The American Story

BOOK THREE

I

Oversize Sinews

AMERICAN GIANTHOOD WAS NEVER THE CONSCIOUS INTENTION. All the phenomena were eruptive; and the giant becoming was himself absurd, always falling down and getting up, never seeming to know what he was about, subject to alternate seizures of wild exaltation and extreme depression. We should call him a manic-depressive.

Forces hitherto unmeasured in the world were acting through him; whether he understood them or not he was obliged to release them. There was no goal that he could see. The vitamin in his diet was hard times.

He was a fool for delusions. The one he loved most, when he had fallen down again, was that he was already too big, that he had done everything, and that he was doomed to perish in a Sargossa sea of excess plenty. Then he would rise and go on, producing more and more, as if it were a fatal compulsion.

Times were hard because everything was too cheap. He could live on twenty cents a day, that was true, but neither in the fruits of the soil nor in the products of toil was there any profit.

His second most beloved delusion was that this evil enigma was from something that was wrong with his money. Yet the more he did to reform his money the worse it was.

He was rich when he thought he was poor and poor when he thought he was rich; and all the time he was creating wealth as wealth had never been created before, in kind or quantity. Even that he did not understand and gave it wrong names; and from giving it wrong names he got the uneasy feeling that he might be losing his soul.

And so he achieved gianthood. It took the last third of the 19th century, from the end of the Civil War to circa 1900, which on the dial of historic time might be ten minutes.

In that little time he lost heaven and hell and the ancient values of patient poverty.

The sinews had to be oversize. Nobody knew why, not then, nor for a long time. They seemed to grow by a strange law of excess, and it was as if all other values of life had to yield to that one necessity.

No period of American history has been so little understood, so misrepresented, so morally disesteemed. Precious minds look away, saying it ought never to have been like that; or, if they look, it does them a psychic damage, like cutting yourself in a shaving mirror when some unwelcome piece of your past suddenly intrudes itself.

In a merciless manner Mark Twain satirized it as the Gilded Age. It was ugly, certainly. Fashions, furniture, buildings, morals—everything was ugly. A habit of bad manners was the national strut. What survived of good taste quietly celebrated its own obsequies. Gilt and gold had equal glitter. A member of the New York Stock Exchange retired from Wall Street to manufacture brass spitoons with a plush top that lifted delicately by a silver-plated treadle.

Even today if you will stand in lower Chestnut Street, Philadelphia, and look down the mews at lovely old Carpenter’s Hall, then face directly about and look at some of the things that were built about 1880, you will wonder how men with fine early American patterns in their eyes could have designed those absurd later facades, heavy with specious ornamentation. But they were fumbling with new materials, new tools and new boredom with anything old or repetitious; and it was in any case a passing phase.

A supreme building genius was acting at the same time, only that it was preoccupied with purpose and function, that is, with railroads, bridges, steel mills, industrial projections, docks, terminals and monster storage bins. It could not stop to look at the outside of what it was doing. The engineers who built Brooklyn Bridge at that time had perhaps not a single aesthetic idea about it, and yet contributed to the world one of its perfectly beautiful forms. The architect was lost until he began to derive form from function. Then new vistas opened. And near the end of the Gilded Age came the Columbian Exposition at Chicago, which was architecturally the finest thing of its kind the world had ever produced; and after that the skyscrapers and the awful grandeur of the New York skyline.

Then you will hear that this age of the vulgarian was also ruthless. So it was.

At the Stockyards in Chicago there is a very pleasant club on the walls of which you may see three generations in portraiture. In the top row are the grimsires—the old pork packers, famous brigands of the grain trade, the merchants who made State Street, speculators in untamed land, men who pushed railroads across mountains and deserts before there was anybody there, who made and lost the great American fortunes and made them again, all with that far-away look in their eyes that comes from gazing beyond the horizon. On every one of them is the uncouth sign of power. You should not like ever to have been in their way.

In the next row are the inheritors, all intelligent and capable men, who learned to live with the amenities, married gorgeous women, bought art objects in Europe and supported symphony orchestras.

In the bottom row is the third generation—men who know their humanities, speak a liberal dialect and like to be known for their social mindedness.

The point is to ask whether these could have made the world that was handed down to them. The answer is no. It was a world that belonged to the strong; they treated it as a private possession. Yet it turned out to be a world that could be divided with the weak, and was, and the more it was divided the more there was of it. Only, before it could be divided it had to be created, and whereas there were many ways of dividing it there could have been only one way to create it in the first place.

If the mystic thinks it was predestined and if others say it was luck, what difference does it make? There was a running together of many things, both with and without apparent casual relationship, at a certain time in a certain way, so that what happened could not have happened anywhere else, at any other time or under other conditions.

It is customary at this point to develop the fact that the Civil War had a terrific impact upon industry. It had of course; and yet the stimulating effect of war upon the economy of a victorious nation amounts only to this, that the necessities of war oblige man to discover his latent powers. He gets excited, money is flung about in a reckless manner, prices rise, there are delusions of great profit, and then a postwar boom which ends in depression and panic—in this case the disastrous panic of 1873. But for all of that there will be a remainder of value, such, namely, as the actual increase of industrial capacity and new ways of performing more work with less labor that had to be learned when so much manpower was on the battle field and war’s insatiable demands for food, clothes and guns had somehow to be met. However, in the story that now begins to be told these factors are unimportant. It would have come out the same way if there had been no Civil War.

There was first of all the fact that the economic shape of the world was changing. The Second Industrial Revolution was beginning, and so far as we were concerned its place in time was perfect. That will be explained.

The Industrial Revolution is a dim name plate in history. It refers to the downfall of the ancient guilds and handicrafts and the rise of the factory system that began in England 100 years before this time. Its bible was The Wealth of Nations, by Adam Smith, published in 1776. England even then was the paramount industrial power of the world and had what she was pleased to treat as a monopoly of machine craft. But mark you, this was before railroads, before steamships, before steel or electricity, before smokestacks and engines, in a world still lighted at night by candles. It was a revolution founded not on engines but upon machines that could automatically and tirelessly perform the tasks of the skilled hand, only of course much faster—and these at first were principally spinning, knitting and weaving machines.

When about 1760 the first spinning and weaving machines appeared there were in England 5,200 spinners using spinning wheels and 2,700 weavers using hand looms, making cotton cloth; and all they could see was that the machines were going to take their work away. It made them frantic. They ran together in mobs to wreck the machines and burn down the buildings that housed them and the homes of the wicked machine owners, until they had to be put down by force. This was perhaps the most tragic labor disturbance in history.

They could not imagine that within one generation the number of workers in the cotton textile industry of England, working shorter hours for higher wages, would increase 40 times. Why? Because the cost of making cotton cloth had been so cheapened by machines that it became England’s principal staple of export, to clothe the people of China, India and Egypt, whereas before by handicraft they had been able to make only enough for themselves.

All machines have to be turned. These early machines were turned principally by water power. Steam engines were still crude and monstrous and very costly; and even after they had become docile the only way of conducting power away from them was by pulleys and belts, so that the limitation on the size of a factory was the length of a leather belt and the machines had to be crowded together; and for that reason among others the conditions of labor in a factory were pretty terrible.

The Industrial Revolution, you see, was at first a fumbling method. There was invention in it, but no science—a substitution of the machine for the skilled hand and a division of labor into a series of small repetitive tasks requiring no skill at all. Children could mind machines. Only do not forget the hitherto non-existent skill that now went into the making of machines.

When this country began, the factory system of Europe was already more than half a century old, its principles were set forth in political economy books, and machines were calling people from the land to the cities.

But here more than nine-tenths of the people were on the soil and the other one-tenth in towns and seaports lived mostly by trade. There was very little manufacturing of any kind. There was no machine industry at all, no machines, no engines; the Industrial Revolution had passed us by.

That was because England was protecting her monopoly of machine craft. She would not sell machines and tried to keep her mechanics from migrating. Manufacturing in the American Colonies had been repressed and in some cases actually forbidden, even for home use. She wanted from the Colonists only raw materials for her own machines and no competition. The first textile machine in America was smuggled out of England in the head of a mechanic, who built it here from memory, and hitched it to a New England water-wheel.

One of the very early acts of the American Congress, after Independence, was a tariff law as a barrier against British machine-made goods, because the British, having lost the power to forbid American industry, now sought to discourage it in another way—that is, by filling the market with manufactured goods at prices with which infant American industry could not compete.

But it was slow. Even after England was willing to sell machines and engines it was slow, owing to the Americans’ want of skill and experience, to the technical superiority of British industry at almost every point and to the long habit of thinking British was best, as it usually was—the best cloth, the best leather, the best china, the best iron and the best machinery. For the first American railroads locomotives were brought from England; the iron rails on which they ran were British made.

Yet in this handicap, as it turned out, there was an advantage that no one could have foretold. Indeed, for a long time nobody could see what the American advantage was. The shape of the whole economic world was changing again. Why the pace of this second change should have been faster here than anywhere else was not at first understood.

To see it clearly we need the aid of a figure.

As water in the reservoir behind the dam gently rises a little higher each day, silently storing its power, until suddenly with one rain more it begins to spill over the top in a wild release of energy, so it was with the Second Industrial Revolution.

The Industrial Revolution that passed us by had evolved machines. The radical principle of this Second Industrial Revolution was the engine.

For more than 100 years the world’s store of mechanical power had been rising in the reservoir, slowly at first and then faster and faster, until its potential was immeasurable. There was no scale. Engines begat engines by a law of geometrical proportion and the machines that engines turned grew likewise. There was no optimum of size—only bigger and bigger.

In one generation the power developed by steam engines was three times the manual power of the world’s entire working population.

Came steamships and railroads and power tools, and then mighty works, such as the Suez Canal, which foreshortened the trade routes. Electricity was coming. Communication was subdued to the speed of light by the telegraph. Agriculture began to be transformed by machines, so that fewer people on the soil could feed more people in the cities. The mechanic gave way to the engineer, the technologist and the scientist; dazzling rewards were reserved for the inventor.

None of these things had the effect of a cloudburst. Each thing was born small and had to grow. It was rain that raised the level of the reservoir.

Then suddenly it began to spill over. That was the first flood of the Second Industrial Revolution. You cannot rest your finger on the date. You may say only that the disastrous phenomena began to appear in the early 1870’s.

Disastrous in a relative way. Disastrous in fact only to the old capital that was invested in machines, nearly all of which were doomed to die.

Why? Well follow it.

What was it that came spilling over the dam? Goods, a flood of goods—engines, machinery, iron and steel, cloth, shoes, food, everything that could satisfy human wants or tend to the greater satisfaction of them; and all this from the fantastic increase that had been taking place in the productive power of industrial man.

The effect was what you might suppose. Prices began to fall. They fell for twenty-five years: and the why and wherefore of their falling became the subject of anxious investigation by Royal commissions, international round tables and committees of economic seers. Why was everything too cheap? What had happened to the thing remembered as profit?

Now, as prices fall what must the industrialist do to save himself? He must reduce his costs. And how will he do that? By calling on the inventor for bigger, faster and more cunning machines.

But in this competitive world each better machine destroys the value of every older machine, even though the older machine may be still mechanically perfect with yet a long life to live if only a better one had not been invented. Obviously a machine that produces cloth at a cost of 15 cents a yard cannot live against one that produces it for 10 cents a yard.

As the new machines came in the output of goods was increased, naturally, since now the industrialist must learn to live by a very small margin of profit on a larger quantity of output. But these consequences have a spiral pattern. As prices fall output increases; as output increases prices fall again; and the rate at which capital in old machines is destroyed becomes heartbreaking. The capitalist who is loath to scrap his old equipment, or who even hesitates, is lost.

You may now have guessed what the American advantage was. When the Second Industrial Revolution began this country’s investment in machines, compared to that of Europe, was small. Therefore it had much less to destroy; and what there was of it was destroyed with a kind of glee. It was known to happen in a steel mill that before it could be bolted down to the floor a very costly new machine, never having turned a wheel, would be carted off to the junk heap because a more efficient one had just been invented. That could not have happened in Europe.

Thus it was that at the onset of a Scythian struggle for economic supremacy American industry began with all young and new machines and a ruthless way of killing them as fast as they became obsolete—and this against the older machines of Europe and against the reluctance of the European industrialist to destroy capital which until then had been very profitable. The old mare was still what she used to be; the trouble was that better mares were getting born. Moreover, American industry had no complacency of laurels, no traditions, no habits. It was rash and experimental; it could embrace a new method with amazing ease, and no one to say, “But we have always done it this way.”

 

II

Laissez Faire

NOW TO GO ON—

There was the fact, secondly, that in this period for the first time—possibly for the last and only time—the philosophy of Laissez Faire found here its suitable climate and could make its complete demonstration.

For better or worse, later generations have buried Laissez Faire in lime. Social teaching now says its only meaning was—every man for himself; devil take the hindmost. But for a nation of individualists, such as this nation had been from the beginning, it was a natural philosophy and responsive to the original political conviction that the first anxiety of a free people should be to limit the power of government. Let the people be; let them make their own mistakes and absorb their own troubles. Few Americans now living have any idea how strong that conviction was.

The theorem of Laissez Faire was first clearly expounded by Adam Smith. It was this—that the individual, freely making his own decisions and pursuing his own selfish ends, was bound in the sum of things to serve the welfare of society whether he meant to or not, because the grand total of innumerable individual decisions, recorded in the market place, would represent a truth of economic reality such as could never be arrived at by the wisdom of bureaucratic government. Therefore let him be.

If it was cruel, it was cruel in the way nature is cruel, and beneficent in the same way, if you stop looking at the weak and mistaken things that lie withering on the ground and look instead at the forest.

Anyhow it worked, as nothing else had ever worked; and although it worked for the strong in a pre-eminent way, it worked also for the weak and for the wage earners, all emotional sayings to the contrary notwithstanding.

It is true that when the employer brought in new and faster machines his single idea was to produce more goods with less labor and that profit was his motive. It is true also that when the immediate effect was to displace labor he thought very little about it. He simply took it for granted that the labor he could dispense with would be absorbed elsewhere in the free economic system, and in fact it was, not despite the machine but because of it, since what the machine really did in a little while was greatly to increase the total demand for labor, as in the case of Great Britain’s textile workers after the introduction of spinning and weaving machines.

Or, if the employer thought about it at all, he thought of the discharged wage earner as an individual like himself—an individual who in an expanding economy would somehow be able to take care of himself, as in fact the individual did, with no benefit of government, no unemployment insurance, no social problem on his account, with the result that never before on earth had there been such a nation of self-resourceful individuals.

In England at this time the social doctrine was that a man was entitled to a living by reason of having got himself born an Englishman; and in England there was wretched poverty. No American of this time ever imagined he was entitled to a living by reason of being an American; and the English kind of poverty was unknown here.

As these changes were taking place there were those who could see only the debris. Most people in fact were unable to understand the fabulous work of construction that was causing the litter. The Creator himself made a lot of litter. We are still clearing it away.

In 1886 the United States Commissioner of Labor made an ominous report on the displacement of the precious human hand by the insensate machine. Here were six hundred doing the work that had formerly employed 2,145, a displacement of 1,545 workers. Where were they, these 1,545, and what were they doing to do? In a certain shoe factory one hundred doing the work that five hundred did before. In metal working industries manual labor had declined one-third. In flour milling it had declined three-fourths, and so on.

Statistically it was dire. What would become of the wage earner? And when he had been entirely dispensed with, who would consume the products of the machine? Should the machine be chained down? Should there be a holiday on invention?

There was never in our history a greater disparity between the emotional surface of American life and the underlying verities. The verities were such as these:

(1) At that time we were receiving immigrants from Europe at the rate of more than a million a year, most of it manual labor, and it was all absorbed, by the factories or by the soil.

(2) The national pay roll was all the time increasing.

(3) The standard of common living was rising because the trend of wages was upward and the trend of prices was downward, so that the buying power of the wage earner’s dollar was consistently greater. This is only to say that the price of labor was rising and the price of everything else was falling.

(4) Never before in modern history had the physical welfare of the common man been so high; witness for one thing the fact that from fuller nourishment and less drudgery he was increasing in average size. In his book Recent Economic Changes, published in 1889, David A. Wells, United States Special Commissioner of Revenue and president of the Social Science Association, wrote: “Dealers in ready-made clothing in the United States assert that they have been obliged to adopt a larger scale of sizes, in width as well as in length, to meet the demands of the average American man, than were required ten years ago. . . . The American is, therefore, apparently gaining in size and weight, which could not have happened had there been anything like retrogression or progress toward poverty on the part of the masses.”

All the same the common man complained more than ever. The unrest of labor was a chronic cause of national anxiety. Why was that? It is another subject and may be looked at in another place. The physical story is still running.

If a celestial economist had been able to view the scene of American activity as a whole, through a magic lens, his impression would have been that of a people whose behaviour was controlled by a frenzy to get ready, and fearful that time would overtake them.

To get ready for what? They couldn’t have known. Blindly they were laying the foundations for a power that was destined to encompass the earth. Intuition kept telling them to make their designs massive, beyond any need of their own they could then imagine, and if it did not immediately pay they were not discouraged.

For a while they had nothing in the way of machines or technical knowledge that Europe did not already possess. What they did was to make everything bigger and faster and hang weights on their safety valves. Nothing was ever so big but it had to be torn down right away and made bigger. Enough was a word they could not pronounce. Stability was one that had not come out of the dictionary. The only stability they knew, as Henry Ford said afterward, was the stability of change; bankers and actuaries might speak of security, but the word had no social meaning whatever.

Railroad mileage—now with American locomotives, American rolling stock and American rails—increased faster than a horse could travel. What if at one time a quarter of it might be bankrupt? That made no difference except to the stockholders who lost their money; the railroads went on running just the same, sometimes growing by the use of receiver’s certificates for new capital, so that a railroad emerging from bankruptcy might be better than when it went broke. And whereas it had been that railroads were built only where the traffic was, originally in competition with canals, now at the rate of three or four thousand miles a year they were pushed westward into country where nobody was. Population followed the railroads.

Thus, until 1881 Dakota Territory had never raised a bushel of wheat for sale; six years later its wheat crop was more than sixty-two million bushels, which may be accounted for as follows: first, railroads had made it profitable to raise wheat for sale, since it could be shipped to market, and, secondly, the use of agricultural machinery had made one man’s labor equal to 5,000 bushels of wheat. In the new roller mills of Minneapolis one man’s labor for a year could reduce these 5,000 bushels of wheat to 1,000 barrels of flour. The labor of two men engaged in transportation would put the flour dockside at New York for shipment to Europe. The cost of carrying it to Europe by steamship was but a fraction of a cent per pound. So the labor of four men—one a farmer in Dakota, one a miller in Minneapolis and two on the railroad—plus a very low rate for ocean carriage—could put into Europe enough flour to feed 1,000 people for a year, and this in competition with Russian peasants and Egyptian fellahs, working by hand at ten and fifteen cents a day, on land as good as Dakota’s.

The effect upon the world’s food supply was prodigious. England at that time was feeding her agriculture to industry, that is, she was providing her industrial workers with cheap imported food and letting her own agriculture starve. Before a Royal Commission in 1886 an English farmer testified: “I have calculated that the produce of five acres of wheat can be brought from Chicago to Liverpool at less than the cost of manuring one acre of wheat in England.”

Here the relation between agriculture and industry was fundamentally symbiotic, which is to say that one form of life was vital to the existence of the other, by a law of mutual benefit. If the fruits of the soil were cheap, so also were the products of industry cheap, and this was important, as the farmer became one of industry’s principal customers, buying always more and more machinery.

Never did the country cease to be farm-minded, since nearly everybody had farm ancestry, so that if and when it was that the terms of exchange between agriculture and industry moved to the farmer’s disadvantage he was sure to receive sympathetic hearing in Congress.

Owing to a disproportionate decline in the value of farm commodities the farmer was in distress when the historic Granger Movement began. The trouble was that for many reasons food was too cheap, not only here but everywhere in the world, and there was very little that could be done about it until population began to overtake the food supply. This was hard for the farmer to see, or to wait for if he did see it. Anyhow, he got the notion that the railroads were devouring his profit by charging too much to haul his produce to market. Out of this agitation came a Federal law creating the Interstate Commerce Commission, and at the same time state railroad commissions, to mind the behaviour of the railroads and regulate their rates. More of that later.

It would have taken 500 years to subdue the west to grass by hand, if it could have been done at all by hand. And the inner voice that could never be still kept saying: “If you take 500 years you will lose it. Do it quickly.”

That is why the mechanical extension of man’s power over the soil became the ruling obsession of American inventive genius. First, then, the steel plow, which had to overcome an immemorial superstition against wounding the earth with metal. Then the riding plow, two furrows at a time; the harrow, the planter, the multiple cultivator, and most wonderfully the reaper, which was a machine that moved against the standing grain and laid it down in swaths by means of a long cutting blade full of gnashing teeth.

Now the wooden plow, the hoe, the scythe and cradle were gone; and that was only the beginning. Came the harvester—a machine that cut the grain like the reaper but at the same time gathered it up in sheaves and tied a string around the sheave with its own steel fingers. Behind the harvester lay the sheaves, in rows as neat as dominoes, needing only to be picked up. And then the threshing machine-first a stationary one to which the sheaves were brought from the field by wagons, the grain passing back to be sacked and the straw piling up in mountains; and then one that by its own power moved over the standing wheat, reaping it into its maw with one stroke, threshing it by internal commotion, spilling the straw back to the ground as it passed, sending the winnowed grain through a pipe to a tank tender.

The first machines were moved by animal power. The power was transmitted to the active parts through the wheels. The steam engine when it came was awkward on the soil and fit only for big farming. The complete mechanization of agriculture had to wait for the internal combusion gas engine that now moves the farm tractors we see everywhere in the rural landscape—activating the mechanical animals that plow and sow and reap, that bale the hay, that dig the potatoes and the sugar beets, that pick the cotton and harvest the corn.

It happened here—originally here. The idea of machine farming, with intent at first only to increase the strength of man in his struggle with the earth, which it did five-, ten-, fifty-fold, and then secondly to eliminate the stooping drudgery—that was an American idea. Other people took it from us, slowly; and with the idea went the American machines to every part of the earth. From the beginning American preeminence in the invention and manufacture of agricultural implements has defied the competitive ingenuity of the whole world.

Invention was before science. Any tinker might be an idiotgenius. In sheds and attics and little machine shops everywhere, with sticks and strings and glue and bits of metal, eccentric minds were making models of things that might work, either to save labor or to save time—two thoughts with the same meaning. It might be a washing machine to replace the Monday tub and washboard, a perpetual motion apparatus, a rotary engine, a flying machine; and there would be a fortune in it if it worked. A young news butcher named Thomas A. Edison, who would live to be called the electric wizard, was thrown off the train one night for exploding some chemicals in the end of the car.

During 70 years until 1860 the United States Patent Office had granted fewer than 40,000 patents; in the next 30 years it granted 400,000.

The leather belt was broken by the discovery that the power of a steam engine could be converted into electric energy and the electric energy could be conducted by thin wires to little motors attached directly to the machines. The telephone arrived. It was a poor day that brought no new thing—either a new thing or a new way of using a thing that had been recently discovered. One day the steel rail, another day the steam hammer, and, seriatim—

the power excavator,

the steam drill,

the sewing machine,

rubber,

electric light,

the rotary printing press,

the typesetting machine,

cranes and elevators,

wire rope,

the compound steam engine,

dynamite,

steel ships,

petroleum,

natural gas,

pipe lines,

Pullman cars,

the air brake,

the electric street car,

plumbing,

refrigeration,

the mass production of clothing.

During one night the width of all railroads was changed to a standard guage so that equipment might be interchangeable throughout the entire railway system. National advertising, national distribution and the mail order catalogue were solvents of localism. There was one Main Street from New York to San Francisco.

Let the master guage be steel.

In 1870 there was nothing that could be called an American steel industry. We bought our steel and iron in Europe. Thirty years later we were producing more than 10 million tons of steel annually, passing first Germany, then England, then Germany, France and England added up, and this would continue until we alone should be making more steel than all the rest of the world.

When the Second Industrial Revolution began this country was 100 years behind Europe in machine craft. Its foreign trade consisted principally in the exchange of bread and meat and cotton for the manufactured goods of Europe, mostly British goods still.

What the next American generation wrought so unbalanced the world that it has never been in a state of equilibrium since.

We continued to sell enormous quantities of bread and meat and cotton to Europe, else she could not have lived; but before the century was out American industry had a great surplus of machine products to sell in foreign markets, and sold them so hard that “the American invasion” began to be bitterly complained of, and in 1897 the Foreign Minister of Austria could be saying: “The destructive competition with trans-oceanic countries requires prompt and thorough counteracting measures if the vital interests of the European people are not to be greatly compromised. European nations must close ranks and fight shoulder to shoulder in order successfully to defend their existence.”

Prophetic, yes; but too late. No counteracting measures would be of any avail. The European system was bankrupt, though few could believe it—the system whereby Europe exchanged her dear manufactured goods for the cheap food and raw materials largely produced by the drudge labor of the world.

The sign of paramount power that had stood over Europe like a star for more than 2,000 years had already crossed the Atlantic to stand over us.

One generation of Americans, with their fierce jealousy for freedom of enterprise and their philosophy of laissez faire, had created here the most powerful industrial nation on earth. It was not what they possessed in land and treasure and knowledge; other people had as much of these or more. It was what they did with what they had; and they were bound to go on until they should have in their hands, of their own making, half the industrial power of the whole world—and no rational idea of what to do with it.

 

III

Losing Heaven and Hell

IN THE CHANGELESS FRAME OF HUMAN NATURE, WHAT WOULD happen to a people like that? As they learned to command nature, to surprise her secrets and deduce her laws, with no benefit of prayer, how would their own works react upon them? What would happen to their ideas of God, their mores, their ways of thinking and feeling and what they quarreled about?

Here we leave statistics. The steel gauge bears no further witness. Facts there are, only now they are facts that have weight without substance, movement without mechanism, locomotion without means.

What they lost should come first.

They lost the Bible of their forefathers and with it their faith in Special Creation according to Genesis. That is not to say they lost God—not quite. A few became agnostics, many became skeptics but most of all, whether they could define it or not, people became Deists, not denying God but thinking of Him as an impersonal creative power, author of the evolutionary principle, who perhaps never did count the falling sparrows or the hairs on every human head.

Secondly, they lost Milton’s Heaven and Hell, and with that went the last trace of Christian resignation to poverty. Man was responsible for poverty, especially the poverty of his neighbor, and man himself could abolish it.

So passed the two fears that for time immemorial had disciplined human behaviour, namely, fear of missing Heaven, where the first shall be last and the last shall be first, and fear of want.

The great experiment began. With poverty people had always behaved well; with riches never. Could a people who had reduced God to an abstraction assimilate bewildering wealth with any profit to their souls? That was to be found out.

At any rate, the American had become a secular animal—the word secular to mean of this world, here and now, and the church in its place.

None of this was as sudden as it sounds.

Some historians, among them Erik von Kuehnelt-Leddihn, think it was but the logical evolution of Protestantism, unforeseen by its founders, such as Luther and Calvin, who today would be more at ease in a Catholic monastery than in a New York Protestant church. However that may be, the significant fact is that long before this, Puritanism was gone from New England and in place of it was Unitarianism, together with many degrees of heresy. Emerson’s Deistic transcendentalism was non-Biblical. Nature was God and man by himself could touch the stars.

The theologian, for long the supreme teacher, had lost his control of the world of learning. Education’s break with theology was drastic, led by Harvard, Yale and Princeton, all theological foundations, who began to put cap and gown on chemists, engineers and mechanics. The task of supporting colleges passed from religious denominations to the rich men of business, whose ideas of education were practical. When Johns Hopkins University was opened, laymen, not divines, ruled the board of trustees, the endowment came from the business world, and Thomas Henry Huxley, the celebrated English agnostic, made the inaugural speech, with no clerical benediction; which led the devout to say: “It was bad enough to invite Huxley. It had been better to ask God to be present. To have asked both would have been absurd.”

Then came the impact of Herbert Spencer, with his faith in the power of man to perfect himself if he were let alone; and more disturbing than Spencer was Charles Darwin with his evolutionary theory of life, which seemed more exciting and for some reason more wonderful than the Biblical story of creation, and more scientific of course; and which with its evidence for the modification of living things by the ceaseless struggle of the fittest to survive exactly suited the American philosophy of laissez faire.

The church was in a bad dilemma. It could go on preaching Hell Fire and Salvation and lose its people through boredom or it could revise its creeds to suit the thinking of the new mundane mind. It was even more complicated. Hitherto the rich had supported the church and the poor were sure that everything would come out even in Heaven. But now the rich were supporting secular education and the poor were in revolt against poverty.

The church made its choice. The creeds had to suffer. The divine became social minded. He went to look at the slums and was scandalized to realize that the church itself had large investments in slum property. He began to preach amelioration, social justice, hatred of the idle rich, more here and now for the underprivileged, and let Heaven be what it might turn out to be. Jesus was probably a socialist; if not, He would be now.

A group of radical divines met in Boston, named themselves Christian Socialists, and issued a manifesto. Control of business was concentrating itself in the hands of a dangerous plutocracy. The teaching of Christ led directly to some form of socialism. The Chicago Theological Seminary began to teach social economics. Where the maledictions of the pulpit had been hurled at little sins of the flesh, now the targets were sweatshops, child labor, the inequities of social division and the vulgarities of the idle rich.

The idle rich were a grand invention.

To Arabian Night’s tales of their silly behaviour the demagogue was indebted for his sting, the reformer for his parables, the socialist for his thesis that the poor were poor because the rich were rich, and the lurid press for a kind of news that divided the headlines with sex and crime.

Contemporary writing was dank with foreboding and hard sayings and classical allusions to the decay of Rome, and everybody loved it, including the rich.

Current history is partly mirage. It perhaps could not have been written differently; and indeed if that had been the last chapter or the beginning of the end of the story, the Jeremiahs of the Gilded Age might be better remembered.

It is not so easy to understand later historians who, with the advantage of perspective, continue to write pages and pages about bejeweled monkeys, Lucullian feasts, real pearls in the oysters, fantastic balls and Kubla Khan dwellings, as if a rash of money had been a kind of leprosy.

To this day it is their habit to speak ill of that exuberant time, even in text books. Their phrases are stereotyped. Here is a late textbook entitled “The Making of Modern America,” in many ways an excellent book, now widely used in the public school system. It says:

“It has been estimated that in 1861 there were only three millionaires in the country. Before the turn of the century this number had increased to at least 3,800, and about ninetenths of the country’s wealth was controlled by one-tenth of the population. Interest on bonds and dividends on stocks made it unnecessary for members of this top-income group to work. . . . The period was one in which ability and success were measured very largely by wealth. Under such conditions it is not surprising to find that many of the newly rich were spending money in showy ways. They lived in elaborate, over-ornamented homes and had many servants to wait on them. One such man was the financier Jim Fisk, who lived perhaps more extravagantly than any one else in his day. In New York City he occupied a great marble home that contained his own opera house. Hundreds of canary birds in gilded cages sang in the rooms. He loved showy clothes.”

Here the writer has solemnly copied down the cliche about one-tenth of the population controlling nine-tenths of the wealth. He had perhaps never heard of Pareto’s law, which proves that a division of wealth between the few and the many in about that ratio is a constant phenomenon in any civilized society and has been for thousands of years.

In any case, neither the gildedness of the age nor the rise in the number of millionaires had anything to do with it. The millionaires increased because the wealth of the country was increasing very fast—and increasing largely from the vision, daring and ability of those same millionaires. Suppose it had been otherwise. Suppose the number of millionaires had not increased at all. Would that have been a sign of health and prosperity? And most of these new millionaires had come from the ground—from the mines and steel mills and oil wells and packing houses—and smelled of their work. That is why their manners were crude.

Waiving that, how does Jim Fisk alone rate a long paragraph in a school book, as if he were typical. The impression that he was typical is produced by the phrase: “One such man—” But he was not typical. Nor was he a financier. He was a low gambler who went up in smoke and left nothing behind him but the smell. Any society may cast up that kind of excrescence. He belonged to Wall Street. Therefore he may be used as an image either of Wall Street or the Gilded Age, as you please, and either image will be true only in the sense that a gargoyle is true.

Wall Street certainly was a wild and dangerous place—a free and open tilting field where a man like Jay Gould could try to corner gold and cause the Black Friday panic, and manipulators could rig the rise and fall of prices to fleece the fatuous people who could be trusted endlessly to present themselves for shearing, the same ones coming back again and again when they had grown more wool.

It was a national game, in the mores of the times, for unlimited stakes and but one rule: Let the player beware. Yet for all the drama, notoriety and scandal, it was relatively unimportant. Perhaps the worst thing about it was that for a long time it obscured the true function of Wall Street, which on the whole it performed very well.

What was that function?

Formerly the business of the country had been largely conducted by firms and partnerships, that is to say, in each case by a few individual capitalists as proprietors. For small business that was all right, but for the big business that was coming it was an inadequate form of organization. A great railroad system, for example, would be beyond the resources of five or six men acting as a firm, no matter how rich they were; and for purposes of a risky adventure it was not easy to find many partners because in a partnership, if anything went wrong, each partner became personally liable for the debts. Remember that nearly everything worth doing was at that time risky. The country was built with what now the economist calls venture capital. How to limit the liability of venture capital, so that cautious investors would be more willing to take part in financing the growth of the country, was one of the problems.

Thus when it became necessary for many people to run their money together to provide the capital with which to perform great works, the ideal organization for that purpose was the limited liability stock company. The stock could be sold at auction in the open market, in any amount from one share up, and limited liability meant that the investor’s personal liability was limited to the value of his own stock. If the company went bankrupt he would lose his investment, but he could not be held for the company’s debts.

Nor was that all. The limited liability stock company had the further allurement that it enabled men to capitalize not the present only but the future too. Generally, therefore, a limited liability stock company issued bonds and preferred stock up to the full value of present assets, and then common stock to represent hope of the future. The value of the common stock was speculative only. The vernacular name for it was water—whence watered stocks.

The buyer of common stock often lost his money and most certainly did if the future had been too cheerfully discounted; but on the other hand if the future was rich, and it often was, his position was very good, since it was that after the bondholders had got their interest and the preferred stockholders their limited dividends, he could claim all the profit. Common stocks, you see, were for those who wanted to make bets on the future of the country, and millions did to their ultimate profit, because the future that did materialize was fabulous.

You may see it this way: If, beginning in 1870, your grandfather on the first day of each year had bought 100 shares of common stock at maybe three or four dollars a share, and any common stock at all provided only it was a different one each year, and had kept on doing it until he died and had then willed them to you under the simple injunction to keep them, you would now be very rich. Out of each five it might be that two would disappear as worthless, but no matter; the gain on the other three would represent a fortune. It may now occur to you that the silly fleece-bearing lambs who presented themselves again and again to Wall Street to be sheared were not altogether as silly as they seemed. First and last they did buy and keep an enormous quantity of common stocks.

The most memorable case was that of United States Steel. It was the first billion-dollar corporation. It was put together by the premier banking house of J. P. Morgan. The purpose, for better or worse, was to avert a panic in the steel industry from an anarchy of competition led by Andrew Carnegie, who was running amuck. The common stock as everybody knew was all water. Nevertheless, Wall Street by arts of sorcery was able to make it an object of speculative adoration; and while the steel men themselves were selling out the public bought it at from $40 to $50 a share. Then the bubble burst. The stock fell miserably to less than $9 a share, and at that point Morgan appeared in newspaper cartoons as Napoleon in retreat from Moscow. It was his worst debacle. But a few years later Wall Street itself was buying Steel common back from the public at $100 a share and nearly everybody lived to see it sell above $200.

Can you wonder that speculative ecstasy, for all its pitfalls, was a common American delirium?

So that was what Wall Street was for—first, to provide the means by which many people could pool their money for purposes of any great capital formation, and secondly, to sell the securities that represented popular participation in the growth and development of the country.

If you say it was wasteful, that may be so; and yet as you look at the prodigious manner in which the country’s working wealth did grow you can hardly suppose that a great deal of capital was actually wasted. If you say it was morally bad, that it inflamed the acquisitive spirit and nourished habits of speculation, you are obliged to say how else it might have been done so fast and so effectively, with the result that one day we should wake up to discover that the great corporations were owned, actually owned, not by Wall Street, not by the promoters and bankers, not by the insiders as we say, but by millions of stockholders all over the country. Never had there been such a dispersal of proprietary wealth.

 

IV

A Gilded Conscience

THERE WAS NO DISEASE, NO LEPROSY OF WEALTH, NO IDLE rich class, neither then nor afterward. The men who provided the money that was spent by their women and sycophants on the follies of the Gilded Age were more likely to die of ulcers and high blood pressure from overwork than from any pathology of idleness.

The same men at the same time were making large contributions to colleges and universities for a kind of education designed to fit men not for leisure but for work. They were creating museums and institutes for scientific research, building free libraries and stocking them with books, and setting up trusts called foundations not as simple charities but as organized forethought for human welfare. The richness and variety of these activities amazed the world.

The vanity of monuments is very old. This was something else. In no human society before had so many rich men been moved by the impulse to leave behind them a finer cultural environment than the one they found. Andrew Carnegie was one of them, and his ambition was to give away all of his money before he died; that was his share of the steel money.

At this time too there was the beginning of a new awareness touching what were thought to be the evils of raging industrialism. The foundations were laid for social and humanitarian movements that were to have long consequences.

The college settlement appeared. That would be a place like Jane Addams’ Hull House in Chicago or the Neighborhood Guild in New York, where ardent young persons from the academic world went, as they said, to share the lives of the poor. That was their romantic statement of it. What they undertook to do was to shock the conscience of the rich by reporting with stark literary realism the wretchedness of the poor. And in that they succeeded.

They made only the mistake of supposing that what they found was chargeable to their own times, to industrialism, or to the callousness of the newly rich American; and upon this assumption they pronounced their moral judgments. It was a common error. When Henry Adams said that until Boston burned he had no idea how meanly the poor lived, although they had been only in the next block, that was true; but it had been true of every big city in the world since Rome, true long before industrialism or laissez faire economy.

He was shocked. His conscience was moved. But no intensity of awakened conscience could abolish poverty—without the means. Nor could it be abolished by dividing among the many the wealth of the few. All that could come of that would be a week’s holiday for the poor, and the case then would be worse than before, because the power of accumulated wealth progressively to produce wealth would have been temporarily destroyed. The most that conscience alone could do was to poultice the sores of poverty by ministrations and charity, as it had done always.

What then? Was that the role of the young ameliorists in the college settlements? If so, it was as if they were saying: The business of man’s creative will is conquest and it cannot be helped; the business of his conscience is to pick up the pieces. Henry Adams, who hated the ways of money, said almost that in these words:

“A capitalistic system had been adopted, and if it were to be run at all it must be run by capital and by capitalistic methods; for nothing could surpass the nonsensity of trying to run so complex and so concentrated a machine by southern and western farmers in grotesque alliance with city day laborers.”

So, since capitalism it was, let somebody solace the poor and make the best of a terrible world.

What they all left out was something that had not yet been revealed—something that had to be taken on faith because it had never happened.

It was this: The only hope of abolishing poverty lay in that American capitalistic system itself.

Why? Because only that capitalistic system could provide the means.

The unique fact about this acquisitive society was not that it had a conscience. Every society has a conscience. The unique fact about it was its passion to create surplus means; and, with that, it could be trusted to act upon poverty, not necessarily for moral reasons, not necessarily on grounds of conscience, but for rational reasons and for its own sake.

Thus, the right thing to have said about bad housing was not that it was the guilt of the rich but that bad housing was bad industrialism. As that fact came to be realized, and then as fast as industrialism could provide the means, the slums would begin to disappear.

If that seems to put the heart in its place, nevertheless so it works. What conscience cannot do intelligence can—and make it pay. And unless it pays even intelligence cannot do it.

One of the very bad spots was a steel mill town, especially one inhabited by Poles, Slavs, Bohemians and other European workers who had never known clean sheets, waiting beds or sanitary dwellings. That was true for a while. Yet when the United States Steel Corporation built its great plant at Gary, Indiana, it put around it a model town for the workers. Not that any law required it. Not that anybody’s heart had softened. Why then? Simply for the reason that when it comes to working the levers of a machine that has cost a million dollars, an ill-housed or unhappy man, who in one moment of sullenness could wreck it, is a very bad risk.

Out of the work of the college settlements and from collaboration between organized labor and those who went to share the lives of the poor, came agitation for laws to make factories safe and sanitary, laws to forbid child labor, laws to shorten the work day, and so on.

Many such laws were enacted, first by the states; and for the improvements that began to take place the law makers took full credit. But again, if industry itself had not been providing the means to make these ameliorations possible, there could have been no magic in the laws. What caused factories to be made over and the practice in them to be revolutionized was not the law but the fact that a bad factory environment wasted labor and hindered production; for that reason it was bad industrialism. Most of the factory laws were in time forgotten, certainly so far as big business was concerned, because no intelligent industrialist would be content to do as little as they required.

As for child labor, notwithstanding any law, the machine that was thought to be enslaving children was itself the thing that set them free; and did it by so increasing the earning power of the adult wage earners that they could afford to withdraw their children from toil.

But the most astonishing and unexpected result of all was the effect of the machine on the length of the work day. A time was coming when industry would be obliged by its own necessity to favor a shorter work day, a shorter work week and more holidays. What was the necessity? Simply, the necessity to sell its products.

With the arrival of mass production the wage earner’s relation to industry was radically altered. Whereas before he had been considered primarily as a producer, now suddenly he became indispensable as a consumer. And it was not enough that he should have a wage that would enable him to buy his share of the product if he wanted it; he had to have also the leisure in which to enjoy it, else he might not buy it.

Henry Ford finally expressed it. He was making cheap motor cars for the multitude. The wage earner was a large part of the multitude. Therefore he had to sell his motor car to the wage earner, else he never could sell enough of them to keep his costs going down. Well then, even though he paid the worker a wage that made it possible for him to own an automobile, still if you worked him from sunrise to dark, and no holidays, what would he do with it?

The question is: Would this time have come when it did, or ever, if the hours of labor had been foreshortened by law too soon? Probably not, or as you think; but in any case the seeds of it were there when the sentimental ameliorists were denouncing the rich and the capitalists for the impoverishing evils of American industrialism.

The college settlement was an emotional causeway crossing ugly waters—waters which threatened, as many then believed, to create by erosion a dangerous social chasm. The rich crossed it one way and the poor the other way; and what this did above all for the poor was to give them a sense of belonging. “It is safe to say,” wrote Beard, “that few economists grew to maturity in the Gilded Age without some association with a college settlement where first-hand contacts with labor could be made.” The sympathies thus established inclined the young intellectuals to social-mindedness; and these, together with the professional social worker who then appeared, carried the torch for the revolt against poverty and gave it a fighting language.

That was perhaps all to the good. If the fervent ameliorist was impatient with the rational and impersonal values of the capitalist, so on the other hand, the capitalist was slow to see how important to his own ends the goads of feeling were. Both were working to the same end. This paradox may not have been true anywhere else; it certainly was true here.

What the capitalist had in his vision was a continuous rise in the standards of common living, considered not personally but statistically, on the principle that if wealth were progressively increased and diffused everyone would get his share. But clearly a people resigned to poverty would be fatal to that vision. What it required for its own fulfillment was a restless, discontented people, whose wants were insatiable and always running ahead of their satisfaction. With no other kind of people would it have been possible for industrialism to multiply and cheapen the things that satisfy human wants, so that today’s luxuries, available to only the few, should become tomorrow’s necessaries for the better living of the many, notably motor cars—to the end that any wage earner could be more and more like the rich, on the highway, in his recreations, in his kitchen, in his comforts, even in his clothes, until at a glance you could hardly tell them apart. Thus you may see that the revolt against poverty was a vital ingredient of the American formula. Its first manifestations, however, were alarming.

Poverty is a relative condition. There was poverty in Europe, but not like poverty in Asia; there was poverty here, but not like the poverty of Europe.

It could hardly have been a poor country that raised in the middle of New York harbor the Statue of Liberty, holding aloft a light, and carved at the base these words, addressed to Europe:

Give me your tired, your poor,

Your huddled masses yearning to breathe free,

The wretched refuse of your teeming shore.

This was a call not for pioneers but for immigrants. It was the song of the melting pot. Here was food, here was work, here was liberty—for everybody. The large idea was that this country could assimilate and ennoble any kind of human material, even the refuse of Europe.

Formerly the migrations of people from Europe to the New World, predominantly English, Scottish, Dutch, German and Scandinavian, had been properly regarded as movements of the spirit or movements of the mind, or both. It was either adventure in the pioneer spirit or it was flight from religious persecution and political tyranny.

But now the economic motive began to come foremost. The immigrant was in flight from hunger (the Irish famine); in flight from the industrial slums of England, or in flight from the peasant wretchedness of eastern and southern Europe. Millions came with only the bundles on their backs. Those who went to the soil were soon quietly absorbed. These were fewer and fewer. Most of them stopped in the cities to perform the menial tasks or sought unskilled jobs on the rough side of industry and with railroad construction gangs.

These were troublesome. The bosses of political machines, like Tammany Hall in New York, adopted them for their votes and mumbled them through the naturalization mill in herds; the demagogue adopted them because they were susceptible.

They were all better off here than they ever were before. Moreover, as we have seen, the welfare of the wage earner was steadily improving. Wages were slowly rising, even the wage of the unskilled worker, and prices were falling, so that the wage dollar bought more and more. Nevertheless, it was at this time that organized labor assumed its militant character. Here for the wage earner was the best living in the world. Why then was the unrest of labor so threatening?

The employer very freely blamed what he called alien labor, referring to the new immigrant. It was true generally that the new immigrant was found on the radical side in every dispute. It was true also that along with the ignorant immigrant horde came a dangerously brooding few who brought with them forethoughts of anarchy and assassination, theories of the class struggle according to Marx and the wicked conviction that capitalism was bound to work oppressively here as they had seen it work in Europe. And it was of course true that none of these immigrants had any understanding of the American context.

Yet it could hardly have been as simple as all that. Many native born wage earners were turning radical. Why? Could they not read the statistics?

A more thoughtful explanation, one with deeper insight, was offered by the Commissioner of the Bureau of Labor Statistics of Connecticut, in his report for the year 1887. He said:

“Necessary wants have multiplied, and society demands so much in the style of living that the laboring man finds it almost impossible to live as respectably now on his wages as his father did thirty years since upon his. That is, wages have not kept pace with the increasing wants and style of living demanded by society. The laborer thinks he sees a wider difference between the style in which his employer lives and the way he is compelled to live than existed between employer and employee thirty years ago. He thinks that this difference is growing with the years. Now, as a man’s income is, in general, measured by his style of living, he cannot resist the conclusion that a larger share of the profits of business goes to his employer than employers received in former years; that the incomes of employers have increased more rapidly than the wages of employees. The laboring people are fully alive to the fact that modern inventions and the like make larger incomes possible and right. They do not complain of these larger incomes, but they do believe most profoundly that they are not receiving their fair share of the benefits conferred upon society by these inventions and labor saving machines. In this belief lies the principal source of their unrest.”

This statement is remarkable for its prognostic quality. The three characters of man were in process of fusion.

First, political man. His demands are few and non-arguable, and they do not change—liberty, justice, equality before the law, self-government. He is more interested in what government should be than in what government should do. That was the early American.

Secondly, economic man. He is interested primarily in division. His demands are variable and arguable. He will not be content with a fixed division because he sees that the society in which he lives is not stationary but advancing, wherefore it is unjust that anyone’s portion should be a rigid allotment.

Thirdly, the social man, whose wants may not be physically measured. They are not physical. Ego enters into them, and though it were only the desire to seem as-good-as, still, that too, you would have to reckon with.

The interesting fact is that the successive demands of organized labor have corresponded exactly to that pattern. First its demand was for a living wage, which it got. Then it was for a saving wage—something over living to be invested or put under the rug, and in time it got that. Thirdly it demanded a social wage, that is to say, a wage that would enable the wage earner to maintain his pride and dignity in a civilized community. That was yet not all. A fourth demand evolved, namely, the demand that labor as a class should receive a progressive share of the total national income. We may look at that later.

 

V

Quarreling over Division

HOWEVER, NO EXPLANATION CAN GLOSS THE BITTERNESS OF the first great quarrel over division. It was all the more tragic in view of the fact that American economic theory was just then in the way of exploding the Old World’s iron law of wages. We had taken our economic book from Europe and the law was there. It said that wages were paid out of profits. If that were true, it followed, as Ricardo said, that whatever raised the wages of labor lowered the profits of capital.

The same law said there was a natural wage; and this natural wage turned out to be that price for labor which was necessary to enable the laborer to reproduce himself—just as the price of an ox might be the cost of reproducing an ox. In that case labor was doomed to receive forever a sustenance wage.

This pessimistic doctrine did not belong here; it would leave the Americant dream in the ditch, and therefore it could not live in the American air. An American school of optimistic economists, led by Francis Walker and H. C. Carey, challenged it as an illusory dragon, and, lo! it was not there.

They arrived at the true conclusion that wages were paid not out of profits but out of production. Thus if you increase production wages and profits may rise together.

There was no such thing as a natural wage. What a liberating thought! It meant that whereas the European capitalist found his profit in low wages and high prices, the American capitalist hereafter would find his in low costs and high production. The lower his cost and the greater his production the higher the wage he could afford to pay.

This was the revolutionary American contribution to economic thought. You might suppose it would have solved the wage question. The trouble was that it had first to be evolved in the mind as a theory and then proved in practice. Between the idea and the practical demonstration of it there is inevitably a time lag. And during this time lag the struggle between capital and labor over the terms of division became ferocious.

Labor was the weaker party. It had no genius for either organization or leadership, and no solidarity. National unions appeared, grew like mushrooms for a little while, and then collapsed. The Knights of Labor was one. Independent unions flourished and declined and flourished again, with changes in the economic weather. Never during this time did unions of any kind represent more than three or four per cent of the country’s total labor force, and some of the time much less.

Public opinion was generally unsympathetic, not because it was anti-labor, which it never was, but because in militant labor’s philosophy there was an alien or European content that was much disliked; and then, besides, there was something about the idea of unionism that offended the American’s jealous individualism, even as a wage earner.

Freedom to strike was conceded, in law and custom both; but the strikers were expected to take the risk. Labor disputes were trials of economic strength. If the strikers could beat the boss, that was all right; if the boss could beat the strikers, that was all right too. But no violence about it. Labor used the strike and the boycott. The employer used the lockout and the blacklist.

On these terms the strikers were at a disadvantage. The boss had always the bigger pocketbook, and they could not starve him out. That is why they so often resorted to violence; and why also no large employer company was without a private arsenal and armed guards. When it became a fighting matter it did not take a big union to make an ugly situation.

The employers were not organized, nor did they go to one another’s aid when trouble came; but they were all on one side and definitely anti-union. Their blacklist, which circulated the names of union agitators, was a powerful weapon; and so was the hiring contract that bound the employee not to join a union on pain of discharge—called the yellow dog contract. Still it would be difficult to say which did the cause of labor more harm—the fighting employer or the fighting labor leader.

There were the Molly Maguires. That was the only name people knew for a terroristic society of Pennsylvania miners, who for a long time intimidated the police power with arson and murder and were at last broken up by a Pinkerton spy who had joined them and made believe to take part in their crimes. The Pinkerton Detective Agency was the name of a private police force that fought for pay on the side of the employer, and so successfully that for many years the sound of the three syllables—Pin-ker-ton—was enough to throw any union meeting into a paroxysm of rage.

There were railroad strikes that paralyzed the traffic of the country and led to so much disorder, killing and damage to property that twice Federal troops had to be called upon the scene.

There was the terrible Homestead strike at the Carnegie steel works. There strikers pitched a battle with the mill guards and Pinkerton men, and outfought them, only then to be put down by the state militia. They lost the strike and went back to work on the company’s terms.

There was the shocking Haymarket Square incident in Chicago. While trying to disperse an excitable open air labor meeting some policemen were killed by a bomb. The person who threw the bomb was never identified. Eight instigators were convicted. Four were hanged, one committed suicide and three were imprisoned.

After the Homestead strike there was an attempt to assassinate one of the Carnegie partners.

These are only the most remembered pieces of the drama. For twenty years there was never a strikeless day; the average was three strikes a day, and a strike anywhere, big or little, could be explosive.

Labor unionism was not committed to violence as a policy. Nobody could say that. On the other hand, it treated lawlessness with silence and never denounced its own law breakers, at least never with convincing sincerity, and from this the public drew a certain conclusion.

There was no sequel. The duration of this phase of the labor movement was thirty years, and after that it was dimmed out in an ecstasy of new prosperity. The tragedy lay in its utter futility. The effect upon wages was nil.

If you will consult any statistical chart showing the trend of wages (it may be a government chart or it may be chart XXV, p. 219, in “Capitalism the Creator,” by Carl Snyder) you will see, beginning, say in 1850, that wages rose almost without interruption for ninety years. They had been rising for twenty years before the labor movement assumed its militant character, just as they have been rising ever since. That is not all. You will see that the curve of rising wages synchronizes almost perfectly with another curve that represents the increased productivity of the wage earner. As more and more machine power was put behind him he produced more per day or per hour, and his wages went up proportionately. Strikes had very little to do with it. That is how the system works.

 

VI

Satan Was Money

THE FUTURE THAT WAS BRINGING ITSELF TO PASS COULD NOT give its reasons. It said: “There is nothing yet. All is becoming.”

Reason said: “There is already enough. Only divide it properly and it will go around.”

But enough was not enough. There had to be plenty. Reason could not imagine what plenty was because never had any human society had plenty.

In the market place the farmer was more unhappy than the wage earner; and like the wage earner he thought the division was wrong. But the economic plight of the farmer was owing almost entirely to two things, both of them too obvious.

The first thing was free land, which was a public subsidy to agriculture and caused it to expand beyond any possibility of immediate profit. The second thing was the sudden transition to a complete money economy.

This statement requires to be considered.

As it had been in Colonial times, so it was for more than a generation after Washington, that craftsmen were directly and visibly engaged in producing what the economist now calls consumer goods—the blacksmith, the wagon maker, the tailor, the shoemaker, the weaver, the farmer, and so on. It is true that they all used a little money, but the use of money as everybody could see was to effect the exchange of goods. What they lived by was goods, not money. The shoemaker knew how long it took to make a pair of shoes and he could see how long it took to make a suit of clothes; the farmer knew how much labor there was in a bushel of wheat and he could see how long it took to make a wagon. With no money at all they could have exchanged goods for goods at fair value. Money was a convenience only. You could live without it.

Then with the oncoming of the Second Industrial Revolution, the division of labor, machine production and the wage system, all of that began to change. The shoemaker no longer lived by making shoes; in fact he disappeared. In his place was a man who lived by the money wage he received as a worker in a shoe factory. And so of the wagon maker, the tailor, the weaver, and all the rest of them. Instead of producing consumer goods individually as before they began to perform industrial functions by the hour, and as they did that they began to relate their livelihood not to goods but to a money wage.

And the same thing happened to the farmer. For whereas formerly he had drawn sustenance for himself and his family directly from the soil, selling only a marginal surplus for money or trading it at the general store for calico, pepper and hardware, now he went in for money cropping. What he produced was a money crop and with the cash proceeds of a specialized crop like wheat he bought everything he needed, including the food for his own table. Thus the farmer too began to live by money.

And another thing. Whereas formerly so many people were directly engaged in producing visible consumer goods, now fewer and fewer were employed in producing visible goods, because the factory system had greatly increased the productive power of labor, and more and more of those who were thus released from the task of producing visible goods were strangely employed in producing goods that were invisible. That is to say, they were beginning to be employed in what now we call the service industries, such as transportation, trade, distribution, exchange, banking, maintenance of machinery; and, stranger still, a long catalogue of non-consumable goods, such as the engines and machines that made factories possible and then machines to make machines. And all of these of course worked for money wages.

So now everybody, including the farmer, begins to live by money, and a time comes when, as Spengler says, “in place of thinking in goods we have thinking in money.”

There was no difficulty for merchants, traders and bankers, who had always thought in money; but for labor and for the farmer, the farmer especially, the transition was bewildering. It was easy for them to believe that money was a mysterious evil, always turned against them by the money thinkers; and they became obsessed by two ideas—one, that the fall of prices was owing to the scarcity and dearness of money, and, two, that the bankers kept money scarce and dear in order to bleed the people.

Out of this came the commotions of angry feeling that make up so much of the superficial history of the 1880’s and 1890’s. The Populist movement of the West, spreading like an epidemic, organized a popular demand for fiat money and lots of it, government ownership of the railroads and dungeons for plutocracy. Along with that was the Granger movement, demanding regulation of the railroads and a reduction of freight rates by law. And there was the Silver movement, which more or less united all of them, and made silver a symbol of the poor man’s money.

The West had plenty of silver in its own mines. If it could be used as money without limit it would cause the farmer’s prices to rise and enable him to pay his debts. Moreover, the spirit of silver was avenging. It would destroy the gold dragon. Gold was the rich man’s money.

The question of silver versus gold became a social issue and kept the country in turmoil for more than a generation. At last in 1896 the Democratic Party embraced silver. Its hero was William Jennings Bryan, who enthralled the convention and won the nomination for President with a single speech, which ended in these words: “We will answer their demand for a gold standard by saying to them: You shall not press down upon the brow of labor this crown of thorns; you shall not crucify mankind upon a cross of gold.”

The excitement reached a pitch of delirium. Was it about money, really? Perhaps not.

The Republican party elected President William McKinley, who had been a late convert to gold and thought the tariff more important. With that the silver movement collapsed, as if people were weary of it, and for a while nothing happened. The next year prices stopped falling. The gold standard act was not passed until three years later, and by that time so much had been forgotten that the formal event caused hardly a ripple on the waters, even in Wall Street.

Silver money might not have ruined the country. It is doubtful if Bryan could have hurt it much. Anyhow, he lived to become a conservative and somewhat dull Secretary of State in the cabinet of Woodrow Wilson and died in one of the higher income brackets.

Cheap money was an omnibus. The Socialists rode it because it was going their way and they loved to see plutocracy leap for its life to the curbstone and shake its fist. The Socialists were just beginning to crystallize. “The capitalist class,” they said, “though few in numbers, absolutely controls the government—legislative, executive and judicial.” The Populists, the Bryanites and the radical farmers were loath to go as far as that; and when the Socialists went on to say that therefore the working class would have to conquer government and seize the means of production—that was going too far. But there was not much quarreling on the bus. The cheap money people wanted all to ride who would, in a general direction, and were never as radical as they seemed to be.

Did the capitalists control the government?

All the history books say yes, as if it were something that requires no proof, or as if to question it were naive in view of the wicked lobby scandals that ran like a serial crime story through the Washington news of that time.

Well, the wickedest and most powerful capitalist then was the railroad magnate and the railroad lobby was a notorious thing, managed on the theory that a boughten vote was as good as any other, even better maybe if only it would stay bought. It was grimy enough. Nevertheless, this ruthless railroad interest was powerless to defeat a law creating the Interstate Commerce Commission to regulate the railroads. The farmer’s lobby was stronger than the railroad lobby.

If you say the Interstate Commerce Commission at first had no teeth and claws and that in any case it was not aggressively enforced, why, so it was. The fact remains that if the capitalist had controlled the government such a law could not have been passed by the Congress. A railroad oracle said: “We could not keep Congress from passing the law because the people wanted it. But in ninety days Congress will be called in special session to repeal it, lest it ruin the country.”

Then nothing happened. The reason why nothing happened was that the time had not come. The railroads were not yet big enough. Of those that existed in 1887, when the Interstate Commerce Commission law was passed, hardly a trace existed twenty years later. They had all been built over again, with double tracks, heavier rails, bigger locomotives and equipment. All of that had to be done before the Federal government could afford to regulate the railroads or limit their profits. The work first and then the taming of it. But when the time did come, there the Interstate Commerce Commission was, and it was easy enough to give it all necessary power.

The second most aggressive formation of capital was sudden and startling. The great industrial corporations were appearing, in steel, mining, milling, electric power, oil, meat packing, and so on. They were growing very fast, the larger ones swallowing up smaller ones, and they were already beginning to be called trusts. People were seized with a new fear. It was simply the fear of bigness.

There were many foreboding rationalizations about it, such as that power was tending to concentrate itself in fewer and fewer hands, that the ends in view were monopolistic and that the logical sequel would be the death of competition. Yet for all the money these capitalists might have been willing to spend to control government and for anything their lobby could do at Washington, the Congress in 1890 passed the Sherman Anti-Trust law, forbidding every kind of contract or combination aimed at the restraint of trade.

This law, like the Interstate Commerce Commission law three years before, had at first no fighting spirit; nothing immediately happened. But that was for the same reason as in the case of the railroads, namely, that the time had not come. Nothing was yet big enough. That was something nobody could prove. It could be known only by intuition. But when the corporations had doubled in size, and doubled again, the time would come, and then as it was needed power could be added to the Anti-Trust law—and it was.

We are supposed to know that two bodies cannot occupy the same space at the same time. Yet here were two worlds revolving oppositely in the same space, almost without touching. The screaming that is still mistaken in the history books as a sound of terrible friction between them was but the vocal dread of things that were not going to happen. One was the world of apprehensive thought, foreboding disaster; the other was the world becoming—the world not of what people thought but of what they did.

They thought a few predatory corporations were going to devour government and enslave the people, whereas ownership of the great corporations was going to pass to the people and the power of government was going to rise to a point at which the great problem would be how to save the freedom of business from the beneficent despotism of an executive bureaucracy at Washington.

They thought the corporations were going to kill competition in order to exploit the consumer, whereas the era of titanic competition was yet to come, and the consumer, far from being exploited, would become the petted sovereign of the economic scheme, and his buying power would be insured by credit provided by business itself or by government, or both.

They thought labor was doomed to become a submerged estate, wholly at the mercy of the organized boss, whereas labor was on its way to an undreamed-of eminence of economic and political power.

They thought the future of American agriculture lay between slaves and tenants. The free and independent farmer was disappearing. How could he hope to “wrest his sovereignty back from the capitalist?”

Well, American agriculture not only became the most prosperous that had ever existed in the world, some of the time too prosperous for its own good, but capitalism itself arrived at the idea that the prosperity of the farmer was essential to the well being of the country as a whole, and must therefore be protected, by the use of public funds if necessary.

They thought the rich would get richer and the poor would sink. The rich did get richer and multiplied in numbers amazingly, but the poor at the same time were getting more, and getting it so fast that a fair standard of common living in one decade became sub-standard in the next.

And while the people were thinking these things, and thinking them with that false clarity that makes fallacy more plausible than truth, what were they doing, as if they were not thinking at all about what they did?

It is wonderful. The story is told without words on sheets of quadruled paper by wavy lines, which the economist calls curves, to show growth as quantity and movement. Every curve, such as, to wit:

(a) the national payroll,

(b) the size of the labor force,

(c) wages per hour,

(d) production of metals and minerals,

(e) production per man hour of labor,

(f) the output of electric power,

(g) capital invested per wage earner,

(h) the horse power of machines behind the worker,

(i) trade per capita,

(j) the national income,

(k) the amount of goods consumed,

(1) railroad tonnage—

—every curve was rising, steadily, uninterruptedly, in a spectacular manner, no matter what else happened—and rising much faster here than in Europe.

An imperious necessity was acting. Capitalism was working. The terms of division might be in dispute, but each day there was more to divide, and it had to be divided among the people, if only for the reason that there was nothing else to do with it. The rich could not consume it.

The perfect symbol was the apparitional New York skyline, building, unbuilding and building again, as the tallest thing made way for a taller one, and that for a taller one still, until you might have had the fantasy of a ten-minute movie film of the life of a redwood forest for a thousand years. What a force up-thrusting! What a struggle for vertical supremacy! Then at last, where the clouds begin, a kind of dizzy stability, and the steeple of Trinity Church at the head of Wall Street lost from view. Remark, there was never any economic necessity for the skyscraper. It was man’s ego externalized.

And so the Giant came of age.

Nearly all the rest of the story turns on this single question: What will he do with his power?

Marginalia

But what is it that may be set over power to govern it?

The answer, ultimately, is nothing.

No matter how vast its political consequences may be, power is not a political fact; it is an elemental fact, to which every other fact in the world must somehow accommodate itself. When and if it obeys the law it does so because it will, not because it must.

Its own law is one of inner necessity. The ostensible necessity may be emotional, romantic, economic or unreal, such as a place in the sun or to make the world safe for democracy. Given the necessity, it will make dirty work of a Constitution, trample down liberty and put the civil code to sleep.

In the first phase, as was the case here, it may be formless, dispersed in many hands, fluid and self-augumenting. It may be a power of wealth and banking, a power of technology, a power of engines. That formlessness will not last. The reason why it will not last is that there is a law of history which says that a nation possessing the supreme power in the earth is obliged to put it forth; and formless power cannot put itself forth.

Philosophically it may be argued that a nation owes it to mankind to put power forth, wherefore it becomes a duty, as if in each case the idea that inhabits power must prove itself in struggle. If it is bad it will be overthrown; if it is good it will prevail, and the world will be somehow different. Suppose the Greeks had not put forth theirs, nor the Romans theirs, nor the British theirs. Would the world now be better or worse?

In any case a nation will do it.

People may think they do it for the good of mankind; in fact they do it with intent to change the world, to make it over more to their liking.

But when that time comes government will take command of the national power, organize it from a center, control it, give it a sense of direction and provide it with reasons, slogans and myths. And once government has done that there is no retreat. It will continue to create the occasions of necessity and to exercise the power until another drama of empire is played out.

This is the oldest story in history.

And what at last does this power turn out to be? How finally is it measured? What is the very essence of it?

Absolutely, at last, it turns out to be the power to kill. All your wealth, your machines, your knowledge, even your wisdom, will not prevail if when the time comes you have not also the paramount power to kill.

It is understood.

Why else did the civilized states of Europe send friendly ambassadors to the barbaric court of Genghis Khan, the greatest killer of his age?

 

VII

World, Move Over

WHEN THE NEW AMERICAN GIANT CAME TO TAKE HIS PLACE at the head of the world he was awkward about it and stepped on many sacred toes. The powers of Europe of course were resentful at having to move over. Why not? They might fight over a division of it, but there was no doubt among them that the world was theirs by right of discovery and preemption and they had treated it in that proprietary manner for a very long time—all the rest of it even after they had given up the idea of sometime returning to the American continent.

If they had dared they would have refused to move over. Indeed, it was only their incorrigible quarrelsomeness and distrust of one another that kept them from uniting to resist. But since they could not resist they took it out in churlish manners. They said this upstart American was uncouth and dangerous; he did not know the rules of the game; he might upset the caravan.

And there was some ground for their anxiety.

The unique fact about American power was that it came to exist without any external struggle. It was founded entirely upon itself. Thus nobody could say how it would behave. Was not the republican form of government in the American design an experimental thing? Never before had a republic been at the top of the world.

Moreover, who could say it would endure as a Republic?

That was the crucial question. Yet few Americans gave it any thought at all, and none in any case could have guessed how strange the answer was going to be.

Take the year to be 1898. The Republic was then 110 years old; and that was its last proper birthday. It was already beginning to be tired of its old-fashioned clothes. In a little while it would be trying on new garments, some of them cut in the European pattern, and in a few years it would have a new look.

You can hardly suppose that the character of a people will greatly change in the brevity of one generation. Yet this can be—that under altered conditions latent characteristics come through and tend to become dominant while at the same time characteristics hitherto dominant tend to become recessive. It occurs often with the individual, who may no longer be what he was and is yet himself. Why not with a nation?

In any case the change that took place in this period was a political revolution. In the year 1898 an American could have said: “A Republic, a Protestant country, an Anglo-Saxon mentality, free capitalism as an economic system, and, over all, a Constitutional, representative, limited government, with emphasis on limited—that is my heritage.”

One generation later those words were still in his catechism, and he remembered them, but he could no longer believe them. The word Republic had become strange on the popular tongue. Those who used it still did it as a challenge. The new word was Democracy—and the country would go to war to make the world safe not for republics but for democracies.

In one generation:

The American had learned to walk in the world with a big stick;

He had been infected with the virus of imperialism, which he called Manifest Destiny, or Taking Up the White Man’s Burden;

He had rejected the stern parent principle of government—the principle as last expressed by Cleveland, who said it was the business of people to support the government, not the part of government to support the people;

He had begun to take social ideas from Europe, whereas until then the movement of ideas had been the other way, from the New to the Old World, mostly ideas about freedom and government;

He had begun to talk of Social Democracy and of a redistribution of wealth by law;

He had learned that the Constitution was what the Supreme Court said it was.

There had been the regime of Theodore Roosevelt, and the beginning of that rise in the executive power of government, impatient of law, which in the next generation, under another Roosevelt, would destroy forever the traditional relationship between the people and their government;

The struggle between government and capitalism had begun;

There had been Woodrow Wilson, with his evangel of the New Freedom, which was a deification of Democracy, and,

The Constitution had been amended to permit the Federal government to lay a direct, progressive tax upon incomes of every kind, with no limitation whatever (precisely Article 2 of the Communist Manifesto)—and this was the instrumentality that would enable the government to seize and control the national power, to redistribute the national income with leveling intent, and to create a dependent people minding no longer the way of their own feet but looking to a paternal bureaucracy in Washington for security, economic welfare and guarantees of the good life.

All of that in one generation.

One of the few who saw it with mantic clarity was John W. Burgess, whose great work entitled “The Reconciliation of Government with Liberty,” was published in 1915.

Until 1898, he wrote, one could say that the American people had found almost the perfect solution of that age-old problem. Some adjustments were needed but no radical alterations. Certainly the American solution did not lend itself to an imperial policy abroad nor to a paternal programme at home. Then the change began. “There is nothing now,” he said (this in 1915)—“nothing now to prevent the government of the United States from entering upon a course of conquest and empire. . . . We are further away from the solution of the great problem than we were twenty years ago. . . . It is time, high time, for us to call a halt in our present course of increasing the sphere of government and decreasing that of liberty; and inquire carefully whether what is happening is not the passing of the Republic, the passing of the Christian religion, and the return to Caesarism, the rule of one by popular acclaim, the apotheosis of government and the universal decline of the consciousness of and the desire for true liberty. The world has made that circuit several times before.”

This was no reading of the crystal ball; it was a rational interpretation of the signs. How true it was may be indicated here. In the next forty years the national debt per head of the population increased 166 times, from $10 to $1,664; the cost of government per head of the population increased more than 25 times; the cost of the military establishment alone became 120 times greater than the total cost of government had been before. Why? Because American armed forces and American fighting bases had been scattered over Europe, Asia and Africa; because we were buying and arming military allies abroad, and because our frontier had become the wide, wide world. A war anywhere was our war too.

 

VIII

Going Forth

THE WAR WITH SPAIN FOR THE LIBERATION OF CUBA WAS a wild tribal dance. Much more than Cuba was liberated. A new national ego was released in a bonfire that consumed the old Continental tradition. Suddenly, and almost without meaning to do it, the United States became a world power with colonial problems.

It was not a splendid war. Some of it was starkly educational and some of it was opera. One of its heroes was Theodore Roosevelt, who, with his Rough Riders, made a legendary figure of himself, on horseback, on San Juan Hill—Teddy “alone in Cuba,” said the cruel Mr. Dooley, who could make the people laugh at themselves and at their idols. But later it was Roosevelt himself who put everything in its place when he said to an audience of Civil War veterans: “It was not much of a war, but it was the only war we had.”

The Navy was not entirely ready, but it could shoot straight and its seamanship was beautiful. It destroyed one Spanish fleet in Cuban waters, and another one in Manila harbor, where, under the scowling eyes of an unfriendly German force greater than his own, Admiral Dewey waited two months to reduce the city, until American troops could arrive to occupy it. Thus Spanish sea power was smashed with two blows. Not a single American ship was lost or even seriously hurt.

Taking Manila was a strategic act of war. It occurred to nobody at the time that we should afterward find ourselves in possession of the Philippine Archipelago, with seven or eight million natives to subdue and govern—Malays, Moros, many tribes and races, some wearing tailored white clothes and some only a g-string.

The Army on the other hand was entirely unprepared and did a very sad job. There was neither a general staff nor any proper organization. Volunteers were moved in Pullman cars over one-track railroads to ports of debarkation and then sent to fight in tropical Cuba without edible rations, with hot-weather uniforms, and no forethought whatever for sanitation. Nine-tenths of the casualties were from disease. Only the individual valor of the untrained soldiers saved the Army from disaster. At a moment when the Spanish forces at Santiago were preparing to surrender, the American commander, weight 300 pounds, sick in a hammock, was asking the War Department for permission to retire.

The war lasted 113 days.

Cuba, “Pearl of the Antilles,” had been a sickness on the American doorstep for a long time. The natives were continually rising against Spanish rule; the Spaniard’s way of putting them down was repugnant to the romantic American.

However, the insurgents were not always the patriots they pretended to be and not above blackmailing American owners of sugar plantations to buy them off from their depredations; nor were the harsh measures of Spanish repression always quite as brutal as they were said to be by the Cuban Juntas domiciled in this country and by the screaming redink press, at the top of which was William Randolph Hearst, boasting that when it came it would be his war.

Furthermore, there was some validity in the complaint of the Spanish government that the Cuban insurgents were nourished by money, arms and sympathy from the American shore, only ninety miles away.

When at last it became evident that Spain could not put out the fire the American government had to face this question: If Spain couldn’t who would? It was not only that American lives were involved and American capital in jeopardy; there was a moral responsibility.

Only a little while before, in a dispute with Great Britain over how a boundary line should be fixed in Venezuela, the Secretary of State had said: “The United States is practically sovereign in this continent and its fiat is law upon the subjects to which it confines its interposition.” That was a most extreme extension of the Monroe Doctrine and meant that the American government was the sole fireman in this hemisphere. Now what was it going to do?

Popular clamor for intervention by force was running very high when one night in Havana harbor the visiting U.S. battleship Maine blew up and sank. Of the crew 260 were killed and ninety injured. There were signs of two explosions, one external and one internal, but what really happened was never positively determined. Nevertheless, “Remember the Maine!” became a war slogan. Two months later the war came.

President McKinley tried to avoid it. So in fact did the Spanish government, which at the very last proclaimed an unconditional truce in Cuba for a period of six months, during which a peaceable solution might be found. At the same time the American Minister at Madrid sent a cablegram to the State Department, saying: “If you can still give me time and reasonable liberty of action I will get you the peace you desire so much.”

It was too late. The President probably distrusted the Spanish word. In any case, the feeling that Spain must be expelled from the Continent by force was too strong for him. Suddenly he gave way and laid a war message before Congress.

For nearly one hundred years the idea had lived that some day the United States would possess Cuba. There had once been a cult of expansionists who wanted to take it by conquest. Nevertheless, in the act of declaring war, Congress proclaimed that the United States would not take Cuba for its own, but that “the people of the island of Cuba are, and of a right ought to be, free and independent.” That gave the war a character the American people loved, namely, the character of an unselfish crusade for liberty. And in the sequel, having created order in the island, and having tutored the Cubans in self-government, the United States did make them free and independent.

What to do with the Philippines was a question that had not yet answered itself when the American and Spanish commissioners met in Paris to write a peace treaty. The American commissioners were divided by it. President McKinley prayed over it. The people debated it with passion.

The moral argument for keeping them was that the natives were unprepared for self-government; if left to themselves they would fall into anarchy and be worse off than they were under Spanish rule. It was a specious argument. In the first place, Spain did not want to give up the Philippines; in the second place, if Spain did not want them Germany stood ready and anxious to buy them.

The exponents of Manifest Destiny were eloquent. How could we decline to play our part in the world? Would it be nice to remember that we had refused to carry the blessing of civilization to these backward people who had been cast into our hands by accident of war, possibly by intent of Providence?

But what decided the question at last was the simple fact that the new national ego could not bear to see the flag come down. So at last, and again suddenly, President McKinley instructed the American Peace Commission to demand all the Philippines, and, if necessary to save the Spanish face, to pay $20,000,000 for them. This nearly wrecked the treaty. Spain thought of appealing to the powers of Europe to save her from these covetous Americans. In the end she took the dollars and surrendered Cuba, Porto Rico and the entire Philippine Archipelago.

That was not the end of it. Whether or not to accept the treaty became a burning political issue, involving not only the most revered traditions of the American Republic but the integrity of the Constitution. How could the business of colonial empire be made agreeable to the Constitution? As to Cuba there was no problem, since we were pledged to make her free and independent; but Porto Rico and the Philippines—what were they? If they were colonies or dependencies, how were they to be governed? The flag was there but did the Constitution follow the flag? If it did, then perhaps we could not govern them at all, because colonies unfit for self-rule have to be governed by a kind of benevolent despotism, even as the American colonies had been governed by the British crown. How could benevolent despotism be squared with the Constitution?

Excepting only the Hawaiian Islands, which had been quietly annexed during the war with Spain and presented somewhat the same problem—with that exception the expansion of the United States hitherto had been in contiguous areas, sparsely settled if at all; and the law was that as such contiguous areas were settled by American pioneers they became first territories under governors named by Congress and then States of the Union, with constitutions, governors and legislatures of their own. This would hold even for Alaska, which had been bought from Russia and was only constructively contiguous. It was empty and open to settlement by American citizens.

But obviously neither Porto Rico nor the Philippines, nor for that matter the Hawaiian Islands, could be treated in that manner. In the first place they were already populated by alien and backward people; secondly, it was not imaginable that they could ever become States of the Union.

When the Spanish-American peace treaty came before the Senate the debate for and against empire was long and angry. Ratification won by a very small margin. Nowhere would the flag be hauled down. The people approved by re-electing McKinley with enthusiasm.

It still remained for the Supreme Court to decide the Constitutional questions. This it did in one of the most tortured opinions on record. Each member of the Court arrived at his own conclusions in his own way. No two alike. Did the Constitution follow the flag? It did and it didn’t. That was to say, the Constitution with its guarantees of rights and immunities did not extend to colonial possessions; on the other hand it was perfectly Constitutional for the Congress to say how the possessions should be governed, beyond the reach of the Constitution.

The almost immediate sequel was a revolt of the Filipinos against American rule and a long and ugly guerilla war that cost as much as the war with Spain. When order and docility had been restored civil government began. Under American tutelage the Filipinos gradually learned self-government. After sixteen years Congress declared that they should be free and independent as soon as they could manage it, and after forty-six years the American flag was lowered and in place of it was hoisted the flag of a new nation—the Philippine Republic.

This was not quite the end of a colonial enterprise that never paid. An unlimited moral liability remained over. At any time American power could be invoked to defend the Philippine flag.

If you find legal logic tiresome, take it simply that the act of accommodating the Constitution to the idea of empire was like a breaking of chains. It would never again be possible to tie government down by law. Increasingly there would be a willful impatience with the restraints of law, a want of reverence for the traditions of limited government and plaudits for a government of action. The hero of this change was now to appear.

A few months after his second inauguration President McKinley was assassinated. His successor was Theodore Roosevelt, an aristocrat born, speaking with a Harvard accent, who had cast himself in the political role of people’s champion.

His philosophy was to live the strenuous life dangerously. The first principle of animal dynamism was trapped in him. Wherever he stood, that was the storm area; wherever he fought, that was Armageddon. As a demagogue in shining armor he made the dragons roar; and yet he would sooner tame them than slay them, for he was not really destructive. There were many good dragons. The people loved him, and were wildly delighted when he had outwitted a stupid law that got in his way or was giving Congress the hot foot treatment.

The Navy was his big stick. Once he got the idea of sending it around the world to make an impression. When a disapproving Congress threatened not to appropriate the money for coal, he said that was all right; as Commander-in-Chief of the Armed Forces he had coal enough to send it to the other side of the world, and Congress could either buy the rest of the coal or leave it there. So he did it.

In the same spirit he built the Panama Canal.

The narrowest point of the Isthmus was in Panama and Panama belonged to Colombia. The American government had negotiated with Colombia a treaty by which she was to receive $10,000,000 cash down and then $250,000 a year for a strip of land six miles wide across Panama. The Colombian Senate, wanting more money, had secret designs for putting a sting on the rich Americans; and after a long delay it refused to ratify the treaty.

But the people of Panama, who were eager for the canal, got word to the State Department in Washington that they were minded to make a revolution against Colombia and set up a government of their own—a government that would be happy to accept the terms Colombia had rejected. Roosevelt then sent a small naval force to the Isthmus with instructions to keep Colombia’s troops away from the scene of trouble, whereupon the Panama people had their little revolution and set up an independent republic ready to do business with the Americans. The American government recognized it immediately and two weeks later made a treaty with it for a ten-mile canal strip.

Colombia of course was very mad and in this country there was an outcry of righteousness. Whether or not Roosevelt had helped to prepare the revolution, it was evident that he had assisted it. He had used the Navy to prevent Colombia from putting down a revolution in her own country. Then he got what he wanted.

He denied nothing. Later he said: “I deeply regretted, and now deeply regret, that the Colombian government rendered it imperative for me to take the action I took; but I had no alternative consistent with the full performance of my duty to my own people and to the nations of mankind.”

And after the fact, which could not be changed, he made this chortling statement: “If I had followed traditional, conservative methods I would have submitted a dignified state paper of probably two hundred pages to Congress, and the debate on it would be going on yet; but I took the Canal Zone and let Congress debate; while the debate goes on the Canal does also . . . Instead of discussing the canal before it was built, which would have been harmful, they merely discuss me—a discussion which I regard with benign interest.”

For candor of self-revelation there is nothing like it in the archives.

 

IX

The First Roosevelt

AS SECRETARY OF STATE, THEODORE ROOSEVELT HAD IN SUCCESSION two men of rare ability. They were John Hay and Elihu Root. Yet he took foreign policy into his own hands, managed it with a kind of innocent audacity, and never lost his balance. Once when Germany was flouting the Monroe Doctrine in a dispute about money with Venezuela he waved his big stick in the Kaiser’s face. Under pretence of collecting a debt no German force should lay hands upon anything in Venezuela, to hold it even temporarily, and he would send the Navy to see to it. The Kaiser took second thought and accepted arbitration.

The point is that neither Congress nor the public knew anything about it until long afterward. In a similar situation a few years before, the offender then being Great Britain, Cleveland laid the facts before Congress in a message that rocked the chancellories. There was hardly a political crisis anywhere in the world on which Roosevelt did not leave his finger marks, as for example, a quarrel between Germany and France in Morocco, where there was no American interest at all. He intervened in the Japanese-Russian war to bring back the peace, and was acclaimed for it; yet secretly all the time he had such a keen regard for a balance of power in Asia that later both sides came to think they had been short changed.

He had the wisdom to know that international diplomacy was not a game to be played in the dust of the public square. In most cases the fewer newspaper headlines it got the better it was.

With domestic policy it was very different. There he wanted the headlines; there his tools were propaganda and publicity, and he used them with both supreme craftsmanship and a kind of Machiavellian sagacity.

The times were sulphurous.

The principle of free and unlimited private wealth was on the defensive against the black waters of a popular hostility that were rising like a flood. It seemed to rise of itself and no one controlled it. Those who rode it called themselves all alike Progressives; and they were a strange miscellany—some Republicans and many Democrats who had broken party lines, some sincere radicals and reformers, some of course who were merely opportunists.

And what did they want? Generally they wanted what the people wanted, or what they thought would be good for the people, and that, briefly, was something less like a Republic and more like a pure democracy. Specifically they demanded:

(1) Laws to limit the power of great wealth;

(2) Laws to level profits;

(3) Laws to smash the trusts:

(4) A law to enable the Federal government to fix railroad rates;

(5) Greater use of public funds for social welfare;

(6) Minimum wage laws, which would overturn the principle of freedom of contract in the employee-employer relationship;

(7) A shift of the tax burden from the poor to the rich by means of a progressive income tax law;

(8) Direct election of United States Senators in place of their election by the State Legislatures, and

(9) Such innovations designed to break the political party bosses as (a) direct primaries in place of nominating conventions, (b) the initiative, whereby people could originate legislation for themselves, (c) the referendum, whereby laws proposed by legislators should be referred to the people, and, (d) the recall, whereby office holders who had made themselves unpopular could be retired, and even the recall of judicial decisions the people did not like.

The trusts survived.

But eventually, as will appear, the Progressives won every one of their other demands, except that experiments with the initiative, referendum and recall, tried out in the States, were soon forgotten.

What should be noted here is that the Progressive movement had a single purpose, which was to bring the sovereign will of the people to bear more and more directly upon government.

Few could foresee, if many cared, where that would come out. Pure democracy cannot govern itself. When it tries it brings upon itself the curse of big government, so big that only a trained bureaucracy can manage it; and the sequel will be the putting up of Caesar and the tearing of him down by fickle popular acclaim.

Under the Constitution the sovereign power resides in the people. That is true. But the first sound axiom of political science is that the sovereign power, be it the king or the people, shall not itself govern. It has other functions. One of them is to say what kind of government it shall be; another is to write its constitution, another perhaps is to act as supreme umpire. But it shall not govern, for if it does you have government by will, responsible to nothing higher than itself because there is nothing higher—that, instead of a government of law, limited by the Constitution which the people have imposed upon it.

 

X

The Big Stick at Home

MEANWHILE THERE WAS TAKING PLACE ANOTHER SUDDEN transformation of the economic scene. All the gods of the market place were smiling. Hard times were forgotten. The long heart breaking decline in prices had come to an end. Now prices were rising. And whereas for twenty-five years the industrialist had been obliged to increase his production because prices were falling—that is, to reduce his cost by increasing his volume—now with prices rising he went on increasing it under the incentive of greater and greater profit. It had worked in that curious way—an almost constant rate of growth whether prices were going up or down.

With the ecstasy of great profit came wild speculation. Those who had had the imagination to capitalize the future were working the wine press, and it was their harvest. Wall Street built a new temple for the money changers and raised its skyline higher and higher to make housing for the great corporations that were appearing as if by prestidigitation.

The promoter discovered a vineyard of golden grapes. He went to and fro in the land buying up competitive private companies, in steel, barbed wire, matches, tin cans, rope, textiles, anything at all, until in each case he thought he had enough to control the industry; then he brought it all to Wall Street where bankers would form an underwriting syndicate and create a great corporation to buy him out. The capitalization of the new corporation might be two or three times the actual value of the properties that were turned over to it. Its bonds and stocks were divided as follows: The first part went to those who had sold out, some of them promising not to re-enter the industry; of what remained the bankers took their share, the promoter his and the rest was for sale to the public on the Stock Exchange. The public’s appetite for these securities seemed insatiable. Everybody was a little mad. It was named the era of Frenzied Finance.

Thus the trusts were formed—a steel trust, a match trust, a cordage trust, a sugar trust, a tobacco trust, and so on. The principal argument in every case was that by running a number of independent companies together in one great corporation the cost of production could be reduced, for everybody’s benefit. That remained to be proved. Sometimes it was true and again it was not.

But this was true. If it was intended that the productive power of the country should go on developing in a prodigious manner, then the time had come for American industry to be reorganized in much larger units—units, for example, such as would be able to spend hundreds of millions of dollars on research laboratories for the further advancement of science and technology. Say the way of doing it was wasteful and ruthless. Still, a better way, if anyone could have thought of one, would have been slower and might have postponed the necessary reconstruction. Again it was as if necessity were acting before people clearly understood what it was.

It was not true, as a few hoped and many feared, that the trusts were going to destroy competition. But the design of competition was going to change. For example, it was going to be competition not between a little steel maker who could not afford a research laboratory and a big steel corporation that could, but competition among very large steel corporations no one of which could afford not to have a research laboratory.

Somewhat the same thing and at the same time was taking place in the railroad world. Under the leadership of daring men like Harriman and Hill, with of course the assistance of their Wall Street bankers, railroads were buying one another out and consolidating themselves into systems; and if it was true that railroads had a power of life and death over cities, communities and regions, then obviously fewer and fewer men were going to exercise that power.

The people were afraid of it. A railroad monopoly seemed an intolerable thing. That was before anybody could imagine that in one generation more two new forms of competitive transportation would appear—the motor vehicle and aviation—and that the wicked railroads would be crying for relief.

Observe how in a free economy competition, if you let it alone, will come a full cycle and break the monopoly. When the railroad appeared on the scene the old wagon freighter was out of business. As an individual he could never hope to own locomotives, strings of freight cars and a steel right of way of his own. One hundred years later the individual could buy a motor truck, on credit if necessary, take it out on the concrete highway and compete with the biggest railroad system.

Sympathetically, however, you can easily understand how people with a nostalgia for simpler times began to feel as they saw hundreds of small independent companies selling out to the trusts, what it did to them when their local plant was abandoned because the far-away trust that bought it found it inefficient, and with what plausibility they painted their black picture of Wall Street, as a place where a few silk-hatted men, brigands of the skyscrapers, controlled the country’s banking, industry and transportation. If you said to them that these men were both good and bad, even as it was among the poor, their answer was that an evil rich man and an evil poor man were not at all the same; the power of a man to do evil was in proportion to his wealth.

The brigands, be it said, had a gift for bad public relations. They might believe it, but what was the good of saying out loud that Providence had very wisely seen to it that control of the nation’s wealth should be in the hands of men who knew what to do with it. The rights of property were sacred. They could not believe they were fighting a losing fight. And to the outcries of the many who thought themselves oppressed they were more than deaf; they were cynical. Who were the oppressed? When before in all history had the common well being of a human society been so high? What was all this, they asked, but the ancient impulse of the many to despoil the few, as had always been foretold of democracy?

This cynicism was not entirely confined to Wall Street. To fix railroads rates by popular vote so offended the principles of one of the high liberals of that day, Godkin of The Nation, that he called it confiscation, or “. . . the change of railroads from pieces of private property, owned and managed for the benefit of those who have invested their money in them, into charitable corporations, managed for the benefit of a particular class of applicants for outdoor relief—the farmers.”

And long afterward, in “The Rise of American Civilization,” the historian Charles A. Beard, certainly no defender of great wealth, said that with their rates fixed by state and federal commissions, acting always under the eagle eyes of the shippers, and with their wages prescribed by trade unions, railroads found it impossible either to increase their charges or cut wages to meet their rising costs of operation. “So, through political action in one sphere and direct labor action in another, a large and important class of American property owners suffered a substantial diminution of their incomes, for the benefit of wage earners, travelers and shippers. In other words, by a gradual and peaceful operation was effected a transfer of economic goods greater in value than the rights shifted from the French nobility to the peasantry by the National Assembly on the night of the famous fourth of August, 1789.”

Like that.

Face to face the hostile forces were thus embattled when Theodore Roosevelt took the stage. His first idea seems to have been not to lead the Progressive movement but to capture it. In good stead for that purpose he had, among others, two singular gifts. He could make a platitude sound like a thunderbolt and he could roar in two keys at once.

Notwithstanding what people thought at the time nor what the history books still say, he was not a trust buster. More clearly than any other statesman of his day he saw that the source of the conflict was a strange contradiction in the American character, namely, a mania for bigness and at the same time a very active fear of it.

The mania was imperious, like a biological principle of growth, and possessed not only the lords of banking, industry and transportation, but also merchants, farmers and organized labor, besides inhabiting the spirit of cities.

On the other hand, the fear of it was a dire foreboding in the heart of the American individualist, whose world was going away. His theme, “The curse of bigness,” was a dirge.

In his first message to Congress Theodore Roosevelt took a fighting position between, on the one side, big business, saying “Let us be,” and those on the other side who were shouting, “Smash the trusts.” He said they were both wrong. Bigness was not the problem. There was an American genius for bigness. Those who would limit it would limit their own country. And for what? Only “to bolster up an individualism already proved to be both futile and mischievous,”—futile, as everyone might see, for the reason that the concentration of power in fewer and fewer hands was but the logical end of extreme individualism, and mischievous because the old laissez faire doctrine of anarchial competition could no longer accommodate the facts.

There were good trusts and bad trusts. Why smash them all alike only because they were big? How to save the good and abate the evil, how to reconcile bigness with the national interest—that was the problem. Monopoly was bad. But as for big business he stood not for breaking it but for the regulation of it by the Federal government from the point of view of the public welfare.

Nevertheless he was the first President to invoke the old Sherman Anti-Trust law with vigor. He seemed to be going all out against the trusts, yet all the time he had secret reservations about it, almost as if he were proving his thesis that that was not the right way. In the end it was proved, but not until the mind of the Supreme Court had undergone an evolution, which took several years.

The first notable action was against the Northern Securities Company. This was a trust device in which E. H. Harriman, James J. Hill and J. P. Morgan had buried the Northern Pacific bone, having first quarreled over it to the point of throwing Wall Street into a frightful panic; it held control of the only two competing railroad systems of the Northwest.

In that case the Supreme Court held that although no act injurious to the public had been proved, still the trust had power to do evil and must for that reason be destroyed. That was in effect a decision against bigness as such, contrary to the Roosevelt thesis.

Next the Court dissolved the Standard Oil and Tobacco trusts, on the ground that their behaviour was bad; but to this it added the dictum that to examine all restraint of trade, or every little case of it, was more than any law could do, and hence thereafter it would construe the Anti-Trust Act by “a rule of reason.” That was coming toward the Roosevelt thesis.

Then, in the case of the United States Steel Corporation, which at that time controlled six-tenths of the entire American steel industry and had been for a long time regarded as the behemoth of trusts, the Court held that although it had the power to do great harm its record was clean; therefore it might stand.

Thus, bigness itself was not evil and the distinction between good and bad trusts was established, fully in accord with Roosevelt’s first premise.

That was the end of trust busting. There were no more punitive actions against trusts as trusts, only against those that were accused of wrong doing.

During his 7½ years in office Roosevelt got only half of what he wanted in the way of regulation. By additions to its law the Interstate Commerce Commission was clothed with authority, and began to say what railroads rates should be, that they should be alike to all, and in general how the railroads should conduct their business with one another and with the public.

So the railroads were tamed.

But it was not until six years after Roosevelt, in Woodrow Wilson’s administration, that Congress created the Federal Trade Commission, with authority to mind the behaviour of big business, to police it, to say how it should buy and sell, how it should treat big and little customers alike, how it should arrive at the prices charged, how it should write its advertising matter to avoid misrepresentation, to lay down the rules of fair competition and to chastise it when and if it forgot the law.

After that, if all trusts were not good trusts it was the government’s fault, and the head of laissez faire might have been presented to Roosevelt as a trophy.

He was not at heart a true radical. There was nothing all good or all bad. If his opinion of political bosses was low, still he understood them perfectly and why they were, could generally outplay them at their own game, and was always willing to sup with Satan if it were with a long spoon.

He had a distaste for extremes. When Ida Tarbell was taking the Standard Oil Company apart at the seams and Lincoln Steffens was writing “The Shame of the Cities,” and when no popular magazine would think of disappointing its reader millions by going to press without a burning article to gratify the public’s preoccupation with the sins of wealth and power—and nearly all the writers in this morbid vogue were his personal friends—Roosevelt suddenly turned on them and called them muckrakers. Hence the frequent historical allusion to the muckraking era. Even if everything they said were true, still the exclusive emphasis on what was wrong with the country gave a distorted view of it as a whole. Anywhere, anytime you could find filth by looking for it, even in your own backyard.

Such was the man of balance, who rode words with the skill of an acrobat, as to say, justice to the poor man but justice also to the rich man, or, justice to the wage earner but justice also to the capitalist.

Now whether it was that the Progressive movement which he had captured in turn captured him and took him further than he might have wanted to go, or whether the incivilities of Wall Street, going so far as to suggest that his mind was unbalanced, did at last get under his skin, the fact is that toward the end of his regime he began to talk more of the “malefactors of great wealth” (a term he invented), of the anti-social nature of the money motive, and of the necessity to redistribute the national wealth to achieve social justice. With the end last named in view he espoused the popular demand for a progressive income tax.

When his time was up he refused to try for another term and nominated his own successor. That was his personal friend and disciple, William Howard Taft, who was easily elected with Roosevelt’s blessing. After the election Roosevelt immediately sailed for Africa on a big game hunt.

Taft was an amiable, obese conservative who thought he was a Progressive, and was mainly distinguished for clumsy speeches. The principal achievements of his administration were all on the Progressive side. It was he who broke a deadlock in Congress on an income tax law by suggesting a Constitutional amendment to make it clearly legal—and that is how it was done. He supported also a Constitutional amendment for the election of United States Senators by popular vote. He doubled the number of suits brought by the government against the trusts; and that was before the Supreme Court had ruled that bigness itself was not wicked.

For all of that, the schism in the Republican Party between Conservatives and Progressives continued to widen. On returning from Africa Roosevelt became very dissatisfied with Taft’s stewardship and turned against him. The Progressives then importuned him to put himself at their head and lead a third party, to be called the Progressive Party; and saying no he yet consented. The platform of the new Progressive Party had everything, including presidential primaries, the recall of judicial decisions by popular vote, easier ways to amend the Constitution, woman suffrage, regulation of industry, abolition of child labor, minimum wage laws, workmen’s compensation and a forethought of unemployment insurance.

The candidates in the next election were: For the Republican Party, Taft; for the Progressive Party, Roosevelt; and for the Democratic Party, Woodrow Wilson. Nearly all of the Progressive Party’s votes of course would come from the disgruntled wing of the Republican Party. Roosevelt had the vanity to believe not only that he could get more votes than Taft, which was possible, but that he could split the Republican Party vote between himself and Taft without electing a Democrat. He was wrong. Woodrow Wilson was elected by less than a majority of the total popular vote.

During the first two years of the Wilson regime Democracy cashed in some blue chips. These:

(1) Two of its Constitutional amendments were proclaimed—one providing for the popular election of United States Senators and one giving the Federal government power to levy an unlimited progressive income tax on all incomes.

(2) Congress created the Federal Trade Commission, to police business, and passed the Clayton Act to fortify the anti-trust law.

(3) In the name of monetary reform the Federal Reserve Bank System was established. That was the beginning of the end of private control of money and banking.

Both the income tax and the new bank system were acclaimed by the people as measures of liberation. Firstly, the tax burden was shifted from the poor to the rich, which was in fact a redistribution of the national wealth, and secondly, never again could greedy bankers manipulate the money supply.

Well, there was liberation, and it was revolutionary, but it was government that was liberated, not the people.

And from what was government liberated?

From the simple thing you may call money worry. Since now with one hand it could seize all private incomes, up to the point of confiscation, and since with the other hand it could turn the Federal Reserve Bank System into an engine of inflation, and so create its own money, it was money free. The Constitutional provision which wisely sought to limit government by putting control of the public purse in the hands of the House of Representatives—that was not repealed. It was only eviscerated. Never again could government be limited by want of money. Thus big government became inevitable. Against bigness in the economic world there was always some defense; against bigness in government there would be none.

When the income tax was being debated in Congress a Senator who said it might rise to ten per cent was hooted down. In 1914 it began at a nominal one per cent on small incomes and rose to seven per cent on high incomes. One generation later it was more than twenty per cent on small incomes and went from that on up to more than ninety per cent on big incomes—in time of peace. And in that period the expenditures of the Federal government increased seventy times.

True, there had been two world wars; but the two world wars, if they had occurred at all, would have been very different if the government had not been money free.

It was the fate of Woodrow Wilson, a pacifist, to take the country through World War I.

Marginalia

If only a nation knew what it was like it might be something else. It almost never does.

One of the noble ideas the Americans have entertained about themselves is that they are a peace-loving people—not that they prefer peace but that they are truly unwarlike. Any suggestion to the contrary will bring scandal on your head.

Was not the American Peace Society the first in the world? Was not American diplomacy always on the side of the angels, pleading for arbitration and disarmament? Did it not, in collaboration with France, get sixty nations to sign the Kellogg-Briand Pact, renouncing war as an instrument of public policy? Was it not an American idea that war could be abolished by law? What of the private Americans who gave their millions to the cause of peace? There was the Carnegie Endowment for International Peace. There was the Ginn World Peace Foundation. There was ex-President Taft’s very eminent League to Enforce Peace. There were school peace leagues and church peace leagues.

There was definitely and uniquely an American peace movement and its errand was to change the world. The curious fact is that it first began to be a political force soon after the close of the war with Spain. As its enthusiasm grew it claimed Theodore Roosevelt as a man of peace.

Its leaders were not a few visionary mystics. They were practical men who got stars in their eyes—industrialists like Andrew Carnegie and Henry Ford, a railroad man like James J. Hill, an inventor like Thomas Edison, President William H. Taft, eminent lawyers, presidents of universities, teachers, publicists and editors.

Preparedness became a tabu word. The arsenals were forgotten. A little army was unhappily necessary as a police instrument. War clouds in Europe were invented by the Old World munitions makers, who were supposed to be sick with dismay; and they were probably responsible too for distressing rumors about the German Kaiser. In 1913 the New York Peace Society sent him a lovely medal to attest its disbelief in those wicked rumors. Andrew Carnegie, who knew the Kaiser, assured the American people that he was a peace lord, not a war lord. Nicholas Murray Butler, who also knew the Kaiser, said the same thing.

The disastrous effect of all this was to convince the German War Lord that the Americans had become a nation of pacifists. If he had not got that idea into his head his behaviour might have been different. Certainly the last thing he could imagine was that in five years he should meet two million American soldiers on the battle field in Europe.

When the country at last did get into World War I the peace societies went along—nearly all of them—and put their minds at ease by saying it was a “war to end war.”

But what this war to end war did, besides beating Germany down, was to make the world weapon crazy. The victorious nations, all more heavily armed than they had ever been before and groaning under the weight of their armaments, nevertheless took off at once on a mad race for naval supremacy.

As a naval power the United States now was in first place and very naturally jealous of it. Great Britain wanted back the supremacy she had lost, thinking it was hers by right; and Japan wanted a navy as big as anybody’s.

Such was the situation when the American government made a proposal which for chivalry, wisdom and peace mindedness stands all alone in history. The principal naval powers were invited to Washington to discuss a limitation of armaments. The Secretary of State (Charles Evans Hughes), addressed them, saying, in effect:

“The American Navy as you know is incomparably the biggest in the world. We are able to double it and double it again. Do you think you can overtake us? But this is folly. Let us put our swords side by side on the table. Ours you see is the longest one there. What we propose is, first, that we shall break our sword to exactly the length of the next longest one, which is Great Britain’s, and then a ten-year holiday on the building of capital ships.”

The delegates were stunned. How could they refuse? A treaty was signed. To bring the American Navy down to the size of the British navy we towed a certain number of capital ships out to sea and sank them and shut up our ship yards. Then after all nothing came of it. Faster than ever the other powers began to build smaller vessels not covered by the treaty and before the treaty expired Japan withdrew because she wanted naval parity.

Yet for all of that on one side, the question remains: Are the Americans an unwarlike people? Before you answer you must look on the other side to see what in its lifetime the nation has done with its sword.

Casting out first the War for Independence, then the many Indian wars and lastly the Civil War, and beginning in 17981800 with an undeclared war with France at sea, the record is that in a century-and-a-half the United States has engaged in ten foreign wars, big and little, alone five times and in collaboration with other nations five times.

Between times the American sword was drawn no fewer than 130 times in foreign lands, in every continent of the world—as, for example, to chastise the Barbary pirates, to prize open the door of Japan, to punish slave traders off the coast of Africa, to avenge the murder of American citizens, to chase bandits in Greece, to obtain apology for insults, to protect American lives and property where they were endangered by native uprisings, to rescue a kidnapped American named Perdicaris in Morocco (Theodore Roosevelt’s message, “We want either Perdicaris alive or Raisuli dead,” Raisuli being the pirate), in Turkey for police action by request, to make the president of Mexico salute the flag, in China many times to quiet the people, in the Latin American republics to restore order, to prevent a bad revolution or to assist a good one, and sometimes here and there just to make a salutary impression.

Certainly we had always been handy with the sword.

The first design for total global war emerged from America’s decisive participation in World War I; the terrible completion of it came in World War II, plus the formula of unconditional surrender, which ruined the old civilized pattern of gallant and limited war.

War was scourge enough before the American will, commanding unfathomable American resources, made it hideous by inventing the atom bomb. When its frightfulness had been demonstrated by two that were dropped on the heads of civilians in Japan, not only did the bomb begin to be manufactured in quantity and stockpiled for future use, but vast and mysterious new works were created to produce a fusion bomb that might be a thousand times deadlier than the fission bomb.

And then, in fear of World War III, which might be the last, the nation that still believed itself to be the least warlike among the powers of the earth, proceeded to build the greatest killing machine that was ever imagined, with these features—air bases in four continents from which to launch bombs, American soldiers in forty-nine foreign countries, a frontier that encircled the globe, and behind it all a foreign policy that obliged it to defend the whole anti-Communist world and to fight for it wherever the aggressor might attack it.

Among those who were crying, “Peace! Peace! Ye shall fight for peace or perish,” were the daughters of Mars; and their voices sounded like all the rest.