Part 43

Industrial corporations afford ready means by which small capital and moderate men are compacted into a service quite beyond the range of individual producers. The difficulty has been that much dishonesty has entered into the formation of corporations, and that unreasonable power has been exercised by those who have had them in charge. The responsibility of a corporation to the community, expressed in a sound financial organization and in the relation of its officers to its stockholders, would in no way restrain the usefulness of these industrial agencies, and would make them wholly consistent with extended and equal opportunities in production. Immense wealth has often been acquired in connection with corporations whose usefulness to the public has been thereby restricted and the profits of stockholders disregarded. Nowhere is the eagerness of personal enterprise so tempted, nowhere does it display itself more 398 disadvantageously than in the large and oftentimes obscure undertakings of corporations. It is not in reduction of these agencies, but in behalf of their safe and profitable use, that the claim arises for uniform and well-regulated action. In large corporations, as in insurance companies, when the business itself has fallen into routine, extravagant salaries have been resorted to as a means of increasing the returns of officers. Oftentimes the plea for raising salaries is one which is self-propagating. Expenses have been greatly enlarged and the remuneration must keep pace with them. Yes, but will not this very increase lead to increased expenditure? Industrial corporations have been, in the present generation, a conspicuous means of production, but they have also conspicuously promoted a bad distribution of wealth, and so helped to promote irregularity and ultimate suspension in the productive process. There may never come a time in which the adventuresome capitalist will not magnify his own usefulness to the community, but there may come a time in which men shall see that the wealth of a few may be purchased at the expense of that general comfort which is the proper return of industry.

A possible rapidity in the acquisition of wealth inflames the speculative temper. We mean by the speculative temper, purchase and sale, not in reference to production but with the hope of making large profits independently of production. Speculation is an expression of a venturesome spirit which, in its impatience, lays light emphasis on the usually slow methods of increase, and promises itself a rapid road to success. This hope is often disappointed, and when disappointed carries with it a more or less extended retardation of business. When the annual losses by bankruptcy in the United States reach $200,000,000, the distress of those whose means of livelihood have been involved in this overthrow must become a very sensible factor. 399 Such a sum would, in its successful use, provide for many households.

The temper which goes with sanguine and unscrupulous methods is a careless, and often a cruel, one. The democratic notion of equality is overridden, is pushed aside as of no significance in the business world. The same persons who insist on an open shop, and give free play to competition when it depresses labor, regarding it as a familiar and convenient principle in determining wages, may combine with each other to control products and enhance profits. The general welfare, which is the controlling idea, is lost sight of or readily forgotten. They have one standard when they look out on the community at large, and another standard when they are preparing the way to make and hold fast their own gains. The directors of business come easily to think that the welfare of the community is identical with their own welfare, and that the enterprise with which they sustain their own affairs is identical with that on which the public prosperity depends. They readily come to the conclusion that their activity, so essential to the community, should be cherished by the community. How possibly can production progress without them. Discrimination in their favor is a short cut to the common prosperity. Men of comfortable means and the poor even owe what they have to the enterprise which scatters wealth everywhere. There is sufficient truth in this feeling, when not too boldly put, to hide its failures. The expenditures of the very rich in the purchases and exchanges they involve do carry a measure of advantage to all, but they also bear with them an unjust distribution, a luxury and a poverty, which weaken the unity and sap the strength of society. It is the very gist of democracy that each man shall count one; that in spite of the diversities and the advantages among men they shall still remain units of the same value in the freedom and propagating power by which the gains of the race are stored. It is neither identity nor 400 arbitrary difference that is admissible, but every man and every class of men carry with them the potentialities, the social and spiritual possibilities, which are the germs of historic development. This is the principle with which all petty social distinctions and all civic tyrannies have been at war.

While, therefore, the evil of monopolies may appear in various forms and be met in different ways, they cannot be permanently removed except by social conditions which equalize opportunities and compel wealth and power, in all their activity, to conform to general safety. Production in all its forms and in all its agents must be subject to that temper of fairness, and come under those principles of equal rights, which bind the parts of the community together, and make them one producing and one enjoying agency. Every assertion of settled superiority in persons, classes and races must be set aside, and the world in its physical, intellectual and spiritual wealth be left open to all. Thus history has treated men, and is more and more treating them, in their claims to consideration. This birthright of men is not to be denied or stolen; for they who steal it have nothing more than this same birthright to plead in extenuation, the combinations which look to the defense and extension of these original gifts are in order, and all combinations which carry them beyond the bounds of their own territory are another outbreak of anarchy.

The soundness of this assertion has been recently exemplified in the history of Pittsburg. Pittsburg is the center of an industry which has come, perhaps more than any other, under the domination of a few leading men. In the Homestead strike they succeeded in dealing a heavy blow to workmen in their efforts to secure something like a fair hold on production. A little inquiry into a community built up for a few and ordered by them discloses conditions quite at war with general well-being. Wages are kept down by the constant presence of the unemployed: the accidents of a dangerous occupation are left to fall 401 upon workmen; the health of the community suffers great neglect, the remonstrances of workmen are met with the response, If they do not like the method let them quit; and the general good order and comfort of citizens receive but little attention. Here is an object lesson in which work, sure, skilful and unflinching; wealth, eager, unscrupulous and unsympathetic, have divided the world between them; no right gained, no power lost. Men may make wealth under these conditions, withdrawing it from the fitting returns of labor, but they cannot, wise as they may be or generous as they may seem to be, restore that wealth to the community in a form in which it will subserve the same living purpose it might have subserved if it had never been withdrawn. The life of a community is achieved where its activity is most intense and constant. Failing in our service at these vital centers, no extraneous effort will cover our fault. We might as well draw sap from a tree and then pour it out on its roots.

We have now given three constitutional remedies for the want of employment. The first is a more equal distribution of the rewards of production, thus making the demand for products as extended and uniform as their production. The second is increased restraints, especially in connection with corporations, in the action of the leaders of industry, rendering them more amenable to the wants of the community to which they belong. The third, arising from the other two and supporting them, is more unity, more harmony between the several agents of production.

There was a report not long since in England of an industrial commission, which had given protracted attention to the irregular demand for labor. The remedies offered were chiefly palliative. It may be thought that this form of cure is all within our reach; that what is here offered as constitutional correctives are beyond our power. There is some truth in the feeling, and would be much truth in it, 402 were not the actions and the sentiments now enforced under urgent consideration for reasons of public welfare, not directly involved in unemployment. We cannot expect to remove so grave an evil as this, the wavering demand for labor, short of some important change in the organization of society. Society is a structure of so many and such delicate dependencies that its perfect action must include the general integrity of the current relations between men. Unwholesome results of frequent recurrence are the most direct proof of an unsound system. Palliatives may soften the evil but cannot overcome it. We should aim immediately to reduce the difficulty and ultimately to remove its causes.

QUESTIONS IN BUSINESS ADMINISTRATION. 403

BUSINESS ECONOMICS.

The Modern Industrial System.

1. Describe the three-field system of agriculture. Page 2.

2. What were the significant characteristics of a manorial society? Page 2.

3. What is said to justify the institution of private property? Page 4.

4. What is competition in modern industrial life? Page 4.

5. Why has the name “capitalistic production” been applied to modern industry? Page 6.

6. Compare the domestic system of industry with the factory system. Page 7.

7. What are the fundamental conditions of our economic life? Page 8.

The Agricultural Resources of the United States.

1. What has been the policy of the Government in its disposition of the public domain? Illustrate. Page 9.

2. What has been the unique and characteristic feature of the land policy of the United States? Page 9.

3. What has been the result of the land policy of the United States? Page 10.

4. What was the first effort toward the solution of farming in the arid soils of the West? Page 10.

5. Explain what is meant by dry-farming. Page 11.

6. How do the farms of the United States compare in 404 size with those of European countries? To what is this difference due? Page 11.

7. What does the movement of the population from the farm to the city indicate? Page 13.

8. What change in method is agriculture undergoing in the United States? Give the reason for this change. Page 14.

9. Discuss the cereal production of the United States. Page 15.

10. Upon what question does the future of the cotton production depend? Page 17.

11. What movement is now put forth to aid in the preservation of our forests? Page 18.

The Mineral Resources of the United States.

1. Into what groups may the natural resources of a country be divided? Illustrate. Page 19.

2. What two answers are given to the problem of the conservation of a limited supply of resources? Page 20.

3. What steps have been taken towards stopping the devastation of our resources? Page 21.

4. What estimates are given as to the amount of coal in the United States and as to how long this supply will last? Page 22.

5. What is the most favorable situation for iron deposits? State reasons. Page 24.

6. Where is the most wonderful iron-mining region in the United States? What makes it such a remarkable region? Page 24.

7. Of what importance are the precious metals? What is the practical problem confronting American gold-mining companies at present? Page 25.

8. To what use was copper put in Homeric times? What has 405 caused it to rise to the front rank in recent years? Page 26.

9. How does the present-day application of water power to machinery differ from its application prior to 1890? Page 28.

Capitalistic Production.

1. What five causes does the census report give for the rapid industrial development in the United States? Page 30.

2. Give Carroll D. Wright’s definition of a factory. Page 31.

3. Illustrate the two meanings which “division of labor” may indicate. Page 32.

4. Show how the subdivision of labor brings about the extension of labor-saving machinery. Page 33.

5. Name the economies of a large-scale production. Page 36.

6. What improvements have made large-scale production possible? Page 36.

7. In what lines of business is there little or no development toward large-scale methods? State the reasons. Page 37.

8. What is meant by standardization? What are the advantages of such a system? Page 38.

Trusts and Monopolies.

1. Enumerate the phases through which combinations for the purpose of fixing prices, have passed. Page 40.

2. What is the advantage of the corporation? Page 41.

3. Give a brief history of the trust movement. Page 42.

4. What economies are secured by a combined or federated industry? Page 43.

5. Name some of the savings which are peculiar to trusts. Page 44.

6. Give an illustration showing the profits of a 406 successful trust promoter. Page 45.

7. What is the effect of industrial combinations upon competitors? Upon producers of raw material? Page 46.

8. Explain the two phases of the relation between trusts and labor. Page 47.

9. What conclusion as to the power of the combination over prices, does the Industrial Commission reach? Page 48.

10. From what two sources do the evils of combination come? What remedies have been suggested to meet both classes of evils? Page 50.

Speculation and Crises.

1. How does the speculator reduce for the merchant the speculative risk attaching to price fluctuations? Illustrate. Page 52.

2. What social value lies in the service of the speculator? Illustrate. Page 53.

3. Explain the difference between legitimate speculation and illegitimate speculation (gambling). Page 54.

4. What is a crisis? Page 55.

5. Discuss the immediate occasion of a crisis. Page 56.

6. What is W. S. Jevons’ theory as to the causes of crises? Page 58.

7. Explain the over-production theory which is given as a cause for crises. Page 58.

8. What is the credit theory of the cause of a crisis? Page 59.

9. Where is the true explanation of a crisis to be found? Page 60.

10. Is it possible to prevent the recurrence of crises? Page 60.

The Modern Wage System. 407

1. Give some beneficial results and some abuses of the factory system. Page 61.

2. Name five points which Mr. Hobson gives to show that, in the transition to the factory system, the position of the laborer has been one of increasing dependence. Page 62.

3. How does President Hadley define wages? Page 63.

4. Describe the systems of labor which preceded the modern wage system. Page 64.

5. How has the extreme individualism of Adam Smith’s theory been modified? Page 65.

6. What are the three peculiarities of the sale of labor? Page 66.

Labor Organizations and Collective Bargaining.

1. Why have labor organizations grown more rapidly in the United States and England than on the Continent of Europe? Page 69.

2. What are the two types of trade unions in the United States? Page 69.

3. Describe the two most important national organizations which have been in this country. Page 70.

4. What are the methods by which labor organizations monopolize the labor market? Page 71.

5. Why do labor leaders object to piece work? Page 72.

6. What are the two arguments in favor of shorter hours put forth by the trade unionist? Page 73.

7. What is the economic justification of the shorter working day? Page 74.

8. Give illustrations where unions have directly limited the amount of output. Page 75.

9. What is the attitude of the majority of the employers in the United States toward collective bargaining? Page 77.

10. What erroneous ideas exist as to the purpose of labor 408 organizations? Page 78.

11. Describe the method of settling an industrial dispute by conciliation. Why is the principle of arbitration fast going out of favor? Page 79.

Women and Children at Work.

1. Describe the evils of the early factory system in England. Page 80.

2. Are the women crowding the men out of their occupations and taking their places? Page 81.

3. What is the most important reason for the low economic position which woman occupies in the industrial world? Page 83.

4. How does George L. Bolen justify the employment of women? Page 86.

5. How can the evil arising from child labor be cured? Page 87.

6. What obstacles have been in the way of efforts to improve labor conditions by legislation? Page 88.

7. Name, and give examples of, the two classes into which the factory acts may be divided. Page 88.

8. What has been accomplished in the United States in the way of labor legislation? Page 89.

Unemployment and Insurance.

1. Classify the unemployed. Page 91.

2. What are personal causes of unemployment? Page 92.

3. Name some industrial causes of unemployment. Page 93.

4. In what does the remedy for the normal unemployment in modern industry lie? Page 95.

5. Suggest some methods of alleviation of the evils of unemployment. Page 96.

6. State briefly the common law doctrine regarding 409 liability for accident. Page 98.

7. What have foreign countries done toward placing the burden of industrial accidents upon the industry itself and not upon the laborer? Page 99.

8. Describe the establishment of compulsory insurance against sickness and old age in Germany; in Great Britain. Page 100.

Machinery and Industrial Efficiency.

1. What three evils are charged against machinery? Page 101.

2. How does the reabsorption of labor displaced by machinery depend upon the demand for an article? Page 102.

3. How may machine methods cause irregularities in wages and employment? Page 104.

4. Show the need of a system of industrial education in the United States. Page 107.

5. Describe the system of industrial education which exists in Germany. Page 107.

6. How does the English system of industrial education differ from the German? Page 108.

7. What is the character of the industrial schools of the United States? Page 108.

8. How have the people of the United States been aided in their industrial development? Page 109.

9. What two obstacles have been met by the movement for better industrial education in the United States? Page 109.

Profit-Sharing and Co-Operation.

1. Name the three principal methods of profit-sharing. Page 110.

2. What is the economic theory of profit-sharing? Page 111.

3. What are the objections against the profit-sharing 410 system? Page 112.

4. Why is the system of profit-sharing comparatively limited? Page 113.

5. According to President Hadley, where is there more chance for the success of profit-sharing? Page 113.

6. How does co-operation differ from profit-sharing? Page 114.

7. What are the reasons for the lack of success of co-operation in this country? Page 115.

8. Describe the methods of the Rochdale Society. Page 115.

9. How does producers’ co-operation differ from consumers’ co-operation? Page 116.

10. Give three examples of successful productive co-operation in the United States. Page 116.

11. Enumerate the advantages of co-operation. Page 116.

12. What is the ultimate ideal of enthusiastic co-operators? Page 117.

13. Discuss the defects of co-operation. Page 117.

Problems of Distribution.

1. What are the three great problems of economic society? Page 119.

2. Define functional distribution; personal distribution. Page 119.

3. What views are given as to whether functional distribution is actually governed by natural law? Page 121.

4. Discuss briefly the distribution of rent. Page 122.