enter- prise is enormously successful, the bondholders get only the amount of their bonds, and the stockholders get all the rest. Stocks and bonds are both, in effect, claims against property, either real or personal, tho the law regards both the stocks and bonds themselves as personal prop- erty. People sell stocks and bonds just as they do any other value, and the places where those of the most prominent companies are bought and sold are called stock-exchanges. The prices of stocks at the exchanges become guides in settling many civic questions. When business is expected to be good, the prices of stocks are high, 124 The Protection of Rights. [§ 140c because the enterprises they represent are expected to divide good profits — pay good dividends. Therefore when a great question hke a pohtical campaign or a war is before the people, the prospects of one side or the other will affect the price of stocks. So when a rise in stocks generally attends the good prospects of one side, that must be the side which makes for safety of property, activity of business, and high wages. But by no means all the stocks and bonds of cor- porations are dealt in at the stock-exchanges. Only those which the managers of the exchanges think of enough importance — probably not one in ten thousand — are put on their lists. The small corporations are unfavorably affecting the craving for land that some philosophers think the wisest of all economic desires. Laborers are not trying to own their own homes as they used to, but are putting their savings more into all sorts of incorporated enterprises. To sum up : the principal benefits conferred on the community by corporations, are that they make it possible to cheapen product by the fullest develop- ment of " the great industry ", to carry on enterprises too great or too uncertain for private capital, and to secure interests in business for the benefit of the owners' heirs. Another advantage is that their stocks and bonds are often good investments. Yet while many are, many more, perhaps, are not. The bonds of the suc- cessful ones are very convenient investments for people who have a little more money than they want to put in a savings-bank, but have not money enough to buy a piece of land worth taking care* of, or a mortgage on one. Those sold on the exchanges are also good in- vestments for funds that the owner may want to use at short notice, which is a consideration of vastly more importance than is generally realized. Sometimes even rich men get into trouble because their wealth is in prop- erty that cannot readily be sold. ... , There never was a greater mistake than por'ations not all the very current one that the bonds and owned by the rich, ^^^^j^^ ^^ ^^^ corporations are all owned § 143] Property as Capital. 125 by rich people. The general course of the money of people of moderate means, unless they have it invested in their own homes and shops, or building and loan associations, is something like this: a great deal of it goes directly into the bonds or stocks of corpora- tions, and much goes into the savings-banks; the sav- ings-banks gather up the little deposits and lend them out in large amounts, sometimes on the bonds of cor- porations, but generally on mortgages on land; and the sums thus borrowed are very largely invested by the rich in the corporate enterprises which they organize. So the fact is that, at bottom, the corporations are really largely owned by people of very moderate means — especially by widows and orphans who cannot go into business or manage real estate. iAo \ ' So much for the advantages of corpora- 142, Irresponsi- . ^ , . ^ ^ ^ f. ^ biiity of corpora- tions ; now there are elements 01 disad- *'°"^' vantage. The chief one is that, as the liability of shareholders is limited, and as, in the large corporations, it is an impossibility for many shareholders to keep close oversight, there is great danger of reckless and selfish management. This danger also weakens the credit of the smaller corporations. 143 Ver small There are too many unimportant little corporations unde- corporations, not Only because of the ^""^ advantages over partnership already ex- plained, but also because some time ago people thought it made a business look big to call it a company. But that has been overdone: the financial irresponsibility of the very small corporations generally makes them a nuisance; especially as many are started for the ex- press purpose of defrauding by the pretentious name of a "company", and without personal liability beyond the stock owned. The privilege of incorporation should not be given below a considerable amount of capital. The evil might be apt to correct itself, however, through the growing unwillingness of people to trust them, if the gull-crop did not seem inex- haustible. 126 The Protection of Rights. [§ 144 t44. Why Labor Labor generally regards corporations hates corporations, with extreme disfavor. As corporations do not die, and generally consist of so many people that they are very unlike a single human being, it has become a proverb that "corporations have no souls ". Moreover, as corporations run most of the very large industries, they are always most prominent in the great labor struggles, and therefore many people have come to dislike them, a.nd the tendency is to tax them unduly. Another reason why they are over- taxed is that in order to limit their liability, they have to publish some of their accounts, so that people will knoY/ how far to trust them; and the tax-collectors are thus better able, as they are generally disposed, to tax them for all they are worth. They cannot do this as readily to private concerns that do not have to pub- lish their affairs. This unfriendly attitude toward corporations, is to be deplored when it extends to corporations con- ducted fairly: and those large enough to cheapen pro- duction through "the great industry" generally are. So far as they are unjustly interfered with, their ability to cheapen things is impaired. 145. Danger of There is danger in their being very MonopolY. large, because they are apt to become so great as to run into monopolies. The word monopoly comes from tv/o Greek words meaning "one" and "to sell", and it means anything which has only one owner to sell. He of course can ask what he pleases, and so long as people will buy, his price is not limited at all by the cost of production. Until Parliament passed the statute against monopo- lies in 1624, they had been largely given to royal favorites. American courts have always held them illegal except for franchises for the public benefit, which can fairly be considered to include patents and copy- rights, and both of these are specially sanctioned by the Constitution of the United States. ' CHAPTER X. COMPETITION, MONOPOLY AND INDUSTRIAL AND LABOR TRUSTS. 146. Rio-htsof "^^f objection to a monopoly is that it and'to competi- deprives the public of its rights to Com- *'°"' petition. There are two principal rights regarding competition. They might be called the right of Competition, and the right to Competition. Each individual has the right of competition — the right of competing with other indi- viduals; and the community has the right to competi- tion — to the reasonable prices and improved qualities of goods and service that competition brings. The right of individuals to compete, is not a right that all are eager to claim. Lazy people do not want to com- pete, or rather do not want to have anybody lazyantitupid.*^' compete with them; they hate the very name of competition, and want the state to try to abolish it, because it forces them to work harder; and incapable people hate it because it drives them to the wall. Yet if they were wise enough to look at the question as consumers, they would see the whole active and able world competing to make things better and cheaper and more various for them. To illustrate the benefits of competition, suppose that, in a primitive community, milk is taken around in goat- skin bags. If somebody comes along with tfa^tech"""^*' '""'" a tin can, everybody will get milk from him [tJenfcTot'' "^^^^^ ^^^ °^^^^ dealers get tin cans. Then, suppose somebody else brings it nicely measured in bottles with spring stoppers, instead of 127 128 The Protection of Rights. [§ 148 a slopping it into each customer's pitcher amid the dust and heat of the street ; pretty soon everybody will take from the bottle man until all dealers supply bottles. In this way competition will have supplied the com- munity with good milk in neat bottles, instead of milk apt to sour, from goat-skin bags. But if the early dealer had kept a monopoly, the people would still be getting it from goat-skins. To carry the illustration a step farther: in some parts of the country, the milkman sits in his cart and yells or rings a bell, for the customer to come out to him; in the other regions, where compe- tition is lively, he jumps out himself and carries the milk in. To illustrate competition in means of 148 (b). In travel. ^ ^ .-l. ■ 4-t, • i travel: there, as m everything else, new methods are constantly driving out old. The railway competed with the turnpike road; steam, the cable car, the trolley and the automobile are competing with the horse; and the bicycle competes with mere walking. 148 (c). In com- Perhaps the greatest revolution effected mereiaitmveiing. ]^j competition in rcccut timcs, is the system of commercial traveling. A generation ago every considerable dealer outside of the great cities had to go to them at least once or twice a year to find out what was going on in his line, and to buy a large stock of goods ; now nearly everything is brought to him by samples. Moreover, as the travelers are constantly coming to him, he need not carry nearly as large a stock of any particular thing, and can therefore have a variety vastly greater and much fresher, and up to the latest improvements. Farther: in old times when the country merchants went to the cities on their regular buying expeditions, they were very apt to get led astray, and leave a good deal of money that they brought home nothing to show for. Under the new system, if they go to the cities as often as they did before, they certainly do not stay as long at a time. The army of commercial travelers with which com- petition has crowded the country, costs a great deal more than the old system of dealers going to the cities. §148^] Competition, Monopoly, Industrial Trusts. 129 But it costs not nearly as much in proportion to the amount of goods exchanged : the risk of unsalable stock is so much lessened, and the chance of getting the best and freshest thing for the money is so much increased. And all this has made it possible to supply more things and newer kinds of things for the same money. That has made new manufacturing industries possible, and increased the demand for labor, and the supply of con- veniences, in very many ways. In addition to the more direct benefits of this system of competition, commercial travelers have improved traveling facilities in general. They enable the rail- roads to give better and wider service than they other- wise could, and they have also led to a great improve- ment in the country hotels. After the stage-coaches went out, and before the commercial travelers came in, the country hotels got into a very bad way. Competition greatly promotes the steadi- tfon if prices"''^' HGSS of busiucss. It rcgulatcs prices, and through Demand makcs their risc and fall so gradual that and Supply. ^ • r people can make some preparation lor either : when goods begin to be abundant, sellers begin to compete by lowering prices; and when goods are becoming scarce, buyers begin to compete by offering higher prices. To put it in more scientific terms: prices are regulated by demand and supply. Prices are steady when the demand for goods or labor is just equal to keeping them in use at the prices asked. That equality is technically called the Equation of Demand and Supply. When the equation is disturbed by increase of supply, competition in lowering prices increases demand until demand and supply are again equal. When the equation is disturbed by increased demand, competition bids up prices and chokes off demand until demand and supply are equal. HS(e). Minor, That ''Competition is the life of trade", exceptions. jg ^^^ qI^ provcrb : it is of great benefit in keeping business active, and men at work. Yet it may not be quite fair to say that rise in prices is always started by the demand of competing buyers. 130 The Protection of Rights. [§148^ It always is in the great auction exchanges for stocks, produce and real estate, where probably most of the world's business is done. Tho of course private dealers do not merely mark up prices of staples to follow the great exchanges, but mark them up also on other articles when they find their stocks running short. 149. Evils in Every good thing can be carried to an competition. extreme, or used in a harmful way — in fact, some people think that all evil tendencies are merely good ones misused: accordingly, competition is sometimes harmful. It is often called harmful in driving out of business men who lack ability. But that is not harmful, even to the man him.self : if an unable ,._, , o man tries to conduct business, he is 149 (a). Suppress- . ' ing incapacity not always keeping his customcrs v/aitmg, among them. making mistakes, unable to furnish good goods, or any goods at moderate prices (except as his bankrupt stock ultimately gets into the bargain-stores) ; and he is under constant temptation to cover up his incapacity by dishonesty. His custom goes, of course, to more able men. Yet there ought to be a place in the world for a man whom Nature has not blessed with business ability: some of the best of men have lacked it. And there is a place for him under the guidance of the man who has ability; and the man without it is much better off there, than in stumbling along by himself, if he only has the sense to know it; and the community is vastly better off for his being there. 149 r^;- Nor is The notion has arisen that competition poverty. jg ^ causc of povcrty, because every man who is not conducting business himself, and sees rich men conducting it, thinks that if he were condtict- ing business, he would be rich too. Every mechanic in the shop blames competition for preventing his being boss; whereas if he were, in the vast majority of cases, he would soon be bankrupt and poorer than he is, and the rest of the men thrown out of employment. The minority who are really able enough to be bosses, are not many of them prevented by competition from § 151] Competition, Monopoly, Industrial Trttsts. 131 becoming bosses. They generally do it in good time. 149 re;. But waste- Yet competition is very often wasteful, fulness is. ^^-^^ 3^3 long as there are foolish men, it very often will be. But as to its driving a man out of business, that is not usually because of waste (unless it is his own waste), but because another man can make a profit by supplying the community at rates lower than the first man is able enough to. But nevertheless, there are plenty of instances of competition being carried to the point of Vv^aste on both sides — for instance, where advertising or drumming (both excellent things within limits) is carried to excess, or when a man has or thinks he has m.ore money than his competitor, and does business at a loss so as to get the other's customers away, expecting to make up his losses after his com- petitor is driven out of business. In this way, before- people learned better, the steamboats in the West and Southwest sometimes carried passengers for nothing, and even threw in their meals. True, the public got the 150. Public seldom ^^^.^^^ ^^J^^ Competition, but only for gainer by wasteful a time. After One party was driven out, competition. ^^^ ^-^^ monopoly held by the other, the monopolist could put prices where he pleased. Such business is not really competition, but an effort to kill off competition. Legitimate competition is really economiical. But leaving out of consideration persons who are ruined by v/asteful competition, if the public has been accommodated at extra-low prices, they might be no worse off if for a time they have to pay extra-high ones, were it not that they must pay them long enough to make up for the Vv^aste, and pay a profit on it. More- over, unsteady prices unsettle business: nobody knov/s what to count on; and prices lower than they ought to be, get people into wasteful ways that do not stop when prices get normal again. 151. Cooneration O^G is tempted to believe that the whole and competition. community would be vastly better off in wealth and peacefulness if competition could be re- placed by cooperation — if instead of all struggling 132 The Protection of Rights. [§ ^S-c against each other, we were all helping each other. But on considering how it is to come about, one is, as usual when venturing very far beyond experience,' mired in a tangle of paradoxes. Competition consists largely in the lowering of prices. This, instead of proving com- petition a bane, shows it to be for the benefit of the public. But on the other hand, we have seen that as regards the competitors, competition is often attended with great waste in drumming, advertising and ruinously low prices. Suppose then that the men in a particular trade get together and agree that they could make more by helping each other than by fighting each other; and so make elaborate agreements to regulate prices and limit advertising and drumming, or combine all their businesses under the regulation of a few of the principals. This has been done in the trusts. But 152. Capital trusts. Y\^hile, under them, the members of the trade get the benefit of cooperation, the public loses the benefit of competition. Here is our paradox: apparently we could benefit by helping each other, but as soon as we try it in the business world, somebody gets hurt. Yet it is true that with less ''human nature", the trusts could both lower prices and increase profits. Even as matters are, it is by no means certain that they do not. It is very certain that during the phenomenal advance of prices in America in the first half-dozen years of the twentieth century, oil, the most trust-guarded of all commodities, advanced among the least. But advances, whatever they may be, do not negative the fact that with less "human nature", trust-economized goods would be the cheapest, and would prove cooperation better than competition. So we can keep on hoping for a co- operative world, but it is destruction to try to realize it any faster than human nature makes the realization practicable. Mr. Bellamy expounded the notion of the benign trust in one commodity, into a benign trust in all, its functions to be conducted by the state. The benefits that he imagined from such a system were so great § 152 a] Competition, Monopoly, Industrial Trusts. 133 that he pictured the average family as Hving, instead of at the present average of six or seven hundred dol- lars a year, at an average of some thirty thousand. The benign trust alone is probably far beyond the range of human vision ; farther still is the degree of political capacity essential to the public administration of one; farther still, the political capacity to administer all; and when, if ever, these remote ideals have been realized, they will need to be reinforced by human control of natural forces, to a degree that still farther staggers imagination, before the good things of this life can be multiplied the fifty-fold that many dreamers fancy would result from an even distribution of the present product. But to come back to the world we know. A trust, if properly conducted, not only does away with wasteful competition, but it has more of the advantages of "the great industry ' ' than smaller individual businesses could have: it is getting to be an old story that the large production is the cheap production. \^2(a).Their Moreover, the trusts save expenses by economy. using fcwcr managers, clerks and buildings, as well as by diminishing traveling and advertising. Where the businesses to be united in the trust are con- ducted separately, many of these items are unnecessarily duplicated The trusts are said to have dispensed with 150,000 commercial travelers from '97 to '99, leaving these men to go into industries supplying new comforts and luxuries, or old ones cheaper. But that economy is effected by driving people out of work. That certainly is a benefit to the consumer, if the trust gives him part of the saving, tho it is not at the moment a benefit to the people driven out of work. But new demands for labor are created by the money saved through cheapened production : therefore people thrown out of work to save that money, will soon be at work again (331), and also benefiting, as consumers, by the cheapened production; and the drummers will soon be drumming again for new bene- 134 The Protection of Rights. [§ 152 a fits to the community,* or conferring them in other ways. If trusts do away with wasteful competition by crush- ing out estabhshments that do not join them, there are two sides to the question. Of course having so much capital, and being able to produce so low under the great industry, if it is their interest to keep prices low enough, the trusts can run destructive opposition to individuals: but on the other hand, after they have driven off competition, they may get prices so high as to encourage individual concerns to enter the busi- ness. As a matter of fact, these considerations have often kept the profits of monopolies within bounds. The weight of intelligent opinion is that but a small relative proportion of the great fortunes has been made in monopolized industries, but that most have been made in industries open to anybody with the ability to con- duct them. The Census returns for 1900 declare that ^au ^^I'ombir^^' ^^ various ' ' trusts ' ' or similar combinations, one-third paid no dividends, and another third paid dividends only on their preferred stock (i 40 c) . Notwithstanding the advantages hoped for by combina- tion, the stocks of most trusts are, thus far, held in very low esteem. This is largely because enormous amounts of them were issued in excess of the actual values of the properties combined in the trusts : in the whiskey trust, for instance, about sevenfold. A very large share of these excessive issues of stock often went to bankers, lawyers, and other promoters, for their services in effecting combinations. The great business depression of 1903-4 was largely due to people who su.pposed themselves rich in these stocks, having spent more money than the stocks turned out to be worth. On the other hand, some of the trusts, especially the * The landlord of a favorite drummers' hotel told the author late in 1900 that he had not noticed any difference in the aggre- gate amount of commercial travel, despite the 150,000 men said to have been thrown out by the formation of the trusts. § 152 <^] Competition, Monopoly, Industrial Trusts. 135 older ones whose stock was not so much watered, have been enormously profitable. The portion of the total output of their respective industries which has been controlled by the trusts, has varied between sixty and ninety per cent. The control of even sixty per cent, enables a combination to regulate prices pretty effectually. Probably the best brief summary of this important topic is contained in Professor Seager's " Economics." 152 (e). Theiy man- Inordinate prices in a trust are short- cal%!Ts^own^ sighted for tv/o reasons : first , the most prof- cwe, itable business must generally be done at prices low enough to .enlarge custom; and second, the only policy that justifies the existence of a trust, is the use of its great facilities to serve the public at prices that defy competition from smaller concerns. If that is hard on smaller concerns, they can join the trust, or go into some business to supply new con- veniences or cheapen old ones. Where it is a question of the public being served well and cheaply, it will not do to be tender about the interests of an individual. It is not meant from all this to intimate that, in virtue of preventing wasteful competition between their members, and producing by cheap processes, the trusts are an unmixed good. As already said, they are in danger of becoming monopolies, just as tlmisdo^s'^not!"^' is an individual competitor choking off another : and moreover, if there is no com- petitor to force the trusts to keep low prices, they are sometimes unwise enough to keep all the economies of "the great industry" for their own benefit until they find that course suicidal. But, it may be asked, has not a man a right to set his own price on his own property? If not, what becomes of property rights? If one man or one cor- poration or one trust has wealth enough to drive out weak competitors and get hold of the entire supply of any commodity or facility, is it not fair that people who want it should pay the holder's price? Perhaps 136 The Protection of Rights. [§t52<^ they should if they let a monopoly get the control, but that is just what they should not do. Moreover, a man has not always a right to set his own price on his own property : a man having a monopoly of plenty of food has no right to demand rights do^noRi ways ^ Starving man's fortune for enough food [.jci^u^^e monopoly to save him. There is a limit, then, to property rights. As we have already agreed more than once, there is a limit to all rights — ■ there is to everything we can conceive of, for that matter: the state has a right, whenever the greatest good of the greatest number requires it, to take a man's property or labor at a fair price, or even his life at no price at all, tho it usually pensions a de- pendent survivor. The state, then, might properly take an unjust monopoly's goods by eminent domain, and sell them to the people at reasonable prices. But \^x <;t.tP rnn+rni ^^^^^ ^^^ priuciplc is right, the way around IS long, it would be simpler tor the state to compel the monopoly to sell at reasonable prices, or better still, wherever the state can, to encourage compe- tition. Laws have been enacted regulating prices of such monopolies as railroads, water companies, etc., and there are also two classes of what are generally called anti-trust laws — one class providing that persons con- spiring to unduly raise the price of goods, shall be liable to the same penalties as persons conspiring to defraud; the other, that corporations so acting shall lose their charters, and trusts so acting shall be dissolved. Per- haps these laws are yet too new to show whether there is much good in them. So far, they have been found very hard to enforce: partly because it is very hard to get evidence that will fasten the guilt w^here it belongs. 154 (a). By Anti- MonopoHcs are against the common law, Trust Laws. ^ud in 1890 the United States Congress (as many state legislatures have done before and since) reinforced the common law by a statute. The following remarks on it in the Times of April 13, 1903, throw much light on the subject — not the least, on the difh- § 154^] Competition, Monopoly, Industrial Trusts. 137 culty of getting advantages out of such laws. The statute declared "contracts and combinations in restraint of trade or com- merce among the states to be unlawful. . . . Nobody had any idea, not even its framers, that it would be used against the railroads. . . . Up to the end of the year 1901 there had been twenty-three suits brought by the government under that Act. Only four of these actions attracted general public attention. The Knight case against the Sugar Trust resulted in the defeat of the government, the Supreme Court holding that production was not commerce. The Trans-Missouri Freight Association and the Joint Traffic Association were actual combinations to fix rates, and the Supreme Court declared them unlawful. In the Addyston Pipe and Steel Company case, a particularly vicious conspiracy in restraint of trade was broken up by the judgment and decree of the court. Taking the twenty-three government suits together, the government has lost eleven outright, has accomplished nothing in two, and has won ten. Of the ten, four are against labor unions and strikers. Of the remaining six, four are the suits above men- tioned. Three other suits, that against the Northern Securities just decided, the suit against the Beef Trust, and the suit against the Federal Salt Company, have been brought since the beginning of the year 1902. This makes twenty-six suits in thirteen years — two a year. No wonder the agitators pro- claimed that the law was a dead letter . . . the anti-trust law has been fished up from its condition of nocuous or innocu- ous desuetude, under which actions were brought at the rate of two a year, to be made to-day the most conspicuous statute in the land. . . . It is to be added, however — and the considera- tion is an important one — that President Roosevelt's provo- cations have far exceeded those to which his predecessors were subjected. The Northern Securities combination was quite the most flagrant, bold and undisguised defiance of the law of 1890 which the country has witnessed. The Beef Trust combination was also one peculiarly offensive to the popular sense of right, a sense somewhat sharpened, no doubt, by the high prices of beef which prevailed a year ago. " The brilliant success of the proceedings against the Northern Securities Company [a corporation formed to hold the stock of several railroad companies, and so do away with competi- tion between them. The government dissolved the corporation. It is not proved, however, that the result cannot be accom- plished in other ways], it is hoped in some quarters and feared in others, will inspire the Administration to an enthusiastic pursuit of other offending corporations. There are plenty of them. Not only the coal-carrying roads, but corporations like the New Haven Road, with its control of the Sound steamboat lines; the Pennsylvania Railroad, which in one way or another 138 The Protection of Rights. [§i54<^ controls the Reading, the New Jersey Central, and the Balti- more and Ohio; the Lake Shore, which controls the "Nickel Plate", and dozens of other railroad systems, small and great, lie open to the assault of the Attorney-General under the ex- ceedingly broad principles of the Northern Securities decision. There is no occasion to prove that they do restrain trade or fix unreasonable rates. The court says that is not the question; and the Supreme Court itself hg.s ruled that the possession of the power to do the unlawful acts is all that it is necessary to prove." The law has been invoked several times since the quoted editorial was written, especially regarding ice trusts, meat trusts, and railroad rebates, with the punishment of some offenders, and probably the dis- couragement of some abuses into which, without the law, the trusts both of capital and labor would have ventured. All newspaper readers know the details: so it is hardly worth while to state them here. More- over, Congress has passed the Railroad Rate Bill, whose efhcacy is yet to be tested, and the Meat Inspection Bill. ,.. ,. , ^ .^ , While in a case that has come under 154 r6;. Capital ... 1 r r ^ Trusts and Labor my knowledge, a number 01 manuiacturers ''"^^^' of exceptional standing were advised by their counsel not to agree on rates and prices, for fear they would be haled into court for violating the an ti -trust law, the Sherman Interstate Act, and the Donnelly Act, the members of the trades-unions all over the country are agreeing to keep up prices, with- out anybody paying any attention to the illegality of it; and all this despite the laboring man's standard claim that he, of all men, is the constant victim of injustice ! So far as monopolies are controlled, as they nearl^^ all are, by corporations, the state has a right to regulate them, because the corporations are made by the state. When the state confers on a corporation the privileges of limited liability, the right to sue and be sued as a unit, and the right of continuous association of property in- terests in spite of the death of a member, the state has a right, of course, to name the conditions on which it confers the benefits — the duties which must attach to §154^] Competition, Monopoly, Industrial Trusts. 139 the rights — and prominent among these conditions, of course, are defences against misuse of monopoly privi- leges. 154 (c). By fixing Probably the most frequent instance of P''''^^^- the state thus making wise conditions, is the regulation of railroad rates — street-car fares in cities, mileage rates on steam roads, and freight rates between points where there are not competing roads. It might be wiser to force the roads to keep their prices down, by setting a limiit to the profits they shall divide: for an arbitrary price might be less than they could continue business at. But a danger in limiting profits, is that the roads would prefer to earn them by a small and easy business at high prices, rather than a larger and more difficult business at low prices; whereas, if they are permitted to make all they can, they may often widen business by rates even lower than those which would give them the profit arbitrarily fixed for them. A road might make as much money by running a few trains at a dollar a head, as by running m^ore at seventy- five cents, and prefer the smaller trouble and wear of the few trains at a dollar. Yet it might make a great deal more money by running still more trains at fifty cents, but be restrained because not permitted to earn more than it could at a dollar. 154 w. Byemi- One of the best instances of wise state nent domain. interference with monopoly abuses, by direct exercise of eminent domain, is at Niagara Falls. The neighborhood used to be one of the plague-spots of the earth — covered with unsightly and ill -arranged structures, and infested by extortionate hackmen and cheating fakirs of all sorts. The state took the land by eminent dom.ain, made a beautiful park of it, and has everything well managed at reasonable prices. 154 (e). Danger of ^^^ such State interferences may become government tyrannical and foolish. Corrupt politi- tyranny. cians may interfere to extort blackmail, and at best the state cannot know all sorts of business, and should be very slow to interfere with, or itself conduct, any. I40 The Protection of Rights. [§ ^55 ,„ _- , ^ , The effect of the s^reat corporations and 155. Effect of great ,> i-i^.-- ij- ^ aggregations of trusts on legislation IS much discussed. capital on Legis- They can afford to bribe more than smaller private concerns could, and get all sorts of "protective" laws to shut off foreign competition, so that they can impose upon the public the highest rates the public will pay; and they can often make most money by selling to a few at high prices, and forcing the many to go without. The Sugar Trust is generally believed to have bought three senators of the United States in the Fifty-second Congress, and prevented the passage of a reformed tariff bill which that Congress was specially elected to pass. Tho that Congress did pass a reformed tariff bill, it was a very lame and doubtful one, largely owing to the obstruction of the suspected senators. The reform did not reach the sugar. 156. Socialism as I't ^^^ been urged that we could get rid a remedy of the corruption if the state itself ran all the industries — that we could get rid of all the trusts by making the state itself a trust that should include them all, as proposed by Mr. Bellamy; and one argument is that then there would be no one interested to buy votes. But examined, this is simply a claim that it would be better if the politicians were running the industries themselves: so they could vote to favor their pets without being bought — so that instead of having the corruption funds of the corporations and trusts ladled out to them as now, they would hold the ladle themselves. Tho nominally the politicians would be working the industries for the state, and not for themselves, we have seen enough of the way they are apt to "work for the state and not for themselves". Moreover, business will be managed much better if the manager is working for his own benefit, and ac- cording to his own ideas, than if he is working for the state, and according to its own ideas — even if there were any way of keeping the state's ideas fixed. But, it is urged, the manager of a corporation or a trust §157] Competition, Monopoly, Industrial Trusts. 141 is not generally working for himself; yet he generally owns a large share, while if his concern belonged to the government, he would not own a millionth part. 157. The only ^^13 only effective policy, then, against real remedies. the corruption of legislatures by monopo- lies, seems to be to do our best to see that only incor- ruptible men are elected to office, to perfect our laws, and to educate people so that there will be more chance of the corporations and trusts being managed by men who will develop the good side for the benefit of the community as well as of themselves. The state must continue to make corporations and permit trusts in some form, while at the same time it must make laws to protect people from them; and it must do this for the same reasons that it encourages the rearing of citizens, when it has to make laws to protect itself against bad ones — corporations and trusts have their good sides just as people have. Probably the competition in drumming and advertising has done as much as anything else to lead to the forma- tion of the trusts. The success of "publicity" in some businesses peculiarly responsive to it, has recently led to a wasteful mania for it, and extravagant efforts of dealers to outdo each other in it, even regarding things, like books, of inevitably limited demand, and touching which people make up their own minds, more or less under expert advice. Regarding this waste and some others, Professor Cooley indicates a remedial influence outside of the trusts. He says * that competition grows with capital and industrial freedom, and that it declines as intelligence and morality on the part of the buyer grow. These conditions of growth are plain, on a little reflec- tion, but the reasons for decline may justify a little explanation. When a man knows good from bad, and follows the good when he sees it, he will be apt to make up his own mind, and it is therefore a com- parative waste to send a drummer or a tempting adver- * In his remarkable pamphlet on Competition, published by the American Economic Association. 142 The Protection of Rights. [§ ^57 tisement after him. Moreover, and doubly important, if he is an honest man in a position of trust, hke that of a commissioner of pub he works or education, he is not going to choose subordinates or material on ac- count of anybody's ''pull". Another hopeful influence that seems likely to promote the advantages and suppress the disadvantages of com- petition in the future, is the growing recognition of broad self-interest and of civic responsibility. Already there is here and there a man at the head of a great combination who, like Pullman or Wanamaker, amid all the errors of the struggle, shows some realization that the best profit lies in serving the public well and cheaply, and has some sense of duty to his fellow men. 157 (a). An iiius- Probably there is justification — double tration. justification as it recalls the bright exam- ple of a good man, for a more specific illustration that success is not dependent on the kind of competition that excludes human sympathy. I have the best occasion to know that some forty years ago, a man very young in the publishing business had occasion to call, on some purely commercial matter, on the late Mr. Charles Scribner, the founder of the great house, to whom the young man was barely known by name. As the visitor was about leaving, Mr. Scribner said: "When I see a young man beginning business, it makes me recall my perplexities when I began. It would have been everything to me if I could have taken them to some more experienced man. I should be very glad if you care to bring yours freely to me." There has never been any indication that the great business founded in that spirit is any the worse for it, while the kind suggestion could have brought nothing but good to the " competing "(?) business. Certainly if that spirit actuated all the members of each trade, the world would be a great deal happier — and richer: the money — or let us say the force, of which money is only the index — now wasted in com- § ^57^] Competition, Monopoly, Industrial Trusts. 143 petition, would be saved for making new things or cheapening old ones. But how to bring about that ideal state of affairs? Well, the persons most imme- diately at hand to begin, are, patient reader, you and I. Of course, in courtesy, I yield you the precedence. CHAPTER XI. RIGHTS IN NATURAL MONOPOLIES. ,,o o +1,' There is a class of monopolies which must 158. Somethings . ,. . ^ . ,. are inevitably in their very nature remain monopolies, monopolies. -^ g^-^^ ^f ^y^ ^^ ^^^ ^^^ A street railroad usually remains a monopoly because not more than one can ordinarily be laid in a street. It is generally the same with a city's water-supply and gas-supply, and even its sewerage, connections with which are actually sold in some places. Perhaps, too, it would not be straining language to say that in some industries, the first factory built is a natural monopoly, because while there may be demand enough to support that one, even at a very great profit, there may not be demand enough to justify building another. And such city works and factories are not the only things which are naturally monopolies. Nearly all roads, bridges and ferries are, and so are natural objects which cannot be duplicated — such as extraordinary mines and springs, and picturesque works of Nature like Niagara and the Yellowstone. 158 ra; But the Some people even go so far as to think earth not one of that there is a natural monopoly a great *^^'"' deal bigger than all the things we have named put together — namely, the entire land of the earth. But it is impossible to see why. Any one piece of land is a monopoly : but so is any one jjiece of pork, and the land in any single locality may be "cornered", as pork or lumber or wool or anything else may; but land generally, cannot be a monopoly, so long as no one 144 § i6oJ Rights in Natural Monopolies. 145 party owns all of it, and people are competing with each other in selling it, any more than anything else that is generally dealt in can be a monopoly. Yet there are thousands of people, and some of them very good people, who actually think that all the inequalities in the lot of man arise from land being a monopoly, and that the inequalities would be removed if people paid rent to the state instead of to landlords (66). 4 en u/L DM A But to return to things which are natural 159. V/hy Railroads ,. . ^ f" , ^. are apt to be mon- monopolies : between two places there can °P°^^^' be several railroads, why then is one apt to be a monopoly ? Because the first one laid out is apt to be on the best route, and there is seldom any other route good enough to compete with it. Another prominent reason is that the travel may be enough to pay enormous profits on one road, v/ithout being enough to justify building another. 4cn / , iA,u 4-u A railroad cannot be built without gov-. 159 io.). Why they ^ xi -^ i_ • xi ^ need government emmcnt authority, Dccause m the country, authorization, ^^ couT^Q nobody cau take land for a road without government authority (78), while in a city it would not do to have anybody who felt like it, take possession of a street for a railroad. Some streets would soon be so full of tracks as to be destroyed for other purposes, and few streets would be left free from them. Moreover, as the right to build a railroad is valuable, the city ought to be paid for it ^pay%ft!'^'^'""'^Y those who occupy the streets for the purpose. The right is really a lease of the streets, and generally a salable one. \^% (c). So with The rights to supply light, water, etc., other facilities. ^^^ ^q control most otlicr such things, are in the nature of monopolies, and of course rights to use the streets for such purposes are virtually leases too. The rights to control these natural monopolies are called Franchises. While the community can sell franchises America°being gen- to corporations or individuals, in Europe erailv grabbed -^^q community generally either uses the ^ ^ ' franchises itself, or leases them, at great 146 The Protection of Rights. [§ 160 advantage; but in America, until very lately, it has generally let the politicians and their friends make up private corporations and settle down on the franchises without any return whatever to the community. This has been permitted because people are generally too lazy, or too engrossed in their own affairs, or too stupid, to take care of their public rights — because, in short, they lack political ability — which of course in- cludes political virtue, just as (despite a few conspicuous exceptions to the contrary) business ability includes business virtue. If the people had enough political virtue or ability to take care of their own interests, they could manage their franchises through their own officers. Yet it might be just as wise under any circum- stances to sell rights to do part of the work, as it is for other corporations to do the same; for instance, the railroads often sell rights to run palace- and dining-cars, and to supply reading-matter on trains. As a rule, when a community wishes to get a profit from its franchises, it is best not to sell them outright once for all, but to lease them, and only for terms of years : because, as the city grows, the franchises sold ^uSht""* ^^ become more fruitful. As an instance of the value of such rights, the city of Balti- more has unusually good parks, and unusually many of them, which are paid for and kept up by a portion of the receipts of the street railroads. Some other Ameri- can cities are beginning to get revenues from their street railways and most European cities which do not run their own, derive large revenues from the companies which lease the franchises. .ft« u„ . , Now let us look back of this little dis- ib/i. How natural . r , ^ i- i 1 Mononoiies become cussion 01 natural monopolies, to see now Personal Property, f^^ ^^ ^^^^^ ^^^^ justified in treating rights in natural monopolies as rights of property. So far we have been principally concerned in relation to property rights, with their creation by the development of natural resources through manufactures and transportation, and with the determination of what shares of the result should go to the Laborer, the Capitalist and the Enter- §162] Rights in Natural Monopolies. 147 priser. The landlord is of course one of the capitalists. We came to treat monopolies and trusts in these con- nections, because they are aggregations of capital. It is more than a mere metaphor to regard even natural monopolies in the same way. Railroads, city water- supplies, etc., are plainly aggregations of capital, but each of them is both an artificial and a natural monopoly ; a mine is perhaps more distinctly a natural one. And yet as soon as any one of these natural monopolies, or even a natural curiosity or beauty attracting admission- fees, begins to pay income, it becomes capital, and therefore its shares become personal property. We will consider these matters more at length when we come to Q-overnment's Promotion of Convenience o Now let us go on to the Law of Personal Property. CHAPTER XIL^ THE LAW OF RIGHTS IN PERSONAL PROPERTY. We saw (82) that the ownership of personal property is generally transferred by mere delivery. It is seldom registered, like that of land, because in most cases the perishable and transferable nature of Iween^Uw^of Per-^" personal property would make registry th"t ' f L^'^^d^'^ ^"^ merely a nuisance ; but its ownership is sometimes registered when it passes out of the owner's possession. For instance, if goods are 163 ra;. Personal P^^ ^^ ^ pubhc warehousc or given to an property seldom exprcss or freight company, or money is registered. j^£^ ^^ dcposit, the article is entered in a book, and a receipt of some kind is generally given. .r.r, ,., , . . Bonds are often registered in the owner's ]63 (b). Important P . . kinds passed by name at the omce 01 the company issuing en orsemen . them, and stocks always are, tho upon being issued, they may be endorsed in blank, and pass through many hands before being registered again. "Endorsed" means literally "on-backed", and usu- ally refers to writing one's name on the back of a paper entitling the writer to some sort of personal property. Endorsing is generally in token that the writer parts with the right to the value stated on the face of the paper, in favor of whoever may thereafter hold the paper, or of some person named in the endorsement. If the endorsement is in favor of a particular person named, the latter can pass the value on, by himself writing a second endorsement. The principal kinds of papers entitling somebody to receive value, of which 148 § 163 <^3 The Law of Rights in Personal Property. 149 the value is passed on through endorsement, are bank checks, promissory notes, stocks, bonds and warehouse receipts for many kinds of merchandise. As a rule, if an endorser has prompt legal notice that the signer of the paper fails to make it good, he is responsible that any later holder shall receive what is called for on the face of the paper, but not in the case of stocks and bonds. On them, an endorsement is merely an authorization to the company to register the certificate in a new name. When an endorser becomes responsible, it is on the theory that he has received an equivalent from the later holder, and therefore is responsible to him for the value for which that equivalent was given; the same theory follows each transfer of the document. But in fact, an endorser does not always receive an equivalent, unless friendship or favor is to be so considered : for men often endorse checks and promissory notes, and make them- selves responsible for their payment, to enable their makers to use them where their credit would not other- wise enable them to. With three exceptions (87), one has a ]Q3(c). Can take • 1,4. 4. . i > 2 t, one's owniuherever Tight to take ouc s property whercvcr one found and /n some gggg {^^ {f j^g ^au do SO without violencc : CCLS6S Oy jOfCQf ^ ■ J J . -a ^ otherwise the rule is about the same as in real estate. If a robber has put property in another person's house, the owner must not break in or fight his way to it. Rather than have the peace disturbed, the law prefers that he should stand still and risk the robber's carrying the property to a place of concealment, on the chances of preventing that in some other way. If somebody goes into the owner's house for it, and has it and refuses to give it up at the owner's demand, it is then the duty of any citizen satisfied that he has stolen it, to arrest him, as it is to arrest anybody he finds committing a crime. If the robber resists, any citizen arresting is armed with the authority of the law, and can use any force necessary. True, the citizen could not use any force 150 The Protection of Rights. [§ 163 c necessary to drive a man off from his land (81 5), but his being there was not a crime. The citizen has the duty and the power to arrest only in cases of crime — such as murder, arson, burglary or theft. The exceptions already alluded to, where a person cannot peaceably take his own property wherever he sees it, are, in a sense, not exceptions, but rather instances (the only ones) where a thing ]}%im'ehhids''can'^ may peacefully cease to be one's property be lost without without onc's receiving a satisfactory neglect. . ^ ? . ^ •^- equivalent, or at least (as m the case 01 taxes or eminent domain) one declared satisfactory by the law. These exceptional instances are money and "negotiable paper" — bank checks, promissory notes and bills of exchange. If theft or accident puts one of them in wrong hands, and they transfer it for good value to a holder innocent of any wrong or knowl- edge of wrong regarding it, the innocent holder can recover its value from all parties who would be liable if it had to come to him regularly. Of course this is hard on honest makers and endorsers of such paper, who lose it, or from whom it is stolen, but it would be harder on the community if all business had to wait for the history of every piece of commercial paper to be investigated, as it has to wait for real-estate titles to be investigated. As a matter of fact, the easy transfer of rights in commercial paper is seldom hard on anybody: for the result of the law is that people take such good care of their paper that it is seldom lost or stolen. While personal property can be loaned or hired out in an infinite number of ways, ownership of it is not considered as enduring enough to be popularly called an "estate", as in land; yet there can be a life estate in some kinds of personal property, perhaps in any kind, notably in libraries and works of art. Like land, however, it can be mortgaged. worilajid" without Such a mortgage is called a chattel mort- registry if in mort- crsiCTQ and uulcss the mortgagee takes gagees possession. o&»_ -i-i-i,, possession, the mortgage, like a real-estate § 165] The Law of Rights in Personal Property. 151 mortgage, is not good against creditors unless »it is recorded. p The difference between a chattel mort- ^ ^' gage and a pledge, is that a pledge is always accompanied with possession of the chattel by the per- son making the loan; a chattel mortgage, if registered, need not be. There are millions of times as many agreements made regarding personal property as regarding land, for personal property is constantly traded, from the candy- shops to the stock-exchanges, by people who never have any land, and even professional dealers in land have to deal many times as often in personal property, in connection with the ordinary requirements of life ,„. D , These facts of course make personal 165. Personal oron- . n ^ ^ r r^ ., erty the great field property the great held 01 Contract: so of contract. what time we can give to details of the law of personal property can best be used incidentally to our consideration of Contract. CHAPTER XIII. CONTRACT. As an Element in Civilization. 166. Difference We have Seen that men start with a right HgEn?pfoperty ^o appropriate things from Nature, to rights. labor on them, and to keep the results. But rights to prevent a person taking or holding an- other's property are merely rights to prohibit something. Rights to demand something — demand another's things or labor, plainly can arise only by giving or promising something in return. The modern state protects each party in his right to demand fulfilment from the other. 167. Contract, ^^^ rights arising from such agreements agreement, bargain, are technically called Rights under Con- tract. Contract means nearly the same thing as agreement. But etymologically, agreement means something to the satisfaction of both parties, while contract means merely drawn together, or perhaps bound together, as we often say when a bargain is under way, that the people are trying to "get together". There is still a third word for that same thing — bargain. But the word "contract" having been more associated with law, has been kept more strictly to its early meaning; for instance, it seldom has anything to do with the profitableness of an agreement, while "bargain " is often used to mean merely a profitable transaction. A good contract generally means one that legally binds 152 § 169] Contract as an Element in Civilization. 153 the parties, while a good bargain means rather one that is profitable to one side or both. Yet each word is used in both senses. Bargain, tho, is never used in a general sense as one of the great foundation-stones of civilization, as we shall see that Contract is. People of low intelligence or low morality or both, sometimes break contracts, on the ground that they do not yield good bargains. IRQ rn«+roo+ n«n ^ slavc or Serf cannot make any con- ies. Contract nos- ... ., ~ , - •' ^ sibieoniy tothe tracts to Speak oi, because he cannot de- ^®^' pend on keeping any ; he can only do what his master says. This affects his rights to property: for, as whatever he does is under his master's orders, his master takes the profit or bears the loss. If there is a loss — if crops turn out badly, for instance, the master is supposed to take care of the slave under all circumstances. Whether the system is good or bad, depends upon what it is compared with. Slavery would not be good in a civilized community ; but savages are so much like children that, if left to themselves, they would be more apt to starve, and rob and kill each other, than if an able man had absolute control to keep them in some sort of order, and tell them what to do. All societies that have reached civilization, have had to pass through conditions of slavery, serfdom and feudalage. Many societies have long stood still, like those of India and China — some until they could stand no longer, and were overcome or died out. Nothing higher than a vegetable can stand still and flourish — a society, a busi- ness, a human being, or even a beast, raust progress — at least enough for exercise, or it will decay. It is like a person on a bicycle — he must move or come down. .CO p * * The way to teach a man to take care of 169. Contract an , . ^r ■ ^ ^ 1 • ^^ ., 1 r education in free- himseli, IS to leave him to take care of himself, just so far as safety permits. Obviously, a man cannot get ahead unless he can dis- pose of his own labor, and in the present state of man- 154 The Protection of Rights. [§169 kind, he cannot get ahead very far, in property at least, unless he can dispose of the labor of others. This does not mean unless he can enslave others: free- men cooperate with a man of true ability to their own good, as well as to his. The difference between the modern guide of labor and the slaveholder, is that the slaveholder, even tho he be incapable and unable or unwilling to take good 170. Under Con- care of liis slaves, can still force them tract, only Able -j^q ^ork for him. The modern employer emplovers can . , . . . ^ , 1 c secure Labor. cannot force his laborer to work for him, because the modern laborer, especially with mod- ern facilities of travel, can contract where he pleases. He is not shut up on his master's place, as the churls and the villeins of England and the serfs of Russia and slaves of America were. The civihzed laborer's power to contract, makes it necessary that his em- ployer should treat him both well and ably. Therefore the modern employer must be really able — capable of guiding his men well, and deserving his position, or com- petition will get his men away from him. And it is becoming more the case every day, that employers have to compete with each other to get the best labor; and he who best guides his labor, and cares for it so as to make it most vigorous, intelHgent and cheerful, gen- erally comes out ahead in the competition, and makes most money. The scientific name for the primitive state of affairs where most men were obliged to stand still just where they were born, is status (the Latin word for standing). One reflecting upon the condition is tempted to suggest the English expression "stick-in-the-m.ud". The condi- 171. status versus ^ion where men can dispose of themselves Contract. and their property as they please, is called the condition of Contract. Wherever status, or "stand- ing", is the condition, if a man is born a ruler, important or petty, he stays one; if he is born a serf or peasant, he stays one. In quite primitive societies, there are examples, such as Mahomet and Genghis Khan, of people changing § 172] Contract as an Element in Civilization. 155 their standing very much, but they were only occa- sional men in generations: there could be only one now and then, because they rose by controlling men, not by contracting with them. In our day, nearly every civilized man can contract. The system of property -holding under dom an°d PHvate^®" which Mahomet and Genghis Khan rose, Kfher.^"^^"'^® ^^^ communal (54), with some slavery and hardly any Contract. There is hardly any Contract under the communal system, because nobody has enough estate in the land to make much contracting with it, or its produce, possible. The property-system under which Hildebrand and Rudolph of Hapsburg, for instance, rose, was Feudal (55) with some little contract. There was more contract under the feudal system than under the communal, because the estates in land were much longer: at the outset of the system they were generally for life, and rapidly became transferable and even hereditary, tho always limited, of course, by the rights of the overlord. The system under which Lincoln and Garfield and Peabody and Peter Cooper rose, is of course the most advanced of all — private ownership and contract every- where. We find, then, Slavery, no Contract; Communism, hardly any; Feudalism, a little; Private Property, Contract everjrwhere. Under feudalism, the relation of each man to his feudal superior, was apparently one of contract to fur- nish so much military or personal service; or later, a certain portion of the products of his land. But reflec- tion shows that it was a contract only so far as a con- tract can be made by one side, and that side the stronger. As men have risen under all systems, of course there is no system where all men stand still. In other words, there has been no condition of universal Status or of universal Contract. All that the facts show is that the more Status and the more Communism, the fewer men rise; the more Contract and the more Private Owner- 156 The Protection of Rights. [§172 ship, the more men rise. Under the amount of Contract in the United States, a thousand men — probably ten thousand, possibly a hundred thousand, improve their condition, where one does in Russia or India, or did in mediae val Europe or under the Turks or Tartars. The first marked decrease of Status and increase of Contract appears in the decline of Feudalism, which is an- other name for Militarism, and in the increase of Private Property. Militarism declined as civilization advanced, 173 Asthev ^""^ Spite of the fact that Europe is a col- evoiye, militarism lection of camps to-day. But those camps ®^'"^^" have ensured peace in Europe since 1870: each nation has been merely playing soldier to keep the others from attacking it. Before 1870, there had never been ten years without war among them. The decline of Militarism was essential to doing away with- Status, because extreme militant conditions are necessarily conditions of status: people ?form ofSus.'^ ^^^ simply command and obey : the enemy will not allow them any chance for divided policy, or much chance to do business or accumulate property. Hence it is only in civilized society that the chief activities, instead of being warlike or militant can be industrial. In a militant society, the men gen- erally do what they are compelled to; in an industrial society, they do what they agree to : so they are making contracts all the time. 175. Fighting ver- ^^ really is a question between a fighting sus producing. \{{q and a trading life, or rather a pro- ducing life. With communal or feudal property, people never produced enough to get rich, and the only way people like those of India or Greece or Rome ever got rich, was by robbing somebody else. And as a fact, they never did get rich in the modern sense. A few people got rich, and made a great show, and did some fine work in art, literature and statesmanship ; but the masses were slaves. i7K/^. in * * ^ Amons: communal and feudal peoples 175 (a), //lustfated . 9 . ^ , ^ n^i 1 in nations of to-day, it IS about the same. I here has to-day. ^^^ been much change in Russia and India and China, for instance, except in name. §177] Contract as an Element in Civilization. 157 Japan is the greatest instance the world ever saw of rapid growth in wealth, power and civilization; and she is an illustration of our thesis: her progress has been accompanied with the most rapid change ever seen of communal and feudal property into private property, of a general condition of status into one of contract. In Japan, too, despite some superficial appearances, private property and contract depended on the down- fall of militarism: in the barbarous and feudal sense of every man being a fighter and thinking of little but fighting, militarism has gone. The Japanese gentle- man does not now carry a sword much oftener than the English gentleman, and in Japan, despite the won- derful showing in her war with Russia, fighting is or- dinarily as much a matter of special profession as in France or Germany. The spread of the institution of private Property^is esserf- property, then, as distinct from communal beioSd'staS property (54) or feudal property (55), is necessary to change a condition of status into one of contract, because to do much contracting, a man must have property of his very own. If the community or the overlord owns all the real estate, there is not much personal property to contract with. No communal or feudal people ever got much personal property yet, unless by pillage. While wealth is not civilization, there never has been any broad and high civilization without wealth. The boasted poverty of Sparta, for instance, was accom- panied by virtual slavery of every man to the state, and by a general belief that skill in theft was a virtue. As, then, wealth depends on manufacturing and trading, we seem brought to the practical conclusion that civilization rests on people trading freely with 177. Civilization ©a-ch other, and such is the fact regarding and" trade go to- all civilization except the sort built on ^^ ^^' pillage and slavery, and that sort is nar- row and perishing. There never has been very high civilization enjoyed by the general community, without a 158 The Protection of Rights. [§ i77 great deal of trading; and the higher the civiHzation, the more the trading. Then conies in the fact that there never has been much trading without the wide preva- lence of the institutions of private property and con- tract, and there is no reason in sight to believe that there ever will be ; and then follows the conclusion that a producing, trading, contracting form of civilization is as much needed to produce from the ranks of the common people a statesman like Lincoln, as to produce a manufacturer like Peter Cooper. „o o I ■ r AH this demonstrates that a man v/ho 178. Breaking Con- , . , , . ^ . , . ,.,,, tracts and advoca- breaks a contract IS domg his mean little ting Socialism. ^-^SiTQ toward bringing the world back to the condition of status; and that a man who advo- cates socialism is trying to put the state in the place of the slaveholder, and so to lessen the amount of con- tract — to make government command what people shall do, instead of leaving them to contract to do what they please — in short he too would get us back to status. Here are two views on the subject that are worth thinking over: In 1903, Grand Master Morrisey of the Brotherhood of Railway Trainmen said to his national convention : ' ' We shall see the time when we will regard the contract-breaker . . . with as much contempt as we now regard the scab." C. P. Shea, President of the International Brotherhood of Teamsters, on trial at this writing for instigating the assaults and murders in the Chicago Teamsters' strike, said: "I do not con- sider anything a violation of an agreement, that is done to uphold the principles of trades-unionism." . CHAPTER XIV. GENERAL LAW OF CONTRACT. Now we will consider the details of Contract. Courts do not want to use their time without reason — ^when, for instance, somebody claims that there was a con- tract when really there was none at all: so the courts have established a test by which to determine, when parties dispute, whether there really was a contract between them. 179. Essentials of a ^0 be a contract, there must be an Contract. offer by one side, an acceptance by the other, and a reasonable consideration why the offer should be made and accepted. All such considerations are. found to be included under the three categories of something to be given, something to be done or refrained from, or natural love and affection. The Romans included it all (except natural love and affection) in four cases — -I give to get you to give, I act to get you to give, I give to get you to act, and I act to get you to act.* But the subject is not really covered by something given or to be given, or something done or to be done: it may include something not to be done, or, as already said, something to be refrained from. A has a right to do something, B offers him something not to, A agrees. Nov/ A does not agree either to give or do, but merely to refrain, yet he binds B to give or do what he offered as an inducement for the refraining. * Do ut des, do ut facias, facto ut des, facio ut facias. 159 . i6o The Protection of Rights. [§ ^79 Yet if we take "act" in the broad sense of a course of conduct, the Romans' pat way of putting it, does cover the idea of refraining being a "consideration". "By a man's acts shall he be judged" — "acts" there evi- dently includes temperance and self-restraint — refrain- ing from certain acts, as much as doing certain others. 179 (a), nuistra- Now to illustrate each kind of contract : 't'^"^- A offers B a dollar for a plant ; each article is given that the other may be given. This is Roman case I. A offers B a dollar to do a day's work. This covers Roman case II. A offers B to do a day's work for a dollar. This is Roman case III. And A offers B to do a day's work if B will take him for a drive on Sunday. This is Roman case IV. To illustrate the case the Roman summary leaves out — where the consideration is refraining from doing something: A has a lot next to B's, and proposes to build a wall that will shut out light and air from B's house; B offers him a thousand dollars to refrain from doing it: A refrains: B is bound to pay the money. It may be observed in passing (tho we shall return to the subject again) that while it may not be right to shut light and air out of your neighbor's house, it may be more nearly right than it would be to keep your own wife and children in rooms too small for them, or to have noise or anything else from your neighbor's windows disturbing them. 180. Natural Love ^^ illustrate a contract where the con- and Affection. sideration is natural love and affection : A father agrees to do something for a son with- out receiving anything in return. Now the law does not enforce mere gifts, but it will hold this to be a good contract, because it holds the natural love and affection to be a consideration. Yet that considera- tion seems queer, because if a father agrees to do some- thing for a son because he loves him so much, and then refuses to stand by it, he simply proves that he did not love his son. that much — in other words, that there was no consideration ; all of which seem.s to show that where natural love and affection is alleged to be the con- § i8i] General Law of Contract. i6i sideration, the contract may be a very weak one; and that where natural love and affection is strong enough to make a contract strong, there must be love enough to make a contract unnecessary. Yet there is a more logical view than that the father does it because of his own love for his child, namely, that the father makes the contract because the child gives him the ** natural love and affection." But, strange to say, I do not happen to have known this view presented elsewhere. Yet there is good reason, after all, why courts should support such contracts, even if the consideration is held to be natural love and affection entertained by the per- son making the promise: for if a man fails in busi- ness or dies, those who take charge of his affairs must carry out his contracts as far as they can, while his mere intended gifts, where there is no consideration, may frequently be set aside. So it is more merciful to his unfortunate family, to put his gifts to them on as good a footing as his business transactions. Yet, tho the courts will generally enforce contracts based on ' ' natu- ral love and affection", unless there is also a "good and valuable consideration" they are apt to look with suspicion upon them, and to set them aside if they bear any strong indication of wronging creditors or later purchasers for valuable consideration. 181. Promises and O^ course entirely outside of any "con- Contracts, sideration" whatever, a promise ought to be as binding as a contract, in honor: because there should be no honor less than perfect honor; but it is not as binding in law, and this because, for many rea- sons, law cannot deal with so delicate a thing as honor. Justice is as high as law can go. We spoke (1636) of endorsements being made, like promises, without consideration, simply from friend- ship or favor. The question of whether the law will enforce them, of course cannot come up regarding the person originally responsible on the paper: for the en- dorsement is simply an obligation to pay, not the prin- cipal, but third parties, if he does not. But if those 1 62 The Protection of Rights. [§ i8i third parties are innocent holders for value paid, the law enforces the endorsement. Yet often the third party — a bank for instance, is not an "innocent third party", but knows that the endorsement is merely for accommodation, and yet takes the accommodation paper, just as it loans money at the market rate if it is higher than the legal rate, because it depends upon people to carry out their contracts without appealing to defects in the law. If paper has been forged, its possession for value by an innocent third party, does not make it good, unless the person whose name is forged can be held for some gross carelessness. The reason is that nobody ever undertook to pay it. Justice requires enforcement of contracts, and not of promises, because breaking a promise without consider- ation, takes nothing from the other man, while break- ing a contract takes from him whatever he does or gives on his side, or the thought and trouble and arrange- ments he may have been put to in making the contract, and toward carrying it out. To illustrate : if A is under promise to B and under contract to C, and then fails or dies, so that both cannot be satisfied, C, who has parted with 'some consideration, would suffer more than B, who has parted with nothing: therefore the law does what it can to protect the contract, while it pays no attention to the promise. But where natural love and affection is the consid- eration, C has not parted with anything, and yet the law treats the case as if he had, because there would be so much hardship if the law should require the representatives of bankrupts or deceased persons to do as much to keep all promises alleged (perhaps falsely) by strangers, as to keep promises to relatives. True, people often love outsiders more than relatives, but the law cannot go into as fine points as that: proof is too difficult — natural love and affection — that is, such as it is natural, under ordinary circumstances, for all men to have, is as much as the law can attempt to take into account. § 183] General Law of Contract. 163 , . „ , It is undoubtedly something of a fiction ega c ion. ^^ make "natural love and affection" a "consideration", like money, or goods, or services, or self-restraint, but many of the greatest improvements in the law have been made by just such fictions (190). For instance: where people are damaged by others in their property and reputation, and come into court for redress, the principle of the law is that they must not only prove that the acts of which they complain really took place, but they must prove that the acts were damaging, and just how many dollars' worth; yet if a woman proves that she has been slandered in the dearest part of her reputation, the law brings in a fiction that she has been damaged by the slander, whether it fell on willing ears or not, and does not require her to prove that she was damaged. If she really was damaged, of course the law's assumption that she was, is not strictly a fiction. In this sense, fiction is a technical term meaning a general principle, regardless of whether it is true in any one case or not. As there is a tendency in fictions to do harm, it is a maxim of the law that fictions must never work injustice — that is to say: that when a judge finds that the fiction usual in somewhat similar cases, plainly does not justly apply to the case in hand, he must not decide as if it did. 183. Mutuality in Now let US consider mutuality in con- contracts, tracts. It always ''takes two to make a bargain". Contracts must always be mutual, — the understanding must be mutual, the consideration must be mutual, and the obligation must be mutual. First: the understanding must be mutual. If you say that to-morrow you will lend me a gun now in the hands of a friend, if I will bring a written abstract of ten pages of Spencer, and I agree to do it supposing you mean Spenser the poet, while you really mean Spencer the philosopher, there is no contract between us, for our understanding is not mutual. If either of us finds out the misunderstanding, he should make a reasonable effort to let the other know that there is 164 The Protection of Rights. [§183 no contract, so that in case the abstract of the poetry should not be a satisfactory substitute for the abstract of the philosophy, one may not lose the trouble of getting the gun, or the other of writing the abstract. It would be reasonable also to see if the parties could make the contract that one or the other intended — either for the abstract of the philosopher; or, if the other would not agree to that, whether he would be willing to make the contract he understood — regarding the abstract of the poet. The second point necessary to the mutuality of the contract, is mutuality of consideration — that is toTsay, as said before, each side must undertake to give or do or not do something, in consideration of the other side undertaking to give or do or not do something. For instance : if a man renders a service such as helping a horse and wagon out of a ditch, without the owner asking him to, or agreeing to do or give anything in return, he cannot make the owner pay. It seems hard not to be paid for valuable volunteer services, and any decent man would pay. Yet to ' admit the principle that volunteer services must be paid for, would overwhelm the world with superfluous and worthless pretexts of service — like, for instance, needless opening of carriage doors, and sweeping of crossings already clean. As farther instances, suppose A tells B that he will do something if B will do som.ething else — that A will cook the breakfast if B will get up and light the fire. They are not under contract unless B says he will light the fire, or straightway does it, and lets A know that he has done it. Suppose A tells B he will do something, and B there- fore expects that he will. A has not contracted to do it, but has merely promised. 184. Law and I^ ^^-^ a contract is more binding than Religion. ^ promise (as we have seen), or even than an oath. The reason is that an oath is a matter of religion, while the law deals only with justice. In modern times people know that it is as much a mistake § i86 6] General Law of Contract. 165 for law to try to handle religion as to handle honor. Now, for instance, witnesses need not swear on the Bible: they can merely "affirm", if they prefer. 185. Justice and ^^ might at first seem that in honor, *^o"°''' one party to a contract should complete his side of the contract even if the other does not, because he has promised; but the third point essential to the mutuality of a contract is that the obligation is mutual. If one side fails in his obligation, that releases the other; and it does so in honor, because the dishonorable have no claims upon honor. And that is not reducing honor to the level of justice, because to permit the dishonorable to make claims upon honor, would be to reduce honor to injustice. Honor can never be contrary to justice. If, then, the dishonorable man has no claims, it might seem at first that anyone would have a right to deceive or rob him. But tho the dishonorable are not entitled to anything beyond justice, they are still entitled to justice. If one man agrees to pay another if he law" wiir^n'of ' ^''' will kill a man or set a house on fire, and ^"^°''c®' the other agrees, there is a contract, but ^doing^' ""''"'^' ^^^ ^^^ ^^^^ ^o"^ enforce it, because it is against public policy : the legal maxim is : ''Men may contract, but not to do wrong." In a more extreme case : if one party risked his life and liberty to commit murder or arson, as there is no wrong in the mere payment of money, honor might require the pay- ment of even the wages of crime, but the lavv^ would not enforce it. 186 r6; wa ers ^ het, too, has all the characteristics of a contract, but the law will not enforce it, because betting adds nothing to the wealth of the com- munity, as a contract enforced at the expense of the community ought to; and because the habit leads a man to laziness and improvidence. And looking at the mutuality of bets, in the long run they are hardly so nearly an even thing that they can claim enforcement even on the ground of fairness: for in the long run, 1 66 The Protection of Rights. [§ i86 6 those who lose must suffer more than those who gain enjoy. This requires a word of explanation: for in the long run, of course, bettors' fortunes must aver- age the same. Now assume that average to be any sum you please — say $10,000. Then, as President Hadley * points out, a man who loses $5,000 will lose what his family has come to regard as essential com- fort, and will suffer seriously, while the man who wins will not receive anything that his habits require, but a mere superfluity that he will be apt to waste as gamblers almost always do. In fact, often so unbalanced are the two sides that loss is suicide, and gain a brief period of dissipation — evil both ways, tho dispropor- tionate, and seldom if ever any real good either way. If one party to an alleged contract agrees to do something impossible — to drain the ocean or move Mount Washington, he is not liable in damages if he fails, because an agreement to do an impossibility is not a legal consideration. But if he agrees to do a reasonable or proper thing, and fails because of accident — sickness or a delayed train, he must pay damages: the misfortune is his, not that of the other party. i of proposed cult than to tell m advance now a social changes. arrangement is going to work. Those we have are the best we have tried, and it has taken a good many thousand years to get them even as good as they are now. They have improved so slowly, be- cause human nature improves slowly, and all social machinery has to be worked by human nature. The communists propose to substitute ommunism. ^^^ ^^^ present order of property rights, having government make an even division all around, * The author, while beUeving this remedy original with him- self, of course supposed it probably original with a good many others. He first proposed it in The Forum soon after the Carnot assassination, and on repeating it in The Review of Reviews soon after the McKinley assassination, he received a copy of a similar proposal that had been made by Judge Arn- quist of Wisconsin. §235^] Personal Property. 221 so that those who have saved nothing can have a share of what other people have saved. 2Zb(a). $1,200 At a superficial glance, it seems as if ^p'^f^^- such a scheme, if it could succeed now, would add vastly to human happiness. But it could not unless it produced more things : for we would have only a little more than twelve hundred dollars apiece: that being the average wealth in the United States in 1900. To divide it evenly would not increase the hap- piness of those who have less, as much as it would diminish the happiness of those who have more. 235 (b). Sudden ^^^ ^^^^ ^^ ^ division were to give wealth 'a doubtful suddcu Wealth, suddcu wealth is not apt ^^^'"^' to be used well. It certainly was not at the British coal-mines when a sudden rise in the price of coal gave the colliers a sudden rise in wages, and many of them spent the money in feeding their dogs on tenderloin steak, and smoking pipes with two bowls and one mouthpiece. True, the rich do not always use their money well, any more than the poor suddenly getting it, always use it badly. It is only a matter of probabilities either way: there is no universal rule with so complex a machine as human nature. It is simply the general fact that a man who gradually makes his money, is almost certain to use it better than a man who gets it suddenly; and it ought to be superfluous to point out why. Yet it would undoubtedly be well for people to have more, just as fast as they can make it: for that will be no faster than they are apt to use it well — and there is hope, as we have said more than once and shall give facts for later, that the ability to pro- duce it * and to use it, are fast being evolved together. * The wealth in the United States, is reported by the Census to have increased as follows. We shall find evidence later (Chapter XXIII) that the poor have received a larger proportion of it than the rich. In 1850, it was $308 per head; in i860, $514; in 1870, $780; in 1880, $850; in 1890, $1039; andinigoo, $12^6. 2 22 The Protection of Rights. [§ 235 h But must each man himiself produce unaided all he can have? Not by any means: inventors and or- ganizers are constantly enabling other people to pro- duce more. Consequently a laborer in a civilized nation has more than a king in a barbarous one; but men seldom appreciate what they have, when others have more. Not only would communism fail to llVa\)tue"whUef '^^^^ everybody rich, even for a moment, but what wealth (?) it did give the very poorest, would all soon be either frittered away, or back again in the hands of Ability. As said before, the machinery has to be worked by human nature : at the outset, communism would make the lazy and shiftless profit at the expense of the energetic and saving ; while after the outset, the shiftless would, just as now, soon waste what they had, not only in extravagance but in foolish schemes, and want a new division; and there would then be less to divide: the shiftless would have 00c /^, ^*t. already used up their share; and com- 235 (d). and then . ^ ^ ^^^ ^ i r there would be munism would havc taken away irom less than now. Ability all temptation to produce more than it could keep — that is to say, more than the average ; and would take from frugality all temptation to save more than the average. 235 (e). Meaning- To carry out any scheme of communism, less without . i j r i •j.t. x robbery. government would 01 course have either to rob the present means of production — factories, mines, etc. — from those who have produced and saved, or to buy them under eminent domain (78). As to eminent domain, of course the communists differ among themselves, as people advocating ideas that do not hold together, inevitably must; some advocate eminent domain, while some go so far as to say that all property is robbery — that people of ability and frugality have stolen from those who lack them, and that the community, in taking all the land and mines and factories and railroads without pay, would only take posseSvSion of its own. But even government's exercising eminent domain §235/] Personal Property. 223 over everything, and paying for it, would leave things just as they are. Everybody would get paid for what he has, and be taxed all he has, to pay it. A practical difficulty not yet stated, is of wealth cannot be '^ow to divide Up a tcu-thousand-dollar 'being'^destr^o^^^^^^ house, or buildiug-lot, or diamond or picture or statue, so as to give each person his twelve hundred dollars. If an attempt were made to give each a share in the diamond, for instance, it is hard to tell what ten of them could do with it. They probably could not hire it out to some vain woman each night : for, as nobody would be worth more than $1,200, no woman could pretend the diamond to be hers. As to the picture and statue, perhaps they could be exhibited, if enough people worth only $1,200 apiece would pay to see them. But as to the house and building-lot, nobody could afford to live in the house or even to make it over into a tenement; and nobody could afford to build on the lot, unless under a syndicate arrangement. People who object to corporations are generally the very ones who would make it necessary for everything worth over $1,200, to be run by a cor- poration. There appears, then, to be no escaping the general conclusion that civilization rests largely on things that cost more than a thousand dollars apiece, and which cannot be divided, or even used to any advantage when held in shares; and that these things are the prizes which Nature holds out to men of great ability, to stimulate them to do all they can to invent and organize and regulate, so as to increase and cheapen things for the public good. Consequently, if you want to intro- duce Communism, you must begin by wiping civiliza- tion out. In short. Nature did not make this for a com- munistic world, but as one where wealth is the first condition of effective industry and the highest art, as well as the legitimate stimulus to invention, energy and capacity, and their legitimate reward. But that is, of course, a hard conclusion for the men lacking in invention, energy and capacity; and among 2 24 The Protection of Rights. [§ 235 / the many ways proposed for making them as well off as anybody, there are many which do not involve the impossibilities of Communism, altho they all have im- possibilities of their own. CHAPTER XIX. PERSONAL PROPERTY (CONTINUED). Schemes for Distributing it more Evenly {Continued), (II) Socialism. Chief among the schemes for giving the lazy and incapable the rewards of the industrious and capable, without attempting to divide everything, is that of merely putting all industries under the control of government, and dividing up product equally, and thus giving the poor an equal share in the profits. This is Socialism. The idea at least does away with the objection to dividing up or holding-in-common things which would be useless if divided up or held in common, and it at least glozes over the objection to putting the capital of the frugal directly into the hands of the shiftless: it wants merely the product given to them. It pro- poses, instead, to put the capital in the hands of the politicians, and have them give the shiftless an even share of the product — so far as the politicians make any — and do not keep it for themselves. That would at least divide up among the poor the profits now wasted by the rich, if the politicians were honest, and if the profits were to be produced. But as profits depend on Ability, and Ability needs them to stimu- late it, if you take them away from Ability, to divide up among those who lack Ability, it is pretty hard to see who is going to produce them. But at least every- 225 2 26 The Protection of Rights. [§236 a body would get wages : there would be no unemployed. But nobody would get as much wages as M^not^rilT now. As soou as Ability flags, demand for the labor for which Ability finds work, must flag, and wages must fall; invention must flag; production must flag, and the world must grow poorer. If government is to keep the demand for labor con- stant, the question is: who is to pay it from decreased production ? Ability might be stimulated to increase production by giving it high office in superintending government „„„ ,, , , .. industries, but to only a limited extent in 236 rW. Impmcti- / J I r J cabiiity of poiiti- any Condition can we loresee, and tor two cat management. ^^^^ rcasons. We uow seldom pay govern- ment officers salaries that honest men, unless already well off, can afford to accept; and as long as the base and ignorant are permitted to vote, and so often elect the base and ignorant to office, the best men could not be put in office as often as necessary, even if we were wise enough to pay them properly. So far, even those who can afford it, do not always take office when it is offered them, because of the humiliating obligations to the bosses that office sometimes imposes. The great difficulty even now is to get government officers who can and will do even the simplest things honestly: it is one of our great misfortunes that the men capable of guiding industry cannot often enough be got into public office of any kind. If, then, we had to depend for the good conduct of all our industries, on the combinations of circumstances where good men can get office and will take it, those com- _--,,, ^ binations so seldom occur, that, altho yvu fQj Losses to education, charity there are many good and patriotic men in and liberty. ^g^^^^ ^^^ ^^^^^^ instead of having the best brains competing with each other, as now, to supply our wants cheaply and in great variety, we should have to put up with what men capable only in politics, might provide. There is nothing in the socialist argument that because government already secures (if it does) fairly compe- §236^] Personal Property. 227 tent managers for a few natural monopolies, it can secure them for productive industries, because monopolies yield results with much poorer management. The same is true of the argument from government's securing more or less competent managers of education, including the museums, and gardens of botany and zoology. In fact, the managers have been very seldom secured by any pure democracy — especially by ours, which has no aristocratic traditions. Our managers for such institutions are most all secured by close private corporations, and no such managers aim at cheap pro- duction, or even great financial results for themselves: they do their work mainly from love of it and for per- sonal development. 236 (d). Forcing One of the sclicmcs of socialism is to Ability. force ability to guide labor, just as it is to force the laborers to work. But while a man can be forced to work in some sort of fashion with his body, there is no forcing him to do his best with his mind. He can only be tempted. "Well, then", some socialists ask, "why not pay men of ability large incomes to serve the public? " But that they get large incomes now, is what most of the socialists complain of. Yet now the men of ability are not sure of the incomes; if they were sure of their incomes as salaries, they would no longer have a stimulus to do their best. Yet to give them, instead of salaries, large, but necessarily uncertain, shares of production, would be to give them just what they are getting now, and just what the socialists want to take away from them. Should real socialism come in then, it can only come in by reducing the production of Ability. 00c / . TA In answer to this, it may be urged that 23o(e). The argu- ' -^ ^ ., ^. ment from expert- govemnient has already been building ^"^^' houses for the poor, supplying them with water and light, and making boots and clothes for armies at a saving; that a great many people sadly lack these good things and most others; and that all the things made by private enterprise are often made at wages that 228 The Protection of Rights. [§ 236 ^ afford but little comfort. But what has been done in housebuilding and gas and even water, has not yet been shown to have been successfully done. We must not forget that agitation has already been strong in England — ^the very headquarters of "municipal trading", to drive government back toward its old functions of pro- tecting rights. When things have been supplied by 236 (f). Can be 4. r . i j j undertaken when government lor the army and navy, and own7u^tomer.'^^ ('^^^ ^^ ^ ^^^^ degree) in the case of gas and electric light, there was a certainty of the customer. The government stood ready to take the clothes for the army and the light for the streets; and the producer made army and navy supplies only to the government's order. There was no call for some of the rarest and most difficult powers of Ability — finding custom, avoiding bad debts, and anticipat- ing just what and just how much the market is going to require. True, if nobody but the government produced anything for the people, government would be sure of its customers. But no more customers would have the money to pay then than now, and those having it might like a choice of shops, and even of articles. They might not like to dress in Tammany style. Be- sides, we do not all dress in uniform, and it is only in uniform that government has yet succeeded as a tailor. 236 (g) Private '^^^ government could of course have a initiative essential great many shops and styles, but if they to variety. were all under the management of Tam- many Hall, they would be apt to be the sort of shops that prudent people avoid; and altho the government officers would not nominally be conducting the shops for their own profit, and tho some really might not, we know from experience that too many would. Government could still leave the private shops open, but only if it courted failure. Managers chosen by Nature to control political pulls, could never compete with those chosen by Nature to manage industry. There is no argument that they could, in the fact that government railways and tramways are often operated ^ 2^ h] Personal Property. 229 side by side with private ones : for all have monopolies of their own routes. To succeed in competitive business, 236 r/?;. General government would have to take away the gouernment pro- citizen 's powcr to purchase anywhere he duction attacks , i • - j.i i • • i Property, Contract plcased, just as the extreme municipal and Chanty. traders are beginning to do in England now. This would not only deprive him of the benefits of Com- petition, but of two other institutions that men have been laboring upon through all civilization, and upon which, in fact, all civilization rests: I mean Private Property and Contract. With them would go production itself, all education of a higher grade than government pro- vides, and the very possibility of charity. The scheme would upset the institution of Private Property, because private property is simply one of the consequences of ability. Other things even, a man will have as much of one as of the other; tho of course other things are not always even, because an able man may deliberately devote his abilities to something that he knows will not pay much, and sometimes "accidents " come in. Still, any system that denies ability free swing, at once attacks the right to create property. The system would attack Contract, because if the state is the only employer of Capital, Ability and Labor, of course any one of them has to accept what employ- ment the state gives, on the state's own terms. No one of them has any more opportunity to contract, on terms satisfactory to itself, than the veriest slave born to re- main in his status. The scheme attacks Charity, those who advocate it would say, by doing away with all needs of charity; but those who oppose it say that there would be more need of charity than now, because there would be less production ; and there would be no surplus of wealth in anybody's hands to be willingly spared for charities and the higher education. The idea that people with the moderate incomes that all would then have, would con- sent to be taxed for such things, is of course advanced, but is too absurd to be worth discussing. 230 The Protection of Rights. [§ 236 i 236 0). Futility of ^^ government paid in bonds for the attempting it by present means of production (there is not eminent domain. Ynonej enough to pay), bonds must bear interest, and even if government management should produce the interest (which it probably would not), where Vv^ould be the gain in government simply working the industries, and paying away all the production above wages (if any), in the form of interest on the bonds, to the same people who now work out the interest for themselves ? Of course people generally would then 236 (jh Effect on get all that the industries might produce laborers. ovcr and abovc the interest on the bonds, but after wages and interest were paid (assuming that they would be paid), the surplus would not be enough to be worth considering. The wealth that the socialists are after could not reach them in that way any more than it does now: for the simple reason that no more would be produced than now (if as much), and, as the census reports of present industries show, even if pro- duction were kept up to the present standard, an even division would not yield an average of much more than two dollars a day for each wage-earner, even putting the managers and their shares in with the rest. But advocates of the scheme say there would be more, because they think that under socialism, most men, having so much more interest in the production, would work that much the harder. But there seem to be a good many men who, if they were llVa^Jiness^^"^'""^ ^^"^^ ^^ sharing the product, as in the Paris public shops, and under the English poor law (34), would not work at all. Unless a boss has the power of discharge, it is hard to see who is effectively to tell the workman what to do to make his work count. In Paris the government officers did not have the power of discharge, but if they have, what becomes of the socialism.? Men could not be forced to work pro- ductively, and even if that were possible, it would be only by bringing the free citizen back under the slave's lash. ^ 2 7,6 m] Personal Property. 231 236 (I), v^ouid de- Moreover, government would have to stroy freedom. -j-gj^ people how and wlien they should work — a man would no longer be able to choose where he should work and what he should work at, and what he should take for his work, nor where he should buy and of what producer he should buy: for there would be but one producer — ^the enormous government trust. The whole thing would be a slavery more minute than any yet devised. There is no control as senseless as that of a majority. The scheme of socialism is that each shall be the slave of all : this in spite of the fact that civiliza- tion had been made by able men choosing work, doing it, and directing it, in their own interest. Even if they have had to direct slaves, it was the masters who made the civilization, not the slaves. True, the laborers in Greece and Rome were slaves, and those countries managed to cut a very decent figure, but the voters were not slaves. 236 (m). The un- But in our present state, socialism is employed. couutcd upou to disposc of the terrible question of the unemployed, and to give everybody good wages, but many people have not the ability to earn good wages. Then the socialists ask: why not have government give good wages anyhow? You admit that government should promote the general con- venience in many ways : why not in the most important way of all — give what it has become the fashion to call a "living wage"? Ought not everybody to have a decent living? Yes, if he can earn it; and of course everybody ought to be able to earn a decent living, just as everybody ought to be decent. But unfortu- nately, not everybody is; and we have already seen the effect of the attempt to give everybody decent wages, under the English poor law, and in the French public workshops (34). It is better a thousand times to receive charity direct than disguised as unearned wages. That step would fatally lower the standard of industry and — ^what is far worse — the standard of morality: one is frank mendicancy, the other is disguised robbery. 232 The Protection of Rights. [§237 237. Names Social- Enthusiasts for any specific panacea viduaiism. naturally invent a name for it, and then gravitate into some one name for all methods out- side of it. As soon as the two names are contrasted, they give an impression of- equal weight in the re- spective ideas which they connote. But this impres- sion is very misleading. Thus while the disciples of Hahnemann (if there are any real "high dilutionists " left) apply the term homeopathy to their doctrine, in the apparently balanced term allopathy they include all the doctrines that have been accumulated outside of their own. On one side, the word homeopathy in- cludes only one idea on the subject; but on the other side, the word allopathy includes all the experience of the human race. The same is true of the words socialism and individualism. To the superficial, they appear to represent two ideas that balance each other; but the fact is that socialism expresses a mere theory, and represents no experience whatever; while individ- ualism stands for the whole of human experience on the subject. Socialism has never been tried, all the progress of mankind has been made under ' ' individual- ism". Greater and faster progress may be possible under socialism, as it may be under any scheme that any theorist proposes; but there is no experience to prove that it will be, while every atom of experience so far, goes to prove that it will not. It must be con- ceded, however, that the proof is not absolutely con- clusive, any more than is the proof that two and two will not sometime make five, or that men will not some- time live forever. It may even be farther conceded that in vast periods of time, there may be possible changes iii human nature that may make socialism possible. There are even some grounds for conceding that there are visible factors working in the direction of such changes in human nature, and this concession may be made even in face of the facts that while these words are being written, the New York papers hold circus advertisements attracting people to see a young woman and an automobile turning somersaults in the § 237 ^] Personal Property. 235 air, the attractions of the performance being enhanced by calHng it "The Dip of Death". But no more than all this can reasonably be conceded, and even these concessions leave no room to think of socialism as workable under any conditions so near as to be of any practical interest to any living man. There have been a considerable number of people, from Ruskin and Tolstoy down, whose emotion and imagination are far in excess of their information and reflection, and who jump in fancy to the realization of the socialistic dreams, without studying what founda- tion Nature has provided for them ; or if a foundation is possible, how long must be taken to evolve it. This word socialism has lately come into l^IJgle name!'^"^ such vcry frcqucut use (and abuse) that it calls for a little more consideration. In a long-past -midnight discussion between the present writer and an eminent professor of sociology, and an eminent speculative writer on Utopias, the last two of whom call themselves socialists, all three found them- selves agreed that government ownership of monop- oly franchises, and regulation of their operation by lessees for limited terms, is all that can reasonably be advocated under present conditions. The two "socialists" then claimed that their interlocutor, in agreeing with them, admitted himself a socialist. His counterclaim was that they, in agreeing with him, proved themselves not to be socialists; whereupon the two agreed between themselves that they needed a new word to indicate their real position; and an ineffect- ive resort was made to the Greek dictionaries. If new labels are to be found for all the different positions held by those now included under the label socialism, all the dictionaries will be worked pretty hard; and probably names for the modern ideas will have to be constructed from the modern languages. The fact is that the word socialism is now made to do duty for^ nearly every hoped-for cure of the defects of society — indeed for nearly every dream, how- 234 The Protection of Rights. [§237 a ever wild, of better conditions. Nearly every unedu- cated or unevenly educated person who is dissatisfied with existing conditions, calls himself a socialist, and many call themselves so on account of some opinion that may be anywhere from a belief that poverty is a bad thing, up to a conviction that if the state owned and administered all the means of production, poverty would disappear. Between the extreme positions, are at least the following stopping-places, some of the occupants of any one of which, like to call themselves socialists, and discriminating labels for each of which may be desirable: I. The state should regulate much 237 (b). At least niorc thoroughly the use of all natural three meanings, monopolies, including the municipal fran- chises — waterworks, trolleys, lighting plants, etc. II. Municipalities should not part with the fees of their franchises for these things, but only lease them, so as to control them more effectively, and get the benefit of the unearned increment. III. Munici- palities — or the state — or the nation, should operate the franchises as well as own them. Now many men who hold the doctrines up to this point, would warmly disclaim the name of socialist, and probably very few persons entitled to speak with authority would apply that name to any step short of government going be- yond the farthest of these points, to a fourth — beyond the natural monopolies, and appropriating the means of production which are not naturally monopolistic. 238. Socialism I^ "this fourth use of the term, socialism against competition, means taking out of the fields of com- petition the things wherein competition is possible — depriving the world of the initiative and energy that competition breeds — of what has been well called "the life of trade". While up to this point, government ac- tivity certainly should increase with government ability — in other words, with political intelligence and m.orality, beyond this point government interference with what we ordinarily mean by "industries", would be inter- ference with what has raised society above the stage of mere militarism. § 240] Personal Property. 235 To the claim that socialism could have foM'ndividuai?sm?° i"aised Society, and have raised it better, one answer is that it never did; and another answer is that no considerable body of pro- fessed socialists have ever agreed on the details for working out any consistent scheme by which they them- selves claim that it ever could. On the contrary, they are always quarreling among themselves. Moreover, there is no reasonable doubt that the best results of what various men claim could be attained by the variety of schemes which they call socialism, are being more and more attained through the only process of which the world has had experience — through individual capacity competing for private property, and voluntarily apply- ing an increased portion of private property toward the results that all good socialists and all good men desire. o.n o ■ !■ A Most of the people who believe in so- 240. Socialism and . ,. , , 1 -, . \ Magic an illustra- cialism (whatever they may mean by it) '°"' attribute to it the power to produce these results by some sort of magic. For instance, after the San Francisco earthquake, the New York Times con- tained the following interesting letter : How Earthquakes and Fires would Lose Their Terror UNDER Socialism. To the Editor of The New York Times: In the first place such a horror would not be possible under established Socialism, for every building constructed by and for a socialist system of society would be fire-proof, and in a great measure earthquake-proof. Cheap, flimsy, crowded, in- flammable, and unsafe constructions would find no place in a city built for use and not for profit. Given, however, present conditions, but with Socialism just adopted as a National system, the disaster at San Francisco, aside from the irreparable loss of life, would simply mean that each of us throughout the co-operated Nation had suffered a loss equivalent to a few hours of our productive labor. The whole resource and energy of the Nation would be aroused to replace San Francisco in a grander, more beautiful condition than ever before. The haunting fear of want that now oppresses thousands that were accounted well-to-do citizens would not be present. Thousands whose lives are shipwrecked by this calamity, and whom the most generous aid possible under 236 The Protection of Rights. [§240 capitalism cannot restore to hope and happiness, would, in a few weeks, recover their full former condition. With hope assured, they would rebuild their city on lines of beauty and safety, drawing on the surplus wealth of the co-operated Nation for all labor and materials required. In that new city none of the dives, traps, or squalid quarters which are now wiped out would ever be replaced. With no incentive for greed, graft or unjust gain the city of the Golden Gate would arise the gem of the Pacific Coast. The temporary loss, in all except the loss of life, would result in lasting gain by affording the opportunity to build the City Beautiful. Private land titles would not obstruct the public welfare, and the lesson would be worth all the fearful cost. Capitalism, with all its generous impulses, now temporarily aroused, cannot succeed as Socialism would do. This is a wider extension of socialism than I remember seeing proposed before. All the earlier propositions that I have seen, seem to have indicated that all the property of relatively small communities — states at the utmost, should be owned by all the citizens in common, irre- spective of who devises it, produces it, or preserves it. There seem to be fatal objections to even that scheme, among them its mad injustice; but the objections do not appear to have deterred this writer from proposing to have all the property in America owned collectively by all the people in America — a scheme that would involve difficulties of administration so far beyond any now faced, as to be simply unimagi- nable. 241 Present Possibly the Writer did not realize how agencies toward far, under the despised agencies now at same en s. work, the losses of San Francisco actually are distributed. For instance, not to speak of the subscriptions for relief, eighteen millions of the losses are to be paid by insurance companies in the little city of Hartford alone. And the stock of those companies is by no means all owned in Hartford, but is distributed through the whole country. Considerable of the insur- ance thus distributed is in England: so the socialist's dream of our all being ''members of one another" is already realized through the sordid channels of self- interest, more widely even than in his dream: for that § 242] Personal Property. 237 stopped at the borders of our own land. Moreover, such sharing of each other's losses — and gains too, is constantly increasing. Yet his completed picture is at least a beautiful one. No one can doubt that the results of his prophecies are desirable, but how are they to be attained any faster than we are slowly approaching them now ? The only indication given in the letter is that "socialism" should be "adopted as a national system" — apparently that Congress should pass some sort of a law, or that some sort of a constitutional amendment should be passed, to the effect that everything shall be owned by every- body, share and share alike; and that everything shall be done for everybody by everybody else, combined as the state; and that nobody shall have anything or do anything for his selfish self alone. When this law or constitutional amendment is passed, nobody shall be selfish or grasping, or inclined to hide away anything, or do scamped work, or disobey any laws that may there- after be enacted. Then the men with capacity enough to direct building operations, will be made more honest and capable by depriving them of their property and rewards, and paying them the same that the men they direct are paid. They are going to be more careful, energetic, resourceful —in short, build better buildings, because they can get no direct benefit from building better buildings. Some people who call themselves socialists would say : ' ' Oh no ! They must be paid in proportion to what they accomplish." But that is just what the world has been trying to bring about for several thousands of years, and has come a great deal nearer to bringing about during the past century or two than ever before ; and it is just what nine hundred and ninety-nine "socialists" in a thousand do not want: they want everybody paid the same, no matter what each accomplishes. We already have laws in most cities fawns' and 3es.'" ^^^ moderately secure building; but in spite of them, much crazy building goes on. But our socialist seems to think that if we pass a law 238 The Protection of Rights. [§242 requiring many times the care from builders that is anywhere required now, if we will merely include it with a lot of other laws under the label "socialism", people are going to obey the laws better; and that if these laws remove all reward of care, such laws will secure the care. Or can our writer intend to go so far as to imply that if the wisdom of Leland Stanford and his trustees had been replaced by that of the average building commission which universal suffrage would provide ; and if the name socialistic were given to such commission, it would turn out better v^ork than Stanford and his trustees did. After the great Baltimore fire, wise and generous people hoped to "rebuild their city on lines of beauty and safety", but the majority, who consisted of stupid and selfish people, prevented all but a moiety of the schemes from being carried out. Now it would be interesting to know how long, on an average, the social- ists think it would take the stupid and selfish people who constitute the majority of the inhabitants of San Francisco and of all other places yet discovered outside of socialistic dreams, to pass a set of laws, even under the label of socialism, that would really "rebuild their city on lines of beauty and safety " more effectually than it is going to be built under present laws ; and how much longer it would take them to get the laws carried out after they had passed them. All the ingenuity and morality that San Francisco has been able to muster, have been trying for half a century to get rid of the city's "dives, traps and squalid quarters ' ' ; but Chinatown has gone on burrowing under itself, and then under its burrows. "And there would be no incentive for greed, graft and unjust gain", says our prophet under the inspira- tion of socialism. All over the world, since even long before Christianity came, good men have been legisla- ting against "greed, graft and unjust gain", but these things continue. If the ingenuity and morality that have been fighting them, had labeled their efforts socialism, would they have had an access of magic § 243] Personal Property. 239 power? Or would they have had to change the char- acter of their efforts? If so, why didn't they? Because they had not enotigk wisdom or conscience? How long then will it take to acquire enough wisdom and con- science to work socialism, assuming that enough of both may sometime be within human attainment? And by what methods are the wisdom and conscience to be attained, other than the preaching, teaching and general discipline of life, that have given us our present modest supply of those desirable qualities. Would labeling ourselves socialists create them? Would the label be more effective than the label "Christian" has so far been? Would the label give ''Capitalism with all its generous impulses, now temporarily aroused", a more chronic amenability to those influences? And could the label be effectively put on "Capitalism", if by that word is meant the capacity which accumulates capital, without materially impairing its effectiveness? In short, is the word socialism as used in the letter, anything more than a name for a dream so far beyond any means of realization, as to make it of no interest, except as an ideal, to any living being; and a dream, like most dreams, full of inconsistencies that make it only dreamable — not thinkable? 243. Another ^^ may be worth while to spend a few specimen. minutes with one more of the latest of these philosophers.* He sums up his preface by asserting that the capitalist must learn that socialism •"demands the right, nothing more or less than the right". As if the problem of the ages, only gradually approaching solution, and never quite to reach it, were not simply what is "the right"! He says: "The gateway of opportunity has been closed, and closed for all time. Rockefeller has shut the door on oil . . . and Carnegie on steel." As if these two men had not probably set more young men on their feet than any two men in history! * Jack London : War of the Classes, 240 The Protection of Rights. [§ 243 He says: "The proletariat will possess itself of the government . . . and run the business of the country in its own interest." As if one man in a score could run business at all, and as if he would not keep a reasonably careful eye on his own interest rather than that of the country! He says: "The working-class is no longer losing its strongest and most capable members. There men denied room for their ambition in the capitalist ranks remain to be the leaders of the workers." As if the leaders of the capitalists were not now more from the working-class than ever before! He farther says : ' ' Either the functions of private cor- porations will increase till they absorb the central govern- ment, or the functions of government will increase till it absorbs the corporations." Either the inroads of the sea will increase till it covers the land, or the waste from the land will increase till it fills up the sea. Both sets of propositions seem to mean something, but, like the phrase of the irresistible ball striking the impene- trable wall, they mean nothing. 244. Need and ^ favorite expression of the ideals of Desert. socialism is: "From each according to his ability, to each according to his need"; and if desert were generally measured by need, a beautiful expres- sion it would be. But the melancholy fact is that, despite many exceptions, desert generally varies in- versely as need — the deserving are not generally needy, and the needy are not generally deserving. Change* the expression to "From each according to his ability, to each according to his desert", and you have a very intelligible and respectable ideal, and one toward which all the ages have been stumbling, and toward which every wise philanthropy, every good law, every enlarged communication, every facilitation of supply and demand meeting each other, every honest trade and every honest job, are leading up; and from which ever}^ enervating and confusing dream, every disguised robbery, every pauperizing charity, every unworkable § 245] Personal Property. 241 statute, every obstruction of demand and supply, every dishonest trade and every scamped job, are keeping us back. Try to reach the ideal by any shorter cut, try to determine each man's desert by anything but the re- sults of his efforts, and who is to make the decision — a committee of Tammany Hall, or of a legislature, or of Congress, or of the labor trusts, or of the capital trusts? In regard to the very needy, it has long been attempted by government charity, by hospital and prison boards, by committees of churches, and by charity or- ganizations. So far it has been very imperfectly done, but no man has yet proposed any hopeful organization for doing it faster. It is going to be done better — im- perceptibly better to-morrow than to-day, a trifle better next week than this week, perceptibly better the next decade than this decade, and noticeably better — better with even a much greater difference, this century than the last century; as it was vastly better the last century than the century before. And all this betterment is to come from improvement in the agencies we know, and from better ones evolved from them. But it is to be less rather than greater, because of all revolutions at- tempted by unreasoning sentimentality, and rallied under phrases that inflame the imagination, but fall to pieces when searched for coherent meanings or prac- tical policies. 245. Hige-pressure Regarding the attempt to give govern- progress. ment more to do, the socialist says that the old ship of state under the orthodox sixty pounds of steam, is carrying us forward too slowly — that it is but mathematics that if we square the pressure, we will double the speed. Give her 3,600 pounds, and we shall go forty miles an hour where we now go twenty. The sober student says that long before we get up to 3,600 pounds, the whole thing wiU be blown to flinders. And while the sociaHst is dancing around and calling for his 3,600 pounds of steam, the inventor and educator and sane philanthropist are evolving a quadruple-ex- pansion engine to take us the forty miles. But the old 242 The Protection of Rights. [§245 ship of state is not built for speed: she is a burden- carrier, loaded down with the faults and imperfections of the average man. ?4fi Socialism Apparently, the only way of making the when possible, will Socialist scheme work, is making voters so be needless. intelligent that they will elect only the best men, and making the best men so unselfish that they will work for others as well as they work for them- selves. On that basis, as it has taken some ten thou- sand years of recorded history to get us up to the present Senate of the United States, possibly ten thousand more might give us a governing body that could work socialism, but when people are able to work socialism, they will be able to take care of them- selves without it. Human affairs are so involved with each civHization^^'^ °^ other that Spencer very justly compares them to a web. You cannot lift a single strand without power enough to lift the adjoining .strands ; and you cannot lift a strand very far, without power enough to lift the whole with that strand. CHAPTER XX. PERSONAL PROPERTY (CONTINUED). Schemes for Distributing it more Evenly (Continued) . (Ill) Trade-union Coercion. In times of peace, the forefront of politics is apt to be occupied by schemes of magic betterment. So- ciaHsm and the schemes springing from trade-unionism are now competing for that position. It is not prac- ticable to give the former any farther treatment here. Regarding the latter, of all the impracticable schemes for equalizing the distribution of production, the one which is now probably deluding more people than all others, is Labor-Union Coercion to raise wages higher than the demand for goods and services will pay. As justice can be reached only through sup^niJ'of labor! "^^^ natural flow of supply and demand, to obstruct either by any sort of coercion, is to go counter to natural law, and going counter to natural law is one of the best definitions of immorality. But tho this principle is very simple, the application of it is often far from simple : every event is the result of many forces, and it is seldom that one force can be justly considered without reference to the rest. There is nothing more in accord with natural law than respect for Hfe, and yet often respect for natural laws, involves disregarding life. For instance: regard for one's own life often calls for disregard for the life of another. So circumstances sometimes arise when 243 244 ^^^ Protection of Rights. [§ 248 morality requires a disregard of the natural flow of supply and demand. But those circumstances are probably all exceptional and abnormal. At the time of the San Francisco earthquake, the equation of sup- ply and demand would often have required prices for food and water that even the consciences of the sellers would not permit. In that case, however, and in most similar cases, the short supply and the excessive de- mand did not result from human volition; and in the case of taking another's life to defend one's own, the conjuncture does not result from the volition of the per- son taking the extreme course. Indeed, it is probably safe to say that all situations which justify action that is ordinarily reprehensible, are forced upon the actor by outside conditions — ^usually by the reprehensible con- duct of another. On this principle it is probably true that action counter to the natural flow of onfy^in^self-Zfence. supply and demand is sometimes justifiable, but only when some natural catastrophe has already interfered, or when some unwarrantable act of man has made the case one of self-defence. Ordinarily justice can float in only on fup^ply^Kbor!"^ fluid competition, and until both sides pro- mote fluid competition instead of obstruct- ing it, justice will be impeded. Some employers try artificially to increase the supply of labor by m^aking a given amount of money pay so large a number of men that they cannot have needed food and comfort, and by get- ting men to work so many hours that they cannot have needed rest and recreation. Trade-unions came into being to artificially limit the supply of labor, as a defence against such employers. But having found that some- times wages can be increased, hours shortened, and condi- tions improved by strikes, the unionists have jumped to the false conclusion that they generally can, and have gone on striking in season and out of season, until lately they have lost more from idleness during strikes than they have gained between them. They have at the same time made serious inroads on the capital of the employers from which their wages come, and on the § 250 b] Personal Property. 245 capital of the community which calls for their work. They have also reasoned that, as a strike, to be efficient, must be close, it is justifiable to bring out- siders into the union by any means whatever. The idea regarding wages is a fallacy, and that regarding coercion of non-unionists is a mistaken and immoral assumption. As wages are represented in cost of prod- /luUi W3ff6S n6C6S" , .1 . 1*1 J ^ ji sariiy limited uct, they cannot go higher than the commu- (a). by demand nity is willing to pay. Neither can they be materially raised by diminishing capital's share of product: for the capital in any trade made unprofitable by excessive wages, would first seek a more profitable investment; failing that, a more prof- itable country; and failing that, would tend to be consumed, as not worth saving. In any one of the cases, wages cannot stay at a point where they drive capital out. So with Ability, if wages get too high to leave Ability's profits in proportion to its degree, it will forsake the industry, and the laborers will be "out of work". 250 (b). by com- The attempt to raise wages above the petition. normal can only succeed, even for a time, for but a part of the men, and must leave some unem- ployed. As Professor Laughlin well said in an ad- dress before the Citizens' Industrial Association of America : "It means always and inevitably, the existence of non-union men, against whom the unions must constantly wage war. Under this system, high wages for some within a union can be maintained only by the sacrifice of others without the union. In short, the union scale of wages can be kept only by driving all other competitors from the field. The monopoly is only artificial, not real. . . . "But if all laborers were unionists, the situation would be the same, as regards supply, as if there were no unions. . . . Then the rate of wages for all in any one occupation can never be more than that rate which will warrant the employment of all — that is, the market rate. . . . "Obviously the union rate can be maintained only by limiting the supply of labor to members of the union and by driving out the non-union competitors. Consequently, the inevitable 246 The Protection of Rights. - [§ 250 6 outcome of the present policy of many labor organizations, is lawlessness, and an array of power against the State. Having only an artificial monopoly of labor, their purposes can be successfully carried out only by force and intimidation." 250 (c). by invert- Moreovcr, high wages tempt to labor- ^''^"- saving invention. This is well illustrated by the discovery of the New York bricklayers in the summer of 1905, that the substitution of concrete for bricks was taking away their means of livelihood. These bricklayers had one of the strongest of unions, and had driven their nominal wages up to four or five dollars a day. Their real wages for a year or two had not been much over half their nominal ones: for the nominal ones had been obtained through the notorious building strikes with their accompanying idleness. In the spring of 1905, after the city's long deprivation of builders, the demand for them was ravenous, and the bricklayers expected a season of unprecedented prosperity. But paying high wages had set builders to experimenting, and to discovering that a dollar-and- a-half laborer with a supply of cement and small stone, could mix and pour into moulds more wall in a day than a five-dollar laborer could lay with bricks. Invention, then, puts a limit to possible wages, as effectually as does the choking of demand that high wages must cause, or the competition of labor attracted from trades where wages are lower. The disregard of these unescapable facts by the unions has cost them dearly. Yet the unionists may acknowledge the force of what has been said, and still doubt if they have at the time reached the possible limit of wages. They are doubly ready to doubt it when they consider the wealth in other hands; and as they are not inclined to the slow and arduous ways that placed it there, and do not often possess the ability to take those ways, they are naturally prone to the strike. But of late they have so often exercised it only to demonstrate its fallacy — to reach through times of privation a scale of wages so high that the public will not pay it — that they miust be getting some inklins: that the method is fallacious. § 252] Personal Property. 247 The other assumption of the unions — & fof c'oi"rS^' that any method— picket, boycott, violence, murder, is justifiable to keep the union close, hardly requires discussion. The few who sup- port it on any basis of professed reasoning, assume that, as the state holds the property and even the life of the citizen subject to sacrifice for the greatest good of the greatest number, the trade has the same moral right over each of its members. The alleged justification — offered in various forms — for these attempted infringe- ments on liberty, is the greatest good of the greatest number, but at best that can only mean of "the greatest number" in the trade in question; and their good is avowedly sought through price? enhanced at the ex- pense of the greatest number of the community (258 a). Here should be most carefully and thoroughly realized, what was briefly touched upon before: first, that the principle of "the greatest good of the greatest number" can be applied only to actually "the greatest number '* — ■ the whole community — which the greatest number of a minor section can never be; and, second, that the ascer- tainment and securing of what is the greatest good of the greatest number, tho it has taxed all the wisdom of all the ages, has even yet been only approximately attained; and that so far as it has been attained, it is exjjressed in the exivSting body of laws made by all for all. 252. Aimed against So much for the principles involved. Now laborer, empioyer, , xjx-i/tvj and pubiic. to come to details. Irade-union coercion is threefold: It is directed primarily against the enter- priser, through strikes and boycotts; but secondarily against the laborer, to prevent his giving the benefit of competition to the enterpriser, or incidentally to himself when he happens to be unemployed: the union wants nobody competing with it, and therefore tries coercion to get all men to belong to it, and to stand idle when it is idle. And third, the coercion is directed against the public — to compel public opinion to endorse labor's contentions, by stopping transit, coal supplies, food supplies, and other necessities and conveniences. 248 The Protection of Rights. [§253 253. Coercing the ^^ "^0 coercing the employer: the time employer. during which the laborer can stand idle without a loss that is serious or fatal, is much shorter xhan the time during which the enterpriser can — the laborer cannot afford to wait for a good bargain, while the enterpriser can. The union therefore tries to in- crease the laborer's ability to wait, and to diminish the employer's ability to wait. This is often done by making the settlement of a difference depend not on the employer doing without the laborer with whom he differs, but doing without any laborers at all. Now there can be no objection to any peaceable efforts necessary to secure to labor the full benefit of the natural demand for labor. They become ob- jectionable only when they deprive the employer of the full benefit of the natural supply. If a laborer thinks that demand for labor justifies higher wages, it is perfectly legitimate to test the question by leaving the work, and seeing if the place can be filled at the price. But when the test is attempted ' ® ""' ^' by all the men stopping work together, it is not made by the natural flow of supply and demand : the natural flow would be for each man to take work elsewhere, when tempted by a natural demand in the shape of higher wages elsewhere. This would not in- volve stoppage of the business : the question could thus be tested without shock or material loss on either side. But there are obstacles to this ideal test, obstacles often so great as a change of the laborer's residence. These obstacles would prevent his getting higher wages elsewhere, unless the wages were enough higher to justify the expense and inconvenience of whatever change might be involved. This expense and incon- venience may readily be greater than would be involved in a strike, and the laborer's rights might be better conserved by v/aiting until enough men were discon- tented to unite in a strike. But not only is the strike against whatever rights the employer may have to get the question of higher wages settled gradually without stopping his works, but strikes are in many instances, § 255] Personal Property. 249 perhaps in most, forced by a minority, or undertaken by men who are not discontented, but who only act in sympathy with a strike elsewhere. Conversely, the employer cannot be expected to carry on work at prices that are not profitable, and an entire stoppage of the works may be as much to his interest sometimes, as at other times a strike may be to the interest of the men. But ordinarily it would be in the course of nature for him to try to reach a lov/er scale of wages gradually, rather than proceed to a lockout, and both incur idleness himself, and deprive his men of their means of subsistence. Thus in both directions, the rights of master and man often conflict. Men with reason and morals can generally settle their conflicts by discussion and com- promise, but beasts can settle them only by war; war, however, is justifiable only as a last resort, and strikes and lockouts are war. Lockouts, hov/ever, play but a small part in indus- trial troubles. The U. S. Bulletin of Labor for Sep- tember, 1904, shows that from 1881 to 1900 inclusive, there were over twenty times as many strikes as lock- outs, and the employers lost over five times as much by strikes as by lockouts. In the five years 1 896-1 900, the strikes increased to over thirty to one lockout; and the ratio of loss increased three and a half fold; tho if the years 189 5-1 899 were taken, it would show a fall in strikes to about fifteen to one lockout. In view of the facts, then, we may reasonably continue to confine our consideration to strikes. In all the coercion, the justice of the case has been obscured by many things — most perhaps by what seem to be the plain facts that a man has a right to stop work when he pleases, and to buy or not buy where he pleases; and that what one man has a right to do, any number have a right to do together. 255. Conspiring to But in all strikes and boycotts there is stop work. more than the exercise of the mere right to stop work or stop buying. What leads to all the outrages is conspiring to stop work or stop buying. 250 The Protection of Rights. [§ ^55 Even granting to the individual the fullest right to do either, there still remains serious question of his right to enter into conspiracy with other men to do it together, when they unduly prejudice the rights of others — when, for instance, not to speak again of private wrongs, they bring an industry — especially a public utility, to a sudden and disastrous standstill. Moreover, even leaving out the many cases when the men are ordered out against the real wish of the majority, or because some other men have struck, and considering only the cases where men strike because they really want to, does each man stop w^ork when he pleases, or do the discontented stay at work after they have become discontented, in order that all may quit work together, to the greater inconvenience of the employer? Such a course is admittedly a conspiracy to injure the employer, and the right to take it is seriously questioned, even by the law. Similarly, of course, with the boycott coercion. 256. Other coer- Beginning with occasional and often cions, entirely justifiable demands for higher wages and shorter hours, the unions have gradually added limitation of apprentices; limitation of a ca- pable man's output to that of an incapable man; re- fusal to handle material from previous non-union pro- ducers, or material coming from other shops, or mate- rial not prepared in their own city, before they have duplicated it and destroyed the duplicate; and hosts of other regulations of their employers' business. The employers have yielded point by point until the de- mands have reached the logical conclusion of that for the "closed shop" — closed to all but union men, and that the foreman shall be a union man chosen by the men, instead of by the man who pays his wages. In 1906 the Typothetag of New York thus stated a situation that is by no means restricted to their trade: "The eraployer cannot put his own son to work at the machinery in his own composing-room until that son, after four years' probation, swears allegiance to the union, subscribing to an oath that puts obedience to the union above his duty to § 257] Personal Property. 251 family, church or state. The employer cannot hire or dis- charge his own men; they must be hired or discharged by a foreman, who must himself be a member of the union. An employer cannot operate the keyboard of a machine that he has paid for, or set his own type; he is not allowed any repre- sentation in his own composing-room. The composing-room is controlled by a union foreman, assisted by a union chair- man elected by union men, the chairman's duty being to see that neither the men nor the foreman shall for one moment forget any of the numerous restrictions which the union has placed on the running of the shop." In the last analysis, the object of the unions has been to break down the laws protecting private property — factories, stores, mines, transportation agencies, in order that they, instead of its owners, may control it and derive from it what revenue they please. This, it need hardly be pointed out, is one of the forms of confiscation grouped under the general term Socialism. Even if they were to succeed in their contention, noth- ing can be more certain than that, if the property were without the guidance of the superior minds which created it, the returns from it would fall off, and the revenues to the workman would diminish, and in many cas^s — in all, if the principle were carried out to its logical conclusion — would cease altogether. At this point, the employers have decided to resume control of their own businesses, and to run the "open shop" — shops open to whom they please to engage, on terms satisfactory to their own side as well as the other — and the parties are in the midst of a disastrous conflict. There can be but one end to such a conflict. Some weak employers in the printing trade have yielded for the moment, because they could not afford to stop work; but the strong ones are holding out simply because they must. The question is simply whether they shall control their businesses or give them up. The laborers cannot afford to have them given up. „.^ ... , ., Most of the discussion of strikes in the statistics of later literature of the subject, of course ^*'''^^^' ends with the census of 1900. Based on the facts up to that time, Professor Adams says: 252 The Protection of Rights. [§257 "In the Final Report of the Industrial Commission (page 864) it is pointed out that although on the average of the twenty years 1881-1900, about 330,000 persons were thrown out of employment annually by strikes and lockouts, this number constituted only about 3.36 per cent, of the persons employed in industries affected by strikes. The actual time lost by strikers in this period amounted to about 194,000,000 days. However, 'spread over the whole period, this loss amounts to very much less than one day per year for each adult worker. In other words, the workmen of the United States have lost less time from strikes and lockouts than from the celebration of the Fourth of July or any other legal holiday. . . .' Similarly, on the basis of the figures of the Department of Labor, Mr. Mitchell calculates that the immediate loss traceable to strikes amounts to only about 3 cents per month for each inhabitant." Now the madness that ruled the unionist world from 1900, the last year considered in the foregoing para- graph, to 1906, when these words are written, would make that paragraph,* if applied to the more recent * Prof essor Adams deduces from a table of strikes from 1 881 to 1900 some conclusions that are strange to find in a book usually as reliable as his. One is that unionism has tended to lessen the number of strikes. In support of this he deduces the fact that in '86-'9o there were 4358 union strikes, while in '96 to 1900 there were but 4175. But I find that the same table shows that in '8i-'9o there were 5669 strikes, which in '91-1900 rose to 8,788, and even that his five years '86-'9o, containing 4,358 union strikes, were followed by five years, '9i-'95, containing 4,613. Moreover, in the two periods he selects, he compares the non-union strikes with the union strikes, with the showing that the union strikes decreased four per cent., while the non- union strikes increased ten per cent. But if he had taken the two decades that I have taken from the same table, these figures would have been that union strikes had increased fifty- four per cent, (instead of diminishing two per cent.), while non- union ones had increased but thirty-five per cent. Since 1900, the statistics are not available, but no observer can doubt that the facts have been even vastly more in the direction that my comparison of the two decades shows, or that the unions have fomented strikes to a degree that seems to mean nothing short of the madness of those whom the gods wish to destroy. Of course it is not to be supposed that Professor Adams deliberately selected fractions of each decade which happened to support his theory, and yet a glance at his table reveals the showing of the whole twenty years to be startlingly counter to that of the two periods he has selected. § 253] Personal Property. 253 period, the wildest nonsense — a fact which it is impor- tant for writers to point out as long as current facts and previous facts continue in such direct contra- diction — probably until the census of 19 10 shows the conditions of the last six years, and, it is to be hoped, the subsidence of them. Favorable symptoms of the subsidence are the rise of the employers' unions and citizens' industrial unions, a great decrease of strikes since 1903, and the falling off, in 1904, of the member- ship of the trade-unions, which is not yet made up, despite the subsequent full employment and high wages. 258. Coercing the ^s to coercing the laborer : there is no ^^^om. question that the trade-union would be more efficient as a monoply, and that it has a right to persuade men to make it a monopoly. But equally is there no question that it has no right to add violence or intimidation to persuasion, or that the unions have at last become so used to artificially limiting the supply of labor, have become such adepts in it, and have de- rived such advantages from it (tho largely illusive ones), that they have got in the way of doing it under un- justifiable circumstances, and by unjustifiable means. Among the means, as already said, is the use of coercion to limit the number of apprentices. Such a policy, even among shipwrecked sailors struggling for a raft too small to hold them all, is not easily regarded with patience, and when it is persistently pur- sued by men already supplied with the necessities of life and not a few of its luxuries, its cruelty and selfish- ness are beyond excuse. Its absurdity is often on a par with them: for instance, in several trade-unions — notably in the typographical ones, it has now got to the point where a father cannot teach his trade to his son in his own shop, without the consent of the union ; and it need hardly be pointed out that if limita- tions were practiced by all trades, more of the com- munity would be reduced to the position of labor too unskilled to be organized — of that pitiable residuum 2 54 The Protection of Rights. [§258 **the unemployed", which is drawn upon only when nothing better can be had. On the other hand, some trades, as in the printers' strike of 1905-6, have forced employers to teach the trade to so many outsiders, that many of the strikers themselves, on wanting work after the strike has failed, find their trade overcrowded. Appreciating the value of unity of action, whether the cause be right or wrong, the unions have stopped at no crime in the effort to secure it. Not content with the savagery of pushing apprentices off the raft, the unions are given to boycott, violence and murder, to coerce men to stop work against their will; and all these steps are habitual in quarrels not their own; and in strikes entered upon when the employers have done no wrong. The Chicago Tribune claims to have statistics showing that in the United States from 1894 to 1904 inclusive, there were three times as many murders committed in riots to coerce laborers, as in all other riots put together. The unions have set no limits to the ends they hope to attain by coercion of laborers. Reason and justice require that, other things even, the lowest bidder should 258 (a). The obtain work. The unions wish to elimi- Labor Trust. natc all bidding among laborers. They have made the euphemism of "collective bargaining", and claimed a mass of virtues for it — correctly claimed, if their own side alone is to be considered. But no human ingenuity can extract from the phrase or the idea, anything but an absolutely close labor "trust": that is precisely what all trusts are made for — collective bargaining — eliminating individual competition. This is not saying, however, that trusts — whether labor trusts or capital trusts, necessarily merit condemnation; but it is characteristic of the low intelligence which must accompany low productive power, to exalt the labor trust while condemning the capital trust. Each labor union is trying to form a trust controlling its branch of labor, and the American Federation of Labor is a trust trying to include them all. To deny § 259] Personal Property. 255 this would be so absurd that many of the members frankly confess it; and while other trusts have the decency at least to profess to lower ■prices, the members of the labor trusts all confess, at least indirectly, that their object is to advance prices. Few if any of them have the intelligence to realize that all labor trusts but each man's own, are advancing prices against him, and that even his own advances the price of such of its commodities as he uses. As so often said already: they do not think as far as their outgo, but only as far as their income. Their ideal "collective bargain- ing" is that there shall be but one bargainer on their side, and that the laborer shall be taken at his price or not at all, even if babes go without milk, and the whole community without meat and coal. While the unionists cry out most bitterly because the capital trust is only "one bargainer", while they are the most bitter denouncers of the capital trusts' destruction of competition in things which unionists realize that they themselves use, they are ready to override everything to destroy competition in labor. While they denounce the Standard Oil Company and the American Steel Company for absorbing outsiders through business com- petition, they themselves habitually try to absorb out- siders by the bludgeon. In trying to limit the right to work and to contract — the right of demand to seek supply, and of supply to seek demand, in a free country, they are attempting an impossibility — without freedom to work, freedom to contract, and freedom to compete, no country can be free: the condition of the workman must be simply that of the slave, and the slave of the worst tyrant known — a wrong-headed majority. 2cg p . As to Coercing the Public, everybody the "nubiic knows illustrations enough, but some will The union label. ^^^^ ^^ ^ clearer understanding of the rights of the situation. A scheme of the labor trust has been to coerce the public from buying any goods not bearing the union 256 The Protection of Rights. [§259 label. It has tried the scheme in many ways calling for the same charity that we give to children when they do things whose enormity they do not realize. One is the ingenuous step of demanding legislation to enforce the scheme, — a step which no capital trust would be either so bold or so innocent as to attempt. Perhaps it was a step more ingenu.ous still, when a labor trust began interfering with education by noti- fying publishers that union influence would be used to drive out of the Boston schools any books that did not bear the union label. The tendency of such a policy is of course to lead people of independent spirit, wherever possible, to avoid using goods with the union label. I have even known a case where a person who responds with considerable freedom to circulars asking for aid for deserving charities, has ceased pay- ing attention to those which bear the union label. To an obvious criticism, he responded that, whatever those bearing the union label might deserve, there were enough not bearing it, to justify concentrating on them all the money he could give. And yet with all the. claims for the union label, the highest New York court in 1906 would not sanction a requirement of it in the contract for the public printing of Onondaga County, pronounced the requirement "against public policy and unlawful", and said that "the Board with just as much propriety, so far as its legal right is concerned, might have permitted only Baptist or Unitarian printers to enter the bidding list". The decision is very full in citation of supporting cases. The following paragraphs from the New York Times of May 12, 1906, may cast some farther light on the alleged right to coerce the public into endorsing a labor contention, by stopping work: "When the strike of the Funeral-Drivers' Union nUistration*^°" S°^ under way yesterday, New York witnessed such scenes as the city never before saw. " Several funerals were abandoned by strikers when the dead were between the church and the grave. § 2 6o] Personal Property. 257 "Of 103 funerals that had been set for yesterday in the city only 23 were finished. The carriages of some of those were stoned by the strikers or their sympathizers. " Farrell's funeral was set for one o'clock. Several carriages and a hearse had been drawn up to the door, when a walking dele- gate from the union ordered the drivers to go back to the livery stable. They went back. Th.n came the news that the livery- stable owner had ten other funerals, and had been obliged to sign the agreement. The carriages returned to the house of mourning, but came back with flying colors. On the heads of the hearse-horses were two red, white and blue flags, and on the bridles of each of the carriage-horses tiny flags signified a victory for the funeral-drivers. The mourners protested, de- claring that the funeral procession with the flags would look like a west-side chowder club. But with the union's flags flying at the heads of the hearse- and coach-horses the funeral went on to the cemetery." In another case "The Rev. Father John C. Henry. . .was delivering a eulogy on the dead man when there was a com- motion at the church door. ... A committee from the striking union had called the driver of the hearse and ordered him to take his hearse back. . , . The coach-drivers were ordered back, too. Leaving the body and the mourners in the church, the hearse- driver and the coach-drivers drove away. The sexton . . . went about notifying the mourners of the situation and telling them to remain in their pews until matters could be straightened out. . . .The police reserves from two precincts were sent to see that the strikers did not again interfere with the funeral. Then Undertaker Hagan hitched one of Undertaker Slevin's horses to an undertaker's wagon, and returning placed the body in the wagon. The immediate relatives of the dead man accepted the offer of a private carriage that had taken a party to the funeral, and then followed the body to Calvary Cemetery. The rest of the mourners went to the cemetery in trolley cars, after this funeral had been held up for two hours. "In another case, up in the Bronx, the body was put in a milk-wagon and driven to the cemetery, while the mourners rode in surreys and grocery wagons." In another case 'A large number of the striking funeral drivers assembled opposite the Ogle home at 8 o'clock. The police reserves were sent for, and drove the strikers away. . . . Four men appeared carrying the coffin on their shoulders and followed by the mourners, who walked. ' ' Dr. Guilfoyle granted an extension of the burial permit in the Weaver case, so that the body could be held at the house until to-day. The law forbids the holding of a body more than four days. . . . The Weaver family, like others in mourning for their dead, were compelled to sit up another night with their dead relative. 258 The Protection of Rights. [§260 ' ' The funeral of Antonio Le Grabier . , . was headed off by a committee of strikers, who ordered the hearse-driver and the coach-drivers to leave their seats. They pulled up, leaving the coaches and hearse in the roadway. ..." In another case ' ' Striking drivers ran out and tried to drag Undertaker Lumoro from his seat on the hearse. Policeman Gleason, one of the guards, ran at the strikers with his club and drove them away. The funeral then proceeded, . . . but still followed by the mob of striking funeral drivers and their friends. "At the ferry the mob threw sticks and stones at the hearse and coaches. The mourners climbed out of the carriages and took refuge in the ferry-house. "A man asked Dr. Guilfoyle to hold the body of his child for another day. He said the child had died of measles, and that the undertaker told him the body would have to be taken to the cemetery in an express wagon. " 'My wife is very ill', he said, 'and she vows she will not permit anyone to place our child in an express wagon. If I can get a permit to hold the body for twenty-four hours more, it will be the means of probably saving the life of my sick wife.' "Dr. Guilfoyle granted the permit. "It was said at the Health Department that if an attempt is made to-day to hold up funerals the police will be called on to make arrests under Sections 314 and 315 of the Penal Code. Section 314 provides that any person who detains a dead human body on any demand is guilty of a misdemeanor. Section 315 says : " 'A person who, with or without authority of law, obstructs or detains any person engaged in carrying or accompanying the dead body of a human being to a place of burial is guilty of a misdemeanor.' . . . "Dr. Guilfoyle said the strikers yesterday had held up the funeral of a person who died from diphtheria. This was a serious matter, he said, as the body had been held over the twenty-four-hour limit without the Health Department's per- mission." The right to stop work! Has anybody 261. The right to g^ right to anything which will lead to such barbarities as these, or such as may be read of in connection with a large proportion of all strikes ? Undoubtedly, other things even, any man has a right to quit work when he pleases. But plainly there are cases where other things are not even. I cannot treat this important subject better than I have done else- § 262] Personal Property, 259 where,* and I will therefore use again the passages with slight modifications. In any contract for work, even if terminable without notice, certain things which it is superfluous to express in the contract, are always understood. One of those things is that neither party shall wilfully use the relation between the two, to the damage of the other, or of any- body else. Nobody would say that a workman whose business it is to connect water- or gas-pipes has a right to quit work the moment he has tapped a main, without making his connection or stopping the leak; nobody would claim that a surgeon has the right to stop work after he has cut a man's leg off, before stop- ping the blood and putting the stump in order ; nobody would claim, indeed, that an actor, having gathered his audience together, has a right to stop in the middle of the play, even if he returns half the entrance-money. . . . No fair-minded person can fail to see that railway employees have no right to quit work while trains of passengers, animals, or perishable freight are likely to be delayed ; and as the welfare of the whole community depends not only upon trains being carried to their destination, but upon their being regularly run at their usual intervals, it also follows from the same considera- tions, that no railway employee has a right to quit work under any ordinary circumstances without giving notice reasonably sufficient for the procuring of a sub- stitute if one can be had, or for making some reasonable arrangement if one cannot. And in all cases, the laborer's right to stop work is limited by the rights of others to have their interests put in safe or reasonably complete condition before the laborer leaves them. 262. The com- The parties to this question are no longer munity's defence, merely the employer, the striker, and the possible man glad "to take his job, but there is a fourth man who is of vastly more importance and power than any of them, and who, as soon as he becomes fully * " Sturmsee ", third edition, pp. 409-12. 2 6o The Protection of Rights. [§262 alive to his rights, is going to settle them in a way that will brook no cavil or resistance. This fourth man is the average citizen — agglomerated as the community at large. In the United States, he represents to-day over forty million adults (including his v/ife) and over eighty million people, including his children, whose milk supply (not to speak of the family food and fuel, and his convenience of passing between house and business) has been held up a little too often by the mere convenience or whim of some two million persons belonging to the trade-unions. If his rights had been violated because of the necessities of these people, or of crying injustice inflicted upon them, he would have felt sympathy and patience. But they have been too often held up, not by men quitting old jobs and seeking new ones, as discontent and opportunity arose, but by conspiracies, for poor reasons, to stop work and make others stop work, together. There has been a principle upheld among Anglo- Saxon people for a good many hundred years, tho suffered to lapse into occasional desuetude, that men conspiring to do a thing unobjectionable if they do it separately, but working harm to the rights of an- other or of the community if they do it together, are guilty of a criminal act ; and the community is rapidly being forced into a disposition to visit on such crim- inal acts, their proper penalties. The work has begun already. „^^ p , , The a8:2:ressions at last have forced 263. Society ^ . ^9^ . - 4.1, _^ organizing combinations not only among the em- in self-defence. ployers, but among new forces that are irresistible — those of the community in general. Few labor unions can see beyond their own ranks; they forget that their exactions must be met not merely by their employers, but by all who use the product, including even members of other unions. In 1901 the first Employers' Association was formed in Dayton, Ohio. Before that time employers had quite generally sought to profit by each other's troubles, instead of uniting against all unjustifiable trouble. § 263] Personal Property. 261 In 1901, an Employers' Association was organized in Chicago, and many other cities soon followed suit. About the same time street-car operatives had been making serious trouble in Montana, and miners doing the same in Colorado, Remembering the Vigilance Committee of San Francisco, the people organized similarly, many workmen, even, being on the side of law and order. Nearly four hundred of these associa- tions have grown up and are now combined in the National Citizens' Industrial Association "for the pro- tection of the common people", which publishes a valuable organ, "The Square Deal". It includes the National Association of Manufacturers, comprising some three thousand firms and corporations, whose organ is ' ' American Industries ' ' ; and also the powerful ' ' Anti- Boycott Association". Thus the intelligence, capital, and rights of citizenship of the country are at last arrayed against the excesses of the unions, and by or- ganized appeal to the law, have obtained important decisions against them ; * have prevented much class legislation; and are disseminating valuable education. The National Association of Manufacturers has estab- lished free employment bureaus to give independent laborers work which strikers have refused. f The * " In three fourths of the Chicago strikes, injunctions have been secured restraining strikers from interfering with non-union men, on the ground that it was a conspiracy to prevent work. Hence the anti-injunction bill which the American Federation of Labor has tried hard to put through Congress. This bill, in the opinion of Mr. James M. Beck, chief counsel of the American Anti-Boycott Association, ' legalized conspiracies ' between unions, but made it impossible to enjoin them." (From an article in the Chicago "World of To-Day" by Mr. Isaac F, Marcosson) t "Nearly every strike ending in a victory for the open shop has been followed by the establishment of a labor bureau. The union men call it a black-list agency, because it keeps a check on a man's record. The National Metal Trades Association furnishes a good example. It runs open shops. Any man of good character want- ing a job in the metal trades can apply there and in four out of five cases he secures work free of charge. The secretary investigates the man's record. All the facts about him are put on a card which is kept in a permanent card catalogue. In this way 262 The Protection of Rights. [§ 263 employers' organizations, in nine tenths of the cases which they have taken up, have estabhshed the open shop, where the unions have tried to destroy it. 264. Educational Great as has been the immediate eco- Results. nomic value of all this experience, its educational value must be greater still. Both are indi- cated in the simple fact stated before, that while in 1903 there were in Chicago 1,300 strikes, in 1904 there were but 800. Unless all strikes are wise and justifiable, it is reasonable to presume that the falling off in 1904 was in the class of those that would not have been so, while the number that did take place is apparently large enough to include virtually all that could have been wise and justifiable ; and more workmen are apparentty learning not to strike wantonly, while they still re- tain the spirit to maintain their rights. Thus the unionists may have lately begun to learn, that after all there is no more magic in coercion than there is in the other nostrums for getting much by the man who produces little; and they are learning it, as the uselessness of the other nostrums has had to be learned, at frightful cost to themselves and the community. If more of such teaching is needed, it may get so far that the twenty million men who are not in the habit of striking, may outvote the two million who the disturbers are kept out of the shops. Last year the Chicago labor bureau of the metal trades had 4,850 applicants and 3,000 men got jobs. "Bureaus in different cities kept in touch with one another. If a man applying in Kansas City lies about the reason why he left a job there, he is sure to be found out if he applies in New York. If a strike is threatened, for instance in the New York metal trades, a central secretary can send a telegram to every labor-bureau secretary, asking him to rush men to New York. In twenty-four hours a hundred boiler-makers would be on their way from Kansas City, St. Louis, Chicago, Cincin- nati, Philadelphia and a dozen other places. "These bureaus have made leaders cautious about calling men out. Formerly they called a strike and then considered the grievance. Now they consider the grievance first." {Mar- cosson, op. cit.) §2640^] Personal Property. 263 are. All strikes have been declared criminal by statute before now. Even in Australasia, "the Paradise of Labor", the mere attempt to foment one is subject to heavy penalties (291), and if the proportion of them which unquestionably are criminal even under our law, should again increase as rapidly as they were increasing before people began the checks just described, all strikes may be declared criminal again, and strikers reduced to depend only on verdicts of not guilty where the strike is justifiable, just as such verdicts are found in the rare cases where killing a human being is justifiable. Probably the workingman would be munity's defence the gainer if they were. In the modern will defend the world, the undisturbcd laws of competition wor man. would probably take better care of him, than, in his recent mad attempts to overcome those laws, and in his subservience to his walking delegates and Sam Parkses, he has succeeded in taking of himself. But probably he will not drive society to any such ex- treme. Other agencies are opposing his errors, and he is coming to recognize them and, it is to be hoped, to be the gainer in consequence. If the justifiability of such strikes as those of the last few years had had to be passed upon by judges and juries, few of the hurtful strikes would have been undertaken, while the laborers would still have felt free to enter upon those deserving of public sympathy, and therefore likely to be of real use. If all unionists ap- preciated as well as those of Australasia seem to (278a), the advantages sure to accrue to them from such legal regulation of strikes as would prevent the unjust and foolish ones — especially those incited for mere leaders' graft, the unionists would be the first to agitate for the growing improvements in the law. The demagogues and corruptionists in the unions oppose arbitration agreements and all other means of avoiding strikes. On the other hand, nearly all the good and wise leaders, and there are many of them, do all they can to avoid strikes, as suicidal. Many honest but stupid men look upon the union as nothing 264 The Protection of Rights. [§264(3 but a machine to strike with, while the fact is that some of the most successful unions, whose men actually receive far more than the average amount of wages, have seldom struck at all. Considering how the unions have lost wages and membership during the recent saturnalia of strikes, it is not unthinkable that unless the strikes disappear, the unions must. If they stick to their legitimate function — like that of the German army for the last thirty-five years — of powerful pro- moters of peace, letting all who would impose on the workingman know that they have not to deal with individuals, but with an army, not much imposition need be feared. They have rushed into their excesses because they had only individual employers and unpre- pared communities to impose upon. Now that the employers and the communities have begun to marshal their forces, the unions will soon find unjust aggression hopeless, but will receive all the more sympathy when their complaints are just. CHAPTER XXL PERSONAL PROPERTY (CONTINUED). Schemes for Distributing it more Evenly {Continued). (IV) Labor and the Law. I will now attempt to give some idea of the general attitude of the law regarding labor conspiracy and coercion. Of the laws enacted by legislatures and an^l'CivfcYawI"^^ pronounced by judges and by priests, such as work, are only statements of natural laws; and anybody trying to reform society by some fanciful scheme counter to natural law, will soon find him.self in opposition to some law of the state rooted deep in human experience. The trade-unions are already in pronounced opposition to the laws of both Nature and the State, as is shown not only by individual violations of the law, but in the general attitude of the unions. To carry out their systems, they have found it necessary to exact from their members a pledge of fealty to the union superior to their fealty to church and state, to prohibit them from entering the militia which protects the established law, and to agitate for the abrogation of injunction, which is one of the most important features of the established law; they have procured the enactment of many impossible statutes, which are of course falling to pieces under the scrutiny of the courts; and they frequently publicly admit that they hold themselves superior to the law, 265 2 66 The Protection of Rights. [§265 and that they cannot succeed without going beyond it. After President Roosevelt told the unionists at Chicago in 1905 that there would be no discrimination in favor of either side, the President of the Chicago Federation of Labor said: "The President deals a death-blow to organized labor . . without discrimination, we are just where we started. What we have been fighting for is union labor to the exclusion of all others." In other words, they had been fighting to override the laws pro- tecting the non-unionists' Right-to-Work, and every man's right to join the union or not at his free will. Their avowed and acted policy is that, if society will not see their most trivial demands granted, society shall suffer the most serious consequences. In short, just as the ignorant, seeking for shorter cuts to fortune than industry, frugality, inventiveness and the other effective sources of wealth, have lately tried, with con- spicuous failure, to set aside the natural laws which control land, money and industry, so they are now attacking not only the statute laws which they them- selves have approved, but the venerable system of Anglo- Saxon common law which has grown out of the experi- ence of the ages, and which is by many, and those proba- bly the wisest, regarded as the greatest achievement and most important possession of the human race. Probably existing laws are adequate to the situation, at least so far as the unions have not effected the repeal of the common law which has protected the liberties of English-speaking people since English was first spoken. Altho the common law has always been re- garded mainly as the defence of the poor against the rich, many people have been surprised to find in it equal elements of defence of the rich against the poor. An impression has become widespread that vox populi is not always vox dei, and that the voice of the trade- unionist IS not always even the voice of the people.* * An instance instructive in many ways, not least regarding the frequent boomerang effect of legislation, is afforded in this connection. No portion of the community was more active than the trades-unions in the agitation which led to the Sher- § 20 5 ^] Personal Property. 267 However, conspiracies of laborers to obstruct and even to destroy the business of employers who would not, and often could not, concede to their demands, have grown so frequent that, like the violence of primitive com- munities, they have come to be regarded as justifiable; and American legislatures have even passed statutes admitting a right to strike. But the courts are taking different ground, 265 (a). The Law The legality of a number of men doing of Conspiracy. together what each may do separately, was treated by Justice Harlan, in the U. S. Supreme Court, Arthur vs. Oakes. He said: ' 'An intent upon the part of a single person to injure the rights of others or of the public is not in itself a wrong of which the law will take cognizance, unless some injurious act be done in execution of the unlawful intent. But a combination of two or more persons with such an intent and under circum- stances that give them, when so combined, a power to do an injury they would not possess as individuals acting singly, has always been recognized as in itself wrongful and illegal." Nearer up to date, in 1906, the Pennsylvania court of first resort (whose judgment was confirmed by the higher court) in the Purvis Boycott case, said: "The defendants contend, however, that what they did in concert was simply what each might have done for himself, acting on his own initiative, and that their concerted action was not, therefore, unlawful. * 'I do not understand such to be the law of our state. There man Anti-Trust Act. This act makes criminal every com- bination in restraint of trade between the states. It was primarily aimed against abuses among the railroad companies and the great shippers. It has now been applied by the courts to boycotts and similar combinations interfering with the business of any establishment sending goods outside of its own state, and the mere notification of their criminality peace- fully resolved the teamsters' boycott against the Kellogg Switchboard Co. in Chicago, the freight-handlers' boycott against the meat-packers, and other boycotts in other places. The unions, dissatisfied with the laws they advocated for others, when applied to themselves, are now agitating for repeal. 268 The Protection of Rights, [§ 265 a is, under some circumstances, a potency in numbers of which the law takes notice. ' Men often do [illegally] by the combina- tion of many, what severally no one could accomplish, and even what when done by one would be innocent. There is a potency in numbers when combined which the law cannot overlook when injury is the consequence. . . .' " Morris Run Coal Company vs. Barclay, 68 Pa. 173. Then was quoted a previous decision, in Patterson vs. Building Trades Council, 11 Dist. Rep. 500: " 'AH the authorities of this state go to show that while the act of an individual may not be unlawful, yet the same act when committed by a combination of two or more, may be unlawful, and therefore actionable.'" The court went on: " The authorities above cited indicate clearly that the doctrine of Bohn Manufacturing Co. vs. HoUis, 54 Minn. 223 and 40 A. S. R. 319, that 'What one man may lawfully do singly, two or more may lawfully agree to do jointly', is not the doctrine of the law of our own state. Neither, indeed, does it seem to conform to elementary principles. The efforts of one, by rea- son of their very puniness, may be such that the law will take no notice of them : ' de minimis lex non curat.' But when, with increasing numbers, the individual effort has grown into an avalanche of power, can it still be said that the law will not notice it because the individual contributions thereto are small? With us the law takes notice of the cumulative power of increasing numbers . ' ' The same point was sustained by Judge Knowlton of Massachusetts when he said : " An act which can be done in legitimate competition by one, two or three persons, each proceeding independently, might take an entirely different character both in its nature and its purpose if done by hundreds in combination." Similar ground was taken regarding the whole ap- parently innocent class of rights which include stopping work at will; choosing one's shopmates; buying where one pleases ; peaceably arguing with another man regard- ing choice of places and times for working, buying and selling; etc., etc., when the United States Supreme Court said: § 265 ^] Personal Property. 269 " No conduct has such an absolute privilege as to justify- all possible schemes of which it may be a part. The most inno- cent and constitutionally protected of acts or omissions may be made a step in a criminal plot, and if it is a step in a plot, neither its innocence nor the Constitution is sufficient to prevent the punishment of the plot by law." The general principle was thus illustrated by Hon. Daniel Davenport, Counsel to the Anti-Boycott League, in an address before the Citizens' Industrial Association of America, in 1905: ' ' Suppose half a dozen men in my town are bakers ; I go to one of them. . . . He may say to me: 'You do not belong to my church, or you do not belong to any church. ... I do not want to sell you any bread unless you join the church.' He has a perfect right to do that. And so, if I go to each of the other five, every one of them has a right to say that he will refuse to sell to me ; but if those six men have combined together and agreed not to sell me bread, in order to make me do some- thing, for instance, to make me join the church, that is a con- spiracy, and every act they do to carry out that conspiracy is unlawful, by reason of the fact of its being a step in the plot. ' ' That principle has been laid down by the Supreme Court of the United States in a case that arose in the State of Wisconsin. It has been emphatically laid down by the courts of Illinois, and it has, within a few days, in cases that we have been connected with in the State of Massachusetts, been recognized and applied." Other decisions to the same general effect are too numerous and too various to recount. Occasionally some demagogic judge who cares more for Labor than for Law, or some petty magistrate who does not know the law, turns up with a decision in the opposite di- rection, but the weight of the law is now past question. The bearing of these decisions on the right to strike is obvious — that men have no right to attack another man's property or business because they once helped in it, and threw up their jobs because they and their employer could not agree; and that conspiracies to strike, picket and boycott are such attacks. 265 (b). The A Strike is questionable also on the second "Cornel-" again, ground that it is an artificial damming up of the supply of labor: so it is open to the same objec- tion with an artificial cornering of goods. 270 The Protection of Rights. [§ 265 6 For these considerations, the common law — the de- cisions of judges have not seldom been against there being any such thing as a right to strike. The Eng- lish courts, whose example has largely influenced ours, have held from time immemorial that it was criminal conspiracy for workmen to unite to raise wages and shorten hours, and Parliament has passed statutes to the same effect. These acts were repealed in 1824, and later there have been statutes declaring that no combined action could be criminal in a trade dispute unless it were criminal when committed by an individual. But there is a growing sense that this is going too far. As already shown, there are many de- cisions of courts, English as well as American, that acts which can work no injustice when performed by an individual, may work great injustice when performed by many men at once. 265 (c). Malicious A long-cstablished principle is that intent. strikcs are criminal if undertaken with malicious intent. The range of malicious intent, how- ever, is not yet very thoroughly defined. It seems to have been sufficiently determined whether there is an element of malicious intent in holding up the transit of food or fuel of the whole community in order to secure some relatively minor convenience or concession for a few. 26b (d). Labor- In Massachusctts, strikes are illegal saving machinery, when directed against labor-saving ma- chinery. In 1895 the Supreme Court issued an in- junction against the masons building the Harvard Medical School, stopping work because the contractors were using labor-saving machinery to form the arches. Labor-saving machinery is so clearly demanded by the greatest good of the greatest number, or " public policy ", that it is strange that this act of the judges should be regarded as something of a novelty. 265 (e). The open Strikes are illegal when directed against ^'^'^P' the open shop. In the Chicago Typothetse Case, in 1905, the injunction prohibited "from attempt- ing to prevent by threats of injury or by threats of § 26$h] Personal Property. 271 calling strikes, any persons from accepting work from or doing work for such complainants." And there are hosts of decisions to the same effect. 265//;. "immedi- Many of the judges who admit the right Thl 'sympathetic^ to Strike, limit it by an important pro- strihe. vision — that legally to conspire to strike, a man must have an "immediate interest" in the object struck for. It is widely held that a man has enough immediate interest in increased wages or decreased hours to justify his conspiring to strike for them, but it is also widely held that in a strike to compel the dis- charge of a non-union man, or the reinstatement of a union man, the strikers have no such " immediate in- terest" as to prevent the strike being an illegal con- spiracy. For the same reasons, sympathetic strikes are now quite generally held to be illegal conspiracies, a man having no such "interest" in another establish- ment or another trade working beside him — on a build- ing for instance, not to speak of a trade in another part of the country, as to justify his striking because the others have struck. 265 (g). Prof. The following additional causes enumer- Adams' summary, ^tcd by Profcssor Adams render strikers liable to criminal indictment: " Hindrance and delay of the United States mail, persuasion of others to obstruct the mails or interstate commerce generally, inducement or coercion of one person to boycott another, the coercion of the public generally to adopt certain measures, and probably the violation of labor contracts. It need hardly be said that in most of these cases the combiners hope to benefit themselves ultimately. But if, in the chain of intermediate means, there is an illegal act such as intimidation of a 'scab', or if the ultimate benefit is remote, trivial or indefinite, while the injury is the immediate object sought, the combination becomes illegal." 265 (h). Conflict- A rccent injunction against a strike ing laws. qj^ -^^q "Wabash road was dissolved because it did not appear that the intending strikers contem- plated an "illegal act". If tying up a railroad is not yet an illegal act, the tendency of the law shows that 272 The Protection of Rights. [§ 265 /^ people are becoming awake to their rights at a rate that will soon make it one. Yet despite these decisions of the courts, Pennsyl- vania has a statute justifying any strike whatever that union rules may sanction Consequently nothing that a trade-union sanctions can be an "illegal act"! But the Supreme Court of the state takes a different view. On March 19, 1906, in the Purvis case before referred to, it said: * * In attempting to justify their conduct the appellants allege authority for it in the act of June 16, 1891, P. L. 300. While that act provides that they may devise and adopt ways and means to make rules, regulations, by-laws, and resolutions of their order effective, it sanctions no rules, regulations, by-laws or resolutions to commit wrong, and if it attempted to do so by authorizing the appellants to interfere with the absolute rights of the appellees, the legislation would be a dead letter, for the legislature cannot abolish the Declaration of Rights." ^ And on the other hand, Illinois has a statute as fol- lows : ' 'Sec. 158. If any two or more persons shall combine for the purpose of depriving the owner or possessor of property of its lawful use and management or of preventing by threats, sug- gestions of danger or any unlawful means, any person from being employed by or obtaining employment from any such owner or possessor of property, on such terms as the parties concerned may agree upon, such person so offending shall be fined not exceeding $500, or confined in the county jail not ex- ceeding six months. "Sec. 159. If any person shall, by threat, intimidation or unlawful interference, seek to prevent any other person from working or obtaining work at any lawful business on any terms he may see fit, such person so offending shall be fined not exceeding $200." But either way, as already intimated, legislative acts are apt to become dead letters, because they are much influenced by ignorant clamor; the body of the com- mon law which has grown up from the decisions of trained judges, has a tendency to put the right of striking with the right of revolution — counter to law, justifiable only in the absence of other remedies for § 266] Personal Property. 273 unbearable ill — a right to be handled, not recklessly, as is the present fashion, but only in the gravest need, and to be tested only by results. 265 (/;. Duty of Under this view, whether, in any special district attorneys, casc, a Strike should be justified as a revo- lution, should depend on public opinion, as represented by a jury. There need be no fear that any jury will favor capital as against labor, and there can be little doubt that in the absence of conflicting statutes, when- ever it shall appear that any public utility is paralyzed by a conspiracy, it is a district attorney's duty, however much it has been neglected, to investigate the con- spiracy, and if he feels warranted, to propose the indict- ment of the conspirators. While, as already said, public opinion could be depended upon for all reasonable leniency, no one who has seen, for instance, many thou- sands of the population of New York City deprived of their usual means of reaching business and returning home, by the conspiracy of a much smaller -number of railroad employees, can have much doubt of what pub- lic opinion in such a case will eventually be. The rights of the public are not going to be left forever under the dictation of labor leaders, or even of trade-union con- ferences, and there cannot be many years before public opinion will demand statutes perhaps like those of Aus- tralasia (278 a. ff.), to protect public rights against them. So much for the general attitude of the law regarding strikes. 266. The work- ^s to the Specific end of coercing men man's freedom. into unions, the attempt to make all men in a trade join the union was declared in 1905 by Chief Justice Knowlton of Massachusetts to be against pub- lic policy, because it was an attempt to create a monopoly of labor in that branch. Many other judges have held the same. In the same decision. Judge Knowlton allowed dam- ages against a trade-union officer for forcing an em- ployer to discharge a non-union man. In New York a statute prohibiting an employer from 2 74 ^^^ Protection of Rights. [§ 266 making non-membership of a union a condition of em- ployment, has been declared unconstitutional. But on the other hand, Professor Seager * says: "The Court of Appeals of New York State, in branding as a conspiracy the effort of a union to secure the discharge of a non-union man, used the following language: 'Public policy and the interests of society favor the utmost freedom in the citizen to pursue his lawful trade or calling, and if the purpose of an organization or combination of workingmen be to hamper or restrict that freedom, and through contracts or arrangements with employers to coerce other workingmen to become members of the organization and to come under its rules and conditions, under the penalty of loss of their position and of deprivation of employment, then that purpose seems clearly unlawful and militates against the spirit of our Government and the nature of its institutions, 't But a few years later % the same court, looking at the same question more from the point of view of labor unions, decided that a strike for a similar purpose was lawful, on the ground that the object sought was not the injury of the non-union employee, but the preservation of the union. So long as there seemed to be no malice in the action, and violence and intimidation were not resorted to, it was held that the incidental injury to the non-unionist could not render it a conspiracy. "This reversal of opinion illustrates fairly well the difficulties which American courts encounter in their efforts to apply the common law of conspiracy to labor cases, and 267. The law chaotic, explains Avhy they arrive at such diverse con- clusions as are shown by the authoritative decisions of the courts of the different states. It would be a great gain if the whole question of the nature of conspiracy in connection with trade disputes could be settled by statute in the United States as it was in Great Britain by the Act of 1875." Uniformity could not be hoped for in state legisla- tion. But perhaps a model for state legislation could * This chapter is largely indebted to the chapter on the Legal Regulation of Labor in Professor Seager's " Introduction to Economics" and to Professor T. S. Adams's chapter on Labor Laws in "Labor Problems". With those two admi- rable and up-to-date works in hand, it would be worse than superfluous for the author of a brief summary like this, to ex- plore the entire ground again. For a fuller treatment, the reader is strongly advised to consult those works. t In Curran vs. Gallen, 152 N. Y. 33 (1897). X In National Protective Association vs. Cummings, 170 N. Y. 315 (1902). §268] Personal Property. 275 be hoped for m a United States statute regarding a con- spiracy to interrupt commerce between the states. Truly, the law has as yet handled labor questions only in a very wobbly way. Professor Seager says else- where : "There is scarcely a regulation, from, a simple restriction on the age at which children may be employed to the provision that men may work only eight hours a day in specified industries, that has not been declared unconstitutional in certain sections of the country, only to be upheld as a legitimate exercise of the police power in others." The vacillation and uncertainty of the law have been great in America, not only because of the fact that each of forty-odd states has its own set of laws, but by the decisions of an elective judiciary seeking the labor vote, and by statutes passed at Labor's demand. Yet the natural evolution of law is unquestionably toward the increased protection of the right to work by those who want to work. Slow as the law has been, it has now reached a secure and consistent position against the picket and the boycott. 268. Picketing ^^ to picketing, the courts, with prac- unlawfui. tical unanimity, are taking very decided ground that it is an unlawful invasion of private rights. The early injunctions against picketing were quite generally on the ground that the common law is against entiting away a servant or an employee, unless possi- bly to secure an advance or prevent a decline of wages. This of course would not permit picketing in a sympa- thetic strike or a closed-shop one, or one resulting from a discharge of hands. But later, very strong general ground has been taken against picketing as tending to disturb the peace. Judge McPherson, sitting in the United States Cir- cuit bench for the Southern District of Iowa, on the 5th of July, 1905, said:* * From an address of Hon. T. J. Mahoney before the Citizens' Industrial Association of America, Chicago, November, 1905. 276 The Protection of Rights. [§ 268 " 'There is and can be no such thing as peaceful picketing any more than there can be chaste vulgarity, or peaceful mob- bing, or lawful lynching. " ' A portion of this language was adopted and amplified in an opinion of the Appellate Court of Illinois, handed down on the 3d of October, 1905, the court saying: " ' "The picket system once established, the intimidation, assaults, slugging and bloodshed followed as naturally and inevitably as night follows day. There can be no such thing as peaceful, 'polite and gentlemanly' picketing any more than there can be chaste, 'polite and gentlemanly' vulgarity, or peaceful mobbing or lawful lynching. " ' "It is idle to talk of picketing for lawful persuasive pur- poses. Men do not form picket lines for the purpose of con- versation and lawful persuasion. . . . Its use is a form of unlawful coercion." ' "After Judge McPherson had filed the opinion referred to, the managers of the strike abandoned the use of the word 'picketing' and adopted that of 'reporting', the pretense being that their acts could possibly be justified by changing the name, but the character of the work done by the ' reporters ' was iden- tical with that formerly performed by the 'pickets'. . . . The system being the same under a different name, deserved and received from the court the same condemnation that had previ- ously been visited upon picketing." One of the latest decisions comes from the United States District Court sitting at Milwaukee, and is thus reported in the New York Times: "Milwaukee, June 17," [1906]. — " In a sweeping injunction United States Judge J. V. Quarles forbade the iron-molders' unions and sixty-one individual members from in any way in- terfering with the business of the Allis-Chalmers Company. * 'The strikers are enjoined from impeding, hindering, obstruct- ing or interfering with any of the business of the company, and from entering the grounds or premises of the complainant against its wish. They are enjoined from compelling or attempt- ing to compel or induce by use of threats or intimidation of any sort, or by fraud or deception or violence, any person to leave the employment of the plaintiff company, and also from attempting to persuade the employes of the company to break their contracts and leave the employ of the plaintiff. "Judge Quarles further commands the striking molders to desist from congregating at or near the premises of the company with the purpose to intimidate or obstruct, surround or impede any of the employees of the plaintiff. The order further pro- vides that the defendants are not even to go to the homes of § 269] Personal Property. 277 any of the employees for the purpose of persuading them into leaving the Allis-Chalmers Company." Similarly, an injunction in the Connecticut Superior Court, June 27, 1906, restrains the union from "per- suading or cajoling" the complainant's employees to leave work. In the Typothetae case in Chicago in 1905, the court enjoined picketing not only at the factory, but " about or near /any place where their employees are lodged or boarded, for the purpose of compelling, inducing or soliciting the employees of any of said complainants to leave their ser- vice; . . . from attempting by bribery, payment or promise of money, offers of transportation or other rewards, to induce the employees of any of said complainants to leave their service." The early decisions against picketing have generally been not only against enticing the employee away, but also on the ground that it engenders violence. The later ones evidently consider the fact that it is an unjustifiable conspiracy against the right to carry on business. As to the liabiHty of unions and their hHi?« fnr'TamJlr^Pc mcmbcrs, for damages in strikes and boy- Diiiiy Tor aamages. , . • xi 1 x x -c ^t, • ^ Ix, cotts : m the last quarter or the nineteenth century, while the English law took the direction of tolerance toward strikes, it took a counter-direction regarding the liability of trade-union funds for dam- ages inflicted in consequence of union action. It had been held that as the unions were not corporate bodies they were beyond the reach of suits, and that their members could only be reached as individuals. The drift of opinion counter to this position became decisive in 1 901, when the House of Lords held in the celebrated Taff-Vale case that the unions' funds were liable, and as there is no limited liability without in- corporation (154 a), this decision would probably make each member liable for the total amount of any damages that might be granted against a union. The damages in this case were /^ 23, 000. The English unions are now 278 The Protection of Rights. ^ [§ 26q trying hard to have the effect of the decision annulled by statute — one of the typical unionists' attacks on the law. In the United States there are already several de- cisions in the same direction: for example, the funds of the Waterbury, Conn., unions were attached for damages resulting from violence in the street-railway strike of 1903, the houses of the Danbury boycotters are under attachment, and so are the bank accounts of the men in Rutland, Vt., who interfered with their employers getting help in 1903. For stopping work, by master or man, to the unrea- sonable detriment of others, it is very probable that the law will soon clearly see the reasonableness of damages: inasmuch as for leading others to stop work, damages have already been granted. There is an important consideration which I cannot express better than I have already done in an earlier work,* which I will therefore venture to quote again: Damages under such circumstances could generally be collected from only one side — if the capitalist is in the wrong, the laborer has an easy remedy; if the laborer is in the wrong, the capitalist has virtually none. This is one reason why employers do not always contract with their employees for a reasonable notice from either side before severing their relations. And at best, the law is a slow and imperfect remedy, tho the best we have. Not the least of the advantages that would come to society from an increased proportion of property-holders, would be increased faithfulness to contracts, from fear of damages. This being absent, - /i^/srfe- hovv^ever, in order to put the two sides on an meanor'as a equality in Contracting, the violation of a substitute. labor-contract might be made a misde- meanor subject to imprisonment. Such a law would guard the poor man against the rich man more effectively than a money penalty, which the rich man could afford to disregard; and it would guard the rich man against * Op. cit. § 270] Personal Property. 279 the poor man, by the only penalty which could be en- forced. Such a law would have the merit that under it, juries could be depended upon to treat the poor man at least as justly as the rich. This point deserves the careful consideration of all who feel an interest in the improvement of the law. 270. Some sum- The Alabama statute prescribes as un- maries of the law. lawful the following acts : "A conspiracy between two or more persons to prevent any person, firm or corporation from carrying on any lawful busi- ness within the state, or for the purpose of interfering with the same. " The loitering of one or more persons about a place of busi- ness for the purpose of inducing others not to buy from, sell to or have business dealings with a person, firm or corporation, or to picket any works or place of business for the purpose of interfering with its business. "The printing or circulation of 'any notice of boycott, boy- cott cards, stickers, dodgers or unfair lists, publishing or declaring that a boycott or ban exists, or has existed, or is contemplated', or publishing the name of any public official or judicial officer upon any blacklist, unfair list or other similar list because of any lawful act or decision of such official. "The use of force, threats or other means of intimidation to prevent any person from engaging in any lawful occupation. " For any person, firm or corporation to maintain a blacklist or to notify any other firm or corporation of the names thereon to prevent the person so named from receiving employment "' Vice-Chancellor Pitney of New Jersey summed up the law in 1903: " First — That all sorts of laborers may lawfully combine and form unions for their mutual benefit, and that they may use all lawful means to promote their own interests, being careful in so doing not to infringe on the rights of others. " Second — One lawful means to that end is the refusal to work on terms offered by the employer. " Third — An unlawful means is to hinder or prevent others from working for an employer under such terms as they shall see fit. ' ' Fourth — One means of such hindering and preventing is in various ways to render it either difficult or uncomfortable for such willing workmen so to work. This is an unlawful means. " Fifth — Another unlawful means in common use to hinder or prevent willing employees from working, and to compel 28o The Protection of Rights. [ § 270 employers to accede to terms which the}^ would not other- wise adopt, is the boycott in its various forms." Injunctions have been issued against 271 Injunctions. ^^^^^^ ^^^^j fo^-jn of boycott palpable enough to recognize, and damages have been awarded in several cases. The Anti-Boycott law in Wisconsin was enforced in so comparatively inoffensive a matter as two news- papers refusing to print advertisements from the patrons of a third which had raised its rates higher than theirs, unless at the same rates. As bearing on such innocent acts as stopping buying and stopping working, which are at the root of strikes and boycotts, Mr. Mahoney said in the address already quoted from, that the courts ' no longer hesitate to grant injunctions which shall not only prevent the perpetration of assaults and the destruction of property, but shall equally protect the peace of mind of willing employees, and give security from injuries and interference with the rights of employers to carry on their business. . . . The courts are equally in accord in exercising the necessary right to punish for contempt those who insist upon violating the injunctive orders. There was a time in the not very remote past when much outcry was raised against trials for contempt being conducted by the court instead of by a jury, but . . . the spectacle was all too frequent, of a jury acquitting men whose guilt was more than abundantly established." But this does not warrant agitation for doing away with injunctions, but only for doing away with the judge's power to punish under them without a jury. A bill for the purpose is now before Congress. That, however, is not what "Labor" wants: it wants its own sweet will free from the interference of either judge or jury. Yet even where the injunctions have not held, they have been of value in giving both sides time to stop and think. But the unions have got so much in the habit of forcing their own way, regardless of all law, that, altho they are constantly seeking injunctions against their employers, they are ver3/ bitter toward § 271] Personal Property. 281 injunctions wh-en issued against themselves, and have sought to have statutes against granting any injunctions at all in labor disputes. This has a show of fairness because it would appear to apply equally to both sides. But the show is specious (altho it seems to have deceived the President of the United States while the proofs of this book were being read) : because the employers are in a small minority and hardly ever resort to violence. Granting the short-sighted view of the unions that any lasting good can come from violence, they can well afford to endure the little violence the other side is apt to attempt, if they can have free swing for their own habitual lawlessness. On this subject of injunctions I again resort to some earlier expressions.* There is one form of anarchism so specious that it has deceived many good men. It proposes to do away with government, by doing away with a little at a time; and its present object of attack is what it is pleased to call 'government by injunction'. Now injunction takes the place, in government, of the ounce of preventive. It is better to prevent lawlessness than to punish it. Injunction is merely the exercise by a judge, of the authority to prohibit an act, not necessarily itself pun- ishable at law, which he believes likely to lead to acts which are punishable at law, and no sane man can doubt that the proper exercise of this authority effects a great saving of public peace and safety. The injunc- tion has been abused, as has every feature of the law: judges are but human, but no sane man claims that that fact should do away with the law. Those who object to injunctions are (many of them without know- ing it) in precisely the same condition as if they objected to the punishment of the actions which injunctions are issued to guard against, while a large majority of those who object to injunctions, object simply because injunc- tions prevent their having their own way; and they object on the same grounds on which they object to the police and militia as well as to the courts — it is * Op. cit. 282 The Protection of Rights. [§271 simply the objection to all authority — it is the spirit of anarchy. The assumption by Labor that of right it owns every- thing, can alone account for some of its claims. The most extreme of them, perhaps, is illustrated in the bill advocated by Mr. Gompers, the president of the American Federation of Labor, which would prevent United States courts from issuing injunctions in any contention between employers and their men, unless to guard some property or right against damage that could not be made good, and then (here is the extreme claim) the bill goes on to provide that "for the pur- poses of this act, no right to carry on business of any particular kind at any particular place, or at all, shall be considered or treated as property, or as constituting a property right." This of course is an almost laughably disguised scheme to obtain from legislation a right to destroy such property at will, through the picket and boycott, which the courts have abundantly declared counter to American liberty. The two million labor-unionists are simply claiming absolute control over the rest of the American people. . At the meeting of the National Civic Federation in December, 1906, the counsel for the American Federa- tion of Labor argued that the laborer's right in his labor is just the same thing as an employer's "right to carry on business of any particular kind at any particular place, or at all". He challenged discussion of the point, and said that he had always found dis- cussion of it evaded. The claim seems to me very much like a claim that because a man's body is made up of cells, a cell is the same thing as a man. In ■'"his connection, however, the fallacy lies in the fact that no laborer ever yet sought the protection of a court for his property in his Right to Work, unless it was for protection from the very men against whom the employer too seeks protection for his Right to Work — his right to carry on his business. Therefore the very identity in the two properties, be it real or fanciful, § 272 a] Personal Property. 283 which the Federation of Labor claims, is an argument in favor of the very court protection of both which the Federation seeks to paralyze in the case of the employer's right — a very pretty example, it seems to me, of the reasoning on which all labor coercion is based. There is probably no more remarkable instance of the madness which can be produced by a brief period of successful aggression before the aggrieved have time to organize for defence. The counter-organization has begun, however, and the madness seems to have reached the pitch where it indicates the intention of the gods to destroy. But if this could mean the permanent destruction of labor organizations, it would be deplorable. Yet the present organizations will be destroyed if they cannot be reformed. There will be better ones in either event, and it is not yet proved that they must be new ones. 272. Regulation Leaving now the law's regulation of of wages hours labor's attempts at coercion, let us devote and conditions. ^ ^^^^ ^^ -^^ general attitude regarding the regulation of wages, hours and conditions. Professor Adams, who certainly will not be accused of unfavorably representing Labor's side, says: * 272(a). The labor "In the United States . . . the history of trust again. labor legislation is one long tortuous record of special protection to the working classes, secured by subtle limitation and frank disregard of the doctrines of free contract, and by class legislation. . . . Labor organizations are specifically exempted in a number of states from the operation of the anti- trust acts (altho such exemption has been held to annul the whole law) ; and in their practical execution the anti-trust laws have been directed against combinations of employers in re- straint of trade rather than against the combination of employees which are equally in restraint of trade." Of Labor laws in the United States, Professor Seagerf says: " There are both state and national laws that directly further the monopolistic ambitions of trade-unions. The state of Penn- * Op. cit. t Op. cit. 284 The Protection of Rights. [§ 272 a sylvania has a law requiring men who wish to become master miners to work as helpers for a certain period and to pass then a state examination. New York state has similar laws in reference to plumbers and horseshoers. The [alleged] pur- pose of such statutes is of course to insure a certain degree of proficiency on the part of workmen who perform these important services, but that they assist trade-unions in their efforts to control the supply of labor in their trades is beyond question. A Federal law which operates in the same direction is that prohibiting the entrance into the country of workmen under contract of employment. It might appear on general principles that the immigrant whose reputation at home was such that he could secure a contract of employment from an employer in this country, would be a better citizen than the immigrant who was attracted only by the vague hope of better- ing his condition, but this view disregards the special interest of those with whom the newcomer would compete for employ- ment. . . . He enters the country as a non-unionist, or 'scab'. . . . The law which prevents such resort to the foreign labor market to break a strike . . . serves to confirm a close union's monopoly of the labor supply, at the expense of the whole com- munity." Of course such utterly irrational laws cannot stand, and never would have been passed if the community in general were as well organized (as it is rapidly becoming) against favoritism in legislation, as the unions are or- ganized for securing it; or even if capital were not so engrossed in securing special, privileges from legislation, that it seldom spares attention to general legislation affecting its general rights, but is content to rest upon its power to take care of them when exigencies arise. Professor Seager farther says : 272 (b). Protecting ' ' The Suprenie Court of Colorado declared the laborer unconstitutional an eight-hour law applying to against himself. men employed in the mining and smelting industries on the ground that if such a law was calculated to protect the health or morals of anybody, it could only be of the very man whose work was restricted, and that the legislature had no right to restrict freedom of contract for the benefit only of the persons whose liberty was thus limited; and yet the Supreme Court of the United States had declared in upholding the constitutionality of an identical statute pre- viously passed by the state of Utah, that the legislature had the right to protect an individual even 'against himself, on the ground that ' the state still retains an interest in, his welfare § 272 c] Personal Property. 285 no matter how reckless he may be' , and that when 'the individual health, safety and welfare are sacrificed or neglected the state must suffer ' . " Following out the idea of "protecting the laborer against himself", Professor Seager turns to another decision of the United States Supreme Court, which ' ' affirms the propriety of labor laws on the general ground that employers and employees are unequal in bargaining power. 'The former naturally desire to obtain as much labor as pos- sible from their employees, while the latter are often induced by fear of discharge to conform to regulations which their judgment, fairly exercised, would pronounce to be detrimental to their health and strength. In other words, the proprietors lay down the rules, and the laborers are practically constrained to obey them. In such cases self-interest is often an unsafe guide, and the legislature may properly interpose its authority.' Finally, it affirms the principle already quoted, that in the exercise of its police power the legislature has the right to protect a man even against himself." This principle may be regarded as established law. New York goes so far as to "protect a man against himself" by punishing attempts at suicide — which, paradoxically, puts a premium on the success of the very act it prohibits. There is a point at which this doctrine would involve the most enervating paternal- ism — a point at which the individual must take the consequences of his own acts. On this point Professor Seager says : " In Great Britain and the United States the notion that the legislative power should not be used to regulate hours and conditions of employment has been abandoned by most thought- ful persons, but the prejudice against any interference with wages, like that practiced in New Zealand and other Australian states, remains nearly as strong as ever. There is, of course, good ground for this distinction. Hours and other conditions 272 (c). Wages of employment affect directly the health and unlike conditions, vigor of the working classes, wages only indi- rectly. Moreover, workmen are less mindful of their own inter- ests in connection with hours and sanitary arrangements than in connection with wages. Making all allowance for these considerations, many thoughtful persons still believe that, under certain circumstances, notably those found in connection with the sweating system, the regulation of wages must also 286 The Protection of Rights. [§ 272 c t)e undertaken by the government if serious evils are to be corrected. It is sometimes argued that the law cannot fix the rate of wages, but this is contrary both to reason and experience. The law cannot fix both wages and the number of persons who shall be em.ployed at those wages, but it can declare that no one shall be employed in given trades unless paid certain minimum wages, and enforce its decree." 272 (d). The liuing And here follows an admirable utterance wage. regarding "the minimum wage", which should not be confused with that favorite topic of the sentimentaHsts "the hving wage". A great deal has been written to the effect that it is an employer's duty to give an employee enough to live upon decently, whether the employee earns it or not. But this sick- ening absurdity should not prevent the reasoning stu- dent from giving attention to the following considera- tions. ' ' The result may be an addition to the number of dependents who are 'unemployable' at the wages fixed because too ineffi- cient to earn them, but it may be better and cheaper for society to support such persons in almshouses than to permit their competition to hold the wages of great sections of the popula- tion down to a starvation level. In order to mark off the dependent from other classes the state may find it necessary itself to fix a standard by which the abiUty of the individual for independent self-support may be determined. Without desiring to advocate the establishment by law of standard or minimum rates of wages for the sweating trades, the author wishes to insist that this policy merits the same unprejudiced consideration as is now accorded by intelligent people to pro- posals for restricting the employment of children or women, or for requiring the use of safety appliances in connection with dangerous trades." „^„ , , ^ u It is hard to tell just how far the law 070 /q) Too iTiuch care enervating should take carc of a pcrsou, and how far and against liberty. ^^ ^^^^^i^ be left to take care of himself. Certainly in countries where the government is very paternal, the mass of the people are apt to be very childish. And yet it is generally agreed that the law should prevent cruelty to children and even to animals — • that it should limit the hours and sanitary conditions under which children and women, and sometimes even §272^] Personal Property. 287 men work; and as already illustrated, many claim that it should even protect a man against himself if he seeks to do excessive and dangerous things. But this can be carried to the extent of infringing upon liberty. This danger in protecting him from other dangers, some- times leads to strange results. For instance: acci- dents from ill-guarded machinery and from laborers working when too exhausted to be cautious, annually destroy more than twice as many lives in the state of New York alone, as were destroyed on our side in the Spanish war, not to speak of the larger number maimed and crippled. These accidents are more frequent in the last weary hour of work than during the rest of the day. Yet there are laws requiring machinery to be protected, and against the working of men — espe- cially on railroads — longer than their attention can endure. But when suits for damages have been brought under these laws, the courts have sometimes declared them unconstitutional, as depriving a man of the liberty to work when and where he pleases, while the facts were that his "liberty" was only Hobson's choice — working as ordered, or throwing up his job. It seems as if such statutes ought to be penal as against the employer: then the "liberty" of the laborer would not be reduced to the miserable alternative of running the risk which the employer should obviate, or temporarily abandoning the means of supporting himself and his family. It may be remarked in passing, that, on the other hand, employers are frequently subjected to injustice in connection with accidents. Juries often mulct them for injuries to employees which are the fault not of the employers, but of other employees. Just as this goes to press, word comes of an interesting and suggestive decision to the effect that in a "closed shop" the laborer loses his right of action against his employer for damages resulting from the fault of a fellow workman, because the employer has not been untrammeled in his choice of workmen, and of course as the workman in the closed shop is inevitably a mem- 288 The Protection of Rights. [§ 272 ^ ber of the union which has circumscribed the employer's choice, he shares the responsibihty for the shop being closed, and cannot "come into court with clean hands", a requisite which equity demands. Statutes protecting the community from diseases bred in tenements and sweat-shops have often been set aside on grounds similar to those stated above — that it is part of a man's "liberty" to work where he pleases. It is a very difficult question how far the state has a right to interfere with the liberty of the individual — his liberty as a child to stay away from school, as child or man to break down his health by overwork, to expose himself to dangerous chemicals and machinery, to buy (or sell) dangerous medicines and intoxicants, and to get drunk and beat his wife. 272 (f). Extremes This qucstiou has arrayed some of the and the medium, "^ggt miuds against each other. At the extremes of opposition are the anarchist, against the state's having any rights at all; and the ultramontane who would have the state, as merged with the church, regulate the minutest functions of the individual con- science. Probably the safe and reasonable limit lies at the state's right of self-defence. The whole com- munity suffers from anybody's ignorance, ill health, mutilation, drunkenness, brutality; and has a right to guard against any such conditions becoming suffi- ciently widespread — directly, or by way of influence on popular conscience and sensibilities, as to cost the state more than it would cost to keep the evil within bounds. What shall be done against any particular self-inflicted evil, is of course for legislators to deter- mine, but their first inquiry should be, not how great an evil it may be to any particular man: for that is his own business; but how great an evil is it apt to be to men in general: and that alone is their business. CHAPTER XXII. PERSONAL PROPERTY (CONTINUED). Schemes for Distributing it more Evenly (Continued) . (V) Remedies on Trial. 2^3 I A. str' I There can be no reasonable doubt that war'and industrial all the decisions alluded to in the preceding '^^' chapter, and many more, are steps in a process by which industrial war is to be replaced by industrial law, just as, in civilized nations, private war has been replaced by private law, and interna- tional war is being replaced by international law. In addition, however, to the evolutionary steps so far indicated, some revolutionary experiments are under way. 2y, , I ._ Three legal remedies for conflicts over men'ts in , distribution, from which much is hoped, Australasia. ^^^ ^^^ actually on trial in Australasia, and only in Australasia. They are (I) state competition with monopolies, (II) the fixing of a Minimum Wage, and (III) Compulsory Arbitration. Australasia being so remote, specially illustrates the universal unreliability of testimony on controverted subjects. Sentimentality and the equally unreason- ing antagonism which it tends to arouse in the prac- tically disposed, seem to make it almost impossible for observers of social experiments even to see cor- rectly, not to speak of reporting correctly. The latest writer on Australasia, Dr. Victor S. Clark,* is conspicu- * "The Labor Movement in Australasia." 289 290 The Protection of Rights. [§274 Otis by the degree to which he has risen superior to these influences. He finds both good and evil in the minimum -wage commissions and arbitration courts, but does not find that either or both of them have introduced the millennium. The interest as well as the importance of the subject justifies a special chapter, whose material I have, with the author's kind sanction, largely drawn from Dr. Clark's work. These experiments being as yet (1907) ^Ifts to bl discount- restricted to Australasia, have worked only ed fot-Amencan {^ ^-^ exceptionally homogcneous com- munity, in which British stock with its broad-minded love of fair play largely predominates. Among the original convicts, many were high-minded persons transported for purely political offences; and much of the later colonization has consisted of large religious organizations possessing capital, character and culture. The amount of convict stock to-day is not worth considering. Dr. Clark says : "The consciousness of national kinship ... is greater than in America, and for this reason communal sympathies are more active. . . . Production is confined largely to raw materials which are exported, and consumption is supplied by manu- factured goods made in other countries." [The inference that wages raised by legislation will not greatly affect prices of articles bought by the voters, seems contradicted later.] "The government, in supplying transport service for the inflow and outflow of these commodities, has become the largest employer in the colonies. . . . The custom, of appealing to the government to decide industrial disputes to which it is a party, makes it easier to recur to the same authority to fix labor conditions in private employment. . . . Forty-seven per cent, of the people reside in cities of not less than four thousand inhabitants, as compared with thirty-seven per cent, in the United States. The average concentration of working popula- tion is therefore greater in those countries, and the labor element has better opportunities for organization. . . . The §275^] Personal Property. 291 difference in the wage of skilled and unskilled workers is much greater in our own country, where the common laborer is usually either a negro or a foreigner. This variation of wages in the United States, parallel with national and race lines, lessens solidarity of sentiment and class consciousness among work- men." Mr. Sidney Webb has said: "Australian politics and Australian governments are very far from perfect, but their faults and their virtues are utterly unlike the faults and virtues of America." For all these reasons, how the Australasian experi- ments would work among the mixed population of the United States, or especially among the almost entirely foreign population of some regions — and those gen- erally the most troublesome regions — and how, more- over, they would work under our almost exclusively private control of industries, Australasian experience gives little indication. 275. State compe- ^^e first of these remedies on trial— tition with monopo- state Competition with monopolies, may ''®^' be dismissed with a few words. Dr. Clark devotes to it but a sentence, tho one enthusiast who has discovered in it a panacea, devotes an article in a recent periodical.* The simple facts are that before there were any monopolies thought of, various Australasian communities, for the sake of aiding immi- gration and land development, started most of the va- rious industries which will be described later. The government's credit being better than fng capital'^"'^' ^^^^ ^^ individuals, and it wishing to aid in opening up the new lands, it borrowed money to lend to farmers. This of course brought the rate of interest down, and may be considered to have been competition with monopoly of capital, if such a thing could exist. Of course the indirect effect of other government enterprises has been similar, and * Everybody's, September, 1906. 292 The Protection of Rights. [§ 275 b 275 (b). In some it may be possible that the Australasians industries. have saved more in keeping prices down, than they have spent in taxes to pay deficits on gov- ernment industries. It is even supposable that in any community where there is enough political virtue to conduct government enterprises honestly, it may be worth while to pay the deficits apt to result from their inevitable inefficiency as compared with private enter- prises, for the sake of guarding against monopolies. It is even supposable that Australasia, with her homo- geneous British stock, her comparative freedom from the demoralizing glitter of superfluous wealth, and her other exceptional conditions, may possess the degree of political virtue needed to curb monopoly by government competition. But nothing has yet been done for the mere sake of that result ; and should its slight indirect accomplishment so far, encourage to successful direct efforts, their success could prove nothing for a community like ours, overwhelmed with debased immigration, and corrupted by the spectacu- lar temptations of misplaced superfluous wealth. 276. The Minimum As to the minimum wage, already men- Wage, tioned (in 272 d, which the student is advised to re-read in this connection), in Australasia, the idea has been worked out, according to Dr. Clark, as follows : " The problems presented by sweating and Chinese compe- tition were so complex and required so much detailed regula- tion that the direct intervention of Parliament was likely to prove cumbersome and ineffective. Therefore authority to deal with these questions was delegated to subordinate bodies, called minimum-wage boards . . . and composed of men having practical knowledge of the industry under their juris- diction. . . . Their functions do not exceed in principle those exercised by railway commissions in America — with the impor- tant reservation that they affect private as well as public and quasi-public industries. The Victorian Parliament . . . gave the boards authority to prescribe a minimum wage for em- ployees in certain classes of establishments. This authority was granted in order to remedy a special evil — a wage so low 276 (a). Against that it threatened the common interest of sweating. society in maintaining a standard of living 7 6 (i ] Personal Property. 293 among all classes sufficient for healthy social progress. . . . The average profits of manufacturers are no higher when sweating is rampant, than when a fair wage is paid. . . . The better 276 (b). Sought by employers rather courted some provision that good employers, freed them from the competition of less scrupu- lous men of their own class. Moreover, tho the determina- tions of wage boards are legislative acts, in essence amendments to the factory law, they preserve in some degree the form of a voluntary agreement. The boards who pass them are com- 276 (c). Hovu posed of an equal number of delegates from the reguiated employers and employees in the trade in question, under a non-partisan chairman, and their decisions are fre- quently compromises", formally not unlike collective bargains made between trade-unions and employers. . . . They are required to ascertain as a question of fact the average wage paid by reputable employers, and are forbidden to fix a mini- mum higher than the average wage as thus determined. The boards are also allowed to fix special rates of pay for aged, infirm or slow workers. . . . Employers have applied for eleven of the thirty-eight boards established." The Arbitration Courts, to be described later, seera to be rapidly taking over the functions of the Minimum Wage Boards, with results not quite contemplated by the originators of either. 276 (d). Not " When the court prescribes a minimum equal always effective.' to or above the average wage previously paid, the employer may meet this change by two different policies. In order to keep his payroll down, he often lowers the pay of his more competent hands, to compensate himself for the higher rate he is obliged by law to give his poorer workers." [Or, second, New Zealand] "statistics indicate that in probably a third of the occupations regulated by the court, the maximum wage does not exceed the minimum fixed by the award. The greatest variation usually occurs in industries requiring the highest degree of skill. In such industries the employer, in order to maintain a gradation of wages among his workmen, usually discharges his less efficient employees. "Slow workers, who are not a negligible element in the in- dustrial army, then become a social problem. They form from ten to twenty per cent, of all workmen, and their distress is an evil greater than ordinary unemployment. Some manu- facturers in Victoria dismissed sixty or seventy hands as soon as the minimum wage went into eft'ect in their business. The labor party proposes to remedy this evil by old-age pensions. To absorb her surplus labor. New Zealand has undertaken great public works, paid for from loans. Western Australia has until 294 ^^^ Protection of Rights. [§ 276 (i recently possessed a growing field of employment in the newly discovered gold districts. New South Wales and Victoria have not enjoyed these exceptional conditions, and in the latter state especially, the problem of the slow worker has been serious." Recyu- Even something like the sweat-shop is descence of the beginning to appear — not the healthful sweat-shop. ^^^^ industry of earlier times: " Slow workers thrown out of employment by the minimum wage sometimes open shops in basements and attics, where they make goods which they peddle directly to retail dealers, or sell to factories at prices lower than the ordinary cost of manufacture. This has occurred in boot and harness trades, and to some extent in cigar-making. However, only a few industries lend themselves to this process of dispersion. No handworker can compete with the products of power machinery. ' ' Testimony as to the influence of the boards upon sweating and Chinese competition varies. Both continue to exist in Melbourne. I have seen large bundles of clothing going out of factories, to be made up by contractors who were evading board determinations. Few, if any, strikes have occurred where wage determinations are in force. 276 (f). Excep- ' 'All the Australasian laws give the regulating tions allowed. authority power to fix a lower rate of pay for slow, aged, and infirm workers; but this is not a sufficient remedy. Employers refuse to receive slow workers in their shops, because they slacken the pace of other workmen. More- over, the formalities required to secure slow-worker permits embarrass both employee and employer. " Therefore, state regulation of industry places a burden upon the weaker members of society." Apparently, then, one effect of state regulation of wages, even in its short experience, is just what the American trade-unions are working hardest against — it is concentrating industry and leaving the slow work- man in the lurch. 276 (g). High And to the concentration of industry prices resulting, threatening to develop into the trust, to unemployment and to the sweat-shop, are added high prices which nullify a raised income to those who have it, and are a hardship to those who have not: "All regulations restricting the freedom of employers in con- ducting their business probably add to the cost of production. §276^°] Personal Property. 295 . . . Therefore industrial regulation increases the cost of living. . . . The Secretary of Labor in New Zealand says that 'It has helped to minimize any advance in the workers' wages'." 276 (h). Bolstering Already efforts are in progress to bolster up needed. ^p ^ policy froHi wliich SO much was hoped, but which even now, in these important respects, seems a failure. Already loom up the usual artificial remedies to remedy a remedy. " The wage-earner is the direct beneficiary of the minimum wage; the farmer pays the increment to the cost of production resulting from laws and awards, directly to his own hands, and indirectly in a higher price for commodities. . . . The farmer cannot recoup himself by adding to the price of his produce, for that is determined in the London markets. . . . The farmers of New Zealand and Victoria, where the rural classes are rela- tively the most influential, have already organized an active campaign in opposition to the labor party. Likewise the fac- tory operative whose manufactures are exported, or meet the competition of imported articles, cannot employ an arbitration law to raise his nominal wages without lessening employment and defeating his own end of social betterment. But he, like the farmer, must pay the increased price for local services and products which such a law occasions, and thtis his real wage is lowered by the very legislation that was devised for his welfare. "The discretion of the judge checks many economic evils that might result from state regulation of industry. The in- crease of prices is beyond the court's control. . . . " Parliament was asked officially to remedy an evil by which 'the advantages bestowed by progressive legislation are grad- ually being nullified and will eventually be destroyed'. A similar demand has been made in Victoria, where it is claimed that so long as the government fixes wages, it should also fix prices [which, outside of a few monopolies, no government has been able to do in all recorded time]; for the free manipulation of the latter may render ineffective any regulation of the former. The same suggestion has been voiced as a future possibility by the leader of the labor party in New South Wales. 276 (i). Points to " The responsibility of the state for a living state employment wage, logically leads to the responsibility of the and socialism. g^^te for employment at that wage. If these two functions of government are generally recognized as moral duties, and are realized in political action, the result is state socialism, , . , Broader knowledge and profounder study than have yet been devoted to this subject are required to give us conclusions of value." 296 The Protection of Rights. [§277 The provisions for "slov/ workers" cer- and'ttftSuawr tainly look as if the law had begun in an effort to rise superior to Natural Law, and, as always happens in such a case, were being perforce tinkered back into conformity with Nature. This gives a very discouraging outlook for the working of the Minimum Wage scheme, but while all caution should be used not to go counter to Nature, it should never be for- gotten that Nature's processes, when ascertained, can be aided by human intelligence and sympathy, and that in social affairs, experiments are as justifiable as in mechanics and chemistry. But extravagant and explo- sive experiments are foolish in all. More in regard to the experiments of the Minimum Wage will appear as we discuss the functions of the Arbitration Courts. A decreed and enforced wage can make employers prefe?; to stop business, or can make employees prefer to beg; but it can never secure the payment of wages materially different from what would be secured by the laws of supply and demand acting in a medium of fluid competition. The only legitimate function of Arbitra- tion Courts (but it includes many others) is to keep competition fluid. This will give them enough to do, and give them glory enough if they do it. In doing it, they inevitably do all the rational work that Minimum Wage Boards can do, which fact is abundantly proved by the ease with which the courts are absorbing the functions of the boards. 278. The Arbitra- Regarding Arbitration Courts, as Aus- tion Courts. tralasia, like the United States, is made up of a number of commonwealths passing most of their own laws, there has been a variety of experience, which now includes experience under a general law for the whole colony. Unlike America, where the immigrants have brought in a large element of Latin imagination and German sentimentalism, Australasia has little imagination, senti- ment or theory, but a very large element of hard- headed British common sense, and circumstances pecul- § 278 a] Personal Property. 297 iarly favorable to its exercise — a homogeneous British community, plenty to do, a minimum stupid and venal vote, a British respect (which far surpasses our alleged one) for education and experience, and (partly in conse- quence) a salutary scarcity of the ranter and the dema- gogue. The curse of the relations between Labor and En- terprise has been that poisonous product of rank democ- racy. He thrives on struggle : arbitration has no place for him; he is opposed to it. His attitude is that the relations between employee and employer are those of irrepressible conflict over the product. Mr. Gompers, the present successor of the long line of failures at the head of American Labor, has said: "It is a fight." But it is a fight in which, as a fight, Labor can never have any permanent success, for the simple reason that as fast as Labor develops honesty and brains, the bulk of them insensibly drift to the other side, in the ranks of the employers. The employers who were not drawn from Labor's ranks are too few to be worth taking into account. While the labor-leaders fatten on conflict, for the men there is no visible hope quicker than their slow advance in productive capacity, and the slow increase of fluidity in competition, of justice and of sympathy, unless that hope be compulsory arbitration. The hard-headed Australasians seem to have real- ized all this, and never to have had any use for Mr. Powderly or Mr. Debs or Sam Parks or Mr. Gom- pers with his "fight". After a few strikes that were passing zephyrs in comparison with some that those men have stirred up, the community in general, ap- parently including a large proportion of the working- men, did not propose to have any more fight. They 278 (a), started to began with asking the two sides to arbi- preuent strikes. tratc, and giving them facilities, and when that scheme would not work, they forced thern to arbi- trate. The general motive of the arbitration laws was to protect the community and the men's families from the follies of strikes. There seems to have been no claim made that the men were not at liberty to damage merely themselves. 298 The Protection of Rights. [§ 278 a It will help the reader to understand the development of the courts, to be reminded again that the colony is a federation of states somewhat like the American union. Of these, on the continent of Australia are five, namely, Western Australia, South Australia, Queensland, New South Wales (capital, Sydney), and Victoria (capital, Melbourne). Something over a hundred miles south of the continent, lies another state, Tasmania, and some twelve hundred miles east of Australia, and a little south, is still another state, New Zealand. On the eastern side of the continent are the continental states New South Wales and Victoria, nearest to Nev/ Zealand, which share with it the leadership in population, wealth, and activity in social experiment. A little care in memorizing these simple facts will be of service as we proceed. The first Australasian experiment of note in Com- pulsory Arbitration, was New Zealand's Industrial Arbitration Act of 1894, much expanded in 1900 and adopted in its main features by Western Australia and New South Wales. „^_ , _ ^, Efforts have been made in almost every 279 I riGitsctiVGriGSS . of Voluntary civilized State to reconcile labor disputes by Arbitration. boards for voluntary conciliation, such boards being often established by legislation. In cases of little importance their a,wards have been often accepted; in cases of great imiportance, seldom. Presi- dent Roosevelt's coal-strike commission recommended statutes authorizing governors to appoint "commis- sions of compulsory investigation" with full power of calling witnesses and examining them under oath, when labor disputes threaten serious disadvantage to the community. The mere reports of such commissions would do something to settle disputes, without com- pulsory arbitration. Nevertheless after several seri- ous and disgraceful strikes in Australasia during the earlier nineties of the last century, Mr. Reeves, the New Zealand Minister of Labor, made a very thorough study of all that had been done anywhere by way of arbitra- tion and conciliation, and concluded that for the award §2 8oa] Personal Property. 299 to have any effect, it must be corapulsory, or at least that nothing worth while had been accomplished where the award was not compulsory, a main difficulty being that it was very hard to get either the party with the v\^eak reasons, or the one with "the heaviest artillery", to go into court. 280. The first ^*-* ^^ ^^94- Mr. Reeves laid before the Compulsory Arbi- New Zealand Parliament a Compulsory trationAct. Arbitration Act. It begins to look as if this step in the little parliament of an island in the Pacific, which to the vast majority of the civilized world is little more than a name, may yet be regarded as one of the most important of the world's pieces of constructive legislation. I am not prepared to suggest that it probably will, but I suspect that it not improbably may. This suspicion I have reached after a very full faith in its impracticability, based on a priori con- siderations, followed by a study of its actual results, including those of similar acts in Australasia v/hich have sprung from it. Among a great many wise and careful details, the act provided that the court should be appointed by the Governor General, and consist of a Judge of the Supreme Court, a representative of workingmen to be chosen from a list submitted by them, and a representative of employers similarly selected. Operatives could appear before the mfyinior.s^^"'"''^ ^^^"^^ o^ly tlirough their unions. This not only to avoid petty disputes, but because all troubles worth avoiding have hitherto come from unions. If any men are in danger of losing their chance in court, the law requires unions to admit members freely, and but seven men are required to form a union where none exists. Employers could appear individually or in organiza- tions. The tendency was to favor unionists as against non- unionists, because the former must bear the brunt of the contentions. Non-unionists could not go into court, 300 The Protection of Rights. [§ 280 a and consequently could not hale their employers into court, but they were free to strike. The court could decide or dismiss any question brought before it, and there is no appeal. Powers of summoning witnesses and getting expert advice are similar to those of courts in general; even additional members of the court could be elected in special cases. Books of account could be called for, but examined only in secret. Yet rather than produce their books, employers have sometimes come to an agreement with their men — and in one case at least, an agreement which was renewed. Mr. Lloyd, who wrote in 1890,* and from whom most of the facts regarding the Arbitration Courts up to his time, have been taken, says: * It is a curious phenomenon of antipodal public opinion that America is being swept by waves of opposition on one side of society to trade-unions and of opposition on the other side to unions of capitaUsts, while in New Zealand the people and the government favor the fullest organization of both." This raises the interesting question whether with courts in which to fight out their differences, the two extremes of the industrial world might not keep each other's excesses in order, without the rest of the com- munity being troubled with either. 280 (b). Could dis- Objectors to compulsory arbitration mis- miss trivial claims, trusted the tendency of the workmen to appeal to the courts on worthless grounds, and to expect from them impossible results. This fear has been to some extent justified; but men will not risk strikes for reasons as w^orthless as some that lead them to seek arbitration. Yet certainly in many cases, arbi- tration takes the place of strikes, and is vastly pref- erable to strikes „ Many students of such matters — prob- c . amages. ^^^^ ^^ would be Safe to Say most — among whom I confess myself to be one, believed that the * "A Country without Strikes", by Henry Demarest Lloyd. § 2 Sod] Personal Property. 301 compulsory courts would be ineffective, mainly on the ground that nothing could be recovered when damages were given against people who had nothing. But our expectations have been confounded, in that there have been no occasions to decree very serious damages. Occasions for great damages, like strikes, boycotts and arson, have been taken care of by the preventive ounce of argument and adjudication, rather than by the cura- tive pound of damages, oon /^. cvt,^,,/ Another objection was that men may zoU ("/. raiznjui 111, iij ,1 acceptance of be Compelled to work, but cannot be com- ecrees. pelled to work efficiently. Yet a good deal of efffcient work has been done under the coercion of the lash; and a good deal more under the coercion of the stomach; and the coercion of a respected court where one has been fairly heard, hardly seems more repugnant than that of an unsuccessful strike, espe- cially as bitterness has seldom been engendered in reach- ing the conclusions of the courts. As it has been objected : ' ' You cannot collect damages from the poor and you cannot force them to work well if they do not want to," so it has been objected: "You cannot make men conduct business under conditions which they consider unfair." Yes, you can: they would rather put up with considerable injustice than have their capital and their brains lie idle. But they need not be irked with much injustice or even with any, under compulsory arbitration: all these objec- tions have been against extreme possibilities, which, with capable and well-meaning courts, have seldom occurred, and as the courts grow in experience, are occurring more seldom. Mr. Reeves wrote to the London Times: " Why assume that the awards of a competent tribunal will be intolerable to one side or the other? It is likely enough, nay, certain, that all awards must be disagreeable to somebody, but intolerable is a word which presupposes that awards are likely to be made which will involve one side or the other in ruin, or drive it to desperation." 302 The Protection of Rights. [§ 2806- „or> / . n Another objection was that you can- 280 (e). Compe- 11 1 -j. ^^ tence of courts in not nx v/ages by law ; and it was well business affairs, ^^^^^^ -^ ^^^ ^^^ ^^ g^ ^-^^^ COUnter tO natural law. But the object of the court has been to ascertain from very thorough investigation what wages naturally should be, and so decree them. Probably the job is generally better done in that way, than through a strike or a lockout. It has also been urged that you could not get prac- tical business wisdom out of a court. But the world has been doing that for a good many centuries, and that, too, before, as in Australasia, business men were made members of the court, with power to call in others as need might arise. 280 (f). Effect on The Ncw Zealand law left the parties to strikes. fight it out if neither of them cared to go into court, but they have generally preferred to go into court. Yet since the problematic law went into force in 1895, there has been among the men subject to it (the public railroad employees in the strike of 1903 were not), no labor disturbance which an Ameri- can would dignify by the name of a strike. But Dr. Clark tells us that '' Even before the New Zealand act was passed, the relations of employers and employees in that colony were normally so harmonious that it is difficult to show positively that the industrial peace at present prevailing is due to legislation. In New South Wales and Western Australia strikes of some con- sequence have occurred in defiance of the court." read of "^^^ ^^ kindred laws were enacted in other the courts and un- statcs of the federation, and finally in expected activity. ^^^^ ^ general law for the whole federa- tion, they have been obliged to go into court, but their doing so has seldom been with any reluctance. This is not the place to recount the differences in these Acts and their results. We have room only for such details as characterize at least the majority of them. The Conciliation Boards in existence when the Act was formed, were not disturbed by it. Moreover, the court has a right to create minor boards of conciliation § 2 8oi] Personal Property. 303 and arbitration. An appeal from them to the Arbitra- tion Court was of course allowed. Mr. Reeves ex- pected them still to settle seven-tenths of the cases (probably relying on the coercion latent in the appeal), and one of the believers in the court, probably for the same reason, said that it would not be used once in twenty years. Up to 1900, instead of being restricted to a tenth of the cases, it had settled two-thirds of them. 280 (h) Both sides ^^ Unexpected development was a tend- arranged cases to ency for employers to arrange with their fefei-. raen to get cases before the courts which would bring decisions controlling dishonest and sweat- ing competitors. This effect was similar to that already noted in the case of the Minimum Wage Boards — in fact, seems to be another illustration of the tendency of the Arbitration Courts to assume the functions — indirect as well as direct — of those boards. Thus men who wanted to cut wages in order to cut prices, have often been restrained. The wisdom of the court has un- doubtedly prevented this from being a serious damage to legitimate competition, yet on the other hand, its effect on prices has probably not invariably been for the good of the whole community, as already indicated regarding the Wages Boards, and as will farther appear later. The courts provide rates "for superior, average and inferior men. No one can be employed for less than the average, except, as has been already explained, men not competent to earn the average, and the rate paid them must, if questioned, be sanctioned by the local Board of Conciliation". The success of such an arrangement, should it con- tinue, would seem to illustrate how a law that cer- tainly never would, and hardly could, be voluntarily obeyed in spirit by those upon whom it is enjoined, can be helped into a working condition by a court well adapted to the requirements of the situation. 280 (i) Courts Experience has abundantly shown that tried to follow all the successful minimum-wage fixing the market. must at bcst tesolvc itsclf iuto a declara- 304 The Protection of Rights. [§ 280^ tion, by an honest and painstaking authority, of what conditions point to as the natural rate of wages, and this certainly is a great deal better than a determina- tion of them by boycott, arson and murder. Mr. Lloyd quoted an anonymous commentator to the effect: " Compulsory arbitration does not attempt any interference with the 'law of the market'. On the contrary, it gives the 'law of the market ' for the first time a full chance to work. It brings the 'law of the market' into full and free discussion. " 'Fixing by law' is an odious phrase. How about fixing prices by the fiat of a corporation or a capitalist, or by bayonets, or by starvation or intimidation? Here, 'law' means debate: the lack of it means destruction for the men. The law does not dictate or fix wages, but merely decides in a dispute between two different views of what wages should be. 'Law' fixes creditors' shares in bankruptcy, lowers Irish and Scotch rents, fixes the price of ferries, railroads, the salaries of state officials, rate of taxation." 280 07. Court's As already said, the first court, in New power of initiative. Zealand, could be put in motion only by one of the parties to a controversy. But the present usage empowers a court to take up, of its own motion, any apparent industrial abuse. But even under tlie primitive practice, Mr. Lloyd was hopeful enough (He has often been accused of being too hopeful) to say : " Trusts like those now coming into favor in England, such as that of the bedstead-makers of Birmingham, in which the masters and the men have united to fleece the public, would not be very promisijQg subjects for compulsory arbitration." He continues : 280 (l<). Question " Another objection often made is, that in of overcrowding. consequence of the law, industry is disturbed by the frequency of disputes ; but when I looked into the number of cases before the court, I found that there had only been about fifty in five years, about one case a month. . . . This, too, it is only fair to remember, is the number of disputes at the beginning of the administration of the law. Every decision that settles questions makes precedents that will prevent other disputes from being brought forward." This is one of Mr. Lloyd's optimisms. In the half- dozen years since he wrote, things have moved fast, § 28i] Personal Property. 305 and, as will be shown, experience has not altogether continued the rosy look which the experiments bore nearer their dawn. But while unanticipated difficulties and abatements have arisen, enough success to justify the experiment still seems possible. But there is abundant evidence that the courts have been some- times overcrowded, and that too by questions so trivial that they have sometimes refused to consider them. He himself quotes a "labor member" of one of the boards to the effect: "Agitators foment disturbances to bring the masters before the court. It is suspected sometimes that even members of the Conciliation Board, who are paid for the number of days they sit, do the same thing. But which is worse, that agitators should foment arbitration, or foment strikes?" The effect of compulsory arbitration has been pecul- iarly happy on the condition of women workers. Even if Mr. Llo3^d's psean in his chapter "A New Song of the Shirt" was pitched some notes too high, there is no doubt that a paean is justified. 281. Aspects in ^^e following passages throw much 1890' light on the case, or at least on one side of it, as it looked about 1890. "The subject came up one day in a group at the club in Wellington. One of the critics of the law quoted triumphantly from a letter of Lord Thring's: 'Is it conceivable that at the close of the nineteenth century either masters or men would submit to such a tyrannical judicial interference with their liberty?' " 'For five years', replied one of the New Zealanders, 'masters and men have been submitting. They may not be satisfied. Where anywhere are there satisfied capitalists or laborers? Where is there an employer who would' not like to pay less, where the workingman who would not like to get more? But they are all at work, though not satisfied. In New Zealand it is proved that the Arbitration Court can make decisions which both sides would rather accept than to quit, as they always have the right to do '." And now a word on one of the excesses of theory which the Arbitration Courts have stimulated. Mr. Lloyd stated it in perfect good faith, as follows: 3o6 The Protection of Rights. [^2^2 " The New Zealand court has but just touched 282. A theory of ^^ j^g decisions on the most important principle wages an pr . ^^ issue in the regulation of wages — whether wages must follow prices or prices wages. Must wages be dependent on prices necessary to market commodities, or must these prices be dependent on the wages necessary to maintain the people in decent comfort ? " The workingman's mind is evidently moving to the latter position. Several of the greatest strikes of recent years, like the English coal strike of 1893, ^-^^ the strike in Lord Penrhyn's quarries, have had the 'living wage' for their inspiring principle, and this new position of the workingmen in those strikes received the open support of some of the most influential mem- bers of Parliament, newspapers, and even capitalists of Great Britain. ' ' This doctrine seeks to make true the fiction of John Stuart Mill that wages are determined by the standard of living among the workingmen. What John Stuart Mill said was the law of wages, the workingmen are seeking to bring about. The New Zealand law, the moment that this new political economy that prices must follow wages invades the bench, can be made a powerful instrument in reinforcing the workingmen." This is no more or less than one of the raise-yourself- by-your-bootstraps notions of which we see so many: somebody has got to pay those wages, and nobody has an unlimited store to pay them with. Some of Mr. Lloyd's final conclusions in 1890 are worth quoting, partly as bases for comparison with later writers. ' ' There is only one Compulsory Arbitration law 283. Mr. Ll9yd's ^^ ^]^g world, and that has been in operation only conclusions in lyuu. . ' -, . • i j_ j j. j four years and m an isolated country, and we must not generalize too freely. Similar laws might operate differently in different countries. . . . " Strikes and lockouts have been stopped. ' " Wages and terms have been fixed so that manufacturers can make their contracts ahead without fear of disturbance. " Workingmen, too, knowing that their income cannot be cut down nor locked out, can marry, buy land, build homes. " Disputes arise continually, new terms are fixed, but in- dustry goes on without interruption. " The country is more prosperous than ever. " Compulsion in the background makes conciliation easier. " Compulsory publicity gives the public, the real arbitrator, all the facts of every dispute. " Peaceable settlement with their men has been made possible § 285] Personal Property. 307 for the majorities of the employers who wanted to arbitrate, but were prevented by minorities of their associates. '' Humane and law-abiding business men seek the protection of the law to save themselves from destruction by the competi- tion of inhumane and law-breaking rivals, " The victory is given as nearly as possible to the right instead of to the strong, as in war. " If the American people have any lessons to learn from these experiences of New Zealand, they can be trusted to learn them. The object of the writer has not been to enforce his views, but to present the facts of an interesting social experiment, on which the public could, if it chose, build views of its own. "Of course, 'our circumstances are different'. Our circum- stances have not been so different but that they have developed the same evils. Perhaps they may develop the same remedy. " And as for the isolation, that is a fortunate incident for the weak, but the United States has a nobler kind of isolation in its might and wealth. It can stand alone for any cause it chooses to espouse." At this point we turn more definitely to ^nmf: ^''''' ^^- Reeves,* the father of the New Zea- land Arbitration Act, whom future ages may perhaps give a high place among the contributors to the welfare of mankind. His attractively written, instructive and interesting book of course is from his point of view, but it seems to be admirably candid. It appeared some three years later than Mr. Lloyd's, when Mr. Reeves's revolutionary Act of 1894 had been work- ing eight years, and had become the parent of others. 285. Claims con- He tells US that from 1895 "to 1900 under tinued success. the Act, factory hands in New Zealand in- creased from 30,000 to 49,000, and export trade grew from 1894 to 1901 nearly 50%; factories from 1896 to 1 90 1 nearly 30%, and total wages paid nearly 60% (which seems to indicate an advance of nearly 20% in the rate of wages), and manufacturing output grew in the same time about 80%. There had been but half a dozen strikes up to 1903. Half of these were among government employees, who did not come under the authority of the court, and nearly all were settled by voluntary appeal to the court. * Reeves, William Pember: State Experiments in Australia and New Zealand, 2 vols. 3o8 The Protection of Rights. [§285 In 1900, when propositions to thoroughly revise the act were before the legislature, only one man spoke un- favorably of it. 286. Judge Back- I^ iQoi New South Wales was medita- hous'e's testimony, ting a similar act, and sent Judge Back- house, a cool, able and experienced man, to investigate the working of the court in New Zealand (1,200 miles off, over seas). His conclusions were: " The Act has prevented strikes of any magnitude, and has, on the whole, brought about a better relation between employers and employees than would exist if there were no Act. It has enabled the increase of wages and the other conditions favorable to the workmen which, under the circumstances of the colony, they are entitled to, to be settled without that friction and bitterness of feeling which otherwise might have existed; it has enabled employers, for a time at least, to know with cer- tainty the conditions of production, and therefore to make contracts with the knowledge that they would be able to fulfil them ; and indirectly it has tended to a more harmonious feeling among the people generally, which must have worked for the weal of the colony. A very large majority of the employers of labor whom I interviewed are in favor of the principle of the Act. One only did I meet who said out and out, 'I would rather repeal it and have a straight stand-up fight', while another was doubtful whether the present condition was better than the pre-existing. The first, in a letter, has since con- siderably modified his statement." Mr. Reeves thinks this "too roseate a view of the feelings of employers." In 1 901, Judge Backhouse's report was followed by a Compulsory Arbitration Act in New South Wales; one was passed in Western Australia in 1902, and one for the whole federation in 1904. These Acts differ much in detail, which of course cannot be entered into here, but they are a necessary and far from unattractive study for any one wishing to promote the substitution, anywhere, of law for war. 287. The courts to The New South Wales Act does not keep the peace. make it necessary for either party to a quarrel voluntarily to go to court before the court can act: the registrar may call the parties into court, and this on the grounds as stated by Mr. Wise, the framer of § 289] Personal Property. 309 the Act, that "combatants who are bringing an industry to a dead stop should be regarded as brawlers in a street who check traffic with their quarreling : they should be made to move on." Mr. Reeves says: 288. Details by "It will be urged, doubtless, that until some Mr. Reeves. body of men has doggedly, or perhaps violently, refused to obey a compulsory award and been forced to the knees by legal process, the strength of the Act will not have been thoroughly tested. Might it not, however, be urged that the true strength of the Act is being shown by the absence of such incident? Does not the growth of a habit of peaceful acceptance of decisions hold out the best hope of ultimate success for the system? " Passing from objections, it is safe to say that the experiment seems on the way to prove several useful points. First, it shows that trade-unionists may be persuaded by the logic of experience to prefer arbitration to conflict , and that their unions may grow and prosper in consequence. Next, that the compulsory deci- sions of a state tribunal may be quite as just and moderate as those of a private conciliation board, and that obedience to them need not mean ruin to an employer, or cruel hardship to work-people. Next, the working of the Act has not strangled industry or fettered enterprise ; trade and business have steadily improved under it. Lastly, instead of it being found impossible to assert the Arbitration Court's authority, there is no serious difficulty in enforcing its decisions; indeed, the enforcement of awards, which is assumed by English a priori critics to be out of the question, has, so far, been found in practice to be by no means the most troublesome part of the work of industrial arbitration." In 1903, Mr. Reeves left the laws in the following condition : " Though not yet twelve months old, Mr. Wise's Act has already ceased to be the newest arbitration law in the colonies. The West Australians, finding their Act of 1900 defective, decided not to amend but to repeal it. Accordingly, in February 1902, they displaced it with a new enactment which followed more closely the New Zealand model. It is noteworthy that, despite the example of New South Wales, this statute makes provision for boards of conciliation." 289 Dr CI rk in Next, in 1906, Dr. Clark * takes up the 1906 not quite so narrative. He wrote when the courts optimistic, were of course much more developed, * Op. cit. 3IO The Protection of Rights. [§289 and I shall quote from him farther details of their constitution and working in their developed shape, as well as the latest results, which are not in all respects quite what the earlier writers counted on. As the brief quotations cannot do justice to his fuller exposition, I shall emphasize an occasional point by italics not his. The reader's patience is invoked for some repetitions arising mainly from comparisons with earlier conditions, and from the increased number and variety of the courts. As now constituted, the Arbitration Courts have all „^„ „ ^ the powers of ordinary courts, and their 290. Courts now ^ . -■: ^ t, • ^ x 1 1 have legislative decisions are not subject to appeal unless P^^^""' their interpretation of the act creating them is in question. They have also legislative power: "The general intent of the law is to give the court power to settle every point that might cause a strike or lockout. [The government employees were not subject to compulsory arbitration, and] a strike, in 1903, tied up the transportation of Victoria. This disturbance was accompanied by incidents that would have rendered the strikers liable to penal punishment in America, and would have been discountenanced by our trade-unions. Trains were deserted by their crews wherever they chanced to be when the strike began, stranding passen- gers and perishable merchandise in out-of-the-way places, and endangering life and property. The public answered this challenge to its authority by a strike law more 291. Laws against (^j-^stic than any legislation ventured by Ameri- ^ '^' ^^' cans in the most acute crises of their civil war. This law imposed a penalty of nearly five hundred dollars or twelve months' imprisonment for engaging in a strike on govern- ment railways, and made men liable to arrest without warrant or bail for advising a strike orally or by publication, or for col- lecting funds for the support of strikers, or for attending any meeting of more than six persons for the purpose of encourag- ing strikers. "Arbitration acts derive their authority from the police powers of government. They are measures to prevent industrial disorder. . . . " The New Zealand law prohibits . . . strikes and lock- outs . . . while proceedings relating to the dispute are pending, and for a sufficient time beforehand to allow either party to be- gin proceedings if he so desires. . ._ . The new federal Act pro- hibits strikes and lockouts unconditionally, without regard to whether they are begun prior or subsequent to giving an award. § 295] Personal Property. 311 "The [New Zealand] law prohibits strikes and ^^u'u'i"'"'"^"* '^^ lockouts among workers and employers in fheti'c strikes"''^^' ^'^^^^^^ industries. Parliament has defined all building trades as- related industries. The court may extend this provision to other groups of employments. Consequently if an award has been given in the bricklaying trade, for instance, the mortar-mixers or the hod-carriers cannot tie up that trade by a strike, although unwilling to lay their case before the court. "A second contingency bringing parties in- ^^"^'^ L'"!r'^^^ ■ voluntarily under the act, is where an award adioinL distr"ifts'" ^^^ ^""^"^ ^^^^"^ ^^ ^^^^^ industry limited to •■ ^ ' some other portion of the colony. The employers or workers subject to the award might be injured in such in- stances by the competition of employers or workers in the dis- tricts not subject to its provisions. If so, they may have the award extended to establishments in the competing district. The purpose of this extension is not to prevent strikes, but in equalizing competition they are incidentally prohibited." This provision has been abused by starting a strike in one jurisdiction where a certain decision may be expected, in order to make the decision effective in an adjoining jurisdiction where it probably could not be obtained. 294, Awards ^s was to be expected, the stringent evaded. control of the Arbitration Courts is often and easily evaded. Dr. Clark gives an illustration: "A service may be embodied in a commodity, and trans- ferred as an element or quality of a material object. To illus- trate concretely, an arbitration court may fix a day rate to be paid to saddlers, and a piece-work rate for every operation of making a saddle; but its jurisdiction does not extend to regu- lating the sale of the leather, saddle-tree, and other materials out of which a saddle is manufactured, or to the sale of a com- pleted saddle. Therefore, a manufacturer may sell these ma- terials to a workman, and the latter may sell the finished product to the manufacturer at a higher price than the materials cost, but at a lower price than the cost of making prescribed by the court plus the cost of the materials." Regarding the immediate effects of the decisions, he says: "It is impossible to give an arbitration court 295. Hard to fit g^ course in technology with each new set of proceedings. . . . The court's decisions seldom 312 The Protection of Rights. [§295 adapt themselves perfectly to working conditions, and continue to be a chafing shoe upon the feet of industry. "A dispute before a court is less serious than a strike. . . •. But these suits occasion expense and loss of 296. Danger of time, and check industry so far as they render over-regulation. uncertain future conditions of production. There are single employers in Australia who work under as .many as seven awards. The total effect of having these disputes con- stantly at issue — and they may await decision a year or more — • resembles that of an agitation for tariff revision in the United States. 'Litigation is multiplied, because workmen will bring a case before the court where they would not risk a strike. So great is this evil that the court in New South Wales has recently adopted the policy of giving artificially created disputes no standing in fact. It has been proposed to require the consent of a large number of workers to start a dispute. But these are palliatives, not remedies. . . . 297. Promotes cen- "Uniform conditions of employment favor tailization of either the big or the little proprietor more than industry. his competitor. . . . Large merchants and man- ufacturers are said to have entered into collusive agreements with their employees to secure orders from the court detrimental to their smaller competitors. . . . Consequently, an economic tendency of industrial regulation is to centralize industry." The very result that all the fierce agitation against trusts in the United States is seeking to overthrow! To this significant objection from the worker's side, Dr. Clark adds: "As the average workers are in a majority and 298. And uniform- control the unions, . . . their influence alone ity of wages. shapes the policy of the arbitration authorities from the side of the workingmen. This influence secures conditions of employment that discount exceptional ability, and deaden the enterprise of more ambitious workers. . . . The value of their potential excess of service is thus lost to them- selves and the community. . . . [The court] cannot reverse the laws of gravity and enable the working people to raise them- selves by their bootstraps to a higher economic plane. Its orders must conform to economic law, or be speedily rendered ineffective by contact with stubborn facts. Consequently, awards ultimately become mere formal statements of average condi- tions of employment." 299. But so mini- ^^ other words, the courts and Minimum mizes oppression. Wage Boards have wrought all these evils, § 3oi] Personal Property, 313 and their decisions might appear to the superficial to amount to nothing after all. But that would be really a superficial view: for it is by disturbing "average conditions of employment" — which means the average flow of supply and demand — that injustice is wrought. If a court can conserve average conditions, it accom- plishes a great deal. "The chief economic benefit workers derive from them [the courts] is that they render conditions of production sufficiently uniform in different establishments to keep unfair employers from obtaining a competitive advantage by oppressing their employees. Although the court's influence upon the average economic condition of the working people may be unimportant, it can effectively prevent unwholesome inequalities in their condition. . . ." Now he comes to the fundamental difficulty in all arbitration (268) : "An arbitration law does not, however, rest 300. Only one side equally upon employers and employees, be- can pay damages, cause the former are held to its strict observ- ance by their financial responsibility, while workers can evade many of its provisions. In minor matters, the sanction behind the court's orders, so far as it applies to workmen, will always remain to a large extent a moral one. "But possibly this appeal to the honor and 301. But moral civic responsibility of the worker is a more effective ° adequate influence in favor of industrial peace than harsher measures. These laws do appear — in spite of the occasional defiance of their orders — to increase the law-abiding spirit. The public opinion of workingmen sup- ports their observance as a matter of principle. Whether the strike as an instrument for enforcing labor demands falls into absolute disuse or not, this spirit is a social gain." And he repeats that the courts have diminished strikes and sweating (despite a somewhat inconsistent showing made earlier [276 e]) and child and female labor, and hours of work — the first two certainly a direct gain, the last two, results that attend the progress of civiliza- tion everywhere. The effect of the Minimum Wage Boards on prices (276 g) is continued by the Arbitration Courts, and more schemes in palliation or offset are arising. 314 The Protection of Rights. [§302 302. Continued "But in time the people who are not em- high prices and ployers or wage-earners, especiahy the rural palliatives. population, may resent paying high prices for services and commodities, in order that employers and employees may enjoy state-protected privileges. A popular demand may then arise for more regulation, for some method to protect the rights of the consuming public — the farmer, the professional man, and the person of small property. This might manifest itself first in laws to control prices, already suggested [and commented upon (276/1)], or for the state housing of citizens — Gently inaugurated as a remedy for conditions caused in part by arbitration awards in New Zealand — or for the erection of state industrial establishments to compete with those reaping a large profit under tariff protection and award control." The Paris workshops again! tho, it must be ad- mitted, with side issues — state housing and state competition with monopolies, which have aroused the enthusiasm of many people who rejoice in old expe- dients with new faces — especially when they do not know them to be old. Elsewhere Dr. Clark says: ' * No error could be more pernicious than to assume that these laws have fully justified themselves by economic and social results. . . . The coming story of the labor party will be a record of failure as well as success. . , , Nevertheless it has won to its main proposals the support of all political parties, and of the great mass of the people. None of the parties now opposes compulsory arbitration or old-age pensions. ..." Perhaps it would have been wiser to say, instead of "now opposes", yet opposes. For I have already quoted passages abundantly showing that opposition is brewing, tho it has not yet become strong enough to appear in the platforms of any party. And now we have reached a set of considerations beginning to diverge from the merely economic: QnQ r^M.+. „^„ "When an award is under litigation workers oUo. Lourts con- ^^ ^ ^i • ^ ■ 1 ° ^ , • sider cost of living, often support their claims by testimony as and profits and to house rent and the cost of staple household all conditions. articles. The principle of a living wage is therefore fully established in arbitration precedents. The judge usually follows the theory that such a wage is a first § 3o6] Personal Property. 315 charge upon an industry, to be imposed if the business is to continue in operation. . . . Dividends and other evidence of the earning power of a business are admitted as having a bearing upon an equitable wage for einployees. The court thus fixes the share of the profits of an industry which the worker shall enjoy. . . . The court has considered such questions as the speed at which machines are to be run, the number of men to be employed to a machine, and whether men working in the open air, or their employer, shall decide when it is too wet to labor. 304. Startling dec- "The chief justice of New South Wales said laration of court's of the act : ' It deprives the employer of the conduct powers, of his own business, and vests the management in the tribunal formed under the Act.' " The laws of two of the states 305. Supports the " expressly state that the court shall have power closed shop — con- to give unionists preference of employment, ditionally, though this is not mandatory. In Western Australia a similar clause was defeated by the protracted oppo- sition of the upper house of Parliament. In the federal law the power is granted conditionally, but it is required that the union shall not engage in political activity while enjoying preference, and that this privilege shall be given only when, in the opinion of the court, a majority of the workers in the occupation regulated by the award approve of the claim for preference. The court in New Zealand has established its right to prescribe that non-unionist workmen already em- ployed when the award goes into operation shall join the union as a condition of retaining their positions. On the other hand, the court usually provides that the union shall have preference only so long as it admits any applicant of good character to membership, upon payment of moderate fees fixed by the court. . . . The stronger organizations had enforced the closed shop in Australasia before the court was established, and refuse to relinquish what they consider a vested right. They further claim the privilege of raising the issue in court, because it is a recognized issue in strikes. The men also assert that preference is just, because only unionists incur the expense, and the odium with employers, of securing awards, and are liable to penalties for breaking the awards. " The most important objection to granting c 1 d cT^sT is- prcference to unionists arises from the organic lation by courts? connection between the unions and the political labor party. Preference to unionists is prefer- ence of employment to members of a political organization." After learning all this, it is startling to find that 3i6 The Protection of Rights. [§ 306 " The proportion of the whole population in such unions varies from a trifle over three per cent, in New Zealand to nearly seven per cent, in Western Australia." And does not all the foregoing mean class legislation ? Dr. Clark seems to think it does: "So at present the government orders business to be con- ducted according to the demands of particular classes. The interests of classes rather than of the public are consulted. "American judges hold that the legislature cannot make laws affecting the interest of a particular class — set apart from the whole body of citizens. These decisions have prevented laws in favor of or against members of trade-unions, and might apply to prevent compulsory preference of employment even to members of a quasi-public society like an industrial union." The Arbitration Courts have, as already said, many- legislative privileges : "As a lawmaker, the court is the mark of virulent and par- tisan criticism, and its orders are subject to the same public comment and discussion as other legislative or administrative acts, while in its purely judicial capacity it receives the respect usually shown to a dispenser of justice. ... In an important mining case ... a newspaper commented editorially upon the merits of the issues involved. The paper was warned that it rendered itself liable to punishment. . . . The freedom of the press, f^^^edom of the press is thus curtailed by ap- plying to a legislative body protective canons of law devised to procure uninfluenced and unimpeded channels for the administration of justice. " However, in response to practical considerations, arbitration laws are evolving toward a separation of judicial and legislative powers. . . . Breaches of awards are prosecuted under an action of mixed civil and criminal character, and the defendant, if convicted, is adjudged to pay costs, and an additional sum partaking of the nature both of a fine and of an award of damages. Such a 'penalty' is made payable directly to the plaintiff." Dr. Clark, it is very important to realize, has shown that the effective administration of the law seems to require proceedings that attack what have heretofore been considered the foundations of civilization, and that, like the attempts to secure equal fortune to unequal men, give an impression that to justify such risks, § 309] Personal Property. 317 the advantages of compulsory arbitration need to be almost incalculably great. Dr. Clark next gives still m.ore startling testimony to the same effect: 308. And "the " Wherever compulsory arbitration is in force, obligation of the court finds it necessary to annul or modify contracts . existing contracts of service, against the will of the parties, tho these contracts are not in then^iselves illegal. ' ' An industrial agreement is a contract approved and sanc- tioned by the court, and might therefore be supposed to enjoy special immunit}^ from alteration. In Western Australia the court has held that it cannot modify an industrial agreement without the consent of all the signatory parties. But elsewhere the court has amended these contracts, or substituted awards in place of them. . . ," All this would not be tolerated under the Constitution of the United States, which does not permit any state legislature even, not to speak of any court, to pass a law annulling the obligation of contracts. "Tho a legislature might declare certain classes of contracts in the future illegal, no law could be made so sweeping as to deprive all citizens of the right of making individual contracts of service, without causing a revolution in our [American] sys- tem of jurisprudence that would encounter the veto of the higher courts." But Dr. Clark has more to say: " Compulsory arbitration and private contract are in the widest sense contradictory. Their mutual opposition continu- ally creates new problems for legislators. . . . These laws revive the old historical struggle between contract and status. They reverse the process of evolution of private rights in European and British law.'' Does this mean simply a relapse toward barbarism ? The reader new to the question is advised to read again Chapter XIII before continuing. The attacks on Freedom of the Press and Freedom of Contract, are accompanied by another attack on what have been supposed to be the bulwarks of liberty: " Rival unions have occasioned some of the of assemblv '^' ij^ost bitterly contested issues under the arbi- tration laws. The bogus union, formed by a 3i8 The Protection of Rights. [§3^9 small group of employees disaffected with the existing organi- zation, with the connivance of employers, and used to defeat or hamper the operation of the law, has been the subject of parliamentary investigations in New South Wales. Therefore the state is forced, in its increasing control over labor societies, even to limit the right of free association among workingmen. , . , The total effect is to make the condition of status more rigid." Next we come to something perhaps more startHng still: " The Australasian legislator has not been restricted in enacting arbitration laws by constitutional limitations such as exist in the United States. ... In most [of those] states no power exists to create a tribunal with the right, 310; And trial without a trial by jury, to punish misdemeanors, ^ J"''^' impose a fine of nearly five thousand dollars, or even as a last resort to imprison offenders." Is this Good-bye to trial by jury? Australia is pro- gressive. But the experiment is new, and conditions are difhcult. 311. Attacks on But Australasians did not know where i^'e'diSted".' "'"" they were going. " The colonies did not enter on this legislation with clear foresight and purpose. The form and effect of these experi- mental statutes were not pondered with the care devoted to a revolutionary programme. The proposer of the New Zealand law stated in the debates upon the bill, that a vast majority of the disputes coming before the authorities would be settled by conciliation, without recourse to the court. The function of the latter body was not regarded as legislative, but as purely judicial — or rather as also conciliatory. The purpose of the law was to bring men to a voluntary agreement. It was to further, not to annul, the principle of private contract. . . . The development of this legislation, however, has been in another direction. . . . " Workingmen have applied for nearly all the 312. New conditions, awards granted in New Zealand and Australia, unexpected results. ^^^^.^ demands, when they file an application before the court, are not guided by past conditions. . . . Therefore the court is obliged to make orders covering many points for which no precedents exist. . . . Statutory or custom- ary law is not at hand to guide its decisions, and so must be §314] Personal Property. 319 enacted. But a new bod}^ of legislation . . . requires constant amendment to correct the contradictions and omissions that reveal themselves in practice. The legislative activity of the court is consequently stimulated from two directions, by the increasing demands of workers for better terms of employment, and by appeals from both parties to have conditions previously imposed made more workable. " The divergence between the original theory and purpose of industrial arbitration, and its present development, is over- looked or disregarded. The final effect of this new institution upon private law and theories of government is not considered, because the popular attitude toward this legislation is oppor- 313 Yet all tunist and practical. But the labor party, admitted to be winch is the most active supporter of industrial progress toward arbitration, fancies that it is a step toward state socialism. socialism." 314. Has experi- And these steps toward state socialism ciailsm'^at'wa?"" ^^^ °^^^ what a labor agitator in other witli Liberty and connections would be apt to call "the Progress? prostrate bodies" of trial by jury, of free- dom of the press, of right of assembly, and of contract; and are of course steps back toward status! The conten- tion that state socialism and status are synonymous terms, seems receiving a startling confirmation from experience, even before state socialism has become mat- ter of experience. After I first read, as a whole, the foregoing con- densation from Dr. Clark's book, I wrote to him that I did not before know what a terrible indictment of government control of industry the book contains. That the extracts turned out an indictment was due, however, to no will of mine. I tried to be as fair to both sides as he is. Either the indictment is terrible, or the experience of thrice ten centuries through the whole world, has been shown to be foolishness, by ten years of experiment on three islands in the Pacific. And this remains true, even if the right of trial by jury is, as many sober thinkers suspect, outgrown in a fairly democratic state; and even if contract, like many other invaluable insti- tutions, is capable, in abnormal conditions, of working injustice. But surely its abnormal conditions should 320 The Protection of Rights. [§ 314 never be approached with a hand less cautious and reverent than the ideal surgeon's — or the ideal jurist's. These most weighty considerations show plainly that in Australasia the thunder is rumbling. But as yet no bolts have fallen; Dr. Clark says: 315. No business " The evidence does not show a general disasters yet. setback from government regulation of in- dustries. The investment of foreign capital may have been checked by the novelty and uncertainty of this legislation, but local capital has been found to meet the demand of growing enterprises. The impression the country makes upon a visitor is not that of a land where industry is paralyzed and business stagnated, but rather the reverse. Permanent and costly buildings are being erected in the larger cities, public improve- ments are going forward, the wharves are crowded with shipping, the railway service is fully occupied. . . . There are few evidences of excessive unemployment. To a person studying conditions in Australasia, the economic argument that a country will be industrially ruined by state regulation is not convincingly demonstrated. But this does not prove or disprove the ad- visability of the laws embodying these experiments: for the argument in question is too general to be valid. The prosperity or depression of a country's business rests upon a broader basis than an industrial arbitration act." Yet our author goes on to shovv^ what ?n pros'perous^ti'mes^ ^^^ been claimed before, that state regula- tions have not yet been tried under ad- verse conditions, but have been acting only in a period which other causes made one of great prosperity. " Since the passage of the oldest of these laws, the Victorian Minimum Wage Act, federation has been accomplished, and a national tariff with free trade throughout the Commonwealth has been substituted for a local tariff and free trade only within the borders of the colony. This enlarged market has caused a great expansion of manufacturing. The exportation to other states of the federation of twenty-four classes of locally made articles increased over one hundred and forty-seven per cent, during the first two years after the national tariff went into effect. . . . This has stimulated the demand for factory opera- tives and raised wages in many skilled occupations." Yet one is not surprised to learn that i §319] Personal Property. 321 317. Disagreement " The economic effects of government regula- as to prospects. tion of industry are still a matter of controversy in Australasia. . . . The contention that the capitalist is benefited by having wages fixed and other conditions of em- ployment determined by a government authority, is some- times supported by plausible argumients; but it is contra- dicted by the attitude of most employers toward these laws. As a body, they oppose compulsory-arbitration and minimum- wage boards. . . . Probably the influence — good or bad — of state regulation upon the prosperity and development of industries has been exaggerated. . . . Indeed state regulation applies to the industries that are the main source of national income only to a very limited extent." 318. Increased ^^^ whatever may be the gains or fealty to Law. losses through the AustraHan labor legis- lation, even if the tinkering and expensive bracing it is already demanding, shall tinker and brace it into some- thing else, or out of existence, one effect of it should be viewed in America with special hope and honor: for as Dr. Clark says: "It is a law-abiding agency, and the forces that in other countries threaten to disrupt society, serve, in Australasia, only to strengthen social bonds." Yet this does seem a little difficult to reconcile with what he expressly asserts of class legislation ; restriction of freedom of the press, of assembly, and of trial by jury; and interference with contract. But the dispassionate doctor's valedictory is : "But if state regulation clearly fails to benefit wage-earners, the country will probably return to free private administration 319. The equilib- ^^ industry. The essential fact is that the {res- rium unstaoie. ^rit condition is unstable." Knowing the policy of a set of doctors plainly not of his school, he adds: "The workers are still confident that state regulation does help them, and will continue to do so. Therefore the limited experience with compulsory arbitration up to the present, sug- gests the possibility of a further development toward state socialism." Like protective tariffs, and stimulants and narcotics — ■ 322 The Protection of Rights. [§319 when the amount in use is proved ineffective, give more! 320. The latest ^^ these pages are about to leave my word. hand, there comes through a correspond- ent of the London Times one of those messages, ex- treme on one side or the other which constantly ema- nate from Australasia. As quoted by the New York Times, the correspond- ent makes out that "Neither party is really satisfied with the state of things in New Zealand; both parties are, in fact, extremely dis- satisfied. The Australian Minister for Agriculture, returning from a visit to New Zealand, has reported that he found the Arbitration Act * working to great advantage.' The Secretary of the New Zealand Federation of Employers tells the cor- respondent that the employers do not agree with this view. The workmen, according to this authority, are 'assailing the employers, threatening to ignore the Act altogether, and to return to their old methods; there has never been any greater friction in labor matters than at the present time.' From the employers' point of view the Act has not made for better work or for improved methods, and it has not fostered trade. On the other hand, it has seriously increased the cost of production. This increase has been such that in those articles which New Zealand might be expected to export, such as clothing, woolens, timber and coal, she is unable to take advantage of her natural facilities. 'The history of the court has been increased impor- tations and decreased local output.' . . . The Seamen's Union and the Otago Trades and Labor Council have in turn de- nounced the court." But despite frequent casual statements ru '^^PJ'.'",^^ like this, and despite the deep shadows 1 eyas ai ure. ^^ ~^^^ Clark's thorough and dispassionate study, we are by no means forced to the conviction that the threatening aspects of government regulation must lead to its complete overthrow. The dangers are almost inseparable from so young an experience, and there seems to be no unescapable reason to fear that they are due to anything more than the excesses of youth, or that they cannot be remedied as experience accu- mulates. As shown, most of the decisions have been in favor of the men, because the market has been steadily rising. Then if the principle of compulsory arbitration shall § 322 a] Personal Property. 323 turn out to be the colossal blessing to mankind which its friends claim, and which its enemies seem growing less inclined to dispute, the fact that it ''happened" to be started at the beginning of many years of in- creasing prosperity, will be classed with such facts as Rome's unification of the civilized world when Christianity appeared — facts which, whether called "Providential" or by any other name, even the phi- losopher is tempted to accept as proofs of an order and beneficence in the universe wider than our everyday conceptions are apt to rise to. 322. Gains in pros- What is to be the effect of compulsory perity may carry arbitration on a falling market, yet re- through adversity. Plains to be ascertained. But the work- men have already had the discipline of eleven law- seeking and law-abiding years, to educate them to respect the law when it goes against them. Of course the enthusiasts are tempted, in face of abundant other obvious causes for Australasia's prog- ress during the last decade, to attribute it too largely to compulsory arbitration; but it would be a blind opponent indeed who would give that no place what- ever among the favoring agencies. Laborers everywhere of course expect that every new expedient is going to give them much more wealth than they produce, and they resort to each expedient to the absurd degree that is already troubling the Australasian courts. But that, tho one of the greatest of their troubles, seems sure to remedy itself. Probably nearly all the excesses are due to trying to make the courts do too much. But it is far from proved that they can do nothing. To have virtually abolished strikes, and made the labor world law-abiding, is to have done a very great deal, and a great deal that we in America sorely need. We have already indulged in a good many futilities by way of voluntary arbitration, and a few successes, mainly in Massa- chusetts. But for labor's own sake, we "^musiVhan^lT^^ need Something stronger. Despite the dem- agogues who, honestly or dishonestly, make 324 The Protection of Rights. [§ 322 a their livmg by fomenting Mr. Gompers's "fight", strikes will not be tolerated much, longer in America. The intelligence of the industrial world, and the com- mon sense of the world in general, is but just organized against them. But the Citizens' Associations who pro- pose to have regularity in their transit and supplies, and freedom from riot, arson and murder; and the Industrial Associations who propose to have Enterprise regulate enterprises, are spreading at a rate beside which the spread of labor organizations was at snail's pace. Possibly the demagogues, for the sake of hold- ing their leadership, may fight compulsory arbitration until, as once in England, strikes may be abolished by law without arbitration to fall back upon. But apparently compulsory arbitration will come sooner or later: it is difficult not to have faith that the habit of seeking law, and understanding it, and abiding by it, which the labor world of Australasia is being trained in, will ultimately save its arbitration courts from such fatal excesses as now threaten, and make them an example that the rest of the world will be glad to follow as fast as institutions can be adapted to it. CHAPTER XXIII. PERSONAL PROPERTY (CONTINUED). Proved Methods for Diffusing it more Evenly. The coolie of China, the ryot of India, ^^S.^Pjogress in ^^le fellah of Egypt, the peasant of Russia, are in a condition not very different from that of virtually all mankind a few thousand years ago, and that our own ancestors had not got very far beyond a thousand years ago. When we compare them with the present population of Japan, civilized Europe and civilized America, we realize that over a large part of the world, pow- erful agencies have long been at work for the bet- terment of man's estate. A little thought must con- vince us too that the betterment has been greater among the masses of mankind than among the few at the head. The average man's condition is now nearer that of the exceptional man, who is forced to respect his life, liberty and property, than was the con- dition of the feudal retainer who held all these things at the mercy of his lord. In the essentials of a healthy existence — food, clothing, shelter, sanitary surround- ings, hospital facilities, education, the average man to-day is vastly nearer the favored man than he was not merely thousands of years ago, but centuries ago — yes, decades ago. Since the middle of the last century, there have rapidly accumulated figures which prove that even in that comparatively insignificant period, the progress is not, as might have been expected, corre- spondingly insignificant, but very significant indeed. 325 326 The Protection of Rights. [^3^3 The agencies that have thus been distributing the good things of hfe, are of course innumerable, and the study of them is too recent, even could it possibly be adequate, to reach a very thorough knowledge of them. But we know some of them well enough to enable us to promote their efficiency. Before proceeding, however, to such detailed con- sideration as we can give them, it is well worth while to pay some attention to the general facts which prove that there are enough agencies whose efficacy has been proved, to render foolish all headlong confidence in the untried quack stimulants which are constantly suggested. But first let us realize that while we would like every- body to get rich in a generation, there is no way to bring it about: Nature has settled the matter in her own way: there is not ability to produce enough. The annual production of the country averages less than $250 apiece, and, as we have seen, the accumulated wealth is but about $1,200 apiece. .- . ^,» , „ A more general diffusion of wealth, then, 324. Diffusion of , •, r i -i-rr • r wealth depends on must wait for a more general dirtusion of diffusion of Ability, ability to produce it. As already said, wealth is Nature's prize to stimulate energy, fore- thought, temperance and honesty — in a word. Ability. Yet the man without ability gains much from the general progress of invention, and General Walker seems to claim * that he gains it all except a little of the inventor's share ; but the doctrine is not generally accepted to that degree. Mr. Atkinson, however, quotes Bastiat with approval to the effect that "in proportion to the increased quantity and effectiveness of capital, the aggregate share of the annual joint product of labor and capital falling to capital, is increased absolutely, but diminished relatively. On the other hand, the share falling to labor is augmented both absolutely and rela- tively." The laboring man does plainly gain much: for his cottage to-day contains many comforts that the home of the rich lacked half a century ago. *" Political Economy", Advanced Course, §§ 326-36. §325] Personal Property. 327 In 1903 the Massachusetts Bureau of Labor Statistics issued a bulletin showing that of 45 > 7 80 persons in the state who had retired from business with a competency for the rest of their lives, 1,076 were laborers. Yet the world is still divided up among a small proportion of rich and a large proportion of not rich. But the proportion is growing more ?B' +fe^^' favorable to the poor. When we were dis- tena to rise. . ^ , -K ^ 1 1 1 1 m-j^ cussmg the relations of labor and ability (pp. 92-3), we took note of Galton's generalization that most men tend to be about average, and that the depart- ures from average tend to be relatively few. From this it is obvious that most men's incomes must be about the average — some $650 a year in America in 1900, and that those who have more, grow fewer and fewer as the incomes increase. Such is the condition at any given time, but there is a vastly wider generaliza- tion than Galton's, which, with the exception of that of evolution, is probably the most tremendous gener- alization yet given to the mind of man. I refer to Spencer's Law of Equilibration, which includes a corollary that under evolution, averages have a ten- dency to rise, and, in their progress, to include the individuals of the grades originally above them. Under this principle, if the dots in the supposed graphic representation suggested in the passage on page 93, could rise, the lower ones would, according to the law, rise faster than the upper ones, and the space occupied would continue to become narrower until in time all the dots would be concentrated on a line considerably higher than the original central horizontal line of the system. This new heavy line would represent all men having attained equality of ability, and consequently of fortune, and on a higher plane than any men occu- pied at the start. No civilization has yet been long enough to attain such a result, and it is vain to specu- late whether any civilization ever will be. But the evolution of each civihzation has been toward such a result, tho it has been reversed when the dissolution of the civilization set in. If, then, a nation is still 328 The Protection of Rights. [§325 in the process of evolution, not yet having entered upon that of dissolution — if, for instance, the United States has not, as many fear, lost the preponderance of capable voters which started her evolution, and has not come under a government of incapable ones, which must initiate dissolution — if the country is still progress- ing, it is inevitable that the lot of average people should be improving, and that a larger portion of the people should be included among the average. For at least the fifty or sixty 3^ears for which the statistics are of account, they show these conditions to have prevailed; and there is enough general evidence from history, to indicate them to have prevailed, on the whole, among civilized peoples, since the dark ages. 326. Diffusion in- Not only is the whole world grow- creasing. j^g richer, but the wealth is becoming more evenly divided. The trade-unions, despite their frightful mistakes, have undoubtedly enabled the laborer to get more of the benefit of the laws of com- petition, as we have seen, and they are making him more of a thinking man — in the last decade, by making him a great deal more trouble to think about, but at the expense of being more of a discontented man. But discontent is a good thing, rightly used. It is the parent of effort. While "rich richer, and poor poorer" and 'poor nooreHMs ^^s all the authority of a proverb, the not true in civilized authority of a proverb is often very poor countri6Si j ±. ^ j i. authority. This one simply illustrates how a slick phrase takes hold of people. There is probably no greater error in economics, and yet none more generally believed. The facts are over- whelmingly against it. In the United States wages have risen an average of sixty-eight per cent, since i860, and. have nearly doubled since 1840. (On re-read- ing, I find this apparently self-contradictory, but take the figures at, say, 100, no, and 200, and it will be found more than workable.) Even as late as 1880 the census gives the yearly average nearly $100 below that of 1890 — $346.91 as against $444.83. The com- § 327] Personal Property. 329 parison cannot be relied on as exact, but the correct- ness of its general showing is certain. Prices have not risen with wages. They have gone dov\rn some eight per cent, since i860. Leaving out luxuries, Professor Mayo-Smith* says that the ''por- tion of family expenses directly affected by the price of commodities was as 94.4 in 1891 compared with 100 in 1880"; and of two hundred commodities in most general use, Mr. W. M. Grosvenor has computed that a dollar in 1885 would buy a quarter more than a dol- lar would buy in i860: and the Maine Bureau of In- dustrial Statistics reported that in 1887 a dollar would buy as much of the mechanic's usual food-supply as $1.20 would in '82, or $1.30 in '77. This was, of course, probably due to cheapened transportation from Western wheat-fields and cattle-ranches. In the early years of the twentieth century, for which statistics are not yet available, strikes have made a great increase in nominal wages, and a great increase in idleness. Both the wages and the idleness have had to be paid for in a consequent increase of prices, but this is obviously temporary. Later it will be consid- ered more in detail. The hours of labor average ten now; in i860 they averaged eleven; and in 1840 nearly eleven and a half. The proof of all these paradoxes up to 1894, is given in one of the most elaborate economic investigations ever made. It was carried on in 1892 and 1893 by a Committee of the Senate, whose reports of facts fill half a dozen large volumes. This report does not seem to need any backing up : for it is a mass of tables of carefully gathered facts; but it happens to be thor- oughly backed by other investigations here and in other countries. Some of the others here are that wholesale clothing dealers report a great increase in average size and * In "Statistics and Economics", to which important work I am indebted for several other points and facts in this chapter, I am glad to find some of my own previous conclusions rein- forced by his figures. 330 The Protection of Rights. [§327 quality of clothes demanded, which shows that the people are better fed and exercised and better off. To come to reports of state authorities, in Massachusetts from '50 to '80, agricultural wages advanced fifty-six per cent.; from '60 to '8^, general wages advanced over twenty-eight per cent., and from '60 to '85, those of mechanics twenty-five per cent.* In Connecticut from '60 to'87, men's wages advanced in the principal factories forty-three per cent., and women's fifty-seven, while their dry goods and carpets cost them more than a third less, but provisions about a tenth more. In i860, a laborer on the Erie Canal got fifteen cents a cubic yard for shoveling dirt; in 1889, he got fifty cents. From 1831 to 1880, wages of cotton-spinners in the United States increased eighty per cent., while the price of cotton cloth decreased sixty per cent., and the average consumption per head doubled. More- over, pretty much everywhere the proportion of opera- tives in the comparatively safe and agreeable and high- paid processes, has greatly advanced. About 1890, a Massachusetts machinist said, pub- licly, in speaking of the state of affairs in 1842: "The wages of a machinist in shop were $1 to $1.25 a day: one nabob of a pattern-maker received the great sum of $1.50. They went to work at five o'clock in the morning, and worked till 7 130 at night, with an hour for breakfast and three-quarters for dinner. It was several years before we obtained eleven hours a day. It has now been ten hours a day for twenty- five years or more, and we grumble at that, tho we get more than twice the wages we did forty years ago ; and we are hoping to get the same or higher pay for working eight hours. I know the condition of the machinist is better than it was when I first joined the guild; he has better pay, better houses, better education, better living. For my part, I don't want any more of the good old times. The present time is the best we have ever had, tho I hope no the best we shall ever see." (Quoted in Wells.) * Most of the facts in this and the next two paragraphs are taken from "Recent Economic Changes" by the late David A. Wells — a book that no one interested in the general welfare can afford to leave unread. § 327] Personal Property. 331 In Massachusetts for the period 1829-31 the pro- bated estates under $5,000 were 85.6 per cent, of the whole, in the period 1889-91 they had fallen to 69.5 of the whole, while those over $50,000 had risen from 13.4 per cent, of the whole to 27 per cent, of the whole. In Great Britain from 1840 to 1890, the number of estates subject to succession tax increased twice as fast as population, while the average amount per estate had not increased at all. In an article in the Royal Statistical Society's Journal for June, 1895, Mr. Bow- ley gave figures indicating that "money wages in- creased 40 per cent, from i860 to 1891, and considering the increased purchasing power of money, real wages in- creased 92 per cent. The eminent English authority, Mr. Giffen,* says that during the last half of the nine- teenth century (that is, beginning earlier and continu- ing later than Mr. Bowley's figures), the average of wages in England nearly doubled, while the working hours have decreased one-fifth. When he first stated this, it was so generally doubted that he repeated his investigations with the same result. f Mr. Mulhall * Giffen, Robert: Progress of the Working Classes in the Last Half-century. t Sir Lowthian Bell, Mr. George Lord and Mr. James Caird have given facts in support of Mr. Giffen. (Wells.) Mr. W. H. Mallock, after an elaborate investigation in the British Census reports, the details of which are given in his " Classes and Masses", states the following conclusions: " People who are in want of the bare necessities of life . , „ if, whilst their own poverty remains the same, the riches of other classes increase, do, in a certain sense, become worse off relatively, . . . But this unfortunate class . . . has grown less and less numer- ous relatively to the entire population." This class "is not in any sense a sign or product of our modern industrial system. A similar class existed before that system . . . and that system has relatively reduced and not increased its numbers . . . and the real problem ... is not how to interfere with the existing economic tendencies, but how . . . to bring the residuum under their influence." "The poor" (except those who have nothing at all) "are getting richer; the rich, on an average, getting poorer . . . and of all classes in the community, the middle class is growing the fastest." Since 1830 the population has increased "in the proportion of 27 to 35; the increase of the 332 The Protection of Rights. [§327 said that in England a laborer who got two hundred pence for a given amount of work, from 1821 to 1848, got two hundred and eighty-five pence for the same work from 1880-83, while in the later period one hun- dred and seventeen pence bought as much grain as one hundred and forty-two did in the earlier period. In regard to beef, the showing was still more favorable. This cheap food was America's gift to the mother country. In 181 5 there were 100,000 paupers in Lon- don. At the rate of increase of population in 1875, there should have been 300,000. There actually were less than 100,000. section in question [the middle class] was in the proportion of 27 to 84." "The middle class has increased numerically in the proportion of 3 to 10; the rich class has increased only in the proportion of 3 to 8." "From 1850 to 1881 the working classes have increased by about 15 per cent., whilst the middle classes have increased by more than 300 per cent." "The incomes of those with less than £600 have increased on the average something like 4 per cent., . . . while the incomes of nineteen-twentieths " of those who have over ;£i,ooo a year "have decreased on an average over 7 per cent." "Landed incomes have not in- creased, but decreased by 14 per cent, in England, and by 13 per cent, in Scotland." The total income of the millionaires, "if divided among the population in equal shares, would yield each inhabitant a dividend of one shilling a month". "The working classes have increased in wealth far faster than any other class in the community." "In 1880 the income of the working classes was (all deductions for the increase of popu- lation being made) more than equal to the income of all classes in 1850." In 1881 there were seven thousand windowless cabins occupied by families in Scotland; by 1891, these had "almost disappeared; the one-roomed dwellings with windows have decreased 25 per cent.; the two-roomed dwellings have increased by 8 per cent., and the three-roomed and four-roomed dwellings by 17 per cent.". "The smaller businesses, instead of being crushed out, are increasing more rapidly than the population." ' ' There is an increase of 1 5 per cent, in the school- teachers; . . .of 21 per cent, in the butchers, which shows the general increase of meat consumption; . . . of 26 per cent, in the doctors; and ... of 53 per cent, in the persons who professionally minister to amusement." "The computed capital of the Post Office Savings Banks ... in ten years has very nearly doubled itself." §32 7<^] Personal Property. ^t^t, In France from '53 to '83 wages advanced some sixty per cent., and in the principal occupations of women (outside of domestic service), they nearly doubled. In Germany, labor statistics are not as easily within our reach, but income-tax statistics prove the same thing. In Prussia, from 1876 to 1888, Dr. Soetbeer (quoted by Professor Mayo-Smith) finds that the pro- portion of income-tax payers with their families, to the whole population, had increased about 22 per cent., that is from 2.3 per cent, of the population to 2.8 per cent., and that the classes which had in- creased at the most rapid rate were those with incomes of over $500. And altho the mOvSt rapid increase of all had been in the class with incomes of over $25,000, the average incomes of that class had decreased ,» thus show- ing both that more people were getting rich, and that the rich were not getting richer. One fact general over all highly civilized countries shows that the details we have been going over, must, on the whole, be correct. It is that the consumption of food has been increasing faster than population. This cannot mean that the rich eat and drink more: for they ate and drank all they wanted before; so it must prove that the proportion of those who can eat and drink freely is increasing. Most of the foregoing discussion of wages and prices was published in 1901. Almost immediately there- after some strange conditions began to show themselves in the United States and to increase until at this writing, in the spring of 1907, they seem to have passed their culmination. The first of them was a run-up in prices of com- modities, following the general inflation of industrial properties through trust promotions. This inflation 327 (a). Pendulum collapscd in 1903, but cotemporaucous with swings backward it there had been a twofold inflation of wages — one resulting from the inflation of prices, the other from the greatest trade-union activity ever known. ' The unions had discovered a new panacea 334 The Protection of Rights. [§ 327 a in the closely organized strike, and proceeded to apply it as vigorously as silver inflation or a protective tariff or any other panacea had ever been applied. Much of the advance of wages from this cause was of course purely nominal — it was obtained through the expensive idleness of the strikes, and followed by much more idle- ness or unemployment, because people would not or could not pay the scale of wages reached. But the country being at peace, there being no money -heresies in the air, the tornado impending from the tariff being as yet no bigger than a man's hand, the crops being good, and Europe wanting them; gold production being large; the quadrennial business disturbance of the presidential election being more nearly settled by a foregone conclusion than usual — all these influences made the period one of prosperity so great as to encour- age the prosecution of the enterprises which had been held up by the high prices of labor. This was espe- cially true of house-building, and the various forms of engineering construction. The accumulation of these undertakings has made an exceptional demand, for the time being, until at last most of the labor thrust into idleness by the new prices, has been set to work. When this dammed-up rush of new enterprises passes, and San Francisco is rebuilt, probably there will be a counter-revolution in wages, as, in fact, there has already been in some trades where there has been no previously dammed-up rush of activity, and, more espe- cially perhaps, where the employers have at last met organization with organization. But all these excep- tional disturbances may in some particulars make the preceding figures for the rise of wages and fall of prices during the preceding half century, look insig- nificant for the moment. Yet in considering whether they can still be accepted as conclusive indications of the advance of the general welfare, the exceptional and probably temporary character of the remarkable fluctuations of the past five years (i 901 -1906) should be carefully borne in mind. And yet in spite of them, the United States Labor §327^] Personal Property. 33^ Bureau report for 1906 shows that the average wage- earner is working shorter hours than ever before, that he is receiving more pay for the short -hour week than he formerly received for the long-hour week, and that the increase in his average wage has been so great that its purchasing power has risen, notwithstanding the increase in prices of many commodities. From 1894 to 1905 the average wage per hour in- creased 21.5 per cent., while the average hours worked per week decreased 3.9 per cent. The average wage- earner, working shorter hours, earns 12.9 per cent, more per week than in 1890. The average price of food, weighted according to the average family consumption in the families of 2,567 workingmen, increased 9.8 percent, above 1890. Not- withstanding this increase, the average wage hour would purchase in 1895 8.1 per cent, more food than in 1890. Still more important has been the increase in the number employed, amounting to 42 per cent, over 1894 and to 40.9 per cent, over 1890. The com- bined effect of the increase in the average wage and in the number employed, was to increase the total amount paid in wages per week by 65.7 per cent, above 1894 and 59.1 per cent, above 1890. The total cost of living shows a larger increase in the purchasing power of an hour's wage than is shown by the price of food alone, for while there has been a gen- eral advance in commodity prices, the average cost of living has not advanced in proportion to the cost of foods. Manufacturing establishments, especially the larger concerns, have been able to introduce economies that have to some degree offset the greater cost of labor and materials. One of the most important factors in moderating the advance in commodity prices gener- ally has been the decline in the cost of transportation — ■ a cost that enters into the selling price of practically every commodity. Th© average freight charge per ton per mile for 1905, as reported by the Interstate Commerce Commission, shows a decrease of 18.6 per SS^ The Protection of Rights. [§ 327 a cent, as compared with 1890. The figures for 1906, when put in shape, will show a still further reduction. This rapid decline in the average cost of transpor- tation has been made possible by the expenditure of hundreds of millions of dollars for the betterment of tracks and road-beds, the elimination of grades and curves, and the purchase of more powerful engines and larger cars. This work will continue on an unpre- cedented scale for some years to come if it is not inter- fered with by radical legislation. But the threat of it is already making trouble. Yet the roads in trunk-line territory alone planned for the expenditure of not less than $400,000,000 in 1906 and 1907, and all over the South existing lines are being improved and extended. Dun's tables show that the cost of living per capita in i860, before the civil war, was $16.87 rnore than in 1905. For the sixteen years 1880 to 1895, inclusive, the average yearly cost was $101.65. For the ten years 1896 to 1905, inclusive, the average was $81.52, $20.13 less than for the earlier period. The preceding discussion has contained lection in^hTurs^' ^o^any Statements of the decrease of hours of labor, accompanied by rise in w^ages. It is inevitable, then, that the production per hour has increased. This is due to improved management, labor-saving machinery, and increase in the ability of the laborers. This latter has been both a cause and an effect: better wages and better conditions of living increase intelligence and working power. Of course a man working but one hour a day will produce very little, and a man working twenty-four hours a day will soon produce nothing. In what number of hours, day by day, will he produce most? Experience seems to indicate that in the general run of work, the happy medium is about eight. And strange to say, this seems to be the experience when the work is merely tending a machine: it will be so much better tended and kept in so much better order. The question of the eight -hour day is an exceedingly § 327 &] Personal Property. 337 interesting one, and can be studied to good advantage in Mr. John Rae's book "Eight Hours for Work". There is no space for its detailed discussion here. Only- Mr. Rae's general conclusions can be given. He sup- ports them with a great array of facts. Of course there is a great difference in trades. There are virtually none in which a reduction from the old working day of twelve or even fourteen hours, has not been attended with increased production; and of those trades where a farther reduction from ten hours to eight has been considered worth trying, the experiment has been successful in the vast majority of cases. The vigor of the operatives, their prompt attendance, their care and attention in their work, their care of their machinery, their speed in little repairs and in shif tings, have not only generally kept up the output, but in a very large proportion of cases, have actually increased it. The men have lost much less time from illness, and been put to much less expense for medicine, special diet and physicians' attendance. They have spent less for drink to overcome or solace their fatigue, and of course have suffered less from the consequences of drink. As a result, crime has fallen off. They have spent their increased leisure better than they did their scant leisure. Gardening, gymnastics, outdoor sports in their season, and reading and attend- ance at schools and lectures in the indoor season, have increased enormously; and with them of course, book clubs, reading-rooms and lyceums. All this has in- creased intelligence, which has increased production. It is not to be confused with the misuse of sudden comparative wealth, which is spoken of elsewhere. The old fallacy that "the profit is in the last hour" was suspected before the shortening of hours was tried, and when it was examined into, statistics proved that the last hour, so far from being the most profitable, was the hour in which occurred most of the expensive accidents to machinery, of the spoiling of material, and of the injuries to laborers, not to speak of most $^S The Protection of Rights. ' [§ 327 ^ ■\ of the expense of lighting, and a greater proportionate expense of heating in the colder hours of morning and evening. Workmen have been increasingly willing to pay for shorter hours through a reduction of wages, but the rule has been that even where production fell off before things were adapted to the new conditions (which it by no means always did), as soon as the adaptations were effected, rising production increased wages until in time they have in many cases, probably in most, become higher than before the reduction of hours. Foremen and the enterprisers themselves have abundantly testified that — perhaps most important of all — ^their own efficiency and the ease and effectiveness of handling their men, have benefited as much as the efficiency of the men. One good result expected from the change has not been realized, but that very fact is a virtual demon- stration that the change has not diminished produc- tion. It was expected by many that the hours taken from production would have to be restored by taking in a corresponding number of the unemployed. Many computations were published which proved to the sat- isfaction of those who made them, that unemployment of the willing would virtually cease. The expectation — unfortunately from one standpoint — has not been realized; but — fortunately for the proof that reducing hours has not reduced production — the proportion of the unemployed has remained about as before. The skeptical reader is urged to study the facts on which all these generalizations rest. Mr. Rae speaks of a book on the subject by Mr. Sidney Webb and Mr. Horace Cox. I have not considered it necessary to consult it, as it is said, on the whole, to support Mr. Rae. He also quotes an opinion of Mr. Jevons that the reduced hours are simply a result of the increased prosperity of the working classes — that they work less time because they can afford to. This factor must undoubtedly enter into the case, but one reason they can afford to work fewer hours is that they can do § 328] Personal Property. 339 as much or more in the fewer hours, and their increased prosperity enters but very indirectly into their better care of their machinery and their own persons, and the improved use they make of their leisure time. I find a report worth mentioning, tho I am unable to give the authority, that among the cigarmakers 51 per cent, died of tuberculosis prior to the inauguration of the eight-hour work-day. Seventeen years after the eight-hour day took effect this percentage had been reduced to 23 per cent. An instance much later than those given by Mr. Rae has just come from the Austrian coal and lignite mines. In 1902, the daily working hours there were reduced from twelve to nine. In 1904, the average production per man per shift was higher than in 1901, by 6.6 per cent, in the coal mines, and by 9.9 per cent, in the lig- nite mines. 328. Increase in ^^ may well be asked if, until the recent wages and, decrease brief and exceptional period in America, in otriBr or cgs com6 • largely from prices the world over not having risen, and Capital's share, g^jj^ wages having risen, and the laborers having worked less time, where the increase has come from. Much of it has come out of Capital's share of product. The census reports of 1880 to 1890 show that during the decade, the amount of wages paid in the country increased 131 per cent., while capital increased but 121 per cent., and value of product but 69 per cent. In England Sir Robert Giffen computes that from 1843 to 1882 capital increased no per cent., and wages 145 per cent. Fifty years ago, yes, thirty years ago, capi- tal in New York itself brought seven per cent., now it hardly brings four. In many of the Western states, it brought ten or fifteen, where now it brings six or seven. A similar reduction has taken place through the civilized world. This falling off of from a third to a half in capital's share, contributes largely to the increase in wages. True, the exceptional business activity in 1 904-6 has increased the demand for capital, but this cannot be considered permanent : the very cause of it is increasing 340 The Protection of Rights. [§ 328 capital at a rate that must lower interest as soon as, in the rhythmic course of things, the wave of activity passes. 000 Af I . Ability benefits by reduction of the 329. and from La- . ^ ^ -^ ^ ..-'., ^ ^ . , ^ . bor's increased interest rate, and m it must be included '^ ^ ^^^' the increased ability of the laborers. Their increased wages have come from increased productive power, in ingenuity, carefulness and steadiness. The enterprisers have been bidding for improved labor as fast as labor would improve itself; and the best enter- prisers bid highest. Of course the less they must pay for the use of capital, the higher they can bid. But of course a great deal of the improvement is due to the abilitv of the enterprisers and inventors. Processes are greatly improved, and so are transpor- tation and organization. In 1890, transportation alone cost, per unit, in America but about a third of what it did even so lately as i860, and, moreover, forests and mines and productive arable land have been opened much faster than population has increased. Regarding the share the enterpriser gets. Professor Mayo -Smith thus summed up the evidence of the statistics : "There is scarcely any doubt that it is falling. Production on a large scale, enormous investments of fixed capital, and increased competition, compel the entrepreneur to put up with a smaller reward." Since 1873 "the laborer has conserved or improved his position by the main- tenance of, or even advance in, wages; the landowner has lost by falling rents ; interest has fallen ; and profits, have been reduced to a narrower margin". Later he says: "This progress has been due primarily to the abundance of capital, which, on the whole, works for the benefit of the laboring classes in two directions — by competing for labor-force and thus raising wages, and by cheapening products and thus making wages go further." The trade-unions have helped raise wages so far as they have increased the laborer's ability, and that § 33o] Personal Property. 341 is very far. But so far as they have interfered with the Right to Work, and encouraged the various forms of scamping, of course they have diminished produc- tion, and, inevitably, retarded the advance of wages: for wages have got to come out of production. Probably the men who get their living out of the unions, would insist that the unions had secured for Labor a large portion of product to which it was justly entitled, and which, before the unions, it did not get; and on the other hand, probably many men who have suffered from the unions' mistakes, would say the unions had wasted more than they had secured. Both ex- tremes would be wrong. The unions have unquestion- ably done something, tho the decrease of interest on capital, and the increase of ability in inventors, enter- prisers and the laborers themselves, has plainly done so very much that it is absurd to claim that the unions have done the lion's share. Moreover, when we see that the establishments that make most money usually pay the highest wages, it becomes plain that the com- petition of enterprisers for the best labor, must, inde- pendently of the unions' influence, have brought wages nearly, if not quite, as high as the enterprisers can afford to pay. Certainly the evidence we have been going over, proves that there is some better way to diffuse the good things of this life, than to reduce their production by communism, socialism or scamping. We saw the bad effects of scamped fu^s?on^of testy!"" work on the laborers themselves (228 a-c), tho they seldom suspect it. The dis- appearance of scamped work alone would make an enormous difference in what the wages would buy. Moreover, the mistakes of the unions cannot forever overcome the economic laws which entitle an honest workman to better wages than a dishonest one, just as an honest merchant gets better credit than a dis- honest one. People are occasionally much impressed when a dishonest man succeeds, and think dishonesty apt to succeed; but when an honest man succeeds, it 342 The Protection of Rights. [§330 is so much a matter of course that people do not notice it. There is much reasoning of that kind: people are often so much impressed by what is unusual, and so little impressed by what is usual, that they constantly overrate the frequency of the unusual, and underrate the frequency of the usual — the very fact that a thing is rare, makes them believe that it is frequent, and vice versa. In spite, then, of an occasional rich rascal, there seems reasonable ground for belief that most men who get rich, get rich honestly: the criminal classes are certainly not the rich ones. 330 (a), which - '^^^ cheapness of goods is very much makes everybody's affccted by the chcapucss of getting them money go farther, ^^ ^^^ cOUSUmer, and that is affcctcd by the honesty of all dealers who handle them, as well as of everybody engaged in transportation — cartmen, railroad people and steamboat people. And strange as it may at first appear, the cheapness of goods is affected by the honesty of people who never see them at all. The rates at which the farmers and miners and manufacturers can produce, and the railroads carry, and the merchants exchange, are all affected by the cheapness with which their banking business can be done, and the stocks of the companies dealt in; and that cheapness is of course affected by the honesty of the bankers and stock-brokers and their employees. In the great business of Wall Street, in many classes of transactions easy to recollect, the brokers rely on each other's mere word for millions, and so the great expense of time and money for written contracts is saved. In banks, as a matter of fact, the signatures of checks are not examined very much: to examine them closely, the expense for officials would have to be doubled. Obvi- ously, then, a bank or a stock exchange could not have been run as cheaply as it is now, in the days of thieving Sparta, or even in those of Shylock; in fact, in less honest times, modern industries simply could not have been run at all: with less honesty, the enormous com- plexity and rapidity of modern exchange was simply impossible. Even outside the producing, exchanging §33i] Personal Property. 343 and banking world, the cheapness of goods is affected by everybody's honesty: the producers, exchangers and bankers have got to depend on engineers and architects, lawyers and doctors, and if those men must be paid for dishonest work in addition to real work, the expense of it must find its way back to the commodities and services that everybody uses. In fact, the whole working world is so bound together that where any part of it goes wrong, all the rest has got to share the expense. There is still another portion of the community whose honesty affects the price of everything that everybody uses. The honesty of the government is important to us 330 (b). especially everywhere. Every taxpayer must not honesty in Gouern- . ■' ^ . i- , i r n ^/- • i ment, Only pay nis own direct share or all official thievery and carelessness, but even those who do not realize that they are taxpayers, must pay in rent, and in what are called indirect taxes, which are levied on many goods in the hands of manufacturers, importers and wholesalers and added to the price when they reach the retailer. 331 and from Next to increased honesty, the most creating and sud- noticeable agency in diffusing wealth is plying new wants, increased variety of production. Tele- phones, bicycles, automobiles, electric lighting and electric railways, and the hosts of other new things mean constant new demand for labor, resulting higher wages^ and at the same time, new facilities of exchange or production, with resulting variety and cheapness of product. Fortunately, man is a creature — the only one we know — of constantly increasing wants. Those who have money to pay out are always more ready to pay it for labor on new things, than for superfluous or wasted labor on old ones : so there is no need of indus- trial suicide by scamping. This labor for the new things of course comes out of more wearing and disagreeable pursuits (327, end of note from Mallock).* But as there would be no such pursuits * According to the United States census, from 1880 to 1890, those in the laborious pursuits of agriculture and the laborious and dangerous ones of minine and fisheries, had decreased from 344 ^^^^ Protection of Rights. [^ 2>?>'^ unless the demand for them were very strong, they must have been kept going when labor has left them : that has been possible by labor-saving machinery. Of course, 331 (a) mainiu ^^ labor Icavcs the disagreeable pursuits for through labor- morc attractive ones, the deserted pursuits saving machinery, iijt,ixii-. • -u- j call doubly lor labor-saving macmnery , and are doubly ready to reward the inventor. Farming, for instance, tho healthful, is lonely and laborious. Within a generation or two, inventors have given the farm machinery that has released a large part of the farm- hand labor and sent it into the towns. The labor thus released has done more than merely find employment without slowing up the earlier kinds of labor. It has made so many new things that it has kept the other mechanics on the jump to make enough old ones to exchange for them. That is to say, the desire for new things — telephones, bicycles, automobiles, mechanical piano-players, talking-machines, has made people work all the harder to buy them. But machinery often releases labor, and still increases supply. The world easily gets fitted to the increase of supply, because competition to sell the increased supply lowers prices so much that people soon use more goods of the same kind, or save enough money because of their lowered price, to use more goods of other kinds. But , it may be asked : How does all this ' ' make work ' ' and do away with reason for scamping? Is it not as broad as it is long — new things call for labor, labor-sav- ing machinery releases it, and the amount of employment is just the same as before ? The answer is that in most cases, labor-saving machinery cheapens goods so that several people can buy, where one could before; and this increases demand for the old goods, so that makers of them soon want back some of their old laborers whom 46 per cent, of the whole number of persons laboring, to 39.6 per cent. In domestic and personal service, there had been a decrease from 20.1 to 19.2 per cent. While in the more desirable pursuits, professional service had increased from 3.5 per cent, to 4.2; in trade and transportation, from 10.7 to 14.6; and in manufacturing and mechanical industries, from 19.6 to 22.4. § 331 <^] Personal Property. 345 machinery discharged, and often more laborers stilL -„,,,, ... Yet while the introduction of labor- 331 (b). which, . tho of some harm savmg machinery has always been a at the outset, blessing to workmen so f a,r as they were consumers, in the early days of "the great in- dustry" introduced by steam, it threw so many out of employment that they had very little to consume. Steam-power did not directly lead to the change. More directly it was due to inventions like Arkwright's loom, Whitney's cotton-gin, and Stephenson's locomo- tive. But they could come only after other men of great ability had provided the steam-power. But however the great industry came, it suddenly produced so many more goods with so much less labor, that great numbers of people were thrown out of employment until the world got fitted to the new state of affairs. Not only was time needed for invention to supply new occupations, but there was scant communication and travel to get labor- ers new places: so the distress was very great. Many people thought that inventions were a curse ; and work- men, and even sentimental philanthropists, often de- stroyed machinery. The effect of these circumstances was that for a time the poor were getting poorer from lack of employment, and the rich richer from the profits of the machines. This started the cry of "the poor poorer, and the rich richer" which became one of the stock expressions of Marx, Lassalle and their school, and is echoed, despite all new facts, to this day. The old facts were even so bad that Marx promulgated an alleged "bronze" (generally quoted as "iron") law, that wages will always be the lowest on which wage- earners can subsist — a law often quoted by agitators to-day, and approved by audiences with money in the savings-banks. But in the modern world, increased IfJof Jny^nlw!'' Communication and travel enable labor to circulate freely in search of new employ- ment when machinery disturbs old employment, and 346 The Protection of Rights, [i H^ ^ workmen are not now opposed to machinery as generally or as bitterly as they once were. Many of them more or less clearly realize three things, especially the first — that a cheapening of most things increases demand so much that often as many producers are needed with machines as without them ; second, that even if that does not turn out to be the case, the discharged people are apt to get work in making some new product or cheapening some old one; and third (tho it is realized more faintly than the rest) that the laborers themselves enjoy the cheapening of product, just as the rest of the com- munity does. So much for what the general progress of the world, outside of the man himself, can do for him. But even now, things do not always adjust themselves promptly enough to save the poor man the choice between getting nothing at all, and getting half what he produces. His only protection against being forced to take what he can get, is not to be poor; and he can help being poor by putting away something whenever he wealth^ hTmself^"'^^^ ^^^ Spare it. Then he or his union can say to anybody who wants to hire: "If 332 (a), by fore- - >/ • 1 - 11 a handedness you won t givc what wc really produce, tmes^ '^^^'^ we won't work at all, and you won't have any chance to make profits." Yet a man would better take a little less in bad times, than go unemployed, especially as, in one sense, he cannot pro- duce as much in bad times as in good. Of course a cloth-mill can run out just as many yards of cloth in bad times as in good, but it will not have the chance to run out as many, because most things will not sell for as much, and some will not sell at all. At first it looks as if it should make no difference to a man if his own product falls in price when other things 332 (b). in which ^^^^ "^OO' ^.ud that if he only gets one dollar prices of necessi- where he uscd to get two, but can 'buy ties tend to keep , . ■, . . -, i 1 . 1 11 1 • • 'j up, while those of tv/icc as much With that dollar, he is just luxuries fall. ^^ wqW off. But whcu priccs fall in bad times, they do not all fall together. When people have § 7)^2 c] Personal Property. 347 to economize, they cut off the things they can easiest do without : so prices of those things fall ; but the prices of things a man must have, keep up pretty well, and for them he must pay two dollars where he paid two before, even if he gets but one dollar for the sort of things he produces himself. Now those things that a man can do without, are a larger portion of what is produced, than generally realized. Civilization consists almost en- tirely in things (and thoughts) that a man can do with- out. The savage has all that a man must have. Even take tobacco and w^hiskey — not that they are civiliza- tion, but they are things that people can do without, and yet they cost the country more than bread and meat put together. So, plainly, there must be other things that people give up easier than tobacco and alcohol. For instance, people can generally be com- fortable for a time without new clothes or new furniture, or repairing and painting, or giving parties. When business is slow, as it is in luxuries in hard times, people compete for customers by lowering prices, and w^hen times are good, people want so many more things, that the supply is apt to be a little short, and they compete for them by bidding higher prices. And now we come to the great and terrible question: What can he who has not the ability to produce much, do for himself? 332 (c). By cuiti- The first step toward a reasonable answer vating Ability. jg ^q realize that the question is partly one between him and the God who made him as he is; and it is also partly a question between him and him- self: for unless a man is an idiot, he can do something to cultivate ability. Ability consists largely in knowl- edge, foresight, self-control and energy — a man can edu- cate himself, think ahead, fight laziness, and control all desires that tempt him to seek a small present enjoy- ment at the expense of a greater future one. All this covers taking care of his health : for if he educates him- self in the most necessary knowledge — that of his own body, and does not sacrifice the future to the tempta- 348 The Protection oj Rights. [§ 332 c tions of the present, and is not lazy, he does take care of his health. There is not much danger from over- work; but there is much danger from overworry under the name of overwork. 333. Poverty sel- -^s a matter of fact, it is next to im- dom blameless. possible to find a man suffering from poverty, if he is educated, forehanded, self-denying and energetic. It is only in cases of very exceptional misfortune, that distressful poverty is not a man's own fault. But people want something more than to be merely above distressful poverty. And there is hope of a man born poor, cultivating so much ability that he can make himself very comfortable indeed. Most of the rich men were born poor.* Of course it is m^en'borrf pS hard to tell how much of their ability was born in them, and how much cultivated, but it is certain that more of their spare time went into studying their work instead of playing, and that more of their early sixpences went into the savings-bank instead, of the beer-pot than was the case with most of the men who did. not rise. This is by no means counsel- ing that nobody should have any recreation while he is young and poor. But the best recreations depitt^ealth. ^^ ^^^ ^^^^ much money; books, music, swims, and walks in the parks and fields and under the stars, are within everybody's reach, if they only would cultivate a taste for them. One should consider not his youth alone, but his whole life — how he will have the best time by and large. In youth, the * Mr. Walker (loi and 227, notes) found that in '78 there were one hundred and seventy-six men conducting ten leading kinds of manufacture in Worcester, and only fifteen of them were the sons of manufacturers, and all but the fifteen began as journey- men. (Condensed from Wells.) The author once got a city audience of workmen to announce what proportion of their employers began as journeymen. Nearly all did Tho such facts are too generally known to require proof, they are not taken into account by those who argue "rich richer, and poor poorer". § ^^6] Personal Property. 349 wiser men have invested work and study and savings which have brought them com^pound interest later ; while those who have indulged themselves unduly while young, had no rewards to reap later, unless sickness and poverty are rewards. 336. Wise philan- Nothing can answer the purpose of a thropy necessary more general diffusion of ability and to civilization. honesty, not even a more general diffusion of human charity: because Nature's law is that a man, to accomplish anything, must take care of himself. But charity can help if it takes the right directions, while it must hinder if it takes the wrong ones. The wrong ones are indiscriminate giving to those who would consume without producing, as the Communists and Socialists propose, The right ones are giving in directions that tend to develop ability. The plainest of those is educating the ignorant, and relieving the sick and hungry, especially such as are apt to try to produce for themselves when they are well enough. The sick and hungry who are not able to produce for themselves — the constitutional paupers, it seems settled that somebody else should take care of when their relatives cannot. It is often asked: Why should worth- less people be taken care of at all? Would it not be better to let them die and get rid of them? That is Nature's way, and is it not better to follow Nature? That might seem the common sense of it, but when Nature evolved human intelligence and human sym- pathies, she started a way with the unfortunates and incapables different from her old way of letting them starve; and, somehow, all the nations, like India and China, that do let their worthless people die, do not succeed in being worth very much themselves ; while nations like Italy and Spain that go to the opposite extreme, and give freely to beggars who could make a living if they would, do not come out so very much better. With them it is not so much a question of helping the unfortunate and incapable, as of encourag- ing the lazy. Such countries, of course, are full of beggars, and do not get on as well as the countries 350 The Protection of Rights. {i Z2>^ where everybody has to produce what he lives on if he is able to. 336 ra; It should After finding objections against all the continue on pres- revolutionary social changes that have ent lines. been proposed to help the poor, there seems nothing to do but what we are doing now, only doing it as much better as we can : civilization has been working at the problem some thousands of years, and must have learned something. Apparently all we can do for the lowest type of man is to wash him, doctor him, massage him, feed him, exercise him, make as much of a man of him as we can, educate him without devoting as much time to the most artificial spelling in the world as to some decent handicraft, and then turn him loose, if he is fit to turn loose, to be farther strengthened by the discipline of the world. As to the higher type of unemployed, the deserving and capable, there are seldom nearly as many of them as sympathetic people generally suppose. Most of the unemployed do not want to be employed. The "great problem of the unemployed" is ge'nerally only one form of the great problem of the useless and incapable, and with the improved adjustments of industry, it is becoming more and more so every day, or would be if strikes were restricted to reasonable cases. Yet there constantly are deserving men whom the shifts and accidents of trade are throwing out of employment. The effort should be to tide them over, of course, but (more effective still, tho, like all reform, slow) to educate them so that they will more often anticipate the shifts and accidents of trade. But not everything can be done by educa- tion. There are often highly educated doctors, lawyers, engineers, architects with nothing to do, yet education does help men: the educated generally have more fore- thought than men less fortunately brought up, and so are apt to have something laid up for a rainy day. For all classes of those who have nothing laid up — who if they ever had anything, have exhausted it, the Charity Organization Societies and Labor Bureaus are doing §336^] Personal Property. 351 excellent work — better than any government ever did or is apt to do. We cannot remedy at once all the defects that the wisdom of the whole world has vainly attacked for a good many thousand years. But we cannot afford to throw over all it has succeeded in doing, in favor of imaginative untried schem.es, especially if they do not hold together any better than those we have already examined. Of course the ideal is a philanthropy 336 (b). It should entirely spontaneous, but there is one con- help on\il those ^. , . -^ -.^ .-, 11,1 that cannot work, dition where govcmmcnt should take one man's property and give it to another: spontaneous philanthropy may not always be within reach, tho it is generally where a little sense can find it; but government is always at hand, and may properly support a man who really cannot support himself and has no relatives who can support him. While caring for the unemployed is very apt to mean caring for the deliberately idle, caring for the unemploy- able is already recognized as among the functions of the civilized state. And this care of the unfortunate should not be restricted to those barely able to keep them- selves alive, but should be extended, as far as it can be without doing more harm than good, to those unable to keep themselves decently alive. Human nature has not yet been universally, or perhaps generally, evolved beyond the point where the strong will take advantage of the weak ; and it seems as legitimate for the law to pro- tect the weak from robbery under the form of bargains, as from robbery under other forms. Of course the diffi- culty of doing so without lessening freedom of contract and a saving sense of personal responsibility, is very great, but the law's cautious experiments toward it should be steadily continued, and more caution still should be used against the acceptance of quack panaceas. Under our civilization, government protects without charge against violence and theft, and also assigns counsel to an alleged criminal if he is unable to pay for it ; but to obtain disputed rights, a man must pay for counsel 352 The Protection of Rights. [§ 336 6 and court costs himself. Hence, as far as the law is evolved, it has been not unjustly called a luxury of the rich, and even the rich often refrain from resorting to it on account of the expense. To relieve the special disadvantages of the poor in this respect, there have been formed in several cities. Legal Aid Societies, which for some years have been of great service in securing the protection of the law for persons otherwise too poor or too ignorant to avail themselves of it. There is a limit on what government can safely take for such purposes : it should not take enough to prevent lazy people trying to protect themselves, or to discourage able people from producing. We have paid much attention to the tl?/LawT'"^^ °^ hopeless absurdity of some pet schemes for helping the poor man by law. Yet law is far from useless to help the less fortunate masses of mankind. All good laws help everybody, and until the recent appeal to law by the strong against the com- bined aggressions of the weak, the evolution of law has been toward the protection of the weak against the strong. But there is a great difference between laws to prevent oppression, and laws to give a man more than he can produce, at the expense of somebody else. Such laws, so far as they can be made to work, would simply oppress the somebody else. True, where a man is living in luxury and idleness and selfishness, a little oppression for the benefit of less fortunate people „„^ , , ^ ^ mi8:ht be TOod for him, if it were possible 337 (a). Cannot . .a i . i • • i_ • discriminate be- for the law to Dcgm Oppressing nim, tween people. ^ithout going farther and oppressing the wrong people, ^-o „ , Not only does there seem to be something 338. Benevolence •-,.,, -1 J^ j_ i_i does not prevent ac- m history to snow that a reasonable com- cumulating wealth, passion for suffering, even if the suffering comes from a man's own weakness and fault, helps peo- ple who feel it, to get ahead; but other facts besides the progress of the benevolent nations, look as if the habit of being benevolent tends to enlarge Ability. Many of §339] Personal Property. 353 the richest men are benevolent, and get rich and stay rich, in spite of all they give away. At first it looks as if it might be safe to take away from a man all that he might have over a reasonably good living, but it would stop the usefulness of such men as Vanderbilt and Stewart just at the time when they are giving employment to most people, and doing the most to make everybody's money go farther. Even if a man is getting rich by the sort of speculation ■ ^^^^ ^ '°"' which is about the same as robbery , it would be impossible for the laws to select the kind of speculation any better than the laws against fraud can select it. Yet there is good reason to hope that the laws can gradually be improved. But there is much more honest speculation than fraudulent speculation, and it saves the community a great deal of money by anticipating changes and pre- paring for them. It is like springs on a wagon. If speculation is by deceit and monopoly, of course all ill-gotten gains should be restored, but it is not so plain that they should be confiscated to public use if the robbed person cannot be identified; and success- ful new laws to make it easier to prove gains ill-gotten than the present laws do, can be only, as the present laws are, the product of slow growth. It is often asked : If a man is not active either in pro- duction or speculation, but is merely living on a for- tune which may have been justly earned, but in fact was not earned by its possessor at all — for which he never gave the community any return, why not relieve him of that excess which does him no good, and put it where it will do some? The law could not go into such fine questions as the amount of good it does him, or he does with it. But even suppose the question ' ' lumped " : if a man spends a great superfluity even in the best of the selfish wa^^s — in fine decorations and other works of art, rare books, and all that, why not let the community take that money and spend it for the same things, so that many 354 The Protection of Rights. [§339 men would enjoy them, instead of one man and his friends ? 340 L w cannot ^'^^ ^^^ reason, the community would regulate wealth probably Spend it very badly. Tammany ^'^^^' taste, and even Congressional taste, are not good, and even that of the Army of the Tennessee regard- ing statues has been questioned. There is,, however, a better reason, al- llmi% AbUitT ready partly given. Such fortunes, even if wisely devoted to the public good, would not begin to benefit the public as much as do many of the efforts of enterprisers which would not have been called forth if the enterprisers could not leave their for- tunes to whom they please. Enterprisers would be apt to stop in mid-career, if going on involved accustoming their children to habits of living which they could not hope to keep up. When a great enterpriser is at the height of his powers, his ambitions for himself are apt to be satisfied. His usefulness is kept up to increase the share of his production which he can leave to those he loves. When we were discussing the general principles of rights and duties, we concluded that there is a certain balance in things. And it would seem to require that 341. Duties of while the world is at work, every man wealth. should do his share: and as a man who has great powers or great opportunities, gets much more from the world than mere government conveni- ence and police protection, — much more in the way of honor and ease than his money pays for, he conse- quently owes the community something more than merely his share of the ordinary taxes. But while we admit that the great enterpriser does his share of the world's work when, in addition to pay- ing his taxes and being reasonable in his charities, he finds work for his less able fellow men, and conducts his enterprises honestly and liberally; the rich man who is not an enterpriser certainly has his duties too, especially in a country suffering, like ours, from having in political office too few men who are so rich that they § 342] Personal Property. 355 "can afford to be honest". A few such men are too o>,. , , / ,-*■ modest (wisely so, in some instances) to Z^\ (a). In politics. ^ ^ \^\. ^ r .^ r^ take omce, out most of them prefer to amuse themselves, all of them hate to associate with the low type of politician we sometimes elect, and — per- haps the strongest reason of all — our people are not fond of electing rich men of leisure, unless they started in the ranks; and, even then, in too many cases, unless the candidates are ready to pay for it. They should not pay for it, because there is enough bribery of bosses and of voters already. True, to be useful in politics, a man need not necessarily take office: he can study politics and public men so as to know good from bad, he can support the good and oppose the bad, and help educate the people to do the same. 341 (b). In charity "^^^ there are other ways than politics and education or in which a man of leisure can reciprocate even in sport. i x xi -j^ • ^ • r ^ • what the community is doing for him — • there are all sorts of charitable and educational and artistic institutions, and necessities for new institutions, that need his time even more than they need his money. , , If the best he can do and all he can men'peculia'rfy^b'- ^o. is to amuse othcrs while he amuses dulv"^ °^ P"'^'"^ himself — in horse-races, yacht-races and similar amusements, he cannot be regarded as useless, even if he does not avoid the palpable danger of such sports. But compared with other countries, America does not get her share of service in politics, charity, education, public improvements, the arts, and even amusement, from her men of leisure: in older countries, such duties are matters of course in the edu- cation of the more fortunate classes. But here, as we are all free and equal and govern ourselves, our need of a class to attend honestly and energetically to politics, is much greater than the need in the older countries : we govern ourselves very badly. Tho the Old World sometimes sends us a Carl Schurz, a Godkin or a Franz Sigel, we are still the dumping-ground for its refuse population; and we have no class of hereditary poli- ticians and men of public spirit, and no long and 35^ The Protection of Rights. [§342 wealthy past sending us a rich inheritance of charita- ble, educational and artistic institutions. The Ameri- can man of leisure who satisfies himself by merely giving money, neglects his other duties, and devotes himself to mere selfish sports and luxury, is just as much more blamable than the European one, as our civilization is younger and less developed than the European one. A man, rich or poor, anywhere, who does 3.43.^Use^ess not do his fair share of the world's work, "dependent", is simply one of "the dependent classes " — he depends on others while giving no ade- quate return. His money may be in one sense an ade- quate return, but unless he made it himself, he is merely dependent on the man who made it, whether that man be alive or dead. Dependence does very well for women and children, but it is disgraceful in a man. No American has surpassed in wisdom or benevo- lence, the one who summed up this whole subject of the distribution of wealth in the following winged words : "Wealth brings with it its own checks and balances. The basis of political economy is non-interference. The only safe rule is found in the self-adjusting meter of demand and supply. Do not legislate. Meddle, and you snap the sinews with your sumptuary lav/s. Give no bounties ; make equal laws ; secure life and property, and you need not give alms. Open the doors of opportunity to talent and virtue, and they will do themselves justice, and property will not be in bad hands. In a free- and just commonwealth, property rushes from the idle and imbecile to the industrious, brave and persevering." — Emerson. BOOK II. THE PROMOTION OF CONVENIENCE. CHAPTER XXIV. PRELIMINARY SURVEY. So much for government's protection of rights. We saw that its other general function is the promotion of the people's convenience. Yet while we have been dis- cussing the state's relation to rights, it has come in our way to touch upon some conveniences — when we were treating of natural monopolies, we mentioned roads, bridges and ferries, railroads through country and city, water and gas supplies, sewer connections, and the development of extraordinary mines, springs and scenery. As we know, some of these things are objects of attention by all civilized governments. So are many other conveniences — chief among them, money, educa- tion, postal service — which in Europe often includes the carrying of telegrams and packages — surveys and maps of the country, harbors well dredged, protected and docked; lighthouses, coast life-saving stations, parks, museums, libraries, almshouses, asylums and hOvSpitals. The things enumerated in this paragraph are provided by all civilized governments. Some govern- ments also provide superintendence of public health, electricity, gas, public baths and lavatories, pawnshops, 357 358 The Promotion of Convenience. concerts, lectures, houses for the self-supporting poor, and cemeteries. These things are not generally gratuitous, however, even in the sense that taxes pay for them: persons using money, railroads, mails, harbors, water, light, cars, ferries, houses, and cemeteries for their dead, generally pay for them directly. A century ago, hardly any government took care of any of the things named, except money, roads, light- houses, harbors, and, in a very limited way, mails and parks. Even then the parks were hardly public parks : they were rarely more than the pleasure-grounds of rulers and rich people, occasionally thrown open to the public. The great parks which everybody can en- joy at all times were almost unknown. Regarding some of these conveniences, great differ- ence of opinion prevails as to whether government should supply them, or leave people to do it for them- selves. As to those that all civilized governments supply, we may as well consider debate closed, at least, as regards the wisdom of government supplying them. But even of them, there are some on which there is great debate regarding what kind and how much, especially regarding money, treatment of the defective classes, roads in their new forms of railroads and street railways, and sundry minor matters. CHAPTER XXV. MONEY. General Considerations. ^ We can begin with a topic that has, at least, one easy side. Of all the items enumerated, probably the earliest supplied by government, and the one where government agency is most taken for granted, is money. The use of our spending any time now on money ques- tions may be doubted, as it may be claimed that the Act of March, 1900, (not to speak of the elec- tions in November of that year and in 1904,) dis- posed of them all, as far as this country is concerned. 344. Reasons for But Mr. Bryan's followers did not seem to studying money, think SO, nor does the Honorable Tom Watson. Money questions will never stay disposed of, as long as the vast majority of mankind are of low produc- ing power and low intelligence. So long, men will try to better their condition by tricks with money, land- tenure, government control of production, frequent strikes — all of the old schemes to get something out of nothing, but with hosts of new faces. Moreover, another reason why the Act of 1900 did not finally settle all the questions, is because it did not touch them all, as we shall see. For three reasons, it is very important for the citizen to understand the government's relation to money. First, because meddling with money questions by the ignorant has caused this country and most countries some terrible disasters — this country, perhaps, worst 359 360 The Promotion of Convenience. [§344 of all, because here the ignorant have most to say. Second, because money questions come more directly home, literally to each man's pocket, than any other questions which governmient affects. Third, because, for that very reason, people are apt to suppose they know all about money questions, and are therefore less apt to leave them, than questions of the post-office, the coast-survey and lighthouse board, and the admin- istration of war and justice, to be settled by people who really know. Even the administration of justice is hardly a more important government function than issuing money. True, justice is more important in a general sense than money: but nothing works more against justice than ignorant tampering with money. Money touches every man, while not one rnan in fifty ever gets into court; and when he does, he soon finds that he does not know anything about law. But nearly every man has a little money, and so seems to think he knows all about that; and apparently, if he has none at all, he is still more apt to think he knows all about it. 345. Barter and Now, to begin with the simplest aspect ■^on^y- of the subject, if there were no money in the world, and a farmer wanted a hat, and his wife a frock, and his child a pair of shoes, he would trade off for them at the store a load of potatoes or any avail- able thing he might have. The usual name for such dealings is barter. It is customary only before people become civihzed enough to have money. Yet the farmer might go around long before finding a shoe- maker who wanted just potatoes enough to pay for a pair of shoes, and a hatter who would take just potatoes enough to pay for a hat, and a dry-goods man who wanted just potatoes enough to pay for a frock. More- over, as the city storekeepers do not generally bother with such dealings, the farmer might spend a week, perhaps, without finding one who would. They would all laugh at him for asking them to. Still, of course all this trouble would be necessary § 347] Money — General Considerations. 361 only if we had no money. Now as we have money, the farmer naturall}?- takes his potatoes where they buy potatoes, and then takes his money where they sell shoes or hats or frocks. So the mere fact that we have money, would save him as much troble as, probably, his potatoes cost. On considering this in regard to all sorts of dealings, one gets some idea of the very great usefulness of money. 346. Swindling by Suppose, tho, that our farmer got paid in '"°"6y' poor money? then he could not do any- thing. But as any man giving another poor money de- ceives him and robs him, what is to be thought of a man who tries to make all the money in the country poor? Plainly that he would attempt the greatest fraud that can well be conceived of, and do a frightful deal of harm. And yet at the height of what we Americans fondly believe to be the highest civilization yet attained, many well-meaning men have attempted that gigantic fraud, from ignorance; and many others from dishonesty. 347. Kinds of In the United States we use many '^o"6y' • kinds of money — paper, gold, silver, nickel and copper. The Chinese, Spartans and a good many other nations have had iron money. The American Indians used wampum for money; and they also, as well as our New England ancestors, used discs of shell. The fur-traders near our northern borders, and many other people, have used skins. Tobacco too has been used, and so have wheat and corn; and in Africa, cattle and even slaves have been used as money, and called live money, as distinct from other kinds, called dead money. We give all these things the same name — money. Now all things that can have a name in common, must have at least one quality in common, but they need not look alike, any more than all things we call food look alike. The very different things we call food, can all be e^-^en, and will all help keep the body alive. 362 The Promotion of Convenience. [§34^ 348, Qualities of ^<^ ^^^ "^^^ things that have been called all money. money, have the quality in common that wherever one of them is used as money, people will give nearly all other things for it. But some people will give nearly all other things for a check on a bank, or a promissory note. Yet they are not money, because people generally will give other things for money, while for checks and notes, other things will not be given by people generally, but only by people who know all about the checks and notes, and have confidence in them. Another difference is that if a check or a note turns out at any time not to be good, the person who last received it usually has a right to demand that the per- son who paid it shall make it good : that is one reason for wanting to know if the person signing is solvent. But if money is what it appears to be when it is paid, the debt is discharged once for all. If, for instance, a bank breaks, or a government is overthrown, those who have any of its money cannot require the people from whom they received it, to make it good to them. Of course counterfeit money is not included in this condi- tion : counterfeit money is not money at all — not even bad money, any more than a portrait is a person. But real money may turn out bad : government notes are real money, but they w^ould be worth no more than paper if the government did not pay them. So a silver dollar of the present weight is real money, but it would be worth but fifty cents if the government would not give a gold dollar for it. So bad money can be legal tender, and a man be legally obliged to take it : the treasury notes now in circulation are not good money, because they are not expressly payable in gold, yet they are legal tender; and bad money was made legal tender all through the civil war, and for years after it, until in 1879 government made the money good by being ready to give gold for it. When a creditor accepts a legal tender as^LegaffenTer!^ (2IO-2EO h) the debtor is legally free from farther liability, even if the money should turn out bad, unless it is counterfeit. § 352] Money — General Considerations. 363 Now we are ready to pack our characterizations of money into a portable definition: 350. Definition Money is anything for which substan- reached. tially all the people in a community will part with anything they are willing to dispose of, and which dis- charges forever the debt for which it is received. Broadly considered, money is simply power con- veniently arranged in units. A hundred dollars is a hundred units of power controlling most of the things that men generally care for. After men have enough money to satisfy all material and aesthetic wants, they crave more because they want more power. The great bankers^ often control the policies of nations. But it should not be forgotten that the great philosophers control them more often, and for centuries after the bankers are dead. Usually the most noticeable difference buys less than good, between good and bad money is that for anything they have to sell, people want more bad money than good money. For instance, when our New England ancestors began using discs of shell for money, at first people would take a few of them as pay for ordinary purchases; but soon, so many discs were made that nobody would sell a thing for any amount of them. The same way during our great civil war: people North wanted at one time nearly three green- back dollars for a thing that they would take one gold dollar for, and people at the South wanted a hundred Confederate paper dollars for anything they would sell for one gold one, and at last they would not sell things for the paper dollars at any price. But people sell the same thing now for a United States paper dollar that they will sell for a gold one. These great differences in the value of oaper nfdney'." paper dollars have arisen because the value of paper dollars depends upon the chance of getting gold ones for them. A note of a govern- ment or of a bank has no magic about it, any more than the note of an individual, even tho the government 364 The Promotion of Convenience. [§352 note does have more pictures over it, and the pictures do fool the ignorant. It is but a piece of paper contain- ing a promise to pay, and all its value beyond that of the pictures, is in the reliability of that promise. Now you can get a gold dollar for a paper one at any moment. During the civil war you could not, and it was very uncertain when you could; and the value of the paper dollar varied with that uncertainty until at times it was but forty cents in gold. The uncertainty was greater regarding a Confederate paper dollar than a Union one: so the Confederate dollar was generally worth less than the Union one, and finally it became certain that you never could get a gold dollar for a Confederate paper one, and the paper ones were worth- less. Tho a paper dollar is money, people often prefer a gold one, not merely because a paper dollar will soon wear out, but especially because, if a paper dollar should not be useful as money, it cannot be put to any other use worth a dollar. It would only be used as a picture, generally a pretty poor one, or as paper pulp to make new paper, and it is not worth a tenth of a cent for that purpose; while the gold in a gold dollar can be put to a thousand uses, any one of which is worth a dollar — in short, a gold dollar is worth a dollar, and a paper dollar is worth nothing except as a promise to pay a dollar; and how much that promise is worth, depends upon how likely it is to he kept. 353, Fiat Money, Money of no intrinsic value is called Token Money. fl^t money: fiat is the Latin for let it he. Fiat money is money only because the government says: "Let it be money." It is also sometimes called token money, just as a gambler's counters are tokeris to be redeemed in money valuable in itself. 354. Redemption Money valuable in itself, which redeems ■^""ey- fiat money or token m.oney, is called re- demption money. A gold dollar will be taken almost anywhere for about the value of so much gold, because somebody near at hand can use it as so much gold. § 354] Money — General Considerations. 365 But a paper dollar will not be taken at full value in a country where it was not issued, because nobody can use it there for anything but old paper, and it must be sent home for redemption. If you were in London with a pocketful of greenbacks and nothing else, you could not buy anything until you had hunted up a dealer in foreign money, and sold him your greenbacks at enough discount to pay him to send them here and get the gold back. Even if you had American gold, instead of greenbacks, the shopkeepers would not generally take that, but you could find ten people who would, to one who would take greenbacks. Only a few special dealers would buy the greenbacks; almost any banker or large shopkeeper would take the gold, tho at a discount, but a very trifling one compared with that on the greenbacks. Within a block, somebody would be ready to put the gold into the melting-pot and use it for making jewelry or gilding or something of that kind; or the English mint would take it and coin it into their money. But nobody could do anything with the greenback except send it to America and wait for the gold, and pay expenses both ways. Therefore, paper money never could be quite as good as gold money for foreign trade. CHAPTER XXVI. MONEY (continued). Some American Experience. 355. How paper ^^ already said, during the civil war, money cheated greenbacks became worth only forty cents creditors, ^^ ^ dollar, and a result was that if, when the war broke out, a man owed a dollar pay- able in two or three years, he could then make his creditor take forty cents for it. That was just what hosts of people did, and what hosts of people, during the Bryan campaigns, wanted to do; and still want to do, by getting a chance to pay irredeemable silver dol- lars where they have borrowed gold ones. During the war, the transaction was somewhat disguised by the pieces of paper being marked as worth dollars, and people began taking them before they began to depre- ciate. Moreover, it was not the fashion to speak of them as going down in value, but of gold as going up ; and what was more important, people endured it all cheerfully, so as to enable the government to use the bad money to carry on the war. The government made bad money, partly because most of our rulers at that time had had little occasion to study finance, and knew no better. Government needed money at once to pay the expenses of the army. So, rather than incur the delay and expense of borrowing, they thought it the simplest thing to issue promises to pay, which were our present greenbacks or their ancestors. As this money was legal tender, and people had to 366 §357] Money — Some^ American Experience. 367 take it, a little explanation may be needed to show how it could get bad. People did not need to sell 355 (a), and things for it unless they got their own mised prices. prices. Therefore, as government kept on making more of it, and people began to lose con- fidence in it, they put up prices, including the price of gold, so that a man who wanted a gold dollar to 356. " Never mind V^J ^ • n a 1 trade.balance experience, isusmess conndence began to supp les gold. appear again in 1898. Despite the danger- ous state of the law, two causes sent us enormous quantities of gold : our manufacturers had begun to sell increasing quantities in Europe, and we had enorm.ous crops in '97 and '98 which a scarcity in Europe compelled people there to pay us high prices for. These agencies filled our treasury so that it seemed safe against any accident in sight. But suppose our crops were to fail for a couple of seasons, and Europe were to have good ones, or find good ones in Asia, Africa or Australia ; and suppose, too, that Germany, with her splendid technical education, were to drive our manufacturers out of Europe, our gold- 369 But th t supply would probably run down to the cannot be depended point where Mr. Cleveland had to sell bonds "'^°"' to increase it, and we might be rushed again to the brink of national bankruptcy — or over the brink. But we have now a defence against that, in the Act of March 19, 1900, which declares it to be the country's policy to pay gold, and provides by legislation the means for doing it which Mr. Cleveland took the respon- sibility of providing himself. Yet tho that act declares 378 The Promotion of Convenience. [§369 it the policy of the country to keep all its money on a par with gold, it does not prescribe any method for doing so, or put the responsibility for doing so on any- body's shoulders ; it leaves room to pay in silver, current expenses of the government averaging over $1,500,000 a day, and $700,000,000 bonds, principal and interest, and fastens no responsibility to redeem that silver on anybody. A secretary of the treasury could do it if he wished, or he could find abundant pretexts for not doing it. A President could order him to do it or not to do it. What is of more importance : any declara- tion of Congress can easily be set aside by a future Con- gress, if elected by the people to do so. Despite the Act of March, 1900, the Democratic nominations later in the year threatened as much as those of 1896. They distinctly interrupted business, but the enormous re- vival after their defeat, shows that at least the people able to conduct business, at last understand the matter. The election of 1900 confirmed the favorable outlook, and in that of 1904, money questions were no longer a distinct issue. But they are apt to crop up again, espe- cially when the hard experience we have recounted grad- ually drops out of memory. The silver craze was not the first time that people have attempted to get rich in some such way, nor will it be the last. The ignorant are all the while trying some such decep- 370. Light-weight tive Scheme for getting rich by magic, aellf scheme! "^ Soon after the war, when it was proposed to pay off the greenbacks, and even when the confidence that they would be paid had brought them back to even value, from a value of forty gold dollars for a hundred greenback ones, there were still people who objected to having the greenbacks paid, and wanted enough more issued to fill evey man's pockets. There was no explanation of how these people expected to get the greenbacks into every man's pockets, or of why they would not be as well off if they would set to work and get a corresponding amount of gold into their pockets. Work did not enter into their calculations. They had a thousand schemes, all §37o] Money — Some American Experience. 379 of which disguised some plan for really making the government give greenbacks to all who wanted them; and of course they did not realize that doing so would make the greenbacks as worthless as the Colonial and Confederate money. CHAPTER XXVII. MONEY (continued). Needs for the Future. Despots have sometimes made themselves rich by debasing the currency and making the people take it at full value; but not often, if ever before, have a people thought, like many of ours, that they could get rich by debasing their own currency. Of course the best safeguard against all such schemes among the people, is not to have ignorant voters. But probably 371. The best ^^t many men in America — white men at safeguard. least — will ever be deprived of their votes. So our only way of having no ignorant voters is to educate them so there will be no ignorant. What most needs to be taught about money, is that there is no way to make a dohar good for a hundred cents' worth of anything else, but by putting a hundred cents' worth of something into the dollar itself, or by being ready at a moment's notice to give a hundred cents' worth of something for it. These methods are not equally convenient : for it is much easier to handle considerable amounts in paper than in coin, or to handle a silver dollar holding only fifty cents' worth of silver, than to handle one twice as heavy. Nor are the two methods equally safe. Silver prob- ably deceives more. Perfect safety lies in having the full value in the dollar itself: then no misfortune or foolishness or rascality can depreciate it. After all, there 380 § 374] Money — Needs for the Future. 381 372. The safest is no absolutely safe material for money, "^o"ey. because new discoveries may reduce the value of gold itself; but gold is the safest there is, and safe enough for ordinary practice. But, as already suggested, that would make handling large sums so inconvenient, that the world is agreed to sacrifice ideal safety for real convenience. Balancing the conA^enience of paper money or light silver money, against its dangers, what is the best money depends on a good many things. Silver has 373 P b tt some intrinsic value, which the paper has than light-weight not, and it has vastly more durability; ®''^®''' but on the other hand, the lack of dura- bility in paper does not count for much, as it is easy to issue a new note for a spoiled one. But the very fact that silver has some intrinsic value, confuses igno- rant people, and even tends to make them dishonest. Paper is really much more honest money than silver: nobody can take it for anything which it is not. The use of it in this country has brought great losses and disasters, but the country has learned a great deal from them. The people could not long have been fooled with paper as they have been fooled with silver. Paper has not brought any trouble in England in recent times; but there, ignorant people are much more under the influence of people of education than they are here, and England has no paper money under twenty-five dollars. Probably if there had been no green- fa^rg'e ^flls!^ '" backs under twenty-five dollars, most of the people who made trouble about them after the war, would have known so little about them that there would have been no trouble. Even if the money-schemes for making everybody rich, are started for selfish reasons by able men, and even if such men are able for a time to fool a few other able men new to the subject, the schemes depend for their principal following upon the people who have too little judg- ment to see twenty-five dollars often. The only thing to make our paper silver certificates safe under all 382 The Promotion of Convenience. [§375 probable conditions, is to put a dollar's siiver?er?iifc^a?es, worth of silver into the silver dollar, and call in all those which contain less. Simply to take away its legal-tender character, would con- tract the currency and destroy confidence, so that many people could not get money enough to pay their debts, and much bankruptcy would follow. It would contract the currency by two temporary strictures: first, people would be slow to accept silver dollars or silver certificates : so they would go to the treasury for redemption. Next, as the treasury is not at all likely to have enough other money to redeem them, it would have to pay out bonds to meet part of them, and the currency it would take in place of bonds would make just that much less for business use, until it should be paid out again. It would destroy confidence, be- cause, the treasury gold supply being gone to redeem the silver currency and certificates, the treasury would be in the condition of a man without money in his pockets or in bank. He might need it before he would have time to borrow it, and, if everybody knew his plight, would probably have to borrow at heavy ex- pense, as Mr. Cleveland did. To redeem the silver currency in new legal-tender greenbacks, would meet most of the difficulties, if government had gold on hand to pay the greenbacks as wanted. But there is a difficulty that it would not 376. Objections nieet : the use of greenbacks keeps the to ail government government in the banking business, and "°^®^' as long as it is, the money system of the country is under the control of politics, and subject to the attacks of the politicians which have kept busi- ness disturbed for over forty years, since government went into that business during the civil war. Yet government can be got out of the banking busi- ness without diminishing the volume of money, and so contracting the currency. The notes of private banks, properly regulated, could replace the government notes, and there is no objection to the government continuing to coin money (if it coins only honest money) as the Con- § 377 ^] Money — Needs for the Future, 383 stitution requires: so it is only necessary to provide for that portion of the money which is not coin, or, at least, not honest coin. The government mints can- not supply all the money needed, for several reasons: 377. Yet coin in- i^ the first place, prices depend on the sufficient, amount of money in circulation, and are now fixed on a basis of much more money than the coin ; to get back to coin by retiring the other money, even gradually, would contract prices so that a corpora- tion having to pay a million dollars' worth of bonds fifty years hence, would find a million dollars of its assets, at present values, fallen to probably a third of that price, while its debts would not have shrunk at all : that means inability to pay them. But instead of getting down to the coin we have, why not let government coin more, as fast as it retires light silver and its other bad money? Because the demand for so much more gold would raise its price, so that the farmer and manufacturer and miner and laborers of all kinds would have to give more of their products to enable the government to get gold — taxes would rise. Another objection 377 (a) and resulting from, or at least closely con- ineiastic, nectcd with, the last, is that currency only in coin is very inelastic. It is impossible- to buy much gold, especially suddenly, without raising the price (that is to say: making it exchange for more of other things) ; and conversely, it is of course impos- sible to throw much onto the market, in coin or in any other shape, without lowering the price (that is to say : making it exchange for less of other things) : so it would be very hard to keep a coin currency just equal to the varying needs of business. Moreover, an exclusively coin currency is extravagant. To have enough gold for active times, would mean to keep it idle in inactive times, and so lose interest 377 (b). and eats OTL it. Busiuess rcquircs an elastic cur- up interest rcucy : whilc Nature and men are taking their winter rest — no crops produced, little building and mining, little travel — there is little business, and little currency is needed. In the spring, as things 384 The Promotion of Convenience. [§ 377 ^ wake up, more is needed, and as fall approaches, and the farmer has to pay labor to gather his crops, and the dealer has to pay the farmer, and the rail- roads and merchants are busy with the crops, a great deal more money is kept in use. A mere coin currency cannot expand and contract to meet these conditions. An exclusively coin currency, then, is open to many objections that can be met only by a paper cur- rency. And yet the burden of our song has been that a paper currency is dangerous. But it is not dangerous if the people generally can be made to „^o f. . realize that it is: because then it would 378. Good paper , , -, r \ currency pref- be taken care 01. A paper currency is ^""^ safe if its promise to pay is certain; and dangerous only if, as in the civil war, it cannot be redeemed in coin when required. Beside the reasons already given for not letting the coin go into use at once, instead of keeping it to redeem the paper, is the very important one that experience has shown that it is safe, even in ordinary banking, to let out four dollars of paper for every dollar of coin in hand. If people know that the banker has a reason- able amount of coin and other value to meet the paper, not all of the paper would ever be presented for redemp- tion at once. People are like the Dutchman who got frightened and went to the bank for his money. As- soon as it was offered him, he told them to keep it: "Ven you got him, I no vant him: ven you don't got him, I vant him." It is not meant to imply that it is safe for a bank worth a hundred thousand dollars to issue notes for four hundred thousand: nobody should have out obli- gations greater than assets, but rather considerably less, to leave a margin for accidents. But if a bank has out four hundred thousand of notes, and no other obliga- tion, it can safely keep all of its property above one hundred thousand, in marketable bonds or good com- mercial paper or any other good "quick" (i.e., quickly sellable) security that will pay it interest. If it can lend four hundred thousand dollars, and get interest § 380] Money — Needs for the Future. 385 on it, by keeping one hundred thousand dollars idle in its vaults, that one hundred thousand will really be earning fourfold interest; and that, with the in- terest on the three hundred thousand in securities, makes the bank get interest on seven hundred thousand while it has a capital of only four hundred thousand. Out of this, however, it must pay expenses, and unless it manages well, it may have no profit after all. It may very naturally be asked: Why then should not all the people participate in this advantage, in the shape of lowered taxation, by keeping the government in the banking business of issuing notes? For the same reason that, as we saw (236 h, 236 c), lovermrient?* ^'^'^'^ government should not be put in the manufacturing business. It would leave to politicians with pulls, the work that should be done by men fitted for it by nature, and put in place by natural selection; and it would take away from the community the enormous advantage of having its banking done by such men under the stimulus of com- petition and personal reward. A word more regarding the elasticity of the paper currency. Of course the bank must lend this cur- rency in order to get interest on it. When the country is very busy, people will borrow it all; when business is dull they will not need it, and will pay their maturing notes, and the bank will have to take its currency back. Then, of course, it fails to gain interest on it, and on its idle coin too ; but the paper costs nothing. 380. Essentials of Notwithstanding all that has been said banknotes. "Wild- in favor of a non-government paper cur- cat' money. rency, the country has tried private bank- notes, and found them wanting. But this was largely because they were issued on the authority of individual states, and especially of some of the newer states, where political organization was very primitive, and the regulations were primitive and primitively enforced. If anybody proposes to put paper in general circulation, it is essential that it should be done under conditions 386 The Promotion of Convenience. ' [§ 380 to protect against general harm. Under the imperfect conditions alluded to, a great many notes were spread over the country without enough coin and other assets behind them to make them safe ; and many of the notes from the poorer and more provincial banks were so poorly engraved and printed that it was easy to counter- feit them. As a result, nobody knew whether most of the money offered him was good or not. People were constantly getting "stuck" with bad notes, as they sometimes are with pewter coin. It became worth while to issue frequent pamphlets — " Banknote Guides ", "Counterfeit Detectors", etc., etc., and every shop- keeper had to keep one, and before accepting money that he did not know well, turn to his pamphlet for description and advice. One of the good things blown by the ill winds of the great civil war and its depreciated greenbacks, was the disappearance of the old "rag money": they blew it out of circulation. Everybody understood a greenback, it was the same thing the country over — ■ well made (even if ugly) and hard to counterfeit. Tho it was worth at one time but forty cents on a dollar, people knew what it was worth without turning to a " Guide ' ' or ' ' Detector ", and soon it drove the private rag money out of existence. That, by the way, was an apparent (but only apparent) contradiction of the famous ' ' Gresh- am's law", that the worse money always drives out the better. But it cannot be gone into farther here. To summarize our conclusions regarding the country's needs. In the first place, there is always a need of plenty of money — more even, when business is brisk, than all the gold coin in the country. In the second place, it should be supplied under regulations from the United States Government, not the state governments, so that the money will be the same throughout the country. The regulations should be: first, secure a^sounnystem°^ ^^^^* nobody not of proved character and ability can start a bank of issue; second, that no more notes shall be issued than there are good § 382] Money — Needs for the Future, 387 quick assets (377 &) on hand for redemption of, at least one fourth of wliich assets shall be gold coin; third, that these notes shall conform to some good definite standards of workmanship — perhaps that they shall be provided by government; only, as we have seen and shall see further, we need to be very cautious in what we trust government to provide ; (The mere mechanical furnishing of these notes would not, of course, be "going into the banking business";) fourth, that a limit for ordinary issues shall be fixed, and all beyond that limit taxed so as to force their retirement when not really needed; fifth, that each bank shall have arrangements for redemption at several centres, so as to facilitate retire- ment; sixth, that government examiners shall visit the banks unannounced, at frequent intervals, to see that the regulations are complied with; seventh, that such penalties shall follow infringement of regulations as to make infringement extremely improbable. There are those who favor a single central bank of issue, as is virtually the case in England; but that does not seem adapted to our large country, and there are other objections which cannot be gone into here. Humanity is not wise enough and careful enough yet to make us sure that any arrangements are going to work perfectly; but under those suggested, the law of demand and supply would probably keep the currency as nearly adjusted to requirements as anything is at the present stage of human progress. If there were not enough, the demand for more would make profits great enough to tempt more people into issuing it; and if there were too much, the portion uncalled for would be retired, and the capital behind it be turned into things in more demand. Under present arrangements the bank 382. Basis^for an cannot issue more, because when there is e as ic currency. ^ demand for more, the only thing back of our present banknotes is United States bonds, which are admirable as far as they go, but they do not go far enough — there are not enou,8:h of them, and they pay very low interest; besides, if a bank wants 383 The Promotion of Convenience. [§382 to enlarge its circulation now, it must go through an enormous amount of red tape, including buying a lot of government bonds, and sending to Washington for notes, and waiting till they are engraved. While all this is going on, a panic could wreak destruction. It would therefore be well to substitute for United States bonds, all securities in the country that an able commis- sion (best, perhaps, appointed b}^ the banks themselves) should pronounce safe for the purpose (they would not be a very large proportion of the whole), such commission to revise its list at frequent intervals, and banks to shift their securities accordingly. Then to get the notes into circulation, it would only be necessary for any man who has the securities, to take them to bank and borrow banknotes on them up to within a reasonable ' limit of their face value ; then when his need is over, he could take the notes back and get his securities. Commercial paper of high quality would not be available to base the notes on, even tho there is more of it when business is brisk, and less when business is slow, because it would be very difficult to be sure that such paper, when offered, was for actual goods sold; and an elastic currency would lead to inflation of values unless it were carefully limited to a basis of actual property. So far as currency might be based on accommodation paper, it would, of course, be pure inflation, and might go on until it should collapse like an exploded balloon. But even if it were based on genuine commercial paper, the producer of raw material might get currency on the note given him by the manufacturer, the manufacturer might get it on his jobber's note, the jobber on the retailer's, and the retailer — a grocer, for instance, on the consumer's; so the same raw material might originate currency four times — on the notes received by the banks from the raw-material man, the manufacturer, the jobber and the retailer; value added by the manufacturer might originate currency three times — on his jobber's note, and the retailer's and the consumer's; the job- § s^s a] Money — Needs for the Future. 389 ber's service, twice; and the retailer's, once — an aggre- gate of ten issues of currency where there would be a sound basis for only three actual values accumulated — ■ the raw material, the manufacturer's, the jobber's. It seems therefore that a safe issue of currency based on commercial paper would be practically impossible. The retailer's note could not represent a value to base currency on: because even if the goods in con- sumers' hands are not — like food, actually destroyed, their commercial value as a basis for currency, is gone as soon as they are in consumers' hands. Even if they endure, like furniture or jewelry, they at once become "second-hand". 383. The farmer's In the foregoing analysis, by the way, "eeds the farmer's demand that he shall have a chance too, as well as the "bloated bondholder" — that currency shall be issued based on his farm, not merely on coin, or even on bonds that can be sold at a moment's notice on the stock exchanges, is counter to the requirement that the currency shall be based on quick assets. His land, or even a mortgage on it, cannot be sold for full value at a moment's notice, if there should be a run on the bank to redeem its notes in gold. This brings up the serious question of how to sup- ply the demand for money in thinly-settled regions where there are no banks — where, according to stories we hear, a man sometimes rides around a whole day in a vain effort to get a fifty-dollar bill changed; and a man on being asked if he could change a lwV!oof