Part 14
The Standard Oil Trust is probably the largest single business monopoly in the world, the value of all its included interests being estimated, according to the evidence submitted, at £29,600,000. In the report it is described as “one of the most active and possibly the most formidable monied power on this continent. Its influence reaches into every State, and is felt in remote villages; and the products of its refineries seek a market in almost every seaport on the globe.” The germ of this huge monopoly was a small petroleum refinery near Cleveland, bought by one Rockefeller, a book-keeper in a store, and a friend of his, a porter, with borrowed money. Rockefeller formed an acquaintance with a rich whiskey distiller, who advanced money and put his son-in-law Flagler into the business. This person’s doctrines are thus described: “He says that there is no damned sentiment about business; that he knows no friendship in trade; and that if he gets his business rival in a hole he means to keep him there.” Such a man is eminently fitted to be the founder of a monopoly: he is a hero of self-help; for he helps himself to anything he can lay his hands on. A second refinery was established in Ohio, and a warehouse opened in New York. The concern grew, and was incorporated as the Standard Oil Company. It is charged with having secured special legislation by judicious expenditure in the lobbies of the Ohio and Pennsylvania Legislatures. By entering into arrangements with the trunk railway lines, it secured special rates for transit. New refineries were established and new oil lands in Pennsylvania acquired; the capital was increased; and an enormous yearly business was done. After a time the company controlled every avenue of transportation; managed all the largest refineries in the land; and was able to shut off every competitor from either receiving supplies or shipping its products. New companies, nominally distinct, but all under the control of the same men, were incorporated in New Jersey, Ohio, West Virginia and other States. The monopoly elected one of its chief stockholders into the United States Senate, it is said, through bribery in the Ohio Legislature over which body it certainly acquired strong hold. These tactics were known as “coal oil politics.” All the dirty work was, of course, done through agents, the directors pretending perfect innocence. In 1882 the Standard Oil Companies were consolidated in the Standard Oil Trust.[61] The stockholders surrendered their stock to the trustees, nine in number, created under the agreement, and received certificates in the place thereof, the representatives of the trust and the stockholders in the refineries making a joint valuation of the refineries, and the certificates being issued to that amount. Thus the separate concerns were merged in one gigantic business, controlled by nine men (owning a majority of the stock), having a monopoly of nearly all the oil lands in America, controlling legislative votes, forming a solid alliance with the railway and shipping interests, and determining to a gallon how much oil shall be produced and refined, and to a fraction of a cent what shall be its price. In 1887 there was a cash dividend of 10 per cent. declared, besides a stock dividend of 20 per cent. on the certificates of four years’ aggregation. In addition to the enormous stock they hold, the trustees receive an annual salary of £5,000. What are the economic results of this combination? It has not raised prices, as the trusts were charged by the committee with doing. On the contrary there has been a steady decrease in price during the decade 1877-1887. The consumption of oil has also enormously increased. The working and producing expenses have been greatly lowered by the dismissal of needless labor and vast improvements in machinery; the pipe lines controlled by the trust having displaced 5,700 teams of horses and 11,400 men in handling the oil. Thus of this trust we may say that though the means used to establish it were morally doubtful or even bad, the political results disastrous, the economic results have been beneficial, except in the matter of helping to form an unemployed class through the dismissal of needless labor consequent on the development of machinery.
The Cotton-seed Oil Trust was organized two or three years ago in the State of Arkansas.[62] Upwards of seventy different companies had been competing with each other and consequently suffering heavy losses. Their mills being comparatively small and equipped with imperfect machinery, they were glad to combine; and those that did not were forced to close. The seventy corporations, the vast majority of the members of which had agreed to the combination, surrendered their stock to a body of trustees and received in return $100 certificates. The various mills send a monthly report to the trust; and if the officers in a given mill do not sell at the terms imposed, they are dismissed by the trust.[63] The object of the trust was declared by a witness to be to prevent bankruptcy, to improve methods, to find markets, to develop the enterprise and to make money. The economic result has been displacement of labor by the machinery and great economy in production. Incidentally it came out that much cotton-seed oil was sold to the French and Italian buyers, who mix it with a little olive oil and export it back to America and to England, where a confiding public purchases it as pure Tuscan olive oil--an interesting illustration of international trade morality.
An examination of the milk and butchers’ trust ought to be a revelation to those who imagine that trade is “free,” and that competition rules. On April 29th, 1885, the directors of the Milk Exchange met in New York and unanimously resolved:
“That on the first day of May next, and until otherwise ordered, the market price of milk produced from meadow hay and sound cereals be 2¹⁄₂ cents per quart, and that produced from brewers’ grains and glucose and corn starch refuse be 2 cents per quart.”[64]
A representative of the Sheep and Lamb Butchers’ Mutual Benefit Association testified that the members of that body agreed that they would only buy sheep and calves from the Sheep Brokers’ Association, a penalty for violation of this rule being imposed at the rate of 15 cents a head per sheep or calf. The absolute despotism, and the system of espionage involved in such regulation is obvious. Here is a copy of a document issued by this body:
“New York, January 9, 1888. Permission has been granted by the board of trustees of this association to Simon Strauss to buy sheep and lambs in New York markets, providing he buys no sheep and lambs from outsiders, under penalty of 15 cents per head fine. Richard S. Tobin, Secretary.”[65]
Occasionally the Association relaxed. On November 5th, 1887, according to its minutes,
“The application of John Healey, No. 2, to be granted the privilege of buying a few sheep and lambs without the 15 cents being charged to the brokers, was favorably acted upon.”
This is not a record of Bagdad under the caliphs, but of the Republican State of New York! The threatened despotism of Socialism has been often eloquently dwelt on; but what of the actual despotism of to-day?
Now what does this examination of trusts show? That, granted private property in the raw material out of which wealth is created on a huge scale by the new inventions which science has placed in our hands, the ultimate effect must be the destruction of that very freedom which the modern democratic State posits as its first principle. Liberty to trade, liberty to exchange products, liberty to buy where one pleases, liberty to transport one’s goods at the same rate and on the same terms enjoyed by others, subjection to no _imperium in imperio_: these surely are all fundamental democratic principles. Yet by monopolies every one of them is either limited or denied. Thus capitalism is apparently inconsistent with democracy as hitherto understood. The development of capitalism and that of democracy cannot proceed without check on parallel lines. Rather are they comparable to two trains approaching each other from different directions on the same line. Collision between the opposing forces seems inevitable.
But both democracy and the new capitalist combinations which threaten it are inevitable growths of an evolutionary process. We are therefore brought to consider the question whether the ring, syndicate, or trust either can or ought to be destroyed. These combinations can be shown to be the most economical and efficient methods of organizing production and exchange. They check waste, encourage machinery, dismiss useless labor, facilitate transport, steady prices, and raise profits--i.e., they best effect the objects of trade from the capitalist’s point of view. Now, the opponents of Socialism say that without this enterprising capitalist we cannot live. He “provides employment,” they say. Well, if we need him, we must obviously pay his price. If he has a natural monopoly of a function indispensable to social progress, society must concede the terms he imposes. These terms are briefly large combinations of capitalist ownership. In this way he can best organize business; if we do not choose to let him do it in this way, he will not do it for us at all. From his point of view that is a fair position to take up; and it places the Individualist opponent of trusts in an awkward dilemma. For he must either submit to trusts or give up capitalists, in which latter case he becomes a Socialist. The answer of Socialism to the capitalist is that society can do without him, just as society now does without the slave-owner or feudal lord, both of whom were formerly regarded as necessary to the well-being and even the very existence of society. In organizing its own business for itself, society can employ, at whatever rate of remuneration may be needed to call forth their powers, those capitalists who are skilled organizers and administrators. But those who are mere dividend-receivers will no longer be permitted to levy a contribution on labor, but must earn their living by useful industry as other and better people have to do.
It may be said that society is not yet ripe for this transformation, nor is it. The forms of the democratic State are not yet perfected, nor has the economic evolution yet proceeded generally far enough, even in England, not to speak of the less advanced European countries. Much yet remains to be done through both the education of the intellect and the development of a nobler public spirit. But on the other hand we seem to be rapidly approaching such an _impasse_ that some very large and definite extension of collective authority must be made. This would seem to involve on one side general reduction of the hours of labor, and on the other an attempt to absorb by the community a portion of those social values which it creates. In reference to ground values it may be anticipated that local democratic authorities will secure them for the benefit of the people by any means which may be found expedient.
As regards the great combinations of capital, State action may take one of three courses. It may prohibit and dissolve them; it may tax and control them; or it may absorb and administer them. In either case the Socialist theory is _ipso facto_ admitted, for each is a confession that it is well to exercise a collective control over industrial capital. If the first of these courses is taken a distinctly retrogressive policy is definitely adopted, a policy of alarm at what Mr. Cleveland called the “communism of capital,” a policy of reversion to the chaos of “free competition,” and of cession of the undoubted benefits which combination has secured. Such a policy would signify the forcible prevention of acquisition of property, the very thing dearest to the Individualist. If the powers of acquisition, now evidently dependent on combination, are to be restricted, what becomes of the “incentive to industry,” the “reward of abstinence,” and all the rest of the worn out phrases which have so often done duty in the place of argument? If the syndicate or the trust represents the legitimate outcome of capitalism--if it is necessary to give order to trade and to prevent the ruinous waste of unrestricted competition, how absurd it is for the State to say to the capitalist: “You shall carry your privileges of acquisition just up to the point where competition is likely to ruin you; but there you shall stop. Immediately you and your friends combine to prevent waste, to regulate production and distribution, to apply new methods of manufacture, we shall absolutely prevent you or restrain you by vexatious regulations.” To which the capitalist may be supposed to reply: “I cannot fulfil my function in society at this serious risk. I shall never know security--never be even moderately sure of reaping that reward to which I am admittedly entitled. If you intend to fetter my action in this way after having proclaimed me free to own the raw material out of which wealth is made--if you compel me to stop at a purely arbitrary line, I must inform you that I am not going to undertake business on such terms.” Would not the capitalist say something like this; and from his point of view would he not be right?
If it were instantly possible to do so, we should take the capitalist at his word; appropriate the necessary instruments of production; and make them common property, the values they create accruing to the community. But the human race generally contrives to exhaust every device which stupidity can suggest before the right line of action is ultimately taken. I think therefore that some probably inefficient method of taxation and public control over combinations will, as a matter of fact, be adopted. Such legislation will immensely restrict individual liberty in certain directions, will produce much friction, and may possibly hamper production; until by a long series of experiments men shall discover what is the most reasonable way of acquiring for the community as a whole the wealth which it produces. But in any case individualism or anything whatever in the nature of _laisser faire_ goes by the board.
And now, finally, what is the immediate policy for rational students of economics and genuine social reformers to adopt? Their motto must be, _Nulla vestigia retrorsum_. To all quack proposals they must offer a steady resistance. These proposals will take the form of attempts to bring back some economic condition out of which society has emerged. One quack will desire to revive the old British yeomanry; another will talk nonsense about “Fair Trade;” a third will offer to the rustic “three acres and a cow”; while a fourth will see salvation in getting rid of primogeniture and entail and “planting” prosperous laborers on the soil--as though the laborers grew there like trees. Those who understand the economic crisis may be ready and eager to support any reform, however small, which is a genuine step forward: but they cannot support any effort to call back the past. They may help to build a new bridge across the gulf that separates us from the Co-operative Commonwealth; but they can never repair the old broken-down structure which leads back to Individualism. Instead, therefore, of attempting to undo the work which capitalists are unconsciously doing for the people, the real reformer will rather prepare the people, educated and organized as a true industrial democracy, to take up the threads when they fall from the weak hands of a useless possessing class. By this means will the class struggle, with its greed, hate, and waste, be ended, and the life hinted at by Whitman in his “Song of the Exposition” be attained:
“Practical, peaceful life, the people’s life, the People themselves, Lifted, illumined, bathed in peace--elate, secure in peace.”
FOOTNOTES:
[51] Enc. Brit., art. “Cotton.”
[52] “History of the Eighteenth Century,” i. 202.
[53] See the evidence contained in Vol. I of Mr. Morse Stephen’s “History of the French Revolution.”
[54] History of the Eighteenth Century, iv, 450.
[55] “Some Leading Principles of Political Economy,” p. 32.
[56] “The American Commonwealth,” iii, note on p. 421.
[57] “Encyclopædia Britannica”: Art., “Political Economy.”
[58] Mulhall: “Dictionary of Statistics.”
[59] “Lords of Industry.” _North American Review_, June, 1884.
[60] Quarterly Journal of Economics, July, 1889.
[61] Report of Senate Committee, p. 419.
[62] Report of Senate Committee, p. 233, _et seq._
[63] Report, p. 244.
[64] Report of Senate Committee, p. 305.
[65] Report of Senate Committee, p. 497.
MORAL.
BY SYDNEY OLIVIER.
The argument of this fourth instalment of Socialist criticism may be provisionally described as an attempt to justify Socialist ideals by the appeals to canons of moral judgment accepted generally and supported by the results of positive ethical science. The previous essays have made it clear that we are dealing with Socialism in that restricted sense in which it is defined by Schaeffle,[66] as having for its aim “the replacement of private capital by collective capital: that is, by a method of production which, upon the basis of the collective property of the sum of all the members of the society in the instruments of production, seeks to carry on a co-operative organization of national work.” We are not dealing with Socialism as a religion, nor as concerned with questions of sex or family: we treat it throughout as primarily a property-form, as the scheme of an industrial system for the supply of the material requisites of human social existence.
If it were admitted that the establishment of such a system would guarantee just this much--that abject poverty should be done away, and that every man and woman should be ensured the opportunity of obtaining sufficient food and covering in return for a moderate day’s work, we might still be far from convincing some people that the realization of that ideal will be a good thing for the world. There are still a great many who, though they may not join in the common prophecy that the chief results of such a system would be an increase in beer-drinking and other stupid self-indulgence,[67] yet regard starvation and misery as part of the inevitable order of nature, and as necessary conditions of progress, conducive to the survival of what they are pleased to call the “fittest” types of life. Such critics see danger to progress in any attempt to enrol intelligence and adaptiveness into conscious combination against starvation and misery, to extinguish by concerted effort survivals of the accidents of primitive barbarism against which as individuals we are always struggling. This aim of Socialism, accordingly, does not wholly commend itself to their moral judgment, to their opinion of what is _good_ in the widest sense, although they may willingly admit that the aim possesses a certain element of shortsighted good intention. Other persons, influenced by religious conceptions older than that of progress, and regarding morality less as determined by reference to that end than as a concern of the individual, a certain state of the soul of each man, are inclined to view the material evils which Socialists desire to get rid of, as a necessary schooling and discipline without which individual morality would decay.
Against these doctrines Socialists would maintain that the ordering of our national life, and of the relations between individuals and social groups throughout the world in accordance with the principles of Socialism, is the effectual and indispensable process for ensuring to the mass of mankind the advantages of progress already effected and its continued and orderly development, and for the realisation, in individuals and the State, of the highest morality as yet imagined by us.
It may be well at this point to anticipate a challenge to define what is meant by the word “Morality,” and to briefly explain the position which will be assumed, and the method which will be followed throughout the succeeding observations. It must be remembered that the subject of this essay is “The Moral Aspect of the Basis of Socialism,” and not “The Socialist View of the Basis of Morals.” We may therefore conscientiously steer clear of the whirlpool of agelong controversy as to what that basis is, merely noting as we pass that any metaphysic of Ethics being necessarily universal, there is in this sense no special ethic or morality of Socialism. By such cautious procedure we sacrifice indeed the fascinating ambition to exhibit, by impressive dialectic pageant of deduction from first principles, the foundation of formal Socialism in the Idea that informs the universe. But we also avoid the certainty of losing, at the very outset of our attempted demonstration, the company of all but that minority who might assent to our fundamental propositions. A further sacrifice we shall make, in descending to the unpretentious methods of empiricism; for we thereby renounce the right of appeal to that theologic habit of mind common to Socialists with other pious persons. Mr. Henry George, educated under the American Constitution, may share the familiarity of its framers with the intentions of the Creator and the natural rights of Man. He may prove, as did Mr. Herbert Spencer in his generous youth, that private property in land is incompatible with the fundamental right of each individual to live and to own the product of his labor. But positive ethical science knows nothing of natural and fundamental rights: it knows nothing of individual liberty, nothing of equality, nothing of underlying unity. Yet here again our loss has some redress; for a brief survey will assure us that various schools of moral philosophy, differing in their characteristic first principles, are converging in the justification of Socialism; and that the practical judgments of contemporary mankind as to what sort of conduct is “moral,” and what conditions make for the increase of “common morality,” are in practice largely coincident. They offer, at least, a body of provisional opinion, or prejudice, to which we can appeal in presenting Socialism for criticism of its morality. The tribunal is by no means infallible: still, the common contemporary sense of humanity may count for something. But in approaching the criticism of Socialism from the point of view of ethics, we are bound to go a little deeper than this. While accepting the phenomena of current opinion on morality as part of our material, we must follow the explorations of ethical speculation into the causes and history of the development of those opinions. By examining the genesis of convictions that this or that kind of action is good or bad, moral or immoral, we shall be helped to form a judgment as to which appears likely to persist and be strengthened, and which to be modified, weakened, or forgotten. If the claim of Socialism rests on judgments of the latter class, we may know that it is a moribund bantling; if they preponderate among the obstacles to its credit, we may prophesy encouragingly of it; if it is supported by those judgments whose persistence seems essential to the survival of the individual and of society, we may be assured of its realisation in the future.