Book II, Chapter VI, on Money, I have endeavored to show how the use

of gold for currency puts those who own and handle gold in a position practically to control the entire country. If I have failed in proving this, there will be no occasion for substituting anything for gold. But if I have failed, it is, I think, my fault; or perhaps Socialist writers on this subject have not had, and do not possess, the intimate knowledge of financial affairs indispensable to an understanding of this subject. If Mr. Kautsky had practiced law in America, and had had American financiers for his clients, he would not, I think, have failed to understand that money is still more to-day what it always has been since the beginning of the civilized world--the "root of all evil." By money, I mean not currency, which is indispensable, but the use of precious metals as the sole fundamental medium of exchange; because the amount of such precious metals being limited, the few, who under competitive conditions contrive to get control of these metals, become by virtue of this control masters not only of our economic, but of our political conditions.

Mr. Hillquit says[189] that the principal economic classes and interest groups are represented by separate and well-defined political parties; and that the "only exception seems to be presented by the money-lending group of capitalists, who, as a rule, do not form parties of their own. This, however, may perhaps be accounted for by the function of money capital, which can become operative only in connection with the other forms of capitalistic ownership, but has no independent productive existence."

It is misleading to endeavor to draw conclusions from political groups which characterize politics in Germany and France, and there is, I think, a better reason why the great "money-lending group of capitalists" or financiers do not form parties of their own.

Mr. Hillquit is doubtless right in saying that the "Republican party is substantially the party of the modern capitalists," "while the Democratic party is largely the party of the middle class"; nevertheless, in America, as in Europe, the so-called interests and capitalists belong to no one party, because they must and do control both. And it is because Socialist writers do not seem to be aware of the extent to which they do control politics, that comparatively little interest is taken by these writers in questions of currency.

No one who lived in Europe during the Boer war is ignorant of the immense desire of both France and Germany to intervene on behalf of the Boers, and they certainly would have intervened not only because it afforded them a good opportunity to crush England, which one of them openly and the other less openly desired to do, but because such a war would have been popular with the masses in both countries. One thing alone prevented this: Financiers in France and Germany were heavily interested in African gold mines and it was their influence that turned the scale against the crushing of England at that time.

In America, the revelations of the life insurance investigation told all the world what Wall Street previously knew: that big corporations contribute to both Republican and Democratic parties and practically control the action of the Democratic side of our legislatures as well as the Republican. Nothing could have been more transparent than the influence of financiers in the decision whether Cannon and the rules that make Cannon supreme in Congress were to be maintained. The Wall Street Group, which had a lobby in Washington, appealed to the Republican majority not to disorganize their party by fighting against Cannon personally, promising that the Republican party would alter the rules that gave him his present autocratic power; and when in compliance with this promise, Cannon was reelected and the rules came up, the same lobby secured enough Democratic votes to maintain the rules in spite of the adverse votes of the insurgent Republicans, the argument then used being that the tariff bill could not be passed unless the rules were maintained.

Again, after Taft had, on three separate occasions, solemnly promised the people, if he were elected, a revision downward of the tariff, the same lobby secured a revision of the tariff upwards. We are assured by Messrs. Aldrich and Payne that the revision is a revision downward. How, then, will they explain the extraordinary haste with which ships sought to reach this port before the new tariff came into effect?[190] Were these ships hurrying to port in order to escape the payment of a low tariff? It may be answered that although the tariff was raised as regards certain articles, it was lowered as regards others. To this I have but to quote the _Reviews of Reviews_ for September, 1909, and the articles entitled, "The Payne-Aldrich Tariff," which follow in subsequent numbers. The _Review of Reviews_ is quoted rather than other periodicals because it is recognized as a supporter of the so-called Roosevelt policies and, therefore, cannot be accused of Socialistic tendencies. It is seldom that the Interests have gone so far as to elect a presidential candidate on a definite promise and deliberately, as soon as the candidate was elected, to violate their promise. But the Interests have at this moment such control over our politics that they can even do this; and it seems very doubtful whether this treachery will ever be materially punished.

If, as I believe, it is important that the competitive system be allowed to survive in the cooperative commonwealth, it is obvious that it can only be tolerated on the condition that the community be safe from such political control as this. And for this reason it seems to me essential that the use of gold as currency be limited; and that as regards the exchange of all the necessaries of our existence, we should have a currency that entirely escapes the control of the financier. This is the reason why I have insisted on the use of store checks which are just as convenient and secure as our present greenbacks.

There seems to be no other way of eliminating the undemocratic autocracy of the financier than by some such system as the one above described; that is to say, the issue by the state of orders on the public stores to the extent of the goods in the public stores, which may in their general appearance differ but little from the greenback of to-day: Instead of reading "Good for $1.00 gold currency," they will read "Good for $1.00 at the public stores." This public store currency will eliminate the use of gold and silver throughout the socialized industries and as regards all agricultural products except a very small portion. Every socialized industry and every farmer will furnish to the state the bulk of his produce--that is, the minimum exacted by the state--in exchange for this kind of currency.[191] It is only the surplus--the amount produced by the farmer and factory above the minimum established by the state--that the farmer and the factory will be at liberty to sell for gold instead of exchanging for public store notes; and of this surplus the farmer and factory will be free to sell as much as they choose for public store notes, so that gold and silver will constitute a small part of the medium of exchange. This system will have the following advantages:

It will practically eliminate the present control of political and economic conditions by financiers. So long as the currency used in exchanging necessaries and comforts is rescued from the control of financiers, it is a matter of comparative indifference whether the financiers control the currency used in the manufacture and distribution of luxuries, for such control will have practically no effect upon the things necessary to human existence.

It will give to the state the use of the gold coin which is now accumulated in its treasury for the redemption of its notes; and the state will use this large gold fund for the purchase of the products of other nations.[192]

Let us see how this proposed system of store notes will work in a given manufacture:

The state will order the steel guild to manufacture thirty million tons of pig iron (the amount produced in 1907 was a little over twenty-six millions); and will allot to the steel guild for the supply of steel six hundred and sixty million dollars in store notes, this being calculated at the rate of $20 a ton. (The price in 1907 was a little over $22.) These $660,000,000 will be paid to the steel guild in the following manner:

Every week a number of store orders will be issued to the amount of the wages of the week and of the fixed charges. At stipulated periods the steel guild will furnish the state pig iron so that the state will never have advanced to the guild store orders amounting to more than the value of the pig iron in the store, an exception of course being made for the first few weeks that the industry proceeds upon this basis. Upon the delivery of pig iron at these stated periods, the state will deliver the difference between the weekly amounts already paid and the price of the pig iron delivered. If deliveries of pig iron can be made once a month, this will enable a repartition of a part of the profits so that the workers will not have to wait until the end of the year before they receive their profits, the final dividend being paid at the expiration of each year.

Such an order as the above will serve the following purposes and have the following consequences: the steel guild will have a definite order for a definite amount of pig iron to manufacture. It will know exactly how many men it will need to manufacture this pig iron. It will employ a few more men than those employed in 1910. The state will issue to the steel guild weekly the amount of store notes necessary to pay the wages upon the same scale as in 1910. Men engaged in the Steel Trust at the moment of transference will continue to work and receive the same rate of wages; but they will be entitled to their share of the profits after the amounts due annuitants and the amounts necessary to create a fund for old age and sickness have been deducted. Obviously, this first order of thirty million tons is far larger than the country uses, because a large part of the product of 1907 was exported. The amount thus exported will be at the disposal of the state either to export, or exchange for foreign products, or to set aside as a reserve upon which the state can draw in case of deficit.

Sec. 10. SUMMARY

Let us now consider the purposes we have in view in this proposed economic organization of the cooperative commonwealth and how far we attain these purposes:

The main object of a cooperative commonwealth is to give to all workers as nearly as possible the exact product of their work. It may be interesting to note that this is the ideal that Mr. Roosevelt himself proposes, and he objects to Socialism because he thinks Socialism will on the contrary allow the "thriftless and the vicious" to profit. These words describe not a cooperative commonwealth, but existing conditions. For example, such a degenerate as Harry Thaw, who would, I suppose, according to Mr. Roosevelt be classified as one of the "thriftless and vicious," obtains his income from the profit created by others who work for it; whereas those who work, instead of getting the full product of their work, are obliged to see that nearly if not altogether one-half of it goes to the support of the idle, among them this young man. These are the exact conditions to which Socialism proposes to put an end, and, therefore, I point out that the principal object that Socialism has in view is to do exactly the thing that Mr. Roosevelt wants to see done--to undo the very things to which Mr. Roosevelt objects.

Another principal object of this proposed organization is to prevent overwork and unemployment, that necessarily lead to drunkenness, pauperism, prostitution, and crime.

A third thing which this system of organization proposes to do is to preserve the resources of the country; and here again we find ourselves realizing the ideal of Mr. Roosevelt. The single idea of a lumberman is to sell lumber--not to preserve it; the idea of a coal miner is to sell coal--not to preserve it; the idea of an iron miner is to sell ore--not to preserve it. In a cooperative commonwealth there is no desire to make profit out of these things. The one object in view is to use our lumber, coal, and ore to the best advantage and with the least waste.

Another object we have in view is to produce with the greatest economy, with the greatest efficiency. We do not want forty refiners engaged in refining sugar where seven will suffice.[193] We want all our factories while they are working, to be working at their best efficiency, not on half time or with only one-half the engines going. We also want the things we need to be produced in such a way as to take advantage of every waste product--a thing that can only be done when industry is concentrated in the hands of a single guild instead of being distributed as it tended to be (before the organization of trusts) in the hands of many competing manufacturers.

This system of production and distribution would maintain the present check upon overpopulation which Mr. Huxley regarded as the principal objection to Socialism;[194] for under this plan, although every member of the community would be assured a comfortable income, his comforts would be limited by the number of children he brought into the world. Experience shows that the prudence of the middle class to-day constitutes a check upon overpopulation; that, in other words, overpopulation is to be feared, not in the middle class, but in those, such as the extremely poor, who are under no prudential check.[195]

The imprudent in such a cooperative commonwealth as is above described, have always before them the prospect of the state farm with its different degrees of unattractiveness. If, therefore, to-day workingmen look upon the almshouse with abhorrence, it does not seem unreasonable to suppose that the workers in a cooperative commonwealth, accustomed to a far higher standard of living than the workingman of to-day, would be deterred as much by the prospect of committal to a farm colony as a self-respecting worker to-day is deterred by the prospect of the almshouse.

But there is another point of view from which the question of overpopulation must be considered: The increasing independence of women in America has already served to diminish the increase of population to the extent which our sociologists regard as alarming. The population of the United States is increasing chiefly through immigration and the increase of immigrants. Here, as elsewhere, it is the extremely poor that propagate. Indeed, as women become more and more independent economically, as they certainly would in a cooperative commonwealth, there seems to be more danger of underpopulation than overpopulation. But here the state can no doubt exert a very important influence; for if there seems danger of underpopulation it might increase its tax upon the industries of the state and apply the tax to the support of children so as to relieve parents at the expense of the entire state, of the cost of educating children, thereby removing all economic motive for underpopulation.

I think, moreover, that since Mr. Huxley's day the whole opinion as to overpopulation has changed. There is not a shadow left of the fears of Malthus; for the extraordinary results published in the 13th Annual Report of the Bureau of Labor show that productivity is likely to increase rather than diminish in a cooperative commonwealth, in view of the fact that all those now engaged in pure competition and therefore a burden on the community, will be put to the work of production, thereby increasing the productivity of the nation relatively to its numbers.

FOOTNOTES:

[152] See Northern Securities Case, 193 U.S.

[153] Kautsky, "The Social Revolution."

[154] Upon every breadwinner there are on an average four persons dependent--the aged, women, and children; 200,000 unemployed is therefore equivalent to 1,000,000 in want.

[155] See Book II, Chapter I, Unemployment.

[156] See Appendix, p. 412.

[157] "Socialism." By John Spargo, p. 217.

"Socialism in Theory and Practice." By Morris Hillquit, Chapters V and VI.

[158] By "pure capitalism" is meant the ownership of industry entitling the owner to dividends although the owner contributes nothing to the industry in the way of personal service.

[159] See Appendix, p. 428.

[160] _Saturday Evening Post_, May 8, 1909.

[161] _Outlook_, March 20, 1909, p. 622.

[162] Ibid., p. 619.

[163] Ibid., p. 623.

[164] On the very day of writing of the above, the N.Y. _Times_ of June 25, 1909, states that the United States Postoffice Department has installed a complete ice-making plant which has made such economy that the Government is considering the building of an ice-plant for all its departments. Private dealers charge at the rate of $7.65 a ton for ice, whereas the Postoffice Department now furnishes ice at a cost of 65 cents a ton.

[165] "The Elimination of the Tramp," by Edmond Kelly. (G.P. Putnam's Sons.)

[166] See Appendix, p. 429.

[167] _Charities and the Commons_, p. 342, June, 1907.

[168] Eugene Simon, "La cite chinoise" (translated into English); Toubeau, "La repartition metrique des impots," 2 vols., Paris (Guillaumin), 1880, quoted by Kropotkin in "Fields, Factories and Workshops," p. 239. See Evolution and Effort, p. 168.

[169] Dr. M. Fesca, "Beitraege zur Kenntniss der japanesischen Landwirthschaft," Part II, p. 33 (Berlin, 1893). The economy in seeds is also considerable. While in Italy 250 kilogrammes to the hectare are sown, and 160 kilogrammes in South Carolina the Japanese use only sixty kilogrammes for the same area. Semler, "Tropische Agrikultur," Bd. III, pp. 20-28. Quoted by Prince Kropotkin in "Fields, Factories and Workshops," p. 239.

[170] L. Grandeau, "Etudes Agronomiques," 3d series, 1887-8, p. 43. Quoted by Kropotkin, Ibid., 101.

[171] See Ponce, "La Culture maraiche," 1869. Barrel's "Dictionnaire d'Agriculture." Quoted by Kropotkin, Ibid., p. 64.

[172] Very little land in New York State produces more than from two to three tons an acre, and most of it does not produce so much.

[173] It is impossible in this book to give to the question of soil fertility the scope which it needs in order to convince a layman of the almost unlimited extent to which good soil can be manufactured and made fertile. Those who are anxious to satisfy themselves on this subject are urged to read the books above quoted.

[174] "The Elimination of the Tramp," p. 51.

[175] Published by G.P. Putnam's Sons.

[176] See "Elimination of the Tramp," p. 45.

[177] See _Hampton's Magazine_ for May and June, 1909.

[178] See p. 58.

[179] The occupation that furnishes most inmates to our asylums is farming.

[180] This limitation on property has already been enacted in the State of New York (Chap. 463, Laws of 1909), and bills of similar import have been introduced into the legislatures of California, Maine, and Pennsylvania. In Maine a hypothetical question as to the constitutionality of such legislation was submitted to the supreme court, which reported favorably (19 Lawyers' Reports annotated [U.S.] 422).

[181] Farmers' Bulletin, No. 242.

[182] Something has been done in connection with the milk supply. Thus the milk producers of Boston have organized a union and have agreed to a price with the Milk Contractors' Association. But although this effort at combination has cheapened milk for large consumers such as hotels, large restaurants, and even small stores, pint customers pay just as much in Boston as elsewhere; that is, 8 cents a quart. (Industrial Commission Report, Vol. VI, p. 409.)

[183] See 13th Annual Report of the Bureau of Labor of U.S., p. 25, where the cost of producing wheat under the best conditions is approximately 30 cents per bushel.

[184] Book II, Chapter II.

[185] For example, it is generally believed that the President of the Steel Trust gets over $100,000 a year. Before the insurance investigation presidents of life insurance companies got similar salaries. Railroad presidents are also paid at similar rates.

[186] "Socialism in Theory and Practice," p. 133.

[187] "Socialism in Theory and Practice," p. 119.

[188] Karl Kautsky, "The Social Revolution," p. 129.

[189] "Socialism in Theory and Practice," p. 164.

[190] See any daily newspaper between March 16, 1909, when the bill was introduced in the House, and Aug. 6, 1909, when the law went into effect.

[191] Obviously, until all the industries are socialized, a part of this minimum will have to be paid in gold. When, however, all the industries are socialized, the whole of the minimum will be paid in store checks.

[192] See Appendix, p. 431.

[193] Book II, Chapter I.

[194] I am not aware that Mr. Huxley has ever suggested any other objection to Socialism than this; but I may be mistaken.

[195] "Government," Vol. I, p. 339.