Chapter 15
We have shown that the congestion of wealth is very largely due to the growth of monopoly, and we have discussed the more immediate evils that result from this congestion of wealth. But when we attempt to describe the evils and abuses which follow close after, as a result of the power which monopoly has placed in the hands of a few, we may well pause at the task. The whole array of perplexing social problems comes before us, and we realize more and more what a curse monopoly has become. The philanthropist tells us that poverty, and all the distresses that follow in its wake, are largely due to the fact that our workingmen under present conditions _must_ live from hand to mouth, _must_ rely on charity for aid in every emergency, and _must_, therefore, decrease in manliness and self-reliance and the ambition to better themselves, as the practical impossibility of success is comprehended.
Good men are lamenting because the Church has, to a great degree, lost its hold on the laboring classes, and are casting about on all sides for a remedy. Will they ever find one as long as the wage-worker carries in his bosom a rankling sense of injury done him? Injury which he feels that the Church is merely seeking to drug with charity instead of wishing to cure it with justice? There is great need that the Church, not alone by the sermons of its most enlightened thinkers, like Dr. Heber Newton, but by the daily practice of the rank and file of its membership, should recognize, as it never yet has done, the great principles of human fraternity, and move intelligently and earnestly to remedy the great evils that menace us.
Even the evil of intemperance can be traced back to a connection with monopoly. Who shall blame the tired laborer, if after a week with sixty hours of unremitting toil, he takes refuge from the dreariness and lassitude of physical exhaustion, the hopelessness of ambition-quenched life, and perhaps the discomforts and disquiet of the place he calls home, in a long draught of that which does, for the time, create in him an image of exhilaration, strength, self-respect, and manhood? It is but an image, indeed, and to all but the victim it is a caricature; but when a man cannot hope for the reality, to only imagine for a brief hour that he is indeed a king of men, and that care and woe and degradation are no longer his lot, is a refuge not to be despised.
There is indeed a class of philanthropists who say, with some truth, that the laboring classes as a whole have now more than they will spend for their own good, and declare that higher wages means merely more spent on sprees and debasing sports, of different sorts but universally harmful. On the other side, the wise philanthropists who are trying to help their fellow-men in that best of all ways, by teaching them to rely on themselves, testify that their efforts to make men independent are largely hampered because it is so extremely difficult for a workingman to live in any other way than from hand to mouth, especially in our large cities. The true solution seems to be that all these reforms must go hand in hand. We must teach men how to make nobler uses of their incomes and themselves, while we endeavor to bring about reforms that shall give them greater comforts and more leisure to use for either self-improvement or self-debasement.
Much more might be said of the indirect effects which result from the taxation which monopolies inflict upon the community for their own profit; but they are now so generally realized and understood that we can devote our time more profitably to the investigation of other evils.
Under the ideal system of competition which we studied in Chapter X., we found that all occupations were competing with each other; so that if, from any cause, one calling became especially profitable, men would flock to it and bring down the profits to a normal point. Monopolies have seriously interfered with this important and beneficent law. How often do we hear the complaint of the great difficulties that beset young men on their first entrance to business or industrial life in securing a situation. The monopolized industries shut out new competitors by every means in their power. The trade-unions limit the number of apprentices which shall be allowed to learn their trade each year. The result is, first, a most deplorable tendency to idleness on the part of young men just at the time when they should be most active; and, second, a still larger increase of men in the professions and non-monopolized callings, tending to still further increase the competition in those callings, where returns are already inferior to what they should be. Surely, we must begin to appreciate how vitally important to every person in the land is this matter of competition and monopoly.
The evils which we have thus far considered pertain to the distribution of wealth. Let us now turn our attention to the production of wealth. Our second law of competition stated that the waste due to competition varied directly as its intensity. We have frequently referred to this waste of competition; let us now inquire more fully concerning its amount and effect. In the first place, however, let us settle the question, once for all, that waste or destruction of wealth of any sort is an economic injury to the community. We have, indeed, already explained this in the first paragraphs of the chapter; but while all authorities on economics agree on this point, the general public is still seriously infected with the fallacy that waste, destruction, and unprofitable enterprises are beneficial because they furnish employment to labor. If this were merely a theory, we could afford to ignore it; but the trouble is that it is acted upon, and works untold evil and damage to the world. To take a typical case, people reason that damage done by flood or fire or storm is not a total loss because employment will be furnished to many in repairing and rebuilding after the devastation. They do not stop to reflect that so much wealth has been wiped out of the world, and that _instead of the destruction furnishing so much additional employment, it has only changed the direction of the employment_. For money nowadays is always spent, either directly, by its owners, or by some one to whom he lends it. And wherever money is spent it furnishes employment. Therefore, if the money which was used in repairing and rebuilding had not been required for that work, it would have been spent in some other direction and furnished employment to labor there. Understanding, then, that the economic interests of the community are best served when each one of its members exerts his energies with the greatest result and with the least waste in producing wealth, let us see to what extent intense competition and monopolies have violated this law.
In his interesting book entitled "Questions of the Day," Prof. Richard P. Ely, of Johns Hopkins University, refers to the building of two great railways with closely paralleled roads already in operation, the Nickel Plate, and the New York, West Shore and Buffalo, and says:
"It is estimated that the money wasted by these two single attempts at competition amounts to $200,000,000. Let the reader reflect for a moment what this means. It will be admitted that, taking city and country together, comfortable homes can be constructed for an average of $1,000 each. Two hundred thousand homes could be constructed for the sum wasted, and two hundred thousand homes means homes for one million people. I suppose it is a very moderate estimate to place the amount wasted in the construction of useless railroads at $1,000,000,000, which, on the basis of our previous calculations, would construct homes for five millions of people. But this is probably altogether too small an estimate of even the direct waste resulting from the application of a faulty political economy to practical life. When the indirect losses are added, the result is something astounding, for the expense of a needless number of trains and of what would otherwise be an excessively large permanent force of employés must be added. Of course, nothing much better than guesswork is possible, but I believe that the total loss would be sufficient to provide a greater portion of the people of the United States with homes."
But it seems quite possible to make a closer estimate of the wealth wasted by the construction of unneeded railways than the general one above. There are now, in round numbers, 158,000 miles of railway in the United States. The two lines named above have a total extent of nearly 1,000 miles; and while they are the most flagrant examples of paralleling in the country, there is no small number of other roads in various parts of the country which, except for their competition with roads already constructed, would never have been built. Considering the fact that the paralleling has been done in regions where the traffic was heaviest and where the cost of construction was greatest, it seems a conservative estimate to say that 5 per cent. of the capital invested in railways in the United States has been spent in paralleling existing roads. But the total capital invested in the railways of the United States is about $9,200,000,000, 5 per cent. of which is $460,000,000. It is also to be remembered that this 7,500 miles of needless road has to be maintained and operated at an average expense per mile per annum of $4,381, or a total annual cost of nearly $33,000,000. Taking Prof. Ely's estimate of $1,000 as the cost at which an average size family can be provided with a comfortable home, and we find that the cost of these unneeded railways would have provided 460,000 homes, sufficient to accommodate 2,300,000 people. Say that 3 per cent. of the cost of these homes is required annually to keep them in repair, then this could be furnished by the $33,000,000 now paid for the operating expenses of needless railways, and an annual margin of about $19,000,000 would be left, or enough to provide each year homes for nearly 100,000 more people in addition. Of course, this is merely a concrete example of what possible benefits we have been deprived by wasting our money in building needless railways.
As a matter of fact, the money we have spent on unprofitable railways, as well as those totally useless, has wrought us an amount of damage far in excess of their actual cost. It is generally agreed by financiers that the periods of industrial depression during the past score of years have been largely due to excessive railway building. For in a period of active railway construction, roads are built whose only excuse for existence is that they will encroach upon the territory of some rival. The capital invested fails to make a return. The loss of income which ensues decreases the purchasing power of the community; and this combines with the sudden loss of business confidence caused by the failure of the enterprise to bring about a general panic and crash which affects the whole community; and by checking enterprise and industry, damages the country ten times the amount of the original loss.
The waste of competition is by no means confined to railways. The Sugar Refiners' trust has raised the price of sugar and thus reduced its consumption so much that they have permanently closed several of their factories. Yet Claus Spreckels is now building a great refinery in Philadelphia, the output of which is to compete with the trust. All this capital invested in that which is not needed by the community is an injury to the public. The French Copper syndicate so raised the price of copper that it became profitable to work old mines of poor ore, which under ordinary circumstances could not be worked at all at a profit. Capital was expended in opening and refitting these mines, and in preparing them for working; while other mines, able to produce the metal at much less cost, were reducing their output because of their contract with the trust.
In various cities of the country, millions have been wasted in tearing up the streets to bury the unneeded mains of competing gas companies. The electric light competitors are stringing their wires over our heads and beneath our feet, and by covering the same district twice or three times, double and treble the attendant evils as well as the cost.
The waste due to intense competition in trade may be avoidable or unavoidable; but it is certainly of enormous magnitude, although the fact of its being a waste is still little appreciated.
The waste due to labor monopolies is much better understood. The strikes which paralyze industry and send want and distress in ever widening circles are universally recognized to be a waste of wealth whose annual amount is enormous. The cost to employers and workmen of the strikes in the State of New York in 1886 and 1887, was $8,507,449. Reckoning from this as a basis, it is probable that the total annual cash cost of strikes in the United States is twenty or twenty-five million dollars. The results of these strikes in decreasing the purchasing power of employés and thus causing overproduction, and in discouraging enterprise and increasing the cost of capital, serve to spread their effect throughout the whole industrial community and thus cause an actual loss and injury many times that borne by the parties directly engaged.
It is thus evident that the waste due to the intense competition which the concentration of productive enterprise has brought about in modern times is a matter of startling proportions. We are wasting and destroying wealth all the time sufficient to go a long way towards abolishing all the poverty in our midst; and the blame for this state of affairs we are now able to place where it belongs.
Surely with a full appreciation of these evils, every honest and patriotic man must be willing to use every endeavor to strike at the root of the evil. The public indeed is, and has long been, a unit in its opposition to monopoly; but in endeavoring to defeat monopoly it has taken just the course which could give no permanent gain. Cities have beggared themselves to aid competing railway lines only to see them consolidated eventually with the monopoly which it was expected to defeat. The multitude regard Claus Spreckels as a benefactor--and will till he forces the Sugar Trust to divide their 25 per cent. profits with him in return for the control of his refinery.
It is no benefit to us if in steering away from the Scylla of monopoly, we be wrecked on the Charybdis of wasteful competition. We have been trying for a score of years now to defeat monopolies by creating competition; but in spite of a universal public sentiment in favor of the reform, and notwithstanding the millions of wealth which we have poured out like water to accomplish this object, monopolies to-day are far more numerous and powerful than ever before. The people who are groaning under their burden of oppression are anxious for relief. The remedy they have so long and faithfully tried to apply has but made a bad matter worse; and it is small wonder that, despairing of other relief, they are adopting false and injurious plans for bettering themselves which serve merely to extend the monopoly policy into all industrial affairs.
We are threatened with a state of society in which most of the principal industries will be wholly given over to monopoly. Those in each occupation will band together to secure the greatest returns for themselves at the expense of all other men; while the few occupations which cannot thus combine in a monopoly--farming, and the different sorts of unskilled labor--will be filled to overflowing with those crowded out of other callings. Those who follow them will do so only because the monopolized occupations are closed to them. Thus will our farming population degenerate into a peasantry more miserable than that of Europe, and our laborers be ground down to a level lower than they have yet known. Is there a probability that such a state of affairs will come to pass? There might be if the public were not keenly alive to the curse of monopoly. But as it is, the greater danger is that through ignorance a wrong course may be adopted for the cure of our present evils, which will aggravate instead of curing them.
XIII.
AMELIORATING INFLUENCES.
If pure selfishness were the only motive influencing the masses of mankind, the evils which we have considered in the preceding chapter would be wholly unbearable. All men would be waging an industrial warfare with each other in their greed for gain, just as the barons of feudal times fought to satisfy their thirst for power and possessions; and as motive is the great force which determines character, we would be, as far as moral excellence is concerned, in the same category as the uncivilized savages.
Fortunately for the happiness of the race, there are important influences at work counteracting, modifying and ameliorating the social evils that threaten us. These influences are not cures for these evils, though they are so considered by very many people. But they are very important palliatives. They are certainly of inestimable value in the lack of real remedies; but it is better to consider them as palliatives merely; for necessary, as they are and always will be, to soften and relieve the ruggedness of human laws and human administration of law, in the present condition of humanity they cannot effect a cure of the evils which burden us.
The first of these palliatives has a purely selfish origin. It arises from the desire of the managers of every monopoly to make the greatest possible profit from its operations. Let us take, for example, a street railway monopoly which is at liberty to charge such rates of fare as it chooses and which has no competitors. If it fixes its fare at 10 cents, very many people will prefer to walk or take some other mode of conveyance, who, if the fare was at 5 cents, would patronize the road. Thus it may very likely happen that 5-cent fares will yield it the greatest net income. It is often said that it is competition which has brought our rates of railroad transportation down to their present low point. While this is largely true, it is also true that the tendency to foster the growth of traffic by making a low tariff has been a large factor in bringing rates down to a reasonable point. Another example of this principle's operation is in the case of monopolies protected by the patent laws. In this case the collection of only a moderate royalty will generally result in greater profits to the inventor than he would secure by exacting a large fee, because of the greatly increased sales in the former case.
It should not be understood, however, that this principle has its only application in cases similar to the two mentioned. There is hardly an industry, monopolized or competitive, into which it does not enter to effect important results. It is to be noted, however, that it is least effective where the demand for the monopolized article is least sensitive to a variation in price. This fact should be considered by those who are fond of arguing that this principle alone is always sufficient to prevent monopolies from doing much harm. While it is powerful in the case of such monopolies as we have mentioned, where the demand for the commodity furnished varies greatly with the price, in the case of the great copper trust or of the quinine trust or of any monopoly controlling the great staples of human consumption, it seems plain that it can have little effect. Nor do we need to base our proof that this principle is not a sufficient remedy upon this ground alone. Grant it to be true that a certain monopoly makes the greatest net profit when its rates or prices are at a certain point; then will it not be apt to set them slightly above that point, where they will give nearly the same profit with a considerable decrease in the volume of business transacted and in the corresponding labor and responsibility? And, again, the point where it makes the greatest net profit is considerably above the point where it is of the greatest possible benefit to the community at large. This latter end is attained when it uses its facilities to their full capacity for the benefit of the public. The rates should be fixed at such a point that this full capacity will be utilized, or as much higher as may be necessary to pay the monopoly a fair profit on its operations.
This influence just considered has its origin in the selfishness of men. The second, and by far the most important influence tending to ameliorate the evils due to monopolies and intense competition arises from that essentially noble trait of human character whose province it is to seek the welfare of others before that of self. It is not to be wondered at that the large benevolence of our noblest Christian thinkers rebels against the inflexible laws of competition, or rather at their stern application to modern conditions of life. Under our social system, indeed, each man is striving to do his utmost to benefit his fellow-men, but only so far as it benefits himself. Christianity goes far beyond this. It teaches the Fraternity of Man, the Fatherhood of God, and thus the duty of all men to care for and love their brothers' happiness and welfare. It is in accord with the noblest and most exalted desires of the human soul. It teaches a man to seek to benefit others for their own sake, not for the sake of the reflex benefit on himself.
The burden of Christ's sermon on the mount was that golden rule of action, "Whatsoever ye would that men should do to you, do ye even so to them"; and the whole of his teachings glow with the spirit of fraternity; the strong bearing the burdens of the weak; the rich cast down and the poor exalted; brother sharing with brother, according to their needs. We are accustomed to make ourselves complaisant with the reflection that these were figurative expressions, and not meant as literal commands. But if we consider candidly, we must confess that if it is the spirit of its Master's commands which the Church means to follow, it is very far, as a body, from reaching up to their full import. The love for one's fellow-men which Christ taught was certainly meant to be expressed in great, noble acts of brotherly kindness. Consider the want, the suffering, the distress, the misfortune, the inequality by which a thousand families have hard work and scanty fare while one revels in luxury. Are these thing repugnant to the spirit of Christianity, or not? Every one knows that they are. It is because Christian men in these days are prone to follow their own ease in common with the rest of the world, and are accustomed to make their Christian code of morals to fit that which public opinion declares to be sufficiently advanced, that Christianity as a remedy for social evils has fallen into disrepute with the laboring classes. But men, both in and out of the Church, who are better informed as to the grand and noble spirit that lies at its foundation, are coming to look more and more toward Christianity as the only deliverance from the evils that threaten us.