Chapter 8

The bearing of these figures on our subject is now apparent. All of this property is disfranchised. It is, economically, to a very great extent disfranchised; politically, it is altogether disfranchised. What I mean by this is that the owners of this wealth, as owners, have very little to say, and nothing to do, about its care and management. Probably more than half of our people are directly or indirectly interested in it as owners. They have been attracted by a desire to share, however humbly, in big and famous enterprises, by the freedom from liability of the portion of their estates outside the particular investments, and by the freedom at death or withdrawal of associates from appraisals and accountings and probable closing of the business, as is the inevitable practice in mere partnerships. Two centuries ago people who saved money could hardly find ways to invest it. The practice of incorporation has enormously increased our wealth by putting a stop to hoarding without interest, stimulating saving, and broadening industry. The number of individual owners of the bonds and stocks of corporations is incalculable, and their holdings added to those of savings banks, insurance companies, trust companies and other fiduciary institutions, churches, hospitals, and colleges, make up a total of almost fabulous extent. It is true that large sums are loaned to persons, and on mortgages of real estate; but for most people such investments are not desirable or convenient, and they are altogether inadequate to absorb the vast sums that are available. In fact probably most investments of this character are now made by corporations who gather the savings of little depositors and premium payers; and it would cost much more to make them in any other way.

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Corporations, therefore, are necessary, but they necessarily separate the ownership of wealth from its management. To invest is generally to entrust your money to another, and those who invest in corporations, unless they control them, are economically disfranchised, because the stockholders in all large corporations almost never influence the management of their property, and as a rule do not know anything about it. They don't because they can't. A few years ago a very large number of people were much worried by the exposure of some scandalous doings by the managers of certain great life-insurance companies. They would have been very glad to combine and choose better managers if they could; but they couldn't. Laws were passed for the purpose of enabling the policy-holders to select their trustees, but the only result has been a ridiculous and rather expensive fiasco. As in politics, the rank and file select the managers selected for them by a few men who understand the situation. When many thousands of people own stock in a concern, they live all over this continent and in foreign parts, and it is a physical impossibility to bring them together. They do not know one another, and very few of them know much about the affairs of the concern, and if they know anything of the candidates that may be suggested, it is generally only by hearsay.

How many of the eighty-eight thousand stockholders in the Pennsylvania Railroad, for instance, have ever attended a meeting? For that matter, how many of them have ever studied the report of the railroad? Not one in ten could spare the time to read it, perhaps not one in a hundred could master it. The report may be read in a few hours; it would take as many months, if not years to verify it. Very nearly half these stockholders are women; the average holding is 120 shares, (par $50), and one-sixth of the stockholders own less than 10 shares each. Ten thousand of them are abroad. Much stock is held by trustees, whose beneficiaries are probably very numerous, and totally incompetent to understand railroad management. There are also more than twenty thousand holders of stock in subsidiary corporations controlled by the Pennsylvania Railroad. No one can tell the number of bondholders; perhaps there are as many as there are employees, making an aggregate of almost half a million.

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Sometimes trustees abuse their office; but on the whole they have done pretty well, and whether they have or not, there is no other way in which large capitals can be managed. All civilization rests on confidence. Such a vast fabric could not be built on confidence unless confidence was deserved. As a matter of fact, a man invests his money just as he invests in a surgeon. He does not think of directing the surgeon how to operate. If the operation does not succeed, he tries another surgeon next time--if there is a next time.

Of course all this applies chiefly to the large corporations. There are many thousands of small ones, having few stockholders, who reside where the business is established. These stockholders know more or less of the details of the business; they can judge to some extent how it is carried on, they are often acquainted with the managers, or are the managers themselves, and if not, they are able sometimes to combine and change the management. And I will anticipate a little and say here that the property of such a corporation located in a small town is often to some extent not politically disfranchised, because the people of the town understand that they are directly interested in the prosperity of the business. But it seems almost impossible for the stockholders to change the management of a large corporation. It has been done a few times. Mr. Harriman notoriously did it by using the money of one concern to buy the stock of another, and that is almost the only way in which it has been done. No doubt there has been an immense deal of combination which has resulted in change of management, but this has not been because the stockholders combined to oust their trustees, but because they thought they saw a good chance to sell their stock to those who would pay high for the control, or to participate in these combinations. There have been a good many cases where an enterprising speculator has managed to get hold of a majority of the stock and change the control, and powerful bankers can sometimes get proxies enough to put a stop to bad management; but spontaneous movements of this kind on the part of the mass of the stockholders are extremely rare.

Beyond dispute then, the great mass of wealth held by corporations is almost wholly under the control of their managers, and not the mass of the owners. Mr. Hill has recently testified that he never knew a stockholder to attend a meeting except to make trouble; by which he perhaps meant that when a single stockholder appeared, it was to get paid for not making trouble.

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It need hardly be said that no such thing as legitimate representation of corporate wealth is known in our politics, and the representation of individual wealth is very limited. The theory of government by manhood suffrage, so far as there is any theory, is now entirely personal. In early times the freemen of the town, or little commune, met and legislated according to their needs. To be a freeman one had to own property; to "have a stake in the country." Nowadays nearly all the men who have no property can vote, and some that have property cannot. In England, they are doing away with "plural voters." Heretofore it was thought just, when a man owned land in more than one place, that he should have his say in the government of all; but this is now forbidden. The right was never recognized in this country, partly because formerly men seldom owned property in two places, but as transportation improved the conditions changed. The "commuters" are legion. Their business and their capital are under one jurisdiction and their dwellings and families under another; but they can vote in only one. Many thousands of men own houses in both city and country. They could help in the government of both, but are disfranchised in one or the other. Under our complicated systems of registration, they are often disfranchised at both.

Of course when population increases, the town meeting becomes a physical impossibility. There is no more direct legislation; it has to be delegated. The power is transferred to the city councils, and to the state and national legislatures. In other words, the interests of the owners of wealth are put in charge of trustees. According to Hamilton, the theory of our government is that the people will "naturally" choose the wisest of their number to represent them. There is not much basis for this assumption. Rousseau scouted it. According to him, the _volonté générale_ could be ascertained only in the town meeting, and he seriously maintained that the ideal government for the Roman empire was by the gangs of rioters that the politicians marshalled in the Forum at Rome under the name of _comitia_. All that the theory of our government requires, is that our rulers shall be such men as are designated by the majority of the voters. That they should be wise and good men may accord with the theory of aristocracy; it is no part of the theory of democracy, and is certainly a very small part of the practice.

When I say that half of the property of this country is disfranchised, I mean that the nature of this property is such that it is peculiarly subject to the power of rulers, and that the owners of it have hardly any legitimate way of defending it against the arbitrary exercise of this power. The corporation is created by the legislature; men cannot combine their capitals and avoid unlimited liability for the debts of the combination, unless the law specifically authorizes the proceeding. Of course, if the legislature has power to make such grants, it must have power to alter them. In short, property held by a corporation is held at the will of the legislature, and in a way and to an extent that property held by an individual is not. It is not very easy for the legislature to plunder or blackmail individuals, even when they are disfranchised, because it has to be done by general laws, and direct methods arouse direct opposition. But, as we have seen, stockholders as a class cannot defend their rights, and as things are now, their trustees cannot have much to say concerning the laws that affect their property. Managers of large corporations are now commonly denounced as unfit to be legislators, and are practically excluded from the halls of legislation. In some states they are even specifically disfranchised, so far as holding office is concerned, and, under the new despotism, ironically dubbed the new freedom, every man whose wealth and ability make his aid important to many enterprises, is to be forbidden to participate in more than one. Yet property is almost entirely subject to the disposition of the legislature! not entirely, for the courts afford some protection; but even this is now threatened: we may "progress" so far as to make it unconstitutional for a judge to declare any law unconstitutional.

It goes without saying that half the property of the country will not submit to spoliation without a struggle. If it cannot have representation legitimately, it will try to get it illegitimately or extra legitimately. The managers of corporations have in the past found many ways to influence legislation. Despite the prejudices against them, some of them have had themselves chosen as legislators; even as judges. Some have brought about the election of legislators who would act in their favor, and have even bribed legislators. Until recently it was not even unlawful for these managers to use the money of their stockholders in political contributions; some managers acted on the "Good Lord! Good Devil!" principle. Probably most of the politicians paid no railroad fares. Many of them got passes for their families and their friends; and it was certainly to be expected that they should listen to the requests of those who granted these favors. The situation became grotesque when a great ruler, seeking a nomination to office with the proclaimed purpose of enforcing the laws against rebates and passes, required the railroad managers to furnish him free transportation on his righteous mission.

There were obvious objections to these practices, and public opinion finally compelled our rulers to pass laws prohibiting them. Theoretically the managers of corporations are now effectually disfranchised. They dare not offer themselves as candidates for office. They scarcely dare to favor, even secretly, the choice of rulers who will listen to them. Fortunately, however, they hardly longer dare to offer bribes. Anyone on friendly terms with them is politically a suspicious character. Any lawyer who has been employed by them becomes unavailable as a candidate for office. Our legislators, as was to be expected, at once showed the effect of release from restraint. It has been uncharitably said that in revenge for the loss of their passes and other favors, they attacked the railroads; but there has been considerable voting of more mileage, and our congressmen at least voted themselves ample indemnity in larger salaries, and they opened fire on corporations in general and railroads in particular, with a broadside of statutes. Against this fire the property of millions of small holders in the corporations has been almost defenceless. Some of these statutes are so drawn that the plain business man does not know whether he is a criminal or not; if he could afford to consult the best of lawyers it would not help him much. The only safe course to pursue is to agree with the adversary quickly; to plead guilty to whatever charge is made, and beg for mercy. That one is innocent is immaterial. The expense of litigation is nothing to the rulers of the United States; but it may be ruinous to their subjects. The cost of the commissions and investigations and prosecutions of the last few years has been enormous. Only lawyers can contemplate it without consternation.

True, the managers of large corporations can make their protests heard. They can publish their pleas in the newspapers, and issue pamphlets, and they can appear before committees and commissions, and submit arguments. The managers of small corporations cannot afford such measures. You might as well refer a servant-girl who couldn't collect her wages, to the Hague Tribunal, as to send a plain business man to Washington to plead his cause.

The animus of these statutes is hostility to great corporations. But it is impossible to legislate against great corporations without hitting the small ones. Take the case of the recent corporation income tax; the 244,000 corporations exempt from the tax had to make out their inventories and keep their books and report their proceedings precisely as if they were liable to the tax. A fine of from $1,000 to $10,000 and a 50 per cent. increased assessment were the penalties for failure. But the cost of complying with all the requirements of the law, for a corporation having an income of two or three thousand dollars, cannot be figured at much less than the tax. Many corporations have no net income. The managers of these concerns are not expert book-keepers, and their returns must be in many cases so inaccurate as to expose them to prosecution if the game were worth the candle. If we assume that the average cost of making out the return is only ten dollars, we have a bill of $2,400,000, which the stockholders, or the employees, or the customers, must pay for the privilege of demonstrating that the small corporations are not liable to pay anything at all.

The corporation income tax law was really an act of popular dislike of corporations exercising great monopolies. Grouping all the little corporations with them was an absurdity and a cruelty.

Corporations have no feelings. They are not wounded by the hostility of legislatures. The managers of corporations of large capital have feelings, and some of them are wounded in their pride by this hostility. But they need not suffer in their pockets. They are abundantly able to protect their own property; they know how to make money on the short side of the market as well as the long side. But the managers of the concerns of small capital are seldom able to do this. Oppressive laws cause suffering to them, to the mere holders of stock in all corporations, to the creditors of all, to the employees, and to the customers. Many of these laws profess to be meant to favor small people as against big people--to restrain the rich corporations so that the poor ones may have more liberty. There is no evidence to show that this result is attained, or that the country would be better off if it were attained. But there is plenty of evidence to show that half the people of the country are suffering from these legislative attacks on their property. The men who manage the great corporations, whatever their faults, are men of enterprise and courage. They are the true progressives; the prosperity that they diffuse among the whole people is ordinarily more than can be destroyed by our progressive politicians. They are now beginning to feel that their rulers are discriminating against them as a class, and are uneasy and disheartened, and reluctant to embark in new enterprises; and the progress of the country is halted by their apprehension. It is not the rich who suffer most: it is "the unemployed," and the millions of dumb, helpless, struggling thrifty men and women whose hard earned savings constitute a large part of the capital of the corporations; and who are already alarmed at the shrinking value of these savings. It is, perhaps most of all, the mass of ignorant unthrifty poor, whose chief wealth is the wages paid them by the corporations which they are taught to look on as their oppressors.

RAILWAY JUNCTIONS

In his illuminating essay on _The Lantern-Bearers_, Stevenson complains of the vacuity of that view of life which he finds expressed in the pages of most realistic writers. "This harping on life's dulness and man's meanness is a loud profession of incompetence; it is one of two things: the cry of the blind eye, _I cannot see_, or the complaint of the dumb tongue, _I cannot utter_." And then, with a fine flourish, he declares:--"If I had no better hope than to continue to revolve among the dreary and petty businesses, and to be moved by the paltry hopes and fears with which they surround and animate their heroes, I declare I would die now. But there has never an hour of mine gone quite so dully yet; if it were spent waiting at a railway junction, I would have some scattering thoughts, I could count some grains of memory, compared to which the whole of one of these romances seems but dross."

"If it were spent waiting at a railway junction" ... Here, with his instinct for the perfect phrase, Stevenson has pointed a finger at the one experience which is commonly accepted as the acme of imaginable dulness. This man, who could be happy at a railway junction, could not have found a prouder way of boasting to posterity that he had never "faltered more or less in his great task of happiness."

It is because railway junctions are the most unpopular places in the world that they have been singled out for praise in THE UNPOPULAR REVIEW. Poor places, lonely and forlorn, cursed by so many, celebrated by so few,--surely they have waited over-long for an apologist.... But first of all, in order to be fair, we must consider the customary view of these points of punctuation in the text of travel.

Far up in Vermont, at a point vaguely to the east of Burlington, there is a place called Essex Junction. It consists of a dismal shed of a station, a bewildering wilderness of tracks, and an adjacent cemetery, thickly populated (according to a local legend) with the bodies of people who have died of old age while waiting for their trains. This elegiac locality was visited, many years ago, by the Honorable E.J. Phelps, once ambassador of the United States to the court of St. James's. He was allotted several hours for the contemplation of the cemetery; and his consequent meditations moved him to the composition of a poem, in four stanzas, which is a little classic of its kind. Space is lacking for a quotation of more than the initial stanza; but the taste of a poem, as of a pie, may conveniently be judged from a quadrant of the whole.--

With saddened face and battered hat And eye that told of blank despair, On wooden bench the traveller sat, Cursing the fate that brought him there. "Nine hours," he cried, "we've lingered here With thoughts intent on distant homes, Waiting for that delusive train That, always coming, never comes: Till weary, worn, Distressed, forlorn, And paralyzed in every function! I hope in hell His soul may dwell Who first invented Essex Junction!"

It was apparently the purpose of the writer to convey the impression that his period of waiting had been passed without pleasure; but yet we may easily confute him with another quotation from _The Lantern-Bearers_. "One pleasure at least," says Stevenson, "he tasted to the full--his work is there to prove it--the keen pleasure of successful literary composition." Was this honorable author ever moved to such eloquence by an audience with Queen Victoria? Never; so far as we know. Was not Essex Junction, therefore, a more inspiring spot than Buckingham Palace? Undeniably. Then, why complain of Essex Junction?

For, indeed, the pleasure that we take from places is nothing more nor less than the pleasure we put into them. A person predisposed to boredom can be bored in the very nave of Amiens; and a person predisposed to happiness can be happy even in Camden, New Jersey. I know: for I have watched American tourists in Amiens; and once, when I had gone to Camden, to visit Walt Whitman in his granite tomb, I was wakened to a strange exhilaration, and wandered all about that little dust-heap of a city amazing the inhabitants with a happiness that required them to smile. "All architecture," said Whitman, "is what you do to it when you look upon it;... all music is what awakes from you when you are reminded by the instruments": and I must have had this passage singing in my blood when I enjoyed that monstrous courthouse dome which stands up like a mushroom in the midst of Camden.

I have never been to Essex Junction; but I should like to go there--just to see (in Whitman's words) what I could do to it. Imagine it upon a windy night of winter, when a hundred discommoded passengers are turned out, grumbling, underneath the stars,--coughing invalids, and kicking infants, and indignant citizens, scrambling haphazard among tottering trunks, and picking their way from train to train. Imagine their faces, their voices, their gesticulations: here, indeed, you will see more than a theatre-full of characters. Or, if human beings do not interest you, imagine the mysterious gleam of yellow windows veiled behind a drift of intermingled smoke and steam. Listen, also, to the clang of bells, the throb and puff of the engines, and the shrill shriek of their whistles. Or peer into the station-shed, made stuffy by the breath of many loiterers; and contrast their death in life with the life in death of those others who loiter through eternity beneath the gravestones of the cemetery. I can imagine being happy with all this (and even writing a paragraph about it afterwards): but, above all, I should like to gather those hundred discommoded passengers upon the station-platform, and to rehearse and lead them in a solemn chant of the refrain of Phelps's poem. Imagine a hundred voices singing lustily in unison,

"I hope in hell His soul may dwell Who first invented Essex Junction,"